5. #Notes of National Banks.#—This is the one form of money that is not issued directly by the Federal government, but through the agency of what is called our "National Banking System," which may be thus described: A national bank can be organized by any number of men, provided the capital stock of the bank is at least $100,000. One-third of the capital must then be invested in government bonds and deposited in the United States Treasury. The bank may then issue notes to the extent of 90 per cent, of such deposit. Such notes are thus amply secured by the deposits with the government. The government guarantees their payment, and so they circulate as well as the certificates issued directly by the government. Thus a great deal of the paper money in circulation is issued by the national banks, which must, on demand, be redeemed with coin, and, in case of failure of the banks, are paid by the government, which reimburses itself from the deposits. A bank-note differs from a Treasury note in two particulars. The Treasury note or "greenback" is a promise of the government, and is legal-tender in payment of all private debts; the bank-note is the promise of a private company, and is not legal-tender. A bank-note is said to be paid when the bank gives a greenback or coin for it. A greenback is said to be paid or redeemed when the government gives gold for it.
The following figures, taken from the report of the Secretary of the Treasury for 1889, give the amounts of the various sorts of money described in the foregoing, which were then in the Treasury, in the banks, and in the hands of the people:
Gold coin and gold bullion, $680,063,505
Silver coin and silver bullion, 343,947,093
U.S. Treasury notes, 346,681,000
National Bank-notes, 211,378,963
Subsidiary coins, 76,601,836
It will be noticed that gold and silver certificates are not included, for, as explained, they merely represent an equal amount of coin or bullion on deposit.
The total amount of money is thus approximately $1,660,000,000, which, divided by the total population, gives about $27 per capita. It should be borne in mind in connection with these figures that other devices, such as checks, drafts, bills of exchange, and other forms of credit, are used side by side with money in carrying on trade and serving the same purposes.
By the Compromise Silver Bill of July 14, 1890, provision was made for a new kind of paper money. By this act the Secretary of the Treasury was directed to purchase, from time to time, silver bullion to the amount of 4,500,000 ounces each month, and to issue in payment for such purchases Treasury notes; these notes so issued to be redeemable on demand in coin, and to be a legal tender in payment of all debts, public and private, except where otherwise expressly stipulated.
[Footnote 1: In the preparation of this article, much assistance has been derived from an article by H.C. Adams contributed to the Chautauquan.]
CHAPTER XIX.
Public Lands of the United States.
Prior to 1781 but six of the original thirteen States—New Hampshire, Rhode Island, Maryland, Pennsylvania, New Jersey, and Delaware—had exactly defined boundaries. The others claimed lands of various extents, stretching to the Mississippi River, or even to the Pacific Ocean. The title to all this land was then in the individual States, and the National Government, as such, had no land of its own. This question of the ownership of the western land was one of the subjects of controversy and discontent between the States. It delayed the adoption of the Articles of Confederation for some time. Those States with little or no land regarded with jealousy their more fortunate neighbors, and would not consent to a union until a settlement or understanding was reached.