The midland journal. (Rising Sun, Md.) 1885-1947, 1894-04-27
\ Bird's-eye View of National Banks.


cial History" being published in
The National Waterman, Wash
ington, ID. c., the following is
excerped:
NATIONAL BANKS AND CURRENCY.
The first national bank act was
passed Feb. 25th, 1868, after an
extended discussion. This act was
thoroughly revised on June Bird,
1864. With numerous amend
ments, every one of which has been
in favor of the banks, the main
features of this revised act are in
operation at the present time.
Briefly stated it gives the right to
five individuals or more to start a
bank with capital of $4,000 OF
more. One-f fourth of the capital
stock shall be invested in interest
bearing Government bonds at their
face value and deposited with the
United States Treasurer. All banks
have the right to deposit bonds on
the full amount of their paid up
capital. After having made such
deposits of bonds, the Comptroller,
upon application, will furnish each
bank with national bank currency
to the amount of 80 per cent of the
face value of the bonds deposited.
This national bank currency, upon
being signed by the president and
cashier of the bank, is ready for
use as national bank paper money
and is usually loaned out to the
people. The national banks receive
each three months from the Treas
ury Department the interest accru-
ing upon the bonds deposited and
also receive from their customers
the interest they may charge upon
the national bank currency loaned
out. In this manner the banks
receive double interest, first On
the bonds and second on the cur
rency for which the bonds are de-
posted. The banks pay to the
Government one per cent interest
upon the national currency receiv-
ed. This interest is paid at the
rate of J per cent every six months.
The banks call this tax, we call
it interest. Banks are required to
keep on deposit with the Treasury
Department an amount equal to 5
per cent of their circulation as a
redemption fund. This fund is
used to redeem worn out and mutt
lated bills that are sent in to the
Department from other banks.
When a bank wishes to withdraw
its circulation, either in part or in
whole, it deposits with the depart.
ment lawful money to the amount
of the circulation it wishes to retire
and receives from the department
bonds upon which the currency is
issued. The Government does not
buy or retain the bonds. The bank
receives its bonds and disposes of
them as it may choose. The de-
partment retains this lawful money
with which it redeems the Outstand
ing currency of the bank as it is
presented. If any of this currency
is lost or destroyed, or for any
other reason is not presented for
redemption the Government, and
not the banks, is the gamer.
But very few banks were started
until after it was moral certainty
that the North would win in the
contest that was then raging
National banks and patriotism are
far from being synonymous terms.
The stockholders in national
bank are only liable, ratably, not
one for the other, for the debts and
contracts of the bank. In State
and private banks they are usually
liable, one for the other, to the
entire extent of the debt or
contract.
NATIONAL BANK PROFITS
Interest on circulation at per cent
at an average $3.50, 900 for thirty
years (compounded) S. 200 900 OOO
Interest on deposits average 81, Co.,
100000 for thirty years, per cent
(compoundep 1900 200
Interest on bonds for thirty years,
per cent (Weaver) SS7, 500, 900
Profits on bonds bought (Weaver) 137, 800, 600
Total SS,175, 900, 200
This is conservative estimate,
as will be seen from the following
taken from speech Ex-senator Vest
October 10, 1888, Congressional