New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-03-23
THE POSITION or THE BANKS.

| The national banks have now obtained the
| repeal of war taxes, which has been recon-
mended so long and so earnestly bg the Con-
| troller of the Currency, and advocated with
| such cogent reasoning by the officers of the
Bankers Association. The taxes paid last
year exceeded 100000, or nearly 2 per
cent on their capital stock. When the banks
were obliged to transfer their bonds held rs Sc
curty for circulation into three per cents or into
| other bonds bought ut such price as to yield
barely per cent on the sum invested, and yet
were compelled 20 pay nearly 2 per cent Ia
taxes to the United States, it was no wonder
that the growth of the national banking system
was greatly retarded. In addition TO the taxes
paid to the United States, the banks were also
compelled TO pay an average Of Is per cent III
taxes 10 State and local governments, so that
the amount paid in taxes actually exceeded last
year the entire interest on bonds held as secur-
fly for circulation by about Sl,9OO,OOO. These
burdens, with embarrassing and yexatOus legis-
laton, prompted by enemies of the system,
have had a marked effect upon its dey elopment
for some years past.
OF the business done by the banking system
at different times some estimate may be
formed from the volume of exchanges reported.
From 1873, when the volume of business was
smaller than it had been for several years be-
fore, the increase in exchanges has exceeded
100 per cent. In other words, the volume of
business done by banking institutions of all
kinds has more than doabled since 1878, and,
had the national system been unfcttered and
free from unnecessary burdens and obstacles,
il would naturally have increased its capital
very largely. But the actual increase in the
10
$1G,9OO,0 900, or less than per cent, in four
years, and the increase in circulation only
S13, 100000, or but little over per cent.
The consequence has been that the same banks,
without such an increase OF capital as TO afford
desirable security to the public, have been
called upon to hold $1,131 100000 deposits
for individuals against 1896, 100000 in 1878,
and to lend 81 ,243, 100000 against
1878, 10000 in 1873; in other words, the
business done by these banks has increased
about so per cent while their capital invested
has increased but per cent and their issues
c circulating notes only about as much. This
change has not been to the advantage Of the
public or of the banks. 1t has been the direct |
result of unwse burdens and impediments |
which hostile or foolish Legislators have insist |
ed upon retaining until this year.
With the new law the banks will not only |
have relief from q great part Of the excessive |
taxation they have borne. large reduction
in the revenue of the Government will also
retard materially the payment of debt, and
thus give longer life to the bonds now held
as security for circulation. 1t is not likely that
the three and half per cents will now
be exhausted for some time 70 come, and
the banks can reasonably expect 10 hold
the three per cents much longer than
before The act was passed. This adyant-
age, with the removal OF heavy burdens of
taxation, ought to encourage a considerable
expansion of the banking system. The increase
OF circulation, it is true, cannot be expected to
be large so long as the Government fills all
channels of circulation to overlooking with
gold and silver certificates But the banking
system may expand itself in sections where the
lack of banking facilities has been a great en-
barrassment to trade, and it may with profit
strengthen itself 10y a reasonable increase of
capital invested.