Arizona republican., 1900-11-28
Annual Report of Comptroller
 Of Currency
A Recommendation to Prevent the Flundering of Banking Institu- tions by Their Directors and Executive Officers.

ended October S1 1900. has been rre-
 pared for transmission to congress.
 The report starts with summary of
 the reports made during the year by i the National banks, in response to tEe call of the comptroller, which shows | the aggregate resources of the 3.S71
 National banks reporting on Septam- Der ,, 1900, to be $5,O4S, ,13S, 1929. Be
 tween the September call of 1899 and 1900. loans and discounts increased | S170,0O ,391.4 The loans and discounts on September 3, 1900, were $2, CSC 759,- 642.57, and individual deposits were S250S. PAS, ,557.53.
 The capital stock of National banks reporting on September B. was $G30.- 299. .O3O.
 In the review of the operations of National banks under i-ne currency act of March IA. 1900, the report shows
 that out of approximately one thou sand informal applications for author- ity to organize National banks. flied in anticipation of and as a result of the | law, 509 have been made formal and have been approved by the cOmptroller between March IA and October 31, 1900 From the 5O9 formal applications came 34S actual organizations of banks, be tween March IA and October S1. OF these 34S banks actually organized, e49 were banks of less than $50,O00 capital, representing a total capitalization of s6,575,O00. and go were banks which | could have been organized under the old law with an individual capital of $5O,OOO or over, representing a total capitalization of 1O,900,000. The bonds deposited to secure ciruclation by these new institutions between March 14 and October 31 was $5,34S, 200 or only about 30 per cent of the maximum which might have been deposited.
 The total increase in the circulation secured by government bonds of all National banks in the system sirce March IA, 1900, has been $S2,454. 27O. The total outstanding circulation on October q, 1900, was S331 513, ,oSS, of which $32.7S4,2 2O4 is secured by lawful money and is in process of retirement. The total bond-secured circulation on October 31, 1900, was $29S, ,S29, ,O64
 On October 31.19O0, there were 935 National banks in operation. with a combined capital of $632, ,5O2 395. The combined resources of the National banks being over $5,OOO OOO, 900. is great CT than at any time heretofore.
 In complying with She requirements Of section 333. providing that the comp troller shall suggest amendments for the improvement of the banking law, he calls attention to the fact that un- der section l, of the act of July F, 1882 under which extensions of National r11- fl1l sfar- comptroller. he is limited by the act to one extension of twenty years 6u- ration.
 Under this section. the charters of 1,737 National banks were extended for term of twenty years from the date of the eXpiratio of their first charter.
 The first of the extended charters will expire on July IA, 1902, and the others will follow in due course.
 The most important recommendation made by the comptroller, and that which is the chief feature of the re- port, is one for additional restrictions upon loans to directors and executive officers of banks. The comptroller states that the large percentage of bank failures attributable to excessive loans to directors and officers, which amounted to 62 failures, or 17 per cent of the total failures of National banks, led him to a careful investigation as to all directors loans now outstanding in the National banks of the country.
 The comptroller believes that under the present law regarding reserve cit ies, too great latitude is now given the bank in connection with the use of the reserve, the primary object of which ie- the banks. and he recommends that amendments to the laws be passed re- quiring that a larger proportion of the reserve should be kept in cash in the vaults of the bank. Considering the banking system as a whole, the pres | ent ability of banks to use credits With | reserve banks as a basis of loans, ere | ates too great an extension of aggre- | gate deposit credits, as compared with | aggregate cash resources, which, in | times of liquidation and financial pan ic, increases the necessity upon the banks of demanding payment of loans from the community. and adds to the demoralization of business incident to such period. By increasing the re- strictions upon the right of banks to count deposits with reserve agents
  will be built under the deposit credits of the country, and it is the belief of the comptroller that in times Of liqui- datfon the greater strength of the banks will more than compensate them for the loss of the small amount of in terest on q portion of their balances which may be due to a change III the present law.
 1t is therefore recommended that section 5192 of the revised statutes Of the United States be amended so that under its provisions but one-fifth, in stead of three-fifths, of the reserve of ' 15 per cent required by the law to be kept by banks not reserve agents, may consist of balances due to reserve banks; and that section 5195 of the re> vised statutes of the United. States. which authorizes banks in smaller re- serve cities to keep one-half of their