Year: 1869

w c regard the NaJlOnal BANKING
System as decided improvement up
on that of state banks, which it has
for the most part superseded. It's
note circulation is both current aud
of uniform value IN all sections Of the
country-attributes that were never
true, and never could be true, of the
issues of state banks. The redemp-
tion of this circulation is amply Sc
scred BY the deposit of the United
States bonds in the National Treas
ury. The laws regulating the admin
istration of the national banks. If
faithfully executed, are abundantly
sufficient to guard them against any


malfeasance or abuse of their powers.


Upon the resumption of specie pay
nent and the coin redemption of the
United States notes, they will need no
modification, except in the character
of their legal reserve, to adapt them
10 the new state OF things.


There Is, however clause in the
twenty second section OF the Nation


al Banking Law which is not at all
material to the system. and which, in
our judgment, ought TO be promptly
J repealed We allude TO the clause
/ which limits the amount of the notes
/ to be issued to the sum of three hun
dred millions Of dollars. This limita-
tion fixes au absolute maximum of
bank issues beyond which they can
i not extend, however urgent may be
/ the public demand for them. The


maximum being reached, then bark


ing under this restriction becomes a


monopoly in favor Of existing institu-


tions by excluding the organization of


any others. The circulation Is made
stiff and inelastic by having no power
| Of increase. to meet the increasing


wants of the people. Much better, in
| our Judgment, Wo1ld ii be to leave the


simple question of amount to the or
/ binary rules OF business, and throw


open banking &c the free competition
/ of all parties who choose TO engage in
| it. Let the Government provide by
adequate guarantees for the Teoemp-
I tIon Of bank Issues Jet It carefully
watch over the system, to see that it
moves within the rules and conditions
prescribed, by law and then it will
have done all that it can wisely do.


The people will then take care of the
! banking business, and expand it or
contract it according to their wants as
practically ascertained IF more banks
are needed. then more will be organ
/ lied and il they are not needed, then


the effort artificially to force them in


to public existence beyond the public
demand will be very sure to correct
itself by their unprOfitableness. The


basis being right, then free trade In


banking. under the general law ofsup-
ply and demand, is elesrly the true


theory. It Is the only theory that can


escape the evils of a monopoly, aud


measure the volume of the note eiCcu-


lation by the wants Of the people.


It is, moreover, a well-known fact


that the New England and Middle


States have a disproporhOnate number
Il of national banks, as compared with


the rest of the country. The South


ern and Western States need more


bank circulation located among them
! selves. There is no excess Of it any


where, and in some parts of the coun-
try a great deficiency. Here is an evil
: that can be corrected only by "A redis
tribution of the circulation, or the
. creation gilmore national banks where
they are urgently needed. The New
England and Middle States naturally
J object to the former of these reme-


dies. They claim all that they have,
and would be willing to have more.


The Southern and Western States


press their claim for larger supply Of
, bank note circulation and that
! too, with great justice. This supply
they can have, as the result of their
: own capital and enterprise, the mo-
ment that Congress shall see fit to re


peal the existing Limitation, and thus
permit them to organize new banks


There is practical injustice in virtu-
ally legis lating the state bank system
[ out of existence, and then so binding
, up the national system that it fails to


meet the wants of the entire country
The proper remedy, correct in prin-


ciple and entirely safe IN practice, for
9 the evil to which VIC have referred is
r to place the national bank system on


the free basis bv repeating The limiting
l clause Banks viii then spring up az
, they are wanted. and a0bere they are
: wanted, under the instincts Of capital
: and at the call of the public require.
f ments The people will be their oWr


judges Of what they need. The vol.
: ume of the currency will spontaneous
l ly suit itself to this need. We ear
!. nestly commend this subject to Con


gress, and call upon it to give the
: country a system of free banking, with


out any cast-iron machinery to limit
L its utility.