Shepherdstown register. [volume] (Shepherdstown, Va. [W. Va.]) 1849-1955, 1893-01-13
From the charlestown Free Press
The Tax on State Banks.

The i ak on STATE panks.
One of the planks I'm the platform adopted
by the Democratic convention at chicago
is: I'VE favor q repesl OF the Ten per cent
prohibitory tax on the circulation vi state
banks" The Republican party speas err,
during the recent canvass, argued lnat such
action would Hood the country Win WIZ
cat money and entas loss upon the people
Tue Democratic speakers confined their ar
guments principally 10 discussions OF the
Tariff nd furce bill aud seldom referred 10
The currency; perhaps, because they nad
not taken the trouble TO investigate IL. But
this question is one that must De solved
IL will not rest until II 10 solved, ano no So
lutiou will be accepted that Is III interest OF
the banks and capitalists and not In interest
OF the people. Out OF IL have arisen tue
Greenback party, the Free silver party anu
the Peoples party. whose members believe
As do many In the two dominant parties,
Inat there is not sufficient money Tor the
business OF the country, that II IL not equal
In distributed and that the National bang
ing system Is not "A sufficient source OF money
supply. .,,.
the repeal OF "A .aw unconstitutional In spirit
II not IN letter. IL the case should again be
taken ~ the supreme Court, as II probably
Will be If not acted on faVOraDly oy cong 'ess,
there "a II he little doubt as 10 what decision
Will be rendered. Congress mas power 70
..Iay and collect taAes'-for the purpose OF
ralsiug reyenue-not To destroy property.
That this tax was imposed on state pank
notes, not Tor revenue, tut To destroy the
hank In evident from the Iact mat bo Oank
maid the tax Ali gave up their circulation
and most OF them their charters Many OF
Them bought the bonds of the government
aud commenced business under the Ma
tional system. thus complying Win the
object anu intent oil the law.
inc right OF the states 10 nave banks OF
circulation had never been Questioned from
Inc foundation OF the government until the
i'm position oi this tax. "The powers not
prohibited by IL line ConstltullonI 10 the
states are reserved 10 the states, respective
w." Is the Language vi the CONSTITUTION, ana
Inis is one OF those reserved powers or
rights.
The banking systems OF the States, gen.
orally, at that Time were excellent, atfording
ample currency tOi all SECTIONS oil tie coun-
try There was then ABUNDANT money Ito
move the crops" aud IL was never said that
money was "nardening In New York" and
bringing five 10 ten per Gu. per uay until IL
could not be had at any price, aud sucn
crisis as that OF 1913 began aud lasted several
years. the effects OF men All remember, ex-
cent those VINO think only OF the crises uhuer
The. state bank system.
Nucn credit was given the then Secretary
of IN. Treasury tor inaugurGtIng the Nation
nj banking system. IL was edlu 10 nave
been an inspiration" so well uld IL supply
the wants OF the government. Ana yet IL
was nothing more Ihan the application OF n
mart OF the stale banking system 10 the Ma
iioIal system. The circulation vi numerous
state banks was then based upon pledge OF
states as security for the notes issued. The
Federal government adopted IhIs system ior
the National banks. II did not require lnucn
Inspiration 10 apply IL. Inc only Originality
.hown was IN the manner of iorcIns the
state banks To give up their bones aud take
those of the government. This was done by
taxing their circulation ten per CT. IL was
one OF those arbitrary measures OF inc red
eral government Justified on'y by the ne
cessiIy OF the times-a war measure which
shou d have been repealed long ago.
There can be no valid objection TO the
currency OF the National banks. That has
been good beyond dispute. The principal
objection is that the system has tailed To
meet the business wants OF the country.
Instead OF the volume OF currency having In
creased ny the establishment OF new banks,
IL has contracted. The shrinkage III the
circulatio OF the NATIONAL Danks Within
The last few years has been more than s1OO,-
OOO.CUO. This has not Deeu causeu oy tue
want OF bonds AS n basis OF circulation, for
the bonded debt OF the country is now near
ly sou, UOO, 0OO, most OF which are lOur per CT.
due In 1907 enough TO furnish OASIS lor AT
older banks bought these bonds at but little
over par. The bonds advanced IN price I'M
MI they sold as high as around 100, when
they began TO decline. When IL had become
evident that the bonds had reached their
maximum price and were beginning To de-
cline the banks called in most OF their cir
culation, sold their bonds ana TOOK the
protits-abUut twenty per cent, on an aver
a.. "
a prod table turn for the banks but II greatly
reduced the money supply OF the people.
Several OF the largest banks III New YORK
city, holding each 2,OJO OOU oil bonds, sold all
but $1,000, reducing their circulation to
Is OUO The national banks generally
throughout the country pursued the same
course until the contraction OF the oank
notes had amounted To hundreds OF millions
of dollars And the comptroller OF the cur
rspcy, In the interest OF the banks, that they
may add To their profits the remaining
premium now recommends that banks with
fity thousand capital be required TO hold
but one thousand dollars In bonds. which
would reduce their circulation TO but zine
hundred dollars; and those with more than
fifty thousand dollars capital be required TO
hold but five thousand dollars in bonds, re-
ducing their circulation In the same pro-
portion. If this should be done the bank
note circulation will amount TO but nomi-
nal sum. IL would be virtual ABORTION oil
that currency years before the payment OF
the bonds upon which IL was intended To be
based. The existing banking system has
thus failed in the very important matter OF
i. treasury notes have made up the de-
ficiency. But for their issue IL Is imposs be
u say to what nomentary straits the
country Wou d have been reduced.
From these facts it is evident that the Ma
tlonal banking system has been gigantic
machine, run by the government IN the In
terest OF the capitalists owning the banks.
The following extract from the report OF
the Secretary OF the Treasury shows the
proportion OF bank notes to the volume OF
paper money in circulation Nov. LIST, 1892:
Gold certificates. 100. 255,3 $40
silver certificates ................. 2l.552532
Treasury notes 1880. -. ...,........ lli.26T 1913
United States notes S..-......... 1872, UsU, 25i
Currency certificates, June s, 1872. l0,55OOJ0
National bank notes. .....-......... I65, 224 l37
The question which now presents itselfis:
From what source shall the currency come
shall IL be from the National banks, by al
lowing them to use other bonds than those
OF the government, thus making the system
more profitable TO the banks? or from the
continued Issue of silver certificates, which
would tend towards a silver basis? Or from
an unlimited issue OF treasury notes with
out the gold to back them?
IL not probable that Congress will rely
upon either OF these sources, but will re-
mand To the state banks their right to issue
notes, subject TO only state control.
The principal objection urged against