The herald., 1894-12-03
PROPOSED CURRENCY REFORM
Comptroller Eckels' Report to
Congress.
Existing Monetary Evils and How
to Cure Them.
Tho Government should Go Out of
the Banking Busiueas-A Safe
and Sound Circulating
Medium.

the Banking Business-A Safe
and Sound Circulating
Medium.
BY the Associated Press.
( WASHING ron. Dec. 2. The repert o
Hon. James ii. Eccles, comptroller of
the currency, to be submitted to con-
gress tomorrow, gives full information
in regard to the organization, super.
vision and liquidation of the national
banks for the year ended October 81
1894. 1t shows that during this period
but so banks were organized, with 9
capital stock of $5.2S5, 900. the smalles,
number chartered, as we'll a. the mini
mum amount OF capital. in any one year
since 1879. OF these new banks 27 are
in the northern and eastern states. 10 in
the southern states and 13 in the west
ern or transmississippi division.
On October 81. 1894. the total numbo,
Of national banks in operation wac 8, 767,
with an authorized capital stock OF
$672, III 1856, represented by 1856. .076
shares Of stock owned by 2S7, S92 share
holders.
On October 2, 1894, the date of the
last report OF condition, the total re-
sources OF the banks were So. 473 922, 055.
of which their loane and discounts
amounted to 81, ,097, 122, ,l91, and money
of all kinds in bank s422, 42S. 1872. Oh
their liabilities SI.72S, ,4lS,Sl9 represent
ed individual deposits; 1894, l2l .0S2 sur.
plus and net undivided profits. and
$172. 1881, 978 circulating notes outstand-
ing. The total circulation OF national
banks on October 81, 1894. amounted to
$207, Az, 603, net decrease during the
year of Sl,74l, ,563 and gross decrease of
$S.6l4 S64 in circulation secured by
bonds.
During the year 70 banks, with an ag-
gregate capital stock OF $40. .475. 900,
passed out OF the system by volun-
tary liquidation; 21. including two
which failed in 1898, with q capital
stock oil s2,770.000. became insolvent
and we're placed in charge of receivers.
The feature OF the comptr0ller's re-
port ia his discussion Of the currency
eystem and the defects which are said to
exist in the note issuing powers vested
in national banks. On this subject he
says:
mo section OF the law should be dis
urbed which can not be materially
improved upon and no amendment en-
grated unless such amendment will
work out better results than follow from
the existing order Of things.
"The present lRw.it must be conceded,
has been successful in every material
feature, excepting in the matter OF bank
note issue, and here the failure has been
but a partial one. The notes issued by
the banks under governmental SUPER
vision have beon uniform in appearance,
and under any and all circumstances OF
the full face value which they purport
to carry. They have possessed the first
requisite Of good bank note issue-im.
mediate convertibility into coin upon
presentation.
ut is probable there could be no bet.
ter plan for simply insuring the note
holder against loes than the present re.
quirement OF deposit OF bonds to se-
cure a banks circulation, but 1t 10
equally certain, however, that . method
could be devised not less safe in this
respect. by sn addition thereto, possess.
ing that which is essential and is now
wholly wanting-elasticity OF issue.
The complaint, therefore. made against
the present system of banking is
shat of inelasticity OF issue-it fails to
meet as fully as it ought the varying
wants OF the country'a trade and conn
merce.
"This defect muet attach to every
scheme for a currency issued by the
banks against a deposit of bonds, the
market value Of which hucustes while
the percentage of issues, less than the
value OF the bonds granted the banks,
remains unchanged.
1T must also be wanting in such q
method because of the delay in the face
OF a pressing need, occasioned by q
securing and depositing the bonds re-
quired and taking out the circulation
thereon.
"But serious as this fault and retard.
full as it Ia to the business interests OF
the country, any attempt to remedy it.
which should lose sight Of or il any
way make less certain the present un-
questioned credit and convertibility of
the bank issues of the country could not
be justified. 1t is . duty OF govern
msnt to see that the currency which
circulates among the people shall always
be- of the very highest character, the
soundness of which should never be q
subject OF inquiry. For thirty years the
American people have had such bank
currency and having seen the value of
it both here and abroad, they will not
be content to have any innovation made
unless such new departure insures not
only equal, but better results.
"It is respectfully suggested that not
only ss good but better results would be
attained if the present bank act were
amended by repeating the provisions
thereof requiring each bank as a prsre-
ouisite to entering the system and issu-
ing bank note currency to deposit
government bonds. In lieu of such
provision, should be substituted one
permitting the banks to issue ciroulat-
ing notes of their assets to an amount
equal at least to 80 per cent OF their un.
impaired capital.
The comptroller follows the auggest-
ions with the further one for the main
tenance of a safety fund to be provided
by graduated taxation upon the out
standing circulation of the banks until
the same shall be equal to not less than
s per cent of the total of such outstano.
ing circulation, this fund to be held by
the government as an agent only and
for the purpose of Immediately redeem
ing the notes on solvent banks. 1t is
Immediately to be rsplenished out of
the ssHets of the banks on which it shall
have q fret and paramount lien, and
from assessment to the extent of the
double liability OF the shareholders.