The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1858-01-08
NEW YORK BANKS.
Annual Report Of the Superintendent Of tho
Banking Department
&C., &C., DC.


accordance with tho provisions OF section II Of the act 70
organize Bank Department" has .se honor 70 submit
Tor tho consideration Of the Legislature, the following
report -
That the past year has been one OF extensive and urpo
faleied financial dsastsr, reaching capital and bof IN AL
sne saeu einpoynent, % isce 70 apparent nat ib
Tho banks in the city OF Eew York with single sxcsp-
on suspended specie payments the thirteenth or Octo-
ber last This was followed by those located in the cities
Of Albany Troy and Brooklyn and generally
the State.
Although quite number Of wha. rlay be called corn
try banks continued payment specie of all demands
presented their counters the Suspension OF the banks ia
those cities operavey susyenson lhruue boat tho
peipg all banks located out Of the c.s above nsneS 70
redeem their circulating quarter OF oas Ger
cent discount through an agent located the oner
Of them
the duty of the Superintendent Of the Banking De-
pIrment. in hs annual report "a tho Legislature, sug
gest any amendment TO tho laws relation ng by
which the system may bo improved and tho safety Of
billholders and depositors may be increased"
The banks Of this State having suspen led specie pay
the 18th October last, renders this duty
what embarrassing This Suspension, with overassing
granares, exemption from peslence; neither Internal
ipsurrecton foreign invasion country peace with
every haon Of the earth without single cause in opera
op that produced the two former suspensoos Of tho banks
OF this State or may say, nation stands alone wi.hcu.
precedent, and without apparent reason derived from
past experience.
differ as tho causes which produced this catastrophe,
and tberesut to follow t. The Superintendent feels that
in presenting his opinions upon tbs subject bis We've
liable 10 counter TO those OF men Of creator research
and experience than himself st IN the performance or
his duty he Will frankly present bis convictions OF lh9
that produced this general disaster the banks
and the people of our state and her preyenyes for .he
future.
The suspension all the banks United St,ss fox
cep those Of New EnglaDd) in 1914 was placed upon the
fact that 1t with 6ret Britain that Of 1887,
upon the dbedpess Of the country to Europe At that
period OF time importers Of the very staple pro-
ductons OF our SOIL and payment could only DC maze IN
for months against the latter alternative, xhen he
price Of exchange on, may say Europe, became s0ch
that necessity compelled suspen nby the banks Of not
.nrly A.NN N.Yk hl af fh. ILala " =
Although IL may be found upon animation hat tho
banks bad placcc homselves in imminent danger, both in
1897 and in 1857 OF suspeD 20 ether than those
OF 1887 must be traced the suspension 0. 1885,.
Let US remove The mystery TIA. surrounds The osnssq
OF banking and endeavor to ace wna' practical banking s
The defines banking TO be "d.scountlng bis and
notes, and other evidences OF debt receiving aepos.
buying gold and silver bullion, foreign coins and bills or
exchange by loaning money real and personal
rty, add by exercising such incidental powers s saa 10
necessary to carry on such bus,ncss'
These fun ous can be carried in this state By
Individual or individuals coptners each liable " his
CREDITORS 10 the extent Of his or their entire property 70
concentrate capital and at the time avoid this nA-
biS extending, as just stated associations formed
under general bank laws the Liabilities OF the asso-
tates extending TO simply paypg their proportion OF
the Indebtedness of the associattn (if nec1sny
Hquida,o it's ceb,s) not so exceed The amount ct
stock owned by each Individual. To reaoh MS
limited liability tho sssociaes must Ne tho pro-
per certificate In the office Of .he superintendent. s tna
Banking Department, and deposit In thai office 500 900
Of the securities required by the act 70 authorize tho
business of banking, passed IN 1898, and Tho varicas
mapds circulating notes OF the superintendent, 4 It 70
chooses The taking OF circulating notes from re do
partment for securities thus deposited, rests entirely a
the option OF the associates They bank ing
ton with tho limited Liability above described whether
they receive notes from the Bank Department
Tho OF our banks In this state with an occas onsI
exception In tho interior oSceptng those Incorporated by
special chsrcrs whose corporate powers hsvs nsl ~
pred by The terms OF the acte creating them
ciaied Institutions with n nraited liability.
