Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1889-11-26
NATIONAL BANKS.
Their Increase in Number Not
Equal to Demand.
Where Interest Reaches 8 Per Cent Banks
Lose Through Deposits.
Some Recommended Reforms and
Changes in Postal Laws.

WAsBnGros, Nov. IS The forthcoming
report Of the Comp roller II Currency cover
the year en- led Oct. 81. 1853, Al sh.ch time
there we're in exists uce 3l9 natl banks. the
largest number In Up. ration since the insugur
alton Of the sykt, IN These associ ATOMS p2s
| sess an aggregate capital of s62o, ,l74 365 The
last reports of their condition exhibit theii
resources AMI liabilities the Both day of Sep
tenber, 1889. Number reporting at tia,
time, 5,209. Within the year I'll banks
were organized having an aggregate capital
of e2l 10000 Thirty-six new banks were
organized in Texa.. the largest number Of
any one state. Pennsylvania has the largest
number Of associations in operation. MAJ
sachusetts leads in point of capital stock, and
New York in respect to deposits and volume
Of business.
Within the report year forty Lone banks
vent into voluntary liquidation and two
failed, leaving net additions to the system of
l6s against 30 last year and l23 annual
average increase since the Inauguration Of
the system. Investigation demonstrates that
the system has not kept pace with the ne
cessities of the people for increased banking
facilities.
The growing tendency to incorporate under
the statutes of several States 10 not a,tribu-
either national or State institutions. but
charged directly to the fact that no profit re-
suits by the reason of the deposit of bonds
and the issue of circulating notes. 1t is
demonstrated through tables prepared by the
government aetuary that an actual lose is re-
sulting to nation banks by reason Of their be-
ing obliged TO deposit bonds and take out
circulation notes, wherever the current rate
of interest is greater than 4.76 per cent. As
the prevailing rate in all States west of the
Alleghenles is in excess Of that named it
follows that ia the greater number of States
and 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 tendency directly to diminish the vol
ume of currency issued by banks already in
existence. The gross decrease in the ma
tioDal bank circulation during the report
year is &37 .4s6 l39; deposits of bonds now
of banks organized during the year is Sll,-
300 in excess of the minimum requirements.
OF the $l46,+7I 700 United States bonds
held as security for circulation by national
banks the Both OF September, S5l ,l74 Az is
in excess of the minimum requirements. Ii
is deemed certain by the Comptroller that
the withdrawal of bonds in excess of the
minimum requirements will continue as long
as the pres, Mt conditions exists. Legislation
is necessary to prevent contraction in the
volume Of national bank currency. In the
opinion of the Comptroller the laws govern
ing natioral banks should be amended to
produce the following notifications:
/. The minimum of deposit bonds to Sc
cure circulation be fixed at 10 per centum of
the capital in respect to associations having
al of Cos
banks having u q greater capital 4 minimum
depo,it of so 600 in bonds should be re-
quired
2. The circulation should be issued to the
par value of the bonds deposited.
3. The semi annual duty on the crcula-
ton should be reduced to equal one fourth
of one per cent. per snnum 1t Is held that
these changes in the law would do little
more than save national banks from loss on
account of the circulation If the present
premium on United States bonds Is main
tanned. Upon a careful survey of the entire
field the opn on of the comptroller 10 that
the proposed legislation taken as whole,
would end 10 arrest the present contraction
rather than accelerate it. A reduction
of the duty on the circulation is commended
upon the ground that the present tax is un-
Just 10 banks, because it imposed an account
of the privilege now vslneless, and the rev.
enues of the government are in excess of its
require ments The Great on of the Office of
assistant examiner is recommended. The
comptroller has averred the discussion of
the various plans suggested for substituting
other securitie. for United States bonds as a
basis for circulation. lie does not recoR-
mend any issue of long date bonds which
would defer the payment of the present is
sues as they mature, but fsvors q reduction
of the interest upon the existing bonds to 2
IA per cent. by prepayment, to the holders
of the difference between that rate of inter
est and the per cent. interest which the
bonds nov carry.