The Anderson intelligencer. [volume] (Anderson Court House, S.C.) 1860-1914, 1890-05-22
How None, is Loaned TO National Banks.


MIR. EDITOR: In your "Alliance Col,
umn" appears an article from tue M.
tional Economist we'll calculated to mis-.
lead. If the statement would work out
in practice our new Banks made mistake
in taking State charters, and the National
Bank of Darlington in changing TO
State Bank. Suppose the new Bank had
taken National Bank kcharter-the cap
ital stock $4,000 They buy U. S. i per
cent bonds for same amount:
Premium on same at % per cent.."$ll 900
They receive in rency......"......... 1o,GO0
Receive less than they pay QUIZ. G,00O
Deposit with U. S. S p. c. redemption. =, $50
Pay out more than they receive.....SlS, ,250
This leaves $42 $50 to lend to custo-
mers, whereas as Safe Bank they would
have had SCI 900, for they would have to
pay s1l1.O0 for their stock at par cf 500
in order 10 pay the premium. Now as to
profit and loss:
First year-interest Oh $4,000
bonds at per cent .........."S2,0 0OU W
Losses first year-intercst
on $4,000, premium on
bonds at per cent......$l2S0 90
So, ,25O redemption, 8 p Co.. $4,000
U. s. tax on $4,000 circu
lation, per cent.-...... 450 90
Annual loss on premium,
$4,000, through II yrs,
bonds maturing in 1907. 9ll.l7 2.65l.11
Loss first year. .Ss5l.l7
This loss is reduced annually in inter.
est on the premiums Of Sll. 900, as the
bonds approach maturity, so that, as sta
ted in my former article, the interest in
the bonds is about set off to these losses.
The Bank about holds its own while the
U. S. makes the tax. The Government
issues no bonds for sale. They are all
outstanding, and it makes no difference
to the u. S. whether the interest is paid
to the Banks or to the party from whom
the Bank buys them. 1t wouldn't cost
the u. S. dollar of interest to issue cir
culation for the par value of the bonds,
or par and premium; and if she would
do so, it would enable these State Banks
to take u. S. Charters, and lead the mon.
ey just so much cheaper to our citizens.
And having more National Banks issuing
more circulation, increasing The volume
of the currency, and competition in lend.
ing, it would remedy the very evil which
is Justly complained of by contraction of
the currency, at the same time increase
the revenue of the Government by the tax
on circulation, and be mutual benefit,
as stated in my former article. If this
was done, We would have at least $780,
100000 additional circulation 10 less than
twelve months, which would be increased
as thu needs of the country would re.
quire. While this is true, still my RENE.
dy is free State banking, with State bends
as security for circulation; which, how,
ever, does not meet the approval of either
those in power or those who would be.
The National Economist assumes that
the National Banks lend out every dollar
Of their Capital and every dollar Of their
deposits at eight per cent interest, inclu.
ding the five per cent redemption fund
which is withheld from them, leaving the
Banks without dollar in their vaults to
pay these deposits or transact their daily
business. It would be as little Kirk Nc,
Donald said to the Cashier: "It's poor
bank that can't change five dollars"
Surely Mr.. Macune, the intelligent ed
itor, is turning politician and seeking
votes.
The city Banks make money out Of U.
S. deposits, like all other deposits placed
with them for safe keeping. But they
don't lend them all out. 3.