Missouri Valley times. [volume] (Missouri Valley, Iowa) 1874-1931, 1900-11-29
1g0 MUCH BORROWING
DY BANK OFFICERS
Excessive Leans to Directors and
Other Officials Cause Of Many
CT the Failures.
R .PJs7 OF TAs CONTROLLER
Recommends Aaai,ional Restrictions on
Loans 10 Bank oalcials-urscs Passage
OF B.osiu, Hi:l -alhes Kecon,-
na.id.tlons.


Washington. Nov 27.-rhe annual re-
poy, of Charles G. Dawes. controller Of
the currency, for the year ended Octo-
her 81, 1000, has been prepared for
transmission to congress.
The report starts with summary of
the reports made during the year by
the natioMal banks, il response to the
call Of the controller, which shows the
aggrcgssle sources of the S,7sl ma
tional ba.als reporting on September ..
1850, 10 be S5.0iS, l2S 1920. Between the
September call OF 1899 ard 1860 loans
AID discounts increased Sl7000S, S91 4b.
Tie LOANS and discounts on September
3. 1850 We're s-.ssa. i5a e4422.5 and iadi-
vidual deposits Were S2.5cS2 Els. 551,53.
The capital stock Of national banks
reporting Oh September was $500 29e,-
1Io.
Ia the review of the operations of ma
tlchal banks under the currency act of
March Ia. lsc0. the reports show that
out of approximately LOCO Informal APP
p.ications for authority to organize ma
tional banks. fled in anticipation OF
and Us; 81 resa,t of the law, 800 have
been made formal ard have been APP
proved by the controller between March
/ and October 81, 1900. From the 500
formal applications came 34S actual or
CARNATIONS of banks between March Ii
and October II. OF these 34S banks ac-
tuaNy organized, 2.9 We're banks of loss
than $4,000 capital, representing a to-
tai capitalization OF $6575.nGO, and
ninetE-llina were banks which could
Eave been organized under the old law
with an Individual capital of S5occ0 or
over, iepresenl!ng total Capitalization
OF sl0.9oe.0G0. Tho bonds deposited To
secure circulation by these new insttu-
tions between March II and October 81
was s5.34s.2C0. or o.l'y about 80 per cont
of the mayimum which might have
been deposited.
Increase L, Circulation.
'iis total increase in the circulation
secured by government bonds OF all ma
tionai banks in the system since March
IA. 1900 has been So "a 30. The tota!
outstanding circulation on October 81
1900. was 1891 .6l3.26 of which $50 1904
is secured by lawful money and is in
process CT retirement The total bond
secured circulation on October 81, 1909.
was SOS S29.064
On October 81 1900, there vera 1886
national banks i'm operation. With a
combined capital of $s32 5O2 500. Th.
combined resources of the national
banks being over 81 0OC geo 900 is greater
than al any time heretofore
In complying with the requirements
of section 1873. provlaing that the con-
troller she'll SUGGEST amendments for
The Improvements of the banking law,
he first calls attention to the fact that
unacr section of the act of July II.
1852. under which extensions of nation
al bank charters may be granted by the
controller. he Is limited by the act to
one extension of twenty years dura-
tion.
Under this section the charters of
l,TST national banks We're extended for
term of twenty Years from the date
of expiration of their first charter
Tho first of the extended charters
will expire on July H. 1862, and the 9TH
ers Will follow in due course. The con-
troller then says:
Without additional legislation authorlz:-
Ing n further extension, II bank desiring
to continue In business under the national
system whose corporate existence has
been once extended will be compelled to
60 into liau!dation at the expiration of
the period of its extension and reorganiZe
as a new association.
This course Will render necessary the
complete, winding UP OF the fairs OF the
iation tire withdrawal of its bonds, and
tho issuing o. q new certificate of author
Ivy by the controller, with q dtstincttvely
new title and charter number, as is at
present the case with AN entirely new or
ganization. While the reorsanized associa-
ton might continue TO be in an respects
stockholders, directors and officers, the
legislation hereinafter recommended
would render unnecessary these steps,
which would be attended with inconveni-
eice both to the business public and the
banks.
therefore respectfully recommend an
amendment of section of the act of july
II, 1882, authorizing the controller of the
currency to extend for a further period
of twenty years, under the conditions and
limita,tions imposed by said act the char
ter of such expiring association as may
desire ~ continue in the national bank
Ing system.
Feature of the Report.
The most ;mportant recommendation
made by the controller and that which
is the chief feature OF the report is
, one for additional restrictions upon
loans to directors and executive Of
flc"rs of banks. The controller states
that the large percentage of bank fail
| ures attributable to excessive loans to
directors and officers. which amounted
TO 81 failures, or II per cent of the total
failures OF national banks, led him to
I: careful investigation as to all di-
lectorS' loans now outstanding In the
national banks OF the country.
This Investigation showed that on
June 20 1900. the date of the control
le:'s call for Il statement of condition
from the national banks. that of 2370o
directors OF national banks In the coun-
try 1884 were directly or indirectly
indebted To national banks under their
management.
The aggregate sum owed by these
Is D..4 borrowing directors and 9 DTQ ,f