The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1890-08-01
About National Banks.

About National Banks.
The Gazette, in attempting to ans
wer the CAPITAL article of last
Sunday, on government loans to
banks. says:
The CAPITAL is perhaps una
ware that the loaning of money to
national banks by the government is
the least of the objections to the ma
tional banking system.
The REPUBLICAN, took up this ques-
tion on the proposition laid down by
Leavitt that the government made
loans to national banks at per cent.
per annum. This paper denied that
loans were made at all.
And, says the Gazette:
The great and vital objection is that
1t places in the hands of a few the alb.
solute control of the volume of the
currency of the nation.
1t does not so place the absolute
control of the currency of the nation.
Reports show that the national bank
notes now in circulation form very
small proportion of the currency of
the country. The gold and silver
coin, silver certificates and treasury
notes form by far the larger propor-
tion of the nations money. The vol
ume of national bank currency is con-
staatly growing smaller, by reason of
the fact that the private banks are in
creasing in number more rapidly than
arc national banks.
Then the Gazette goes on with a
species of sophistry by which it seems
to think 1t shows that national banks
getslxteen per cent. interest on money
invested in bonds. 1t says:
What is the status, then? The bank
pays 1926, 600 for the bonds. The bank
receives 100000 from the government.
The bank then has really only $25OOO
invested in bonds, on which it receives
$4,000 per annum.
The above is about as crude and de-
void of sense ss some of Leavitt's
statements. The Gazette assumes
that the government makes to tie
bank a direct loan of an even $4,000
for a definite number of years, or
something of that kind. While in re.
ality the government must be treated
as any other depositor. and the banks
of deposit thus become the govern
ment's agents to handle its money. for
the convenience of the government.
The funds thus deposited by the gov
ernment are subject to drafts at any
and all times, and said banks can only
use this money as they can use any
other deposit which is subject to
check. Furthermore, the example
given in the REPUBLICAN, which the
Gazette tries so hard to mlsconstrue,
does by no means contemplate that
the government guarantees to keep
the bank in question supplied with
100000 of government money. On
the contrary, Under the conditions
named the law simply limits the bank
to the deposit of 100000 at any one
time and the treasurer directs that
government revenue from certain
sources be deposited in such banks, in
sums within the limit. In this state
the money thus deposited has always
fallen far short of the sum the
bank is required to secure. And
wherever the government re-
receives a revenue 1T likewise has ex-
penses which are always paid from its
depository. The REPUBLICAN is not
championing the cause of national
banks, particularly, but the questions
raised by it were merely questions of
fact, brought out by misstatements re.
garding the matter made by members
of the independent party. The Ca
zette's arguments, as such, are too
shallow to be worthy of notice; but
the REPUBLICANS desire to have the
matter stated fairly and in accordance
with facts requires it to devote this
space to the subject.