The Providence news. (Providence [R.I.]) 1891-1906, 1897-01-04
COmptrOllerS Authority is
Restricted.
His Position as to National
Banks IS Advisory.
Recent Failures and How Banks are
Frequently Wrecked.

WASHINGTON, Jan. 4.--[Special l-Th
recent numerous hank failures In the wes
have served To call attention TO the impor
tance of the supervisory work of the comp
trolier of tho currency. The comptrolle
Is by law given supervision OF all the ma
tional banks in the country. His powo
over them is not great enough to enabl,
him to compel them to obey the law, bu
he can and does exercise strong inauenc,
upon them. As was shown In the case Of
tho recent failure of the National Bank OF
Illinois at Chicago, tho comptroller had
repeatedly warned the officers and director:
OF tha. institution that they were violating
tho 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 direcssSy, 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.
II the comptroller had becn given by law
the power to enforce his demands, IL he
were something more than a 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 ilt 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 moro 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 vi S,675 ma
tional banks Their shareholders number
nearly 100000 They have notes In circu-
laton to the amount Of $210, 900, 900. Their
total resources are SO, 260, 900, 900, and their
deposits amount TO tho enormous sum Of
al, 900, ,O00, ,0C0, or twice the national debt,
less cash, in tho treasury. This last item
shows how close are the relations between
the comptroller's Office and the business of
the country. II 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 tho 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 10 enforce his wishes. He
q tr tr,t sxsl. l.
by public announcement OF its wea ness,
but this would only serve to precipitato
the disaster, which Ii is bis duty TO avert.
There is no longer any anxiety concerning
loss TO tho holders of national bank notes |
In the old days of wildcat banking note
holders never know whether they woro safe |
or rot. Often bank failures subjected them |
to great losses. But under the new ma
Iional bank law, In force since 1868, no
holder Of u national bank note has lost
penny. All such notes aro protected by |
deposits Of United States bonds, which
preclude tho possibility of loss.
The comrtrolIer's chief duty now Is to
guard the rights Of the depositors and Of
ho business community I'm general. This
8 great and "a delicate responsibility. If
10 Is lax in enforcing the law, danger will
AN'B Al Hb u toO LyIttnIlCdl, DunkS \
will bo forced into failure when little
more patience and tolerance might save
hem and all the interests involved 1t is
pparent that much more depends upon
no fidelity with which bank officers dis
harge their duties than upon the zeal of
he comptroller. If they are prudent and
onest, there will be no trouble. If there
; trouble, IT has been brought about be-
~. hf, -
!, and despite all he can do there may be
o way of correcting the evil.
Tho chief trouble with national banks Is
hat their officers persist In making loans
relatives and to personal friends who
70 engaged in enterprises of doubtful
alue. In this way bank after bank has
cen wrecked. The temptation to help out
no's relatives or personal friends has been
10 undoing Of many fine reputation.
here Is one quality which national bank ,
licer must havo II ho Is to be u success, If
, Is to avoid humiliation and disgrace.
o must be able to say 'No." The weak
an, tho good naturcd man, the kindly
an, has 90 business in IA bank, where
her peoples money and the prosperity Of !
city are intrusted to his care. $
Since the present national banking law
10 posStti, III 1000, tUcTe nave Dten report ! q
TO the comptroller of the currency 1863
tional bank failures. That was up TO
t. last year. The total liabilities Of
csc failed banks was S190, 600, 900. When q
cir affairs were finally settled up, 10 was 8
md they wore able to pay S93, 800, 900 In '
vidonds, or about AZ per cont This is q
Q bad showing. considering that most I,
tho bank failures have beon in times of
nic, whom values Of securities wero fall.
: fast g
Bank Failure Waves. a.
Tho failures OF national banks bavo q
ne In waves. Between 1903 and 1872 "
'ro woro only "A failures, and their liza n
.tles were small. But In the next six q
irS-1S53 To 1873, inclusiye--therc were n
failures, with liabilities aggregatinQ =.
Dut s70,000,O00. That was tho panic y
iod of 1873. VI
Between 1873 and 1893 there were a good 81
ny failures, ngRrogating 325 in numbsr. "a
6, as n rulo, their liabilities were small. n,
mo second great cra OF national bank ii
lures began ia 1888 In that year 276 n,
iks failed. In 1854 tho number was ~. o'
1895 II was lis, and In 1895, up to Oct ~
4 xuuc VI