New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1898-12-05
CURRENCY OF THE NATION.
.N,J1yAL REPORT OF CONTROLLER
CHARLES G. DAWES.

NEW PROBLEMS PRESENTED
BY NEW POSSESSIONS.
Washington Dec. 4-The annual report OF Charles
n Dawes Controller Of the Currency, for the year
srded october ST. 1885, vii, be sent to Congress to-
morrow.
with respect 10 the condition OF National banks
=, the year. as shown by the five reports required
:, the banks. the report says:
.o,wi,hstandnng that the number of banks in
GAZE OF report since December 49, 1890 the amount
- individual deposits. loans and discounts and
he existence of the National banking system on
SeD:einbsr 10. for the first time the aggregate re-
lar mark the increase since October 5. 1897 being
$50 1857 &c. A comparison OF the last returns
Snr,ns the year Of slOas52lSs "A in loans and dis
counts. s9l s4 $50 in Government securities on de-
the amount held by the banks. and s57.so4s27 a in
IN the amount Of United States certificates of de-
post FOR legal tenders results in a net increase Of
the dcposts aggregated SSs34sI2s 90 ana on Sep
terber % 1895 s2O3l $3.50 % the increase being
SsSkS S - shows an Increase OF ass2SsS O. and
United States deposits of &9,o220l9 q.
The Controller states that he does not review in
their details the plans for the modification OF the
currency and banking systems. which are now the
subject OF economic and general discussion through
.out country. but confines his discussion TO the
general principles underlying all OF them because
they seem 10 ignore the interests OF bank ue-
posters. with whose protection the Conuo"el Is
peculiarly charged. lie states that those plans
which are now most generally discussed may pe
Considered as based upon the following PROPOSE
tons.
Firs:-That the disproportion between outstand-
fig currency liabilities OF the Government paEapie
f. gold and the gold held for their redemption
should be lessened by contraction in the amount
Of these demand-currency liabilities
Second-That the void IN circulation caused ny
such contraction should be filled by an extension
OF the circulation Of National banks winch CIR
culation redcena bic in gold. is ultimately 10 de-
pend for is chief security upon first lien upon
the commercial assets Of the issuing banks
He states that the assumptions which seem to
underlie these plans are these
First-That unless we 10 have a currency
con;raction some radical extension OF banknote
issues is absolutely necessary to the securing or
fIl,!es 10 its gold reserve by which adjustment the
greater safety of the gold stdnlard Is sunserNeo'
second-That through this radical extension and
change in lie present form OF oanh,no.e .SsueS
alone is elasticity 70 be secured in our currency
AS opposed 10 these propositions. and in connec-
ton with The data given and views expressed here
matter relative changes in the present banking
laws the Controller states that his suggestions are
bas upon the following assumptions
First-That there IS existing no such condition OF
the United States finances. revenues or creoit as 10
justify the proposition that the shifting OF the our
cen o: gold redemption of Outstanding currency
a. necesstate Of itself radical changes ana con
cossions in National banking laws relative 10 ths
issue q notes which changes ard con cessons would
no. ne considered wise if the interests OF the COM
Inurity.. irrespective Of Government hnances' were
Second-That IT, from considerations Of general
public policy irrespective Of governmental hnances'
e. o. paifs condtion of The tinted states are
l,r~ ~
amendments 10 law suggested by the Presldent IL, IN
his last annual Message safer rato between rs
famed the stability of the present gold standarq
Insured. and the currency maintalned upon sounu
basis without contraction.
FUNCTIONS OF NATIONAL BANKS.
The Controller then says:
discrssion OF changes in the present banking laws
mat by far the most important Junction OF me Na
toual banks is that or an acllhs ihtuledm ~
tween the depositors and borrowers or commu-
oniary in Importance and usefulness unoer the
present proposed system or hank- note issues
ctsrges in the laws governing the motel issuing
nowers OF National banks. that the effects OF such
S Sosns rs ana borrowers be carefully studied
Il the belief Of the contr9er ,nai ,n tne e pro-
i,or which is a Fundamental basis OF AL ,hese
IS I no S Of public policy but that lis prac-
tea effect upon The present relation OF GepOsltors
70 banks in the smaller eoInmumtes OF re abot
20 most riurious conditions in the general busl-
OF the country.
Tie Controller then fully discusses the claim
tina. there is an inherent moral right irrespective
Of public policy to prefer a note-holde- over de-
rositholder IN the distribution Of the assets Of an
,rsolvent bank and denies that sucn right exists.
Ar,er reaching this conclusion the Controller then
asks;
r. then. there Is no inherent moral right to
establish preference Of the note holcins creditors
credi,ors n the distribution OF the assets Of an IN
solvent bank. the question arises Docs pubic d POI
hat such preference should be given in order TO
establish banknote system which vii give banks
such profit that 10 secure 1t they Will relieve the
6d1n1tio9 and AFFORD the country circulating
use? TO ''''7
He then states
In order 20 determine this question, actual data
a. command must be examined critically IN orIsI
done the depositor class b. this preference and the
consequent effects Of his wrong upon the commu-
rity at large and its business.
The Controller then presents series Of tables
which indicate more exactly upon what class Of de-
posto-s the real burden of this preference Will fall
with almost crushing weight
These tables give approximately the loss whlch
under the proposed plans would result TO depos'tors
from the preference of note-holders over deposit
holders in case Of insolvency based upon the show
ing made by the ls5 insovent National hanks whose
affairs have been finally closed during the exist
ence Of the system.
For the purpose Of these tables It is assumed IN
the case Of each class Of nsovent banks that their
officers would haze made the same proportioha'e
losses upon the commercial assets in which the
notes issued were invested that they actually did
upon the assets n which The deposits and capital
Of the banks Were invested.
u the good assets Of these different classes OF
insovent National banks, as shown by the records
Of this Office has been added the amount which
would have been realized from the unsecured notes
issued II loaned or invested with the same rate or
loss as was made upon the money invested in the
actual assets
From the assets thus increased there is sub
traced s. Der cent Of the preferred-no issues pro-
posed 90 wit the par OF the notes less the D per