The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-02-01

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Government over private banks, SO called.
Ihey are based on National bonds and if there
were no National bonds there could be no Ma
llonal banks. 1t is quite natural, therefore,
mat lney should favor large issue of National
ponds, and longtime bonds too for consid-
cradle portion of the bonds issued during the
war OF the Rebellion have matured and many
more are about to fall due after which they
cease TO bear interest and are liable to be paid
on at any time if the country is prosperous
Inc continued existence of the National banks
uepends upon new issues of National bonds
Inc system under which these banks are or
canned and their operations are conducted
may pc thus stated: Half dozen men who can
raise the sum OF $100, 900 agree to form a bank
corporation and each takes stock in itHpropor-
tlonate to the money put in by each They draw
up anu sign incorporation papers, pay over
t sneir money, which is exchanged for green
I4a;s, and with the greenbacks they buy
United States Government bonds to the amount
OF 9ioo,O 700, Now the law provides that these
bearing say per cent interest, may be
returned 10 the Government for safe keeping,
ana then the Government will issue $50 900
=, ~ Dank notes to this new bank and print the
name OF the bank on the bills. In q word the
DEM gets back all but one-tenth of its capital,
paying / per interest on the $50, 900 and
ulaWlng per cent interest from the Govern
ment on the whole 100000 They are now
ready for business. the bank is opened and thew
proceed to loan this 500, 900 in their own bank
plllS TO individuals at from to 10 per cent,
en4 pahknllls being redeemed by the Govern
hent II the bank should fail; but the Govern
ment does not repay depostors, and their sole
dependence is upon the bank itself for the
return of their money, and the bulk of the
business done by banks through loans and dis
counts is by the use of the money belonging to
oeposltors and not by the use of their own
capital, as a glance at the sworn statements of
panKerS VIII at once demonstrate.
Ihree months ago, on October 80, 1895, the
Comptroller of the Currency reports that there
were 37l2 of these National banks, with a total
capital of 1857 100, 900, and deposits by in
dlviduals to the amount of ST 7O1 653 OOO
making the available resources of these banks
double the capital. Adding the surplus fund
OF S246 AS, 900, we have combined total of
$Z,ooo,2O6,0O0. By using all these combined
resources, they have loaned So. 041 ,846, OOO
leaving on hand the sum of 1868, 636, 600 with
which to meet the calls of depositors for the
sum OF S1,7O1 ,653,000 or more than three
tunes the amount on hand. If a panic occurs
and less than one-third of the depositors call
Tor their money, they can be paid by taking
the last dollar out of the whole 1912 National
banks. Thus it is seen why the banks have to
close their doors the moment people loose
coincidence" In them, for 1t appears that more
than two-thirds of the banking business is done
on confidence" or bank credit, and only one
oeposltor IN three could possibly get his money
II put one IN three should call for it on the
same day. 1t is not surprising that SO many
banks TAIL, but that so few iail under such
conditions.
The growing hostility to National banks is
not due, however, to occasional failures, but to
the TACT that they have grown so rich and DOW
er1uI as TO exert an almost irresistible in
huence IN politics, and are so successful in
electing their friends as congressman Sena-
tors and Presidents. No one believes that
majority or large minority of the American
people is opposed to the restoration of silver to
free coinage, or desires the retirement of the
greenbacks by re-funding them in interest
bearing bonds, TO be sold to bankers that we
may have nine new bank notes to replace
every ten greenbacks now in circulation The
people prefer the greenbacks which bear no in
terest, but, as before stated, the National
banks must all cease to exist in few years un2
less they can induce the President or Congress
to issue more bonds.
JOSEPH AsBURY JOHNSON
IL Essex street, San Francisco