1 Proceedings of the American Bankers' Association, 1879, p.

The banks themselves are not specially interested in the proposition to repeal the act of 1864. The national law gives them no such opportunities as they enjoyed under their State charters. The question is, been tried by the stress of war, and by the crisis of 1873, and have been found to be better planned for service than any mechanism of credit heretofore tested in this country.

National Banks Of The United States Appear Above, As Follows

It will be seen that the capital of the 2053 American banks is about equal to the capital of the 3417 British banks, while the liabilities of the British banks are considerably more than double the liabilities of the national banks. The ratio of the aggregate capital and reserve to liabilities is 55 per cent. in this country and 23 per cent. in Great Britain.

The unexampled solidity of the national banks attracted the intelligent attention of the London Economist as long ago as 1860. After a thorough examination of the then comparatively new system, the Economist said, February 24,1866 :

We find that the banks of America are in a very sound state; we find that they have a larger available reserve against their liabilities than any European banks; wo find that they depend far more on their own capital, which cannot be taken from them, than any European banks. In former times-in 1837 and 1857-the State banks of America kept very small reserves, and failed by wholesale; but this is not the case with the new national banks. If America were now subjected to the difficulties of 1837 or 1857, probably her banks would be able to resist the strain. Of course America must pass through the trying change from war to peace; she ought to pass through the trying change from an inconvertible currency to a convertible. But we now see that in both changes she will be assisted by a sound system of banking, and therefore we need be much less fearful of a momentous crash than if, as in former periods of danger and difficulty, her central institutions of credit had been, even when not insolvent, at least grossly deficient in available resources.

The trying change from an inconvertible to a convertible currency has now been accomplished. "Resumption was made certain on the 1st clay of January, 1879," says Comptroller Knox,"by the cheerful co-operation of the banks."1 Their own notes are redeemable in coin the moment the legal tenders are withdrawn from circulation. In the execution of every measure intended to restore the national credit and lighten the public burdens, the government has been able to rely securely upon the intelligent and powerful aid of the national banks. These advantages have been secured to the public under a law which is not irksome to prudent, well - managed banks, but has proved exceedingly vexatious to those associations which would prefer to do a speculative business with insufficient capital, no reserves to speak of, and an excessive circulation. The sole privilege which the law grants in compensation for its many restrictions, is the right to issue circulating notes. That the banks value this privilege is shown by the fact that they generally abandoned the State system as soon as a prohibitive tax was laid upon the notes authorized by State law. That they do not value it inordinately is also plain; for,although their capital entitles them to over $400,000,000 of notes, and they hold nearly bonds enough to secure that amount of circulation, they have called for only about $300,000,000.

1 Proceedings of the American Bankers' Association, 1879, p.

The banks themselves are not specially interested in the proposition to repeal the act of 1864. The national law gives them no such opportunities as they enjoyed under their State charters. The question is, as it should be, whether the public will be better served by institutions held to the strictest accountability, subject in all their dealings to the control of the national government, or by associations released from all responsibility toward a government from which they receive no privileges. The case is not complicated. It is admitted that the composite system of bank and government paper, established during the war of 1861, cannot long endure. It is proposed to adopt the government paper alone. That would be to return to the continental currency and the colonial currencies. It is proposed to repeal the tax on State banknotes. That would be to revive the system which failed in the war of 1812 and in the crises of 1819,1837,and 1857. There is but one course left-to adopt as a permanent tern the national banks, which have been tried by the stress of war, and by the crisis of 1873, and have been found to be better planned for service than any mechanism of credit heretofore tested in this country.