The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-12-03
VIEWS OF THE COMPTROLLER.
An Elaborate Report Submitted
TO Congress.
FAULTS OF THE SYSTEM IN USE.
Various Changes Urged for Increas-
ing the Elasticity of the
Currency Issue.

Currency, as submitted to Congress, gives
full information in regard to the organlZa-
ton. supervision and liquidation OF the
national banks for the year ended October
81, 1894. 1t shows that during this period
but fifty banks were organizsd with
capital stock of $52S5, 600, the smallest
number chartered, as Well as the minimum
amount of capital, in any one year since
1879. OF these new banks twentyseven
are in the Northern and Eastern States.
ten in the Southern States, and thirteen IN
the Western or trans issssippi division.
On October 81, 1894, the total number OF
national banks in operation was 1885, with
an authorized capital stock of S672, 81, 500,
represented by 1855, 076 shares of stock.
owned by 2S7.S92 shareholders.
On October 2, 1894, the date Of the last
report of their condition. the total re-
sources of the banks were $3, 473. 922, 055.
of which their loans and discounts
amounted to S2,007. 122. 191, and money of
all kinds in bank TO $422, 42S. 1872 OF their
liabilities SLIPS. 41S.S19 represented indi-
vidual deposits. 1884, 121. 0S2 surplus, an d
net undivided profits and $172, 331. 97S cir
culating notes outstanding. TAe total cir
culational of national banks on October
81 1894, amounted to S207, 472 COS. net
decrease during the year OF 81. TAI, 563 and
gross decrease of SS.614,S64 in cireula-
tion secured by bonds.
During the year seventy-nine banks with
an aggregate capital stock of $l0.475, 600
passed out of the system by voluntary
liquidation; twenty-one. including two
which failed in 1898 with a capital stock of
in nj
placed In charge of receivers.
The feature of the Comptroler's report
is his review of the currency question 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
turb bed which cannot be materially i'm
proved upon and no amendment engrafted
unless such amendment will work out bet
ter results than follow from the existing
order of things. From the present law it
must be conceded it has been successful in
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 govern
mental supervision have been uniform in
appearance, ana under any and all circum-
stances of the full face valu- which they
purport to carry. They have possessed
the Iirst requisite of 8 good bank note issue
-immediate convertibility IN coin upon
presentation.
ut is probable there could be no better
plan for simply insuring the note-holder
against loss than the present requirement
of a deposit of bonds TO secure a banks
1aff ion, IY,f tl,r rtaiV
ever, that method could be devised not
less safe in this respect, by an addition there
10 possessing that which is essential and
is now wholly wanting-elasticity Of issue.
The complaint therefore made against the
present system is that banking in elasti-
city of issue fails to meet as fully as il
ought the varying wants of the country's
trade and commerce. This defect must
attach to every scheme for currency
issued by the banks against a deposit of
bonds, the market value of which fluctu-
ates while the percentage of issues. less
than the value of the bonds granted the
banks, remain unchanged.
lit must also be wanting in such a
method because of the delay in the face of
pressing need, occasioned by light
money market or other reasons, in secur-
ing and depositing the bonds required and
taking cut the circulation thereon. But
81 ious as this fault and retardful as it is
to the business interests of the country,
any attempt to remedy it, which should
lose sight of or in any wise make less
certain the present unquestioned credit
and convertibiliiy of the bank issues of
the country, could not be justified. 1t is
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 should
never be subject OF inquiry. For thirty
years the American people have had such
bank currency and, having seen the
value of 1t 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.
ut is respectfully suggested that not
only as good but better results would be
attained 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. In lieu of such provision should
be substituted one permitting the banks to
issue circulating notes of their assets to
an amount equal TO at least 80 per cent of
their unmpaired capital"
The Comptroller follows the sugges
tons with the further one for the mainte-
nance OF safety fund, to be provided by
graduated taxation upon the outstanding
circulation of the banks until the same
shall be equal to not less than per cent
of the total of suoh outstanding circula-
ton, this fund to be held by the Govern
ment as an agent only and for the purpose
of mediately redeeming the notes on in
solvent banks. 1t is Immediately to be re-
penished out of the assets of the banks
on which it shall have a first and para.
mount lien. and from assessment to the
extent of the double liability on the share
holders. The COMPTROLLER says:
'Whassver other changes. IL any. it
would be necessary to make in the pres
ent system relative to current redemption
of bank notes and the Governments po-
sision toward the same and kindred mat
tiers, it is not necessary to set FORTH II
the recommendations here made. togeth or
with that which will follow, should receive
consideration Mt the hands of Congress A