Year: 1878

There is a popular idea that the Ma
tional Banking system Is almost per-
feet in its operations. Secretary Sher-
man in his report gives the following
as the advantages possessed by this
system over the old State Bank system
advantages which he imagtnes can
only be possessed by National
system:
81. The security Of the biIlholder
from loss through the failure of the
bank.


"2. The rapidity and certainty of
the detection and prevention Of coun-
terfeiting, from the fact that the notes
are engraved, printed and redeemed
at the Treasury Department..
ts3. The frequent and careful ex-
animation of the banks, and the publica.
ton of the detailed statements of their
condition.


"4. Uniformity and free circulation
of the notes throughout the United
States, without respect to the place of
their issue.


as. The admirable provisions by
which failing banks are placed in liqui-
dation and their assets cheaply and
promptly applied to the payment of
creditors.'


1t will be observed at once that the
basis of the National bank note Is the
Federal bond and that when there is
no bond the system must fail or be
remodeied. To make the system q
permanent one therefore it is necessary
the National debt should be permanent.
But no one has ever held that the Ma
tional debt should be perpetuated in
order to perpetuate the National bank
system. Year by year the number Of
National bonds decreases and year by
year the amount of bank circulation
| will need to be increased. Surely that
cannot be a wise system which pre-
supposes a perpetual debt of large and
increasing amount. And when the time
comes, as it must come in very few
years, when the Government bonds
are less in amount than what should
be the paper circulation of the country,
upon what is an additional circulation
to be based? Clearly the Government
in its desire to become the bankers for
the people cannot be permitted to base
that additional circulation upon any
securities which may meet the favor
of each and any Congress.


AS to the danger of counterfeiting
our notes of State banks, it is as easy
to counterfeit those Of the National
banks whose paper is of an uniform
character and whose notes being circu.
lated far away from the point of issue
rarely come back to meet careful
inspection. A million OF dollars o.
counterfeit notes upon an Oregon bank
might be kept some time in circulation


in the Southern States before thei


worthless character Is discovered. Th,


danger from counterfeiting Nationa


notes appears to us far greater thar


that of counterfeitiag home note
H.


instant.


3 AS to the examination of tho bank
by Government inspectors, it is a wei


known fact that devices are resorted t,
, for showing clean books which almos


invariably mislead tho agents, ant
that the public know that n bank il


insolvent before the Government has
, an inkling of the fact.


It is held that the great value of The


National system consists in the fac


that the notes have u uniformity o


circulation, and are accepted anywhere
in the Union. There is doubtless some
convenience in such uniformity, bu
this convenience is at the expense O
} convertibility in coin. The Mobile


merchant holding the note of Cali


fornia or New Hampshire bank would


be unable, when resumption is entered


upon after January, to secure gold fol
it, if he should wish to do so promptly
; There can be no stability in a system
, which permits the distance OF a con
: tinent to lie between the note-holdel
. and the place of convertibility.
AS to the provisions for placing Ma
tional banks in liquidation and apply
ing their assets cheaply and promptly
to the payment of creditors, there ap


pears no reason why similar ant


equally as strong provisions cannot bt


applied to State banks.


None of the advantages suggested By
Secretary Sherman actually exist. The
State banking systems may possess
< every good quality of the National sys


tenn except perhaps the convenience o.


exchange-but even this Inconvenience
of want of uniformity is more thar
). offset in the local bank by the power
: full influence it lends to the business
. interest of its own locality. Instead o


aiding to concentrate all business a


the great moneyed centres of the East
it aids in building up local centres o


tradc.-INOJitc Register.


NELvIL SOULE.