The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-12-26

into large sections, we find the percentage Of
tax TO banking capital largest In the Middle
and Western States, being severally stated
at three and six-tenths and three and five
tenths per cent while II only reaches two
and cight-tenths in New England. aud but
two and scven-tenths per cent. in the South
ern States. Taking the whole country to-
gethcr, the ratio Of State imposts to the cap
ital stock Of national banks during the year
1877 was one and nine-tenths per cent. In
| other words. the sum levied for State pur-
poses was about onc-third larger than that
paid into the Federal Treasury.
The remarkable inequalities in the rates
Of taxation laid on banking capital in differ
ent municipalities may be illustrated by re-
turns from some OF the principal cities. For
example, in New York city the total sum
drawn from the banks for all fiscal purposes
actually represents five per cent. Of their
united capital In Cincinnati the ratio Is
four and six-tenths per cent, in Milwaukee
II Is five per cent, in Chicago five and eight
tenths per cent. and in Albany it touches
the surprising figure OF six and two-tcnths
per cent. Turning from ratios to aggre-
gates we find that the banks Of New York
city alone paid in the shape of taxes more
than three million dollars during the year
1877. One effect Of these high rates Of taxa
tion may be discerned in the reduction Of
capital and surplus by the New York city
banks The total decrease which has oc-
Cured during the last five years, II we in
clude both the national and State banking
institutions in this municipality, falls but
little short Of thirty million dollars.
At first sight this burden seems 10 be
serious enough. but it is frequently alleged
10 be more than Offset by the haRdsome
profits Of these establishments. We hear
good deal about certain privileges and
immunitics, which on inquiry do not prove
to be recognized by statute. There Is a
widespread notion, for instance that con-
siderable proportion Of each banks eircu-
lating notes are lost or destroyed, and that
the disappearance " this paper inurcs TO
the benefit OF the issuer. The truth il, that
every banking company on liquidation Is
obliged 10y law 10 leave n deposit In the
Treasury to cover all its outstanding issues.
and there must the sum remain until the
last dollar bill shall have been presented
Obviously it Is tho national Government,
and not the private association. which
ing notes We may say, too, that the popu-
lar belief greatly eXaggcrates the quantity
OF lost or unrcdccmcd bills. Looking at the
whole currcncy-some eleven millions
issued by eight y-nine banks in liquidation
prior TO 1919, there now remains outstand-
ing only about three hundred thousand dol
lars. or less than three per cent. of the
amount issued.
The capital mistake however. entertained
upon this head. has TO do with the earnings
attributed 20 the banks. The fact is that
considerable part Of these institutions have
for some time been compelled 10 entirely
forcgo dividends. Thus in the scmi-annual
period ending March 1, 1873, not less than
three hundred and twcnt weight passed
their Dividends, and by the first of last Sep
tember the list had been swollen 10 three
| hundred and hfiy-sevcn. representing about
eighteen per sent. OF the whole number.
| During the last three years an average
| amount Of SI5.N0.OO0. or about one-tenth
| Of the entire capital belonging To the
| national banks. has paid no interest what
ever 10 it, owners. These figures exhibit
| but partially the 5hrinkaRc of bunk profits
in late years or those banks which have
earned something, very many have been
compelled 10 reduce their dividends 70
rates which would scarcely in any other
| business be considered n compensation for
the use 81 capital. Since 1870 the ratio Of
dividends 90 capital and surplus has re-
coded from s.3j 10 GIL per cent. while the
ratio Of total net earnings has dwindled
| during the same period from about eleven
| per cont. To five per cent. The latter fact
i demonstrates b.yv largely. tho IfVid.nds 80
late years have been drawn from the ac-
cumuations 81 former periods, and that
even the diminished return now received
| by shareholders considerably exceeds the
actual current earnings Of tho banks.