New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1872-12-02

IA
New York bank, which would be resp2nso;e oT o %ds
spread disaster IL Is clear that pank naVg sucp en
10 ia 10 such unreasonable extent as 10
lead 10 embarrassment II unexpectedly called upon Tor
the reserves OF its correspondents provision OF law
urohibifng banks from extending their loans beyond
three times their capital would seem 20 pe not
able but sch provision would be much more restrictive
than e present requirements OF the law In reference 10
reserve. 1880 -, = ,,,sto,a which
were in most respects models OF sound system OF
bank legislation, required an ample reserve W ~ ~
M sUch resricfon The country banks Of that State
were however, required TO redeem tlelr nOtes IA sno
returns will show that while tho country Dans usuai
held but very small proportion taDont q per csnu ~
circulation and deposits IN their vaults tney "e,e
10 keep on deposit with their city Correspondents
az argeI proportion OF reserve as nnder me naons
system An examination OF the weeky I9Iusns mai tbt
to the Clearinghouse In New-1Ork Guy VIII SHOW ta
the State banks OF established reputation IN umSs =!
monetary stringency hold sufficient reserve wltnVo W
such provision OF law while the larger prOpOrtoho VI
banks not included I'm the national system afe eontu
ally below ajudcious limit The truth Is tat ne S
and wellmanaged banks do not need any Jaw III rolet
to reserve and do not, therefore, ask LOT sEe
Of legislation u this respect The weak bapKs anu 1Use
already too largely extended wish 70 he free from az
stctiOns It IL the constant tendency OF sucn DAs "
increase their liabilities In times OF excessive sIlngeb
men upon commercal paper but TO dealers specula
tive securities upon short time at high rates of interest
more likely 10 afford faciIities for understandable
stock specuatons than relief to legitimate business
transactions. The law is intended as a wholesome re-
city and Village in the Union. Next 20 the absolute
securty provided for the pied bits of paper in the
pockets OF every citizen, no provision OF the act has
done so much to give character aud standing 10 the
national banking system the assurance to the thou
sands OF deposofs throughout the country who after
ALL the chief source OF profit TO every DahV mat
ties Of every bank as the experience OF years and the
fluctuations OF business have shown 70 be necessary.
win always be kept hand 70 answer the extraordinary
and unexpected calls OF creditors.
NEwsIssUE DESIRABLE.
g, 4ba 1;ob;Iifiaa ranuirinQ o.
serve in the banks OF the City of New-York are very
great The banks outside of NewYOrk during the dull
season. send their surplus imeans to that city for deposit
upon interest to await the revival Of business Inc
banks in the City of York. at suchIperods OF the
year. have legitimate outlet for these funds, aud are
therefore threatened with loss The Stock Board taxes
advantage OF this condition Of affairs, speculation is
stimulated by the cheapness OF money and market Is
found for the idle funds upon doubtful coaeras and
the result is seen In the Increased transactions at the
clearinghouse which, during the past year. exceeded
go OF an average Oh more s ssAn the result
Of legitimate business the total amount OF
being greater ths9 naE o rh he ey arises largely
from the payment by the banks OF interest on deposits
-an oldestablished custom when catn9. essny , De
deposits would remain at home II they Goqd DC used at
low rate of interest and made svaaole az any ' me-
sure investment OF this kind, however, open 70 the
country banks; and the universal custom Is Ioent IST
Insecure 10 their correspondents in the city, Where
they supposed 70 be safer, and at the same same
eminent issue bearing low rate OF interest 10 De
counted as proportion OF the reserve and an In
crease OF the amount which the country banks are re-
ored TO keep on hand IL the proper remedy Tor sucn
state things Such an issue need not result IN lnn
ion OF the Government II the currency is held the
objection the loss OF interest TO the Government put
100000 OF taxation annually paid by the banks 10 the
Government, at time when almost every KIND OF inter-
nal taxation has been discontinued Such reduction OF
taxation should not be grudgingly made IL the result
shall be give elasticity TO the currency 10 strengthen
and steady the money market, TO give additional
security belonging to depositors by retain
ing in the vaults Of the banks large amount OF funds
be thrown upon the stock board TO unsettle values
throughout the country and alternately increase anh
depress the price oi every commodity.
THE CHICAGO AND BOSTON FIREs-EFFECT ON
THE BANKS.
The great fire in Chicago, of Oct. to IL,
1871 should be mentioned among the noteworthy events
of the year. The buildings occupied by the 10 natlona
banks that city all totally destroyed IN the gen.
era confagration except onei and that one was rem
dered uutenantable for some weeks. The amount OF
bills receivable held byEthese banks at thatitme was
more than S2lOOO,O0O and the indebtedness to cor
respondents nearly 100000 and to individual deposit
ors about ST. 100000 For time it was thought that
they we're so seriously crippled that they would be IN
able To resume business, and It proposed TO open
their doors with the offer of payments by instruments
10 their creditors. The contents or their vaults were
bnuever rescued in good condition and finally wise and
prudent counsels prevailed, owing largely TO the
presence and advice Of my predecessor Eight days ar
the ta9 yoa their Former Iocatio%s and
opened the transaction Of business Instead OF bal
epces being largely drawn upon deposits flowed In
freely from dealers and correspondents and at the close
OF the first days business the receipts were found TO be
considerably larger than the disbursements t was soon
asceraiped that the immense losses anticipated upon
bills receivable would not be experienced and eonnd
dence restored The total loss arising from the re
st.ao tod "a NJ
the loss from the destruction of bankbudlnRs, furni-
ture and fixtures at about sleooO The banks, at the
lime Of this disaster had accumulated surplus fund
exceeding oneourh Of their aggregate capital and had
mt their command reserve equal TO more than 80 per
cent OF their liabilities and consequently were able TO
resume business without embarrassment.
since the above paragraph was written great confa-
grafton has taken place In Boston, resulting in the de-
structon OF from $O0OOO0 to $3000O0OO Of property
The facts pertaining 10 the Boston banks were III many
respects similar 10 those of Chicago. Their aggregate
eaptai was s4ssOOOOO; their surplus. sl40O0O; their
bills receivable $780, 00 their deposits, sOlOOO bnd
their reserve, according TO their latest official reports
about rs per cent Of their liabilities The buildings OF
national banks out OF 40 transaetng business In
the city, destroyed by the fire. but their assets were
subsequently recovered On the second day after the
commencement OF the fire all the banks but one were
represented at the house. ana on tne lourtn gay
ali of them had resumed business Inc aggregate loss
upon bills receivable is estimated at from s5OOO TO
100000 The losses OF the banks are chargeaDe 70 sur
ns which was OF the requirements of the law,
and il is not supposed that the regular dividends TO
shareholders will be materially reduced by the DISASTER
.. UsURY.
Charges have been made against several Ma
ona Banks during the past year for receiving usurous
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 usurtous rate
charged was but slightly In excessof theate Of six per
cent allowed by law. Section 80 OF the act provides
that when the amount Of interest charged greater than
the rate authorized by State law twice the interest Ped
may be recovered by the person paying the same while
section So provides that the franchises OF association
NAV be forfeited II the directors OF bank know VIC.
ate the provisions Of the act The original
rency act Of February H. l6S provided rs penalty for
same act also subjected the rights privileges and fran
chses OF association to forfeiture for wiifu viola.
tons OF the act II may be DOUBTED. therefore, whether
Congress Intended to impose specific penalty involving
the loss OF the whole debt AID then in addition, subject
the bank TO forfeiture OF charter IN subsequent