FINANCES OF THE UNITED STATES. 



287 



rate of exchange from the rate of one-tenth of one 

 per cent., now existing at most periods of the year 

 between the different cities of the Union, to from 

 one-half per cent, to one per cent., thus restoring, 

 to a considerable degree, the condition of the ex- 

 change at the time of the inauguration of the na- 

 tional banking system, and causing an annual loss 

 to the people of millions of dollars. Such a system 

 would, however, undoubtedly result in the return 

 of the notes of the national banks at certain sea- 

 sons of the year, when they were not needed, to the 

 vaults of the country banks, to be paid out when 

 the demand for currency increased. Such a system 

 would also give, what is exceedingly desirable at 

 the present time, elasticity to the currency. 



The profit upon the circulation of national banks 

 organized in the Southern and Western States dur- 

 ing the past year did not much exceed one per cent, 

 for the country banks, and was less than one-half 

 per cent, in the redemption cities. Under such a 

 condition of things, with so small a margin of profit 

 to be derived from the issue of circulating notes, 

 there would be little demand for circulation, and 

 consequently but little danger in throwing the doors 

 wide open for the issue of circulating notes to any 

 association properly organized that might desire such 

 circulation ; but, with the reduction of the value of 

 the bonds, and the approximation of the value of 

 the bank-note to the value of specie, the profit would 

 increase, and with the increase of profit the demand 

 for the issue of additional bank-notes would also 



increase ; BO that under such a system the issue of 

 bank-notes would have a continual tendency to 

 lessen the value of the paper dollar, and prevent its 

 approximation to the value of the gold dollar, and 

 all ideas of specie payment might forever be aban- 

 doned. 



In order to insure the prompt redemption of the 

 national bank-notes, the amount issued must be so 

 much increased that the notes will be. say, at one- 

 eighth of one per cent, discount, and this would 

 probably not be accomplished until an addition 

 should be made to the present circulation of one 

 hundred millions of dollars. The same result would 

 follow from the reduction of the volume of legal- 

 tender notes simultaneously with the increase of the 

 issues of the bank-notes ; out Congress has so fre- 

 quently refused to diminish the amount of legal- 

 tender notes, that, in the opinion of the Control- 

 ler, any general system of free banking, accompanied 

 with redemption, must be postponed until the re- 

 sumption of specie payment. 



The following table exhibits the resources 

 and liabilities of the national banks of New 

 York and the United States at the close of 

 business, September 12, 1873, the returns from 

 New York City, from other redemption cities, 

 and from the remaining banks, being given 

 separately, together with the aggregate re- 

 sources and liabilities of all the banks: 



THE NATIONAL BANKS OP NEW TOEK CITY. 

 Their Comparative Liafnlitics and Assttt from 1869 to 1873, Five Yean. 



