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up by the bank in other bonds of the United States at their cash value, or in money.
Upon such transfer and delivery of United States bonds the comptroller shall deliver to the bank such quantity of circulating notes, prepared in the treasury department, of various denominations, from one to one thousand dollars, as shall be equal in amount to ninety per cent. of the market value of the bonds so pledged. These notes, all signed by the treasurer and register of the treasury, bear the imprint of the seal of the treasury, and express upon their face the promise of the bank to pay their amount on demand, to be attested by the signature of the president or vice-president, and cashier of the bank receiving them; and it is further provided that not more than one-sixth part of the notes furnished to an association shall be of a less denomination than five dollars, and after specie payments shall be resumed, no association shall he furnished with notes of a less denomination than five dollars.
Such notes, after being signed in such manner as to make them obligatory promissory notes, payable on demand at the place of business of the bank, may be issued and circulated as money, and they shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except for duties on imports, and shall also be receivable for all salaries and other debts of the United States, except interest on the public debt, and in redemption of the national currency, or United States notes. And no such association shall issue post notes, or any other notes, to circulate as money, than such as are prepared in the treasury and furnished for its issue.
Associations are restricted in the right to hold, purchase, or convey any real estate, other than such as may be necessary for the accommodation of its proper banking business, and such as may be mortgaged, conveyed, or purchased in security or satisfaction of debts ; nor can they hold any real estate so conveyed, mortgaged, or purchased, for a longer period than
The rate of interest and discount is not to exceed the legal rate of the state or territory where the bank is located, and in any state where the rate is not fixed by law, the association shall not charge more than seven per cent. per annum, under penalty of forfeiting the entire interest so charged, or double the amount to any party having paid such excessive interest.
Nineteen cities are named in which all associations not therein located, shall redeem their circulating notes at par, and each association in the cities named, shall designate an association in the city of New York, at which it will redeem its notes at par, the selection to be made in all cases with the approbation of the comptroller, of which public notice is to be given. Every association formed under this act, must receive at par, for any debt or demand, any and all bills or notes issued by any association existing by virtue of this act. Failure to redeem at the designated place of redemption, works a forfeiture of the banking privileges, and a receiver shall be appointed to close the business of the delinquent association.
The associations in the nineteen designated cities are required to have on hand at all times an amount of lawful money, at least equal to twenty-five per cent. of their circulating notes and deposits, and every other association is required to have on hand at least fifteen per cent. of its circulation and deposits.
Quarterly reports are required in a form prescribed by the comptroller, exhibiting in detail the resources and liabilities of each association before commencing business on the morning of the first Monday of the months of January, April, July, and October, and also monthly statements of the average amount of loans and discounts, specie, other lawful money of the United States, deposits, and circulation, and the amount due to the bank available for the redemption of its circulation at the designated place of redemption.
The expense of printing the circulating notes, and other expenses incurred in executing the provisions of the act, to be paid out of taxes and duties assessed upon the circulation of the association-each association to pay, in the months ofi January and July, a duty of one-half of one per cent. on the average amount of its notes in circulation, one-quarter of one per cent. each half-year upon the average amount of its deposits, and one-quarter of one per cent each half-year on the average amount of its capital stock beyond the amount invested in United States bonds.
The shares are taxable by the states as personal property, and the real estate held by the associations is taxable by states, counties and cities where located. The total amount of circulating notes to be issued under the act, shall not exceed three hundred millions of dollars.
Associations going into liquidation voluntarily, may, after
one year's public notice, pay into the treasury, in money, the amount of their outstanding circulating notes, and take up their pledged bonds—thereafter the treasury shall redeem and cancel such notes.
