Dodgeville chronicle. [volume] (Dodgeville, Wis.) 1862-current, 1869-12-17
REPORT OF THE COMPTROLLER OF
THE CURRENCY.

Is.
Making the total number organized up to October,
1889. sixteen hundred and ninety four Hhc num-
Der in active operation Is sixteen hundred and
twenty.
The total amount of notes of al denominations
outstanding on the Both of September, 1863, was
&2gg. $50, 1876 A. The amount of United States
bonds held by the Treasurer of the United States to
secure the redemption of the circulating notes OF
National Banks on the Both day OF September, 1863,
was $3i2, 475, 100.
The Comptroller cites attention to the fact that,
as the law now stands a bank may, by vote of the
shareholder owning twothirds OF Its stock 60 INTO
liquidation and close up its affairs. After the ex-
piration Of one year from the publication OF police
to its bl-hoders and creditors, required by the
statute, it may deposit with the Treasurer OF the
United States legaltender notes for its outstanding
circulation. and take up the bonds held as security
therefor. This section was undoubtedly 1ntende 4
to provide for the winding up OF banks under
the ordinary conditions incident to specie
payments Butundcr existing circumstances, banks
20 into liquidation, and call upon note holders 10
present their notes for redemption, by publishing
notices. as required by law, but, during the whole
year thatfollows. are not Obliged to redeem any
thing except, now and then, worn-out or deiaced
note. This facility of circulation and the absence
some ASSOCIATE ons to take the legal steps for going
into liquidation with the expectation of continuing
TO reap the benefit OF that outstanding circulation,
while they continue to do banking business under
State laws or private bankers. This is an abuse
that could only be practised under suspension OF
specie payments, and during the absence of all de-
mand for redemptions but for the time it is none
the less an abuse that requires correction. The
Comptroller recommends That Congress SnOuld pass
act in one section, unconnectcd with any other
subject, requiring all banks that 90 into liquidation
to deposit legatender notes for their outstanding
circulation, and take up their bonds deposited with
the Treasurer of the United States security for
such circulation within sixty days from the date
of the vote of the shareholders to go into nqulda-
ton.
1t is recommended that all taxes imposed on Ma
tOnal BapSs3by the United States be made return
able and payable to The Treasurer of the United
States, irhe same manner that the larger portion
of them now are
The employment by the government of agents to
examine into the affairs of National Banks, with
out previous notice, has done more than any other
one thing to promote the safety and sound man
agemet of the banks, and the good results brought
about directly and indirectly, by such examinations
have fully indicated the wisdom of the provision.
Congress is urged to make provision for an increase
ter of necessity as well as matter of justice
The salaries of the clerks employed in the Comp.
trolers office are inadequate to the abilities and
integrity required and the Comptroller recon-
mendsefhat they be increased. He recommends
that the Deputy. Comptroller be paid salary OF
$500; the head of each DIVISION 81 400 two cor
respondents, 81 200 each; and two boOkkcepers,
$4,000 EACH j. "a I'D IL -ADs = - .4t|
The recommendation contained in his last pre-
ceding annual report looking to the establishment
of an agency in the city of New York in the in
terest of educational Banks, owned and controlled
by them for the redemption of all their business is
again Submitted to the Consideration of Congress
Concerning the interest on deposits and call loans
the COmptrellcr says that the law for the organiza
ton Of National Banks defines their power
with precision They are empowered to exercise fa4,
he necessary to carry on the business of banking,
by discounting and negotiating promissory notes,
drafts, bills OF exchange, and other evidences OF
debt; by receiving deposits; by buying and selling
exchange, CON- and bullion; by loaning money
on personal security; by obtaining, issuing,
iit it will be seen ''oi that National Banks
authorized, among other things, TO receaGe de
p0sits;" that is when money is brought to them
they are authorized to receive it. They are not,
however authorized to hire deDOSitS. and the law
does not contemplate that they should solicit loans,
under the guse OF deposits, by the offer to pay in
extensively. and although by implication, the law
forbds it, theprohibition is not sufficiently explicit
or positive to prevent it. # banks pay interest on
these deposits, they must, ofcourse use them and,
they are payable on demand, they must be loaned
call. Call loans, as arule, are made to brokers
and operators in stocks ond gold Men engaged in
which they may be called upon to refund at an
hours notice. The facility with which large loans
can be effected, payable CALL at low rates of in
terest while commercial paper is only done at high
rates, or is declined altogether, fosters speculation.
