The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1884-08-14

Secretary Moreland then read a paper on the
banking and currency system in its relation to
the business of the country. furnished by Hon.
Hugh McCulloch, who was unable to be present.
MR.. M'cULLooHs ADDRESS
The excellence of the national banking system
years 1t has done all that its warmest adj
vocates expected It has given to the country,
what it never had before. and greatly needed,
bank-note circulation perfectly secured and cur
rent throughout the Union. It has done more,
it has shown that there can be great national
banking system without the centralized power OF
national bank, and free from partisan politics
1t has not it is true in all cases, protected de-
posltors from losses This has never been done
and never can be, under any system OF Danklng
but it is safe to say that the losses OF deposltors
by the failure of national banks enormously as
d.,positors have been increased within the last
twenty wears, have been much less than they
were under the system tlf 1T might be called
SYSTEM that preceded it. That it has not been
mo effective in this direction is attributable to
the fact that while IN the management OF the
banks party politics have been ignored, the
Comptroller has, in some instances, been forced
to yield his better Judgment in the appointment
OF examiners, to the pressure Of politicians, who
have had friends to be served, or supporters to-
be rewarded. To be competent examiner of
banks, especially of the large banks in our COM
mercial cities, a man should have qualifications
which very few, men possess He
should have thorough knowledge of
bookkeeping. combined with strong will and
perfect integrity. He should be hard worker.
and SO keen and thorough in his investigations
as to render imposition difficult, if not impossi-
ble He should be able as some men are to
tell by the bearing of the officers Of bank. and
even its very atmosphere whether it is faith
fully or unfaithfully managed, before he Elk
amines it. Having had, in years long past,
good deal of experience in the examination OF
7 Of
duties of a bank examiner are, and what his
qualifications should be. To select examiners
of the right kind, no one is SO competent as the
Comptroller ought to be, and no one has sodeep
an interest so far as reputation is concerned. as
himself in the manner in which their duties are
performed. Its by him that examiners are APP
pointed. They are his agents. and he is to some
extent responsible for their incompetency or
neglect. He should therefore, be perfectly in
dependent of all outside influences in making
appointments This, apprehend, has not al
ways been the case, and to this is attributable
to a large extent, the fact that the examinations
of the national banks have not been, in all in
stances, as intelligent and searching as they
ought to have been. Still. as / have said the
national banking system has done all and more
than its advocates expected. By superseding
the State banks. upon which, without 1t, the
government would have been compelled to rely
in the late civil war for bank-note currency, it
did much to save the government from bank
ruptcy, aud it has for nearly quarter of cen
tury furnished the country with bank
notes on which no loss has been, or ever can
be sustained. / did not however, commence
writing this letter for the purpose of euIogizing
the national banking system, but of speaking
very briefly of the dangers which threaten its
perpetuity. It's great value nay, its very exist
ence, depends upon the security of the notes
issued by the banks which are organized under
it. This security consists of government bonds.
which are deposited with the Treasurer in Wash
ington. Nothing else will answer the purpose
Holm hu,s
but they would never be issued if they were to
be protected by an equal amount of coin in the
vaults of the banks. They must, to a large ex-
tent be based upon credit. and there can be
credit reliable enough for the basis of national
paper currency except the national credit
Nothing. therefore, but the bonds of the goyerll-
ment can perfectly secure national bank-note
circulation. OF these bonds the national banks
are being rapidly deprived and will be soon de-
prived altogether, unless the public revenues are
largely reduced The public sentiment seems to
demand an extngushment of the public debt as
soon as the condition Of the treasury will per-
init it; but so highly is the national banking sys-
tenn approved by the business men of the country;
SO essential has its maintenance become to our
national prosperity; so entwined is 1t with both
pnblic and private interests, that the sentiment
ii favor of the extinguishment of the debt would
doubtless be satisfied with reduction OF 1T to
such an amount as would be needful to secure a
bank-note circulation, were it not for the recent
decision Of the Supreme Court on the legal
tender question which throws dark cloud over
the financial outlook. 1t is not for me to crlti
else that decision. The justices of that court
are among my personal friends. / have the
highest respect for their characters and legal ac
quirements. This much, however, cannot for
bear to say 1t is q decision which fails to com
mend the approval of the best legal minds Of the
country. It clothes Congress with imperial
power-the power which the trainers of the Con
stituton manifestly intended to withhold. 1t
announces a new doctrine, that Congress, in
ste IF haiT n IN 10 Of
ated powers, may do anything and everything
which the Constitution does not absolutely pro-
hibit. Indeed if by its authority to coin and
borrow money Congress can authorize the issue
of government notes as money, it is difficult TO
see what power does not constitutiOnally belong
to it. Discussion of this question, however, is
now of no avail. 1t is now the law, that Congress-
in the exercise Of its own discretion. may au
thorze the issue of legal tender. notes at all
times and to any amount. Such is the decision
of the court from whose decision there is no ap
peal. and it is not to be disguised that ltputs the
national banking system IN imminent jeopardy.
Nothing can save it, if the redemption of the
government bonds goes on and this can only be
prevented by a reduction of the government in
come to the amount required to cover
Its ordinary expenses, OF which reduction there
are no present indications. Now, as the
country must be supplied with paper currency
of some kind, the question arises, of what shall
this currency consist Certainly not of the
notes of State banks, because if such notes
could be perfectly secured their credit would be
local; they would not be current throughout the
Union. But they could not be perfectly secured
large part Of the States have no bonds out
standing to base circulating notes upon. Many
that have are in bad credit. None have main
tanned absolutely good faith with their creditors
except Massachusetts and California. Besides
State credit has been impaired by the late decis-
ions Of the Supreme Court, in the Virginia and
Louisiana cases, which place State sovereignty
upon higher plane than even Mr. Calhoun ever
contemplated, and enables the States to violate
with irnpunity any and all contracts which they
have entered into with their creditors no mat
ter how carefully prepared, or how fair and just
may have been their provisions 1t is, there
fore. quite certain that if and when the notes Of
the national banks are withdrawn from circula-
tion their place will be filed not with the notes
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