New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1886-11-29
THE BANKS OF THE NATION.
HOW TO MAKE THE SYSTEM PERMANENT.
SUGGESTIONS IN THK ANNUAL REPORT OF con-
TRoLLER TRENHoLM-THE DANGER CAUSED BY

WASHINGTON. Nov 2s-wilam L. Trenholm, Con-
troer OF the Currency concludes his annual report TO
Congress with the following remarks on the National
banking system;
Tn selecting the information presented In this report
have endeayored 20 exhibit the practical working OF the
presen national currency and bank laws aud have also
had in view the Importance Of supplying material Tor q
full understanding Of the relations between the National
hanks and The general business OF the country in order to
explain the widely prevalent desire among business men
hanks upon more permanent basis The National hank,
ing system had its origin during the War and i VIII
always stand splendid in history rs an example OF Imam
cia skill successful under very difficult circumstances
The problem in s6 was how to bring the banking cap
cannot be doubted that the banks had II then In their
power to exact from the Government concessions iar
more valuable than those granted them. Even these
moderate concessions have long since lost all the ee-
Of monopoly and the act OF june ~ as.4, acl
hanks organized during the war, In order 70 give the
pr vege Of issuing that sum to banks IN states that were
cut off by the War from access 10 inc NATIONAL banking
system q measure entitled TO honorable consideration
because OF that time those states were without snict
political influence TO exact share IN his valuable PRIV
iege and the existing banks were strong enough 10
have made successful resistance had they been seshy
by the act of January Ia, 1878, which created free
banking system throughout the United States and, sup
plomented by the act OF July 2 lssZ Drought It's Dene
hts within reach OF even small communities Under the
SANCTION OF these laws tho National hanks have
become numerous widely distributed. aud intimately
Identified with the varied Industries ny which
or entire population literally obtain their daily bread
hut during the same time e iapln ieaueson on ine
the funded Of the Government has been introducing
bih NOW hammers its extension i'm pairs its usefulness
and threatens its continued existence, while there
are s great areas OF country In which the natural
resources arc awaiting development by just such means
a. these banks might lie made 10 supply.
the cxpectafjon that the funded debt will he paid OF
fast the bonds mature ana In consequence question
has arisen TO what changes should be made IN the
Natina hank system order that It shall not suffer de-
tcri0nton destruction upon the Withdrawal OF the
wirb reoiire every bank before beginning business to
Srnost a certain amount in United States bonds. The
nayment of the bonds the maturity in 1891 OF
he 10 ucr cent bonds amounting To S250OOO.OOO and
in 1907 Of the per cent bonds amounting 10 nearly
s,srity in the securities available to the banks
basis their corporate existence ana TINS IS reneCed III
fine advance OF these bonds TO premium 50
high that every day their enforced pur-
chase becomes more and more onerous. Banks
National banking associations forced into the market
ms purchasers OF the per cent or per cent bonds ana
mi constant demand in connection with the prospective
scarcity already referred to- sustans and lends still fur
Their to elevate the premium on these nonds As te tine
il reasonable to expect still greater demand for the
per cents and it is question o, serious nporance
whether the banks can aOru 10 hou vi W , pei oent
In the present age all business try to anticipate
future conditions and TO provide well in advance against
foreseen contingencies hence II IL TO 10 expected that the
banks will wait until the approach OF 1881 TO shape
their Motley with reference Ia the continued holding OF
bonds For this reason 1t IL not too early now
consider what LEGISLATION may be proper to remove tins
this s"sS b Of ha respectfully Snsaog
as It appears from the point Of view officially
occupied by the Controller OF the Currency Son ns
system established by law, Whatever may be It's FORM
Mrs~That banks promote the general welfare of the
the particular SYSTEM established by law
Is the best obtanabe under the conditions prevailing ut
T .aT first nosnate will not he questioned peo
ple in modern times have risen TO civilization or
maintained their civilization without banks and least OF
ali il he questioned in this country. where besides
National banks III OuerdllOn we nave over
5000 State banks savings banks ara private banks ana
bankers whose operations extend into the mnutest ra
fcatons the enpoyments and resources OF our Sixty
the second posate involves the question: whether the
present National bank system should be preserved and
So whether 1t is good enough as 1t Is or whether II can pe
AKA was controlled as TO its purposes by the paramount
necessity OF inducing the banks aud other capitalists 10
@ Sdt wons sTe basis Of solid value to the cur
rency then being paid out in immense vonnc under he
Of these banks into National banking system adapted to
commercial and industrial needs appears only sub
eVer as the ssaT
ccater coesvencss and method TO the system regarded
more specialiy in its banking than IN its currency
ton has been to subordinate tho issuing of currency to
the more important functions performed by tne banks rs
institutions OF discount and deposit Inc enecl OF ls
legislation and its wisdom are eAehp a"aaront
the present high credit and the CONSEQUENT
tbe system could he preserved purely one or deposit
and discount there would probably arise an almost UNI
tion Immediate and careful attention. but II is doubtful
whether the banks would find sufficient inducement 10
remain In the system without enjoying some privileges as
10 the issue of currency, and II has been questioned
whether there is power under the constitution ior the
charter OF National banks except l0r
money circulation IL follows that any legislation di-
recied TO the improvement and permanent establishment
OF the National banking system must incnde some pro-
vision for the maintenance National bank circulation,
while ON the other hand appears that whatever oppo
mainly az banks of issue and under our system Of COY
eminent nothing can be regarded as permanently esao
-bo1, haao
public opinion Hence II Is evident that the problem now
TO he solved Is how to remodel the cfiec ol
the National bank system as 10 OBTAIN approval
OF them. Objections TO the present National DanK
currency appear to be comprised within three classes
FirsfA general objection to paper money in any FORM
secondAn objection to Natlonal Dak notes Dascd upon
amount paper money that might be Issued directly
upon the credit Of the Government do,o,,no, &,
volume by definite percentage upon deposited securities
itv ~ volume which are the chief commercial advan-
tages Of bank currency In any form.
Against these objections 1t Is answered:
Ffrst-That the question to having paper money at
all is present practical one because II Is evident
other and that Of all forms OF paper money of which
have had any experience the present NATIONAL banK cur
reney Is the Least h Tode WHO 'nA
Second-That while bank currency based on Govern
ment bonds and redeemabe in greenbacks may he
sidered as a kind of Government money. which the
banks getting the profit yet without ms privilege or
some other equivalent TO IT, the National bank system
could never have been established, can it now be
maintained and that this Is the cheapest price at which
the people or the Government could have got banking
system good in all respects and 50 valuable as this has
proved TO be.
Another argument il that the Government must pay in
eres upon bonds whether these held by the banks
or not hence the profit to the banks these bonds has
been obtained without charge on the Treasury WHILE
the other hand the banks had not been offered sufficient
nduccnent invest In these bonds, many more OF them
would gone abroad at low prices and the country
a whole would now be 50 much the worse Of
Thrd-That the want OF iexiblly In the currency and
OF elasticity of volume consequences arising from the
scarcity OF bonds and the high prices TO which they have
risen and that this could not have been foeseen pro-
yided against in the original acts. but may be
died by proper legislation.
These objections and the answers TO them are stated
without comment. They seem worthy OF consideration.
Same suggestions have been made 10 egls-
laon on this subject which. together with such concur
sions have been able 10 reachare subject TO whatever
disposition Congress may be pleased TO order.
FXGOVERNOR PORTER PAID FOR THE PIES
Prom The indianapolis Journal
Porter did cOuplete his collage courae