St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1886-11-29
THE NATIONAL BANKS.
Comptroller Trenholm Speaks in His An
nual Report of Our Present
Banking System.
The Currency Act of 1868 Passed to In.
duce Banks to Purchase Gov
ernment Bonds.
The Consolidation of Banks Only a
Subordinate Incident in the
General scheme.
swers to Them Stated With
out Comment.

WASHINGTON. Nov. 2S.-Hon. William
Trenholm, comptroller of the currency. in
his annual report to congress will say, re-
garding the national banking system: The
present financial prospects of the country
induce the expectation that the funded
debt will be paid off as fast as the bonds
mature, and. in consequence, a question has
arisen as to what changes should be made
in the national bank system in order that it
shall not suffer deterioration or reduction
upon the withdrawal of the support upon
which it is based b! the present laws. which
requires every bank before beginning buSi-
ness to deposit a certain amount in United
States bonds. The payment of the per
cent. bonds. the maturity in 1891 of the 4 a
per cent. bonds, amounting to $780,
600, 600, and in 1907 of the 4
per cent. bonds amounting to
nearly S73S, 900, 900, have combined to pro-
duce prospective scarcity in the securities
available to the banks as basis for their
corporate existence and this is reflected IN
the advance of these bonds to premium so
high that every day their enforced pur-
chase becomes more and more enormous.
Banks are now holding 3 per cent. bonds,
and new y-organiZed national banking as
sOciatiOns are forced into the market as
purchasers of the 4 per cent bonds, and
this constant demand, in connection with
the prospective scarcity already referred to,
sustainS and tends still further
TO ELEVATE THE PREMIUM
on these bonds. AS the time approaches
for the payment of the 4 15 per cent. bonds,
it is reasonable to expect a still greater de-
mand for the per cents, and it is qIes
ton of serious Importance whether the
banks can afford to hold or to buy per
cent bonds. In the present age all busi
ness men try to anticipate future conditions
and to provide well in advance against fore
seen contingencies, hence it is to be eX-
pected that the banks will not wait until
the approach of 1891 to shape their policy
with reference to the continued holding Of
high-priced bonds. For this reason it is
not coo early to consider what legislation
may be proper to remove the element of
future uncertainty from the natioual bank
ing system. and, looking to the possible
consideration of the subject of congress- |
respectfully submit the following statement
of the question as it appears from the point
of view officially occupied by the comp
troller Of the currency. The fundamental
established by law. whatever may be its
form must necessarily be:
Frsr-That banks promote the general
welfare of the community.
SecOnd-Tbat the PARTICULAR system estab-
lished by law is the best obtainabe under the
conditions prevailing at the time and place.
THESE POSTULATEs,
therefore, underlie our national banking
laws. The first postulate will not be ques-
toned since no people in modern times
have ever risen to civilization or main
tanned their civilization without banks, and
least of all, can it be questioned in this
country. where. besides S.26S national
banks now in operation. we have over 5. coo
state banks, savings banks and private
banks and bankers whose operations eX-
tend into the mnutest ramiications of the
employment and resources of our60 900, 900
of population. The second postulate i'll
wolves the question whether the present
national bank system should be preserved,
and, if so, whether it is good enough as it
is or whether it can be improved. Tie ma
tional currency act of Feb. IL. 1868, was
controlled as to its purposes by the pera-
mount necessity of inducing the banks and
other cap ,taStS to become purchasers of
government bonds under conditions that
would give basis of solid value to the
currency then being paid out in
immense volume under the pressure of
military eXigencies. Hence the consolida-
ton of these banks into a national banking
system. adapted to commercial and indus
trial needs, appears only as a subordinate
incident in the general scheme. AS early,
however, as the year 1864 it was perceived
that the general welfare of the people would
be promoted by
GIVING GREATER COHESIVENESS
and method to the system. regarded more
in its banking than in it's cur
rency features. and from that time to this
the effort of legislation has been to subordi-
nate the issuing of currency to the more i'm
portant functions performed by the banks
as Institutions of discount and deposit. The
effect of this legislation and it's wisdom are
eXemplified in the present high credit and
the consequent wide commercial usefulness
of national banks. If the system could be
preserved purely as one of deposit and dis
count, there would probably arise an almost
sentiment in favor of bestowing
upon it's preservation immediate and careful
attention. but it is doubtful whether
the banks would find sufficient inducement
to remain in the system without enjoying
some privileges as to the issue of currency,
and it has been questioned whether there is
power under the constitution tor the charter
of national banks except as Instrumental
tiles for money circulation. 1t follows
therefore. that any legislation directed to the
and permanent establishment
of the national banking system must in
clude some provision for the maintenance
of national bank circulation. while, on
= H.