Morris tribune., 1884-12-03
OUR MONEY.
Extracts from the Annual Report
of the Controller of the
Currency.
Statistics of the Business Performed by
the National Banks---Recom-
mendations.
Bonds and Their Payment as They Be.
come Due-Interesting
Information.


The annual report of the Comptroller Of the
Currency shows during the year ended Nov. l,
1884, 191 banks have been organized, with an
aggregate capital of $16,042,23o. Circulating
notes have been issued to these new ssociat1ons
Gated by geographical divisions as follows
Eastern States 10 banks, with capital OF $780,
600; Middle States IS, capital 1912 $50; Southern
States 80 capital So 991, 100; Western States 102
capital S. 9O5, $50; Pacific States 5, capital $780,
600: Territories 10, capital 81, 143000 Since the
establishment of the national banking system.
Feb. IS, 1853. there have been organized s.2ol
national banks. The total number in existence
Nov l, 1884, was 2,6T1-the largest number in
operation at any one time Eleven national
banks, with an aggregate capital OF 81, 2s5, ooo'
have failed and been placed in the hands OF re7
ceivers during the year.
as tabulated, indicate that the business OF the
national banks during the last eleven years has
generally increased. The items OF United States
bonds and circulation thereon decreased during
the last two years. The aggregate liabilities of
national banks to depositors and correspond
ents were reduced during the year upward Of
$94 900 900. This reduction of liabilities and the
general reduction Of loans by banks, which
amounted to over $6S, 900 during the year,
the Comptroller says was doubtless occasioned
by the financial troubles of May and general de-
preston of business During the samea period
national banks increased their cash resources
by about $21 900 specie and $l1 900 600 legal
for the same.
The total number of banks still in operation,
organized under the act of June 8, 1854, and
RODS of succession, which will terminate I'M
less hereafter renewed during the years previ-
GUS to 1900, is 4SS with capital OF 1921
and circulation of $194, 745 ,305.
The banks held Nov. 1, 1884, $165, 604, 400 per
cent. bonds, payable at the pleasure Of the Gov
eminent, Of which So, 200 have been called
for payment, interest ceasing Nov. 1, 1884
thase honHs ar not rnnlHrad nv others hear.
ing interest, there will be an immediate reduc-
ton in circulation of 90 per cent. Of their
amount Nov. there were $194, 1sO: 500 per
cent. bonds payable at the pleasure of the Gov
eminent. These bonds will probably be
paid within the next two years. even II con-
siderable changes are made In the tariff; and
cents mature, there will be no bonds which the
Government can call in for redemption. No
doubt the accumulation OF surplus revenue, II
it continues to accrue at the present rate during
the four years between 1887 and 1891, together
with the revenues Of 1892, will be more than
sufficient to pay off the AZ per cents. and from
1892 until 1907 it will be impossible for the Gov
eminent to use any of It's surplus revenues for
the payment of its bonds, except at the option
of their holders. It is apparent that the Gov
eminent cannot accumulate and hold its sur
plus revenues, even during the short period
from 1887 to 1892, without great disturbances to
the business interests Of the country, and much
less can it do SO during the longer period from
1892 to 1907.
It appears, therefore, that the foregoing con-
siderations should be given due weight in any
plan for funding the per cent. bonds maturing
In 1907, and the Controller therefore suggests
that the principal difficulties of the situation
may, perhaps, be obviated as well as q reduc-
ton Of interest effected by funding these bonds
into others which shall mature in proportionate
amounts at certain fixed intervals. Thus the
s73s. 600, 900 per cents might be funded into an
equal amount of 8 or ~ Fer cent bonds, one
fifth Of which, or SAT ,600,U00 to mature at in
tervals of five years, the first installment due
IuIx, he oiy,fD inafa11DoaOte 0f
$47, 900 each Of the list of July in the last
year each succeeding period Of five years, viz. {:
1902. 1907, 1872 and 1917 The average ma
turity Of these five classes OF bonds would be
the same as that of the present per cents-viz. {:
July l, 1907
Whatever course may be deemed expedient by
payment of the public debt, the Controller is Of
opinion that it is perfectly safe and Will AFFORD
great benefit to the public to permit an issue
by the national banks Of circulation to the ex-
tent Of 100 per cent-par value-of bonds de-
posted, instead Of 80 per cent. Even admit
ting that bonds representing the public debt
when funded at lower rates might ct times in
the future be below par in the market, the Gov
eminent would, If forced to redeem the notes Of
insolvent national banks, always have right to
cancel bonds on deposit securing the same. and
dollar for dollar. to the notes redeemed It is
further submitted that the profit on circulation
may be increased to point which will induce
banks to keep UP their circulation to the maxi
mum, and stop contraction Of their circulation,
which is now occurring, by repela1ng the law
taxing such circulation at the rate Of one-haf Of
per cent, semi-annually. The expenses Of
keeping up the national banking system by the
Government are at present paid In part from the
proceeds Of this tax and in part by assessment
on banks. If this tax be abolished all these ex-
penses should be paid by the last named
method.
In concluding this subject the Comptroller
wishes to have it distinctly understood that he
is not in favor OF any measure which will cause
Gait &C. zir,TN hat Hny
gregate paper circulation, made up Of legal
tender and national-bank notes and gold and
silver certificates, is ample for all the needs Of
contraction Of national-bank circulation, which
without appropriate legislation is imminent, will
seriously embarrass the business of the country,
and that If this contraction Is permitted to go
on it may result in the entire discontinuance Of
the issue Of notes by national banks. The
Comptroller believes that this form Of currency,
which can be increased or diminished in accord
ance with natural laws which control business,
should be continued in preference to any other
now permitted by law.
In regard to the circulation based on silver.
the Controller says the people Of the United
silver dollars in amount equal to more than one
third the national-ba circulation. If 1t Is
to issue circulation based upon silver, the Con-
troller believes circulation should be issued
upon coin or bullion which contains sufficient
number of grains of silver to have intrinsic val
inal value Some writer's have suggested that
the circulating medium might be based upon
bullion, both gold and silver, and the Controller
is Of opinion that under certain restrictions and
regulations it would be far more correct in prin-
ciple to issue silver certificates based upon
the deposit of bullion, to be valued in exact
proportion of silver to gold, than to continue
the issue Of certificates under the present law.
If this were done, silver bars might be stamped
at their market value and held in the Treasury
for the redemption of certificates which would
call an amount of silver equal in value to their
nominal or face value expressed in gold. The
periodically valued at it's market price in gold,
and a certain proportionate amount Of silver so
held might perhaps be coined TO provide means
for the redemption Of certificates, If redemption
was required for business purposes. The Con-
troller believes that the use Of silver as money In
this manner, and its periodical valuation would
have more influence In appreciating the market
value of silver among the nations Of the world
than the present arbitrary coinage OF 412&
grains Of silver as q dollar. The issue Of cur
rency based upon silver should not, however, be
unlimited, and the present laws making the
purchase and coinage of fixed amount Of silver
bullion mandatory are very pernicious in their
effect, as the unlimited and continued issuance
of full legal tender silver coin, and certificates
based thereon, of intrinsic value less than their
face has already caused the boarding Of gold,
and will eventually drive 1t from the channels Of
tr ade, thereby causing practical suspension Of
gold payments. There are many indications
of this, notably the uneasiness in financial cir
cles in June and July last, caused by the reserve
of gold in the Treasury falling SO near to a
gold certificates ceases. It will also be observed
fhot d,Ir ring the nreaant wear national hauIxa