St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-12-03
ELASTICITY OF ISSUE.
That the One Thing Missing
in the American Bank
Note.
REPORT OF JAMES H. ECKELS
Why the Bank Note Of the
Day Lacks the Necessary
Elasticity.
CONGRESS MUST 60 SLOW.
Suggestion of Notes to Be
Circulated Against a
Banks Assets.
REPORT OF JAMES H. ECKELS
CONGRESS MUST 60 SLOW.

WASHINGTON, d. G., Dec. 2.-The
report Of Hon. James Ii. Eckels, comp
trolier of the currency, submitted to
congress today, gives full information
in regard to the organization, super
vision 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 cap
ital stock of $685. 900, the smallest
number chartered. as well as the mini
mum amount Of capital. in any one
year since 1879. OF these new banks
twentY-seyen are in the Northern and
Eastern states, ten in the Southern
states and thirteen in the Western or
transsMississlppi division, On Oct. 81,
1894, the total Dumber of national banks
in operation was 8, 156, with all author
lied capital stock of $672, ,67l. .365. repre-
sented by 1885, .076 shares of stock,
owned by 287, 1872 shareholders. On
Oct. 4, 1894, the date Of their last re-
port of condition, the total resources of
the banks were s.. .473. 922. 055, of which
their loans and discounts amounted to
s., ,0O7, 122, 191 and
Money of ALI Kinds
in banks, S422, 42S, 1872. or their liabili-
ties 81. TBS, 41S.8l9 represented individual
deposits. 1884. 12l,O63 surplus and net
undivided profits. and $172. .331, ,97S cir
culating notes outstanding. The total
circulation of national banks on Oct. 81.
1894, amounted TO $207.472.6 .603. a net de-
crease during the year Of 81, TAI, ,563. and
a gross decrease of $S,GI4 S6l in circula-
tion secured by bonds. During the year
seVenty-nlne banks, with an aggregate
capital stock of 0,475, coo, passed out
Of the system by voluntary liquidation.
TWenty-one, including two which failed
in 1898. with a capital stock OF 81, ITO, :
900, became lnsOlYent and were placed
i'll charge of receivers. The feature OF
the cOmptr0ller'S report is his discussion
of the currency question and the de-
fects which are said to exist in the note
Issuing powers vested in national banks.
On this subject he says:
R"NO section of the law should be dis
turbed which cannot be materially im-
proved upon, and no amendment en-
grated unless such amendment Will
work out better results than flow from
the existing order of things. The pres
ent law, it must be conceded, has been
successful Ill every material feature, eX-
cepting 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 Supervision
have been 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 a good bank note issue
immediate convertibility into coin upon
presentation. 1t is probable that there
could be no better plan for simply in
suring the notehOlder against loss than
the present requirement of a deposit of
bonds to secure a banks circula-
ton. 1t is equally certain, hOweve,
safe in this respect and in addition
thereto possessing that which is essen
tial and IS now wholly wanting-elas-
ticity Of issue. The complaint, there
fore, made against the present system
is that. lacking in elasticity of issue. it
fails to meet as fully as It ought the
varying wants of the country'S trade
ana commerce. This defect must at
tach to every scheme for cur
rencY issued by the banks against a
deposit of bonds, the market value of
which tluctuates while the percentages
of issue. less than the value of the
bonds granted the banks, remains un-
changed. 1t must also be wanting in
such method because of the delay in
the face of a pressing need, occaSOned
by tight money market or other rea-
sons, in securing and depositing the
bonds required and taking out the cir
culation thereon.
Currency Must BE Sound.
"But, serious as this fault and retard~ :
full 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 un-
questioned credit and convertibility of
the bank issues of the country, could
not be justified. 1t is duty of govern
ments to see that the currency which
eirculates among the people shall al
ways be of the very highest character,
the Soundness of which should never be
a subject of inquiry. For thirty years
the American people have had such a
bank currency, and, having seen the
value of it both here and abroad, they
will not be content TO have any inuova-
tion made unless such new departure
insureS not only equal, but better re-
suits.
"lG is respectfully suggested that Enot
only rs good, but better results would
be attained 1T the present bank act were
amended by repeating the provision
thereof requiring each bank, as pre-
requisite to entering the system and is
suing bank-nOte currency, 10 deposit
government bonds. 1n lieu of such
provision should be substituted one per-
mitting the banks to issue circulating
notes against their assets to an amount
equal to at least so per cent of their un-
impaired capital"
The comptroller follows this sugges-
tion with the further one for the main
tenance of
A Safety Fund,
to be provided by graduated taxation
upon the outstanding circulation of the
banks until the same shall be equal to
no less than per cent Of the total Of
such outstanding circulation, this tund
to be held by the government as an
agent only, and for the purpose or i'm
mediately redeeming the notes OF in-
solvent banks. 1t is Immediately TO be
replenished out of the assets of the
banks on which it shall have first and
paramount lien. and from assessments
to the extent OF the double liabilities On
the shareholders. The comptroller says: