The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1899-12-07

der the national bank act. While this
would seem TO be a. fair and moderate
limit, It Is undoubtedly too large for the
resources of small communities, where
banking facilities are much needed, ana
1t Is suggested that for places of popu-
lation OF 1000 or less the minimum be re-
duced TO S25,O0O
2. The national bank act clearly rec
ognlzes the note-issuing function as
proper one, but II is plain that the oris-
iral conditions and limitations imposed
have, under changing conditions, become
substantially prohibitive In their terms.
This ought to be restudled, and as large
a liberty given as may be consistent with
safety In the exercise of that useiul
function.
3. The law prescribes percentages
which national banks shall carry in cash
against their deposits and limits the
amount of risk which the bank shall
take In loans to any one Individual. frln,
or corporation. The percentage of cash
reserves seems to have justified in prac-
tce the provision Of the law but the
limitations on loans have been found TO
work with great inequality. The recon-
mendations of the comptroller Of the cur
rency on this point to be found In his
report to congress last year, merit care
full consideration.
4. While limitations and restrictions eK-
list in several directions no limitation
has ever been given as to the ultimats
liability bank may carry upon given
amount of capital. Upon this point the
bank with $4,000 capital stands legally as
free as does the bank with S., 100000 cap
ital. Cash reserves are defensible sub
ject OF legislation. because they affect
the immediate solvenCy of the bank The
limitation of liability compared with cap
ital is equally so, since the percentage OF
capital and accumulated surplus affects
the ability of the bank to bear it's own
losses. Capital, loans, and deposits bear
heathful and proper relations to each
other. Everything else being equal, the
measure of risk is determined by the eX-
tent of the loans; and for the ultimate
solvency of the bank as to its deposits,
the capital of the bank is the proper
guaranty. The capital should, therefore,
be relative and fairly adequate to the
risks involved.
Remedy Needed.
1t is mainly in the lack of adequacy to
public needs that our national system Is
ut fault The repressive effect upon note
issues destroys, or injuriously limits, one
Of its very important functions. How IN
certain particulars this injury results [
have tried truthfully to show. In view
of the weakness and limitations which
tline ana experience nave Dfought unuer
notice, efforts have been made to modify
the national banking act. In the house
Of representatives of the last congress,
certain bills were proposed embodying
measures which I believe would be effect
i've toward needed reform. These meas
ures In their general principles are ap-
| proved by the informed judgment of the
most thoughtful of our people. 1t is to
| be expected that they will be again Of
| fered for the consideration of the present
congress. Without indulging IN specific
recommendations at this time, which If
made could be but repetitions OF pre-
| vious recommendation, ] commend the
| subject to the thoughtful attention of the
| legislative body.