The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1900-11-26
STATE Of NATIONS BANKS
ANNUAL REPORT OF THE COMP
TROLI4ER OF THE CURRENCY
URGES REFORMS
ONE RELATES TO THE LOANS
Which Directors Have Been Secur-
ing From the Ranks With
Which They Are Con-
nected.

WASHINGTON, ID. 3, Nov. 25.-The
annual report of Charles G. Dawes,
comptroller of the currency, for the year
| ended Oct. 81, 1900; has been prepared
for transmission to congress.
The summary of the reports made dur
ing the year by the national banks in
| response to the call of the comptroller.
shows the aggregate resources of the
1871 national banks reporting Sept. s..
| 1900 tC be $5,048, 13S, 499 49, Between the
September call Of 1899 and 1890 loans and
discounts increased $40, COS, 3g1 4G. The
loans and discounts Sept 5. 1900.
were $2,6S6, 759, 642.57, and individual de-
| posts were $2s50S, 24S, 557.53.
The capital stock of national banks re-
porting September was $500, 299 03O
In the review of the operatio of IA
tional banks under the currency act of
March IA, 1900, the report shows that out
of approximately 1000 informal sppli-
cations for authority to organize ma
uonal banks, filed in authorization of and
as result Of the law, $40 have been mace
formal and have been approved by the
comptroller between March il and Oct.
81 1850. From the SEQ formal applica-
lions came 348 actual organizations OF
banks between March IA and Oct 81
OF these 34S banks actually organized,
249 were banks of less than 500, 0O0 capital
! representing a total pitalizatiOn of So
oIo,VVo, and W were banks which could
have been organized under the old law
with an individual capital Of $4,000 or
| over representing a total capitalization
of $40 O00 The bonds deposited TO Sc
cure circulation by these new institutions
between March IA and Oct 81 was
50, 5000, or only about 30 per cent of the
| maximum which might have been de-
| posted
The total increase in the circulation Sc
h1-.O
al banks in the system since March a..
1900, has been $50, 1870 The total out
standing circulation on Oct. 81. 1900
| was So3l, 26S, of which $32, 78l S0i is Sc
cured by lawful money and is in process
! CT retirement. The total bond-secured
| circulation Oct. 81, 1900, was $29S, S29, 064.
oct 81, 1900, there were 1886 national
paI.ks IN op ne with a combined
| capital of $632, 5G2, 395 The combined re-
sources of the national banks being
| over $1,000, 000,0 600 is greater than at any
! time heretofore.
Under the pre- sent law the commissions
| er can only grant one extension of
! twenty years to- any national bank
! he suggests new law making it pos
s1ble to grant a second extension.
He points out that with 2S,709 direc-
! tors in national banks in the country.
! 1884 directors and 1929 other officers
! owe to their respective banks $2O2, 287,-
! al, or nearly one-third their capital
! stock. He presents a bill to throw
greater safeguards around the loans to
| directors
He points out the much higher ratio
of assets to capital stock In the metro
| poHtan banks as compared with the
| banks in smaller communities, and sug-
| gests that in fairness the law limiting
! loans to 10 per cent may be exceeded
! In loans on collateral security in cases
where it does not exceed 2 per cent of
| the total assets of the bank Proper
| safeguards being provided.
The comptrolled also discusses the
cash reserve plan, as follows:
AS TO GENERAL CASH RESERVE.
| The question of those laws which at
! feet the right of ore national bank to
! consider as a cash resource a deposit
in another national bank, called it's re-
! serve agent, is one of great Importance
! ana involves the most fundamental prin-
| ciples of safe banking
| In times of financial crisis, when there
are widespread Withdrawals in currency,
not only in reserve cities, but through
| out the country, the reserve cities are
! subject to a, strain which endangers
| the stability of the entire banking sys-
! tenn.
The reserve banks, as q rule, must
! loan a large proportion of their money
| en- call. To secure sufficient call loans
! they must go to the speculative eX-
! changes, an othe injurious results of
! that practice are easily understood.
| 1t is only by loaning money on spec
ulative securities that the banks are en-
| abled to pay the shigh rates of interest
on bank deposit balances which form
| the attraction to the country banks for
| the deposit Of SO much larger portion
| of their funds in New York than Is
needed for the clearance of exchange.
Daring the summer of 1899 there oc-
CURED a marked demonstration of the
! evil effects of this practice upon leg1ti-
nate business The interest paid by
Eastern reserve agents upon deposit
balances attracted anr immense surplus
to New York and other Eastern cities.
This created a. speculative move
ment in stocks which was carried
on with a constantly rising range
| Of prices until the fall. At that
time the crop :. movement in the
West and the rising rate of interest there
led the banks of tie interior to draw up
on their balances in New York and to
order the shipments of large amounts
OF currency as against these balances
The business of the country was in a
prosperous condition, with the tendency
toward an increase in general prices and
in the wages Of labor. There was no
lack Of confidence in the country and
nothing which indicated panic conditions,
and yet this demand by the banks of the
West for the shipment Of currency on