Democratic Sentinel, Volume 10, Number 5, Rensselaer, Jasper County, 5 March 1886 — Phases of United States Banking. [ARTICLE]

Phases of United States Banking.

The banking law of 1791 established one organization only, the United States Bank, with a stock limited to $10,000,000. The present system, founded upon a number of different acts passed between 1863 and 1875, provides for a practically unlimited number of banks, and fixes the inside limit of capital at $50,000, SIOO,OOO, and $200,000, according to the population of the city where organized. In the old United States Bank, the Government took $2,000,000 of stock, and three-fourths of all private and corporate subscriptions were to be paid in United States bonds, the remaining one-fourth to be paid in coin; in the National banks the Government takes no stock, but guarantees each bank’s notes of issue, on condition that 111 per cent, of these notes is deposited in the United States Treasury in the form of Government bonds, as security. No part of the law of 1791 restricted the issue of the bank’s notes, this matter being left to the accepted prudence of the bank’s directors. As this prudence is not so fairly calculable a quantity at the present day, the question of security limits each bank’s circulation. The circulating notes of the Bank of the United States were made receivable in payment of all dues to the United States; the present law provides that National bank notes “shall be received by the Government in payment of all taxes and other dues, except duties on import -, and are payable for all debts or demands owing by the Government, except interest on the public debt, and in the redemption of the notes themselves. ” These are the salient points of contrast between the two systems, to which we may add the fact that the law limited the existence of the charter of the United States Bank to ten years, to be extended at the pleasure of Congress; while the National banks are made, if their solvency continues, permanent institutions. By no means all of the specifications of these laws are here quoted, as the circumstances under which they were framed are widely different. —Inter Ocean.