The delegation by the government to banking as
sociations of the power to issue notes to circulate
est and SO to furnish cheap money to the business
community. The incorporated bank, doing bust
ness and issuing circulation under the authority of
the government is uniformly regarded as the most
reliable and reasonable source of accommodation
by the business community. The private banker,
depending upon the active use of his capital for his
profit, must charge much higher rate OF interest
to realize the same relative profit, supposng, of
course that the deposits of the two institutions are
equal. The government, therefore, confers great
er boon upon the business public, by enabling it to
borrow money at moderate rates of interest than is
generally realized or admitted. # all the banks
deprived of their circulation during the COM
ing year, by act of Congress, the rates at which
money could be borrowed in most sections of the
country would be nearly doubled. The assumption
by the government of the sole power to issue kcircu
lating notes would in no wise furnish relief.
Theaverage dividends made by the banks dur
thnp fNynar xTi1l nya TON Nor
cent upon their capital, after Geductng taxes and
expenses. And as the premium on gold shall -di-
minishs and the National Banking system shallbe
made free to all who are able and choose to comply
with the conditions the average profit Will conform
to the law which governs all business. 1t will be
fair living profit and no more .tr. b+t4
There are two kinds of currency in USE one is
sued directly by the Government; the other
issued by the banks One kind would seem TO
be enough. The best should be preserved and per-
fected: the other Withdrawn. The very moment
the government issues are made redeemable, they
will cease to answer the purpose of currency; for
after they are redeemed, they are in the treasury
and cannot again be paid out, except upon appro-
priations made by law, in accordance with the con-
stutional provision, and consequently cannotagain
be put in circulation, exceptas disbursements may
be necessary to pay expenses and debts of the gov
eminent. So that Government circulation is con-
vertibe, and therefore not elastic and cannot be
made so without first making radical change fn
the organization of the United States Treasury by
which 1t should be converted into huge banking
institution calculated to receive deposits, make
tiona Bank.
The notes issued by National Banks are nominal
ly redeemable and if the legal-tender notes were
out of the way, would be actually so, and, being
issued by institutions in sympathy with trade would
contract and expand in obedience to the law of sup
ply and demand, so that they would also possess
the element of elasticity.
As to the comparative merits Of the two different
kinds of currency, impartial consideration
would probably decide in favor of bank circula-
ton, principally because it would possess the power
of adapting itself to the exigencies Of trade. If
government issues could be made to possess the
same power of adaptation the verdict would be in
their favor. candid investigation, however, cannot
fail to Develop the fact that there Is no branch OF
the fiscal service adequate to the direct issue and
care of such currency as the country requires
The Treasury system is arbitrary in its colec-
lions and disbursements, so little i'll harmony with
the business interests of the community, that it
frequently absorbs large amounts of currency at
most inopportune seasons, and disburses them with
Just as little regard to the wants OF trade.
SO long as the collection of revenues is liable to
be process of contraction, and their disbursement
a process of imitation, the agencies through which
collections and disbursements are effected cannot
be regarded as suitable agencies for furnishing
sound currency to the people.
The argument that the government should fur
nish the currency in order that it may realize the
profit upon its circulation is common one, butw
not bear scrutiny There is no profit to the govern
ment the circulation of an inferior currency
Only sound currency will promote the material
prosperity of the people; and the government can
realize no profit from anything detrimental to their
interests. As currency. therefore, government is
sues are not profitable. As a loan without interest
they are equally Improbable, because they are
Injurious to the national credit and add enormous
ly to the expenses of the government
If, however, it is impossible for the government
to comply with the conditions necessary in order to
furnish sound currency, it at least provide for
the withdrawal of its own notes. and prescribe the
conditions upon which, and the agencies through
which, better currency may be provided. AS be-
fore stated, there should be but one paper currency