The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-12-06
Appeal for a Change in the Law Now
Governing the Matter of Bank
Note Circulation.
PAPER CURRENCY QUESTION
UNITED STATES ALONE CONTINUES
THE GREENBACK ISSUES.
The 3,0i7 National Banks Have an
Authorized Capital of $780,
Observation-Disclosures.

| WASHINGTON, Dec. 5.-The annual re-
port of James Fl. Eckels, controller of the
currency, for the year ending Oct. 81, 1897
| opens with brief review of the history OF
| the LEGISLATION which constitutes the pres
| ent national bank act, and invites the at
tention of Congress to amendments to the
| law recommended in former reports without
specifically repeating them. On the subject
| Of bank note circulation the controller
| says: 1T is noticeable that in all the
| changes which have been wrought in the
national currency act from its inception to
| the present time the feature subject TO
| criticism, but which was intended should
constitute the principal benefit to be con-
/ ferred, has remained comparatively un-
| changed, namely, the note-issuing function.
Whatever justification there was in the first
| instance for restricting the issuing of notes
| against the bonds of the government, de-
posted with the treasurer of the United
| States to 80 per cent. Of the par value there.
Of, long since ceased. In the report of every
controller 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 they are
| located might have the additional benefit
| of an added loanable capital has been
|
without amendment. Not only should the
| bank act be amended in this particular but
! Congress should seriously consider such
change in the method of bank note issues
as will enable the banks of the country to
more adequately meet the demands of trade
| and commerce in all sections of the coun-
! try.
1.-The business of banking, like every
| other form of investment, must be made
attractive to capital. If it is placed on a
| footing different from other undertakings,
embarrassed through unnecessary restric-
| tions and deprived of proper sources of
! profit, the result cannot be otherwise than
that investable capital will seek other
means of employment and to such extent
deprive the people of the benefits of the
agency most requisite to commercial activ-
| ity.
SOLE PROVINCE OF BANKS.
| 'It is considered by every great CONNER
cial government, except the United States
to be the sole province OF the banks to issue
the paper which circulates as currency
| The belief in bank-note currency as be-
| ing better and safer than government pa
| per currency prevailed unquestioned in this
country until, under the apparent exigen-
cies of war, the government undertook to
| isue paper currency. Even under such cir
| cumstances the promise was always given,
| however, that it should be retired at the
| earliest practicable moment and the admis-
! sion freely made that it was neither a wise
measure nor safe form of currency Be-
| tween the competition of the government
note issues the hand and the
| necessary restrictions imposed by law on
| the other, together with the increasing price
| of bonds required to be deposited as Sc
curity, the note issuing function of the
| banks has been permitted to become merely
| an incident of the conduct 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 be issued by the govern
ment instead The experience of every gov
| erEment has been that governmental cur
rency paper is a 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 jeopardy through it and the business
| interest of the country subjected to unnec-
| essary 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 careful analysis: The
government has no means for caring for its
demand liabilities except through borrow
ing and through the levying of taxes On
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
ment, for in each financial eXigency which
has confronted the government the banks
have furnished to it the amounts neces- 4
sary to maintain it's solvency. 1t is impos-
sible to believe that with system of bank
note issues, based in part on securities and
in part on bank assets, the country cannot
be provided with sound, safe and elastic
bank-note issue, always commensurate with
and responsive to the demands of trade
land and the Bank of Ireland have been
found to be ample in their resources to
rrrrfd dn flAa VaOfn fnrf ~, a.
of the United Kingdom 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 has been so con-
trolled as TO successfully meet the CONNER
cial needs of the empire.
The controller calls attention to the
method of organization of this bank, and
publishes some interesting statistics in con-
nection Herewith.
GROWTH OF NATIONAL BANKS.
The total number of national banks or
ganized since the system was put into oper-
alton in 1865 are shown to have been $685.
On Oct. 81, last there were in active opera
tion S,617 having an authorized capital of
$500 230, ,295. The total outstanding circulation
of the banks then in operation was 1929, ,199,-
$780, OF which 500, 1866 was secured by
bonds of the United States and the rest by
lawful money deposited with the treasurer
OF the United States. The Lotal circulation
outstanding of all national banks on Oct. 81
last was $230, ,13l ,005, of which amount 81 ,55S,-
800 was secured by bonds held for account
of insolvent and liquidating banks, and $26.-
325 by lawful money deposited for their
account and by active banks reducing cir
culation. The net decrease in the amount of
circulation secured by bonds during the
year was $12,5S4 334, and the gross decrease
in the total circulation was 81 S51 ,292.
Tho 3617 banks in operation are divided
geographically as follows: Five hundred
and lightweight, with an authorized capital
stock of $159, ,291 $40, in the New England
States: 956, with an aggregate capital stock
of $195, ,275 in the Eastern States 546,
with a capital stock of $66, 761 800. in the
Southern States; O45. with q capital stock
of $3.50 1e9 ,967, in the Middle States 357 with
a capital stock of $32 654, ,160, in the Western
States and 124, with "a capital stock of
$17 465 900, in the Pacific States. During the
year forty-four banks were organized with
an aggregate capital stock of 81 4420 900.
During the year seventy-One banks went
irto voluntary liquidation There was paid
to creditors of insolvent banks during the
year $13. 1863 7S1 in dividends. The magnitude
of this unequaled record, the report says, |
will be more fOrcibly illustrated II consid- |
cred in the light of what has been accom-
plished heretofore in the way of dividend !
payments TO the creditors of insolvent insti- |
tutions In 1898 there paid in dividends |
50 433 646 in 1894, $5.124.577: i'm 1896 49, 552
in 1896. g. 451,s5s. and in 1897 $lSl 7Sl, max