The record-union., 1898-12-05

and as conclusion from the views
hereinbefore expressed, the Comptroller
would make the following recommends
tions in regard to the present laws gov
erning the issue Of national bank notes:
'sFfrst-The existing bank-note sys-
tenn, based upon deposit OF Government
bonds as security, should not now be
abandoned.
'Second-For the purpose Of allowing
elasticity to bank-note issues to protect
the banks and the community in time
of panic, small amount of uncovered
notes, in addition to the secured notes,
should be authorized by law under the
following limitations: They should be
subjected to so heavy a tax that they
could not be- issued in normal times for
the purpose of profit, but would be
availa BILE in times Of emergency. The
tax should be so large upon the solvent
issuing banks as to provide fund
which, in connection with the pro rata
share of the assets of an insolvent
bank, would be sufficient to redeem the
notes in full without necessitating any
preference of note holders over deposit
ors Of any fnsolvent issuing bank The
tax should be so large as to force this
currency into retirement as soon as the
emergency passes.
Such currency could be used only
to lessen the evil effects of the too rap
i'd liquidation of credits which are coll
lapsing under the financial panic, but
could not be profitably used as a basis
of business speculation and imitation It
should be to the business community
what the clearing house certificates are
to our cities in times Of panic-a rem
edy for an emergency, not an instru-
ment of current business"
The Comptroller, under the head of
Limitation Of loans,'' urges an amend
ment of Section 5000 of the. national
banking law by which he will>be given
power to enforce a. personal penalty for
infractions of the law prohibiting ex-
cessive loans, something which the law
does not at present give. He then rec
ommends an amendment which will al
low the banks Of larger communities to
have more nearly the privilege of loan
ing a given per cent Of their assets to
one individual, which now belongs, un-
der strict compliance with the present
law, to the banks Of the smaller COM
munitieS.
Under the head Of insolvent banks the
Comptroller discusses in detail his rul-
ing of May s, 1888, reversing the form
er position of the office in refusing to
revise an assessment against stockhold-
ers when an error in the first assess
ment became manifest,
He states that in eight banks revis-
ion Of the first assessment has been
made. In three cases he hS.s made a
second assessment against stockholders
in the interest of depositors, and in five
cases he will make returns to stockhold-
ers Of sums illegally collected from
them
He states that in the administration
Of insolvent banks In >the interest Of
creditors he has effected annual saw
ings approximating 100000.
Under the head of domestic branch
banking the Comptroller, while recon-
mending that domestic branch banks
should be legalized in communities of
less than 1900 inhabitants, many of
which are now unable to support inde-
pendent banks, opposes the granting of
any more liberal privileges of branch
banking than these, on grounds Of pub
lie policy.
In connection with foreign and colo
nial branch banking, the Comptroller
discusses at length the necessity for
the establishment Of dnterna tional and
intercolonial branch banking. He
shows the disadvantages, ais compared
with foreign trade, under which Amer
lean export and import trade now Ia
bors as a result of inferior banking ia
ciMties. and shows that these same dis
are a serious hindrance to
the adjustment of our trade relations
to the new advantages afforded by ter
ritorial expansion.
In this connection he discusses the
Hawaiian and Porto Rican banking and
trade situations. He says: The foun-
dation for the greater growth Of trade
between the United States and her coli
onies must be speedily and firmly laid
in proper banking laws, which will re-
suit in enabling her merchants to do
business with the people of the colonies
without the disadvantages existing at
present. Our present national bank
ing laws do not authorize the estab-
lishment of American international or
American intercolonial banks, nor could
any national bank establish a branch In
a territory or colony such as Porto Rico
or Hawaii, even if our present laws un-
changed were extended over it.
while it is questionable whether
Congress should legalize the establish
ing of foreign or colonial branches by
national banks transacting business
H. -.
least pass laws authorizing, under prop
er restrictions, the general incorpora-
tion Of banks organized to carry on in
ternational and intercolonial banking,
as distinguished from domestic banking,
admits of no reasonable doubt.
Unless some such legislation is pro-
vided the American exporter and inn
porter, in his trade with Americas own
colonies, will be compelled to endure all
the disadvantages under which, In all
South American markets and in many
other markets of the world, he now la
bors in his competition with foreigners
enjoying superior banking facilities"
His recommendations in connection
with this branch of his report are made
as follows:
THE determine tion of the relation of
any new banking system to the exist
ing banks and domestic credits of Porto
Rico, differing as they do from those of
this country, involves many difficult
questions; and legal provisions for the
appointments of a commission especially
charged with the examinat ation of the
conditions of domestic banking and
finance on the islands, and with the
Of the proper form of
laws in connection Herewith, is respect