The herald., 1896-12-09
CURRENCY COMPTROLLER
Reports on Condition of the
National Banks
THE CAUSES OF FAILURE
Invariably Traced to Loose or Fraud.
ulent Management
Recommendations Made Of Amendments
to the Banking Law Which Will
Secure a Better System
Associated Press Special Wire


WASHINGTON, Dec. 8.-The annual
report Of Comptroller of the Currency
Eckles, submitted to congress today con-
tained information in regard to organi-
zation, supervision and liquidation OF
national banks for the year ended Oc-
tober 81, 1896.
During the year twenty-eight new
banks organized with a capital aggre-
eating $3,245,000. OF 5051 national banks
organized since June 30, 1863, 1879 were
in active operation October 81, 1896, with
an authorized capital stock aggregating
$3.50, ,014,S 1896.
The total amount of circulating notes
outstanding october 81, 1896, was 1884,
553,8O7.
The net increase in circulation issued
by bonds during the year was $685.
053 and the gross interest increase in
total circulation was s21 ,099, ,429. The to-
tai resources of 1876 banks reporting Oc-
tober 81, 1896, was SO, 263, ,6S5, ,313, of which
1888, 26S,SS9 represented loans and dis
counts.
OF their liabilities. 81, 597, 1891, ,05S repre-
sented individual deposits, 1886, ,342, 1874
surplus and net undivided profits and
$209, ,944, ,O19 outstanding notes secured by
bonds.
The number of banks that went into
voluntary liquidation during the year
was thirty-seven, with a capital stock
Of $3,7450O0.
Receivers were appointed during the
year Tor twenty seven banks, with cap
tal stock of $3.S05, 900.
The comptroller states that the i'm
portance Of obtaining proper classifica-
ton of money and currency held by the
banks throughout the country led to
the sending out Of circular addressed
to national and other banks and trust
companies requesting them to furnish
correct Classification of the amount and
kinds of money held by them on the 1st
Of July last.
Answers were received from 5723 bank
ing institutions. An exhaustive and
interesting analysis is presented of re-
turns received from banks as to the ex-
tent to which the use of instruments of
credit enter into the settlement of whole
sale and retail transactions in daily life
The conclusion drawn from these re-
turns is that 67.4 per cent of retail trade
of the country is transacted by means
of credit paper: that 95.3 per cent of the
wholesale trade is so carried on; 951
per cent of both. other than mercantile,
and 92.5 per cent of all business. In re-
tail trade national banks have Sc per
cent of deposits
The percentage of credit instruments
in these deposits varied from 50 in Rhode
Island to S7.3 in Nevada. but the returns
from Nevada are go small in the aggre-
gate that they are not regarded as
safe basis for inference.
According to these returns the per-
centage of business done by checks, all
classes being included, is 925. New York
leads the list with 1854 per cent; Massa-
chusetts and Maryland come next with
1872 and 1873 respectively, and Nevada
and Minnesota next with 1928 and 925;
Missouri has 90.7 and New Mexico 90S.
The lowest percentage shown is that of
California. 69.4.
The comptroller also deals with the
question of the duty, of directors with
respect to the causes of failures of banks
and says that "the inevitable conclusion
drawn from a study of causes resulting
in these failures. is that in a great ma
jority Of instances those directly re-
sponsible for the management of the
bank are involved, both directors and
executive officers have been negligent
i'm their duties and wanting in insisting
upon the employment of methods of Or
dinary safety and prudence"
In 1896, up to the date of the close of
this investigation. 81 failures of state
banks were reported. with assets $10,-
131 .007; liabilities, 81, 7,17S61S.
The comptroller suggests the following
amendments to the national bank act:
That loans and discounts of banks to
executive officers and employees be re-
strcted in amount and secured by prop
er collateral; that no loan b. made to
director nor executive officer of the
bank. except upon the collateral security
or a satisfactorily endorsed note; that
directors be required to make exami-
nation of their bank once each year; that
cashiers under certain conditions be au
thorized to sign circulating notes and
reports of condition; that provision be
made for administering general oaths
taken under the national bank act: that
in places having population of less
than 1000 inhabitants, national banks
shall be permitted to organize with
capital stock of less than $25,000; that
national banks be permitted under GER
tain regulations to establish branch
banks in towns and villages where no
national bank is established and
where the population doej rot exceed
1000 inhabitants; that the semi-annual
tax on circulation be reduced to one
fourth of one per cent; that the issue
of circulating notes to par value of
bonds deposited be permitted.