The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1889-11-26
Recommendations Made that the Laws Be So
Modified as to Arrest the Present Con-
tractiono of the Circulating Medium.
Annual Reports of Three Important Di-
visions Ofthe POstOffice Department.
Money-Order Offices Nearly lf-Sustaining-
Number of Pension Claims Passed Upon
by Assistant Secretary Bussey.
~

Currency, covers the year ended Oct. 81.
1889, at which time there were in existence
1919 national banks. the largest number in
operation since the Inauguration of the
system. These associations possess an
aggregate capital of 500. ia. 1856. The last
reports of condition exhibit their resources
and liabilities on the 30th day of Septem-
Der, 1889. The number reporting at that
time was 1890. A summary of these re-
ports shows: Capital. s6l2.5 s4. 095: surplus.
S197. 1914. 76l; undivided profits. ss4. s66. 500;
gross deposits. including amounts due
banks, 1850, aS5. l6l; loans and discounts.
81, sos, 10. 739, all of which items show an
increase over any previous date. The
amount of circulation outstanding was
Sos. G62, 7S2, of which Sl31, 3SS.SS was Sc
cured by United States bonds. and the
remainder. S72.279.396. was represented by
deposit of lawful money in the treasury.
These banks held Sl94, 9S2. 900 United States
bonds. of which S146.471. 700 were to secure
circulating notes. Sl64, SIC. 40 of specie. and
$50. 752. 093 of legal-tender notes.
Within the year2ll banks were organized.
having an aggregate capital of S2l. 10000
These banks deposited with the Treasurer,
to secure circulation, S4.37S.550 United
States bonds, upon which were issued
S3,Sl2,975 in circulating notes. Thirty-six
of the new banks were organized In Texas.
the largest number in any one State. The
State of Pennsylvania has now the largest
number of associations in operation. Massa,
chusetts leads In point of capital stock, aud
New York In respect TO deposits and volume
of business. The large number of new
banks entering the system and their Wild
distribution is an evidence. the Comptroller
says. that the system is adapted to the
varied conditions existing within the ex-
frema limits 0f the national domain.
Within the year forty-one banks went
into voluntary liquidation aud only
two failed. leaving the additions, to
year. and 1as the annual average increase
, since the Inauguration of the system.
| Notwithstanding this increase, says the
| Comptroller, the system has not kept pace
with the needs of the people for increased
to incorporate under the statutes of the
| several States is not attributable to any
change in the law affecting either national
or State institutions. but is charged directly
to the fact. says the Comptroller, that no
profit results To tile banks by reason of the
| deposit OF bonds aud the issue OF circulat-
ing notes. 1t is claimed. IN fact, he says.
that an actual loss results in many West
ern States and Territories where the inter
est is highest and banki~ng-facilities most
needed. 1t is deemed certain by the Comp
troller that withdrawal of bonds held in
excess of the minimum requirements Will
COubiluc W lOuR DIS tlc plCbClb COnOltiouo
exist, and it is asserted that legislation is
necessary to prevent a contraction of the
volume of national bank currency.
In the opinion of the Comptroller, the
laws governing national banks shonld be
SO amended as to produce the following
notifications:
/. The minimum deposit OF bonds TO secure
circulation should be fixed at 10 per centum OF
capital in respect to associations having a cap
ital of $500. 600 or less, and for all banks having
a greater capital, a minimum deposit OF 5000
IN bonds should be required.
2. Circulation should be issued 10 the par
value of the bonds deposited.
3. semi-annual duty on circulation should be
so reduced as TO equal one-fourth OF l per cent.
per annum.
1t is held that these changes in the law
would do little more than save the national
banks from loss on account of circulation.
IT the present premium on United States
bonds is maintained. Taking as a basis
of computation the capital stock as u APP
pears in the summary of reports for Sept.
30, 1889. the present minimum of deposit of
bonds is found to be S95. 297 ,2S3. If the law
is amended as proposed, the minimum of
bond deposit required will be reduced to 49,
Sy1 ,5S1, making possible a withdrawal of S5l,-
400, 702 in bonds. upon which is based Si6.255.-
1913 in circulating notes. 1t is asserted that
this would greatly exceed the limit of
probable contraction, it being fair TO pre-
sumo. says the Comptroller. that the banks
now maintaining a deposit IN excess OF
legal requirements would not withdraw
Tie bonus IuuS TcledSeu. lDOu - CAREFUL
survey of the entire field. ii is the opinion
of the Comptroller that the proposed legis-
latlOn. taken as a whole. would tend 10 ar
rest the present contraction rather than &C
celefsste il, for the following reasons:
First-The present excess now held at a loss
will probably increase il a profit is apparent
~Second-The banks now holding an excess will
not avail themselves of the privilege OF withdrawal
conferred by the reduction of the minimum.
| Third-The organization of new banks will be
nearly or quite doubled. and the deposltof bonds
received from this source Will be maintained
even under the reduced requirements.
Fourth-The withdrawal of bonds by reason of
banks going into voluntary liquidation will be
Fifth-The addition of 10 per cent. in circula-
ton will apply to all bonds now on deposit. as
well as those which may hereafter be pledged,
and would add nearly SIS. 0OO, 900 to the circula-
ton upon present holdings.
The operation of these various infiu-
ences, the Comptroller says, wonld tend TO
prevent any considerable reduction in the
amount of bonds held To secure circulation.
while the increased percentage of new Is
sues would operate TO neutraliZe the effect
of any possible withdrawal, and might in-
fate, rather than contract. the total vol
ume of national bank circulation. In any
event the provisions of Section o of the act
of July ~, 1881. he says. would still be in
operation. limiting the deposit of lawful
money or withdrawal of bonds TO some
S3.0O0.0U0 during any calendar month,
which would limit possible contraction to
S36.000.0O0, which is less than the gross de-
crease OF circulation during the year just
closed.
The reduction of the duty on circulation
is commended upon the ground that the
present tax is unjust to & ; banks. because
it is impossible. on accC IL Of a privilege
now valueiess and the revenues of the gov
eminent are in excess % tn requirements.
This semi-annual dutyd he last fiscal
year amounted TO 81 .4I0: and the total
amount paid IN federal les 10 June 80,
1883. by the system, on capital. deposits
and circulation. is stated at S137, 664. 1857.
The reduced rate of duty would produce q
sum in excess of the expenditures made by
the general government ON account of the
banks.
In submitting this recommendation the
Comptroller states that he has been largely
Influenced by the increased accsssions To
the system from Western and Southern
States. and the evidence daily accumnlat-
ing that II Is not only adapted to the wants
of that vast area now inadequately sup
piled with banking facilities, but that its
adaptation has become more fully appre-
ciated. IL being of the greatest Importance
to those regions that the abundant capital
of the older States be utilized. and through
accomplished.
The oaip aocru;po 20 <ha ~o-o~,p,apS h-