Gainesville daily sun. (Gainesville, Fla.) 190?-1938, 1906-06-01
SIZE OF BANK LOANS.

Now that the Senate has passed the
railroad rate bill il will have time 10
pay 70 other pending measures Among
rhese il the bill which hat passed the
House OF Representative providing
that a national bank may loan TO one
individual or firm or company no
larger a cum than one.teDth OF lite
capital stock and One.tenth OF it's an
| impaired surpIus, but in no case the
loan TO be greater than 20 per cent OF
the capital stock. This bill is q vast
improvement upon the present law
which provides that national bank
may not loan 10 any one borrower
more than one-tenth Of it's capital
stock
In these days OF large business trans
ac,ions, that limitation isa hardship
to The banks. says The Wall Street
journal In fact, it has been law
which could not be enforced and il is
necessary that it should be changed 20
H. 10 conform ~ the new conditions OF
hIsintEs
Why the House Of Representatives
should have amended the bill 70 as TO
make it impossible for national bank
20 loan 10 the foil limit OF one.tenth
Of its capital stock and unmpaired
Surplus does not appear clear. II
changed the bill 90 as to discriminate
stock and OF large surplus, although
theEe banks are among the strongest
and most conservative in the country.
This discrimination impaires the value
Of the measure, notwithstanding its
Improvement over the present law.
For instance, a bank like the Chemical
National, Of this city, which has a sur.
plus Of over 1880 900 and a capital OF
only $4,000 instead Of being able TO
loan 10 the full amount OF one.tenth
OF is surplus, would be- limited TO ~
per cent Of it's capita stock, so that
under the measure, As II now SANDS,
it could loan TO one borrower only
$4,000. while il there were not this
OF nearly $4,000 TO one Dor.
rover The evident intention il 10
compel a bank like the Chemical Ma.
tIOnal To increase It's capital stock
There seems, however, TO be- no i'm.
ptrHtiNe reason why it should be com.
PEELED to do this. The surplus IA IS
much the capital OF bank ss Is II
capital stock. \ bank does not escape
any taxation hy Keeping its capital
stock small, because the taxation ia
upon the book value Of the stock II
has been urged that the banks should
br compelled TO increase their capita
stock in uidef tOg,ve To the deporltors
the added safeguard OF the doub g
liability But the depositos are just
~ strongly protected 10y big surplus as
they are 10y large capital stock
The argument that 10 permit the
banks to make larger loans TO single
borrowers will operate against the
small borrowers and IN favor Of the
bug corporations, il absurd undoubt.
ehly To increase the facilities the ma.
tiunAl banks ia this respect will enaulr
ihrm 10 accommodate more readily
the requirements Of the large Dor.
roWert, hu, 4 will not IN any way
work 20 the disadvantage ~ the smSIl
borrowers Their small loans will re-.
crivr ~ mach consideration M ever
The senate should paH the bill which
has come from the House OF Eeprrser.
iAuves, amended. however, 20 ~ to
give the bank, permission 10 loan to
snHlc hofroWS ~ an amount equal to
10 per cent To their combined capital
aud surplus, regardless Of the ere Of
their cApl,Al Stock
Onr gallon oi Alcohol vii produce
twice as much light ~ gallon ~
the Tee, kerosene The farmer can
produce the Acoho, while John H..