Ottumwa weekly courier. (Ottumwa, Wapello County, Iowa) 1872-1899, 1875-12-15


the roat TO Congress.
Signed, U. GRANT.
Executive Mansion, Dec. z, 1873.
Comptroller Of the Treas
llry's Report.
Comptroller Knox. Of the United
States Treasury. has submitted his
annual report to the Secretary Of the
Treasury. After reviewing at length
the growth of the National Banking
system. he devotcs some space to
showing its profits aud drawbacks !:
the number OF failures Of national
banks and amounts involved thereby,
and concludes with some reeommeu-
dations concerning the consolidation
Of the national debt.
PROFITS or NATIONAL BANeS.
A monopoly Is privilege: some
thing sd valuable thar it commands a
premium. and which its owner does
not willingly surrender without a
struggle. But the national banks have
since the passage of the act Of June
20th. 1874. voluntarily surrendered
more than S33.000.000 OF their circula-
tion.and forty-tllrce banks with total
capital of S5,0i0.O00. have since that
date gone into liquidation. chiefly tor
the reason that the privilege of circu-
lation is not a profitable one. and be-
cause tho restrictions OF the syatcm
are onerous in comparison with those
imposed by State legislatures. u the
national bank act contained no re-
strictious upon the banks. or imposed
no tax upon their circulation, and II
currency were issued to them equal
in amount to the value Of the bonds
deposited, then the interest received
by them upon the bonds would. il il
granted. be in the nature Of a grattii.
ty. This condition of things was true
in some of the States previous to the
organization of the national banking
system: but it has not mt any tiiue
been true Of the national banks.
A very erroneous idea prevails as to
4 the amount of profit derived by the
national banks from their circulation
i but to show that the profit from thi,
/ source is not nearly so great as il sup.
T posed by many persons. il is cnt,
necessary to take into consideration
the amount of capital the banks nee
essarily invest in the United State,
bonds required to secure their circu
/ lation. with the legal restrictions tl,a
! govern their business. and then tt
/ compare the combined income re-
ceived by them on their bonds ani
\ circulation with that which would b,
received on the same capital loaned
on bond and mortgage security. bu
free from the restrictions goycrnin.
national banks. On November |. 1875
there were on deposit with the Treas
urer. as security for the circulation o
the national banks. $a6TT. .549. .4l2 In tn,
4 States. Ii from this amount be de
dncted the amount held as sccurit,
for the notes of the national gol(
banks. aud also the sum deposited
in excess of that required by law. t,
secure the circulation issued upo,
them. there will remain 1851 .i9S. i.
OF bonds, worth. in currency an tn
day Bamed, Sl2o, ,Sin.oss
Ii there be deducted from tn
amount OF capital required Ia pur
chase bonds t$42o.SiO533l. the anoun
of premium which they bore ON No
,ember /. 1876. ($6t34a.4 .42l. JAS well a
the ten per cent. margin for which n
circulation is issued. (36,l49.Sll). tn
available means of the banks will b
reduced from S425.S30. 533t to faA,.3iS
30
The bonds representing thi, amour
Of capital consisted. as appears by tn
, table. of $22S9. .0ie. 200 of five per cent
and SlOa.637 400 of six per cent. gold
i hearing bonds. together with tl2,Sli
5l2 of Pacific Railroad bonds issue
/ by the Government. and bearing /,
, teres, al the rate of six per cent. y,
, annum in currency, The annual il
: tercst on these bonds amounts to SIS
3O.55i in gold and $16S,S70 In ru
rencv. the total cura&ncy value of Il
interest at the date named, with col
ut ll6, being $22,26i.3l2. As Il
, banks are required to pay into Il
: Treasury of the United States one p,
!. cent. of their circulation (or $3.25:
. 1872 as tax thereon, they have lie
J $l9.OllSaO in currency as the n
amount of interest received by the
: IN their bon,ls,
An receiving their circulation. th.
are required by the act of Juue j
!, 1874. to place an amount equal to ii,
U per cent. thereof Cor xl6,2614l3) wit
J, the Treasurer of the United States
y redemption fund. leaving. OF II
x325.34S, ,260 that their bonds sccul
= 1905, 9,OSO.S4l, only. available for as
!. which amount. il loaned at eight D
cent per annum. Estimated as q
average rate throughout the conntr,
lr will produce an income Of $2I. ~
/. 46I aud this added to the net intere
received on the bonds ($la,6l0.Sa
r gives Si3.I31, ,as91 as the whole incon
l. derived by the national banks fro
A. their circulation aud from the bon
l. deposited tn secure it. The capt.
used To purchase the bonds ($i25. .S4'
J33), il loaned at eight per cent. a
nual interest. would produce an annu
y income of x34.O6I,04 aud the ditlt
% encc. which is $9.G7O.Oja or two n
At one -auarter per cent. ON the capt.
le represents tho profit that the ban
" receive over aud above what could
is obtained from the loan of the sa,
ID amount of capital at the rate of
ID terest named. This i, ,uncisel, sho,
O. as follows;
10 Iu,srss, ON ,svses,, s,7 Of s.rsul.,,ou
.h loaned ut q per cent ....a.......... ssATsG