The San Francisco call., 1903-12-07
WOULD AMEND
THE BANK LAWS
Comptroller Says Better
Safeguards Are
Necessary.
Recommends Greater Lati-
tude on Issue Of Ma
tional Notes.

10 Congress, William b. Ridgeley,
Comptroller of the Currency, again
renews the recommendations con-
tanned in his report for 1902 for legis-
lation in regard to liquidation and con-
solidation Of national banks and extern
sion Of corporate existence. The nee
essary method of effecting a consoli-
dation under the law as it now exists
is inconvenient and cumbersome, and
in the interest of better and more eff
ficient administration recommends
such an amendment of the law as was
advised in his last report.
The national bank act does not suf-
ficiently protect the rights of minority
stockholders on the question of exten-
sion of expiring charters, as explained
in detail in the report for 1902, and
the Comptroller urges that action be
taken on this important matter for the
better protection Of minority or dis
senting shareholders.
The most notable fact in regard to
the national bank circulation is the
great increase in its volume, which
reached $421, ,222.4 .489 on September 5.
1903. the largest amount which has
per cent of the maximum possible cir
culation, which is higher than this
percentage has been since 1886. This
increase in the volume of circulation
has been largely due to special efforts
on the part of the Treasury Depart
ment 1t has been feared during the
past few months that when the de-
mand came for currency to move the
L
than the usual disturbance in the
money market. That this demand has
been met with less disturbance and less
advance in rates of interest than for
several years past is doubtless due
largely, among other causes. to this
increase in bank note circulation.
1t is further Of interest to note that
just as the circulation was reaching
its maximum and the demand for
bonds had advanced their price, the
deposit of lawful money to retire cir
culation, which for some months has
been light. suddenly increased, and
during the latter half of September
applications were received taking up
the maximum of $4,000. 900 per month
for the months of September, October,
November and December.
This still further emphasizes the one
serious defect in our system that the
variation in the volume of our cur
rency, instead of responding to the de-
mand for currency. depends on the
market price of bonds. Until our bank
note circulation is made automatically
to respond to the demand for currency
for daily cash transactions, without
reference to the price of bonds, it will
never be entirely satisfactory or eff
ficient.
In the Comptroller's report for 1902
a recommendation was made that the
national banks be allowed to issue a
portion of their notes uncovered by
the deposit of bonds. This seems the
most simple and practical, as well as
the safest way, to introduce some
elasticity into our bank note circula-
ton and the same recommendation is
renewed.
During the past year or more our
banks have successfully stood the very
severe strain due to a great decline in
the market prices of all classes of Sc
curities and the natural reaction fol-
lowing a period of great business ac-
tivity and very general speculation, not
only in stocks and securities, but in
many commodities and products. There
have been, considering all the circum-
stances, fewer bank failures than
might have been expected. Those
which have occurred have been due to
special or local causes or gross mis-
management and in some case most
fragrant dishonesty on the part of the
bank officials. AS a rule the reports of
the bank examiners show the national
banks to own very few stocks and al
most none Of a very speculative char
acter. The bank reports show total
loans by all the banks of 81, ,372, ,697, ISL
on collateral security. These loans are
mostly on good classes Of stocks and
bonds well margined, and as far as
they are concerned there is less cause
for concern than there has been at any
time for several years. The loans are
readJusted on a lower basis of prices
than before and are as a whole as am
ply or more amply margined than they
were on the higher prices. 1t is due to
the banks to say that the way they
have handled their business and met
this decline is an evidence of strength
and careful management.
That there has not been more
trouble with the banks and disturb
ance Of business generally during this
period Of declining prices is also a
great evidence of the confidence of our
people in all our money and currency.
If there had been the slightest doubt as
to our monetary standard or as to any
Of our currency in circulation we might
have had most severe and far-reach-
ing crisis. That we have not only es-
capped this. but that there has not been
greater disturbance of general business.
shows what progress and improve
ments there have been in all our bank
ing. financial and monetary affairs
since they were last subjected to Sc
rious strain Of this kind.
Accompanying the Comptroller's re-
port is a table giving a detailed state
ment Of the resources and liabilities of
all the national banks OF the United
States, as shown by the five reports of
condition made in response to the call
of the Comptroller.
Comparing this statement with that
for September Is. 1902. II is observed