The Memphis appeal. [volume] (Memphis, Tenn.) 1886-1890, 1886-11-30
COMPTROLLER TRENH9LM
CONCLUDES lis ANNUAL REPORT
10 CONGRESS-
With Remarks on the National Bank
ing System-A Sensible
Paper.

tional banking system: The presen
financial pro pecis of the country 10
duce the expectation that The funded
debt will b. poid of as fast as ih'
bonds ma ure, and in consequence
question has arisen as to VIVA
changes should be made in the ma
tional banking system in order that 1
shall not suffer deteTiora ion or de
struction upon the withdrawal OF tht
support upon which 1t is based by the
present laws, which require every
bank before beginning Blu .iness to de-
post a certain amount in United States
bonds. The payment OF the pei
cent. bonds. the maturity In 1891 oil
fine III per cent. bonds, amounting to
$3.50. 000, 600, and in 1907 of the PEI
cent bonds, amounting to nearly
S73S. COO, 900, have combined to pro.
duce a d ospective scarcity in the se-
curities obtainable to the banks as q
basis for ,keir corporate existence,
and this is n flected la the advance OF
these bonds to the premium 80 high
that every d y their enforced purchase
becomes more and more enor-
NOUS. Banks now holding per cent.
bonds and newly organized national
banking aseo cations are forced into
the market as purchasers OF the per
cent. or the A per cent. bonds, and
this COZ slant demand, in connection
with the prosptc i've scarcity already
referred to, sustains and lends still
further 10 elevate the premium on
these bonds. AS the time approaches
for the payment of the AZ per cent
bonds it is reasonable to expect q still
greater demand for the per cenis.,
and it is q question Of serious import
ance whether the banks can afford to
hold or to buy A per cent. bonds after
1891. In the present age all business
men try to Anticipate future condi-
tions and to provide well against FORE
seen contingencies, hence it is to be
expected that the banks will not wait
till the approach Of 1891 to shape their
policy with reference to the continued
holding Of high priced bonds. For this
reason it is not too early now
to consider what legislation may
be proper to remove this element
of future uncertainty from the national
banking system, and looking to the
possible consideration Of this subjact
by Congress, l respectfully submit the
following eta'ement of the question as
it appears from the point OF view Of
ficially occupied by the Comptroller of
the Currency. The fundamental pos
tulates underlying every banking
system established by law, whatever
may be it's form, must necessarily be:
First-Thst banks promote the gen.
eral welfare OF the community; and
Second-That the particular system
established by law is the best obtaina-
BILE under the conditions prevailing at
the time and place.
These pcstulates, therefore, underlie
our national bank laws. The first
postulste will not be questioned, since
no people in modern times have ever
risen to civilization or ma ntained
their civilization without banks; and
least of all can 1t be questioned in this
country where, besides 1858 national
banks now In operation, we have
over 5000 state hanks, savings banks,
and private banks and bankers whose
operations extend into the minutest
ramifcations OF the employment and
resources of orr go, DOC, 900 of popula-
ton. The second p, s!ulate involves
the question whether tue present
national bank system should be pre-
served, and If 80, whether it is good
enough as 1t is or it can be improved.
The national currency act of Febru.
airy IL, 1858, was controlled as to its
purposes by the paramount necessity
Of inducing the banks and other capi-
talists to become purchasers Of govern
ment bonds under conditions that
would give basis Of solid value to the
currency then being paid out in i'm.
mense VOLUMES under the pressure of
military exigenci g; hence the cousoli-
dalton OF these banks into national
banking system ad Apted to CONNER.
oial and industrial needs appears only
as a subordinate incident in tt @ gem
eral scheme. As early, however, as
the year 1854 it was perceived that
the general welfare OF the people
would be promoted by giving greater
cohesiveu ess and methods to the SIS
tenn, regarded more especially in its
banking than in is currency features
and from that time to this the effort
OF this legislation has been to subordi.
nate the Issuing of currency to the
more important functions performed
by the banks as institutions OF dis.
count and deposit. The effect of this
legislation and its wisdom are exemp-
Lifted in the present high credit and
the consequent wide commercial USE
tulness of national banks. II the sys-
tenn could be preserved purely as one
OF deposit end discount, there would
probably arise universal sentiment in
favor OF bsstowing upon its preserva.
ton immediate and careful attention,
but 1t Is doubtful whether the banks |
would find sufficient inducement to
remain in the system without enjoy
ing come privileges as to the issue Of |
and 1t has been questioned
whether there is power under the
constitution for the charter of ma
tional banks, except as instrumental.
tiles for money circulation. It fol-
lows, therefore, that any legislation
directed to the improvement and per-
manent estab ishment of the national
banking system must include some
provision for the maintenance of
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 nothing can be re.
yarded as permanently established
until 1t has obtained the sup.
port Of well settled public opinion;
hence 1t is evident that the problem
to be solved is how to remodel the
currency features of the national
bank system 90 as to obtain popular
approval of them. Objection to the
present national bank currency APP
pears to be comprised within three
classes, namely:
Ftrst-A general objection to paper
money OF any form.
Second-An objection to national
lank notes based upon the assumption
nat take place OF an equal amount of
PAPER money that might be issued
nent.
Third HIA |