New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1898-12-05

Wnlcn are cOllaDSing under nnanclal panic, out
speculation and imitation. II should be to the
tihcates are to our cities in times OF panic-a
remedy for an emergency. not an instrument OF
current business
LIMITATION OF LOANS.
The Controller. under the head OF Limitation Of
Loans" urges an amendment to section $500 OF the
National Banking law. by which he will be given
power to enforce a personal penalty for nfractlons
OF the law prohibiting excessive loans. something
which the law does not present give He then
recommends amendment which will allow the
banks of larger communities to have more nearly
the privilege OF loaning given per cent OF their
assets to one individual which now belongs. under
strict compliance with the present law. 10 the
banks of the smaller communities.
Referring to the violations OF the present law.
the Controller says:
United States under the PREF o.
Banking act. might adtudicate the question Of
other remedy than forfeiture OF franchise,
Since the the Institution Of the National banking king
common and the Controller. though allowing no
great practical diicuiy in his endeavors to en-
force this requirement.
On September 20 1895 the date of the last call
by the Controller for statements OF the condition
OF National banks, l,l24 banks constituting nearly
one-thrd of the entire number of banks in the
system, reported loans in excess OF the limit AL
lowed by Section 500. Revised Statutes of the
The greater ratio borne by banking resources to
banking capital in the larger communities, as
ties is Responsible for the defective and unequal
working of the present provision.
capital Of the q National banks in the city OF
New York is as IS Is to l. Of the II National banks
ST. LOUIS rs is to Of h 1? a b Bk
In other reserve cities as sc is to l. while in 1885
country banks the ratio is but as A. Is to /.
Ile law limiting loans 70 10 cent OF the cap
tal when applied to the 1885 banks OF the smaller
communities of the country. as whole, would
assets to one individual, As compared with this,
could not loan over hfty-sx-one-h undredths OF /
per cent Of their total assets to any one ndivdual
hundredths per cent Of their total assets; the
banks Of St Louis not oyer IA per cent Of Their
over Isl per cent OF their total assets.
In other words the proportion Of their -, assets sets
loan. in strict compliance with Section 500. to
individual is sxty-three -one- hundredths OF ] per
cent greater than in 21 reserve cities. seventy
four-one -hundredths Of per cent greater than In
ST. Louis over twice as great as in Chicago ana
nearly four times as great as in the city OF New"
This provision as It stands at present constl-
larger in proportion TO the total assets Of banks
in smaller communities. where. as ruIe large
secure while in the larger business centres OF the
tain demand both from banks and borrowers TOT
large and safe loans, its effect is the reverse 10
such extent as TO he injurious
The habitual disregard OF the present provision
by the officers Of so many banks interferes With
the proper OF the ndsreSce to the
other restrictions ~ the Nationa! Ranking law,
Ths fa 9ey Of Sf Penalty for the
OF excessive loans sometimes embarrasses the con,
raCtIassness in loanne which point the ulti
mate ruin of banking institution aha,
A 9yf9Tf 5i'e shond allow the banks larger
communities TO have more nearly me Pri' Isa5 70
one IndividIal which now belongs. under strict
Compliance with the present provisiop TO IN, the
privieee they are now debarred by law.
The results be o6snTd T. 9TT ig 5
"shai AZ no tine exceed one tenth part Of the
amount OF the capital stock OF sIGn aSSoc'a 10"
provided that the restriction OF this section as
to the amount Of total liabilities TO any assoca
ton or firm Tor money borrowed. shall. not apply
where loan in excess Of onetep nn p psnt OF the
total assets Of said bank at the lime Of making
said loan Said loan shall be at all times protected
than the excess in the amount Of said loan over
A strict and personal penalty enforceable by me
Controller should then be pTovded lor 81 rs
eral and strict compliance with its terms. ooo
inst and eomitabie in its relation to all National
banks. and TO all communities of our country large
and small which II is not a. present
II would not lessen the amount which the smaller
banks can now loan in compliance with the section
not allow the larger banks to loan to any one In
dividual corporation more than 10 per cent OF
sncmred FOR the EXCESS Would still amount to
per cent Of their total assets than the per cent
Of total assets which the smaller banks can now
loan under the section as IT stands at present
Section sos thus amended will not interfere. as
at commHntes to meet the legitimate require
ments OF business in those commercial centres. !,
will enable the Controller. by its enforcement 10
prevent an undue concentration Of loans and con-
serve their general distribution; .,.o, -,
Under the section thus amended the capital of a
bank will be protected .nasnuch as no loan dn N
excess Of the 10 per cent Limit can then be made
The penalty clause will enable the Controller not
only to limit the size. but to enforce the securing
OF excessive loans.
The Controller then presents series Of tables
showing the general effect OF such an amendment
non the business Of banks in its relation to exist
ing loans.
ADMINISTRATIONS OF INsOLvENT BANKS
Under the head OF nsovent banks the Controller
discusses in detail his ruling OF May 8. 1898, re-
versng 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 revision Of the
first assessment has been made. In three cases he
has made a second assessment against stockholders
in tho interest OF depositors. and In five cases he
will make returns 70 stockholders Of sums Illegally
collected from them.
He states that in the administration Of insolvent
hanks in the interest Of creditors he has effected
annual savings approximating 100000
The report makes a statement in reference 10
oank examinations follows:
The appointment by the Controller TO these i'm
portant positions Of competent ana ape men IS
one OF the most sacred duties OF his office To pro-
ect ov every possible safeguard their independence
and disnterestedness Is equally important. Win
This latter object in view. the Controller has for
hidden the practice. which he found IN existence
in some of the larger cities. of the employment or
The examiners by banks Of their district in special
rninatfon work the benefit Of the bank. and
nj For the Controiler's Office This practice has
tendency to interfere with the rigid importantly
which should characterize the work OF Govern
ment official. .,, $500
During the year the Controller has extended over
,ba ci,ies Of New-York Boston. Philadelphia and
Raltimore tho system Of semi-annual ysi;ations by
examiners. in force In all other sections OF me
comn,rv He has utilized. with some beneht. the
oy|nners in Investigations into the credit Of heavy
debtors OF banks. where such indebtedness con,
e,i.nted a menace TO the safety OF the banks. and