Page:Speeches, correspondence and political papers of Carl Schurz, Volume 2.djvu/518

States bonds held is rather small, and in the South still smaller, and the bonds which are there are mostly held as fixed investments. The persons who want to establish national banks must therefore buy their bonds. They must buy them where bonds are sold, that is in the Eastern markets; and they must buy their bonds with money. Where do they get that money? They take that money out of their home circulation, and the money so taken out of their home circulation they carry to New York. Now see how this operates. For a $1000 bond they have to buy they pay, as 5 per cent. bonds now stand, about $1120 in currency. That sum of $1120 is withdrawn from their home circulation and is added to that of New York. Then they take the $1000 bond so purchased to Washington, and for that $1000 bond they get $900 in bank currency, and the $900 they carry home. Then they lock up 15 or 25 per cent. on the $900, as the reserve prescribed by law, in their bank vaults, as they may be country or city banks. For the $1120 carried to New York the country bank then puts out $865 and the city bank $675 to accommodate their customers with loans and discounts. These loans and discounts may indeed come back to the bank every thirty or sixty or ninety days. But does not the Senator from Indiana see, is there anybody so blind as not to see, that a much greater amount had gone East before the Western or Southern bank could make any loans and discounts to its customers with its national-bank circulation? Is it not as clear as sunlight that for every $865 issued by a country bank, or every $675 issued by a city bank, $1120 had gone to New York before? Is it not clear that the amount of loanable money, instead of being increased, has been diminished 30 or 40 per cent. by the operation? It is true that by the establishment of national banks here and there some greater banking facilities may be offered.