The New York herald., 1878-11-21

surplus Of S62i 100000 and liabilities Of $1.14000oooO
shows the ratio OF capital to liabilities OF the
S,il7 banks in the United Kingdom to be 1918 per
cent and the ratio Of their capital and to liza
bties to be 23.07 per cent. while the corresponding
ratios Of the national banks 4oss and 81 3 the
ratios of the national banks being in each instance
more than double those of the United Kingdom.
THE MATrEH OF EXCHANGE.
He refers then to the convertbility of the national
bank note, and says:-
If the New York system Of redemption were to be
applied to the national bank circulation in place Of
the existing method it would probably at once raise
the price OF exchange to the rate current under ta
cent. Under the system now in vogue the notes OF
the national banks. wherever located. have pos
have ruled at the lowest rate The of exchange
between st. Louis. Cincinnati. Chicago and New
Yors have Sfea par ana asns for
l,ooo instead of from sio to SIS per
$1,000 common under previous systems.
Redemptons have not been so frequent under this
under the previous systems of New York and New
England for the reason that the notes are more fully
secured and also because the demand for Treasury
notes has not been so great formerly the de-
mand for gold under similar circumstances. The ma
chinery of the law is however in operation and the
frequency of redemptions will to great extent de-
pend upon the demand for gold after specie payment
shall have been resumed But the notes OF the banks
being secure beyond peradventure this demand Will.
in all probability, be much less than under former
systems of unsecured currency.
The surplus of the national banks amounted on Oc-
tober to nearly $1l7 600 000 part OF this rep
resents the profits earned by former State banks pre-
yous their conversion into national organizations
and brought by them into the system. The greater
portion was, however, accumulated by banks during
the years of business prosperity Immediately succeed
ing the close Of the war;
Then follows table showing that the maximum
surplus reached in 1876. when it $133 os5
which time it has been decreased to S531
The dminuton has been caused by charging
thereto. from time to time. portions of the losses
sustained by the national banks, such losses aggre-
eating during the last three years S64, l19,4lb.
The losses in 1876 $19, 19027
The losses in 1877 Observation-Disclosures. 19.9335SS
pa create, o,.;on of Tho losses mentioned has
been cancelled by charging it to the account OF cur
rent profits in consequence OF which 357 banks with
aggregate capital of $50 have in the last six
months paid no dividends at all while during the
three years the average number OF banks semi-an-
nuaiy paying dividends on acconnt OF losses losses had
seventh of the whole number now in operation. The
average amount of capital upon which no dividends
had been paid during that time is $445S35 515, from
which it follows that for continuous period of three
than onetenth of the total capital of the
national banks has been without profit to the owners
The belief so widely entertained that the profits
made by the national banks are excessive is in great
part due to the exceptionally large dividends paid by
few banks which are favorably located and have q
large surplus and which make large returns to their
shareholders the amount of their nominal capital.
The profits OF these banks are not 10 any cOnsluerDle
extent derived from their circulation, but from
plus and deposits. Many Of the banks making these
exceptional dividends have much less amount Of
circulation than those making moderate dividends
only while few of them have no circulation what
ever.
AMOUNT OF TAXES.
The total amount Of United States taxes collected
from the commencement of the system to the present
time is as follows
On circulation. $DiIo,slI 90
On deposits 4oSso' '.oo ~
On capital. o'z''4oo 20
Total .ss6. .os3 5A 40
The rate of taxation upon the banks in the city Of
New York and in other cities has averaged more than
five per cent annually during the past four years and
there doubt that the annual taxes collected from
these institutions has been greatly in excess OF the
rate collected upon the capital of other corporations
private firms and individuals which cannot be
curaely determined as s that OF the national banks
from the published statements.
FAILURE OF NATIONAL BANKS
Mr. Knox next refers to the failures Of national
banks and gives table showing that the total amount
Of capital of all the insolvent national banks is
s16O11oO; amount of claims proved. s23 $685. TOO; Of
dividends paid s s13 while the estimated losses
are but sc, ,4I5,42s The average number Of failures
during each Of the past fifteen years has been less
than i've and the average annual loss less than
$4,000.
The City Of Glasgow Bank which recently failed in
Scotland. had capital and surplus Of less than
It loaned to four debtors Of the bank
more than $ssOoo.ooo. upon which there
is oss ~ Of The sts i fnsn nsar,v
which is four times great the losses 10 all the
creditors of national banks which hsve failed since
tendent of the State Of New York reports the abili
ties of twenty-five savings banks which have failed
in that State during the Last six and half years at
I7 and estimates the losses to their creditors
at $4,303 616 which is more than onethrd OF their
entire Indebtedness. He estimates the losses during
the last three years at $3400000. which is more than
of the estimated losses to the creditors OF all
the national banks in the United States from the be-
ginning of the system until now. The losses from
Ave state banks in the city of Chicago during
the last two years, which banks were organized un-
der special charter. under which neither State super
$3Sl9 500 liabilities of S57s5572 The losses from
the State and savings banks Of the country during the
than the total loss resulting from all the failures
which have occurred of national banking associations
The government has had large amounts on deposit
continually with great number of national banks
throughout the country for its convenience in max
ing disbursements but has suffered no loss during
the past twelve years Upon the crculstng notes OF
the national banks there has been loss whatever
NEGOTIATION or BONDS.
One OF the chief objects in view Of the organization
Of the national system not only to furnish bank
notes which were safe and convertible but to supply
steady market for and facilitate the negotiation of
United States bonds; and there is doubt that the
credit OF the government and its ability to borrow
money ut low of interest have boon greatly in
creased by making its bonds basis for the issue Of
national bank notes OF the United States bonds held by
the national banks November 1868 and deposited
with the Treasurer security for their circulating
notes nearly threefourhs bore interest at the rate OF
six per Tho amount Of this class Of bonds has
since been gradually reduced until II is now less than
one-quar1r OF all the bonds held; while nearly
fourth Of the whole amount bears interest at the rate
Of four and half and four per cent only. About
ffth Of the entire issues Of the latter classes
of bonds is held by the national banks.
Tho government has still outstanding more than
s693 900 900 Of six per cent and than
of per cent bonds. The reduction of the interest
this amount to tour per cent would save the gov
ernnent nearly s2l0oO.ooo OF interest annually The
funding of the six per cent bonds into four per cents
has made rapid progress during the last and the
banks have been of great service 20 the government
in this process of reminding by negotiating and alb
sorbing very considerable part Of the new issues.
should the national stem continue there is doubt
the present rapid reduction in the burden of in
win continue also. III the national bank system
Is be abolished and additional amount of United
States notes is TO be issued all hope OF reducing the
Of interest On the public debt must be abandoned
FUNDING THE DEBT.
The larger portion OF the five and six per cent gold
bearing bonds of the United States il payable a the
option of the government and the remainder will be
payable in 1884, two years hence. AZ already stated