Page:A History of Banking in the United States.djvu/491

 The charters of the national banks begn to run out in 1883 and 1884. In anticipation of this, the act of July 12, 1882, provided for their extension for another twenty years. The minimum amount of bonds requisite to remain in the national bank system, to be on deposit for circulation, was reduced to one-quarter of the capital, for banks with less than $150,000 capital, the minimum capital remaining at $50,000. The reduction of circulation under this law was limited to $3 millions per month, and a bank which had reduced could not increase again within six months.

As the United States bonds increased in value, the profits of the circulation of a national bank declined. When the charters were renewed, the question of continuing the system was raised, and there was no little hostility to it manifested. One of the chief subjects of complaint was that the national banks get double interest on their capital. Every bank of issue gets double interest on its capital, minus such deductions as must be taken into account for taxes, specie reserve, and so on. If the bonds must be bought at a premium, and only 90 cents on $1 of their par value can be obtained in circulation, the deductions are so important that the special advantages of being in the national system are very slight.

The greatest amount of national bank notes outstanding at the end of any fiscal year was, in 1882, $358.7 millions. In spite of the formation of new banks, the voluntary withdrawals reduced the national currency, in 1891, to $167.5 millions. This is in a total net circulation, in the hands of the people, as current cash, of $800 or $900 millions. As these banks went out of existence; or out of the system, or reduced their circulation, the amount of greenbacks deposited by them in the Treasury to retire their circulation, as it should appear at the redemption bureau, increased until, in 1887, at its maximum, it amounted to $97.9 millions. According to the current view, this was so much money withdrawn from circulation, and by the act of July 14, 1890, it was turned into the available funds of the Treasury, and the Treasury became liable for the redemption of a corresponding amount of notes.

Clearing house certificates were again issued at the time of the Baring failure in 1890. Between November 11th of that year and February 7th following, the amount issued at New York was $15.2 millions; at Philadelphia, $8.8 millions; at Boston, $5 millions.

The democratic platform of 1892 favored a repeal of the ten per cent. tax on the State bank circulation. In June, 1894, a bill was introduced into the House of Representatives to remit the ten per cent. tax on State bank notes which had been used between August 1st and October 15th in the commercial crisis of 1893. An amendment was proposed repealing the ten per cent. tax altogether. It was lost, 172 to 102, and the bill was defeated.

The financial storm of 1893 is properly called a panic. By various steps taken in the way of concession to silver the currency had once more been made excessive, independent in amount of the demands of trade, and