The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1889-01-19

WIN CHANNA
notes at par, so that large quantities of the
bonds were taken in exchange for the notes,
and the notes were again used by the
Treasury for its purposes.
But the browning conception of the times
was the act authorizing the establishment OF
the national banks, whether we view 1t as
affecting the government or the people.
What was the effect of the inauguration OF
the national banking system upon the gov
eminent at the time?
A large issue of bonds had been author
lied.
The possible uncertainties of the war had |
reduced the government credit. A home |
market was needed for the bonds, and the
establishment of the national banks had |
the double effect, so far as the government
was concerned, of at once placing large |
amount of them in our own country, and
at the same time giving them credit, both
at home and abroad 1t is true the act OF
Congress providing for the national banks
virtually compelled the state banks to retire
their circulation. A tax of ten per centum
upon their outstanding notes was equivalent
to abolishing them as banks of issue. This
seemed harsh, arbitrary and unfair, but as
it was an exercise of power, the legality OF
which has never been questioned, 1t Is for
the country to say to-day, in the face of the
facts as they existed then and exist now,
whether or not it was wise exercise OF
power.
But what of the national banking system
and Its currency? The system is based
upon the deposit of United States bonds
with the Treasurer of the United States
at Washington. Upon this deposit, eircu-
lation to the extent of ninety per cent. Of
the amount is issued to the banks,
| The bonds so deposited are held by the
Treasurer, specifically as a security for the
| circulation issued.
The banks pay to the government, an
nuallv, as a tax, an amount equivalent TO
one per cent. upon their average outstanding
circulation.
They are required to keep, constantly
reserve, in the cities of 25 per cent, and IN
the country of 10 per cent, of the amount
/ of their deposit. To the surplus of each
4 bank must be added, semi-annually, one
tenth of the net earnings Of the bank, until
/ the surplus Is equal TO one-itth Of the
capital paid in.
No individual or firm is permitted to be
indebted to any bank in an amo INT exceed
ing one-tenth of the capital.
Five sworn and published statements of
/ the condition of each hank are required an
nualv, and, 10 addition to the affidavit Of
4 the cashier. must have the attestation of
three Of the directors.
/ These statements are called for any day
the Comptroller of the Currency may
I select, anterior to the day upon which the
call is issued, thereby precluding the posi-
/ bility of the banks making any arrangement
in anticipation of the call, by which they
might, if they were 50 disposed, make an
unfair representation Of their real condition,
In addition to this, experts in banking.
authorized BY the Treasury Department,
make annual visits to the banks, coming
always at such times as they think not,
having the power, aud generally the dis
position. TO make the examination as
thorough as possible, and TO require the
I officers Of the banks 70 make their state
ment under oath if necessary.
| have thus briefly recounted some Of
the features Of the national bank law,
which, | think you viii agree with me-
throws around the system marked degree
of security and protection.
In any system of banking. however land
this remark is Of general application,
much depends upon the capacity and hones-
~ of those into whose hands its working
I Is committed. For however carefully the
law may be drawn, and with whatever
scrupulous nicely the system may be ad-
/ justed, iueapaeity on the one hand aud dis
/ honesty on the other, viii do much 70
thwart, disgrace and destroy.
But what are the especial characteristics
] of the currency issued By the national bas'ks,
which render il superior 70 the currency
/ issued under any other system of banking
Of which we have knowledge Three
points shall claim cur attention.
First, il Is superior in the fact Of the
absolute security which belongs to It; the
measure Of its security being the response
/ bility Of the government Of the United
States. Constantly the government holds,
and must hold under the law, surplus Of
/ ten per cent. Of It's own bonds, over and
above the amount Of currency issued, as
security for the redemption Of the circalai-
ing notes Of the banks. So that it matters
nothing TO a holder Of national bank bill
whether the bank is prosperous or other
wise. whether it Is in the full tide OF sue
cess or In liquidation, Whether by the
stupidity or dishonesty Of the officers, the
stock holders have been swamped, and every
dollar i lost TO every stackholdcr and
depositor; no matter what disaster occurs
} to the bank itself its circulation remains
as good as the best, and cannot under the
national banking system, be otherwise.
/ Now. 50 far as | am advised, this country
is totally unacquainted with any currency
which approaches this in the matter OF
security. And, indeed, prior t, the passage
of the free banking act, the circulation of
the national banks which we're ia liquida-
ton commanded a premium of from 1 70 6
per cent. Not, Of course, because il was
really superior in value to the circulation
Of other national banks, but because it was
not Of less value, and could be availed Of in
the formation Of new banks.
Secondly, its greater protection from
eounterfeiting. Under the State banking
system eounterfeiters found an open field in
which to ply their vocation. Every bank
issued its own currency, and made it dis
tinetly different from that Of any other.
The machinery and processes for printing
the notes were comparatively simple and
inexpensive. The counterfeiters were able
to issue notes almost, if not quite, equal
in artistic finish to the genuine bills, So
that, as might be expected, large numbers
of counterfeit State bank notes were con-
stantlv in circulation But under the
national banking system this whole diff
ficulty is in a great measure remedied /
The currency is uniform. There is a
certain kind of work upon each national /
bank bill requiring the most delicate ma
chinery. Another kind requiring the most /
ponderous and heavy, and moreover very
expensive. All the resources of the arts
of engraving and printing, praetieed under
the most favorable circumstances, are
centred in single plate; so that, as We
may we'll imagine, counterfeit national bank
notes are comparatively scarce, and, when
l.