The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1879-11-27
GENERAL WASHINGTON DISPATCHES.

WASHINGTON. Nov. 90. 1879.
OVER cERTIFIcATIoN OF CHECKS AND LoANINa
OF MONEY UPON UNITED STATES OR
KNox's REPORT.
Comptroller Knox's forthcoming report. which
has not yet been completed. will contain. in ad-
dition to the extracts made public yesterday morn
ing. the following interesting paragraphs
On February 10 and March 3, 1862. two extraor-
binary acts reference to the business OF banking
we're passed by the Fortieth Congress. which enact
6,207 and 5,20S of the Revised Statutes. The
first OF these sections prohibits the loaning
notes collateral security. with the purpose Of
withdrawing such notes from use. aud the latter
section prohibits the certtcation OF checks drawn
money actually on deposit in such bank. The VIOLA
ton OF the section first named is made INSIDE
meanor and punishable by u hno not exceeding
$1,000 and by y further sum equal to ons-third Of
the money loaned. The officer or officers of the
bank who shall make such loan are also La
fourth OF the money loaned. The penalty
for the violation Of the last named section 10 forte
ture Of the ch of the bank and the appointment
OF receiver to close its affairs. 1t scarcely
credible that 1T should have been found necessary
national banks located in the principal CONNER
cial city Of the country of methods of business
ssnlnS su h va ne pGneps ouo of
even this Legislative prohibition was not
sufctent IN times oil extraordinary activity in the
Stock Board to entirely prevent the illegal certihca-
ton OF checks. A few months thereafter the Com
mittee on Banking and Currency Of tho House Of
Representatives. after an investigation which
pied some weeks instructed to inquire II any
further legislation was necessary to prevent the
proper certhcation OF checks by national banks
ana to report by bill or otherwise.
(Reports of committees. No. 81 II. r., Forty-hrs
Congress. second session, "God Panic Investiga-
In compliance with these instructions . bill was
reported. which June 10. 1870. passed the House.
,.l.1t
OF any national banking association who should
violate tho provisions of the act OF March B. 1862
lating to certified checks, should be deemed guilty
Of a misdemeanor, and DO fined not more than
$4,000. or imprisoned not more than i've years. or
both. IN the discretion of the Court. This bill like
the similar which proceeded It, passed the House
almost unanimously and with but little discussion.
Representative from New York city. who was also
hmomber of the Committee on Banking and Currency.
seemed to reflect the sentiment of tho House and
ALSO OF his constituents when he said
II concur with my colleagues IN regard to report
Ing this BILL after careful examination OF the facts
ascertained by the Gold Investigatng Committee
and OF tho statements by the substantial merchants
OF New fork-not the spectators either In produce
or gold. but the men of solid parts tho men who
look to tho substantial interests OF tho people out
side as well a. inside their city. men Of character
The House bill of June 49, 1870 failed to pass tho
Senate, but the action Of the House had tho
largely diminish although it did not entirely put an
end TO this illegal practice. No complaints of it's
renewal reached the Comptroller until recently.
when his attention was called to the large increase
OF certified checks among tho Clearing House tx
changes their amount having risen from S31 900 900
on April to $4t 900 June H. to $6OOOo 900 on
October 2, and finally to more than 100000 900
on October 30th last. He also informed OF an
Informal conference of tho presidents of some of tho
prominent banks with the object of devsiun some
plan to avoid the risk and loss of such over certi-
cations. 1t had also about tho same time been
brought to the knowledge of the Comptroller that
certified checks drawn upon an institut on which
was known to be largely addicted to this practice
had been refused by banks in good standing, where
upon ho considered It his duty to exercise whatever
power belonged to his office for the arrest
and prevention of tho custom complained OF.
lilo. therefore. the 10Th ult., directed tho
National Bank Examiner for the city of Now York to
sxanine such banks were believed to LIE certify
Ing checks Illegally, and 10 report the facts
10 this office; and separate letter trans-
mttsd to him ON the same day requesting him 20
consult with the Clearing House COMMITTEES and to
take s advice In reference to the best to DO
pursued Tho Examiner soon After reported that