Telegram-herald. ([Grand Rapids, Mich.) 18??-1892, 1891-08-21
SHERMAN SPEAKS.
Ia Reply TO Statements Made by the
Peoples Party Regarding Banks.

| California was interviewed by Den
yer paper on finaneiel questions. The
| inter lew ha beea ep bli a in N any
Western Peoples party papers with
unqualified commendatlon. In that in
teryiew he used the following falia-
eious reasoning In support OF the allie
cation that 1.-The government loans
money TO National banks at / per
cent"
The power OF the government to
issue Legal bonds. paper money, has
been established by the United States
Supreme Court, and the proposition
| 70 lend tt TO the people at u rate not
To exceed = per cent on cultivated
lands at one hall their value Is GER
tainly as safe q transaction as the
present scheme by which Ii lends to
the National banks at l per cent.
interest 90 per cent OF the par value
OF ITS own promises to pay United.
| States) bonds.
If / have $4,000 in United States
bonds AMI deposit them wi h the trca :
urer, the government permits me To
soan 30 per cent of the face value OF
the bonds in National bank currency
without interest, and at the same
| time il pays me Interest," on my bonds
et l-2 per cent. Ipocket the bank
notes and lend them to the farmers
| ut l. per cent, or any rate can force
| them to pay. Now. Is the bond any
| better security than the land? or is
| there any better reason why the gov
eminent should lend TO banks at per
| cent. than 10 farii.ers a. > per cent?
L
and clear a statement OF this fallacy
| as has been made. and emanates from
q leader OF the Peoples party. The
| Blade sent the above cxtracb to Hon.
John sherman. asking him to discuss
| the matter. Below is given Senator
| Sherman's reply.
| Mansfield. Ohio, Aug. II, 1S91.-Ed-
| itor Blade: Your letter OF the 18th,
requesting me to answer the state
ment made by the Peoples party that
| the United States loans to the Nation
| al banks money at 1 per cent. is re-
| ceiyed.
| / have read the printed slip inclosed,
| and 1t seems to mo so fallaciOus that
a child could answer it. National
| banks are authorized to issue their
notes-not the notes OF the United
States, but their corporate notes-to
| circulate as money only by those who
are willing to take them. They stand
like any other note Issued by CO. po--
alton, having no legal-tender quality
and resting upon the confidence OF the
holder based upon the security fur
nished. In order TO make them abso-
iutely safe, the United States. itself a
| large debtor, evidenced by its bonds
outstanding, requires each bank TO
| secure itScirculating no Is by q Gepos-
| Il OF greater amount of these United
States bonds. Nor Is the organiza-
| tion OF n bank an exclusive privilege,
| but it Is open to all citizens OF the
United States upon the same terms
| and conditions. These bonds are not
| the property OF the United States. as
the paragraph assumes, but the debt
OF the United States, held and owned
by individuals. The stockholders have
TO buy these bonds at their markot
| price, and now have TO pay a very
large premium on them. They are
the debt OF the people. considered the
highest possible security. They are
the property OF the bank. which. like
any other holder, is entitled to the in
| terest as IL accrues. These bonds are
deposited with a designated officer in
trust. TO collect the interest and pay
it TO the
Owners Of the Bonds,
but TO hold the principal as security
for the outstanding notes OF the bank.
| The Government pays nothing to the
bank except what il woud pay TO any
| other holder of these bonds-the inter
est as il accrues. But the United
states levies upon the bank tax
of per cent. on its circulating notes,
partly TO reimburse expenses incurred
by the government IN printing the
notes in order to have the most ample
security against counterfeiting, and
| also tax upon the corporate fran
| chfse granted by the government to
the bank. How any sane man can re-
gard this transaction as a loan by the
| United States to the bank is beyond
my comprehension. Whatever may
be said OF National banks or the
policy oi supplanting them by
some other form OF circulating
notes. this can be said OF them that
the system has been the most success
ful banking system ever devised by
nan. No one has ever lost n dollar
on the circulating note OF any Nation
nj bank. and the government has paid
nothing 10 them except the interest
that it would pay TO any other cred
sror uopn its bonds
| The business transaction which the
Peoples party invites the United
States 10 embark I'm Is to loan to any
body who can furnish the requisite
security. United States notes. the ag-
gregate amount Of which il not fixed.
No provision Is TO be made for the
| payment OF these notes. bat they are
90 circulate as money without redemp-
tioa or the promise OF redemption.
When issued they are simply an ir-
| redeemsbhe paper money, precisely
similar i'm character and form to Con
tinental money and the French aesign-
ats. or more recently still. the Rhode
island money issued at the close oi
the revolutionary war By the Peoples
party OF that day. Very truly yours
John Sherman
Little Danger from Water Poisoning.