Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1892-11-04
NOTES OF STATE BANKS
Edward Atkinson Discusses This
New Question.
FROM THE STANDPOINT OF FINANCE.

L
| Mere Political Sophistry Shown To Be the
Contents of Republican Screeds-An
| Article Which Every Voter Should Read.
The following article on the question OF
state banks is worthy the consideration OF
every citizen. It's author, Edward Atkin-
son. of Massachusetts, is recognized as one
OF the foremost writer's Of the country on
| topics Of political economy. Among people
devoted TO finance, the mere name of Ed
| ward Atkinson is enough to invest an
article with interest, as he goes to the bot
| tom Of every subject and treats it from the
| standpoint Of principle. In this article on
| state banks he brushes away the political
| cltmor, and treats the subject in his usual
effective and convincing way:
1T is greatly to be regretted that the re-
peal of the tax upon state bank notes should
have become an element in mere party
| contention. It has been asserted by the
speakers on the one side, who are attempt
| ing to create a prejudice against the other,
that, because declaration is made in the
platform of that party that the national
/
| tax on state bank notes should be repealed,
it is, therefore, the purpose of that party to
| break down or do away with the national
| bank system
Such is not the case.
The reason for the imposition of the tax
| on state banks has been enormously stated
| by these speakers.
The facts are that, under the stress of the
| war, it became necessary for the national
| government to collect forced loan by the
| issue Of the legal tender notes known as
greenbacks. It also became expedient to
establish the national bank system, for the
purpose of borrowing the capital Of the
banks to the extent of the circulating notes
that might be issued by them. The govern
| ment retained possession of the bonds
| issued as evidence that such capital had
| been borrowed, and authorized the banks
| to issue national bank notes, not legal ten
der, secured by the deposit of these bonds.
| The system has proved to be an adj
| mirable, excellent and safe system; its
| merits are recognized, without any dis
| tinction Of party, by all who are con-
versant with the functions of banks and
bankers, but neither the legal tender act
| nor the bank act was passed for the pur-
pose of supplying people with money, or
instruments of exchange of any kind. That
was an incident of the forced loan and of
the issue of secure bank -potes. The whole
series of acts were war measures, or acts
for borrowing.
The fault in this system, now admitted
without distinction of party, is it's lack of
elasticity and the difficulty in maintaining
safe circulating medium so as to meet
the increasing demands of the country due
| to it's rapid growth, from which has ensued
| need of additional notes or instruments
of exchange.
The issue of national bank notes long
since ceased to be sufficiently profitable to
the banks to induce them to maintain
THE BANK NOTE CIRCULATION;
hence, while the increasing need of the
country has been felt, the bank circulation
has been greatly reduced. The popular
cry of few years since for more green
backs, and the recent demand, especially
in the south and the far distant west, for
the free coinage of silver dollars, may be
| almost wholly attributed to the lack of
elasticity in the circulating medium con-
sisting of a limited amount of United
States legal tender notes and the national
bank notes.
The increasing demands of the country
! for more notes or some kind of instrument
| to be used as money suitable to be passed
| from hand to hand in small transactions
has enabled the country to absorb the silver
notes issued as representative of the silver
| in the treasury. The necessary use of these
silver notes in daily transactions, in con-
| nection with other forms of circulating
| medium, has up to this time prevented
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treasury in any dangerous manner; there
by the treasury has been enabled to main
| tain the whole volume of currency up to
| this time at a parity with the lawful unit
of value, or dollar made of gold.
How long can this course be continued !
1t has long been manifest that substi-
tute must of necessity be found for the ma
tional bank note. Sooner or later, earlier.
| perhaps, than most people expect, the
United States bonds which are available to
secure the circulation of national bank
notes will be paid or purchased in pur-
suance of the sinking fund act.
What, then, is the alternative?
Is it rightly the function of the United
States government through congress to
forbid the states by a prohibitive tax from
organizing a system of banking, in order to
facilitate the traffic of their respective
states, or to enable each state or each
neighborhood to conduct it's own tsansac-
lions on the security of the capital and
credit of its own citizens
1t should be remembered that the great
volume of banking capital under the ma
tional bank act is held in the eastern and
middle northern states. This is already d
subject of prejudice to persons, without re
spect of party, who are not fully CONVEX,
SAINT with the
FUNCTIONS OF BANKS AND BANKERS.
7 They are jealous of the restrictions of
| banking, and if the national government
| lends itself to what may be held to be a
| monopoly of the functions of banks OF
| issue, there would be much greater danger
| of the unlimited issue of United States
| legal tender notes, or of silver dollars OF
the present standard without regard to any
| agreement of national legal tender, than
| there will be if states are permitted to char.
| ter banks of issue for the service of their
own citizens.
l will venture to repeat some of the
stupendous figures which 1 have already
given in explanation of the rapid alb
sorption of silver notes and of every
other form of circulating medium during
! recent years.
Through the application of science and
invention to the field, the farm and the fac
| tory since the restoration of the specie
standard in 1869, the total product of this
country has been enormously increased;
with that increase has come correspond
| ing increase in business transactions or ex-
changes, of which perhaps the surest dem
onstration may be made by examining the
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