The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1898-12-06
The Report of
Mr.. Dawes.
ABLE DOCUMENT.
Chief Questions Of National
Finance Dwelt Upon.

! Washington, Dec. 5.-The annual re.
port of Charles G. Dawes, comptroller
of the currency, for the year ended Oct
81, 1898, has been sent to congress.
With respect to the condition of ma
tional banks during the year as shown
by the five reports from the banks, the
comptroller says:
Notwithstanding that the number OF
banks IN operation on September 20, 1898
is less than at any date of report since
December 49, 1890. the amount of individ-
ual deposits, loans and discounts and to-
tai resources is greater than at any time
during the existence of the national bank
ing system. On September 20. for the first
time, the aggregate resources reached
and exceeded the four-billion-dollar mark.
the increase since October s. 1897, being
S29S,3lG33f 10. A comparison of the last
returns with those of October 5, 1897, in
dicates an increase during the year of
SlO4 $50, "A in loans and discounts; SIS,
$3.50 in government securities on deposit
with the treasurer of the United States to
secure circulating notes and public depos-
It's and the amount held by the banks
S5i 3O4, SG "a in specie and legal tenders.
The reduction of S25 465, 900 in the amount
Of United States certificates of deposit
of lawful money of S31, S39 S27 "a. On Octo-
Der 5, 1897, the deposits aggregated 81 ,S53,
349, l2S 80, and on September 20, 1898. 81 OIL
454. $40 80, the increase being SITS, 1876 All 70.
The balance due other banks and bankers
shows an increase of S52. 627 3SS. o. and
United States deposits of $59,023, 0l9.27.
The comptroller 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 dis
cussion throughout the country, but
confines his discussion to the general
principles underlying all of Them be-
cause they seem to ignore the interests
of bank depOsitOrs, with whose protec-
ton the comptroller is peculiarly
charged. He states that those plans
which are now most generally discussed
may be considered as based upon the
following propositions:
First, that the disproportion between
outstanding currency liabilities of the
government payable in gold and the
gold held for their redemption should
be lessened by a contraction in the
amount of these demand-currency Ii
abilities.
Second, that the void in circulation
caused by such contraction should be
filed by an extension of the circulation
of national banks, which circulation,
redeemable in gold, is ultimately to de-
pend for its chief security upon a 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 are to have cur
lrency contraction. some radical extension
of bank note issues is absolutely neces-
sary TO the securing of the proper adjust
taTli
it's gold reserve, by which adjustment the
greater safety of the gold standard is sub
served; and
Secondhand through this radical ex-
tension and change in the present form of
bank note issues alone is elasticity to be
secured in our currency.
AS opposed to these propositions, and
in connection with the data given and
views expressed hereinafter relative to
changes in the present banking laws,
the comptroller states that his sug-
gestions are based upon the following
assumptions:
First - That there is existing no such
condition of the United States finances.
revenues or credit as to justify the propo-
sition that the shifting of the burden OF
gold redemption of outstanding currency
from the government to the banks is SC
important as to necessitate of itself radi-
cal changes and concessions in national
banking laws relative to the issue of notes
which changes and concessions would not
be considered wise if the interests of the
community, irrespective of government
| finances, were alone considered.
Secondhand if, from considerations OF
general public policy, Irrespective of gov.
ernmental finances, bank note issues Sc
cured only by commercial assets of banks
seem unwise, that the resources, credit
and financial condition of the United
States are such that by means of reve-
nue. laws and other amendments to law
suggested by the president in his last an
nual message, safer ratio between its
outstanding circulation and gold reserve
can be attained, the stability of the pres.
ent gold standard insured, and the cur.
rency maintained upon u sound basis
without contraction.
The comptroller then fully discusses
! the claim that there is an adherent
moral right, irrespective of public pol
| icy, to prefer a note holder over a de-
post holder in the distribution of the
assets of an insolvent bank, and denies
/ that such right exists.
In the bank note issues of foreign
countries in case of insolvency" says
the comptroller, 'the note holder would
! it is understood, enjoy no preference
over the deposit holder. They would
share ratably in the assets. To give
the credit which enables the notes of
| these great banks to circulate. restrict
ed by stringent laws as they are, nc
! injustice to depositOrs such as is pro-
posed in these plans for the United
/ States is necessary. In one country
only, Canada, are the note holders pre-
ferred over the depositors in case of in
| solvency. The nOte-iSsuing banks of
Canada are but IS in number with a
combined circulation of about $3S 900,
900"
The comptroller states that he can
not accept as safe any deductions
drawn from the bank note system OF
these few central institutions of east
ern Canada which would tend to justify
the application of the laws governing
| that system to the 5000 national banks
of this country.
The comptroller calls attention. as a
summary of his views upon the pro-
posed plans, to these propositions:
''First-As a fundamental proposition
any bank note system depending for
security upon the commercial assets of
banks and sanctioned by government
/ should be inherently fair in it's relation
to the deposit-hoding creditors and
the note-hOlding creditors of an insol.
vent bank.
"Second-No system is inherently
fair which creates a preference Of the
note holder over the deposit holder in
the distribution Of the assets of an in
| solvent bank
"Third-In none of the older coun-
tries, to the success of whose uncov-
cred 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