The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1886-12-02
OUR GOVERNMENT BONDS.
DISCUSSING THE QUESTION OF MA
TloNAL BANK CIRCULATION.

Il
the question of National bank circulation,
aays; Banks now holding three per cent
bonds. and newly organized National bank
ing associations, are forced In the market as
| purchasers Of the four per cent. or four and
half per cent. bonds, and this constant de-
mand, In connection with the prospective
scarcity Sustains and tends still further 10
elevate the premium on these bonds.
HAs the time approaches for the payment
| Of the ~ per cent bonds, 1t Is reasonable to
| expect a still greater demand for the per
cent, and 1t is question Of serious import
ance whether the banks can afford to bold
or to buy per cent. bonds after 1891. In
the present age all business men try to an
ticipate future conditions, and to provide
well in advance against foreseen contingsn-
cies, hence il is to be expected that the banks
will not wait until the approach of 1891, to
stop their policy with reference to the con-
tinued holding of high priced bonds.
"For this reason it is not too early now to
consider what legislation may he proper to
remove this element Of future uncertainty
from the National banking system, and look
ing to the possible consideration Of this SUBJ
ject by congress, respectfully submit the
following statement Of the question as it ap-
pears from the point Of view officially occu-
pied by the comptroller of the currency. The
fundamental postulates underlying every
banking system established by law, whatever
may be its form, must necessarily be:
"First-That the banks promote the gen.
eral welt lre Of the community, and secondly,
that the particular system established by
law is the best obtainable under the cond
tious prevailing at the time and place. TheS.
postulates, therefore, underlie our national
banking laws The first postulate will not
be questioned since no people in modern
times have ever risen to civilization or main
tanned their civilization without banks; and
least of all, cannot be questioned in the
country where, besides 1858 national banks,
now in operation, we have over 5000 state
banks, saving banks and private banks and
bankers, whose operations extend into
the minutest ramiications of the em-
ployment and resources of our 60,000, ,0OO
population.
"The second postulate involves the ques-
tion whether the present National bank sys-
tenn should be preserved, and if so, whether
it is good enough as it is, or whether it can
be improved. The national currency act Of
the l2th of February, 1868, was controlled as
to its purposes by the paramount necessity
Of inducing the banks and other capitalists to
become purchasers of government bonds
under conditions that would give a basis Of
solid value to the currency then being paid
out in immense volume under the pressure of
military exigencies, hence the consolidation
of those banks into a National banking sys-
tenn adapted to commercial and Industrial
needs appears only as a subordinate incident
in the general scheme.
"As early, however, as the year 1854, it
was perceived that the general welfare of
the people would be promoted by giving
greater cohesiveness and method to the sys-
tenn, regarded more especially in its banking
than in its currency features, and from that
time to this, the effort of legislation has been
to subordinate the issuing Of currency to the
more important functions performed by the
banks as institutions Of discount and deposit
The effect of this legislation and its wisdom
are exemplifed in the present high credit
and the consequent wide commercial useful
ness of National banks.
"If the system could be preserved purely as
one Of deposit and discount, there would
probably arise an almost universal sentiment
in favor of bestowing upon its preservation
immediate and careful attention, but it Is
doubtful whether the banks would find sufh-
Gent 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
for the charter Of National banks, except as
instrumentalities for money circulation,
ut follows, therefore, that any legislation
directed to the improvement and permanent
establishment of the national banking sys-
tenn must include some provision for the
maintenance Of o national bank circulation,
while on the other hand it appears that what
ever opposition exists to the national banks
attaches to them mainly as banks of Issue
and under our system of government pothing
can be regarded as permanently established
until it has obtained the support Of a well
settled public opinion. Hence, 1t 10 evident
that the problem now to be solved is how to
remodel the currency features of the national
bank system SO as to obtain popular approval
Of them.
@Objections to the present National bank
currency appear TO be. comprised within
three classes, namely: First, general OBJ
lection to paper money in any form. Second,
an objection to National bank notes, based
upon the assumption that they take the place
Of an equal amount of paper money that
might be issued directly upon credit Of the
government Third, the objection that a
currency determined in value by definite
percentage upon deposited securities of high
value can never possess the fexibility and
elasticity of value, which are the chief COM
merclal advantages of a bank currency in
any form.
against these objections it is answered:
First-That the question as to having paper
money at all is not at present practical
one, but It is evident that our people will
have paper money in one form or another,
and that Of all forms of paper money of
which we have had any experience the pres
ent National bank currency is the least OBJ.
jectionable, even to those who think that all
such money should be avoided
"Second-That while bank currenc Y
based on government bonds and redeemable
In greenbacks, may he considered as a kind
Of government money, on which the banks
are getting the profit, yet without this priv
ilege or some other equivalent to it, the Ma
tional bank system could never have been
established, nor can 1t now be maintained,
and that this is tho cheapest price at which
the people, or the government could have
got any banking system % good in all re-
Spects and 30 valuable a. this has proved
to be.
"Another argument Is that the government
must pay interest upon Its bonds whether
these are held by tho banks or not, hence the
profit to the banks on these bonds has been
obtained without charge on the treasury,
while on the other hand if the banks had not
been offered sufficient inducement to invest
in these bonds many more of them would
have gone abroad at low prices, and the
country as q whole would now be SO much
the worse Off
@Third-That the want Of fiexibility in the
currency and of elasticity Of volume, are