The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1886-11-09
NATIONAL BANK CIRCULATION.
The Comptrolier's Views as to the Effect OF
RedeemiDg the Three Per Cents

The Comptroller's Views to the Effect of
RedeemiDg the Three Per Cents
WASHINGTON, Nov 8-Mr Trenholm Comp
troller of the Currency. in an interview, speak
ing of the effect on the national banking gystem
of the continuous calling of the 3-per-csn bonds.
said: whenever the bonds are called for re-
demption, the interest upon them ceases, but the
Treasury cannot make the bank surrender its
bonds and receive payment therefor. Many of
the banks are satisfied to be deprived Of the in
terest on the 3-per-cent bonds il they gan only
continue to do business by allowing theaf> to re-
main as security in the bands of the United
States Treasurer after they have been called.
Only interest bearing bonds are acceptable as Sc
curity, under the national banking act-of 1862.
The act establishing the national banking sys-
tenn, in one clause, made it necessary that inter-
est-bearing registered bonds of the United States
should be deposited with the Treasurer, in order
that the bank might begin business as a national
bank; but in. subsequent clause, which
specifies the amount of bonds that must
be deposited, the words interest bearing we're
not repeated, and for that reason some of the
banks contend that having complied with the
first section by depositing in bearing bonds
they comply with the second by continuing
to DO business on the basis OF bonds which have
ceased to be Understanding by being called for
redemption But the Treasury Department has
held that the law requires all bonds kept on de-
posit to be Understanding, and the opinion of
Attorney general Garland now simply affirms
and confirms the rulings Of the department.
He says that about 81, 100000 of per cents
are still outstanding and liable to call. and that
three fourths of those called within the past two
or three months have held by that Treasurer of
the United States for national banks Being
asked what he will do If national banks do not
obey the law and surrender the bonds for re-
demption when called, Mr. Trenholm said: 81
shall ask the Attorney general what must do
You know failure to comply with the law rem
ders a national bank liable to forfeit it's charter
at any time; that if bank fails to keep on
deposit the kind of bonds required by law, it
may be proceeded against in the courts for the
forfeiture of its charter but so violent remedy
would be resorted to only in pursuance of an
unavoidable public duty"
The volume of national bank currency at pres
ent in circulation, Mr. Trenholm says is in round
numbers about $2l7000,000 He does not think
that any considerable proportion of the 3-per-
cent bonds, now on deposit as basis of nation
al bank circulation, will be replaced by other
bonds when called. Some of the banks he says,
have already notified him that they will go out
of business. Whether any great incon venieuce
will result from these banks going out of bust
ness he says, Geo ponds upon the number and inn
portance of the banks that drop out of the sys-
tenn. AS rule, he says the large banks will
have no difficulty in maintaining the minimum
deposit necessary to enable them to do business.