The Labor enquirer., 1884-10-11
NATIONAL BANKING SYSTEM

THE COST OF ISSUING CURRENCY ON THE
IA NATIONAL BANKING SYSTEM. n
International bank bill was passed February
1868, and modified in 1864. This system is
copied from that of the Bank Of England
The bank buys Of the government interest,
bearing bonds, deposits them with the treas.
urer, and receives 80 per cent the deposit in
notes to issue to the people at the rate OF
interest allowed by state laws. Thus the bank
receives interest on its capital and also on its
| notes. @ j Z
/ ask careftl attention to what this plan has
already cost us, as revealed in the books OF
the treasury. To ascertain this cost, we must
find how much, in bonds, the government
paid the bankers for the loan secured from
them, what amount of interest paid upon
their bonds and on the currency given them
to issue, and other sources of income to them
| as bankers.
The first national bank notes were issued
under the law of 1854. [section l3, statutes,
page 99.l i have carefully taken from the
books of the treasury the amounts issued
each year up to 1880, l6 years, and the average
was over s3OO,OOO,OOO. 1 figure only on this
amount. The sum required S30O,OOOOOO in
bonds. These bonds were paid for in legal
tender notes, when they were at such dis
count that the bonds cost in specie about so
cents on the dollar. The buyers had corner
on specie and controlled it. These bonds
were mainly purchased in '64, IS, '66, '67 and
'6s. For loan of 100000 of specie, the
government gave it's bonds for $780, 900.
The bankers thus cleared $l65,000000. The
interest on these bonds at per cent is Sl9 S0O,-
900 annually. Multiply this by l6, the num-
ber of years, and we have s4OS,672OW. Ii.
Next, they received as free gift an average
Of $780, 600 900, to issue at any rate of interest
allowed by the states up to 10 per cent. On
this they have averaged at least per cent,
making s24,OOO,OOO annually, or in sixteen
years, sSs4,QOO,OOO. - r.. s.
Again, we must add to this, interest on de.
posit of government funds which have aver.
aged S160O0,0O0. This at per cent has pro
duced sl5,s6o,OOO In sixteen years. b.
Once more, the banks have drawn interest
on bonds held to secure these deposits, SIS,
100000. Summing these items Of interest
drained from the people by the national bank
system we have the enormous sum OF SS23,
| 1000 paid in simple interest. H.
| For five years the interest on the bonds was
paid in advance annually. The interest on
the currency was all paid in advance. If we
should compound this interest at the rates
! they received by loaning it, it would nearly
double, this almost incredible amount
| individual deposits in these banke have
averaged 5000 100000, upon which has been
realized at least per cent, alarge sum which
properly belongs to this cost, but we pass II
without further comment. n +.
4 From this enormous sum must be deducted
the per cent tax on their circulation, which
these banks paid more than private banks
This would be s., OO0,oOO year. or sis, 900 in
sixteen years. pass the expense to the gov
ernment Of furnishing the notes to the banks
| for ten years, at least a million of dollars q
year, and the amounts they yireceived for sell
| ing bonds for the government, ,..and the appre
ciationiof their bonds above par,
| / Carefully carried out, the sum amounts te
/ billions, that the National Banking associa
tfon has made out of the people simply by
handling their currency. 1t is no marve
| THAT some of the best business men of thu
land, largely engaged in banking said, wher
the act passed: 4That will ruin this natior
If long continued. No people, whatever thei
Industries and resources, can long endur,
such drain" ss3fsSs
utterly fail to find any, reason why th
amount OF the national debt put into interest
bearing bonds to furnish basis for banker
to issue currency, might not have been pu
II directly into currency. That simple course
demonstrated to be feasible by the sum issue,
in greenbacks, would have saved the enol
4 nous cost so plainly set forth. The marvel
GUS expense of the national bank system ha
been robbery, deliberate, merciless, and ruin
; Gus to the producers. 1t Is q curse, more t
be deprecated than the civil war, with all it