Year: 1868

| character of monopoly from the whole sys'
TEN by repeating the clause limiting its circu-
| lation to the amount now outstanding? Before


the banks could issue S7O0,OOO,OOO in currency
! so as 20 take the place of the greenbacks, they
would be required to deposit bonds to the
amount of $1,000 100000 or one half the interest
paying portion of the National debt. BY con-
verting such quantity of bonds from an idle
nse in which they pay no taxes into the capi-
tai of a tax paying business, we may infer that
the taxes they would pay would equal those
paid by our present National Banks, and would
| reduce the net interest on their bonds III Ike
manner to two per cent. This would be cleaI
saving of $400O0,000, or a net saving over the
greenback policy of S39OOO,OOO. The beneficial
effects of thus expanding the National Banking
system and utilizing the public debt would be
so manifest that our national fnanclers would
look around TO see where rs large share as
possible of the National bonds might be SINH
larly utilized. Not only our banks, but our in
surance and trust companies, seek to inspire
public confidence by depositing securities OF
some kind, and provision might be made for
basng these also on national bonds, thereby
absorbing $JOO,OO0,OOO more, and ef1ecting a
saving of nearly $2O,O0OOOO more in annual in
terest Moreover, this policy of utilizing the
public debt would merge its original quality of
debt in it's more important function OF business
capital, just as the greenbacks, by being made
legal tender, merged their original character OF
forced loan in their more extended and use
full function of currency. Such result would
greatly enhance the gold value of our bonds,
and enable US to carry them at a much lower
rate OF interest, and gradually to own them all
in this country, thereby stopping the drain OF
foreign interest For q creditor would prefer
to loan at three per cent on bond which is
on its way to par, rather than at six per cent.
on one whose principal is stationary or declln-
ing in gold value. In every way, therefore, the
Free National Banking system tends to save
five dollars of interest where the greenback
policy, conceding the utmost claims of Its
friends, would save one.


ILL., But in the end the greenback system
would not work as its advocates expect. For
we must have some banks of issue and circu-
lation. They are as much a necessity of mod
ern civilization and of American finance as
railroads, and far more so than gold. We
have passed through the greatest war
known in history substantially without
| gold but we could not effect the exchanges of
property needed to preserve the people OF the
| United States from famine for week without


paper money. And some system of redemption
and circulation is as essential to paper money


as the circulation and oxydaton of the blood
are to human life. The greenbacks are not a
banking system. They are the notes OF a
| single bank, viz: the United States Treasury
and the fact that they are receivable for taxes
| and payable for most of the expenses OF the
| Governments is a sort of redemption But to
| give them rapid and healthy circulation, AMI
| to make them expand and contract III volume


with the demands Of business, the Government


would need to issue them as bank OF dis


count. in exchange for the notes of private


parties The National Banks can perform
! this function. The Government cannot. Were


the National Banking system destroyed, and
| the country flooded with an unsecured, IRE
| deemable, stagnant mass of Government notes


the people would have to revive the banks oi
| discount, either by returning to the National
/ or to the State banks. If we return to the
| State banks. they would be based, like the
| National on bonds. IL on State or individual
bonds, they would be less secure than If on
| Government bonds. If based on Government
! bonds, the United States would pay them the


same rate of interest it now pays, and the last


vestige of the supposed saving by the green


back policy would thus disappear.


w. Now that our National Government has


become the largest operator in our money mar


ket it is indispensable that the control of oui


banking system should be national, our currency


national, and, so soon as possible, redeemabl'


in gold The National Banking system pre-


sents nucleus Of the right sort. 1t needs


amendment and expansion. But its abolition


would be great blunder.