The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1894-12-07
ECkELS ON BANK ISSUE.
He Discusses Currency and the Defects
and Limitations of Present System.

He DiScuSSes Currency and the Defects
and Limitations of Present System.
The report of the Hon. James III.
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 n capital stock of
$3.50, 600, the smallest number char
tered, as well as the minimum amount of
capital, in any one year since 1879. OF
these banks twenty-seven are in the
Northern and Eastern States, ten in the
Southern States, anc thirteen in the West
ern or trans-Mississipp division.
On Oct. 81. 1894. the total number of
national banks in operation was 1856,
with an authorized capital stock of $6I2,-
1866, represented by 1,95J,076 shares
of stock owned by 2S7 800 shareholders
On Oct. >, 1891, the date of their last re-
pert OF condition. the total resources of
the banks were $3,4T3, 922, 0J5, of which
their loans and discounts amounted To 3d.
O01, I'D. lO1, and money of all kinds in
bank, 22,42S, 1872. OF their liabilities
Sl,I2S, 4lS,S19 represented individual de-
posits, 1884. 121 .0S2 surplus and net I'M
divided profits, and $172,331 ,97S circulat-
ing notes outstanding. The total circula-
ton of national banks on Oct. 81, 1894,
amounted to $207. AZ, 603, net decrease
during the year of 81, III 563 and gross
decrease of SS,G14, S64 in circulation Sc
cured by bonds.
During the year seventy-nine banks,
with an aggregate capital stock Of S10,-
10000, passed out of the system by vol
untary liquidation: twenty
two which failed in 1S93-with capital
stock of 50, 10000. became insolvent and
were placed in charge Of receivers.
The feature of the Comptroller's 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 engrafted unless such
amendment will work ont better results than
How from the existing order of things.
For the present law il must he conceded it
has been successful In every material feature
excepting In the matter Of bank-notc 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 all 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-
ton.
1t is probable that there could be no better
plan for simply insurng the note holder
against loss than the present requirement OF
a deposit Of bonds To secure banks circula-
ton, but IL Is equally certain, however that
| a method could be devised, not less safe In
this respect, and In addition thereto pos
sessing that which is essential and Is now
wholly wanting-elasticity of issue. The COM
plant therefore. made against the present
system is that, lacking In elasticy OF Issue.
IL falls TO meet as fully as it ought the vary
ing wants of the countrys trade and COM
merce This defect must attach to every
scheme for a currency Issued by the banks
against n deposit of bonds, the market
value of which luctuates while the percent
age Of issue, less than the value of the bonds
granted the banks remains unchanged.
But serious as is this fault and retardful
as IL is TO the business interests Of the coun-
try, any attempt to remedy IL which should
lose sight of or In any wise make less certain
the present unquestiOned credit and con-
vertibillty of the bank issues OF the country
could not he justified. Ii is duty of govern
ments To see that the currency which crcu-
lates among the people shall always be OF
the very highest character, the sOundness OF
which should never be n subject OF Inquiry.
For thirty years the American people have
had such n bank currency, and having seen
the value OF IL both here and abroad they will
not be content 10 have any innovation made
unless such new departure insures not only
equal but better results.
1t is respectfully suggested that not only
as good but better results would be attained
III the present bank act were amended by re-
pealng the provision thereof requiring each
bank as a prerequisite TO entering the sys-
TEN and issuing bank-nOte currency to de-
post 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 10
ut least 30 per cent. Of their unimpared
capital.
The Comptroller follows this suggestion
with the further one for the maintenance
of safety fund to be provided by grad
uated taxation upon the outstanding cir
culation of the banks until the same shall
he equal TO not less than 8 per cent. of
the total of such outstanding circulation.
this fund TO be held by the Government
as an agent only, and for the purpose of
Immediately redccmine the notes Of insol-
vent banks. Ii is to be Immediately re-
| plenished out Of the assets of the banks,
on which il shall be n first and paramount
lien. and from assessment to the extent
Of the double liability on the shareholders.
Miss Della Shenk, n respectable young
woman, has mysteriously disappeared
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