I doubt if the national banks can expect to receive in the future more than four per cent. from the bonds deposited by them with the Government; and considering the profits attributed to their business, it may be that there would be a reluctant consent even to this allowance. Here it must be observed, that the whole system of national banks is founded upon the bonds of the nation; so that, at the rate of liquidation now adopted for the national debt, the system will be without support in the lapse of twelve or fifteen years. The stability of the banks, which is so vital alike to the national currency and to the pecuniary interests involved in the business, can be assured only by an issue of bonds for a longer term. Of course, the longer the period, the more valuable the bond. To reduce the interest arbitrarily on the existing short bonds of the banks, without offering compensation in some form, would be positively unjust, besides being an infringement of the guaranties surrounding such bonds, and therefore a violation of good faith. A substitute Twenty-Sixty bond will be assurance of stability for this length of time, while the additional life of the bond will be a compensation for the reduction of interest. As it is not proposed to issue such bonds immediately, except for banking purposes, they will not fall below par, and this par will be coin, which, I need not say, the sixes now held by the banks will not command. If, through the failure or winding-up of any bank, an amount of the substituted bonds should be liberated, there will be an instant demand for them at par by new banks arising to secure the relinquished circulation.
The extension of bank-notes from three to five hundred millions, which I propose, will extend the banking system where it is now needed. This alone is much. How long the Senate debated this question at the last session, without any practical result, cannot be forgotten. That debate certifies to the necessity of this extension. The proposition I offer shows how it may be accomplished and made especially beneficent. The requirement from all the banks of new four per cent. bonds, at the rate of one hundred dollars for eighty dollars of notes issued and to be issued, would absorb six hundred and twenty-five millions of the national debt into four per cents., while the withdrawal of one dollar of greenbacks for each additional dollar of notes will go far to extinguish the outstanding greenbacks, thus quietly, and without any appreciable contraction, removing an impediment to specie payments. Naturally, as by a process of gestation, will this birth be accomplished: it will come, and nobody can prevent it.