Evening star. [volume] (Washington, D.C.) 1854-1972, 1870-12-05
REPORT OF THE COMPTROLLER0 OF
80 THE Currency.

u.
THE CURRENCY.
Hon. Inland K. Hurlburd, Comptroller of the
Currency, states that since his last annual re-
port 81 national banks have been organized,
making the total number organized up to date
1,i5l. OF this number FIVE were organized by
the surrender of circulating notes for that pur-
pose by existing national banks. and did not in
crease the aggregate OF national bank circuls-
ton.
Thirty-one banks have been organized under
the act approved July u, $50, providing for the
issue of tfty-four millions of additional bank
circulation. The aggregate capital of the banks
bank of about Sl0i, 500. There are on file ar
plications for banks in addition to these TO the
number OF $50, and the amount of capital re-
CURED to supply them eli would be ST. 900 O-0.
Expe rience has shown, however, that a large
number of applications are placed on lille as
caveats to occupy the ground, and TO de-
are speculative, and, some, intended to be
bona fde, fail, because, when brought to
the test, the capital is wanting. Probably, il
all these applications should be granted, not
more than half of them would be carried through
TO complete organization The amount of cap
ital IN the Western and Southern States, not
lermanently invested or actively employed in
business OF various kinds, but immediately
available for the purpose of organizing rational
banks. cannot be very large, and the impress
ZION that many millions OF cash capital were
awaiting the opportunity of investment in na-
tiOnal banking institutions has not been fully
sustained. The provision made by the late act
g undoubtedly ample for the supply OF those
States which have less than their proportion,
and would probably suffice to supply all rea-
sonable demands if not restricted in its distri-
button. The propriety Of providing for the re-
moval OF such restrictions after the expiration
OF one year from the date Of the passage of the
act is respectfully suggested.
Under the provisions OF sections 3, 4, and of
the act approved July IL, 1870, authorizing the
establishment of national banks for the issue of
circulating notes redeemable in specie, but one
bank has yet been established, the Kidder Ma
with capital OF 500, 900. Inform alton has been
received that several other institutions of this
character are in process of organization, or in
Caitorpia a%1 not CT Q. %n tS are IN
paying banks would be established to any con-
siderable extent, at present, in those sections OF
upon the legal tender issues of the Government
already prevails; although it was, and is STILL
supposed that one or more gold banks might be
established and successfully conducted in each
OF those cities on the Atlantic seaboard where
considerable foreign trade is carried on, and
IN which certain amount of business is neces-
sarily transacted upon specie basis. III all the
business Of this kind that is carried on in the
cities of Boston, New York, Philadelphia and
baltimore could be concentrated i'm one or two
banking institutions In each Of those cities, its
extent would undoubtedly warrant the employ
ment OF q very respectable amount for its ex
elusive accommodation.
Under the operation of the act Of Congress
approved July IA, 1870, ate require national
banks going into liquidation to retire their cir
culating notes, !" twenty banks, which had been
nomlnally in liquidation for various periods OF
time, have deposited in the treasury of the
United States legal-tender notes for the redemp
ton OF their outstanding circulation, aud taken
up the bonds pledged as security therefor. Tie
amount Of srch deposits since the date of the
last report is g, 401.9l0, and the amount of
bonds, at their par value. thereby released is
S2'56,cO0. All banks in liquidation except
those IN process OF consolidation with other
banks have now retired their circulation.
Since the organization of this bureau to the
lst day OF October, utimo, circulating notes
more or less worn and mutilated have been re-
turned 10y the banks TO be de troyed by burning
TO the amount of $50, 591 sis. OF this sum- sli,-
JiS,ll9 or more than one-half the total amount
were returned during the last year. The ra-
pldlty with which the national bank notes are
becoming unit for circulation, and are being
returned for destruction in order that they NAV
be replaced by new notes, is constantly increas-
ing, requiring a constantly increasing force of
clerks to attend properly and promptly to the
assoIting counting, registration, and final burn
ing OF the notes.
In the effort to protect the public from the
'mpositions of counterfeters, which is being
made by the proper authorities, it would be well
10 throw every possible difficulty in the way of
the circulation OF counterfeit notes For this
purpose il is recommended that every national
bank be required through its officers to stamp
the word counterfeit upon every false forged
or counterfeit national bank note that NAV be
ter Of the bank.
When the capital Of a bank becomes seriously
impaired by losses or otherwise, it would be de-
sirable for the Comptroller of the Currency TO
DE clothed with sufficient power to require the
bank to be wound up, or have its capital made
1000 ", ha reasonable time. As the law
clarlng any dividends SO long the capital of
the bank remains impaired, but the resources
OF bank may be crippled and its usefulness
destroyed beyond hope OF repair and yet it
may continue to live a sickly existence FOR
years. In such cases the bank should be re-
CURED to make up the losses by an assessment
be closed.
The operations of the national banks through.
OUT the country during the last year have been
disaster to an unusual extent. The profits have
not been SO large as in former years, owing to
various causes, among which may be noted the
in the amount Ofthe transactions I'm government
bonds and consequent falling Off in Commissions.
and the fact that, owing to the general shrink
age IN yai S which mas taken place. the banks
charged off the bulk of their bad debts. The
result, however, may be regarded as, upon the
whole, satisfactory. Very thorough and rigid
investigation has been made by skilled account
ants, commissioned rs examiners, into the mode
Of doing business, character of the manage
ment, and the value and condition of the assets
oi the banks during the year, and it has been
iscertained that the bills and notes discounted
are, to remarkable extent, based upon bona
noe transactions, while the accommodation loans
are uniformly safe and well secured The re-
serves required by law to be held, to secure the
pay ment of circulation and deposits, are as a
rule, kept on hand. and the general average of
such reserves is ordinarily considerably above
the amount required.
The limitation OF loans to one-tenth of the
paid In capital, most wholesome Restriction
u, in large majority of the banks, carefuIly
observed. and the loans are almost UNIFORMLY
we'll distributed. In very few instances are the
directors allowed to monopoIize to any consider
able extent the facilities offered.
Complaint Is made from time to time and
from various localities, that borrowers are com
PEELED to pay more than the legal rate of inter
est for money, and doubtless the Complaint is
well founded. On this subject there is a prac-
teal suggestion or two that may be profitable
considered. If the interest on the bonds de,
tosited to secure circulation, and the use OF cir
cnlation and deposits, at illegal rate of interest
Will not enable banks to pay taxes expenses,
and dividends equalto at least the current value
OF money where the bank Is doing business, the
legal rate will be transcribed, or the bank will
wind up. This may safely be taken for
granted. An attempt to compel the iusti
luton to keep within the limits, under such
adverse circumstances, will result in forcing NJ
into liquidation. In nine cases out OF ten where
these complaints are made, the evil Complained