The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1860-01-07
THE BANKS OF NEW YORK.
Annual Report of the Superintendent OF
me Ba IN Department.
Hr.ry or Nav YORK, BANK DEPARTMENT,

Annual Report OF the superintendent OF
the Bank Department..
ErArE OF Nsw YORK, bank DEPARTMENT,
ALBANY, Dec. 81, 1859. I
The Superintendent Of the Banking Department,
In accordance with the provisions Of section H. of
NE "Act TO organize Bank Department has the
honor submit, for the consideration Of the Legls
latuIe, the following
The past year has furnished additional evidence
OF the utility, as well the safety of the business
Of banking, as now pursued in this State under the
provision Of the "Act TO authorize the business OF
banking" passed April Is, 1888, and the amend
ments to TO the same.
The tact that the use of capital in the business Of
banking is open TO any or all who choose this par
Gcular pursuit, or may say protest. IN, places it
upon the same basis that of any other invest
ment of capital for business purposes.
The business of banking IN this State, until 1888
transacted through special charters, comforting
exclusive privileges; and even after twenty years
experience under the General Bank Law, it is
difficult TO impress upon the public mind the fact
that the employ ment Of capital In banking IS and
should be- as free its use is in any other pursuit
The old system OF special Charters by It's very en-
ormiIy left its impress strongly upon the public
mind, that banking was q monopoly enjoyed by the
hvorite few that legislation has been invoked each
year either to restrain the action of capital Or fe
ter 1t in its operations.
Is it not strange that men Of sagacity In all
things else cannot see at glance that the business
of banking has been, by the act OF 1888 and the
same footing as the employment of capital is in any
other lawful business pursuit.
The merchants and the mechanics of the city of
New York the farmer Of the Interior or the village
merchant and mechanic would resist, and properly
30, any legislative interference with their business
pursuits. Would the Legislature tertain, for
moment, proposition that all the commercial
agricultural mechanical business Of the State
should he confined in its operations to, say, ouce
and q half twice the amount of actual capital
employed in transactiDg such BUSINESS! Not for u
moment. The business men OF the State would
resist any Interference OF the kind with their pur-
suits, as AN outrage upon their private and per
sonal rights. Capital, whether employed in rails
ing agricultural products, or in building sewing
machine or a locomotive, or in the business OF
banking, is entitled to the same protection from
our laws and should be left, unshackled by legis-
htion, for the of the individual propretors OF
Il Let Us suppose, for moment, that the capital
employed in the businessof bar king, to be retired
rom that pursuit and returned to its owners 10y
Legislative enactment Would it lie idle? By no
meaps. II would enter uoon enterprises itself, 0r
would be loaned for business purposes, and in a
few short months would be performing the very
functions that appertain to it, in its present
employment. In this position it would require no
selfconstituted board to regulate it in its opera
lions or invoke legislation for its control.
The publ cation of the weekly statements of the
banks in the city of New York, and the quarterly
statements made 10 the superintendent all tend 10
keep the public eye upon the business Of banking
IA this State. Capital employed in this business
and It's operations is kept constantly before the
people, and assumes a power and control oser the
business of the country beyond what it Is legiti
mately entitled to exert. The amount thus EN-
ployed is far below that ofmany other branches OF in
dustry and the capital employed in those pursuits
silently and surely performs its duty without az
tracting the public gaze or appealing for leglsla-
tive action to facilitate control its operations.
The employment of capital in the business Of
banking and the use of currency are made two s.
tinct operations by cur General Bank Law. While
the former is entirely uni mited, and properly so;
- taL ovdha I'D In
single idea of perfect security to the note holder.
The wisdom of each of those provisions cannot be
questioned by any one who remembers the suspen-
sion and resumption Of our banks in 1851.
The repeal Of the restraining law OF 1880. by the
act Of 1897, left every citizen of the state in po-
sition to pursue the business of banking under the
General Bank law of 1888; and with the excep.
ton of issuing currency to circulate as money, and
limiting the liability Of the stockholders when a
banking association was formed under its pro-
visions Eno new power was conferred by It.
The effect Of the repeal of the restraining act of
1880 is readily in the creation of large indi-
vidual banking houses in the city of New York,
whose business Is exactly Of the nature o. bank
ing association. These private banking houses re-
ceive deposits, discount notes, sell bills ofeXchange,
and deal in coin and bullion, with liability that
covers the entire fortune of their proprietors.
The issuing of currency, as before stated is dis
tnct func ton of either the individual banking house
or the banking association Each can avail HI mseu
Of that function or not as it may choose. They
are precisely alike, and each has the right to pro-
secute its business in its own way subject to the
same laws and restrictions.
Would il not be a new feature in legislation to
have petition presented to the Legislature to cur
tail the business OF Messrs. Brown Brothers Il Co.,
or Nessrs. Duncan, Sherman Co to exactly twice
The amount of the capital actually paid IN by the
respective partners Of those firms? Such pro-
position would meet the general contempt 1t would
certainly deserve. Still, as before remarked, men,
wise in all things else, yearly press upon the
attention of the Legislature the necessity of con
fning the discount line of banking association to
once and q half or twice the amount OF their
capital absolutely paid in That this view Of the
unlimited use Of capital in the business of banking
u equally safe to the people OF the state as 1t Is
IN apy other pursuit, let look at its operation;
IOr the past few years.
During the past year capital has, for the frs,
time since the passage of the General Bank Law
comparatively paused in its aggregation for the
purpose of pursuing the business of banking. On
the 9th of June, 1857, the amount OF actual capital
employed in the business of banking was. in round
numbers, SOB 100000, having risen to that amour
from s44 600 COO, in ls49. During the year ending
10th June, 1858, 100000 was added to the bank
ing capital of this State; and this too, while the
entire community was laboring under severe pc
cunisry embarrassment. The amount of capita
that has sought investment in that business during
the past fiscal year is scarcely million and q
quarter of dollars, and of this sum moety is IL
the shape Of increased capital to banks already
existing; and but s46S,s25 has sought investment
in new associations and individual banks.
This furnishes clear proof that capital has become
alarmed at the risk it sustains in the prosecution
Of the business of banking, or that its profits are
decreasing, or that other investments are being
considered either more safe or more profitable.
The desire of accommodating property or capital is
more general and more intense with US as nation
than with any other. Still while capital perhaps
takes greater risks for large profits in this country
than in the old world yet with its proverbia tindity
Il has, as before remarked, for the first time since
the passage of Free Bank law, paused in its ag
Bregaten, for the pursuit Of profits in the business
Of banking.
The business capacity and sagacty that can gather
capital in masses would seem to be able to pre-
serve ii at least uniDpared in its employment, and
make such investment ptohtAbf large rate Of in
ment will as all experience has Taught concentrate
capital in any enterprise whatever. Banking in this
State until 1858 was more profitable than the ordi
nary investments found by capital But either from
timidity as to the ultimate security Of such invest
ments or fro belief that the profits are to fal
OF, its possessors have Comparatively ceased to EN-