The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1899-11-28
It WILL GIVE ELASTICITY
Recommendations Of the Comp
troller of the Currency.
DAWES ANNUAL REPORT
An Uncovered Emergency Circulation.
National Banks Should Be Allowed
to Issue to the Par OF the
Government Bonds.

Washington, Nov. 27.-The annual re-
port of Charles G. Dawes, comptroller
of the currency, for the year ended Oc-
tober 81, 1899, has been prepared for
transmission to congress.
With respect to the condition of ma
tional banks during the year. as shown
by the five reports required from the
banks, the comptroller says:
The number of banks in operation on
September T. 1899, was 1886, with
paid in capital of $6O5, 1880. The in
dividual deposits on that date amount
ed to s2,450, 725, 1851, and the aggregate
resources to s4,65O,3 55, 1894. A COM
parison of the September returns with
those made on September 20, 1898, in
dictates an increase during the year in
individual deposits of $419,271 ,055.02; in
loans and discounts of $340, IS9, $3.50 in
amounts due from other banks and
bankers, $3.50, 391 ,S966S; in specie, $44,-
697, 225.44, and in aggregate resources,
S646, S44, OSS.57. On September z the net
deposit liabilities of the national banks
of the country aggregated $3,031, 463,-
016.6S, on which a reserve of $S9O,56
$3.50, or 29.3S per cent. was held. The
composition Of this reserve was as fol-
lows: Specie, $338,571, $685. legal ten
ders and United States certificates Of
deposit for legal tenders, S127,754, COL;
due from reserve agents, $414, 126, 660.44;
redemption fund with the treasurer of
the United States, $10,116, 1868.
In recommending to congress i'm
provements in banking laws as directed
by section 1888 of the revised statutes,
the comptroller before making his chief
and new recommendation for a bond
secured elastic circulation, repeats his
recommendations of one year ago for
law providing for an unsecured emery
ency circulaton to lessen the destruct-
i've power of financial panics, and taxed
so heavily that under normal conditions
it must he retired and can neither pro-
vide profits for the banks nor serve as
basis for the expansion of CONNER
cial credits. He emphasizes the neces-
sity of such a circula ton, designed,
like clearing house certificates, simply
as a remedy for rare emergency,
and not as an instrument of current
business, repeating the words of his
former recommendation, to-wit:
For the purpose of allowing elasticity
to bank note issues to protect the banks
and the communities in times of panic,
small amount of uncovered notes in
addition to the secured notes, should
be authorized by law under the follow
ing limitations: They should be sub
jected 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 connection with the pro rata
share Of the assets of an insolveat
bank, would be sufficient to redeem
notes in full, without necessitating any
preference of note-holders over de-
positors Of any insolvent issuing bank.
The tax should be so large as to force
this currency into retirement as soon
as the emergency passes. Such a cur
rency could be used only to lessen The
evil effects of the too rapid liquidation
of credits which are collapsng under
financial panic, but could not be profit
ably used as basis of business specu-
lation and financial imitation.
In introducing his new recommends
ton the comptroller then says that If
such a law be not passed marked de-
gree of elasticity is possible of attain
ment in connection 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 ac-
cordance with the presidents recon-
mendation, 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 authorizing
this, provision can be made for a Sc
cured emergency circulation
AS a summary of his views on this
subject, the comptroller would call at
tention to the following propositions:
First. Whether or not legislation be
passed providing for an uncovered
emergency circulation for needed pro-
lection from the disastrous effects of
panics, a very much larger degree Of
elasticity can be impaired to our pres
ent bond-secured bank note currency,
thus making it of greater use in seas
ons of the year in which the demand
for currency is above the normal and
of invaluable assistance in times of
panic.
Second This result can be obtained
by the enactment into law of the presl-
dents recommendation that national
banks be allowed to issue to the par
of the government bonds deposited by
them as security, and by the modif1ca-
ton of the present tax upon national
banks as follows:
After determining approximately the
| lowest rate of profit which will call in
to circulation the additional amount OF
| national bank notes deemed necessary
| for public convenience, this rate Of
profit should be reached by lessening
or shifting to the franchise of banks
the present / per cent. tax on circula.
ton to 80 per cent. of the par of the gov
eminent bonds securing it. A tax of
or 8 per cent. should then be levied or
| the excess of circulation over 80 pc
cent of the bonds, which will make o
such excess circulation secured
emergency circulation only to be uset
| when it becomes a public necessity
| and not as a means of profit by tn
| banks under normal conditions.
The general increase in bank circula
ton desired being possible of attain
ment through the lowering of the ia!
on the 80 per cent. circulation, this ad
ditional tax on the 10 per cent. excess
circulation to the par of the bonds viii
not materially interfere with such gen
eral increase and will only operate t
create an emergency circulation
| great value.
Third AS the use of rediscount
and bills payable on the part o
the western and southern banks at Ger
tain seasons of the year is regarded a
evidencing the need of an elastic Gil
culation, and as bearing upon the ques
ton of the measure of relief which ma
be expected from the bond-secure