Crawford avalanche., 1894-12-13
EcKELs ON BANK ISSUE.
He Discusses Currency and the Defecti
and Limitations of Preaeut 9yateun.

He Discusses Currency and the Defects
and Limitations of Present System.
The report Of the Hon. James n.
Eckels, Comptroller of the Currency, sub
mitted to Congress, gives full information
In regard to the organization, supervision,
and liquidation of the national banks for
the year ended Oct. 81, 1894. 1t shows
that during this period but fifty banks
were organized. with a capital stock Of
Sc, ,2S5, 900, the smallest number char
tered, as well as the minimum amount Of
capital, in any one year since 1870. OF
these banks twenty-seven are in the
Northern and Eastern States, ten in the
Southern States, and thirteen IN the West
ern or Mississippi division.
On Oct. 81. 1894. the total number Of
national banks in operation was 1856,
with an authorized capital stock of $672,-
GIL 1865, represented by 7,955,076 shares
of stock owned by 2S7, ,S92 shareholders.
On Oct 2, 1894, the date of their last re-
port of condition, the total resources of
the banks were $3,473, ,922, ,O55, of which
their loans and discounts amounted to ST.
007 ,122, 101, and money of all kinds in
bank, $422, ,42S, 1872. OF their liabilities
81, TBS, ,41S,S10 represented individual de-
posits, 1894, ,121 ,OS2 surplus and net un-
divided profits, and $172 331 ,07S circulat-
ing notes outstanding. The total circula-
ton of national banks on Oct. 81, 1894,
amounted to SPOT, ,472 ,6O3, net decrease
during the year of 81, ,741 ,563 and gross
decrease of $S,614, 1854 in circulation Sc
cured by bonds.
During the year seventy-nine banks,
with an aggregate capital stock of $10,-
nytf .ff hA .cto lxrx
untary liquidation; twenty-one-including
two which failed in 1S03-with capital
stock of So, TO- 600, became insolvent and
were placed in charge of receivers.
The feature of the Comptrollers report
is his discussion of the currency question
and the defects which are said to exist in
the note-issuing powers vested in ma
tional banks On this subject he says:
No section of the law should be disturbed
which cannot be materially improved upon
and no amendment engraftcd unless such
amendment will work out better results than
flow from the existing order of things.
For the present law 1t must be conceded IL
has been successful In every material feature,
excepting In the matter OF bank-note Issues,
and here the failure has been partial one.
The notes issued by the banks under govern.
mental supervision have been uniform In ap-
pearance and under any and oil circum-
stances Of the full face value which they pur-
port to carry. They have possessed the first
requisite Of good bank note issue-immedi-
ate convertibility into coin upon presenta-
tion.
1t is probable that there could be no better
plan for simply insuring the note holder
against loss than the present requirement OF
n deposit of bonds to secure a banks circula-
a method could be devised, not less safe In
this respect. and in addition thereto pos
wholly wnnting-elasticity OF issue. The com
plant, therefore, made against the present
system is that. lacking in elasticy OF issue,
Ing W wants of the country's trade and com
merce. This defect must attach to every
scheme for currency isued by the banks
value of which fiuctuates while the percent
age Of issue. less than the value of the bonds
granted the banks, remains unchanged.
But serious Is this fault and retardful
rs IL is to the business interests Of the coun-
try, any attempt to remedy ii which should
lose sight Of or In any wise make less certain
the present unquestioned credit and con-
yertlblity of the bank issues OF the country
could not be justified. 1t Is a duty Of govern
ments to see that the currency which circu-
lates among the people shall always be Of
the very highest character, the soundness OF
which should never lie subject OF Inquiry.
For thirty years the American people have
had such a bank currency, ana having seen
the value Of IL both here and abroad they will
not be content to have any innovation made
unless such new departure insurcs not only
equal but better results.
II Is respectfully suggested that not only
as good but better results would be attained
II the present bank act were amended by re-
pealing the provision thereof requiring each
bank as prerequisite to entering the sys-
TEN and issuing bank-note currency to de-
posit government bonds. In lieu of such
provision should be substituted one permit
ting the banks to issue circulating notes
against their assets to an amount equal to
at least 90 per cent. OF their unimpaired
capital.
TIE Comptroller follows this suggestion
with the further one for the maintenance
of safety fund to be provided bye grad
uated taxation upon the outstanding cir
culation of the banks until the same shall
be equal to not less than 8 per cent. of
the total of such outstanding circulation,
this fund to be held by the Government
rs an agent only, and for the purpose Of
Immediately redeeming the notes of insol-
vent banks. 1t is to be Immediately re-
plenished out of the assets of the banks,
on which it shall be first and paramount
lien. and from assessment to the extent
of the double liability on the shareholders.