Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1899-11-30
ENORMOUS INCREASE
IN BANKING ACTIVITIES OF THE
COUNTRY.
REPORT BY COMPTROLLER
Old Recommendation for Means Of
Greater Elasticity Renewed-Inter-
colonial Banks Now Declared TO be
Urgent-Abolition Of the per Cent
Tax on Circulation Advised.


Chas. G. Dawes comptroller of the
currency, says the number of banks in
operation Sept. Z, 1899, was 1886, with
paid-in capital of s6O5,772,97O. The
individual deposits on that date
amounted to $3.50, 725, 1851, and the
aggregate resources to S4,650, $50, 1873 A
comparison Of the Sept. returns
with those made September 20,
1898, indicates an increase during
the year in individual deposits of
S419, 271 ,055.02; in loans and discounts
of $40, 7S9, 623.2O; in amounts due from
other banks and bankers, S160, 391,-
S96.6S; in specie, s44, ,225.44, and in
aggregate resources S646 ,S44, 0SS.57.
Sept the net deposit liabilities of the
national banks of the country aggre-
gated S3,031, 1853, 016.6S, on which
reserve of $500, SOS, $3.50 or S29.3S per
cent. was held. The composition of
this reserve was as follows: Specie,
1888, 81 ,3S3.S3; legal tenders and
United States certificates Of deposits
for legal tenders 1927, io4 ,651; due from
reserve agents, s414,126, 660.44; re-
demption funds with the treasurer of
the United States $10,116,130.63
The comptroller repeats his recon-
mendation of one year ago for law
providing for an unsecured emergency
circulation to lessen the destructive
power of financial panics, and taxed
so heavily that under normal condi-
tions it must be retired and can neither
g n lyc
serve as basis for the expansion of
commercial credits. He emphasizes
the necessity of such circulation, de-
signed, like clearing house certificates,
simply as remedy for a rare emer-
gency, and not as an instrument of
current business. The comptroller
says that if such law be not passed
a marked degree of elasticity is pos
| sible Of attainment in connection with
our present system of bond-secured
national bank notes and should be pro-
vided for by law whether the former
law is passed or not. He believes that,
in accordance 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
authorizing this, provision can be
made for secured emergency circula-
ton.
The comptroller believes that the
levying of a tax of one-sixth of one
per cent. upon circulation to 80 per
cent. of the par of the bonds and al
lowing the banks to issue currency to
the par of the bonds by paying a tax
at the rate of 2 or 3 per cent. per an
mum on the excess up to the par when
outstanding, will result in the desired
increase in our general bank note is
sues, and provide a marked degree OF
elasticity in our circulation. He be-
lieves that from the passage of laws
offering, as suggested, the rate and
method of taxation of national bank
notes, an increase of at least 100000
600 may be reasonably expected. Based
upon our present bond-secured bank
note circulation, which amounts to
about $207, 100000, and this added
amount, we would have, under such
laws an available bond-secured emer-
gency circulation of at least $4,000, 000
Among other recommendations, the
comptroller strongly urges laws
authorizing the incorporation of banks
for the purpose of carrying on inter-
national and intercolOnial banking as
distinguished from domestic banking.
He also recommends laws authorizing
the establishment in small communi-
ties of national banks with a capital
of $4,000. He repeats his recommen-
dation of one year ago relative to a
modification of the law restricting
cent of the capital of national bank,
and advises the attaching of a penalty
for making excessive loans after the
present section is modified.
The object, he says, 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 profit on circulation will result in
an increase. It 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 cir
culation, but it is not the
only method. By modification OF the
present rate of taxation on bank
notes, coupled with the authorization
of issues to the par of the bonds, the
same inducements can be offered for q
larger circulation and yet provision
be made for secured emergency circu-
lation.
The comptroller, therefore, recon-
mends legislation authorizing the is
suance of national bank note circula-
ton 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 or per cent. per annum for
the time used, which will tend to pre-
vent its unrestricted use under normal
conditions, and to save it for use at
those periods of the year when crops
are to be moved, and in
those periods of panic when it is
most valuable to the banks and the
business public as means of assist
ing the general liquidation of credits.