The representative. [volume] (St. Paul, Minn.) 1893-1901, 1896-06-03
LIGHT TURNED ON.
CONCERNING NATIONAL
BANKS.
Their Origin, Growth. Uses, Abuses
and Power.
Their True Place in Our Political
Economy.
BY A. E. BALL of Minnesota.
Written for The Representatives
OH PTER TIT

By A. E. BALL. of Minnesota.
Written for The Representatives
CHAPTER III.
BANK CIRCULATION AND TAXES
THEREON. .a,-
Every association that engages in a
general banking business. which includes
circulation before it begins business
transfers to the treasurer of the United
States as security for It's circulating
notes. any United States registered
bonds, bearing interest, to an amount
where the capital is one hundred and
fifty thousand dollars or less, not less
than one-fifth of the capital, and fifty
thousand dollars where the capital is in
excess of one hundred and fifty thou
sand dollars. saa 49,. ,.,ao ~
From the above, it is readily seen that
bank with fifty thousand dollars CAPT
tai, the smallest organized, by deposit
ing $4,000 of bonds, can draw $11,375 in
national bank notes.
Originality the law compelled the
banks to take up their own notes. and
could take up any excess of bonds be-
yond the amount required by Jaw But
in 1874, the following section (5161 R. ST.
was passed.:
"To facilitate a compliance with the
two preceding sections, the secretary OF
the treasury is authorized to receive
from any association and cancel any ma
tional bank notes or lawful money in
lieu thereof in like amount" and then
the bank could withdraw a proportion
ate amount of bonds held as security for
circulating notes.
Tho "a hovo pro1-i,ior hoe .ao~al -.
pcrtant part in our financial history
which will be hereafter considered. It
was passed to aid the banks in getting
their bonds returned. without being to
the expense of calling in their own
notes, and, in operation, has proved not
only their shortsightedness, but that
they were penny wise and pound foolish,
providing a treasurer knew law and had
the nerve to use it.
The circulating notes are furnished
the banks in blank, being first num-
bered in the following denominations:
five, ten, twenty, fifty, one hundred. five
hundred, and one thousand dollars, as
may be required Sec. s. act of 1874,
provides that the comptroller of the cur
rency shall cause the charter numbers to
be printed on all notes thereafter is
the control of the comptroller
Originally one and two dollar notes
were issued, which were probably dis
continued to force coin into circulation.
These notes may circulate as money,
and "shall be received at par in all parts
of the United States in payment of taxes,
excuses, public lands and all other dues
to the United States, except for duties on
a COL vic oil =
other debts and demands owing by the
United States to individuals, corporations
and associations within the United
States, except interest on the public debt,
and in redemption of the national cur
rency." Worn-out and mutilated cur
rency IS redeemed at the expense of the
United States. Five percentum of the
sum Of any banks circulation has to be
kept on deposit in lawful money of the
United States in the treasury, to be held
and used for the redemption of it's cir
circulation.
Tax on circulation, it is called, but the
section reads: "In lieu of all existing
taxes, every association shall pay to the
treasurer of the United States in the
months Of January and July, duty of
one-half of one percentum each half year
upon the average amount of it's notes in
circulation"
1t will be seen by the above that these
banks are lightly taxed. On $4,000 900
highest possible circulation a bank of
$4,000 capital can have, the tax is only
$3.50 per year, which they can pay by
handing in that amount of their own cur
rency. But, as slight as this tax is
there is chance for the grossest fraud
and, as several national bankers now en-
joy life in felon's cells, it is sensible to
conclude that several UNPUBLISHED rascals
are still in the banking business. al
though it may be legal presumption
that man is innocent until he is proved
guilty
Sec. 81, Laws of 1874, requires each as
ISOLATION, within ten days from Jan. !
and July 1 of each year, to make re-
turn, under. oath Of it's president or cash
ier to the treasurer of the United States
the average amount Of its notes in circu-
lation for the six months next preceding
the most recent first day of January OF
July"
This is shown by the comptrollers re-
port as follows:
Total outstanding circulation
OCT. 81, 1895. 1918, $40 ,901
Total on which circulation
tax is paid. ............... 10, 400, 76e
Excess of circulation reported
over what pays taxes. 49,. 43,119, 49,
which exceeds Is per cent.
1t Is thus readily seen, if this loophole
was plugged up, the government would
collect $431 1862 more than it does now
but to rub it in harder, sec. 81 provides
CAN stocks, bonds, treasury notes, and
other obligations of the United States
that have been exempt from taxation by
or under state or municipal authority
and generally assessors have considered
national bank notes as obligations of the
United States, shall be exempt to- banks
1t is fair to conclude that these banks
have swindled the states and other MT
nicipal authorities out Of at least $1O,-
900 a year, even when declaring un-
der oath, exclusive Of their deficiency of
their circulation tax The above might
be thought legal inadvertence, were it
not for the fact that such inadvertences
are very frequent, and all blown toward
the banks. A farmer knows which way
the wind bows when a grain setting is
threshed, when he sees where the chaff
is. It is as reasonable to conclude what
has shaped bank legislation.
LISTS OF SHAREHOLDERS.
Among the many minor regulations of
the banks which is of much more impor-
lance to the public at large than it us
ually gets credit for or is contemplated
under the law, is the List of Shareho,d-
ers AS the law now stands, the presi-
dent and cashier of each bank are charg-
ed with keeping full and correct list Of
names and residences Of each in the Of
flee where it's business is transacted;
and this one list is only subject to the
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