The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1867-06-11


show the profits and SURPRISES at different periods
January, 1865. 1926 s2s,ess,1ss $4,000 $40
October sea; sSss$s SSssaS
April, 1867. ..... .l,G49 3l.06S,366 60,le3,223
There been steady until January, 1867,
in the principal items In the last quarter there has been
falling of some items The capital reduced about
sll 100000; cash items, sl4 600 900: United States
bonds to circulation, $3.50 600, 00o and indi
vdual deposits. $45. 600 O00 This last item would seem
to indicate that tho public begin 10 lose confidence in
these institutions safe repositories for their funds
Still much Of this falling or is no doubt owing TO the
decline OF the general business Of the country.
writer in the Merchants Magazine justly calls atten
ton to the fact that the shank reports not issued
frequently required, while the subject Of bank
sources suggests default certain banks which may
well excite concern.
have recently devoted much time and caro- to the
examination of the general mode Of conducting business
ID the national banks Of Buffalo, Wisconsin, Michigan
and Illinois; and, while find most Of them to all out
ward appearances In prosperous condition. have dis
covered, to use mild term, many irregularities"
that justify me in arriving at the conclusion
that as q system the national banks do not
meet the expectations Of the public and engines in
the hands Of unscrupuous nanciers to profit at the
pense OF The business public and in such condition
to alarm and dsquetude When the act for the
establishment and government Of the national banks
went into force the country was flooded with private
corporations and private bankers who saw in new
system fine opportunities to profit at the expense of the
general government and through political influence,
euro large revenue from United States deposits and
other They rushed into the new system, and
those whose Offices could command the Treasury bust
have had season OF unprecedented profits Those
who could not this through political influence
have not mado large margins. Many Of these banks
started by large spectators who own controlling
INTEREST," especially to facilitate them in their financial
and commercial schcmea The consequence is that the
stability Of these banks depends entirely upon the
or failure Of the speculaons Of the controlling spirit
OF the corporations In this city, in Milwaukee, Buffalo
and Detroit indeed everywhere, find that the officers
Of thsse banks more or less systematically use tho
funds Of their respective institutions for stockjobbng
and commercial ventures. In some It has aua-
pred that gamblers closely Identified in inter-
est with the banks, and obtain accommodation where
with to speculate upon questionable security and divide
the profits Of their operations with the bank oqlces
These cases. however isolated Ones the rule being
that The officers themselves borrow the funds for their
own benefit and reap all the profits But these arc not
the only complaints that may be urged Under the Law
banks are limited TO the rate Of interest sgaized by
tho State In which they carry on business. Here and
elsewhere they very generally avoid the law and realize
from fifteen TO twenty per cent BY the INDUS 0ps-
While the statute protects the government from loss
through the msmanagement OF these corporations there
s no adequate protection thrown around the deposor
Many persons who ignorant Of the suppose that
the hold responsible for the redemption
Of the notes OF these banks they also individual
posts result OF this common is that the work.
ing classes select these banks In which deposit their
savings, and when Of them goes under from mis-
or other causes the sufferers alone are the
leDOSitorg evident that n ia
needed and the amendment of the Law by which the in
dvidual depostors would be secured would give great
Having said this much by way Of preface shall now
proceed to give the results of my Investigations far
whom derived my information | am convinced that I
do not misrepresent the actual stale OF affairs they
exist in the West
A careful examination into the system OF doing bus-
In Buffalo convinced me that the national and pri
yate banks are too ntenty anxious TO rich at the
pense OF the commercial community. to accommodate
their favorcs TO any great extent unless they are
pretty well secured by mortgage real and personal
property Neither does appear that the officers Of the
banks have used the funds at their disposal any
extent for purposes OF speculation, still they open
TO the charge Of SHARP practice at the expense Of the
Western shippers.
There are IN that city three national banks one with
a capital OF S2500O0, and two with q capital Of
100000 The last dividend Of one was fifty per cent,
another put at thirteen per and the third distributed
its earnings without deignpg inform the outside public
what Its dividend really was. This Is In addition to
large amounts added 10 the surplus Persons familiar
oil all the banks above nifty per cent This
almost Incredible: but when describe the in
which business carried on In that city, will be more
easily understood.
very large portion OF the business Is in advances
made TO Western grain dealers upon security Of bills OF
adng OF grain in transit to the seabosrd By lake and
canal The Western buyer cannot wait tor the arrival
of his produce the seaboard for returns He applies
the Builao banker and obtains accommodation in the
shape OF New York exchange, the banker taking the
Of the consgnee and the bill Of ladlng collateral
security and allowing margin OF from ten TO twenty
per cent for possible fall In price before reaches tide
water For these twcnty-day bills OF exchange they
charge one half per cent When they discount this
paper they do not pay money, but accept the dra
deposit one-hal per careful calculation will
thus show that ten and twenty day transactions the
banks realize fully sixteen per cent nj the expense Of
the Western consgnce II Is by operations Of this kind
that they enabled swell up their surplussss and
declare dividends OF atty per cont
The scarcity Of banking capital Is very marked In that
city The total capital Is not 81 000 and
all adequate 70 meet the ordinary demands OF
featuring and commercial business To supply this
deficiency several private banks with large capital
about being started One with capital OF $3.50 900 s
now being formed The banks Of Michigan generally
considered healthy and hourishing condition There
are in the State fortytwo national banks, with circu