, 1872-12-03

ments to their creditors. The contents Of their
vaults wero however. rescued in good condition,
and finally vice and prudent counsels presanea,
ewing largely to he presence aHn ~ ny
| the banks obtained new Offices IN dwelling
houses distant from their former locahons and
opened Tor the transaction OF business. Instead
Of balances being Largely "n ~ upon, deposits
dents and at tie close of the first days business
the Teceipts we're found to be considerably
larger than the disbursements. It was soon
aacertained than the immense losses anticipated
rienced, cad confidence Was restored.
The total loss arising from the
fire on discounted paper is estimated at about
| six hundred thousand dollars, and tho loss from
the destruction Of bank buildings, furniture, and
fixtures, at about one hundred and seventy-six
| thousand dollars. The banks, at the time of
| this disaster, had accumulated surplus fund
exceeding one-fourth of their aggregate capital,
| and had at their command a reserve equal to
| more than 80 per cent Of their liabilities, and
! out embarrassment. The wisdom of the sec
tions Of the law requiring an accumulation Of
surplus and the holding Of reserve could not be
better illustrated.
Of the National Banks Of the City Of Chicago,
evidence will be found Of the steady increase Of
business in these banks during the past year.t
UsuEf.
Charges have been made against several Na-
tional Banks during the past year for receiving
| usurious rates of interest. These complaints
have been made not only against banks in the
South and West, where high rates OF interest
prevail, but also against banks organized in
other States, where the usurious rate charged
was but slightly IN excess OF the rate Of per
cent, allowed by law. Section 80 of the act pro-
yides that when the amount Of interest charged
is greater than the amount authorized BY State
law, twice the interest paid may be recovered by
the person paying the same; while Section So
provides that the franchises Of an association
uo" the act. The IuA'e originI I Rationa sni7 Cur r.
rency act Of Feb. II, 1863 provided as 3 penalty
for 1sury the forfeiture Of the debt, and Section
50 Of the same act also subjected the rights,
privileges, and franchises Of m association to
forfeiture for Hilful violations Of the act. It
may be doubted, therefore, whether Congress
intended to impose specific penalty involving
the loss Of the whole debt, and then, IN addl-
tion, subject the same bank to forfeiture OF
charter in a subsequent section, which is app1i-
cahle to other violations of law. I am informed
by gentlemen who participated in the framing
Of the present National Currency act, that the
forfeiture Of twice the amount OF interest was
regarded as sufficient penalty for such viola-
tions of law, and, at the same time, sufficient
protection to borrowers.
These statements are confirmed by the net of
April o. 1870, San act to amend the Usury laws
u kIt 14stA4Gt VI SAA0AAUAds H44IEu t1tflAES
that if any person or corporation in this Die
trict shall contract to receive greater rate Of
interest than 10 per cent upon any contract in
writing. or 6 per cent upon any verbal contract,
such person or corporation shall forfeit the
whole Of said interest 80 contracted to be re-
ceiyed, and shall be entitled only to recover the
principal sum due to such person or corpora
tion." It will be observed that the forfeiture Of
the interest is the only penalty prescribed By
Congress nearly six years after the passage Of
41a 6ryyTa oct fNr rrr o111
Individuals in the District Of Columbia.
The rates Of interest fixed by State laws are
not governed By any sound economical or busi-
ness principles. In three Of the New England
remainder the rate has remained for half a cen
tury at uniform standard, which is less than
the present rate Of the Bank of England. In
Minnesota and Virginia the rate is limited to 12
to 10 per cent in Alabama and Ohio, to s per
cent, while in Pennsylvania, Maryland, and
Kentucky, the rate is fixed ct per cent. In
New York, the taking Of an excess beyond the
limit of Z per cent forfeits the whole debt, and
subjects the creditor to fine and imprisonment.
It would be difficult to give any good
reason why the rate OF interest should
be limited to 10 per cent in the City of Washing
ton, to 6 per cent in the neighboring cities Of
Philadelphia, Baltimore, Wilmington, and Ra-
leigh, and to u per cent across the Potomac, in
Alexandria, and in the capital of Virginia. Many
of the States have practically repealed their
usury laws, while other neiyhboring. States ro-
tain upon their statute books laws which are so
continually evaded that they have become obso-
lete. Savings banks chartered BY Congress,
savings banks, trust companies, and safe-deposit
companies authorized by the Legislatures Of al
most every State Of the Union, as we'll as pri-
yate bankers, offer for interest on deposits rates
nearly equal, and sometimes exceeding, the ru1-
ing rates allowed By law; and, under such cir
cumstances, it s difficult to control, BY legisla-
ton, the rates of the National Banks.
Self-protection stimulates even the most con-
servative banks to control their own business
and retain the accounts Of dealers of long stand
ing. The rates OF interest charged must corre-
6pond in some degree to the supply Of money
and to the demand. If high rates are paid for
deposits, it is with the expectation that the bor
Hence loans are made to those dealers who Will
1eaye the largest proportion Of the amount bor-
rowed with the bank Tor the longest period in the
guise Of deposits. Banks in New York charge
per cent, IN Philadelphia and Baltimore, per
cent; but their loans are made chiefly to
dealers whose average accounts show balances
continually on hand equal to one-eighth or one
fourth of the amount borrowed; while the
banks in tho South and West not unfrequent1y
charge the ruling rate without regard to the ae-
lat;ng the usury laws are 80 numerous that it
may well be doubted whether it would not be
better for all parties to allow the rate charged
to be regulated BY the state of the money mar
het. o18ut1 cA1stAA1E 4a"h3 III Ill c1s1 luouE4
market, the rate not unfrequent1y falls below
that prescribed by law. If money is scarce, the
rate is nominally within the limit but really
regulated in accordance with previous under
standing between borrower and lender.
There are no usury laws in Great Britain. or
in the other commercial European States; and
the Commonwealth Of Massachusetts,, one Of the
most prosperous and enlightened States Of the
Union, has recently abolished such laws; and it
will be found, by reference to the table else
where, that the earnings Of the banks in that
State for the four years since the passage Of the
act, have been even less than in many Of the
Eastern, Middle, and Southern States, where tile
rate is fixed at 6 per cent.
aIr. McCulloch, late Secretary Of the Treasury,
in his first report, as Comptroller of the Curren-
cy, recommended uniform rate Of interest, and
expressed the opinion that Congress possessed
the power to enact such law. under the consti-
tutiona1 provision Of regulating commerce among
the several States. Congress alone has the
power to coin money and regulate the value
thereof; and if italone has authority issue aud
authenticate the paper currency of the country,
there would seem to be no good reason why it
should not also provide for its free circulation,
WHICH ls now impeded by the eVer-changing
statutes Of forty different Ieoislafures