The true northerner., 1897-01-06
WANTS MORE POWER.
Comptroller Eckels' Authority
Over National Banks.
HIS POSITION Is MERELY ADVISORY
Recent Bank Failures-How They Are Of
ten Wrecked-The Comptroller Can Only
WHrn-He Cannot Enforce His Wishes.
Liabilities and Assets.

ten Wrecked-Ihe eComptroiler Can Only
wsrn-He Cannot Enforce His Wishes.
Liabilities and Assets.
WASHINGTON, Jan. 5.-l Special THE
recent numerous bank failures In the west
have served to call attention to the impor-
tance of the supervisory work Of the comp
troller of the currency. The comptroller
Is by law given supervision Of all the ma
tional banks In the country. His power
over them 10 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
30 Inbers 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 one ending, and that was failure, dis
honor and ruin.
Wants the Law Amended.
II the comptroller had been given by law
the power to enforce his demands, II he
were something more than mentor of the
| banking orncers or tine country, perhaps
this Illinois failure would not have oc-
Cured. 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 fit to amend the law I'm 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 8
checks upon the operations Of bank officers,
congress Is more inclined than IL ever WAS
before TO place power in the hands Of 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 1910 ma
/ tional banks. Their shareholders number
nearly 10000 They have notes In circu-
lation to the amount of t210, 600, 900. Their
total resources are So, $50, 600, 900, and their
deposits amount To the enormous sum Of
81 SOC, 900, 900, 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 are 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, IL 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, IL 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 ma
tional bank law, in force since 1868, no
holder of "a national bank note has lost
penny. All such notes are protected by
deposits of United States bonds, which
preclude the possibility of loss.
The comptrollers chief duty now Is to
guard the rights of the depositors and of
the business community in general. This
is "a great and a delicate responsibility. If
he Is lax in enforcing the law, danger will
creep in. IL he is too tyrannical, banks
will be forced into failure when little
more patience and tolerance might save
them and all the interests involved. 1t Is
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 %
Is trouble, il has been brought about be-
fore the comptroller can know anything of
1t, and despite all he can do there may be
no way of correcting the evil.
The chief trouble with national banks is
that their Off Gers persist In making loans
to relatives and to personal friends who
are engaged in enterprises of doubtful val.
ue. 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 1ne reputation. There
Is one quality which a national bank officer
must have II he Is to be a success, IL 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 a bank, where other
peoples money and the prosperity of city
are intrusted to his care.
Since the present national banking law
was passed In 1853 there have been report
ed to the comptroller of the currency l, 1853
national bank failures. That was up to
Oct. last year. The total liabilities of
these failed banks was $199, 900, 900.
When their affairs were finally settled up,
1t was found they were able to pay $685.
500, 600 In dividends or about AZ per cent.
This is not q bad showing, considering
that most of the bank failures have been
in times of panic, when values of securi-
ties were falling fast.
Bank Failure Waves.
The failures of national banks have
come in waves. Between 1868 and 1872
there were only A failures, and their liza
bilities were small. But In the next six
years-IS73 to 1878 inclusive-there were
256 failures, with liabilities aggreRating
about $40, 100000 That was the panic
period of 1873
Between 1878 and 1898 there were
good many failures, aggregating SEQ In
number. But as a rule their liabilities
were small.
The second great era of national bank
failures began in 1898. In that year 276
banks failed. In 1894 the number was 40.