The Kinsley graphic. [volume] (Kinsley, Kan.) 1890-1940, 1893-09-01
A BANK CIRCULAR.
C0nmissioner Breidenthal Notifies Kan
sas Banks That They Must Withdraw
Balances from New York Banks, as They
Are Not HaYinR Ont Currency

Commissioner Breidenthal Notifies Kan
sas Banks That They Must Withdraw
Balances from New York Banks, rs They
Are Not Paying Out Currency.
Topeka, Kan, Aug. 26-State Bank
Commissioner Breidenthal has issued
the following circular letter to all stats
and private banks in Kansas:
TOPEKA, Kan. Aug 81, 1893
To the Cashiers of all State and Private Banks
in Kansas:
Dear Sir: Idesire to call your attention to
the fact that the banks of New York city are
refusing and do absolutely refuse to pay drafts
made upon them except through the New
York clearing house. and have to my GER
tain knowledge refused requests for pay.
ment Of amounts due Kansas banks except in
their own certificates Of deposit which ara
made payable through the said clearing house
and not in lawful money. And further, that
they have given instructions to make all drafts
on them payable through said clearing house
This action on the part Of such banks would in.
dicate that they are insolvent The United
States supreme court declares insolvency to be
inability to meet obligations In the usual or or.
dinary course of business. which applied to .
bank means inability to pay the demands that
are made upon them not in clearing house Ger.
tfncates, but in cash. lawful money. Section
Is OF the Kansas banking law provides that
"each bank shall at all times have on hand 20 per
cent OF its deposits, one half Of which may
consist OF bal alances due to it from good solvent
banks" In view Of these facts balances due
from New York city banks in excess OF per
cent OF your deposits will not be considered as
a part OF your legal reserve, until such banks
shall again resume payment in lawful money of
the United States The per cent. referred to
is permitted for the purpose Of enabling you to
supply your local demand for New York ex-
change. Please furnish me the name Of your
New York correspondent and statement Of
vnr hav np A1SA
advise me whether you are indebted to any
New York bank and If so state the amount Of
such Indebtedness. Very truly yours,
JOHN w. BREIDENTHAL
Bank Commissioner.
EFFECTS OF THE CIRCULAR
Asked why he had issued the circu-
lar, Commissioner Breidenthal said that
his reason was apparent in the circular
itself. 1t was done for the protection
of the banks of Kansas. He denied
that there was any politics in it or that
1t was intended to bolster up Senator
PETER in the stand he took on the floor
of the senate Wednesday. He said the
circular had been in contemplation
fully ten days, week before Senator
PETER made his speech.
Asked what effect the circular would
have, Mr.. Breidenthal said that 1t
would result in the withdrawal of the
Kansas banks of their balances in New
York and the transfer of them to other
money centers. This was about all the
effect it would have. Money now on
deposit in New York would be gradual
ly withdrawn by the sale of exchange
until balances should become reduced
to the per cent. allowed by law.
Local bankers think the effect of the
circular on the banks affected by it
will be more serious than Commissioner
Breidenthal anticipates. A large num-
ber of the banks of Kansas are borrow
ers in New York, by means of re-dis-
counting, and when they begin to with
draw their balances the New York
banks in retaliation will call for their
loans
Asked if the clearing house system
of meeting demands on the New York
banks had affected the Topeka banks,
P. /. Bonebrake, president of the Cen.
tral national bank, said his bank and,
SO far as he knew, the local banks had
not felt it; that business with the New
York banks was transacted az
promptly as before. He said he
thought all the banks of the country
would testify the same except
those of Chicago, which has grown to
be the rival money center to New York,
and there New York exchange was at
a discount and the bankers were pro-
testing against the New York way of
meeting the present emergency.
2. G. Noel, president of the First na-
tiOnal bank confirmed Mr. Bonebrake'S
statement and said he was meeting
with neither trouble nor delay in deal
ing with his New York correspondents