The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1895-11-01

/ ndLlOn y DOnOS against the reL0OCeSC
possibility of loss or depreciation,
Mr.. Currier, has given you some
thing of a history of this national
bank legislation. The total author
lied circulation issue was limited by
the act of 1864 to three hundred mil
lions, increased in 1870 to three hun
dred and fifty-four millions, and in
1875 ali limitation was removed
At first there was a profit in circula-
ton, but the tide turning, provision
was afterwards madefOr the redemp-
ton and reduction of the circulation.
first to three hundred millions and
later without restriction.
National banks in the city of New
York are required to hold in their
vaults in lawful money % per cent. OF
their deposits and circulation; but in
! other cities this limit was placed at
10 per cent. Those of other redeem
ing cities were required to hold the
same percentage of reserve as in New
| York, but were permitted to keep
One-half this reserve in that city.
| National banks are allowed to charge
interest at the rate permitted by the
states in which located. SharehOld-
ers are held individually, equally and
ratably liable for all debts of the as
ISOLATION to the extent of their stock
in addition to the amount already
invested therein; and all debts and
| losses must be deducted from the net
profits before dividends are made.
In 1890 the total number of nation
al banks in existence was 1858, with
a capital of $625 0S9 ,645, d surplus OF
| $20S, 707 1856, earning something over
| $72, 600, 900, and declaring dividends
averaging $40 per cent, Originally
the national banks realized their
chief profit from circulation, but
since the marked increase in the price
OF bonds selling for high premium,
| but little or no profit is derived from
that source, and the chief income is
now from deposits, which the sound
ness and stability of the system at
tracts. This is illustrated by the
following comparisons:
| In 1866 the aggregate capital was
$403, 357 ,346. and the deposits $500, 2l2,-
ia, In 1890 the capital had in
creased to $3.50, AL .232, and the indi-
vidual deposits to 81, 564 ,S45, 275.
Thus in % years the capital stock
had increased 81 per cent, while in.
| dividuaI deposits increased over 200
per cent. This growth is illustrative
! of the development of the capital OF
the country, public confidence which
the system has enlisted, revolution
izing as it were the previous system
of hording wealth among the people.
With all respect to grumblers and
chronic cOmplainers, so admirable
has the national bank system worked
that despite this age of refOrmers
and self-cOnstituted craftsmanship,
no better system has been suggested,
| while the intelligence and experience
of the financial world gives toit their
best thought and effort in building
IT up.
One of the very best accomplish
ments of the last Minnesota legisla-
| lature was the revised state banking
! law passed. While it is modelled
largely after the National law, in
some of it's fea lures it is more strin-
gent. It's capital must be fully paid
| up before the bank is permitted to
do business; every director is re-
quired to own at least five shares OF
stock in his own name; before divi-
dends are declared all bad accounts
and losses are to be deducted from
the profits, and One-tenth OF the net
profits carried to the surplus fund,
| until such surplus fund amounts TO
twenty per cent. of the capital stock.
| and at this ratio it is to be main
tanned unimpaired. Directors are
required to furnish the same securi-
ties and pay the same interest on
loans charged to outside parties, to
+! be made by the board and in the
absence of the party interested; the
total liability to any bank from any
individual or firm is limited to fifteen
per cent. of the capital stock, and to
any director or officer to ten per
cent. There are many other admir-
able features, which the already
length of this article deters me from
mentioning.
Referring to Mr.. Curriers' paper /
| hardly think he does the average
| bank officer justice in attributing the
almighty dollar as the motive OF
/ courteous treatment towards Dor
rowers. From a limited experience
l am convinced that inyariable cour,
tesy and kindly treatment is the
record at home; and with borrow
ers, those who maintain a repu'
tation for integrity and correct bust.
ness habits these things count more
than property in securing bank ac'
commodations. Many OF our sue.
cessful business men own the growth
and development of their business to
/ the assistance of the banks. Indeed
but for the accommodations which
the banks furnish our material inter.
ests would beyery different compared
to what they are.
/ cannot agree with him in bis
statement that the government can
not pay ten per cent. on the dollar
if forced to redeem it's paper. Ii true
it would be practically bankrupt and
without credit. Instead It's paper
commands high premium among
the safest and most conservative I'm
anciers of the world, for it's credit is
backed by the resources OF the whole
country and the loyalty and patriot
ism of it's citizens. The civil war de-
monstrated this fact, and any emer.
gency or embarrassment will work
a repetition.
| 1t may be a matter of sentiment
| with Mr.. Currier when he expresses