Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1886-10-31
An Important Decision.
Tgy teleQYaph 10 tbe Dispatch

TBy telegraph TO the Dispatch.I
WASHINGTON, October 30.-Attorney-
General Garland has given an opiuiOn 10
tho Secretary Of the Treasury that national
banks must deposit Understanding bonds
70 secure their circulation, and that the
called per cent. bonds cannot be used a. q
basis Of circulation.
Thefollowipg Is the text Of the Attorney
Generals opinion
Certain per cent. bonds OF the United
States held by it, Treasurer a. security for
circulating notes 81 the First National
Bank OF North Bend. Neb.. having been
called in for redemption ana ceased 20 Ice
bearing the bank has been notified
by the Comptroller Of the Currency 10 ex-
change those bonds for intcresi-bearing
bonds Of the United States The bank, la
reply. ask % know by what authority the
demand has been made. alleging thai il
has once complied with Section 5lj9
Of the Revised Statutes by depositing
with the Treasurer Understanding bonds
Of lhe United States. which are WORT, par.
An opinion Is requested upon the question
thus prescnted-namelv whether the stop
ping q interest on the bonds deposited,
resulting from the call Of the Secretary Of
the Treasury, authorized the Comptroller
Of the Currency 90 require the bank to sub.
stitute interest bearing bonds for bond,
now on deposit. j. Is not open 10 question
that bonds deposited 10y q national bank 10
secure us circulation must be interest
bearing al the time the deposit i made.
On that point the law Is explicit.
ID would seem TO be equally clear
that whatever purpose Congress had
In view in requiring the bonds deposited
TAO int
the purpose has continued the same from
10, first law on the subject in 1868 down
70 the present time, there beng an absence
Of any legislative declaration Of change
ID Intention in that particular. In re-
yOYing the question whether II l. essential
10 2 valid deposit Of bonds by national
bank that the bonds deposited should be
inlcrJ St-beMiug during the whole time of
deposit, il may assist Us 70 Iead the &C, OF
1863. under which the national bank system
was introduced, in the light OF circum-
stances IN which il was passed. The couD-
trv was engaged in great war. II was Of
vital Importance 10 strengthen the credit OF
the Government by Increasing the demand
for it, bonds and by ayerting the pending
caiami,its Of an unrerulated and rapidly
expanding paper circulation. II was 90
accomplish these objects that the national.
bank ,ystem was devised, and IL ], imp1s-
,ihie 10 doub. that II was the intention tGa'
banks composing the system should have
no bond, on deposit with the Government,
except such a. were still current,
ana as Tn. Government wa, interested 10
keeping buoyuut the market. thi,
would seem % have been the view Of toe
eminent Secretary 81 the Treasury, 20
whom Is generally a,cribed the authorship
OF toe national bank system. In BIZ, report
90 he 4tl OF December. lSj2, he Sty- 10
accommodation OF the projected system
Tie secretary has already mentioned tue
support 90 public credit which may be e.
peclcd from the proposed associations.
The importance Of Tins point may excuse
some additional Observa ions. The Or
cauizat.ou proposed, il sanctioned by
Congress. would require within 4 very
few wears Tor deposit a, security fOr
circulation bond. Of the | nited states t0au
amount not less than S2jU.O00.OO0. II may
vel be expected indeed since the Circus-
ton, by uniformity ia credit and value aud
capacity OF quick and cheap transportation.
VIII be- likely b. Doe used more extensively
than any hitherto issued; that the demand
for bonds viii compass this limit. should
ConCIcS, see IN 10 restrc; the privilege OF
deposit % bonds known Il. j-2O's, author
lied 10y TIE act Of last session, the de-
mand would promptly absorb al o.
that description already issued ana make
large room for more steady market
FOR The bonds would thus be established
and The negotiation Of them greatly i4cili-
tatcd. Bur Il is not In immediate results
that the value OF this support would be
uaiy Or chiefly seen. There are always
holders Who desire 20 sch securities OF
whatever kind. II buyer. are few or I'M
certain the msrkct-Nalue must decline.
But The plan proposed would create q con-
slant demand, equdling and often exceed
~ thc supply Thu, steady uniformity
iu price would bee maintained, and general
IS 80 q late someW hat above those Of tie
bonds Of equal credit, but moi available 10
banking associations. il Is MOI easy % aI-
preciaie The full benefits Of such condition,
90 q Goycrnm' Mt Obliged o. borrow.
90 That conclusion arrived at-namaiy.
hat il was the Intention Of Congress, that
Cepo-lt- II bonds oy national banks should
Dc kept Understanding during the whole
penod ui the deposits Is correct. would
seem 10 hc rendered absolutely certain by
The nci OF july -. lSS2. 10 enable national
banking associations 10 extend their corpO-
]
section provides that any national bank
may, on dcpO>Iinc lawful money with the
Treasurer Of the nicd States. Withdrawal
pioportiOnate amount OF IT, bond, on de-
pO-il. subject. however. L. the prOylsO thai
not more than three millions OF dollars
shall he deposited dunn. any calendar
month i0r This purpose, and % The further
proli>o that the provisions Of TIN. section
shall not apply 20 bonds called for rrdemp-
lion by tie Secretary Of The Treasury, nor
g. the Withdrawal Oi circulating notes iu
consequence thereof TIN, language, il
would seem. leaves no doubt that il wa,
the intention Of Congress. that when bond,
deposited 10 secure the circulation of O
banb are called for redemption the payment
pi them means retiring The circulation they
secure, unless iuOced the bank. a. Il may
lawfully do. should make q new deposit Of
IN adequate amount Of Understanding !
bonds II follows. then, that unless the
First National Bank OF North Bend ,ub.ti- |
ut, in,crcst-besrina bonds for the existing |
deposit of bond. called for redemption The |
proceeds of the latter must be applied 90 |
retiring the circulation secCred by ii.