New-York tribune., 1884-01-27


The present danger to the banking system is
that those who wish TO save it do not agree as
to the mode. There are too manyplans. Several
are excellent, but only one can be adopted. If
those who desire to keep the National banking
system alive insist upon half a dozen different
plans, and vote against any except the one
each thinks the best the enemies of the sys-
TEN will prevail.
A bond of the United States is now ample
security for notes up to its par value. The
shOrt-term bonds can hardly fall below par be-
cause the Government is Tedceming them. The
lOng-teIm bonds command high premium, and
would be bought in by any honest and rational
Administration if they should fall near
par, in preference to redemption of bonds pay
able at the option of the Government. If the
bond is ample security for its par value, what
reason is there for demanding deposit of more
than the value of notes issucd2 At the outset
when public credit was frail and exposed to
the chances of war, and specie resumption
seemed impossible, there was good reason.
That time has long passed. The bond dcpos-
tied now yields less than 3 per cent interest, in
stead of over per cent when the banking sys-
TEN was established. To exact more security
than is ample is to make the abandonment Of
the system more probable.
Senator McPhersOn's bill, which the Finance
Committee of theSenate has reported favOTably,
is not just what most friends of the National
system would have preferred. 1t allows the
Issue of circulation to the par value of any bonds
deposited, provided the amount shall not exceed
the capital stock paid in. This Is an exceedingly
simple remedy; the question is, not whether it
is the best possible, but whether it is sufficient
and safe. If the bonds are in all cases sulii-
cient security for their par value, is there danger
on the one hand that the circulation may be
unduly expanded, or on the other hand that the
remedy may not suffice to prevent surrender of
The fact that the circulation was fairly main
tained as long as per cent bonds were plenty,
though banks were required to deposit $780,
300 bonds in order to issue $4,000 circulation,
strongly indicates that the banking system
would not be generally abandoned if 8 per
cents, or other bonds yielding nearly the same
rate, could be used as security for their par
value 1t will be some years, at any rate, before
the per cents can be cleared away, and it may
be expected that another Congress will be not
more unfriendly than the present, so that a
further remedy can be applied if found neccs-
sary. On the other hand, there can be
no great expansion of the system without
such demand for 4 and 4l2 per cents that the
high premium upon them will induce sales
Banks gong out of the circulation business, on
his account, will then be apt to balance in the
main those that may go into it, and take bonds !
1t higher figures than now rule.
1t is not the question whether this plan is the |
pest conceivable. 1t has the support of some
Democrats in the Senate, and icir |
party friends control the House. A bill which |
40 influential Democrats in the Senate support |
S very apt not to become alaw. If this remedy |
an be applied while one that we consider bet
er cannot be, is it not wise to do the best thing |
TO preserve the banking system1