The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1889-11-26
TO PREVENT FURTHER CONTRACTION.
The Comptroller of the Currency on
tho National Banks.
Why They are often Losers Under
the Existing Requirements.
Brazilian Delegates Admitted to the
International Congress.

WAsHINGToN, November 25.-The forth
coming report Of the comptroller of the cur
rsncy covers the year ended October 81. 1889.
at which time there were in existence 3,319
national banks, the largest number in oper-
alton since the Inauguration Of the system.
These associations possess an aggregate cap
ital of $500, 1855. The last reports of their
condition exhibit their resources and liabili-
ties on the 3Oth day of September 1885, The
number reporting at that time was 5000.
Within the year 211 banks have been organ
ized, having an aggregate capital Of $2l, ,240.-
600. Thirty-six new banks have been organ
lied in Texas, the largest number in any one
State. Pennsylvania has the largest number
of associations in operation. Mass
achusetts leads in point Of capital stock and
New York in respect to deposits and volume
of business. Within the report year Al
banks went into vol untary liquidation and
two failed, leaving net additions to the sys-
tenn of 16S, against 80 last year, and an an
nual average increase Of 123 since the inau-
guration of the system. Investigation de-
monstrates that the system has not kept
pace with the necessities of the people for in
creased banking facilities, The growing
tendency to incorporate under the statutes
of the several States is not attributable to
any change in the law affecting neither ma
tional or State institutions, but is to be
charged directly to the fact that no profit
bonds and the issue Of circulating notes. 1t
is demonstrated through tables pre-
saFg RalfS thss actual Sss IS resulting
to national banks by reason Of their being
obliged to deposit bonds to take out their
circulation, whenever the current rate of
interest is greater than 476 per cent. AS the
prevailing rate in all the states west Of the
Alleghenies is in excess of that named, 1t fol-
lows that in the greater number of states aud
those increasing most rapidly in wealth and
population, the enforced deposit of bonds to
secure circulation is an impediment in the
way of the organization of new banks and
has a tendency direstly to diminish the
volume of currency issued by the banks
already in existence. The gross decrease of
national bank circulation during the report
year was $37, ,489, 139. The deposits of bonds
by new banks organized during the year
were S11,300 in excess of the minimum
requirements
Or S146. .451, ZOO United States bonds held as
security for the circulation of national banks
on the Both of September, S51, ,174, AIT was in
excess of the minimum requirements, 1t Is
deemed certain by the comptroller that the
withdrawal Of bonds held in excess of the
minimum requirements will continue so long
as the present conditions exist. 1t is assert
ed that legislation is necessary to prevent
the contraction of the volume of the national
bank currency. In the opinion Of the comp
troller, the laws governing national banks
should be amended to produce the following
notifications
Q) The minimum deposit of bonds to se-
cure circulation to be fixed at ten per centum
of the capital with respect TO associations
having a capital of $500, 600 or less, and for
all banks having greater capital mini
mum deposit of $4,000 in bonds should be
required.
(2) Circulation should be issued to the par
value of the bonds deposited.
.(3 The semi-annual duty on circulation
should be reduced to equal one-fourth of one
per cent. per annum.
1t is claimed that these changes in the law
would do little more than save the national
banks from loss on account Of circulation
bonds is maintained. Upon careful survey
OF the entire field, in the opinion of the comp
tr0ller, the proposed legislation, taken as a
whole, would tend to arrest the present con-
traction, rather than accelerate 1t. The re-
duction of the duty on. circulation Is COM
mended upon the ground that the present
tax Is unjust to the banks, because imposed
on account of privilege now valueless and
that the revenues of the government are in
excess of its requirements.
The creation of the office of assistant ex-
aminer is recommended. The comptroller
has avoided the discussion of the various
plans suggested for substituting other secur-
tiles for United States bonds as the basis of
circulation. He does not recommend any is
sue of long date bonds which would defer
the payment of present issues as they ma
ture, and favors the reduction of interest
upon existing bonds to two and one-fourth
per cent by prepayment to the holders of the
difference between that rate of interest and
the four per cent. interest which the bonds
now carry.