Savannah morning news. [volume] (Savannah) 1868-1887, 1886-10-31
BOND DEPOSITS OF BANKS
A REQUIREMENT THAT THEY
BE KEPT INT r. ST BEARING.

The Attempt of the First National Bank
of North Bend, Ind, to Leave Called
Bonds as Security for Circul alton, De-
feated by a Decision of Attorney Gem
eral Garland.
WASHINGTON, Oct. 30.-Attorney Gen.
Sral Garland has given an opinion to the
Secretary of the Treasury that national
banks must deposit interest bearing bonds
to secure their circulation, and that called
per cent. bonds cannot be used as
basis of circulation.
Following is the text of the Attorney
Generals opinions;
Certain 8 per cent bonds of the United
States held by its Treasurer as security for
the circulating notes OF the First National
Bank of North Bend. Neb., having been called
in for redemption and ceased to be n crest
bearing, the bank has been notified by the
Comptroller of the Currency to exchange
those bonds for interest bearing bonds
of the United States he bank
In reply ,t asks sor to know no.. ,e ey what
alleging that it has once complied with sec
ton $3.50 of the revised statues by deposlung
with the Treasurer intere-t bearing bonds of
the United States which are worth par An
OPINION Is requested upon the question thus
presented, namely, whether stopping OF inter-
est on bonds ueposited, resulting from ca
of the Secretary OF the Treasury. authorized
the Comptroller of the Currency TO require
bank to substitute interest bearing bonds for
bonds now on deposit.
MUST BEAR INTEREST.
1t is not open to question that the bonds
desposited by national bank TO secure IT'S
circulation must be interest bearing at The
time the deposit Is made. On that point the
law Is explicit. 1t would seem to be equally
clear that Whatever the purpose Congress
had IN view in requiring he bonds deposited
by national banks TO be interest bearing,
that purpose has continued the same
from the law gNhippt 1854
down to the present time, there being an alb
sesce of any legislative declaration OF
change in intention in that par
ticular. In resolving the question
whe her it is essential to valid de-
post of bonds by national bank that the
bonds deposited should be interest bearing
during the whole time of deposit, 1t may
assist us to read the act OF 1888, der which
the national bank system was introduced,
and in the light of the circumstances in which
1t was pas. ed.
THE GOVERNMENTS AIM.
The country was engaged in a great war.
Il was Of vital importance to strengthen the
credit If the government by increasing the
demand for its bonds and by averting the
pending cslamities of an unregulated aud
rapidly expanding paper circulation. lt was
to accomplish these object Is that The national
bank system was Uevlsed. and 1t is lmpOssib Bile
to doubt that was The intention that the
banks composing the system should have no
bonds on deposit with the govern ment except
such as were still current. ami as the govern
meut was interested ia keeping bOuyant in
the market, ana this would seem to have been
the view of the eminent Secretary of the
Treasury to whom is generally ascribed the
authorship of the national bank system.
HIS REPORT.
In his report OF Dec. J. 1862, he says in re-
commentator Of the projected system: 1.-The
Secretary has already mentioned the support
to The public credit which may be expected
from the proposed association. The import
ance of this point may excuse some additional
observations. The organization proposed, if
sanctioned by Congress, would require within
very lew years for depot, a. security for
circulation. bonds of the United States TO
amount not less than S25O.U0C. 600. 1t may
well be expected, indeed, since the circula-
ton by uniformity in credit aud value, add
capacity OF quick and cheap transportation
will be likely 70 be used more extensively
than any hitherto Is ued, that the demand
for bonds will compass this limit. should
Congress fit 70 Restrict the privilege Of
deposit to bonds known as hVe-twenties
authorize by the act of the last session. the
demand would promptly absol all of that
description ready issued and MAKE large
room for more. steady market for bonds
would thus be established and the negotiation
OF them greatly facilitated
FAR REACHING IN EFFECT.
Butt il not in immediate results that the
value of this support would be only or chiefly
seen. There are always holders who desire
TO sell securities OF Whatever klnd. If buyers
are few o. uncertain TIE market value must
decline. But the plan proposed would create
constant demand eQualilng and often eX-
GtCulHE lHc supply. nus a otcdAF uuLhIItl-
~ in price would be maintained ana general
ly at a rate somewhat above those of bonds of
equal credit but not available to banking as
sociatlOns. 1t Is not easy to appreciate the
1ull benefits OF such conditions 20 a govern
ment Obliged TO borrow.
THE CONCLUSION CORRECT.
That the conclusion arrived at, namely
that it was the intention of Congress that de =
posts Of bonds by natl ,nal banks should be
kept interest bearing during the VII de period
of deposits is correct, would seem 0 be rem
dered absolutely certain by he act of July II,
1852, $50 enable national banking associations
to extend their corporate existence and for
other purposes" Section pro ides that any
national bank may. on deposing lawful money
with lht Treasurer Of The United States.
withdraw proper Tomato amount OF its bonds
on deposit, subject, however, to the provisO
''that not more than $4,000 900 shall be de-
posted during any calendar month for this
purpose ana 10 the further prOvisO that "the
bonds called for redemption by the Secretary
Of the Treasury nor u " ithdrawal of clt Gu at
ing notes IN consequence hereof" THIS Ian
guage. 1t would seem, leaves no DOUBT that it
was tue intention of Congress that when
bonds de Jos ted 10 secure the circula ION of
bank are called Tor redemption payment Of
them means recurring the circulation they
cure, unless, indeed, the bank, 40 II may law
fully 10, should make d new deposit Of an adj
eGQuate amount of interesJ- bearing bonds.
1t 10 lows then. that unless the FIRST National
Bank Of orth Bend substitute iuterest-bear-
ing bonds for he existing deposit OF bonds
called for redemption the proceeds Of the lat
ter ust ne applied To retiring the circula-