Associations failing to redeem their notes in lawful money on presentation at their places of business, or places of redemption, their notes may be protested for non-paynı ent. Thereupon, they shall not pay out any of their notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive money belonging to them, and deliver special deposits. The comptroller being satisfied of their failure to pay their circulating notes, shall, within thirty days, declare the pledged bonds forfeited, and give public notice to the holders of their notes to present them at the treasury for payment; and upon payment the comptroller shall cancel their equivalent value of the bonds. deficiency in the market value of such bonds, the government shall have a prior lien on the assets of the association ; and the comptroller in case of such depreciation shall sell the bonds at public auction in New York, and apply the proceeds. For further assurance of the comptroller as to the condition of these associations, he may at his pleasure appoint 'a visitor to examine and report to him upon all the matters embraced in the act establishing the national currency system. Any existing state bank may become a national association under the act, upon application of the holders of twothirds of its capital stock. The shares of such bank, after its organization under the Federal act, shall continue of the same amount as before conversion, and the existing officers shall continue until others are elected or appointed under the provisions of the act.
All associations under the act, when designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, except receipts from customs; and may be employed as financial agents of the government, and shall perform such duties as may be required of them as financial agents. All associations designated as depositaries shall receive at par all national currency bills, by whatever association issued, and paid to the government for internal revenue, loans or stocks.
It is easily seen in the provisions of this act, that its central idea is the establishment of one sound, uniform circulation, of equal value throughout the country, resting upon the foundation of national credit combined with private capital; intended to effect a transition from a currency heterogeneous, unequal and unsafe, to one uniform, equal and safe, providing an effectual safeguard, if effectual safeguard is possible, against depreciation, and affording complete protection against losses in discounts and exchanges-losses which, under the old system, amounted to probably half the nominal value of the currency issued under it in the last fifty years. The scheme takes no special care of depositors, or other dealers with the banks, but rather takes care that they shall have no power to lessen the ability of the banks to meet fully and promptly the obligations which they contract with the note-holders.
A revolution such as this, springing from an exigency of our great war for the preservation of the Union, will in the next half-century reimburse to the public wealth the whole cost of the strife of arms. The system has, besides, a force to bind the Union together in future, beyond all estimation in value. Every banking association having its bonds deposited in the treasury of the Federal Government, every individual who holds a dollar of the circulation secured by such deposit, and every man whose business success depends upon
the credit of that circulation, will be pledged thereby to the maintenance of the national unity. Whatever there is of cohesive power in a public debt, will thus be distributed upon the entire population, in corroboration of all other motives for universal loyalty. Incidental to these higher services, there is also provided by it the happiest adaptation of fiscal agencies that can be imagined in a country of such vast extent of territory, and variety of financial relations with the central government.
The vast range and value of the services provided for in the new system, are, of necessity, as yet, but inductions and expectations. It is responsible for none of the existing disorders of the currency, and its power to remedy them cannot be fairly or fully tested until it has exclusive possession of the field. The aggregate capital which it commands, and the total amount of its circulation, are vastly less than those of the state banks and the government currency, , which are still counterworking its agencies ; but it has already demonstrated its working power as a mere banking policy. The official reports of the comptroller of the currency, show the following facts :
The first national bank was organized in June, 1863. On the 18th of March, 1865, there were in operation, 908, with an aggregate capital of $202,844,486. The total circulation furnished by the bureau for their issues, was $104,750,540. Of the aggregate capital, three-fourths belongs to former state corporations converted into national associations.
These 908 national banks are located in twenty-seven states and territories—in every loyal region of the Union. Three hundred and twenty-four of them have been organized since the 25th of November, 1864, or in less than four months ; at least nine-tenths of these being conversions of state corporations.
The reluctance and resistance of the state banks began to give way in July, 1864. In October, immediately before the re-election of Mr. Lincoln, the result of the political canvass being foreseen, the Philadelphia banks commenced the change, and in November they were all converted. The larger part of the Boston banks yielded about the same time, and now the comptroller describes the applications of the state banks all over the country, as a rush that promises an immediate and universal adoption of the new policy.
The system was born of the rebellion ; it has grown in sympathy with, and in dependence upon, the growing success of the Federal arms. Under the auspices of our present able Secretary, it is certain to be matured with the recovered authority of the government of the Union. Mr. McCulloch is entitled to much more credit for the advantages accruing from our present excellent banking system, and the universal confidence with which it has been received, than the public is aware; for he is not a politician or office-seeker, but an unostentatious, thoughtful, business man, whose only care is his duty, and whom the study of years and ample practical experience have made well nigh perfect in the philosophy of currency.