Having thus stated tho liability and the ms.hod q form
ing bank tho PRACTICAL working or the system ths real
question for consideration presan; 10 ..ir-
trae this the New York Clearing House presenr me bert
soiution.
rse banks Of Nsw York emy meet eAay
through their agents nj common centre
each oter tbcre qudsted on tbs general ssiips-
ment of balances found debtor bank, the balance
ns tho deposit bank for The dIror.n sr,s- in o.srsS
In other words, Is found 10 have !nc red liabilities
above the amount q his demands inst dc whole c tho
banks admitted 10 the Clearing House DIS specie
IN the Bank Of America corrcspondng,y reduced, tho
Bank Of America holding iin spccc reserve trustee for
The wisdom lhst created this system or settling Ala
oommon ceu,re the balances against each ober Of tie
question, and cordially admits IL conservative and
heathinl action Sni, this only process, and dccs
banking practically IN this STAT An error a prrci.
po In banking IL no less an error II con5urred N BY al
the banks in the city Of Now York or Of the saie seif
To designate banking in tho fewo, possible words
ssy W IL an exchange Of credits nothing more, nothing
less In other woris, the bank tsng u capital and rs
credit par;ularly the latter N attract depostors (sod
circulate It's notes bank Of issue while undertakes
10 pay demand all lis liabilities thus created and for
bills Of exchange on foreign oonnir n,sss rvasle IN
demand tho means or rather The money, l5s great
prororuon Of which is paper promises 70 lAyl thss
drs~n 70 w. loaned upon notes or other obagsloIs,
pay able al specific times and places
This method Of ,ransae,ng business OF necessity places
the debt or liability OF The hanks OF ths their
diors, in great call Loan TO be pad upon demand.
Their power to pay exists n coin, H. absolute money
specific times places and Tor the exchange of
obligation TO pay upon demand, by the banks when
called for issued the shape Of draft, certificate Of ie
poei,, or bank notes an ndyi dual or nrm. H. ,Ss
bank, taxes his or ueir promise ~ pay a. hTiy sx-
~, ninety days, using their credit and capital 70 exact
Nov what is succcssful banking in tho city OF New
York akpg profits TO the stockholders he rae ,est
large deposits change the rule bat assuming ,hose
be nearly equally dvidcdY simply carrying largcst
debt Of good paper, interest upon the smallest
Of dead weight specie aud skiuy adjusting the balances
daily 70 be struck for and against the bank The clear
ing house thus maintaining is credit and standing ma.
house by the balance there daily presented.
To up successful banking IN that city, (ak ns tho
question u immediate profit " stockholders ~ true
test and this would appear as The standard there with az
seemed o be the rule Of action instead Of large yearly
pSas) in neurrrg he greatest amount q debt pay
(con) 10 pay the same when demanded In other words,
is atrial Of ssi between The officers Of zach bank 70
sustain the largest discounted deb, by floating balance
{owned by to-day another tonorrow Of fair pro-
portion Of the coin ION deposit in the Bank Of AercaJ
with IL reghbors thus enabling hem 10 settle balances
with each othcr and they in the struggle 70 keep each
h proportion Of tho specie rest seem 70 have lost sight
OF the Marnng met That the reserve 1eadly oecresse,
while the great demand loan steadily enlarged An
Community Of interest, all co1'Srt sl acton ss so oer.s
all forgetting the maxim of united, stand; divided,
we fall" Tho result, (unavojdablepcrhaps under TIC
certainly strengthens, IL does not prove
the trrthfulness OF tho adage.
The interior banks outside Of largo cites whcre
balances settled BY the banks every day, from their
proximity, opcraiedyike the New York clearing house
with each other, balances being paid by drain upon New
York and the compulsory redemption OF country bank
notes the chief element of profit 10 country bansl
nj one quarter cf per cent in either the city
Of New York Brooklyn, Albany Troy placed the qne~
ton Of profits in banking IN tho ssilf adjussnsnt on
balances, by the bank officers, upon the same footing
throughout the saate
tos with a secured currency, doubts and every
rfor thaS fnsfp. h,,ku