New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-11-26
REPORT ON CURRENCY.
CONTROLLER DAWES WANTS LOANS TO
OFFICIALS CURTAILED.
THEY OWE AN AMOUNT EQUAL TO ONE
THIRD THE CAPITAL OF ALL
NATIONAL. BANKS

nth a summary OF the reports made during the
yesr by the National banks response the call
Of the Controller, which shows the aggregate re-
sources OF the 3s71 National banks reporting on
september 8. 1900 be S5.o4S1 lbs 49, -. Between
re September cali OF 1880 and 1890 loans and dis
counts increased $40 00S :91 IS. The loans and dis
counts on September . 1890, were s2.6s6 1862 "a
and individual deposits were S2.Jos24Sl11 a. The
capital stocks of National banks reporting on
september were $3.50. 299 o3o. In the review
al The operations Of National banks under the
Currency act Of March H. 1899 the report
shows that OF approximately one thousand
Informal applications for authority TO organize
National banks filed in anticipation OF and as a
result Of the law. $40 have been made formal ana
have been approved by the Controller between
March IA and October 81. 1890. From the SOC for
nal applications came 34s actual organizations OF
banks between March IA and october 81
Tire total increase The circulation secured oy
Government bonds Of al National banks IN me
,.steCl since March y, 1902 has been So ioi,-iV
Ne total outstanding circulation on Octoher 81.
-s was 1881 .26S Of which 81 s42e4 IS secured
sy lawful money and i il process ~ retirement
ne total bond secured circulation on october o..
so vas SIS So 90. on that date there We're $50
,arioual hanks IN o,erarion. with combined capt.
La o. St-- 81 $50. The combined resources ot Inc
,a;ioua. banks being over 5 Voc 0o,ce is greater
man airy tine heretofore.
IA complying with requirements Of Section
.aS. providing that the Controller shall suggest
nleudnleuts for The in.i'roleTne OF the Banking
.aR re first calls attention TO the fact that under
section or the o: July =, -SS-, under winch
,A1ensons 81 National bank charters may be grant
a. by the Controller. lie l. hmileu % the at 10
one extension. az twenty years duration Under
tuis section ne charters OF 1,1SI National banks
acre extended . term q twenty ears from the
ate Of expiration OF their first The first
~ The extended charters Will expire July a.
20. others viii follow in due course. The
controller JheI says.
without additional legislation ltaorizing q fur
is.er extension 0esIa4nE 10 continue IL bust
cAlsteEce has been once e&Ienoed Will be conpe.ed
- extension ana reorsar.ILe as asS1gla-
ere w:nc:ng UP Of the arTatrs OF me expiring
.aHA. the retirement Of its circulation, the with
iac1:tey neR tie and chaTfer 1UmteT as ~
eseIt the ease with an entlreiy new organization
.n.refore respectfully recommend amendment
e section Of ne acI Of july Z, 1882 authorizing
lle controller Of the Currency 10 extend for a
tae- period of twenty years, under the conditions
such expiring associations as may desire to con
TIME - The National banking system
LOANS TO BANK OFFICIALS
Tn most important recournen6atf lion made by the
Controller. and that which Is the chief feature Of
III r--crt, one for additional restrictions upon
loans = directors and executive officers OF banks
The Controller states that the large percentage
ra-s failures attributable TO excessive loans 10
dire tors and officers which amounted 70 sixty
failures Il per cent Of the total failures Of
National banks. led him careful Investigation
al directors loans now outstanding in the
National hanks Of the country. This Investigation
aored hat Juna % 1900 the date OF the Con
troIe-s call for statement OF condition from the
National hanks, Of 2s,7GS directors Of National
hanks in the country 1884 were directly or indi-
rec-iy indebted 10 National banks under their
management
The aggregate sum owed by these 1884 borrow
Hs Directors and 2,27s officers and employees who |
Se-e not directors sg9 PSI Al As the capital |
stock OF the National banks the country on June
= &C. .53s 4sl follows that the drac. a,a
zrrst 1iar oS
10 z = per cent about oue-- 7ird the csri-aI
These direct and indirect liabilities Of directors and
ofors 20 banks under their ma cement amounted
10 - 1e- of the total loa-s and discounts %
the National system The Controller then saws.
Nh,.e thes= tables do rot necessarily indicate
IEal Nali2na- oanhinc officers and directors as q
80 80 e9-S+ Ter pIIEiieses-and many Of these
cre6lt1r banks The Controller believes the "a bis
"a" placing additional restrictions and safe
G ONO 'a'Ht l9aTlS IN which the experience
Creates danger - ne improper and lax u.s. Of
the SAFETY Of ne deposi1o-s and - eh
recognized t1ar their safety IS as much endangered
directors rom tbs seize ~ by M o i gtlte s9oo
aW which does sufficiently restrict the oppor-
=. rhe.- position Tho controller gives herewith a
.+' ~ ne 3l-- introduced at the last session OF
.L-=- 80 ul ron. Marriott Brosius, chairman OF
= ne -o2lIalttee on Banking and Currency III r.
LAD MS careful consideration. ana the passage Of
mElc1 with some additions he earnestly recon-
IN text Of this bin is printed in the report In
s-7E-aHo@. II provides that no National bank shall
tan u rs officers employees until the PROPOSE
A.I - TIE loan shall have oeea submitted in
'rifing 70 The directors or executive committee
= TIE osEk and approved by the ma jority Of them
n hne s hE0d for attractions OF this section II
provides that a. any regular meeting the directors
. Astional bank may tx by resolution the limit
= ereGit which shall Be extended 10 any director
f1tn tAe limit q credit thus fixed the executive
si-eers u heir discretion. may loan directors
Nithout other action by the board. Unless the
.i~-' o credit has been thus fixed application
t'r loan ~ director must be in writing. ap-
proved by two other directors. Such a loan may
= made by an executive officer but be
Ign; 70 the at'entton OF he board OF directors
Is heKt meeting for purposes OF record. A pen
a'' IS provided for violation % this section.
The DIsTRIBUTION OF LOANS.
re oil also contains the amendment to Section /
- VINCE 70 his Two former reports The Con- /
EO-ler recommended relative 20 restrictions upon
-7 general loans OF banks Section 200 present
reads as follows
- -, % o' any company, corporation or firm. /
-- money borrowed, including in the liabilities Of
- y. Lhfreor snail a. no time exceed one-tentn
beIt of the amount q The capital stock of such |
bills q exchange drawn in good faith against
ae,lally existing values. and the discount OF com
person Regulating tfe same snail not be consid-
eFsa Is money borrowed
ne present need is for an amendment to this /
provision which. while compelling. under penalty. /
ne SAFE and proper distribution Of loans OF larger
,eL1EA. VIII enable them TO loan nearly the (
sane PER cent u their total which the pres
-. PROVISION allows 70 small banks The greater /
- Dpfl Re D. banking resources 70 banking cap
~ Il ne larger communities al compared with
ehe Taiio II smaller communities. IS responsible
or ne effective and unequal working OF the pres
- PROVISION The average ratio OF resources TO /