Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1891-06-21
Double Interest.

We said the other day that a capitalist
could hypothecate his Government bonds
for 90 per cent. of their face value. A
correspondent thereupon wrote to US as
follows:
"Could the capitalist deposit his bonds with
bank or banker and draw 90 per cent OF their
value without pdVtnd interestf And does he not
draw from tho Treasury under the present law
90 per cent. of their par value without interest7
We might answer that this interrogatory
il entirely "of the question" we were
discussing, which was whether the banks
receive double interest or not. We endea-
yored in the article to which our CORE
spondent refers to show first that the
Government would have to pay lust as
much interest upon its debt il there were
not national bank in the United States
as it now pays; and, secondly, that the
Government does not pay double interest.
Our correspondent introduces new
element into the discussion. 1t suggests
to us at once that the notes which
are divided out amongst the banks
are not thus carefully guarded in the in
terest of the banks, but in the interest OF
the people. The bonds are deposited in
the Federal Treasury in order to make the
note-holders-that is, all the people Of the
United States-absolutely secure. The
Treasury notes are counted out carefully
and correctly TO each bank in order that no
greater number of them shall pass into the
circulation of the country than the banks
are able to redeem-ln other words, they
are thus counted in order that bank note
of a Maine bank may be good in Califor-
MIA, or of Virginia bank in Texas. More:
In these bonds, deposited by the banks,
the banks have defeasible property. If
the banks refuse to redeem their notes, the
Government will sell those bonds and re-
deem the notes based upon them, andpay to
you and to US whatever is due to us as the
holders of such notes. We the people
have lien upon those bonds. How could
this be done under the sub-Treasury
scheme2 Whose notes would the Govern
ment redeem? It's own9 We have thou
sands of national banks giving us the best
paper currency the world ever saw, and
charging us not one copper for their ser
vices in that behalf. Would the Govern
ment or the people be benefited If UNCLE
SAM should undertake to make our cir
culating medium the football of pecu-
latiye Government officials? The banks
now feel called upon to maintain paper
circulation of the highest character. Who
would perform this service for us under
the sub Treasury scheme? Who would
take a Treasury note to Washington to
learn whether it was counterfeit or not {?
In word, Is il not absolutely certain that
the people are benefited more by the re-
strictions imposed upon our banks than
the banks themselyesr We in Virginia
once had what was called an independent
banking law. Under it owners Of State
bonds and various other kinds Of bonds
could establish banks. The State Trea-
surer countersigned all the notes; but
there wers no such precautions against
over-issue as the United States law con-
tains. Each bank could issue five dollars
of notes for each dollar OF specie in its
vaults owned by itself. Was that double
interest? Who wouldlik to return to the
independent banking system and have
banks Issuing q million Of dollars OF notes
ON two hundred thousand dollars inspecie