Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1897-01-05
WANTS MORE POWER
Comptroller EckIes' Authority
Over Our National Banks.
His Position Now is Merely Advisory
Wants the Law Amended.
Can Only Warn and Cannot Enforce His Wish
es-Recsnt Failures.

VS-ssVSOVs S'sssS~s
Washington, Jan. 4.-(SpeciaD.-The
recent numerous bank failures In the west
have served to call attention to the impor-
lance of tho supervisory work Of the COMP
troller of tho currency The comptroller
is by law given supervision of all the ma.
tional banks in tho country. His power
over them is not great enough to enable
him to compel them to obey the law, but
he can and does exercise strong influence
upon Them As was shown in the case OF
the recent failure of the National Bank OF
Illinois at Chicago, the comptroller had
repeatedly warned the officers and directors
of that institution that they were violating
the law in their loans The officers prom
ised to reform, but did not do SO. They
promised to diminish the amount of loans
to members of their own directory, but in
stead increased them. OF course such
banking methods, such disregard OF the
warnings Of the comptroller, could have
but ono ending, and that was failure, dis
honor and ruin.
Wants the Law Amended.
If the comptroller had been given by law
the power to enforce his demands, If he
were something more than mentor Of the
banking officers Of the country, perhaps
this Illinois failure would not have occur
red. Comptroller Eckels has time and
again asked congress for greater power IN
dealing with national banks, for authority
to enforce his demands, but congress has
not as yet seen flt to amend the law In the
direction asked for. There can be no
doubt that after some Of the recent expert
ences in western banking methods, which
have shown the value of the comptroller S
checks upon the operations of bank officers,
congress is more inclined than it ever was
before to place power In the hands oil the
federal supervising officer
The Importance of the Office of comptrol-
Ter of the currency may be judged by the
fact that he has supervision of 1876 ma
tional banks Their shareholders number
nearly 800, 900. They have notes in oircu-
laton to the amount of $210, 900, 000 Their
total resources are s., 900, 600, coo, and their
deposits amount to the enormous sum OF
81, 600, 900, O00 or twice the national debt,
less cash, in the treasury. This last item
shows how close are the relations between
the comptroller's Office and the business OF
the country. If bank failure occurs, busi-
ness men arc the chief losers. One failing
bank pulls down another, and there is
trouble throughout an entire community.
1t is the duty of the comptroller to so guard
and supervise the operations of the banks
that failures shall not occur, If possible.
He must give warning when bad business
methods lead to danger
Losses In the Past.
But the comptroller can only warn. He
has no power to enforce his wishes. He
may, 1t is true, blast the credit of any bank
by public announcement of its weakness,
but this would only serve to precipitate
the disaster, which it Is his duty to avert.
There is no longer any anxiety concerning
loss to the holders of national bank notes.
In the old days of wildcat banking note
holders never knew whether they were safe
or not Often bank failures subjected them
to great losses. But under the new mo-
tional bank law, in force since 1868, nc
holder of national bank note has lost a
penny. All such notes are protected by
deposits of United States bonds, which
preclude the possibility of loss.
The comptroller chief duty now is to
guard the rights of the depositors and Of
the business community in general. This
is great and delicate responsibility. II
be is lax in enforcing the law, danger will
creep in. If he is too tyrannical, banks
will be forced into failure when little
more patience and tolerance might save
them and all the interests involved. It IL
apparent that much more depends upon
the fidelity with which bank officers dis
charge their duties than upon the zeal Of
the comptroller. If they are prudent and
honest, there will be no trouble. If there
is trouble, it has been brought about be-
fore the comptroller can know anything Of
it, and despite all he can do there may be
no way of correcting the evil
The chief trouble with national banks II
that their officers persist in making loans
to relatives and to personal friends who
are engaged in enterprises of doubtful
value. In this way bank after bank has
been wrecked. The temptation to help out
ones relatives or personal friends has been
the undoing of many flnc reputation.
There is one quality which national bank
officer must have il he Is to be a success, II
he Is to avoid humiliation and disgrace.
He must be able to say mo" The weak
man, the good natured man, the kindly
man, has no business in q bank, where
other peoples money and the prosperity Of
city are intrusted to his care.
Since the present national banking Law
was passed, in 1868, there have been report
ed to the comptroller Of the currency l, 15s
national bank failures. That was up to
Oct. last year. The total liabilities OF
these failed banks was $199 100000. When
their affairs were finally settled up, it was
found they were able to pay 1903, 500, 900 in
dividends, or about AZ per cent. This is
not bad showing, considering that most
of the bank failures have been in times OF
panic, when values of securities were fall.
ing fast. :
Bank Failure Waves.
The failures of national banks have
come in waves Between 1868 and 1879
there were only A failures, and their liza
bilities were small But in the next sir
years-1s73 to 1878, inclusive-there were
256 failures, with liabilities aggregatine
about $7O.0O0,O0O That was the panic
period of 1878
Between 1878 and 1898 there were good
many failures, aggregating 1926 in number.
But, as a rule, their liabilities were small.
The second great era of national bank