Year: 1870

mittee After two or three months OF association somo
the sharp of the members opinions got worn
of by menal friction and they began 10 realize the ne
cessty OF reporting bill to meet Of the acknowl
edged and pressing wants OF the country and the Treas
The urgent demand OF the West and South for an
equitable distribution OF National bank currency and
banking facilities claimed their attention The fact that
NewEngand with but 3,OOoO0 population, has one
third OF all the bank circulation authorized by law while
other States have almost none, an injustice whoh
could not be longer ignored The Western ana southern
States wanted the banks in order not only to get more
currency aoat in that section but for the advantages
they offered to business. The Committee were also I'M
pressed with the strong opposition gathering sehgth III
all parts OF the country the monopoly feature OF inc
present National banking system and at the same time
saw the great difficulties of organizing any safe system
Of free banking without the basis Of specie payments


There were other important matters that ineVitaoy
came up in connection with any bill anecIins 'no cur
rency and chief among these was the fuhdig quc''o
II new banks were be established then lower r'e Vi
than al, per cent must be fixed for the bonds or
n new obstacle would be created to funding the deDt
and IL these bonds to bear but four ana our anu
half per cent then the bonds OF the old banks oueh'


ly TO DO replaced by bonds bearing the same anu
il this were done an important beginning Wond DC auo
toward funding the whole debt. Then the treasury
wanted to get rid OF the 500oOo OF outstanding nreo
per cent certificates which due upon presentation
and constitute call loan liable to be preciptaed upon
the Treasury for payment at any time when these pay
ments would most embarrass its operations Ihese teo
per cents are nearly all held by NewIork DaKs as re
serves in lieu of geenbacks which enables them 10 ara"
interest on their reserves was never intended by tho
banking law and thus enjoy great advantage over the
country banks who were not fortunate enough to get
hold OF the three per cents.


The Committee have been able to harmonze 30 Iar as
TO meet the chief points above stated They found that
tho total deficiency of National bank circulation in tho
States which have less than their quota to be s95OO
and they therefore chose this figure the limit OF the
currency be issued TO old banks in such States
Conforming to the necessity they under OF steering
carefully between contraction and imitation, with no
leaning toward either sde they have provided in their
bill for the redemption and cancelng OF the three per
cents fast the currency is issued, and after ali
these called In the greenback are to be Cancelled to
the of per cent Of the currency issued excess
Of the three per cents supposng the whole se6ooo OF
National bank notes TO be issued G 100000 Of greenbacks
would be Cancelled This 80 per cent provision was In
sisted by the Observation-Disclosures who urged that the
amount OF geenbacks Cancelled should be 20 per cent
less than the currency issued balance the greenback
OF 20 per cent which the new banks would De
vaults.


All the new currency ia To be issued the basis Of
u per cent bonds which must be purchased at par IN
coin its equivalent The ratio between the currency
issued and the bonds deposited is to be the same as now
required OF the old banks and the new bonds are 10 De-
like the old Ones exempt from taxation As an induce
for banking under the SYSTEM an abatement OF
onehaf OF the per cent circulation is to be made


At this point in the bill the question OF what should be
done with the old banks necessarily came up The Con-
mtce did not think IL lust TO cOerce them into suDst
tutng the bonds for the 6per cents before should
be demonstrated that banking could be done successfully
on bonds with interest low 4t per cent. They,
therefore, agreed that the old banks should not be dis
turbed until 60 per cent OF the new currency should 9e
taken up under the provisions OF their bill When TINS
is done they provide measures to force the OLD banks 10
accept the bonds have their business wound up:


In order to answer the demand for free banking the
Committee have section in their bill authorizing the
any banking association issue TO them notes to the
amount of so per cent of the par value OF the bonds
banks keep in coin OF 25 per cent OF its cir
culation The opponents of specie payments Oh the
Committee aSsened 10 this part of the bill In the belief
that will he imperative. and that banks will be or
ganzed under It, Gen Garfield, however, considers 1t
of great importance, the commencement OF the adoI
ton of specie payments by al bank ana believes tha1
will at once go into effect on the Pacie Coast e a5o
banks will be established al NewOreans and Charleston
where large share of the cotton business Is done In


have given above the main features Of the Currency
bill Gen. Garfield will probably be willing 10 MAKE ~
harmonic with any general funding Du tnat ne ways
and Means Committee may report ana as ms D covers E
before that Committee except two sections Is pos
slDle tht Gen ochehck VIII report noso % os
whatever his Committee may agree upon IN pace OIL
them, amendment 10 Gen. Gartelds Dill, when IN
that would include everything likely TO be got
through this Congress the subjects Of banking curren-
cy, and the funding of the debt. ~ ,,


The leading objection TO the bill and 5 an objection
which urged by Gen. Garfield in his Committee and
overrued by them that the increase of banks VIII
increasing the credits, which the business Of the new
banks will give to the people The currency WILL there
FORE be increased O the amount of the checks which the
creation OF these banks will put in circulation to DO
passed from hand 10 hand in lieu OF money Many or
the ablest financial writers maintain that bank deposits
are actually currency, and Gen. Garfield holding this TO
be true the MAN, believes that to increase banks in
the whole amount of bank deposits in the coun
try, and thus initiates the circulating medium.


second objection likely 10 be urged in the House Ia
that the abatement Of Onehaf OF per cent OF the tax
on the circulation OF the banks is equivalent To adj
ding nearly that amount To the Interest on their bonds
u
figure than ia usually fixed by public opinion Tor the Ill
terest the funded debt