Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1890-07-25
NATIONAL BANKING PLANS.
The Senate Receives n Letter From the
Controller of the Currency.

The Senate Receives n Letter From tho
Controller of the Currency.
WASHINGTON, July 24.-Mr. Sherman has
laid before the Senate letter from the Con-
troller Of the Currency, in regard to the bill
affecting National bank circulation recently
reported to the Senate. The Controller says:
1t will be observed that there were on the Nth OF
May last 8, 43S National banking associations in
operation In the United states having total capital
of $685. U5 6. These associations had total circu-
lation of I25 79l, $40 secured by pledge Of United
States bonds amounting to s14S. 79O 800 at their
face value. The circulation stated does not in
clude $50. 519, 5S5 In process of retirement and
represented b an equal amount Of lawful money
IN deposit IN the Treasury of the United States.
1t also apDears that the minimum amount OF
bonds required to be deposited by these banks
under existing law is s9s, 900. 4oO upon which they
$50, oiO, 414. 1t would, therefore, be possible
for the banks to Withdraw bonds TO
the amount or "a. 500, 40 and surrender
sS6, 7S1 526 of their circulating notes
under existing law. The bonds on de-
post in excess of legal requirements are arule,
the property of the older banks located in the
Eastern and Middle States where the current rates
of Interest are relatively low. Banks recently Or
ganized have, as a rule, the minimum deposit of
bonds, and this is in general sense true of all
banks located in States and Territories where in
terest rates relatively high. The first section
of the bill Senate 8 1922 reported from the Com
ments, provided that National banking associa-
tions may be organized and operated with nom
inal deposit of bonds to secure circulation. This
provision standing alone would be favorably re-
celved by the banks. 1t would however. tend to
contraction of the bank note circulation, unless
accompanied by the second section. which entities
said associations to receive circulating notes
equal In amount to the par of the bonds pledged
for their redemption The operation of the bill a.
a whole would in my opinion, be salutary. 1t
would enable new banks to organize without fore
Ing them to appear in the bond market In compe-
tition with the Secretary of the Treasury Ihis
would result in an advantage to both the Govern
ment and the new banks. Many banks located IN
the newer States where the interest rates are high
would no doubt reduce the present amount OF the
bonds now held to secure their circulation, and
this would result in benefit to the banks and also
to the people whom they serve, as 1t would in
crease locally the amount of funds available for
loans by putting in circulation the sums now
locked up in bond premiums.
In conclusion, the Controller says that Con-
gress seems to have determined that the further
issue of bank notes is not desirable, and in that
event the burden of maintaining circulation,
he thinks, should be removed from these asso-
Citations, SO that they may more faithfully
and satisfactorily serve the people as banks of
discount and deposit. in which sphere they have
never been adversely criticised by any portion
of the people.