Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1897-11-17
NOTES THAT WILL PASS.

bank system is n financial fetish, Is ar
rayed against the issue of notes by state
hanks. and the people and business are
wisely timid regarding any note tha'
would not pass current in any State IN
the Union at its face value, and would
not be good as would be national-oank
note in case the bank issuing 1t failed
Nor do we consider that for the nonce
the discussion OF currency reform as az
fecting the natioral banks is much less
academic. The policy anent this matter
that we are told has been agreed upon
by Mr.. Gage and the President to the
contrary Notwithstanding. we do not look
for any serious attention being given to
the currency problem by Congress so long
as the Republican party is in power. Inc
whole course of that party touching the
currency and the financial influences ana
interests that dominate its leaders mill
tate against the hope that republican
Congress would make any change In tx
listing conditions.
Yet the question of currency reform is
one that will not down, so far as the
masses are concerned. Sooner or later
reform has got to come. Therefore. any
light on the subject of banking and cur
rency is practical, as bearing upon the
future. Any information along this line
must be regarded as an important FACTOR
in the campaign of education through
which the contamination so deVoutly 10
be wished-a banking and currency sys-
tenn adequate to business demands-must
be attained.
We are led to these remarks by an
article which we find in late issue OF
the New York Journal of Commerce. I'M
der the caption, should State Banks
Issue Notes?" and which is striking
commentary upon the position of those
who indulge in sweeping condemnation OF
State banks. Our New York contem-
porary, after stating that there Is very
substantial reason for distrusting the
ability of the national banks to supply
all the additional currency that wou!d
be needed to fill the vacuum caused by
the retirement of government paper, pro-
yided it were retired, expresses the opln-
ion that an effort to reconstruct the cur
rency without the cooperation OF the
State banks would fail. The Journal
takes up the antagonism of the national
bank advocates to State banks of issue,
and says that this attitude of discrimina-
ton is due entirely to an ante-war preJu-
dice arising from the then defects oil
State banks. Next, and in support of
contention that it advances, that state
banks have become elevated to sound
financial methods, and that II is bind
and unqualified injustice to judge the
State banks of to-day by the record Oh
the system previous to 1860. it presents
the following facts, figures, and argu-
ment:
what they State banks were before
the war is inferable from the fact that
the competition of the superior methods
of the national system reduced their
capital from $3.50, 600 600 In 1860 to $i3 100000
I'm 1879 What they have since become, in
spite of the competition of the national
banks. is evidenced by the increase
of their capital from 81, 100000 in 1873 to
25oOOO 900 in 1893 The people are not
Indifferent about the quality of the in
situations to which they intrust their
money: and. when steady twenty years
increase of deposits in the State banks
from S110.OO0.O 900 in 1873 TO $685., 100000 in
1896 faces us, it must be conceded, In all
fairness that those institutions have
made an immense gain in public conn-
dence; and that gain in confidence can
only have come from corresponding
Improvement in the safety and utility or
their methods"
Again. in comparing the growth OF
state banks with that of national banks
between 1873 and 1896, the Journal says:
During these twenty-three years the
increase in the capital of the State banks
has been sS5, O0O. 900 greater than that of
the nationals; or 462 per cent. In the case
OF the former and 80 per cent in the lat
terra ratio far below the growth of pop
ulation. In loans and discounts, the
State institut' rs have increased 4Si per
cent and the national 113 per cent; while
the deposits of the former class show q
gain of 52S per cent, and the nationals
an increase of only 1853 per cent. 1t Is
worse than idle 10 ignore this immense
ratio of increase In the business of the
state banks. II the two systems should
respectively maintain these relative ratios
| OF growth, the time cannot be far distant
when the State banks will vie very
| closely with the national in the magni-
tude of their operations"
AS TO the comparative safety of the
| two systems, the Journal adduces figures
which prove that the "much discredited
state institutions have stood about as
| well in respect 10 insolvencles as the
| national" The final deduction Of our
New York contemporary from its ex-
| haustive examination of the subject Is
| that IL is impossible to candidly deny
| that, taking State banks as a whole and
| Judging them by the results OF their
operations, their ability TO supply a
sound note currency under proper safe
| guards has a fair claim to public con-
! 6dence alongside that enjoyed by the
| national banks.
The conditions, the Journal says. or
which state banks should be permitted
| 10 issue ought, however, to be prescribed
| by Congress. and should be in ali respects
| the same as those provided for the ma
| tional banks.
Certainly, the observations Of the Jour
nal of Commerce and the facts 1t sets
forth should command. In view of the
absolute protection it would afford the
note holder weighty consideration, when
ever the time arrives in which the ques
ton Of currency and banking reform
shall be taken hold of with an earnest
| "a ho,aat n,,rnnse IN hiring about sucf