National Republican., 1888-02-12
BANKS AND BANKING,

| EerOuSlV uenuueu OF currency can not he
too often brought to the attention OF
Congress and the country. The articles
of the NATIONAL REPuBLICAN, commenced
last May and continued from time to
time, have caused widespread discussion
in the press of the country. The fact
that large and unnecessary accumulations
of money in the Treasury have been
shown, has led to the impression that
this was the sole reason for this strin-
gency. This is not, however, true; it is
but one of three reasons, which, taken
together, makes the situation dangerous.
OF course, the accumulations of vast
sums of money in the Treasury, thus
Withdrawing it from circulation, is one
reason for the present scarcity of money,
and should be remedied by legislation,
which viii not only prevent such accu-
mutations hereafter, but will provide for
the return in the immediate future of the
surplus now on hand to actual circula-
tion.
But the great reasons for the stringency
of the money market are the retention
of the vicious system, provided as war
necessity, of having banks of issue that
can, by their power as such, contract the
currency ut will, and by the failure to
provide for an expansion of the currency,
at least equal to the rapid growth of the
population.
These are the two great causes of the
present condition of the money market
and they must be met by wise and we'll
considered legislation.
AS to the first proposition in regard to
banks Of issue, while the power to
charter them is conceded by the Repub-
icans to exist in the government, it is
not agreed to by all, certainly not by
those who endorse the views of Andrew
Jackson as set forth in his able message
of July 10, 1889, vetoing the new charter
of the United States Bank.
But, leaving the constitutionality of the
chartering and maintaining banks of
issue out of the discussion, its inexpe-
diency and impropriety, except in times
of emergency, may well be denied. In
fact, it is undeniable that the control of
the currency, in the hands of private cor
porations, is a mistake that should be
corrected at the earliest possible oppor-
tunity.
The National banks have themselves
given cause to the people to desire their
powers as banks of issue taken away. On
more than one occasion, to prevent what
they deemed proposed unfrienply legis-
lation, they have withdrawn millions of
dollars from circulation, thus contracting
the currency, and when their object was
obtained have increased it again, thus ex-
panding circulation. For years past they
have slowly but surely followed the policy
of contraction, as is shown by the follow
ing figures. In December, 1881, the
amount of notes in circulation was 1926
OO0O00 whilst last December it was only
SlG5OOOOOO, n contraction of neatly 50
per cent, whilst the number of the banks
has increased from less than 2,2OO to over
5000, and the capital stock has been in
creased over $l00,0O0,OOO.
On the 18th of October last, at the reg
ular annual convention of the national
bankers, after discussion or conference
with the Secretary of the Treasury and
in consonance with the policy he was
then pursuing, the following resolution
was presented:
ReSoi,ed That we favor a rapid extnguish-
ment of the public debt, and therefore re-
commend .hc continued purchase by the
Secretary of the Treasury of the outstanding
government bonds. We consider reduction
of the revenues wholly unnecessary, mex
pedicnt and unwise. Let the surplus be
promptly and constantly applied to the liqui-
datiOn of the debt, and let the action of the
treasury in the work of buying the bonds be
further reguared, systematized and con-
trolled by additional legislation.
High taxes on the people and high
premiums for their bonds, with the rapid
extinguishment of the public debt with
in five years and the consequent retire
ment of all national bank notes, because
of the removal of the securities upon
which they rest, is the policy here laid
down.
On the 18th of October, quoting this
resolution, the NATIONAL REPUBLICAN
said:
These bankers issue the national bank cur
rency, amounting to more than one-sixth of
the circulation of the county, and these
notes can only be issued upon the security of
United States bonds deposited in the treasury
of the United States.
The profit ON these notes is so small, in ad- |
dition 10 the rate of interest on the bonds, |
that the bankers have been surrenderng their |
circulation ut very rapid rate and with |
drawing their bonds to be used in other ways
than as security for issues of notes.
Now after II conference between some of
the leading bankers and the Secretary, and |
after the Secretary has fixed Il heavy rate of |
premium to be paid on the bonds, the
bankers pass the above-quoted resolution,
that the Secretary of the Treasury
shall purchase their bonds at the premium
he has named.
If the Secretary purchases the bonds of the
banks the bank notes will be retired, and the
currency contracted to the amount of SlGG.-
100000
Is there conspiracy between the bankers
and the Secretary to further contraction in
hat gun,p