The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1844-01-08
The notes countersigned and registered for the incorpo.
rated banks, under the law Of the last session, are as
1889. ne $40, 64o, $50

asa9,77e sis,e4o.sss
The plates Of the several banks were reauired by the
Law OF the last session to be surrendered to the Comptroll-
er On the list of July, and it wns deemed proper to call on
FOR all the impressions which had been taken from them.
=" fsr ss these returns are furnished, the result is as
follows -
Total amount printed m :; s.e @i0'' osi'e "'
" in circulation July i...... ~S,3S7,e3a
=" sheets and notes on hand. 2s,922, s2o
Destroyed to LIST July, in circulation, and on
hahd. . 'sloi ,oSl 90"
The table marked No. sshows the capital Of the sevc-
raj Incorporated hanks; the amount OF notes which each
H. authorised to circulate by the act chap. 40 of the laws
Of 1881: The results are as fouows:-
Aggregate capital of incorporated banks. %. $50, o9l 100
Circulation authorised by law. ........ 6,2l5,C@
Amount Of registered notes delivered. .... II, els $3.50
Amount Of old circulation destroyed since LIST
Juiyr . -. lo,lio,3oV
Amount Of blank Impressions destroyed do. 1893, $50
The circulating notes and blank Impressions of notes
to tho amount OF Sl9,9 IO 3s6, as given in the two last
items, have been counted and destroyed by burning, since
the hrst Of July, by an agent Of the ComPtrolier and an
agent of the bank. who have made afhdavits thereto,
which are filed in the Comptroller's office.
The Bank fund now amounts to Sl09,2 a7 a..
roller, directing him not to nav anv portion Of the Bars
+ und TO the creditors Of any bank that may have become
insoi'sn, since the failure Of the Bank OF Buffalo, without
ressTvlnC q sufficient amount to pay all the creditors OF
said Rank OF Buffalo, and all the creditors OF any BANK
having al interest IN said Bank Fund which has iailoi
or become insolvent prior to the failure Of the said Bana-
Of BuAslo. This Is a proceeding before the Vice Chan
cenor VI the sth circuit, and its object IL understood to be-
have failed, and not allow the safety fund TO be applied
exoiu.ively to the payment Of circulating notes, to the
picJudiee Ut depositors and other creditors who were
such creditors at the time OF passing the law Of ie42.
Tho original act to create II fund ior the benefit oil the
crodltoIsgoi certain money cd corporations declares tina,
the Bank y und shall be inviolabiy appropriated aad ap
pbed TO tho payment OF such portion vi the debts vi aN
Of the said corporations which become insoiyent as shall
remain unpaid, after applying the property and ene cts o.
such ms0lvent corporation. The OH st-'tinn nf the net
Chap .. of isas) provides for the payment IRON The sai<ty
applied the assets ofthe bank. This law recognizes 10
discrimination between a creditor who has d cert ihcate oi
| deposits, and one who holds the notes Of the .s.5.
The act Of 1887, Chap. $500 amending the act above w..
ierred to, was passed for the purpose OF protecting the ball
holder oil an insolvent bank from loss by the depreciation
oil the circulating notes TO effect this object the Comp
troller was authoriz. d when an injunction was granted.
to apply a portion OF the Safety Fund in mis- hands to the
redemption of the notes, in such manner as he may
deem most otectual to prevent any loss to the holders OF
such notes or bills from a depreciation in the value there
OF" But the condition on which the Chancellor could
grant an order authorizing the Comptroller to redeem the
circulating notes, afforded ample protection to the depo-
sitors and this condition was that one OF the Bank Con-
missloners should make a certificate ~ that the amount OF
the debts of such banking corporation, over and above Its
property and effects, will not exceed twothirds of the
amount OF the Bank Fund then paid in and invested, ex.
elusive of all prior established claims thereon"
This act made full provision for all the debts Of the in.
solvent corporation the bill holders were paid at once 10
protect them against loss by depreciation. but they had
no exclusive right to the whole OF the Safety Fund, and
the portion belonging to depositors and other creditors
was reserved for an equal distribution among all the ere,
Il 'hoi' ~ IN NHhllt Will IL tldlUit u W " NtSkt
right in the fund, as the laws then existed.
