The Savannah morning news. (Savannah, Ga.) 1900-current, 1900-11-26
THE NATIONAL BANKS
ANNUAL HIsroHT OF CONPTROLLETs
OI- rHT CtnHisNCY.
THEIR CAPITAL S63o,2ss,o3o.
nur RESOURCES o. a.s7i banks
AnE sIN TINES THAT.

Recommendations Made for Addt-
tionRI H~strtctioa- Upon Loans to
Directors and Executive omcer- OF
National Hanks-Dirr~tor- Havs,
borrowed Nearly 0ne-third of To-
tai Capital Stock-Provtsion. for
strengthening Cash Reserve.
The annual report ~ Charies q Dawes.
controller of the currency. for the year
ended oct a. 1899. has been prepared for
iransmlsslon TO Congress
The report starts with a summary Of
the reports made during tho year by tho
national banks iu response TO the oall a
the controller. which shows the aggregate
resources OF the SSH national banks re-
porting ou sept s, 1870. TO be- tb0SLS-
g9o - Between the September call OF isaa
and ieo loans and discounts increased
ti7ooS. a9l g. The loans and discounts oa
Sept Q. 1870. were s. ess. 80 ei1.57. and In
divldual deposits were s. 3iOs 2iS .51.51.
The capital stosk og national hanks re-
porting on sept . waa $50 20 Qo.
In the review of the operations Of ma
,onal banks under tho currency act OF
March 10. lsp. the repor, shows chat out
of approximately one thousand informal
applications for authority 60 organize ma
zion banks nlcd In anticipation and as
result 81 the law. 509 have been made
formal and have been approved by tho
controller between March "A and oct ~.
1900 From the 90 formal applications
came 1S acsual organizations Of banks
between March Il and oct. 81. OF these
ss banks actually organized. 2i9 we're
banks of less than 5000 capital. repre-
senting a total capitalization of i6.575ooo.
and % were hanks which could
have been organized under tho Old
law with an individual capital OF 10000
or over representing a total capitaliEa-
tion of 100000 Tho bonds deposited TO
secure circulation hy these new institu-
tlons between March a aud Oct. ~ we're
s.. .sis 80 or only about 20 per cent Of tho
maximum which might have been de-
posited
The total Increase IN the circulation Sc
cured hy government bonds of all ma
tlonal banks IN the syatem since March
i4 1900 has been So fst.go. The total
Outstanding circulation on Oct Al.
800 t1si. sis.2ss. Of which 90.
7s,.2ol ia secured by lawful money
and II in process Of retirement. The to-
cal bond-secured circulation on oct. ~.
1900 was s2as S2eoa
on oct 81. 1870. there were g. s35 national
banks In operation. with = combined cap
ital Of ff32. bn2.19 The combined re-
sources Of the natiooal banks being over
SEN O0a@0 Is greater than At any time
heretofore.
Restrictions Tpon Loans.
The most important recommendation
made by the cone roller. and that which -
the chief feature ~ the report is one for
additional restrictions upon loans to d.
rectors and executive officers of banks.
The controller states that the arge per-
eentage OF bank failures attributable 90
excessive loans Ia directors ana officers.
which amounted 60 g. failures or n per
dent Of the total failures of national
banks. led him 10 a careful investigation
as to all directors loans now outstand-
Ing In the national banks u tho coun-
try.
This Investigation showed chat on June
% is00 the date ~ the controllers call
! for q statement OF condition from the ma
tlonal banks that OF - .709 directors of
national banks iu the country B.l3i we're
directly OF Indirectly indebted to national
banks under their management.
The aggregate sum owed by these 49,,
/ bA borrowing directors and 2.z7e officers
and employees who were not director.
was 500. 81. .4n A. the capital stock OF
the national banks Of the country ON June
- was fsgl. ~. i6i. Il follows that the d.
rect and Indirect liability Of directors and
officers amounted TO s2.55 per cent. or
about onc-ihlrd the capital These direct
and indirect liabilities OF directors and
| officers TO banks under their management
/ amounted 90 775 per cent. of the total
loans and discounts OF the national sys-
tenn
The controller then says;
While these tables % not necessarily
Indicate that national bauking officers aud
directors as "a wh0ie, abuse their privi-
| lcges, and many of these directors loaua
are among the safest owned BY the credi-
tor banks. the controller believes the
tables show clearly the great Importance
OF properly framed law placing add
tlonal restrictions and safeguards around
these loans. IN which. the experience OF
the banking system teaches. IS involved
the Rreatest danger of the improper ana
lax use Of banking funds.
The controller gives herewith q copy or
the bill introduced az the last session %
Congress by Hon. Marriott Broslua. chair
man of the Committee ON Banking and
Currency III II i20i3. F'ifty-eixth Con-
gress FIRST SESSION., which has had his
careful comeidera ii0n, ana the passage
Of which with some additions he earnest
ly recommends. This bin has been drawn
20 as 20 insure a greater degree of safety
Ia loans 20 directors and officers with
what is believed to be a minimum Or iH-
convenience 10 such officers consistent
with the safety OF such transactions. IL
properly recognizes the distinction IN tho
relations Of directors TO a bank ana those
sustained by executive officers.
The text of this bin b. printed In tho
report, In substance O. provides that no
national bank shall ioap 10 It's officers
or employees until the proposition for tho
loan shall have been submitted IN writing
10 the directors or executive COMMITTEES
Of the hank and approved BY the majority
OF them nne ls fixed for mfractlons of
THE section. IL provides that at any req
uiar meeting the directors Of a national
hlnk may fix by resolution the limit Of
credit which shall be extended 90 any
director within the limit OF credit thus
fixed The executive officers. In their dis
crctlon. may loan to directors without
other action by the board Unless the
limit Of credit has beep thus ixed an ap-
plication for a loan by a director must
be IN writing. approved by two other
directors. Such loan may be made by
an executive officer, but must be brought
20 the attention OF the board OF directors
AZ rs next meeting for purposes of record.
penalty ls provided for violation OF this