Twice-a-week plain dealer. (Cresco, Howard County, Iowa) 1895-1913, 1897-01-01
Bank Currency Mania.

troller Eckels' recent report, the New
York Suns financial article has some
greenback ammunition decidedly eff
fective, and which coming from the
New York quarter is mighty accept
able in the west. The banks new
currency demands are pronounced a
manila. Because in war times, in our
enormous initiation, when many even
doubted that the government would
endure, its currency deprecated, the
banks insist it is liable at all times to
do so; because once enjoying the I'M
lawful monopoly of issue of paper
money, they must have it again; be-
cause of the false assertion that the
present administration was obliged
to issue $262, 100000 of bonds to main
tain the greenbacks, they say it will
have to be done annually while the
legal tenders remain. The truth is
that these bonds were sold to pay
governmental expenses and deficien-
cies from inadequate revenues. Saws
the Sun:
1.-The banks audaciously assert that
institutions which have suspended
payment four times in twelve years,
and which are at liberty at any time
to tender silver dollars to their
creditors in payment of their obliga-
tions are more trustworthy than
a government which. during the
same period invariably paid all it's
obligations in gold, and that the
credit of many thousands of such in.
stitutions, scattered over the country
and not bound together by any or
ganization or sense of mutual obi
cation, is better than that of one
which represents the whole nation,
and which has the whole nations
wealth at its command. A Govern
ment bond bearing interest they con-
cede to be the safest obligation in
world. but one bearing no interest is,
they declare, worth less than if it
were issued by any wildcat bank
Comptroller Eckels figured it out
that the gov eminent had lost by not
funding the legal tenders into per
cent bonds, on resumption day, Jan,
1, 10, the sum of $3.50, 9s4, 900, being
the difference between principal and
interest on the s346, 6s1 900 of old
greenbacks and that of bonds sold
for redemption purposes and for the
gold issue. But the Sun shows the
utter impracticability of conversion
of those legal tenders at that time or
in single day. Says the Sun:
AT that date all the available gold
in this country had been swept into
the treasury by the bond sales of 1877
and 1878, and an attempt to draw
even $10O,0O0,00O more of the metal
from Europe would have been
peremptorily stopped by action of
the great European banks. The legal
tenders would, therefore, themselves
have had to be surrendered in ex-
change for bonds, and what effect on
the country's finances this contraction
would have had need not be des-
cribed. 1t would have put interest
up to fabulous rates and ended in fl
nancial chaos"
But Eckel's account is not correct.
He has charged interest on the gold
for which the bonds were sold and
thus reckoned it twice over, first on
the bonds, then on the gold. This
error reduces the cost of the green
backs since 1879, to $47,OOO,OOO in
terest on the $95,0OO,OOO bonds sold
for the redemption fund; crediting
the interest saved on the whole vol
ume, and the account stands that the
greenbacks produce balance in
their own favor of $347, 466, $40 or
more than 100 per cont.
For the banks, Eckels figured out
that they had saved the government
about $3.50, 900 year, or $157 ,4a9, s4s
in the thirty-three years since the
national banks Were chartered. This
figures taxes paid at a large annual
sum when they long since practically
ceased paying taxes; also $21, ZOO, 900
for services in handling government
deposits. The truth is that the en-
tire amount of the taxes paid by the
national banks is less than $4,000, 600
per year, and that they collect on the
50 per cent of the bonds, against
which is issued to them an equal
amount of circulation, $4,000, 900 a
year in interest, giving to them in
stead of the government, profit of
$6,00O,000 a year, a pretty healthy
subsidy.
But the practical question is as
great as that of economy. The Sun
says:
1.-THE national banks alone hold
$120, 100000 of the $500, 900, 900 as part
OF their reserves, and the state banks
$40, 100000 to $5O,OOO,0 900 more, all OF
which, if retired would have to be
replaced with gold if violent con-
traction of loans and CONSEQUENT
panic were to be prevented. That
any such amount of gold could be
obtained by selling q per cent bonds
is not to be supposed. The rate
would have to be not less than pc,
cent and very probably would be ;
per cent. This rate would govern
the entire loan SO that for the priv