Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-07-05

Nor were these two great faCtors of
low tariff and plentiful gold coinage the
only agencies Of thrift at work during TINS
renowned stage OF our history. There was
srill another whose influence for good or
bad has been much debated, but which. in
my opinion. played no lncOnSlderable part
III producing The abundance with which
that great period WIS blessed. refer 10
the state banks. The circulation Of these
banks grew from $lOl001,OUO in lSi1 10
500, 0000 900 in 1860 You may grasp L
clearer idea OF the effect OF this stimulation
to business by recalling that at that time
the volume OF state bank issues was more
than the present volume OF national bank
circulation. though our business necessities
now are perhaps four times is great. II is
a remarkable tribute 10 the efficiency of
those institutions thar they steadily grew
in popularity before the war, in he face of
long-continued attacks upon them, and II IS
probable that If the desperate struggle be-
tween the Sectious had been avertcJ, inSti-
tutlonS of that sort would to-day constitute
the great ami reliable streams of currency
distribution in this country. Much dis
credit was iustitigbly thrown upon the state
banks because their bills were not always
kept at par in every part of the Union. This
was due. however not to the fault of the
system. but to loose regulations for the in
Spection and control of the business, and
especially TO lack of care in limiting the
amount of note issues. These difficulties
We're being rapidly overcome when the war
began. The state bank circulation WAS
hISed on The idea of al actua! redemption
OF the bank note in specie. A state bank,
for example, emitted $4,000 of its bills,
under the regulations and limitations Of the
law The bank issues would flow out
through local channels in every direction,
but As soon as they ceased to be needed in
actual transactions they would begin TO
hal l,n rod 1nI
intended 10 be secure enough to pass at par
in daily business, but not secure enough to
be permanently held 20o0 miles away with
out any thought of redemption. So they
continually returned 10 the vaults of the
banks that ISSUED them, and Just as con-
tinually the banks put them out to local
borrowers AGAIN. This necessity of re-
demption created steady return current
of these bills from the cities to the country.
The result was that there was continual
local supply of money in every part of the
Union.
The present national bank circulation
lacks this fructifyng principle. A national
bank note is as c-rod as gold-it will pass
anywhere in the United States at par-yOu
can lay it away fo. twenty years and feel
sire it will not be deprecated when You
take it Up again. This is we'll. But on the
other hand, after they are once put out they
lose all local ideutity-the bank officers
VINO sign lDetl MAY never see thtiu dSdIil.
they are never presented for redemption
because the man who gets possession of
one knows that il is secured by United
States bonds. 10 per cent more valuable
than the bank note itself. In other words
the special excessive security for the
bank note defeats the policy of redemption
altogether. The result is that national
bank notes collect in the money ccnters Just
like gold. Vast deposits of gold, silver and
national bank notes heap up in the great
cities, and are there held or loaned on call
Hence we are presented with the frequent
contrast of money! plentiful and cheap in
the great cities, and scarce and high in the
country towns and districts. The great
cardinal merit of the old state bank system
was that by the unvalying course OF an
actual specie redemption, an unnatural CON
centration of money in particular localities
was prevented. This system was SubStan-
italy the same as that now in operation in
the Dominion of Canada.