Year: 1878



 circulating notes without interest should be retained by the government, snd not granted to private corporations Any sound financial system would in that case requiBe the govern ment to retain enough specie in their vaults to redeem such notes as would be presented in the ordinary course of business; and, in case of extraordinary demands, that they should make immediate sales of interest bearing bonds with the proceeds of which to strengthen their reserve of coin. No civilized government has ever yet made such an experiment as this, so far as we know, and it might turn out one of those plausible theories which promise more than they perform, especially when we take into account the fact that the banks now pay more than five per cent, on their circulation by way of taxes. As relief to the present business depression, we imagine that the carrying into effect of Article III, of the platform of the Connecticut Greenback party, would have precisely the op- posite effect to that which they seem to antic- ipate. This article reads as follows:

 Article Hive call for the immediate re- peal of the so-called resumption act, and the national bank act, demanding the retirement at once of the national bank circulation, and substitution therefor of full legal tender paper money.

 The retirement of the national bank circula- tion would necessarily involve an entire change in the business of banking. Existing institu- would proceed to collect in their loans to re- tire their circulation, and to divide their bonds and surplus among their stockholders. No doubt many private banking institutions would arise but would not the inevitable result of the change be an increase of interest on negotiable paper2 AS it seems to us, both the banking corporation and the men who dc business with that corporation are benefited by the formers privilege of circulation. It is the man who never borrows money of bank who, if any body, has right to complain of it's privilege of circulation. It is the business men who need bank accommodation, who will suffer if the banker who loans them the money they require is cut off from his privilege of circula- tion. We may be sure that the banker will have his reasonable remuneration and the profit he has hitherto made out of the public through his privilege of circulation must then come out of the debtor by way of increased interest.

 If national banks were earning money at the enormous rate supposed by some, they could, indeed, bear reduction of profits. We see, however, that, on an average, they are not able to earn more than seven per cent, for di- vision among stockholders. A quarter of this comes from the surplus earAed in better times but seven per cent. on his stock is about allth stockholder can expect. On this stock he pays state and local taxes probably amounting on the average of two and one half per cent With only five and half per cent. net receipts from money invested in bank stock, it is evi- dent that the business is one with which further interference means destruction. Even in these dpll times, when capital is satisfied with small interest, it seldom goes into the business of banking. Free-banking, so loudly demanded at one time, brings few new banks. On the other hand, some have thrown up their char ters and divided up their net assets.

 The destruction of the national banking sys- tem, at period when the debtor is in great need of all the advantage It can give him, and when the sudden withdrawalo of credit, and col lection of mercantile paper could not but bring disaster upon the country, would seem to us a most ill advised measure. In this connection. we may be excused fer referring briefly to some of the advantages which the country has hith- erto derived, and is still deriving, from the best and safest banking system it has ever known.

 We must not forget in the first place, the greatest need from the money realized on the sale of it's bonds to the banks. Their whole capital was staked on the success of the gov ernment and, at the time most of them were organized, the finances of the government were in most perilous condition, and in the most urgent need of the help thus given them. The success of the Confectionery, or even the prOlongation of the war, would have led to na- tional bankruptcy, and the loss of every dollar invested by the banks in government bonds.

 The safety and convenience of national banking is in marked contrast with the results of the previous system of state-banking Then financial crash was intensified by an attend ant bank crash. The country was flooded with bank bills of varying value, or of no value at all, and the ignorant laborer was often swim dled out of his just dues by pretended payment in bank notes which those who were a little wiser fnanciers well knew to be worthless. HNha cnupH hopL Ae ~e Al.. country were at heavy discount out of their own limited range or ordinary circulation. All was confusion worse confounded Yet from all these added sources of loss and annoyance our excellent system of national banking has saved the country at time when all other val ues were undergoing incredible fluctuations. In all the evil years that have succeeded the crash of '73, the country has scarcely seen a single old-fashioned rush of victimized bill. holders of victimized depositors, and of vic timized stockholders, frantically striving to save something from the ruins of broken bank.

 Another great incidental advantage of our banking system is to be found in the fact that

 

 ital it invests in untaxable bonds This capi- tai pays taxes on it's par value to the amount of about two per cent to the government, and an average of two and one half per cent. local taxes is paid by the stockholder besides Let nssuppose that the banks are wound up, and their bonds divided among stockholders They are then no longer taxable. The nation at once loses it's seven millions now annually de- rived from taxation of banks, and the State. city and town. the nine millions and seven hundred thousand dollars they now receive from that source Even if these bonds change hands, their non-taxable quality follows them. In Connecticut, for instance, the abolition of the banking system would withdraw from the grand lists of it's respective towns, the sum of $27, 900, ,OOO-more than the total grand list of Itchield county. The nation might be bene- fitted, indeed, by certain reduction in it's in