The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-12-05


enforcement to prevent an undue concen-
tration of loans and conserve their general
distribution. Inasr of the section 9, thus
tected, inasmuch as no loan in excess of the
10 per cent. limit can then be made, ex
cept upon proper collateral security. The
penalty clause win enable the controller not
only TO limit the SIZE but enforce the secur-
ing of excessive loans.
The controller then presents series of
tables showing the general effect Of such an
amendment upon the business of banks in
its relation to existing loans
Under the head of insolvent banks the con-
troller discusses in detail his ruling of May
s, 1898, reversing the former position of the
office in refusing to revise an assessment
against stockholders when an error in the
first assessment became manifest. He states
that in eight banks a revision of the first
assessment has been made. In three cases
he has made a second assessment against
stockholders In the interest of depositors.
and in five cases he will make returns to
stockholders of sums illegally collected from
them. He states that in the administration
of insolvent banks in the interest OF cred
itors he has effected annual savings approx
mating 100000.
BANK EXAMINATIONS.
The controller makes statement in refer
ence to bank examinations, as follows: The
appointment by the controller to these inn
portant positions OF competent and able men
is one of the most sacred duties of his office.
To protect by every possible safeguard their
important With this latter object in view,
the controller has forbidden the practice
which he found in existence in some of the
larger cities of the employment of the ex-
aminers by banks of their district in special
examination work for the benefit of the
bank, and not for the controllers Office.
This practice had a tendency to interfere
with the rigid impartiality which should
characterize the work of government oti-
cial
During the year the controller has ex-
tended over the cities of New York, Boston,
Philadelphia and Baltimore the system of
seml-annGal vsitations by examiners, in
force in all other sections of the country.
He has utilized, with some benefit, the eX
aminers in Investigations into the credit of
heavy debtors of banks where such indebt-
ednesS constituted a menace to the safety
of the banks, and where, despite the crit
icisns of the controller and the efforts OF
the bank officials, no material reductions in
the amount OF the Indebtedness could be
had
Under this head the controller, while rec
ommendng that domestic branch banking
should be legaliZed in communities of less
than 1000 inhabitants, many of which are
now unable to support independent hanks,
opposes the granting of any more liberal
privileges of branch banking than these,
on grounds of public policy. lie states that
such privileges would place the larger
banks of the great cities in competition
with the banks of smaller communities, and
would probably result in a rapid centraliza-
in the hands of a constantly leSSen1ng num-
Der of institutions. Theoretical advantages
are claimed for such results, but in our
judgment they would be injurious to the
best interests of our country. Such Sys-
tenn would increase the difficulties in the
way of the small borrower, though lessen
ing them for the large borrower. 1t would
tend to separate the borrower from the
lender, as it would of necessity remove the
central Lending power IRON the 5ma o4 he
claimed that the agents in charge of the
branch banks you'd possess the same pow
ers of loaning as the officers of the smaller
banks now possess. but such arguments ig
more the prevailing tendencies of modern
corporate management which magnify OF
necessity central responsibility, and con-
stantly tend to subordinate to rigid systems
the activities and responsibilities of agents
upon detached duty"
COLONIAL BRANCH BANKING.
In connection with this branch of his re-
port the controller discusses at length the
necessity for the establishment of interna-
tional and intercolonial branch banking.
He shows the disadvantages, as compared
with foreign trade, under which American
export and import trade now labors as a
result of inferior banking facilities and
shows that these same disadvantages are
serious hindrance to the adjustment of our
trade relations to the new advantages af-
forded by territorial expansion. In this con-
Rican banking and trade situations. He
says: 1.-The foundation for the greater
growth of trade between the United States
and her colonies must be speedily and firmly
laid in proper banking laws which will re-
suit in enabling her merchants to do bust
with the people of the colonies with
out the disadvantages existing at present.
Our present national banking laws do not
authorize the establishment of American in
ternatiOnal or American intercolonial banks,
nor could any national bank establish
branch in territory or colony such as
Porto Rico or Hawaii, even if our present
laws unchanged were extended over it.
While it is questionable whether Congress
should legalize the establishing of foreign
colonial branches by national banks
transacting business under the present law,
that it should at least pass laws authorizing
under proper restrictions the general incor-
poraton Of banks organized to carry on
international and intercolonial banking, as
distinguished from domestic banking, adj
mits of no reasonable doubt. Unless some
such legislation is provided the American
exporter and importer in his trade with
Americas colonies will be compelled to err
dure all the disadvantages under which in
all South American markets and in many
other markets of the world he now laborS
in his competition with foreigners enjoying
superior banking, facilities"
His recommendations in connection with
this branch of his report are made as fol-
lows: THE determination of the relation Of
any new banking system to the existing
banks and domestic credit of Porto Rico,
differing they do from those of this coun-
try involves many difficult questions, and
legal provisions for the appointment of
commission especially charged with the ex-
animation of the conditions of domestic
banking and finance on the islands, and
with the recommendation of the proper
form of law. in connection Herewith, is re-
Spectfully urged upon Congress.
In view OF the conditions and necessities
of our trade with our new territories of
Porto Rico and Hawaii and with other
South American countries, as we'll as with
those other territories over which our coun-
try must exercise a more or less extended
measure of control, the controller earnestly
recommends the passage of laws authoriz-
ing the incorporation of banks organized
for the purpose of carrying on international
and intercoionial branch banking"
The controller states that up to and in
Guiding Oct. 81. 1898, there have been or
ganZed 5151 national banks, % per cent. of
which have been placed in voluntary liqui-
dalton and less than per cent. in the charge
of receivers AT the close of the year there
were in active operation 1888 associations,
with authorized capital stock of 1921, 552 1876.
The outstanding circulating notes of the
banks on that date amounted to $239, $40 PSI,
of which S210. 045 1856 were secured by bonds
and the remainder, $29, S25, by lawful
money on deposit with the treasurer of the
United States for the account of liuuidating
culation. The circulating notes outstanding
are So, 5S211 in excess of the amount on Oct.
81, 1897. During the year there were organ
lied ffty-siX banks, with total capital stock
the system during the year by voluntary
liquidation was siXty-nine, one of which
was subsequently placed in the charge of a
receiver. The capital of the sixty-eight
banks which liquidated amounted to S12,5e9-
600 and the circulation to $21S4 95S The
combined capital of the seven insolvent
banks was 81 200 o00.'
The controller is required by law to pub