Idaho semi-weekly world. [volume] (Idaho City, Idaho Territory) 1875-1908, 1893-09-22
STATE BANKS

The Pocatello Herald is giving
space for free discussions of all pub
lie questions, and the keen and thor
ough manner In which the subjects
are treated add greatly to the gener-
81 interest of that paper. Its con-
tributors are literary geniuses and
logicians very far above the plane Of
the common place, and their effu-
sions prove not only interesting, but
instructive, and are valuable public
educators, devoid Of partisan vim
dictiveness. In the last number A.
B. Hover deals with the State bank
question in an argumentative and en-
tightening manner, and traces effects
through to final results with mathe-
maticsl exactness. Following are .
few extracts:
The proposition is to real the 10
per cent. tax on State bank issue
bills issued by banks that circulate
as money!, aud to convert national
banks now in existence into State
banks and permit them to issue, as
under the present system, 80 per
cent. of not only the national bonds
held, but on all State, county, mu-
nicipal, school and other bonds, in
Guiding private or personal securities.
The piracy of this scheme cannot
be fully understood at this early stage
of thought on the question. But
taken in connection with past expert
ences in wildcat banking, coupled
with the fact that we are TODAY pass
ing through financial crisis that is
tie direct effect Of the power invested
in the large banking institutions by
law, and by possessing the major por-
tion of the money, should be, and is
sufficient to stamp the scheme with
the severest condemnation of all fair.
minded citizens.
First, all, or nearly all, such bonds
are drawing i to 8 per Cent. interes,
and run from ten to thirty years
Allowing the average natural life a,
twenty years, with interest at 5 pei
cent. per annum, it will be seen thai
by maturity the full face of the bono
will have been paid in interest, while
yet the debt remains the same q:
when first contracted, requiring the
same effort on the part of the coming
generation to discharge the obliga
ton. Hence the perpetuity of deb
"a policy diametrically opposed t.
all sound government, the assertion
that national debt is a nationa
blessing to the contrary notwith
standing.
Now let US look little further in
to the scheme-thst feature proposing
to make them a basis of issue. Asid,
from the above illustration we will
presume the following: Suppos,
that the county of Bannock shoult
desire to erect court house and jai
and would issue bonds to the amour
of $4,000 at 5 per cent. to run TWEEN
ty years. With the 10 per cent. ta
on State bank issue removed, i
would allow of some individual o
collection of individuals to establis
bank of issue and issue 80 per cent
of the face value of such bonds, an,
in order for the people Of Bannocl
county to obtain the bills so issue
, they would have to pay to the insti
tuition permitted to make the issu
10 per cent. at least, SO that at tn
end of twenty years they would hav
to pay in interest the sum of $4,000
on original bonds and 100000 to ge
D the bills in circulation issued by th
, banking institution.
But let US go little farther an
, , see if we can successfully demonstrat
i our position on favoritism. The fl
+ vors granted and the opportunit
given to banking institutions thereb
J. will be clearly understood after
|, careful perusal of the following Ca
culations, figuring on $50, 900 bono
ed Indebtedness of anv available cla
of bonds as basis of issue: Intere
J. on original bonds of $4,000, 20 yea
a at per cent, $4,000; interest upo
v the interest of the original bonds
;. 10 per cent, $12,240; interest upo
. the 20 per cent. issue (*45, 5,0OO at
- per cent. compounded, amounting
5 $260,960, making a grand total
d over $323,2O3. Now suppose the +
It vored institution desires to cancel
70 chsrter at the end of the TWEEN
:, years. 1t simply surrenders its iss'
=" of (all that has not been lost, burn,
IS or otherwise destroyed, which is
r, net profit to the institution) $45,0C
n has the same Cancelled by the prop
|. authorities, takes down its $500
!, that it has up for security, which ad
Us $4,000 more to the former amour
making 1928, 203 in all; the result
interest investment on $50,0O0 of I
s. peoples bonds, and the bonds a
,g still unpaid.
n The question is, can any peoK
IN stand a deal like that and not so
- find themselves in a position whe
they are compelled to surrender tn
a. holdings to the interest gstherers?