They take deposits, and they make discounts; but the value of all the facilities thus offered will not make up for the diminution which the home circulation, the amount of loanable money, has actually suffered in that locality by the process. Where, then, is the increased accommodation of the business public? Nowhere; but the result is just the reverse.
But, sir, in the establishment of a great many Western and Southern banks things have been done which show the effect upon the home circulation still more clearly. Banks have been established, not upon money taken out of their home circulation, but upon credit. New York bankers (and I have this from one of them) were applied to by parties from the West to advance the money for purchasing the bonds necessary for the establishment of a national bank in the West. The New York banker bought the bonds and charged a commission and interest. Then he deposited the bonds in the Treasury at Washington, and the national-bank currency was issued thereon. But that currency did not go West at all. The New York banker kept it as part payment for his advances and commission in purchasing the bonds for the Western parties, and the latter had to cover the balance by drawing what money they could from the West. Can anybody tell me how the amount of loanable money was increased by this operation in that Western locality where the bank was established? Not even the currency went there, but the amount covering the difference between the currency and the bonds was drawn from there, being thus a clear deduction from the home circulation. Everybody acquainted with these things knows that this has been the case in a great many instances.
But the Senator from Indiana tells us that many applications are made for permission to establish national banks in the West and South. That is probably true.
