Ellsworth American. [volume] (Ellsworth, Me.) 1855-current, 1879-02-20
Boston Journal
National Banking.

- suoHCIlocr IN Eastern Maine expresses
the opinion that the present Is a DIT time
for journals 10 give their readers all posi-
bic information on the subject of national
banking, since that present system is likely
TO be called in question as a political issue.
In the same connection he propounds a
number of questions in order TO draw out
such information as he desires himself and
thinks will be valuable to others. As
briefly as possible we will try TO answer
the questions proposed.
/. What Is bank stock, and how are national
banks organZedY
Bank stock IS the money actually paid in
by the shareholders of national banks and
constitutes the capital which Il the basis
OF the business. 1t is bona dds capital
The law provides that any number OF per-
sons not less than i've, citizens OF the
United States, and living chiefly In the
state where the association Is to be To-
Gated may form company To do banking.
Ia cities Of more than JO.0UO inhabitants
the shareholders must subscribe 500 900,
tn cities Of less than 81, 900 and more than
5000 the stock must amount to 100000,
but IN towns OF 5000 a bank can be organ
iLei with $4,000 OF stock. When the par
Ties make their application they must give
the names, residences and amount OF stock
subscribed by each person OF the proposed
10 the Comptroller OF the Currency aud
he has satisfied him self that the parties are
intending and have the means To engage In
the business, be issues them a charter, but
does not permit them to begin the banking
business until he is satisfied that oue-half
of the capital stock Is paid in. Thereafter
the corporation Is TO see that 10 per cent
OF the balance of the stock il paid in every
month until each share Of 500 is repre-
Sented by 800 OF lawful money. But be-
fore beginning business the corporation il
required to deposit with the Treasurer OF
the United States at least one-third of the
amount OF the entire stock OF the bank, and
in no case less that $50 900 Of United states
bonds, TO be Increased a the capital stock
i paid III. When the bonds have been de-
posted the Comptroller must deliver To
the banking association $50 of bank notes
for every 500 Of bonds deposited, and
these notes constitute the circulation OF
the bank. Thus it will be seen that the
greater portion OF the stock OF the banks Is
represented by the bonds deposited to Sc
cure circulation. The balance is devoted
to banking purposes These bonds are to
secure circulation, and. in case q bank fails
the Comptroller redeems It's bills with the
proceeds of the bonds.
:. What ARE loans and discounts:"
The money loaned by the bank to its
customers-loaned either upon names or
colaterais ike bonds and stocks which
have market yalu".
3. What is the present bank circulatons
The amount OF National bank notes out
standing February |, 1879, was 1922 $780,
$40. The amount OF this outstanding cir
culation available To the banks is consider
able less than the above figure, since the
banks are required 10 keep deposit of
per cent of their circulation in the Treas
ury Tor the redemption of their bills. De
Quoting the per cent, from the above and
the amount available for the use of the
banks Is not far from s30j 900, 900. The
banks pay all the cost of printing their
bills and redeeming and renewing their
notes, which averages about SlS5, 600 per
year.
4. What is the amount OF bonds the banks
are obliged 10 deposit in the Treasury to secure
circulation.
As before stated, the banking associa-
tion gets $50 OF bills for sl0O OF bonds
Then the banks are required to keep per
cent. of their circulation on deposit at
Washington in lawful money, so that prac-
tically the bank gets but SS5 in notes tor
each 500 of bonds. The total amount of
bonds deposited to secure circulation Oc-
tober /, 1878, was S347 $50 $50. At the
present time the greater part of these bonds
Dear 3, 4 IL and per cent. interest. the
per cents held by the banks having been
largely called in.
s. What is the meaning Of deposits" and
why are the banks required to hold from Is to
% per cent. of the amount thereof as a reserve?
The bank is the agent OF the borrower
and the lender and the medium through
which business men discharge debts. The
merchant keeps an account" with the
bank and every day deposits the money he
receives in the bank, both for safe keeping
aud for convenience in paying out by
checks on the bank. The deposits of a
bank, therefore, is the money entrusted to
It by its customers. The Government re-
quires the bank to hold from Is to % per
ceWt. of the money entrusted to it by ndi-
vidhals for the security of such persons
and so that there shall not, under ordinary
circumstances, be such an oyer-loaning by
the bank thar it cannot meet the demands
oi its depositors. 1T banks should be al
lowed TO lean all the money in their pos
session, it would frequently happen that
they could not pay depositors as they re-
quired their funds-a failure which would
result in frequent embarrassment and some
times in panic.
8 Upon what are the banks taxed, by whom
and how mnchf
National banks are taxed by the United
States Government on circulation, depos-
its and capital. 10 1873 the United States
tax was Sc, 7Sl ,455 So. and since 1864 the
total amount Of taxes collected of the banks
by the Federal Government is $50 033 ,554-
40, of which some $50, ,775, ,Sl7 ,35 was upon
circulation alone. The State, city or town
taxes the stock of national banks. The av-
erage amount OF State or local taxation
throughout the country the past twelve
years has been about IS. 500, 900, and
amounted to about 7-l0 per cent. on the
par value of the stock during 1878. The
Federal and local tax throughout the
country averaged IL per cent.for 1873.
But for his dog. which pinned him to
the ground and held him until his neigh
bors could break in aud bind him, farmer