St. Johns review. (Saint Johns, Or.) 1904-current, 1913-11-28

] llOil.
At a time when Government
Bonds sold below par law was
passed called the National Bank
act. This law compelled all
banks that wanted to become
National Banks to invest a Ger.
tain percentage of their capital
in y. S. two per cent bonds and
receive bank notes in exchange.
Immediately the price of these
bonds went up, for a market was
created. and ever since the banks
have had to buy those bonds at
a premium, which, of course, is
a total loss to the buying bank.
The Government taxes the
bank for outstanding bank notes,
or circulation; the bank has to
keep a redemption fund with the
! u. S. Treasurer, for Which it
receives no interest; it bears the
cost of shipping and insurance,
as well as other minor expenses,
and it cannot count those notes
into its legal reserve. This ar
tihcial market has saved the
Government millions of dollars
annually in interest. for it could
not float such an immense issue
at two per cent, but would have
to pay three per cent.
Now as TO the loaning Of this
money: if, for example, the
bank with which | am connected
buys say $50, 900 worth of Gov
ernment Bonds, il has TO pay
gold for it, as we did, also a
premium which we charged off
our books. Does any one here
think that we could not loan this
$50, 600 as advantageOusly as we
can the same amount, after we
converted il into bank notes?
Does any one here think that
there are very many banks in
the country that could afford TO
invest in two per cent Govern
ment Bonds and keep them in
their vaults. and then in case
they needed more money, go
to the Government and receive
bank notes for them2
Here it is where the bond Sc.
cured currency fails TO perform
its proper function. How many
banks can afford to make such
investments when they pay 3 or
4 per cent. and i'm some i'm
stances, higher on deposits. cover
all expenses and taxes in operat-
ing the banks, which are by no
means small. and still earn "A re-
turn on their capital invested?.
What sort of a man is he who
simply plays ball with figures
and never minds the facts. so
long as he can create a prejudice
in the minds Of the people giving
himself out as savior of the peo.
pie and making political capital
out OF the transaction?
The Bank Of England. as we'll
as the Reichs Bank of Germany
issue their own bank notes. based
on commercial paper and gold |
reserves, and | do not think YOU
ever heard that their notes were
not considered good.
There are also people who pre-.
diet that as soon as the proposed1
currency bill is n law that there |
will be plenty of money for all |
and one can have il merely for
the asking. That there will be |
money To take care of !
the legitimate business of the |
country | believe. but the spec.
ulator and promoter will find il !
harder than ever 10 have the
banks finance their schemes. for
every bank will endeavor to carry !
assets of such nature which will
POSSESS the quality of rediscount
ability. This is as il should be.
No commercial bank should |
end itself TO help speculative
purposes or take over permanent |
Investments. as il is principally !
he peoples money over which !,
[ is custodian and trustee, and /
'Or which il must be ready 10
make AN accounting and pay
nent at any time.
] frankly admit that there are {
,ankers who have misused the !,
,reat trust placed i'm them. and !
Is Il general rule il has not taken I
he people of a community very
Dng TO ascertain Who they are. d
But when speak of bankers,
mean the average banker oper-
ting ON legitimate lines all over r
he United States. and who are ,
equitable, and these men should
ot be held accountable for the
ms of the few. You will find
nat bankers are as a rule trust
'orthy men, and that the prac- G
ce of community is To trust
lem largely without implication.
think they are trusted more
nan any other class of business .
len. The bankers always realize y
nat i'm order To have their banks
rosper and i'm good condition,
ne people must prosper, and
nat no panic is a money maker
N the bankers or the people. q
Congress should not consider \
llitical advantages in this legis- -
tion. but base il on sound and
'onomic principles, which are
eater than party platforms,