The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1898-12-05

lnHt1HCts tuey SNOW tHGt-
THE dep0sltors OF ~ inaolvent banks,
having q combined capital OF S9,l22,O0O
/ nominal aesets S2t.i53.9t2, and with cash
dividends paid depoaliors OF 81, 99G,9s3. or
| 7t.6l per cent, situated in the Middle
states Of Ohio. Indiana, Illinois, Mlchi-
gan. Wisconsin, Ainnesota, Iowa, and
Missouri, would have lost. by preference
Of the note holders With 100 per cent Is
sue, 1910 per cent more than under the
present system, or 56,H per cent OF their
dividends; wiki mn so per cent note is-
sue, 3l.70 per cent more. or A.35 per cent
OF their dividends; and with a 90 per
cent issue. 23s2 per cent more, or 1926
per cent OF their dividends"
From the tables which we have given
II Is evident that from the deposliors IN
smaller national banks OF from $4,000 to
100000 capital and from the deposltors
OF the newer sections Of the country, the
greater amount Of the cost of this rldlca!
experiment In currency must be collect
ed. Thus upon those deposltors least
able to endure loss must the heaviest
Losses fall"
The comptroller calls attention, as n
summary OF his views upon the proposed
plans, TO these proportions:
First Az fundamental proposition.
any bank note system depending for Sc.
Curlty upon the commercial assets OF
banks and sanctioned by government
should be inherently fair in Its relation
to the deposit holding creditors and the
note holding creditors OF an ingolvent
bank
Second, No system Is inherently fair
which creates a preference of the note
holder over the deposit holder in the dis
tributloR OF the assets OF an InsolVent
bank.
Third. In none of the older countries,
to the success OF whose uncovered note
systems we are referred as tending to
justify the experiment In this country, Is
the note holder by the law preferred over
the deposit holder in case OF insolvency
Of banks OF issue. Canada, with It's IS
central banks Of Issue, as compared with
5000 scattered national banks In this
country, furnishes the only exception TO
this rule.
Fourth. The necessity OF the prefer
ence under any such system In this
country to give security and credit 10
the notes demonstrates that It Is the de-
poaltors Of the country. and not the
banks, upon whom the great weight OF
the guarantee of the note Issue must
fall.
Fifth. A fairer system would provide
that when receiver took charge OF an
InsOlvent bank he should not first pay
into the general redemption fund held
by the government an amount derived
from the assets OF the bank sufficient TO
pay the note holders In full before pay
Ing anything to depOsltoru, but he should
pay into the fund that pro rata share OF
the proceeds derived from the assets
which should so TO the note holders, not
as preferred creditors, but as creditors
In the same class as depositors.
1.-THE tax upon the solvent banks for
the currency privilege should not, then,
be limited to not exceeding l per cent
per annum OF their annual note Issue, or
In any other amount. but should be
made sufficiently large TO provide for the
deficit, whatever II should prove TO be.
Sixth. II under such system, owing
to causes to which we have referred the
tax upon the solvent banks would be so
large as to render the issue Of such cur
rency Improbable and unattractlve 20
the banks, 1t would be n denomination
of the radical difference in the environ
ment and condition of our banking sys-
tenn as compared with the more central
lied and older systems OF Europe. It
would be n demonstration OF the fact
that under the proposed legislation,
while the banks would take the profits
upon the circulation, the deposltoS
would take the bulk OF the losses.
at would be a conclusive denons.rl-
tlon of what we believe TO be the fact
that, under our banking system as at
present organized. the absolute safety
OF notes secured only by commercial as
sets and Issue to the extent proposed in
these plans can be eecured only by resort
to grave injustice upon deposi;ors,
| which can not be justified upon any
grounds of public policy.
Seventh. Such system OF uncovered
notes as this proposed, providing for 4
preference Of the note holders over ether
creditors, would Interfere radically with
the more important functions OF national
banks to which the note Issuing function
IL secondary and subordinate,
This would be against public policy
and would operate against banking In
the smaller communities, and In the
western, southern, and central portions
Of our country.
Eighth. The government OF the
United States Is not In such straits, in
| connection with It's present currency
system, as to compel It to enter into q
plan OF currency changes by which 1t In
| effect sells extended and valuable cur
rency privileges to the national banks
OF the country In exchange for asslst-
| ance from them In meeting It's present
| governmental currency obligations pay
| able In gold.
ninth. II the present conditions OF
governmental currency demand reforms,
10 secure which will entail cost, II Is
| better for the government, as the repre-
sentative OF all the people, and under all
| circumstances connected with our bank
| Ing system, TO pay an ascertained and
exact cost direct than 10 endeavor to
evadc It by granting extensive currency
| privileges 10 banks which Of necessity
must reimburse themselves from the
community and tho depoait0r class for
| any cost which they incur In assuming
| the burden OF gold redemption or main
tainlng the crcdIt Of their notes
The comptroller then discusses the
question or the elasticity needed in bank
currency, commenting upon the great
elasticity OF the check and draft Crcula-
tIon OF the country.
The comptroller under the head OF
| Limitations OF Loans" urges an
amendment TO section 800 OF the ma
;lonap banking Law, by which he VIII
he given authority to enforce Il personal
| penalty for lnfrnc;iyrs OF the law pro-
hlbitiug excessive loanB something
which the law does not at present give,
| He then recommends an amendment
which VIII allow the banks OK larger
communities TO have more nearly the
privilege OF .oaning given per cent
TnTT. NC