Virginia free press. (Charlestown, Va. [W. Va.]) 1832-1916, 1892-12-21
The Tar,on sac BaMks.
IcoMMUNIcArED.l


go is ''We favor repeal of the ten per
cent. prohibitory tax on the circulation OF
State banks" The Republican party speak
ers. during the recent canvass, argued that
such action would food the country with
"wid-cat money and entail loss upon
the people The Democratic speakers con-
fined their arguments principally to discus
sions OF the tariff and force bill and seldom
referred TO the currency perhaps, because
they had not taken the trouble to investl-
gate it. But this question is one that must
be solved. It will not rest until it Is solved,
and no solution will be accepted that Is IN
interest of the banks and capitalists and
not in interest Of the people. Out of 1t has
arisen the Greenback party, the Free Silver
party and the Peoples party, whose mem
bers believe, as do many in the two dominant
parties, that there is not sufficient money
for the business wants Of the country, that
it is not equally distributed and that the
National banking system is not elastic in
volume and is not sufficient source Of
money supply.
The removal Of this tax would be simply
the repeal of a law unconstitutional in spirit
if not in letter. If the case should again
be taken to the Supreme Court, as it prOba-
biz will be if not acted on fayOrably by
Congress. there can be little doubt as to
what decision will be rendered. Congress
has power TO clay and collect taxes" for the
purpose of raising revenue, not to destroy
property. That this tax was imposed on
State bank notes, not for revenue, but to
DESTROY the banks is evident from the fact
that no bank paid the tax. All gave up
their circulation and most Of them their
charters. Many of them bought the bonds
of the government and commenced business
under the National system, thus complying
with the object and intent Of the law.
The right of the States to have banks of
circulation had never been questioned from
the foundation of the government until the
imposition OF this tax. "The powers not
prohibited by it the Constitution to the
States are reserved to the States, respective
w." is the language of the Constitution, and
this is one of those reserved powers or rights
The banking systems o. the States, gen
orally. at that time were excellent, afford
Ing ample currency for all sections of the
country. There was then abundant money
"to move the crops, and it was never said
that money was hardening in New York, "
and bringing five to ten per ct. per day, until
it could not be had at any price, and such
a crisis as that of 1873 began and lasted
several years, the effects of which all re-
member, except those who think only OF the
crises under the State bank system.
Much credit was given the then Secretary
of the Treasury for inaugurating the Nation
al banking system. 1t was said to have been
an inspiration" so we'll did it supply the
wants of the government. Aud yet it was
nothing more than the application Of part
of the State banking system to the National
SYSTEM TIC NaANAAttAlNtA VI ANAtAASt AsfANN
banks was then based upon a pledge of
bonds deposited with the treaSurers Of the
States as security for the notes issued. The
Federal government adopted this system for
the National banks. 1t did not require
much inspiration to apply it. The only
originality shown was in the manner of
forcing the State banks to give up their
bonds and take those of the government
This was done by taxing their circulation
ten per cent. IL was one of those arbitrary
measures of the Federal government justi
fed only by the necessity Of the times-a
war measure which should have been re
peaied long ago.
There can be valid objection to the cur
rency Of the National banks That has
been good beyond dispute The principal
objection is that the system has failed to
meet the business wants of the country
Instead of the volume of currency having
increased by the establishment of new banks,
it has contracted. The shrinkage in the
circulation of the National banks within
the last few years has been more than $780,
100000 This has not been caused by the
want of bonds as a basis of circulation, for
the bonded debt of the country is now
nearly $500. 600 900, most of which are four
per cents. due in 1907, enough to furnish a
basis for at least fourteen years to come
Most of these older banks bought these
bonds at but little over par. The bond,
advanced In price until they sold As h Oh
as around 1870, when they began TO decline
When il had become evident that the bonds
had reached their maximum price aud were
beginning to decline, the banks called in
most of their circulation, sold their bonds
and took the proi,s-about twenty per cent.
on an average, Of the amount of their sales
This was profitable turn for the banks
but it greatly reduced the money supply of
the people. Several of the largest banks in
New York city, holding each 100000 of
bonds, sold all but $4,000, reducing their
circulation TO $4,000 The national banks
generally throughout the country pursued
the same course until the contraction of the
bank notes had amounted to hundreds Of
millions of dollars. Aud the comptroller
of the currency, in the intetest OF the banks,