The times., 1898-12-05
THE BANKING SYSTEM
Report by the Comptroller Of
the Currency.
TO BE SUBMITTED TODAY
A Decrease i'm the Number of Banks
The Resources Exceed Four BILL
ions of DoIlnrs-The Hawaiian and
Porto Rican Situation.

Porto Rican situation.
The annual report of Charles G. Dawes,
comptroller of the currency. for the year
ending October 81, 1895, will be Gent 20
Congress today.
In his opening chapter, the comptroller
says:
Notwithstanding that The number of banks in
operation September 20, 1885, is less than at
any date of report since December 10. 1890 the
amount of irdiS -ual deposits loans and diGeoun'
and total resources is greater than at any time
during TIE existence of the national banking sys-
tenn On September 20, fo- the first time, the ae-
grogafe resources reached and exceeded the ST.
0C0. 0,000 mark. the increase since October D,
1S9s. being s29s.sss, ,s57.l6 \ comparison Of the
last returns with those OF October D, 1881. indi-
Gates increase during the OF >lOl 9j2 ISL IA
in loans ard iiscounts; SO. .I9Iss0 in Government
securities on deposit with the Treasurer of the
United States TO secure circulating notes and pub
lie deposits and the amount held by the banks;
So, ,5OI s27 "a in specie and legal tenders. The
reduction of s25. 1850 in the amount of United
States certificates Of deposit for legal tenders re-
suits in i net increase Of lawful money of S3i,-
$50. s27.sI. On octobeF 5, 1897, the deposits ag-
gregated 81 .S53, .Si9-50 ami September 20,
ls9s s2.0Sl, ,i5i, 20 the increase being slIS-
l0j,ill.I9. The balance Que other banks and
bankers shows increase Of S52,62s ,SSs % and
United States deposits OF s59O2S,Ol9
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 sub
ject of economic and general discussion
throughout the country. but confines his
discussion to the general principles under
lying all of them, because they seem to iS-
more the interests of bank depositors.. with
whose protection the Comptroller is pecu-
liarly charged. He states that those plans
which are now most generally discussed
may be considered as based upon the fol-
lowing propositions:
Fi'st-That the disproportion between outstand-
ing currency liabilities OF the Government payable
in gold and the gold held fer their redemption
should be lessened by contraction in the amount
of these demsnd-curreney liabilities.
SecOnd-That the void in circulation caused by
such contraction should be filled by an extension
of the circulation Of national hanks, which circu-
lation, i,deemable in gold. is ultimately to de-
pend for its chief security upon first lien upon
the commercial assets Of the issuing banks.
Elastic Currency Needed.
The elasticity needed in bank currency
is discussed, also the great elasticity of
the check and draft circulation of the
country. and the comptroller makes the
following recommendations in regard to
the present laws governing the issue of
national bank notes:
First-The existing bank-note system. based
upon deposit OF Government bonds as security,
should net 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, a small amount of
uncovered notes, in addition TO the secured notes
should he 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
available in times tf emergency. Tae tax should
be so large upon the solvent issuing hanks as to
provide a fund which. in connection with the
pro rata share of the assets of an insOlyent bank
would be sufficient TO redeem the notes in full
without necessitating any preference Of note
holders ever depOsitors Of any insolvent issuing
bank. the tax should be so large as TO force this
currency into retirement as the emergency
passes.
The comptroller, under the head of
Limitation of loans,' urges an amend
ment to section 500 of the national bank
ing law by which he will be given power
to enforce a personal penalty for infrac-
tions of the law prohibiting excessive
loans, something which the law does not
at present give. He then recommends
of larger communities to have more near
ly the privilege of loaning given per
cent of their assets to one individual.
which now belongs under strict comph-
ance with the present law, to the banks
of the smaller communities.)
Domestic Branch Banking.
Under the head of domestic branch
banking, the comptroller, while recon-
mending that domestic branch banking
should be legalized in communities of less
than 1900 inhabitants, many of which are
now unable to support Independent banks,
opposes the granting of any more liberal
privileges of branch banking than these,
on grounds of public policy.
He discusses at length the necessity for
the establishment of international and
intercoionial branch banking.
Banking in the Colonies.
In this connection he discusses the Ha-
waiian and Porto Rican banking and
trade situations, and says:
The foundation for the greater growth OF trade
between the United States and her colonies must
be speedily and firmly laid in proper banking
laws, which will result in enabling her merchants
to do business with the people of the colonies
Our present national banking laws do not au-
thorize the establishment of American interna-
tional or American intercolonial banks, nor could
any national bank establish a branch in a terri
tory or colony such as Porto Rico or Hawaii,
even il our present laws unchanged were extend
ed over it.
While it is questionable whether Congress
should legalize the establishing of foreign or
colonial branches by national banks transacting
business under the present law. that it should at
least pass laws authorizing. under proper restric-
tons, the general incorporation of banks organ
lied TO carry on international and intercolonial
banking. as distinguished from domestic banking,
admits OF no reasonable doubt.
Unless some such legislation is provided the
American exporter and importer. 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 labors in his COM
petition with foreigners enjoying superior bank
ing facilities.
1t is recommended that Congress pro-
vide for the appointment OF a commission
especially charged with the examination
of the conditions of domestic banking and
finance on the islands and the recon-
mendation of proper laws in connection
Herewith. The comptroller also earnestly
recommends the passage of laws author
izing the incorporation of banks organ
lied for the purpose of carrying on inter-
national and intercolonial branch bank
ing.
Up to- and including October 81. 1898.
there have been organized 5.15l national
banks, % per cent of which have been
placed in voluntary liquidation and less
than per cent in the charge of receivers.
At the close of the year there were in ac-
tive operation 1888 associations, with au-
thorized capital stock of 1924, So, ,195. The
outstanding circulating notes of the banks
on that date amounted to s239 546. PSI, of
x,.,,tol, coin 0f- Ase wara cacytra6 hx- ha,x5-