The herald., 1898-04-27
Office OF THE HERALD,
. LOS ANGELES, April 2G, 1895.
1T is easy finding reasons why other
folks should be patient"

g., 1T is easy finding reasons why other
folks should be patient"
A bill has been introduced in congress
authorizing the issue of circulating notes
by state banks. The measure provides
that any state bank may deposit with the
treasurer of the United States bonds Of
those states which have not defaulted
within ten years, or of any city or county
of 10000 inhabitants, the debt OF which
does not exceed 10 per cent of taxable val
untion. In return the banks are to receive
notes for circulation not to exceed 80 per
cent of the par value of the bonds depos-
tied, or 70 per cent of the paid up capital
. Of the banks. A tax of per cent is levied
on the ciruation, and the banks are also
to contribute toward a per cent fund
which Is to be held as n guarantee against
default The notes are q first lien on the
assets of the bank. The proposed measure
Is discussed In a recent issue OF the Finan-
cier and is criticised adversely as follows
The act involves a radical. departure
from the policy pursued by the government
toward state banks since the Inauguration.
In the first place it necessarily repeals the 10
per cent tax on state bank note circulation,
but only removes this burden for the banks
willing to accept the bond basis for circu-
lation. There Is no doubt that the circula-
tion would prove absolutely safe, but at
the average selling price of municipal and
state bonds, we doubt whether 1t would be
profitable for the small state banks
throughout the country, and especially
in the west and south, to invest their
money in bonds at low rate OF interest
e. for the purpose Of loaning the extra circu-
lation.
For instance, bank with $4,000 capt.
tail under the terms of the bill would be
permitted to deposit 70 per cent of this
amount, or $17,50O in bonds, for which 1t
would receive so per cent, or $1f 600 in cir
culation. Assuming that it received an
average of 34 per cent interest on Its
bonds, the yield would be $6l2.50. III 1t
loaned out the $4,000 circulation at per
cent, the additional income would be $3.50,
making total of 1882 on an investment
of 7,5O0 assuming that the bonds were
bought at par Deducting per cent tax
on circulation and l per cent exacted as
. fund for the safety system, the net yield
would be s12i2 or 7.04 per cent on the In
vestment. At per cent the bank could
have loaned its SIT 500 for $l225, or only SIT
less than Il received after having gone
through the operation necessary to make
It a bank of issue. Other expenses would
more than offset the Insignificant gain on
note circulation, so that the bank would
really be loser by complying with the
terms of the bill. Where money can be
g loaned at or per cent, as is often the
D, ure, therefore, in as far as it proposes to
relieve small country banks, Is Impractical
BILE for the simple reason that 1t Is un-
profitable.
The municipal bond sales for the month
Of March were less than Sc, 800 900. At pres
ent rates for money the bidding is not so
spirited, and in a few cases cities have
postponed sales until the outlook is bright
er For the same reason, says the F1nan-
cier, number of large railroad reorgani-
ration interests are lying dormant, and
new enterprises for the moment have been
abandoned, owing to the timidity of cap
itaL
A change has been made in the law reg
ulating investments OF savings banks de-
posits In New York by an act just signed by
Governor Black. Under the new law no
investment in any bond and mortgage can
be made by any savings bank except upon
the report Of committee Of it's trustees
charged with the duty Of investigating the
same, who shall certify to the value Of the
according to their best judgment, such re-
port to be filed and preserved among the
records Of the corporation. The banks are
allowed to invest in the first .mortgage
bonds OF any railroad corporation of the
state the principal part of whose railroad
Is located within the state and in the mort
gage bonds of any such corporation issued
to retire all prior mortgage debt thereof,
provided that such corporation shall not
have failed at any time within five years
preceding the date of the Investment to
pay regularly and punctually the pricnipal
and interest Of all It's mortgage Indebted
ness, and, in addition, to have regularly
and punctually paid dividends upon all its
outstanding capital stock for period of
i've years, at the rate Of not less than four
per cent. Furthermore, at the date of such
dividends the outstanding capital stock of
at least one-half OF the total mortgage in
debtedness, including bonds issued under
any mortgage securing any bond in'which
investment shall be made. OF the whole
amount OF deposits not more than twenty
per cent can be invested under the law,
within whose provisions, 1t may be said,
street railroads are not regarded as rail-
road corporations
Wall street has been full of rumors for
some time past Of coming changes in the
management of the American Tobacco
company. commonly known as the Tobacco
trust. The stock has been steadily alb
sorbed In quiet way for more than two
the books on last Friday the buying be-
came urgent, and the price advanced 25
points in two days After the books closed
cessfully carried through another deal. and
that the control of the company had
changed hands. Talbot ]. Taylor & Co.,
moore ~ Scniey ana WoerlSnOeHer & GO.
also had large blocks registered in their
name at the closing Of the books, and
oliver H. Payne, closely connected with
the Standard Oil company, has large
:. block of the stock in his own name, and
besides has obtained large amount of
proxies, sufficient to give absolute control
of the company. The change in the man
agement, says the Post, is the outcome of
the cigarette war which has now been
waged for several years. The end looks
like the defeat of the managers of the To-
bacco trust, for their most active directors
will be forced to retire at the meeting next
month. The treasurer, George Arents, will
be succeeded by one of the repres essntatiyes
Of the new interests The plug tobacco
factories throughout the country will be
formed into one organization. part of the
stock of which will be given by the holders
Of American Tobacco certificates 1t is
sue of new American Tobacco stock
o O O
The Commercial National bank of Phil
ndelphia, capital $S10,O6J, has been absorbed
by the Fourth Street National bank. This
Is the third bank absorbed by the latter
In year.