The Cambria freeman. [volume] (Ebensburg, Pa.) 1867-1938, 1891-03-20
4 BANKING SCHEAIE.
A Proposition to Abolish the
Present System
Three Thousand Governmental Banks -
a SUbstItGte-They 20 loan Money
to borrowers at the Rate OF
Eour Per Cent


farning 1t Prospect Park, IL, and,
from = farmers standpoint, he gives
the following suggest.Ons on banking
in an interview with 3 representative
of the Chicago Inter Ocean:
Why occasional money stringency?
Because through numerous bank and
other failures people become frightened
and hide their money. Two causes have
combined 10 produce recent failures.
One has been the late era OF real es-
tate speculation in the vicinity of large
cities, initiating values TO . point that II
had TO stop. The ether has been the
steady diminution of money through the
contraction Of National bank currency.
Ten years ago the National bank ci-cS.-
latioI Was $50, OJo,Oe3. One year ago
it was 500, coo, 600 To-6ly Il is about
$50, ,0oJ, 600.
Why do National banks contract their
circulation? The National bank law
enacted in 1868 and 1854 made Il obliga-
tory upon the baDl- company TO loan
onc-third Of is capital L the Govern
ment, upon which it was granted
charter % do business for twenty years
and issue bank notes t. the extent of
90 per cent. of loan 70 Government. rs
Government bonds IN the beginning OF
this system paid per cent interest in
gold, and gold yielded 30 per cent. pre-
mium, banking was very profitable.
Latterly. as the Government VIII pay
no more than 3 per cent. interest banks
are unwilling to lean it money They
prefer not TO Issue National bank cur
rency, but would rather take other peo-
pies money on deposit, get fun interest
for all they loan. and be free from the
annoyance Of Government bank inspec-
ton; consequently they are gradually
withdrawing the currency they have is
sued from circulation.
But, il may be said, if the Government
could give encoura cement why should
not the present bank system be contin-
ued? Because our National debt IS be-
ing too rapidly extinguished to allow
the present system to be perpetuated.
Banks that have proven the most rclia-
BILE, and have been of the greatest ser-v-
ice to the people, have been those init
mately connected with the Government;
have been founded on Government ne
cessities, when the Government had &
large debt and had to borrow. Thus
the Bank of Venice, founded in II.f,
owed its existence to the imperative
necessity that the government borrow
money. This bank. under government
control, was the admiration OF all Eu-
rope for 600 years, and only ceased its
existence on the overthrow OF the re-
public in 1877 by the revolutionary army
of France
The Bank of England, established in
1894, was organized as means through
which to borrow money from the pco-
pie. The government had been paying
from 20 TO 30 per cent on money, which
was difficult to get at that William
Paterson, a London merchant, con-
ceived the idea Of organizing a com
pany to furnish S5, 600, 900 70 the gov
ernment as q permanent loan, for
eleven years, at S per cent. interest.
Subscriptions to the entire stock were
taken in ten days after the books were
opened, and from that day 70 this the
loan TO the government has been about
equal to its capital. the bank company
obtaining their profit from their bank
notes IN circulation and their deposits.
The government supervision over the
bank has been such as 70 give entire
confidence, SO much so that the bank is
allowed TO issue SIS. 0O0. .OGO in excess of
its gold deposits This bank should be
maintained, and viii be, as the peoples
guardian of the public debt of England,
which is s., 400, C2O, 900.
In contrast with the beneficent serv-
ice rendered the people, through the
Bank of England, was the disastrous
consequences to the people through the
failure OF the Bank Of Glasgow, which
went down in 1873 owing the people
S33. 600, 900; bank officials, free from
government control, having scuan-
dered its funds and nisreprcsented its
condition for years before its failure.
The unreliable condition Of banks in
the United states is well illustrated IN
the fluctuating values Of paper money
from 1SfO to i5jo-banks without Cow
ernment control. The war came on;
the Government found it necessary to
borrow, and then WAS inaugurated our
National bank system, which, under
Government supervision and inspection,
has served its purpose with comparative
safety TO the people. With the extin-
guishment OF the public debt, however,
which Is down to $3.50, 900, coo, the pres
ent National bank system must be
changed
The defects in our present system are
the following:
l. Even perfect as our National bank
system IS the failures had been 50 nu-
morous as to cause loss to depositOrs
in National banks of $780, 600 annually
for twenty-seven years prior to 1879.
while the loss to depositors in other
banks was over SIC, 900, coo per wear dur
inG the same time. The great number
OF bank failures of late is not only
taking the hundreds of thousands from
suffering bank depoSitors and putting
the same into few hands, but money
strlngency compels many millions Of an
nual loss To the people from being
obliged to sell property at a sacrifice,
while the enormous interest which
borrowers are compelled TO pay
IN the money crisis is another
loss of many millions to the people.
2. The present system is one of favor
ltism. The man SO fortunate as to do
business at a bank can have accomno-
cations, while the farmer, offering Sc
curity worth twenty times the money
required, can not get a dollar IRON the
bank, but Is compelled TO pay an extra
PCT cent above interest, in order TO bor-
row
3. The unequal and very high rates
# interest in certain portions of the
country, especially in the newly settled
Is great burden to the poor
In some portions of the
Vest the allowable rate is is per cent.
'er annun; and, with a commission
.bove that TO farmers. il is not surpris-
ng that all the farms and chattels
hereon are so mortgaged that they are
apidly passing into the possession OF
he few money loaners. The postal
ystem. under Government manage /
ncnt. makes II possible TO buy n post
@c stamp as cheap i'm Idaho as in New |