Omaha daily bee., 1896-02-28
RANEtNG Law cnANGES.

The house committee on banking aud
currency has under consideration two
bills amending the banking law which
are oc considerable Importance. One of
! thcsc permits banks to issue circulation
! 10 the par value of the bonds deposited
as security for circulation and 1t Is
predicted that this proposition will pro-
woke the greatest discussion. 1t Is not
new. having been urged upon the at
tcntion of congress for years. but al
ways encounteripg IN opposition tEat
caused action regarding 1t to he de-
fcrred. Republican and democratic
comptrolcrs of the currency have rec
commended. with the approval of the
secretaries Of the treasury. that the
national banks he allowed to issue cir
culation to the par value of their bonds,
instead of 30 per cent. If this were per
mittcd II would result i'm n material ad-
dition to the currency supply, probably
over $50, 100000 at once, and while 1t Is
true that the banks would derive some
benefit the people also would be bcne-
fitted If there is demand for Il larger
volume of currency. The opposition,
however docs not consider what adyan-
tagr the public would derive, but only
what the banks would get out of this
additional circulation. ana it is very
probable that this will be found strong
enough in the present congress, rs it
has been in past congresses. TO dr'cat
the proposed change in the law.
Another bill restricts the borrowing
of banks funds by the officers without
the full knowledge of the directors. 1t
is thought that this proposed amend
ment of the banking laws will be de-
fpated in the committee, for the reason
that the publicity given to the condition
of banks by the periodical reports made
to the comptroller of the currency are
a sufficient safeguard to the inStitu-
tions Experiences, however. has shown
that such is not the case The very
place since the national system was
established have resulted from unre-
stricted borrowing by the executive otli-
GERS of such institutions and yet their
condition was made to appear all right
in the reports to the comptroller of the
eve of collapse. In Il much greater
number of cases banks whose reports
showed them to be in first rate cCndi-
ton were subsequently found to be
carrying the worthless paper of their
executive eff -ers. in every instance of
this kind Investigation disclosed the
fact that the directors were unaware of
what was going on, or, in other words
were not attending to their business as
bank directors should. ThA proposed
amendment might not prevent the loot
ing of bank by dishonest executive
officers, particularly where directors are
careless and lax in their supervision,
but it would have wholesome effect
and would tend to increase public con-
fidence in the banks. Every failure of
Il bank by reason of the fact that its
executive officers have enjoyed the nnrc-
stricted privilege of borrowing from the
institution is damaging to confidence.
especially when it happens in such n
case that the bank had been reported
to the comptroller of the currency in
sound condition. There can be no valid
objection to the regulation which the
bill in question proposes.
1t is hardly probable. however, that
either of these proposed changes in the
national banking law will be made ut
the present session of congress. At any
rate it is safe to say that there will be
no change in the law regarding circua-
ton