The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1886-11-30
NATIONAL BANKING.
The System as It Is Fully
Explained
~ COMPTROLLER TRENHOLM.
the Objections and Ausu ers 70 Them
stated without Comment IN T. Is
Annual erort.
~ COMPTROLLER TRENHOLM
The National hiking sys'e n

OF me natlOlat banking system. III
present. Il lsnciaI prosperity OF the coun'
try induces The expectance that the
funded oebt viii be paid OF - fast a.
me bonds mature, ami in conss quence
the question has arisen IS 20 what
-ranges shOu b.. made IN The national
bankus system in order that IL shell
not suffer deterioration, or destruction
i:un the withdrawal Of the sepport
upon which il is based. ny the present
laws. which require every bank. before
BEGINNING business. u deposit a certain
amount IN United States bonds. The
payments If the 3 per cent. bonds, a.
maturity in 1891 OIL per cent bonds.
.ggrrga ing $3.50 OJO 900. aud in 1907, %
psr cent. ponds, amounting - nearly
s55S. 600 100, have combined 20 produce
4 prospective scarcity IL securities avail
able 20 banks as basis for their rurppr-
ate existence. and this is reflected in the
advance OF these bonds 10 a premium so
nigh that every day their enforced puT-
chase b comes more ana more enOr-
nous. Banks now holding per cent
bonds, and newly organized national
banking assoc atoms. are fore. q MO the
market ss u ;hassrs of ~ cent, or
the AZ per ut. bonds, q d tbis cou-
slant uemAud. in connection With the
prospective scarcity already TefeIre Ito,
sustains A. tends still further 20 elevate
the premiUm OF these bonds. AS the
time APP ,,rOsches Tor the payment o. ~
per cent. bonds. II is reasonable TO ex-
r-rr still greater demand for 1 per
cents, and il IL 4 question OF serious i'm
t,yr &c whether banks eau affGrd 10
nold or o buy per cent. bond after
1891. Ia the present age all business
men try to anticipate the full condi-
tons and to provide well in advance
-psinst unforeseen emergencies. and
hence il is to be expected tina; osn X will
not wait until the approach o: l~9l. 20
shaps their policy with reference 10 the
cJnIin L ed holding of high priced bonds.
FOR This reason IL is not too sariy now
u CONSIDER what legislation may be pro-
per to remove this element OF future I'M
certainty from the national banking sys-
tenn, and looking 70 the possible COZ
sideration of this subject nv Congress.
l respectfully submit the following
statement OF the question as il appears
from the point OF view OF finance &C
cupied by the comptroller OF the cur
rency. The fundamental principals TN
DERIVING our banking system established
by law, whatever may be its form. must
necessarily be, first, tina: banks promote
the general welfare OF the community
and. secondly, that the particular sys-
tenn established by law is best obtain
able under the conditions prevailing 81
the time and place. These postuiates,
therefore, underlie our national banking
laws. The first pcstulaie will not be
questioned, since no people IN modern
times have ever risen 10 civilization or
maintained their civilization without
Danks. and least of all can il be ques-
toned in this countr where besides
ISIS national banks now in operation,
we have over 5000 State banks, savings
banks and private banks and bankers,
whose ope atoms extend 10 the minutest
ramihcati, ms o. the employIuents and
resources vi our G0OO0 90 o people.
rbe second postulate involves the ques-
ton whether the present national bank
system should be preserved, and If 30
whether II is good enough IS il is, or
whether IL can be improved. The
national currency act Of February 18Th,
1862, was contracted as TO its purposes
by the paramount necessity OF inducing
banks and other capitalists 10 become
purchasers of government bonds under
conditions that would give q basis OF
solid value 10 the currency then being
paid out in immense volume under the
pressure of military exigencies, hence q
consolidation OF these banks into q nat
ionsl banking system adapted 20 the
commercial and industrial needs,
appears only as q subordinate incident
in the general scheme. As early, how
ever. as the year 1864 il was perceived
that the general welfare Of the people
would b promoted by giving greater
cohesiveuess and method TO the system
regarded more especially in its banking
than in its - feature, and from
that time t. this, the efforts of
legislation have been 10 subordinate
the issuing OF currency to more
important functions performed BY
banks as institutions Of discoun; ami
deposit. The effect Of this legislation,
and its wisdom, are eIemplified in the
present high credit and consequent
usefulness OF national
banks. II the system could be pre-
served purely as one Of deposit and dis
count. there would probably arise an
almost universal sentiment III favor Of
bestowing upon its preservation imme-
date and careful attention but il
is doubtful whether banks would find
sufficient inducement to remain in tbs
system without enforcing some privi-
leges as to the Issue of currency, and IL
has been questioned whether there IS
power under the Constitution for the
charter of nationa, banks, except as
for money circulation.
1t follows, therefore, that any legisla-
ton directed TO the improvement and
permanent establishment of q national
banking system must include some pro
vision for the maintenance of national
bank circulation, while on the ether
hand IL appears that whatever position
to them rs banks of issue. and
under our system of government no
thing cSn be regarded IS permanently
until 10 has obtained the
support OF all settled public opinion;
hence IL is evident that the problem
now u be solved is how 20 remedy the
national bank system 50 IS to obtain
popular approval of them. The objec-
ton TO the present national bans
currency appears TO be comprised
with three classes, namely: first.
general objection 10 paper money 10
any form; second, IN objection 10
national bank notes. based upOn the !
sumption that they take the place OF 1
Al lusl amount OF paper money that I
- g be used directly upon the govern |
fH1~a nhfnpe-nn fhar q nmrrannr-