The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-11-27
THE CIRCULATING MEDIUM.
Valuable Information from the Annual
Report of Comptroller Cannon.
The Operations Of the BankS-The Causes of
the Contraction of the National Bank Cur
rency, and Remedies Suggested


Secretary of the Treasury. 1t shows that there
were four national banks organized in Indiana
during the year, with capital of ST. 0500 900, and
circulation of $607, 500; in Ohio seven banks
organized with capital of 81 500. 900 and s49l.-
400 circulation. During the year ended Nov. !,
1855, 145 banks were organized, with capital of
SIG, 1913. 600, and circulating notes We're issued
to these new associations amounting to 81, 274,-
9l0 Since the establishment of the national
bank system of Feb %, 1863, there have
been organized 3.406 national banks; of these
432 have gone into voluntary liquidation for the
purpose of winding up their affairs, 70 have
gone into voluntary liquidation for the purpose
of reorganization, and GA are in liquidation by
expiration of their charters, of which number SO
have been reorganized, and 104 have been placed
in the hands of receivers, for the purpose of
closing up their affairs, leaving the total num-
Der in existence 2, 727, which is the largest num-
Der that has been in operation at any time.
Under the provisions of the act of July II,
1872 national banks with a capital of from 800,
OOO to $l5O, 0O0 may be organized upon mini
mum deposit OF bonds equal to % per cent. of
their capital. The Comptroller states that this
reduction to the minimum deposit of bonds has
had the effect to increase the number of banks
organized lie calls particular attention to the
fact that banks are no longer organized especial
ly for the purpose OF issuing circulation, for the
reason that in a great majority of cases only
the minimum amount of bonds required by law
is deposited for the purpose of issuing circula-
ton, and states in this connections
lit is believed that the national bank system
will be continued, even if the associations organ
lied under it cannot issue circulation at profit,
inasmuch as in experience it has been
shown that it is for the best interest
of the public, as well as of the banks that
this business should be carried on under gen
eral law having effect throughout all the differ
ent States This statement is made
without prejudice to the banks organized I'M
der the statutes of those States which
contain provisions and restrictions similar TO
those of the national banking law. In many of
the States, however, the banking laws are de-
fectlve. and it is evident that the legislation
upon the subject cannot be homogeneous nor
the working of the laws so harmonious and use
full under statutes passed by thirty-eight States
as under one general law Of Congress- applica
BILE to all banking institutions"
The Comptroller gives details in regard to the
action of the banks expiring since 1882. and re-
fers particularly to the operation of the law of
extension, which appears to have been generally
satisfactory; but calls attention to certain
amendments which the experience of the past
three years has shown to be necessary. A
larger number of banks expired by Limitation
during the year 1885 than have or will expire
during any year prior to 1900
Among the banks which have been extended
during the past year were thirty in the city of
New York, with an aggregate capital of $685.
$50, 900. as we'll as large number in Boston,
Philadelphia and other principal cities, being
some of the largest banking institutions in the
United States Attention is called to the fact
that many of these banks were originally organ
lied under the various State laws. Notwith-
standing the organization of banks, the
aggregate amount Of bonds on deposit to secure
circulation has during the past year diminished
from 1925 BIG, 300 to $308 364, $50, and the net
decrease in circulation during the year has
been $l5, 545 46l. The reduction in circulation
has been less than was estimated by the Comp
troller in his last annual report, as no United
States bonds have been called for payment dur
ing the year ending Nov. /. The reduction from
other causes, notably the small profit on circu-
lation, has been greater than was anticipated.
and the Comptroller believes the contraction of
national bank circulation will continue unless
some legislation is had which will increase the
profit which national banks receive from the
issue of circulating notes, and proposes
that the tax on circulation be removed, and the
amount of circulation which national banks are
permitted to issue be increased to the par value
of the bonds deposited by them. He refers to
the fact that, although there has been a contrac
ton In national bank notes. the circulating me-
dunn of the country has been increased bv silver
dollars and silver certificates. and in this con-
nection he calls attention to the statement in
his last annual report, that the continued coin
age of the standard silver dollar under the pres
ent provisions of law, is in excess of the re-
quirements of the country, and is liable to bring
the business of the country to silver basis and
cause some degree Of financial disturbance
-Four banks, with an aggregate capital of $780,
600, failed during the past year Dividends have
been paid during the year to the creditors of in
solvent banks to the amount of S. l51 sos. Dur
ing the fiscal year ending June 80 there was paid
to the government 81, 794, 584 taxes on circulat-
ing notes of national banks. Information is
given as to loans and rates of interest through
out the country, particularly in the principal
cities and the attention of Congress is called to
the difficulty of enforcing the provisions of Sec
ton 5000, Revised Statutes, which restricts loans
of national banks to any one individual, firm or
corporation to one-tenth of their capital stock
Tables are presented which indicate that the
average dividends and earnings of national
banks In the United States are, as a rule, less
than those of banks in other countries
The Comptroller is of the opinion that the
national banks have not been seriously affected
by the large number OF mercantile failures
which have occurred during the past
two years. The usual tables in regard
to the distribution of coin and paper
currency throughout the country among the
people and the banks, are brought down to date,
showing an increase for the year in gold, silver
and paper currency. The report contains COM
ties of the national banks during the past ten
years, and detailed statement of their
condition on the first day of October,
1885. The different items indicate
that the business of the national banks has
largely increased during the past year. Although
the items of United States bonds and circulating
notes have decreased the liabilities to depositors
and correspondents have increased more than
$ls00O0000 During the year the banks have
increased their specie resources h'ore than
SAT-, 600, 600. This increase is mad up of
$44 All, ia of gold coin and 81 791, 1874 of silver
coin. The legal-tender notes held by the banks
have, however, diminished about 50, 500 000 The
various subjects treated of are accompanied by
elaborate statistical showings, and there are
chapters on State taxation of national banks, the
operations of the principal clearing houses clear
ing-house certifca ties, the condition of State and
savings banks, and other financial questions.
Vessel Capsized and Crew Lost.
CLEVELAND. O.. Nov. 26.-To-day, while the
tug James o. Mandeus was ten miles off Cleve-
land en- Lake Erie, looking for lows, Captain