Evening star., 1900-11-26
LOANS TO BANK OFFICERS
DISCUSSED IN CONTROLLER DAWES
ANNUAL REPORT.
OF 2S,7OO in the Country, 1854 Were
Indebted to Institutions Under
Their Management.

The annual report of Charles G. Dawes
controller Of the currency, for the year
ended October 81, 1900, has been prepared
for transmission to Congress.
| The most important recommendation
made by the controller, and that which is
the chief feature of the report, is one for
additional restrictions upon loans to di-
| rectors and executive officers of banks
| The controller states that the large per-
| centage of bank failures attributable to ex-
cessive loans to directors and officers,
which amounted to sixty-two failures, or II
per cent of the total failures Of national
banks, led him to careful investigation as
to all directors loans now outstanding in
the national banks of the country.
| This investigation showed on June %,
| 1900, the date of the controllers call for
a statement of condition from the national
banks, that of 2S, 100 directors of national
banks in the country 1854 were directly
or indirectly indebted to national banks un-
| der their management
| The aggregate sum owed by these 1854
borrowing directors and 2,279 officers and
employees who were not directors was $202,
| PSI, AL. AS the capital stock of the ma
| tional banks of the country on June - was
Sbjl, $50 4O1, it follows that the direct and
indirect liability of directors and officers
| amounted to 3255 per cent, about one
third the capital. These direct and indirect
liabilities of directors and officers to banks
under their management amounted to 7.7o
per cent of the total loans and discounts
of the national system.
| The controller says:
while these tables do not necessarily
| indicate that national banking officers and
| directors whole abuse their privileges,
and many of these directors loans are
| among the safest owned by the creditor
| banks, the controller believes the tables
| show clearly the great Importance of
| fra na6 q w n q inna
| strictions and safeguards around these
| loans, in which, the experience of the bank
| ing system teaches, is involved the greatest
| danger of the improper and lax use of
| banking funds"
| Condition of the Banks.
The report gives a summary of the re-
ports made during the year by the national
| banks in response to the call of the con-
troler, which shows the aggregate resources
of the 3,S71 national banks reporting On
September ), 1900, TO be s., 04S, 13S 20. Be-
| tween September call of 1899 and 1900 loans
and discounts increased S11O,OOS, ,391.46 The
loans and discounts on September 8, 1900
We're s., $50, 759, 642.57. and individual depos-
| Its were 81, sos, 24S, ,557 .53.
The capital stock of national banks re-
porting September was $500, 299. .O3O.
! In the review of the operations of ma
t.onal banks under the currency act Of
March ii, 1900, the report shows that out
| of approximately one thousand informal ap-
| plications for authority to organize nation
| al banks. filed in anticipation of and as a
result of the law, 500 have been made formal
| and have been approved by the controller
| between March IA and October 81, 1900.
| From the 500 formal applications came 34S
actual organizations of banks between
! March IA and October 81. Of these 34S
| banks actually organized, 249 were banks OF
| less than $4,000 capital representing a to-
tai capitalization of s6o75,OOO. and ninety
nine were banks which could have been
4 H. \
| ual capital of $4,000 or over, representing
a total capitalization Of $1O,9O0OOO. The
| bonds deposited to secure circulation by
| these new institutions between March IA
and October 81 was $J:}4S. POO, or only about
| 30 per cent of the maximum which might
| have been deposited
| Increase in Bank Circulation
The total increase in the circulation Sc
cured by government bonds of all national
banks in the system since March H. 1900
has been $50 454,21O. The total outstanding
circulation on October 81, 1900 was $751;
613.26s. of which s3o 7s4 2O4 is secured by
lawful money and is in process of retire
ment. The total bond-secured circulation on
October 81. 1900 was $2!,S S29 O64.
| On October 81 1900. there were 1895 ma
tional banks in operation, with a combined
capital of $632, ,5O2. .S95. The combined re-
| sources of the national banks being over
s.. OO,00O,000 is greater than at any time
| heretofore.
| Extension of Charters.
| In complying with the requirements of
section 3s3, providing that the controller
shall suggest amendments for the improve
ment of the banking law, he first calls at
tention to the fact that under section Of
the act Of July H. 1892 under which ex-
| tensions of national bank charters may be
| granted by the controller, he is limited by
the act to one extension of twenty years
duration.
| Under this section the charters of 1737
| national banks were extended for a term
of twenty years from the date of expiration
| Of their first charter.
| The first of the extended charters will
| expire on July A. 1902, and the others will
| follow In due course The controller says:
| Il therefore respectfully recommend an
| amendment Of section 1 Of the act of July
| II, 1882. authorizing the controller Of the
currency to extend for further period of
twenty years, under the conditions and linn
| itations imposed by said act, the charter
| Of such expiring association may desire
| to continue in the national banking sys-
| tenn
RecOmme n da tiOns.
| The controller recommends that section
| 1892 of the Revised Statutes of the United
States be amended SO that under its pro-
visions but one-fifth instead of three-fifth
| Of the reserve Of Is per cent required by
law to be kept by banks not reserve agents
may consist Of balances due to reserve
banks. and that section 5195 of the Revised
| Statutes of the United States, which au-
| thorizes banks in smaller reserve cities to
| keep one-half of their lawful money reserve
| in balances in central reserve cities, be re-
pealed
The controller repeats the recommended
| ton made by his predecessors that the pres
| ent law should be so amended as to provide
| fixed salaries for bank examiners, to be
| paid from fund collected from the banks,
| to take the place Of the fee system now in
| force. The amount allowed an examiner for
| the examination of smaller banks Is not
sufficient to compensate him for the time
| necessary In many cases for an extended
examination. The present system encour-
| ages, to too great an extent. superficiality
| in examinations and interferes greatly with
| the proper and wise apportionment of time
| of examiners among the different banks.
| Among other recommendations the con-
troller strongly urges laws regulating inter-
national and intercolonial banking as dis
| tinguished from domestic banking, and
prints in an appendix the result of investi-
cations into banking conditions in Porto
| Rico, Hawaii and the Philippines.
/