River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1897-12-09
ECKELS REPORT MADE.
Interesting Information Concern
ing National Banks.
Comptroller of the Currency Tells OF
the Growth of the system. and
Argues Mt Length in Favor of
Hank Node Circulation.

OF James II. Eckels, comptroller OF the
currency, for the year ended October 81.
1897. opens with a brief review of the his
tory OF the legislation which constitutes
the present national bank act and invites
the attention of congress TO amendments
10 the law recommended In former reports
without specifically repeating them.
On the subject OF bank note circulation
the comptroller says: 1T is noticeable that
IN all the changes which have been wrought
IN the national currency act from its incep-
ton 70 the present time the feature subject
10 criticism, but which was intended should
constitute the principal benefit TO be con-
ferred, mas remained compa ra lively IN
changed, namely. the note-issuing func-
ton. Whatever justification there was in
the first instance for restricting the issu-
ing OF notes against the bonds Of the gov
eminent, deposited with the treasurer OF
the United States to 20 per cent. of the
par value thereof. long since ceased. In
the report OF every comptroller of the cur
rency during the past 20 years the wisdom
Of changing the existing law so that the
banks, and through them the commune
ties In which located, might have the ad-
dltlonal benefit of an added loanable capt.
tai has been urged. Despite all this the
law still remains without amendment. Not
only should the bank act be amended In
this particular, but congress should Sc
riously consider such a change in the meth
cd of bank note issues as will enable the
banks of the country 10 more adequately
meet the demands OF trade and commerce
IN all sections OF the country. The busi-
ness of banking, like every other form OF
investment, must be made attractive to
capital If II is placed upon a footing
different from other undertaking. embar-
raised through unnecessary restrictions
and deprived Of proper sources of oft,
the result cannot be otherwise han that
investable capital will seek other means Of
employment. and TO such an extent deprive
the people of the benefits OF the agency
most requisite TO commercial activity
1T Is considered by every great CONNER
cial government except the United States
to be the sole province of banks to issue
the paper which circulates currency
The belief in a bank note currency as being
better and safer than government paper
currency prevailed unquestioned In this
country until. under the apparent ext
gencies of the war. the government under
took to issue paper currency. Even der
such circumstances the promise was al
ways given, however, that ii should be re-
tired at the earliest practicable moment
and the admission freely made that 1t was
neither wise measure nor safe form of
currency. Between the competition of the
government note issues on the enc hand
and the unnecessary restrictions imposed
by law upon the other. together with the
increasing price of bonds required to be
deposited as security, the note-is uing
function OF the banks has been perlAitted
10 become merely an incident to lie con-
duct OF the national banking associations
OF the country.
1T has been seriously suggested more
than once that the bank note issues be done
away with and all paper he issued by the
government instead. TIE danger of such
course Is not TO be overestimated. me
experience OF every government has been
that governmental currency paper is a
source of weakness and danger. In the
United States, where there has been the
nearest approach to success, with the vol
lme of the federal paper comparatively
limited In amount, the credit OF the gov
erEment has been more than once put In
jeopardy through it and the business in
terests of the country subjected to unnec-
ossary loss and confusion.
THE argument that the government, bet
ter than the banks, can provide for the re-
demption of paper note issues will not
stand the test of a careful analysis. The
government has no means for caring for
its demand liabilities except through bor-
rowing and through the leyying of taxes
Upon The other hand. the banks have assets
which can be promptly converted into cash
to meet their outstanding notes when pre-
sented. Their ability to command gold has
always been beyond that of the govern
ment, for in each financial exigency which
has confronted the government the banks
have furnished to 1t the amounts neces-
sary to maintain its solvency. 1t is i'm
possible to believe that with a system of
bank note issues based in part upon Sc
curities and in part upon bank assets the
country cannot be provided with a sound,
safe and elastic bank note issue. always
commensurate with and responsive TO the
demands OF trade. q
The total number Of national banks or
ganized since the system was put into op-
GRAFTON in 1868 is shown to have been 5095.
On October 81 last there were in active op-
Grafton 3.6l7. having an authorized capita
of S630. 800 295. The total outstanding cir
cUiation of the banks then in operation was
1929 1879. $50. of which s2e2, .555 was secured
by bonds of the United States and the ball
ance by lawful money deposited with the
treasurer of the United States. The total
circulation outstanding of all national
banks on October 81 last was S230. i3l. COS. of
which amount 81, 55S. 500 was secured by
bonds held for account of insolvent and
liquidating banks and s26. 205. S25 by lawful
money deposited for their account and by
active banks reducing circulation. The net
decrease In the amount OF circulation Sc
cured by bonds during the year was sl2.-
5S4 334 and the gross decrease in the total
circulation was s4.s5l .292. During the year
a banks were organized with an aggre-
gate capital stock of So. 420 coo. During the
year II banks went Into voluntary liquida-
ton. There was paid to creditors of in
solvent banks during the year Si3.l69.7sl in
dividends.
THE magnitude Of this unequaled rec
ord" the report says. will more forci-
bly, illustrated If considered in the light of
what has been accomplished heretofore in
the way of dividend payments TO the cred
itors Of insolVent institutions. In 1898 there
was paid in dividends 50. 433 646 IN 1884. 49,
124577. in 1895. So 3S0.552 In 1896 49, 45l 959 and
in 1891 S3l69,1sl, making total of divi-
dends paid within the five years from 1898
TO 1897 of ST, sis. or S6A per cent. of al
the dividends that have ever been paid 10
creditors of insolvent national banks
From 1868 to 1897 there has been paid in
dividends S5935. 925. and in the year EN-
braced IN this report 5l3, l69,7sl, or II l-3 per
cent of all the dividends that have been
mold during the period of "a years of the
Existence of the system. Since october 81.
The end of the report year. II additional div
idends have been ordered, amounting 4 the
aggregate to a bout S625.OOO.
The report contains the latest compiled
statistfcs relative to the worlds monetary
systems and the stock OF gold. silver and
paper currency. A very interesting fea-
lure of this statement is the per capita
amount of each kind of money in the
countries named The per capita averages
in the principal countries of the world are
as follows: United States, $23.70 United
Kingdom, $2065, France, S546S: Germany,
s1s.95: Austria Hungary. 1888. and Russia.
1886.