The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-12-07

agreeable task 10 point ou, defect and nkncssos
without Offering effective remedies. and II Is much
s Si 70 cticise than TO create In my opinion.
plainly marked Society. left in state OF com
pareuve freedom has by slow steps worked oui
best suited 70 lis needS fThe pscce o bs1i
ing is az natural an evolution as IL the locomotive
or the steamship. and in 1T, relation 10 modern
industry and commerce II Is hardly less Important
and serviceable. Note is, uing was a develop
neni OF the natural function Of bank, that func-
uon being Ia make private credit effective 10 COM
mercial anu industrial needs What the bank
credit does IN large way. with the aid Of checks
ana drafts the bank note does in smaller. bus
have ssid that foreign systems Of banking af-
ford objects OF Profitable study We need not GO
so far Forty, years ago before the imperative
needs OF the Government repressed the natural
devs I s Of banking, thsre had already boz
tens iilling to high degree Of perfection the ser
vices which such institutions should render 10
Ohio Indiana. Louisiana. and New Sork-who
differing from cnch other in many particulars
s'anually adequate Ia public needs
IL Is the general Theory Of our Government thal
the largest liberty should he enjoyed by the peo-
pie; subject only 10 such restraints as the welfare
and safety of the whole may require, and in tho
field Of banking i may be affirmed that this prin-
clple should I've observed.
b~g now 10 point out some Of the general limi-
auons and restrictions which Congress has IEi-
posed IN this department, and inquire as 10 their
justice, wisdom and adequacy.
Asto conditions al capitalization, The law re-
quircs minimum capital Of $50. 900 a. a precedent
reorganization under the natonal'bank act while
this would serm TO be n iair and moderate limit
II Is undoubtedly too large for the resources Of
small communities where banking facilities arc
much needed and il is suggested thai Tor plcccS
OF a population ~ 1000 or less the minimum 70
reduced 40 S25, 600
the notciSsuins function as n proper one, bu' IL
Is plain that the original conditions and limita-
tons imposed have, under changing conditions.
become Substantially prohbtye in their terms
his ought to be rcStudicd, and MS large liberty
exercise OF that useful function.
The law prcscrlhes percentages which M
uonal banks shall carry in cash against their
deposits and limits the amount OF risk which tho
bank shall take in loans 10 any me individual.
firm. or corporation. The percentage Of cash
reserves seems 10 have justified IN practice the
provision Of tie law bu, the iimitations on loans
have been found 10 work with great Inequality.
The recommendations Of the Comptroller Of tic
Currency on tits point, 10 w. found in his rep n
to Congress asst year, merit careful consideration.
T. While limitations and restrictions exist in
sceTal directions, no limitation has ever been
given as 10 the ultimate liability bank may
carry upon given amount Of capital, Upon
legally as rec as does The bank with 5000, 900
capital, Cash reserves arc y dcfensible subject
OF legislation, because they effect the immediate
compared with capital l. equally So, since the
percentage Of capital and accumulated surplus
affects the ability nj the bnrl 10 hear its own
losses. Capital, loans, and deposits bear health
inl and proper relations 10 each other. Every
thing else being equal, the, measure Of risk is
the ultimate solvcncy of the bank As To its de-
pests the capital Of the bank * the proper guar
anty. The capital should. therefore, he relative
and fairly adequate 10 the risks involved,
IL Is mainly in the lack Of adequacy 10 public
needs that our national system Is ~ fault Tho
TeprCSSive effect upon not" issues destroys. or
iniuriously limits, one of ils very important tuuc-
tons How in certain particulars this injury
results have tried ,ruthiully to show. In Wow
Of the weakness and limi,auo which time and
experience have brought under notice, efforts
have been made tu modify the national banking
act. In the House of RPnreSeutnf yss AZ no last
Congress, certain bills were proposed cmbodyinr
measures which believe would he effective To-
ward needed reform. These measures in their
general principles arc approved by the informed
indGmcn, OF tho most thoughtful OF our people.
II is IN be expected that they will hc again offered
for the consideration Of the present Congress
Without induglng In specific recommendations
NJ this time which II made could be but reprti.
lions Of previous recommendation commend
Oh" subject To the thoughtful attention Of tho
Legislative body.
l.. j. GAGE.
Secretary. -
To the SPEAKER OF THE House. OF RspnB-
SESTATINES.