Omaha daily bee., 1899-11-28
Condition of National Banks.

Condition of National Banks.
With respect to the condition Of national
! banks during the year. as shown by the five
reports required from the banks, the comp
troler says
The number of banks in operation on
September Z. 1899, was 1885, with paid in
capital of s6O5, ,772, $40. The individual de-
posits on that date amounted to s2,45O 725,
595.3l, and the aggregate resources to 81,
$50, 1855, 1894. a comparison of the Septem-
ber returns with those made on September
20, 1898. indicates an increase during the
year in individual deposits of S419,2 ,271 ,o55.0 02;
in loans and discounts of $340, 7S9 ,623.20; in
amounts due from other banks and bankers,
$780, 39l, ,S96.6S; in specie. $44,697 ,225.44, and
in aggregate resources, $646, ,S44 0SS.57. On
September the net deposit liabilities of the
national banks of the country aggregated
50, OBJ, ,463 O16.6S, on which a reserve of $500,
56S, ,S25.90. or 29.3S per cent was held. The
composition of this reserve was as follows:
Specie, S33S,571, 3SS.S3; legal tenders and
United States certificates of deposit for legal
tenders, $127, ,651; due from reserve
agents, $i14 ,126 ,66O44; redemption fund with
the treasurer of the United States, $40, 49,
1868.
Bond-Secured Elastic Circulation.
In recommending to congress improve
ments in banking laws as directed by sec
tiCn 333 of the revised statutes, the comp
troller before making his chief and new
accommodation for a bond-secured elastic
circulation, repeats his recommendation Of
one year ago for law providing for an un-
secured emergency circulation to lessen the
destructive power of financial pancs, and
taxed so heavily that under normal condi-
tions it must be retired and can neither pro-
vide profits for the banks nor serve as a
basis for the expansion OF commercial
credits. He emphasizes the necessity of such
a circulation, designed, like clearing house
certificates, simply as a remedy for rare
emergency, and net as an instrument of
current business, repeating the words of his
former recommendation, towit:
For the purpose of allowing elasticity to
banknote issues to protect the banks and
the community in times of panic, a small
amount of uncovered notes in addition to
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 Of emergency. The tax
should be so large, upon the solvent issuing
banks as to provide a fund, which in con-
neCtion with the pro rata share of the as
sets of an insolvent bank, would be sufii-
cent to redeem the notes in full, without
ers over deposdtors of any insolyent Issuing
bank. The tax should be so large as to
force this currency into retirement as soon
as the emergency passes. Such a currency
could be used only to lessen the evil effects
of the rapid liquidation of credits which are are
could not be proftably used as basis of
business speculation and imitation
In introducing his new recommendation.
the comptroller then says that If such a
law be not passed, a marked degree OF
elasticity is possible Of attainment in con-,
nection with our present system of bond
secured national bank notes and should be
provided for by law whether the former
law is passed or not.
The comptroller believes that in accord
ance with the presidents recommendation,
national banks should be allowed to issue
circulation to the par of the United States
bonds deposited by them for circulation.
and that, in connection with the law author
izing this, provision can be made for Sc
cured emergency circulation.
The object of allowing the banks to take
out circulation to the par OF the bonds Is
to induce them to furnish for the use of the
public a larger amount of circulation than
is in existence at present. The present rate
of profit to be derived by the banks from
their circulation Is not sufficient to justify
them in issuing a larger amount, but any
method of increasing the profits on crcula-
ton will result in an increase
1t is true that the authorization of an
issue of currency to the par of the deposited
bonds, subject to the present rate Of tax, is
one method of inducing a larger circula-
tion, but it is not the only method. BY
of the present rate of taxation
on bank notes coupled with the authorize
ton of issues to the par of the bonds, the
same inducements can be offered for a
larger circulation and yet provision be made
for secured emergency circulation.
.:nnI< Note Circulation.
The comptroller therefore, would recon-
mend legislation authorizing the issuance of
bank note circulation to the par
of the deposited United States bonds and
that the additional 10 per cent circulation
thus allowed the banks be subjected to a
tax at the rate of 2 or 3 per cent per an
mum for the time used, which will tend TO
prevent its unrestricted use under normal
conditions, and to save 1t for use at those
periods of the year when crops are to be
moved, and in those periods OF panic when ii
Is most valuable both to the banks and the
business public as means of assisting the
general liquidation of credits. With the
object of securing an increase in the present
banknote circulation, he would recommend
the reduction or adjustment of the present
tax of l per cent per year on the clrcula
tion to 80 per cent of the deposited bonds
the amount of the reduction in the tax on
to be collected from the necessary
per cent of tax on the capital and surplus
of national banks If requisite to the public
revenues. To allow the banks to issue up
to the par of the bonds, UNSOLICITED to ad
ditonal tax on the 10 per cent extra circu
lation, will result in their Immediately
taking out their additional circulation for
the purpose of profit. Business credits will
be extended and adjusted to correspond with
such increase of the currency, and prac-
tlcally the same inelastiCity will character
lze our banknote issues then as now. With
the advent of panic we would have no
additional means of lessenng the necessity
of a call upon the business community to
furnish, by the repayment of loans, prac--.
tically the bulk of the deposits drawn by
frightened depositors.
1t will be seen from an examination Of the
calculations given hereinafter that exactly
the same rate of profit could be realized by
the banks upon circulation to so per cent of
the bonds deposited, taxed at four-ninths of
per cent per annum as they could realize
upon circulation to the par OF the bonds at
the present tax of per cent.
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