The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1893-09-01
A Bank CIRCULAR.
Commissioner Breidenthal Notifies Kan
sas Banks That They Must Withdraw
Balances from New York Banks, as They
Are NJ. LAYING Out Currency.

sas Banks That They Must Withdraw
Baiancrs from New York Banks, as They
Are No. Paying Out Currency.
TOPEKA, Kan. Aug. 26.-State Bank
Commissioner Breidenthal has issued
the following circular letter to all state
and private banks in Kansas:
TOPEKA, Kan Aug "a. 1893
To the Cashiers OF all State and Private Banks
in Kansas:
Dear Sir: I desire 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 ter-
tain knowledge refused requests for pay
ment Of amounts due Kansas banks except in
their own certificates of deposit which are
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
dictate that they are insolvent The United
States supreme court declares insolvency TO be
inability to meet obligations in the usual or or
binary course OF business. which applied TO a
bank means inability to pay the demands that
are made upon them. not in clearing house GER
tifcateS but in cash, lawful money. Section
IS of the Kansas banking law provides that
''each bank shall al all times have on hand ~ per
cent OF It's deposits, one-hah of which ma
consist OF balances due to ii 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
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 fer 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
the amount you have on deposit there Also
advise me whether you are indebted to any
New York bank and IL so state the amount OF
such Indebtedness. Very truly yours,
JOHN W. BREIDENTH>L
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. It was done for the protection
of the banks of Kansas. He denied
that there was any politics in it or that
| it 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 il
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 i
will be more serious than Commissioner
Breidenthal anticipates. A large mum
Der 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 Yorl
banks in retaliation will call for theil
loans.
Asked if the clearing house system
of meeting demands on the New Iorl
banks had affected the Topeka banks
=. l. Bonebrake. president of the Cen
trail national bank. said his bank and
so far as he knew. the local banks haC
not felt it; that business with the New
| York banks was transacted a
promptly as before. He said h
thought all the banks of the country
would testify the same eXcep
those OF Chicago, which has grown t.
be the rival money center to New York
and there New York exchange was a
discount and the bankers were pro
testing against the New York way o
meeting the present emergency.
p. G. Noel, president of the First ma
tional bank, confirmed Mr.. Bonebrake'
statement and said he was meeting
with neither trouble nor delay in deal
ing with his New York correspondents