Mower County transcript. [volume] (Lansing, Minn.) 1868-1915, 1873-12-04


NUMBER 35.
Interest on Deposits and Ccrtillcalion Of
Checks.
The forthcoming report of the Comp
troller of the Currency will contain the
following on the subject Of interest ON
deposits and certification of checks
In my last annual report I referred
briefly to the evils resulting from the
payment of interest on deposits, and
my predecessors have frequently refer
red more at length to the same subject.
The difficulty has been that the pro-
posed legislation by Congress upon
this subject would apply only to ma
tional banks. The effect of such legis-
lation would be to bring state banks
and savings banks organized by the
authority of different states in direct
compe tition with national banks in Sc
curing accounts of correspondents and
dealers. The national banks would be
desirous of retaining their business,
and the more unscrupulous would not
stop to evade the Law by offering to
make collections throughout the coun-
try free of charge, to buy and sell
stocks without commission, and re-
discount paper at low rates. The pro-
posed action Of the Clearing House in
the city of New York, if adopted by
the Clearing Houses in the principal
cities of the Union, would do more to
prevent the payment of interest on de-
posits than any Congressional instru-
ment. But the evils resulting from the
payment of interest upon deposits are
by no means confined to city banks. It
may be safely said that this custom.
which prevails in almost every city and
village of the Union, has done more
than any other to demoralize
the business Of banking. State
banks, private bankers, and associa.
tiOns, under the guise of savings banks,
everywhere offer rates of interest upon
deposits which cannot safely be paid
by those engaged in legitimate bust
ness. National Banks, desirous of re.
tanning the business of their dealers,
also make similar offers, and the result
is not only an increase of the rate of ill.,
terest paid business men, but, as a
consequence, investments in insecure
loans, being loss to the shareholders
Of the banks and the depositors. The
kind of legislation needed is that which
shall apply to all bankers and banks
alike. whether organized under the
National Currency Act or other
lawe. A law prohibiting the payment
of interest on deposits by national
banks will have little effect, unless
followed by similar legislation under
the authority of the different States,
and there is little hope that such
legislation can be obtained. The
National Currency Act, which was
passed during the war, provides for q
tax of one half of one per cent. upon
all deposits, and the subsequent in
ternal revenue legislation extended this
tax to all deposits made with State
banks and individual banks. This was
essentially war tax, and should in my
judgement, be repealed, with other
similar internal revenue taxation, and
recommend that if legislation is pro-
posed on this Subject, that
law be 80 amended as to Ne
peal this tax so far 40 it applies
to demand deposits, and that an in.
creased rate of taxation be imposed
uniformly upon all deposits which
either directly or indirectly are placed
with banks or bankers with the offer OF
expectation of receiving interest. Such
legislation, if ngidly enforced, will
have the effect not only to reduce the
rate of interest throughout the coun.
try, but will at the same time prevent
the illegitimate organization of savings
banks, the organization of which
shonld be allowed only upon condition
that the savings of the people shall be
carefully and prudently invested and
the interest arising therefrom, after
deducting reasonable expenses, dis
tributed from time to time to deposi.
tors, and no other persons Whatsoever.
The act of March g.. 1869, authorizes
the appointment of a receiver if any
officer, clerk, or agent of any national
bank shall certify any check drawn
upon said bank, unless the person o,
company drawing said check shall
have on deposit in said bank at the
time said check is certified to an
amount Of money equal to the amount
specified in such check. Receivers
have been appointed for the National
Bank of the Commonwealth of New
York, and the New Orleans Banking
Association, during the past year, fol
violation of this act, and it is the in.
tention of the Comptroller hereafter to
enforce this act wherever he is satisfied
of such violation.
The Comptroller of the CurreAby re
peats his recommendation in last
years report for the repeating of Sec.
ton 6 of the act of July 18, 1870,
which provides that after the whole
$54, 900, 600 of circulation shall have
been distributed, $40, ,OO0, 600 addi.
tional shall be Withdrawn from the
banking associations organized in the
states having an excess and distributed
among the states having less than thei,
proportion under this section; that
the amount be withdrawn from New
York, Massachusetts, Connecticut and
Rhode Island and the Comptroller
also recommends the authorization ol
$25, 600, 900 more to be distributed t<
the states which are deficient, namely
those of the South and West. He is o
the opinion that it would require iron
three to five years to distribute TIL,
amount.