Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1886-12-03
OUR BANKING SYSTEM.
TRENHOLM'S REPORT
ON THE SUBJECT.
Tho Calling in and Redemption of the
Government Bonds will seriously
OBJECT The Banks, aud Bull the
four per cents.

w ASliiNGIDN, NOV. 60 W lllllll H.
Trenholm, comptroller of currency, con
CludeS his annual report 10 Congress with
the following remarks on the national
banking system: The problem in 'G3 was
how to bring the banking capital OF the
country to the support Of the treasury. 1t
cannot be doubted the banks then had it in
their power to exact from the government
concessions far more valuable than those
granted them. Even those moderate con
cessious have long since lost the elements
of monopoly and the act Of June ~, 1874,
actually took away $5G,00OOO Of circula-
ton, partly from banks organized during
the war, i'll order to give the privilege Of
Issuing that sum to the banks in the
= ates hat were cut oil 10y the war from
aCCcs, % the national banking system, a
measure entitled to honorable cousidera-
ton because at that time those states
were without sufficient political Influence
To cNaC. share IN this valuable prNl-
iege, and the then existing banks were
etrong enough To have made II sue
cessitI resistance had they been
sellishiy inclined The last vestlge
of monopoly was swept away by
the act OF January II, 1870, which
created a free banking system throughout
act of July ID, 1852, brought It's benefits
within reach OF even small communities.
Under the sanction of these laws the ma
tOnal banks have become numerous,
widely distributed and intimately iden-
titled with the varied industries by which
our entire population literally ubtaiued
their daily bread but during the same
Tune the rapid reduction Of the funded
debt OF the government has been intro
duCng INTO the very basis OF the system
an element of instability which now
hampers It's extension, impairS its useful
ness and even threatens its continued
existence.
While there are still great areas of our
country in which the natural resources
are awaiting Development by just sue n
means as these, the banks might he made
to supply the present needs. The hHau
clal prospects OF the country induce the
expectation that the funded debt VIII be
pad oil us fast as the bonds mature. The
payment of the per cent bonds, the ma
turlty in 1881 of the / per cent bonds
amounting to $50 0OO, 600 and in 1891 of /
per cents amounting to sos, 900 900 have
combined to provide Il prospective
scarcity in securities available to
banks as IA basis Tor their
corporate existence. AS the time ap
prOaches for the payment OF the I Il per
cent bonds ii is reasonable to expect Il still
greater demand for per cents, ana it Is "A
question OF serious importance whether
the banks can afford to hold or to
buy per cent bonds after 1891
III Is not too early now to
consider what Legislation may be
proper to remove this element of future
uncertainty and looking TO II possible con
sideratiOn of this subject by Congress,
respectfully submit the following state
lnent OF the question rs 1t appears to me.
The Fundamental postulateS underlying
ga 4 "a is lax
whatever may be Its form, must neces
sarliy he: first, that the banks promote
the general welfare of the community
and secondly that the particular system
established by law is the best obtainable
under the conditions prevailing ut the
time and place. These postulates there
fore underlie our national banking laws.
The first pOstulate will not be questioned.
The second pOstuiate involves the question
whether the present national bank system
should be preserved, and if SO whether
it is good enough as it is OF
whether 1t can be improved. As
early as the year 1864 it was perceived
that the general welfare of the people
would be promoted by giving greater co.
heslVeness and method to the system re-
garded more especially in its banking
than in its currency feature, and from
that time to this the effort of legislation
has been to subordinate the issuing OF chr
formed by tue banks as Institutions of
discount and deposit. The effect of this
legislation and It's wisdom are eX-
cmpliiied i'll the present high credit
and consequent WIDE commercial
usetulnes, of the national banks
Any legislation directed to the improve
ment and permanent establishment Of
the national banking system must in
CIudc some provision Tor the maintenance
OF the national bank circulation, while ON
the other hand it appears that whatever
opposition exists to the national banks
attaches to them mainly as banks Of Issue
ana unuer our system OF government
nothing can be regarded as permanently
established until II has obtained the sup
port OF well settled public opinion.
Hence II Is evident that the problem NOW
To be solved Is now to remove the currency
features of the national bank system 50 as
TO obtain the proper approval OF them.
Objections to present national currency
appear TO be comprised within
three classes, namely; First, in Il gen
erul objection To paper money in any
form; second, 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 the credit of the government; third
the objection that the currency determined
III volume by definite percentage upon
the deposited securities OF high value can
never possess the ficNlb.llty and elasticity
of the volume which are the chief com
mercial advantages of II bank currency in
any form. Against these objections it is an
swered; that the question as to having
paper money at all is not at present Il
practical one, because it is evident
that our people will have paper
money IN one way or another
second, that while bank currency, based
on good bonds and redeemable in green.
backs may be considered as kind OF
government money ON which banks are
getting profit yet without this privilege,
the national bank system could never have
been established nor can it now be main
tanned and that tins is the cheapest price
at which the people or the government
could get amy banking system 50 good
in all respects as this has proved to be.
While on the other hand if the banks
had not been offered sufficient induce
ment to invest in these bonds many more
OF them would have gone abroad AT low
prices ami the country aS a whole would
now be 50 much worse oil
The Conynham Explosion.
WILKEsRAERE, Pa, Noy. 2s-Walter