The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1894-12-03
Baltimore Bankers' scheme Very
Largely Indorsed for Making an
Elastic Circulating Medium.
ADMINISTRATION
POLICY
DOUBTLESS OUTLINED IN THE
TREASURY OFFICIALS STATEMENT.
Civfl-Service Report Cites Glaring
yf0lations-Plea from COmmis-
sioner of Navigation.


Currency. to be submitted to Congress to-
morrow, gives full information in regard
to the organization, supervision and Iiqui-
dation 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 S, ,2S5 900, the smallest
number chartered, as well as the minimum
amount of capital, in any one year since
1873. OF these new banks twenty-seven are
in the Northern and Eastern States, ten
in the Southern States and thirteen in the
Western, or transmississippi division On
Oct. 81, 1884, the total number of national
banks in operation was 3,756, with an au-
thorized capital stock of $685. .s65. repre-
sented by 7,955,O76 shares of stock owned
by 2s7,s92 shareholders. On Oct .. 1894, the
date of the last report of condition, the
total resources of the banks were So, ,473, ,e22. :
005. of which their loans and discounts
amounted to $2,6O7.122191, and money of all
kinds in bank, s422. 2.42S.192. OF their liabiI-
tiles S,72S, ,4S,s1s represented individual de-
posits sS34,121,O ,OS2 surplus and net undivided
profits and s172, 331, ,97S circulating notes out
standing. Total circulation. of national
banks on Oct. 81. 1894, amounted to s2O7.
472.6os, a net decrease during the year of
S,7H, ,563 and a gross decrease of IS, ,614. .Ss4 in
circulation secured by bonds.
During the year seventy-nine banks. with
aggregate capital of so, .ooO passed
out of the system by voluntary nouida-
tion. twenty-one including two which failed
came insolyent and were placed in charge
of receivers. The feature of the Con-
troller's report is his discussion of the cur
rency question and the defects which are
vested in the national banks. On this sub
Ject he says:
THE CONTROLLERS ADVICE.
mo section of the law should be dis
turbed which connot be materially improved
and no amendment engrafted unless such
amendment will work out better results
than flow from the existing order of things
From the present law it must be conceded
IL has been successful I'm every material
feature, excepting in the matter of bank
note issue, and here the failure has been
but partial one. The notes issued by the
banks under governmental supervision have
been uniform in appearance, and under
any and all circumstaces, OF the fun face
saius sus wnich they purport TO carry. They
nave possessed the first requisite of a good
panK note issue-immediate controverti-
Dlilty IN coin upon presentation. 1t is prob
able that there could be no better plan for
SIMPLY insuring the note-holder against loss
than the present requirement of q deposit
or bonds to secure banks circulation, but
IL is equally certain, however, that meth
respect, and in addition thereto possessing
that which is essential and is now wholly
wanting-elasticity of issue. The complaint.
therefore, made against the present sys-
tenn is that, lacking in elasticity of issue,
IL 1allS TO meet as fully as 1t ought the
varying wants of the country's trade and
commerce. This defect must attach to ev-
cry scheme for currency issued by the
banks against deposit of bonds, the mar
ket value of which f1uctuates while the
percentage or issue, less than the value of
the bonds granted the banks, remains un-
changed. 1t must also be wanting in such
a method because of the delay in the face
OF pressing need, occasioned by a tight
money market or other reasons. in securing
and depositing the bonds required and TAX
ing out the circulation thereon.
but serious as this fault and retardful
as 1t is to the business of the country, any
attempt TO destroy it. which should lose
slgnt OF or in any wise make less GER
convertability of the bank issues of the
country, could not be justified. 1t is a
duty of governments TO see that the cur
rency which circulates among the people
shall always be of the very highest char
acter, the soundness of which Shall never
the American people have had such a bank
currency, and having seen the value of il
both here and abroad they will not be con-
tent to have any innovation made unless
such new departure insures not only equal
but better results.
onV is enadP resdPeesfa5y nt sgggested that no!
obtained If the present bank act were
amended by repeating the provision there.
of requiring each bank as prerequisite to
entering the system and issuing bank note
currency, to deposit government bonds. Ir
lieu of such provision should be substituted
one permitting the banks to issue circulat
ing notes against their assets to an amount
equal to at least 30 per cent. of their un
impaired capital"
FOR SAFETY FUND
The Controller follows this suggestion
with the further one for the maintenance
| of a safety fund to be provided by gradu
ated taxation the outstanding circula
| tion of the banks until the same shall b,
equal to not less than per cent of tn,
| total of such outstanding circulation, thi
| fund to be held by the government as al
| agent only and for the purpose of immedi
ately redeeming the notes of insolven
| banks. 1t is Immediately to be replenshe,
| out of the assets of the bank on which /
shall have first and paramount lien, am
from assessment TO the extent of tn
double Liability Of & the share-holders: TIL
| If any, it would be necessary TO make il
| the present system relative TO current re
demption of bank notes and the govern
| ments position toward the same and kin
| dred matters, ii is not necessary to Sc
forth: If the recommendations here made
l together with that Wntcn Will follow
| should receive consideration at the hand
| of Congress, a bill drawn after careful
| study and investigation of the whole sub
| ject would necessarily embody all the de
| tails incident to a change from bond I
safety fund security as basis for ban
circulation"
| The Controller then cites such proof an
| gives such statistics as seem to him I
| make the plan suggested n perfectly SAT
| one to enter on. He says. The change
| thus outlined on investigation. II is be
| lieved. will prove to be safe in affordin
| complete security to the note-holder an
give to the business interests of the cour
| try bank note issue responsive to thei
| needs" Continuing. the Controller says:
1.-The profit on the issue or circulation [
| the banks by such change would be so aus
| mented that it is giving to them frar
| chise, for which IL is suggested they shoul
be called on TO make proper return to th
| general government. This return shoul
| not, however, be of such character as
defeat the ends sought In the privilee
given The currency redemption of the Il
| gal-tender issues and the treasury issue
under the act of 1890. and the re-issuin
instead of cancellation OF the same. mu:
| always create distrust Of the government
credit abroad and at home SO long as III
laws now on the statute books remain vi
| changed The general government ought
! be wholly free from the direct issuing an
redeeming of notes to pass as money anon
| the people. No government has ever y,
successfully engaged In so doing. and II
experience Of the government or the Unite
States has proven no exception to II
rule. The general cost and loss entailed c
the government and the repeated periot