The record-union., 1897-12-06
THE PRESENT
NATIONAL BANK ACT,
Annual Report Of Comptroller Of
Currency EcksIs.
Reviews the History Of the Present National
Banking Act,

With the Government and De-
precates the Issuing of the
Paper by the Government Alone.
WASHINGTON. Dec. 5.-The annual
report of James II. Eckles, Comptroller
of the Currency, for the year ended Oc-
tober 81, 1891, opens with a brief re-
View Of the history of the legislation
which constitutes the present national
bank Act, and invites the attention of
Congress to amendments H the law
recommended in former reports with
out specifically repeating them. On
the subject of bank note circulation, the
says:
1T is noticeab BILE that in all the
changes which have been wrought in
the national currency Act from it's in
ception to the present time, the feat
ure subject to criticism but which was
should constitute the princi-
pal benefit to he conferred, has re-
mained comparatively unchanged
namely, the note issuing function.
Whatever justification there was in the
first instance for restricting the issu-
ing Of notes against the bonds of the
Government, deposited with the Treas
urer of the United States to 80 per
cent. of the par value thereof long since
ceased. In the report of every Comp
troller of the Currency during the past
twenty years, the wisdom of changing
the existing law so that the banks, and
through them the communities in which
located, might have the additional ben
eft of an added loanable capital has
been suggested. Despite all this the
law still remains without amendment.
Not only should the bank Act be
amended in this particular but Con-
gress should seriously consider such a
change in the method of bank notes is
sues as will enable the banks Of the
country to more adequately meet the
demands Of trade and commerce In all
sections of the country. The business
Of banking, like every other form of in
vestment, must be made attractive to
capital. If it is placed upon footing
different from other undertakings, en-
barrassed through unnecessary restric-
tionS and deprived of proper sources Of
profit, the result cannot be otherwise
than that slvestible capital will seek
other means of employment and to this
extent deprive the people of the bene-
fits of the agency most requisite to
commercial activity. 1t is considered
by every great commercial Govern
ment, except the United States, to be
the sole province of the banks to issue
paper which circulates as currency. The
belief in bank note currency as being
better and safer than a Government
paper currency prevailed until ques-
toned in this country, until under the
evidences of war, the Govern
Even under such circumstances. the
promise was always given, however,
that it should be retired at the earliest
practicable moment and the admission
freely made that it was never a wise
measure nor a safe form of currency.
Between the competition of the Gov
ernment issues on the one hand. and
the unnecessary restrictions imposed
by law on the other, together with the
increasing price of bonds required to be
deposited as security. the note issuing
function of the banks had been per-
mitted to become merely an incident to
the conduct Of the national banking as
sociations of the country It has been
seriously suggested more than once that
the bank note issues be done away with
and all paper be issued by the Govern
ment instead. The danger of such a
course is not to be over estimated. The
experience of every Government has
been that governmental currency paper
is source of weakness and danger. In
the United States. where there has been
the nearest approach to success with
the volume of the federal paper COM
paratively limited in amount, the
credit of the Government has been
more than once put in jeopadry through
country subjected to unnecessary loss
and confusion.
The argument that the Government,
better than the banks. can provide for
the redemption of paper note issues.
will stand the test of a careful ANALYSIS.
The Government has no means for car
ing for its demand liabilities except
borrowing and through the le-
vyfng Of taxes. Upon the other hand.
the banks have assets which can be
promptly converted into cash to meet
their outstanding notes when presented.
Their ability TO command gold has al
ways been beyond that of the Govern
ment. for in each financial exigency
which has confronted the Government
the banks have furnished to it the
necessary to maintain its SOL
vency.
1T is impossible to believe that with
a system of bank note issues, based in
part upon securities and in part upon
bank assets, the country cannot be
provided with the sound safe and elias
tic bank note issue, always commensu-
rate with and responsive to the de-
mands Of trade. The Bank of England
the Bank of Scotland, and the Bank of
ireland. have been found to be ample
in their resources to provide the note
issues for trade with the United King
dom. The same is true of the Bank of
France. The Deutsche Reichsbank. or
German Imperial Bank. has for more
than twenty-five years issued bank
note paper against assets, which has
maintained its value and been so con-
trolled as to successfully meet CONNER
cial need of the Empire
The Comptroller calls attention to the
method of organization of this bank.
and publishes some interesting statis-
tics in connection Herewith
The total number of national banks
organized since the system was put
into operation in 1863 is shown to have
been 5,U9o. On October 31st last there