The Democratic advocate., 1892-07-16
New National Banking System.

At the recent meeting of the Boston Bank
Presidents Association an address was made
by Hon. Michael D. Harter, of Ohio, advo-
eating the merits of bill-of which he is the
authorize relieve State bank notes of the
unequal tax now imposed upon them and to
provide for the issue by national banks of
notes upon the basis of securities other than
United States bonds. This bill, Mr.. Harter
thinks, will meet the need of the States Of the
South and West for currency as good as the
existing currency, but less likely to be drawn
away from the place Of issue to few financial
centres As now under consideration in a
committee of the House, the bill provides as
follows: State banks and bankers, author
lied under State statutes and issuing circulat
ing notes shall pay no larger tax upon their
notes than the national banks pay. The tax
paid by State banks shall be ! per cent. per
annum upon the average amount of their cir
culation when the circulation does not exceed
30 per cent. of their actually paidup capital
stock; 2 per cent. per annum when the issue
of notes exceeds 80 per cent. OF paid-up cap
ital stock, but does not exceed $50 per cent;
10 per cent per annum when the issue of
State bank notes exceeds $50 per cent. of the
capital The tax is to be paid semi annually
to internal revenue collectors.
The continuance of the national banking
system is to be secured by permitting them to
use railroad and municipal bonds, as well as
United States bonds, to secure their issue of
notes. The bonds, which are to be in the
custody of the treasury of the United States,
are to be bonds of which the principal and
interest are payable in gold; they must have
been listed upon the stock exchange of some
large city for five years, must have always
paid interest, and must have sold, for not less
than three years, as high as l05. City bonds
will not he accounted good security if the
total tax levy of the city issuing Them ex-
eeeds per cent per annum of its assessable
basis. When railroad ceases to pay divi-
dends on its stock its bonds will cease to be
good security for national bank notes. So
also when its bonds or that OF a city fall below
par. In either case the comptroller will call
upon the national bank which has them on
deposit to substitute other bonds for them.
The Comptroller and Secretary of the Treas
ury shall decide what securities are good.
Any railroad official that makes a false state
ment of earnings, expenses or condition of
road, with the object of influencing the mar.
ket price of its securities, shall be imprisoned
az hard labor for at least ten years.
The bill provides that ''the United States
shall not hereafter guarantee the payment"
of the notes of national banks. There shall
be no limit TO the amount OF notes national
bank may issue, except THIS, that It's Issue
shall not exceed 80 per cent of the par value
ofthe bonds deposited to secure its circulation.
A national bank may at all times have on
hand, in the custody Of the comptroller, such
amouRt of notes, ready for issue upon the de
post of securities, as shall not exceed the par
value of its paid-up capital stock.
1t is to be noted ia commenting upon the
system here briefly presented that it recog-
nizes the propriety of the poliey--laid down
in a plank of the Chicago platform of the ma.
tional Democracy-that State banks should
be relieved of the existing tax of 10 per cent.
upoa their circulation. This tax, intended
to promote the success of the national banking
system and secure the absorption of United
States bonds, is regarded by many as an odious
discrimination. 1t works, it is held, to pre-
vent the existence of needed bspking facilities
and an elastic currency in the South and
West With the extinction Of the national
banking system-immineRt, it is thought, on
account of the probable early extinction OF
the national debt-the restoration of State
banks becomes question of practical inter
est To the business community.