Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1882-05-18
National Banks.

Inc discussion Oh tue Dill LOT extenulnP
the charters Of the national banks is serv-
ing beneficial purpose in giving solid
information concerning them. One of the
best speeches thus far delivered upon the
subject was that of Mr.. Grape of Massa-
chusetts. He did not claim that the sys-
tenn was perfect, but the best we have
ever had, and with few changes might be
improved. The merits ofth system have
been tested by twenty years experience.
Its advantages are found in its uniformity.
its restrictions, its responsibility and its
supervision. The capital fund must be
paid in full, and portion of it must be
invested in government bonds. If the
capital from any cause becomes impaired
it must be promptly restored. 1t discour-
ages the loaning of money upon securities
not readily convertible; it limits the
amount which can be loaned to any one
person or corporation, and forbids the
lending OF money on their own circulat-
ing notes or upon shares of their own
stock. 1t prohibits a rate of interest
greater than that allowed by the laws of
the State where located, and requires a
fixed percentage of reserve to meet the
demands of depositors and noteholders.
1t allows no preference in the event of
insolvency. 1t gives a double security to
creditors by making individually respon-
sible the shareholders for all contracts,
debts and engagements of the bank to an
shares, in addition to their investments in
said shares. 1t requires the accumulation
of u surplus fund, which can only be used
to meet losses and bad debts in excess of
current earnings, and forbids the payment
Of dividends not earned. 1t compels full
statements of resources and liabilities,
under oath. to be made several times each
year, and the publication of the same. 1t
subjects the banks to personal examina-
ton by experts appointed by the comp
troller. who inspect the accounts. securi-
ties and assets, and inquire into their liza
bilities and investigate their methods of
business, thereby restraining and detect
ing irregular practices. Itgives publicity
to ownership of shares. thereby fixing in
dividual liability and facilitating local tax
alton. 1t secures the redemption of their
circulating notes and their ready CONVEX
sion into lawful money. and the destruc-
ton Of their worn and mutilated bills. 1t
inficts penalties (which are severe and
summary for the violation or non-per-
formance OF the provisions of the national
banking act.
Against these important advantages
what objections can arise to counter-bal-
ance them? One objection is that the
hanks make great profit upon their cir
culation. But Mr.. Grape shows that this
10 without foundation, illustrating his po-
sition by exhibits from the actual opera
ton of a bank of $4,000 capital. by
which 1t is found that the profit on circu-
lation of such bank was about one-third
Of one per cent on the investment. In
banks Of $4,000 capital. if the bank can
accruing is about $3.50. a very small sum
for the investment made, not enough to
induce the organization of bank. In
deed the profit on circulation is S, small
that the tendency with banks of large
capital is to drop the circulation of notes.
IS not affording sufficient profit to pay the
trouble Of issuing and redeeming them.
The statements frequently made that
banks receive rs profits in their business
sixteen to eighteen per cent is hardly wor-
thy of denial or notice in the face of the
fact that the sworn returns, compiled and
published by the comptroller. show a
profit on capital and surplus of only 7sl
per cent for 1880, and 9.l5 per cent
for 1881, the largest rates of earnings for a
number of years; or to deny that the
bonds deposited with the treasurer
Of the United States to secure circulation
ere drawing five to six per cent interest
in gold, when every one knows the
rate is only from three and one-half
to four and one-half per cent; or to
deny that the banks are monopolies,
whom foryears our banking laws have been
ftee TO all who chose to engage in the
business, and no one man or corporation
can have any special privileges not open
70 every man and every corporation.
Tho hanks have proved themselves good
inolifntions. No man has lost = dollar in
Is