Savannah morning news. [volume] (Savannah) 1868-1887, 1885-11-23
THE TWO sYsTEMs OF RANKING
The Present National Bank system and
the Dad State Bank System-Which is
the M0st Beneficial to the People?


that the national banking system is the
best we have ever had, has been so often
made, until presume the people take it
for granted that 1t is so and never take
the trouble to compare it with the old State
bank system. That the latter has q great
many advantages the former does not
| possess, and that it is equal to it in all
other particulars except the guarantee of
its issues by the government, l will en-
deavor to show. In the first place when
national bank is organized, il takes
capital away from the place in which it
is located instead of bringing capital TO it.
Alleging that the bonds deposited with
the United States Treasurer can be pur-
chased at par, and for the sake Of
illustration, say the bank begins
with capital of 100000, and that the
capital is all subscribed for where the
bank is located The citizens actually
lose $4,000 of the amount subscribed, as
the government only issues and indorses
80 per cent. in bank notes of the 100000.
grant that the stockholders of the bank
get about per cent. interest on the $l0,-
200, but the latter amount is lost to the
money-borrOwing people. Should the
bonds sell at premium. then that much
more of the capital is taken from the
home of the bank and locked up in Wash
ingtOn. So much for the disadvantages
vi luS present sysIeLls dJ Tue SldIts 50 ldT
as the people are concerned. In
the next place, depositors, who are
generally the largest creditors of n bank,
are not so well protected a S they were by
the old State system. Nearly the whole
OF the capital stock of a national bank Is
pledged to secure the bill-holders, and
should bank fail there is very little left
for the depositOrs from the assets of the
bank. By the old State system all the
IN, Lob, o.F
the assets. That the bill-hOlders would
suffer very little,can easily be determined
by taking into consideration how few
bills OF any one bank are generally in any
| one PERSONS possession. By the old
State system a bank is really stronger
than any national bank can be. An old
State bank, with issues, can live on
per cent. interest, and declare larger
| dividends than national bank can with
8 per cent interest. There was never any
cry of lack Of currency under the old
| State system, while there has scarcely
been year, since the present system was
established, that currency did not become
exceedingly scarce, to the great detri-
ment of business. National banks have
to live greatly by deposits. A State bank
was not so much dependent on them, but
/ derived its great income from its circula-
ton. Every bill presented to a State
coin, or the bank would be Immediately
placed in the hands Of a receiver and
wound up. Directors of the old State
banks were as careful in lOaning out their
bills, as the directors of the National
banks are in lOaning out the depOs-
its, with the advantage greatly in favor of
the former, for the bills were widely dis
tributed and the banks were less likely to
have runs on them for the redemption Of
q n M
the deposits. | think ! can, without the
fear of contradiction, say that all the
banks located in South Carolina and those
banks in Georgia located in cities of any
size under the old system could show a
better record than a similar number Of
national banks located in any part of the
South. In summing up the whole mat
ter, the presentsystem has but one advan-
tage over the old State systematic perfect
security OF its issues, and that is certainly
a mere nothing compared with the greater
| number Of advantages possessed by the old
/ State system. Let the government at
| Washington continue to keep Its green
backs in circulation, repeal the national
bank act and replace the national bank
notes by an additional issue of green
backs, and let the States be allowed to re-
establish State banks, with issues, and
require the banks to redeem their issues
in either greenbacks or coin. There is one
safeguard that should be thrown around
banks of issue under the old system. The
stockholders should be held responsible
for the entire indebtedness of the banks,
and the Legislature should grant no char
ters to banks with very small
capitals, situated in small places,
where there is very little
terest to the general government by re-
placing the National Bank circulation
with greenbacks, would amount to over
$9,000,0O0 per annum, even at as low a
rate as 3 per cent. We had a banking
capital in his city, before the war, Of
$5,000,00 On this capital $I5,000,000 OF
bills might DE issued. You can readily
see the great advantage to the community
there was in the old State system. SO far
as the convenience OF travel and making
remittances to other States are concerned,
there is no difference between the old
State system and the present national sys-
TEN. If you wish TO travel in any part of
the United States, or make a remit
lance TO any city in any Of the States, you
could buy checks on New York, which
would pass anywhere. That is done TO a
great extent now, Notwithstanding the
present bank currency is good in any
State in the Union. ] would great deal
rather deposit money in an Old-time State
bank, with issues, than to deposit in
national bank of the present day, if / had
to choose between the two. How many
merchants or citizens residing in this city
would loose any great amount by being
holders of its bills. il a State bank with
issues should fail? There is scarcely a
merchant or citizen who keeps 500 out OF
bank. while some have 500, 900 on deposit.
Now, l ask if this amount is not safer in
State bank than IL would be in national
bank? Suppose Two banks, OF equal cap
itals, were 10 fail-one State bank, with
issues not Endorsed, and the other a ma
tional bank. with its issues guaranteed by
the government, aud suppose two parties
had money depOsited-One $4,000 in the
State bank and one like sum in the ma
tional bank, which would have the best
shOwingY Why, the one who has his
money in the State bank, because all its
assets would be equally distributed be-
tween the billhOlders and the depOsitOrs,
while the national bank party could
only get portion Of what was left after
paying the billholders in full, which
would be 10 per cent. OF the capital
stock. IL is true the stockholders are
responsible for an additional sum equal
10 the stock they hold, but how often Is IL
tho case that the assets OF the bank are all
that the creditors can hope 20 recover
anything frOmf Old State bank stock
holders were also liable 10 the same eX-
tent that a national bank stOckhOlder now
is, 80 the present system has no adj
vantage over the Old in this particular.