The San Francisco call., 1899-12-07
GAGE SUGGESTS
NOTIFICATIONS
Present Banking Laws
Too Strict.
Special Dispatch to The Call.

WASHINGTON, Dec. 6.-The annual
report or Lyman ]. Gage, Secretary OF
the Treasury, was filed here to-day. After
dealing with the financial condition of the
country, expenses Of government, etc,
Mr.. Gage makes the following recon-
mendations:
l. AS to conditions OF Capitalization The
law requires a minimum capital OF $50. 900 as a
precedent 10 organization under the national
oank act. While this would seem 10 be a fair
anu moderate limit. II is undoubtedly too large
Tor the resources OF small communities where
banking facilities are much needed. and II Is
suggested that for places OF population OF 1000
or less the minimum be reduced TO SIS. 900.
= Inc national bank act clearly recognizes
u the note-lssuing function as proper one, but
~ ~ - pam that the original conditions and lin
ltations imposed have. under changing condi-
lions. become substantially prohibitive in their
terms This ought 10 be restudied. and as
IaIBe a liberty given as may be consistent with
sateIy IN the exercise Of that useful function.
3. The law prescribes PERCENTAGES which na-
tional banks shall carry in cash against their
deposits and limits the amount OF risk which
% .he oank shall take in loans to any one indi-
NluuaI, nrm or corporation. The percentage OF
cash reserves seem 20 have justified in practice
ihe i provision Of the law. but the limitations
eaIaLtys The recommendations OF the Comp
.roner or the Currency on this point. 10 be found
ful consideration.
l. While limitations and restrictions exist In
several directions, no Limitation has ever been
given as 10 the ultimate liability a bank may
carry upon a given amount Of capital Upon
this point the bank with $50. 600 capital stands
Iesally as free as does the bank with s. 900. 90
capital Cash reserves are defensble subject
OF legislation. because they affect the imme-
dlate solvency OF the bank The Limitation OF
inability compared with capital Is equally so.
since the percentage OF capital and accumulated
surplus Affects the ability OF the bank 70 bear
It's own losses Capital. loans and deposits
bear healthful and proper relations TO each
other. Everything else being equal. the meas
ure or risk Is determined by the extent OF the
loans; and for the ultimate solvency OF the
bank as 10 its deposits. the capital OF the bank
Is the proper guaranty. The capital should.
therefore. be relative and fairly adequate TO the
risks involved
IL is mainly in the lack OF adequacy 10 public
needs that our national system IS at fault.
The repressive effect upon note issues destroys.
or injuriously limits. one OF its very important
functions. How IN certain particulars this in
jury results ! have tried truthfully 10 show.
In view Of the weakness and limitations which
time and experience have brought under notice.
EFFORTS have been made 10 modify the national
banking act In the House OF Representatives
or the last Congress certain bills were pro-
posed embodying measures which believe
would be effective toward needed reform.
These measures in their general principles are
approved by the informed judgment OF the most
thoughtful Of people. II Is TO be expected
that they will be again offered for the consid-
Grafton Of the present Congress Without in
dulging in specific recommendations at this
time which II made could be but repetitons
OF previous recommendations, ! commend the
subject to the thoughtful attention OF the legis-
lative body