The relative rights of bill holders and depositors re
mained in this situation until the act. Chap 2i7 Of the law
Of ls42, was passed, at which time ten ofthe Safety Fund
Banks had become insolvent, with debts enough to baRk
ofdollar,. This act provides that when an Injunction is
granted and an order made by the Chancellor on the
Comptroller, it shall be lawful for him TO apply any OF
all of the moneys belonging TO the Bank Fund to the pay
ment and redemption Of the circulating notes of such bank.
ing corporation or corporations, in the order in which
such injunctions shall have been granted"
This section, instead OF requiring a portion of the fund
in hand to BE- reserved for the payment OF depositors, as in
the law OF 1897, appropriated every dollar Of it TO ds-
charge the claims Of those who held the notes Of the
bank.
In addition to this appropriation Of the whole fund TO the
payment OF one class Of creditors to the exclusion Of all
others, theii2th section of the act OF lsi2 authorised the
future contributions of the safety fund banks for the mex,
six years to be applied in the same manner-by authors
ing the banks within six months to commute for the pay
ment of 3 per cent on the Safety Fund, and pay in tbs
notes of any OF the insolvent banks at par, with an allow
ance OF interest to the bank of 7 per cent on the sum paid
to the time when the contribution would have been du,
from the bank.
At the time this law passed, a large portion of the out
standing notes of the insolvent banks were held by bank
deposit as security for loans. Could such claims, as III,
laws stood previous to that Of ls42, be entitled to Q prefer
ence over the claims of those who placed their money il
the bank and took a sertifc ate of depositel
There is another feature OF the law OF lsl2, which, If no
re medied, will postpone TOR several years any relief eveI
tothe bill holders Of those banks which failed last. Thi
: the provision which requires the bankfund to be spplie'
to the redemption Of circulating notes in the order il
which the injunctions were issued against them. With
in six months preceding the passage of this law six bank
had failed, having an aggregate circulation OF 81 ios 600
II the holders ofthe fair circulation OF the bank which frs
> Jailed were entitled, under the bank fund law, to n pre-
ference over the holders ofthe circulation of a bank which
subsequently failed. The holders of packages received di
rectly from the hank, as security for o loan, were entitlei
% no such preference. And II is 10 be regretted tha'
a Thorough examination had not been made In 1912 and
the Safety Fund apportinRed among the holders OF The
legitimate circulation OF the banks which had Jailed
While the great mass of the note holders were cut OIL by
3 he provision referred to, from any CLAIM on the money Ia
the custody Of the Comptroller, another section OF The
law, which authorised the hanks to commute, dld not re-
, strict them to the notes ofthc banks IN the order IN winch
Q they were enjoined, but gave them the range OF hithc
banks which had failed. and even allowed them 20 pay IN
the notes Of a bank which suspended ai'er the law was
passed.
The Banks and Brokers, who held large sums In the
notes ofinsolvent banks, by hypothecstion or Otherwise,
have been essentially benefited by the law OF 1912 But
il has not secured that relief to the great mass of the bill.
holders which was anticipated, and which Is promised
iemption Of the circulating notes of insov.nt saiety fund
} banks" The failure in that prompt redemption OF the
notes in the hands of the great mass of the people, which
Is here promised, has occasioned serious disappointment
% thousands of innocent hill-holiers II mean could b,
obtained to take up lat .once the notes OF ol the banks
which have failed, and nj the same time provide lot III,
payment OF depositors. and other creditors, the msesur,
would be beneficial to the Banking system nal 10 no
more than justice to all the creditors of the insolveni
banks
1t has been suggested that a stock might be issued, sui
hcient to redeem all the liabilities OF the safety fund
banks, exclusively on the future contributions Of the
hanks TO that fund.
Certificates issued under such an arrangement, bearing
an interest of per cent, without in any way pledging
he responsibility OF the State, would readily be taken 10y
teposhers and the holders Of large amounts OF the notes
md the hundred thousand dollars of money and securities
in the Treasury might be applied to the redemption OF
he notes held IN small amounts.
II this suggestion should he acted on by the Legisla-
,urc, 1t would be necessary for the receivers TO sell the
,sscts Of the hank M euction 18th as little delay a. prac.
,icable Litigated cases might be excluded rom the es'h
nate oil means &c pay on an me creongrs ,,is sm' n /" ,aid ' ;n,o
the Safety Fund.
The following statement shows the amount Of notes out
standing lt the time OF failure of the several banks which
have suspended since the Bank Of Buffalo, the amount