Year: 1870

Extract from Gen. j. A. Garheld's


Mansfield Speech.





The Democratic Convention demands
the immediate abolition of the National
Banks, and the issue of Treasury notes
in place of the $500, 900, 900 Of National
Bank notes now outstanding. Let us
consider this reckless proposition. Do
the Democracy mean that there shall be
no banks in this country? that the United
States shall be the only modern nation
in which there are no institutions of
credit, whose soundness is in some legal
manner guaranteed to the people Or,
will they remand US to the wretched sys-
TEN of State banks from which the
National Currency act so happily reliev-
ed us ? If this be their purpose, the
scheme will find no favor among the
millions of our people who suffered un-
told losses under the old system, but
who have never lost a dollar by the fail
ure of National Bank.


So far as can be learned from its
terms, the resolution proposes no sub
/ stitute for the National Banks or their
circulation except a direct issue from the
Treasury of 5000, ,Ooo, 900 of greenbacks.
They will not only withdraw the circula-
| ton, but will abolish the banks also.
This proposition exhibits the blindest
ignorance of the whole subject of money
and credit, as related to business.


By far the largest proportion of all the
/ exchanges in this country-the pur-
chases and sales-are effected, not by
the use of paper or metallic currency,
but by checks, drafts, bills of exchange
and other forms of bank credit. In
England, it has been ascertained that
fully o5 per cent. of all her vast COM
mercial and business transactions are
carried on by these agencies, and only
| : per cent. by the actual use of currency.
The business of the New York Clear
ing House during the year 1860 amount
ed to more than thirty-seven billions,
but only little more than one billion Of
money was actually used in these trans
actions.


The bank is the modern institution
employed by all civilized nations to
facilitate the operations of trade and to
economic the use of money. 1t can no
more be dispensed with than the railroad
or telegraph.


Suppose that this policy were adopted
and the sixteen hundred banks which
now afford facilities for credit, deposit





were abolished, and that the Treasury
should issue greenbacks in place of the
bank notes Cancelled, to whom would
they be issued? To the creditors of the
Government, to the holders of bonds in
the great money centers, thus increasing
the glut in the cities and the striagency
in the country, and abandoning to the
tender mercies of private brokers and
money lenders all those who need credit
in the transaction of business.


GREENBAcKs VERSUS THE BANKS.


The issue of greenbacks would utter
ly fail to meet the necessities of business
which requires credit as well as currency.
There are still graver difficulties IN the
wav. Under the late decision of the
Supreme Court of the United States, not
one dollar of the new greenbacks would
be a legal tender for any debt existing at
the time of their issue. Indeed, the plain
inference to be drawn from the opinion
of the Court is that the whole issue would
be declared unconstitutional. Treasury
notes were made a legal tender only as
a measure of Overwhelming necessity to
meet the demands of war. Even those
Judges who dissent from the opinion Of
the Court, defend the issue Of the legal
tender notes only as war measure.
And yet the Democracy propose to
plunge the country into all the legal
difficulties which are sure to arise out of
a new issue.


The proposed issue would so depreci-
ate the value of the greenbacks now out
standing as greatly to derange business
and indefinitely postpone the return to
specie payments. As the banks are now
organized, the chief strain will fall upon
them when resumption takes place.
They are required to redeem their own
notes in greenbacks and must therefore
march abreast with the Government in
the approach to specie values. The
Democracy propose to abolish the
banks Immediately, and leave the Gov
eminent to carry the burden alone.
The matter of expense is also worthy
of consideration. Some people seem to
think that the abolition of the banks
would abolish or cancel the $3oo, 900, 900
| of bonds on which they are based, or
would at least cancel the interest on the
bonds. This is, of course, a mistake.
! The stockholders of the banks own the
bonds, and they would still own them
and draw interest on them the same af-
| ter as before the abolition of the banks.


The Constitution does not permit the
State or local authorities to take the
bonds as such nor is the principal Of
the bonds taxed by Congress. But the
| S7oo. ooo. 900 of bonds that constitute
| bank capital are taxed by the States in
| the form of bank stock, and Congress
taxes the banks directly in many ways.


During the year 1869 the banks paid
taxes as follows:


To the United o29 9S2
no has aaVTn al


Making total tax of.................-sl9oO oO2 6a3
Or four and a half per cent. on their
capital.


would be wholly lost to the nation and
to the States by the abolition of the
banks.


But. fellow citizens, this topic is too
! important to be dismissed without ex-
| animation in still another direction. 1t
the immediate repeal Of the National
| Ranking law would cause no revulsioR
in the business of the country if there
| would be no loss of taxes by it if there
were no constitutional objection to an
/ additional issue of 5000, 5000 OF legal
tender notes, and no violation OF phght-
/ ed faith in it / should still insist that
i this proposal Of the Democracy Is most
unwise, and its adoption would be eX'
tremely dangerous.


II would be unwise, because currency
of Treasury notes has no power to ad-
ant itself to the wants of trade, which
vary from year to year, and from month
to month in the same year. An amount
of currency amply sufficient for the win
ter and spring might be wholly INSULT
Gent for moving the fall crops. Any


fixed amount might be insufficient at one
time, and redundant at another On the
contrary. the currency and credits afford
ed by the National Banks are regulated
} bv the wants of trade, and increase ol
! diminish in amount according to the
: fluctuations of business. Its adoption
would be dangerous in the highes
degree, because of the great temptation
, it would offer to Congress and tbs
President to increase the volume Of cur
: rency in the place of levying taxes. Sup


pose that just on the eve Of an i'm


portant election, an administration
6nds A LARGE deficiency Of revenue. and