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Annual Report of the Comptroller of the Currency, Volume 1 1892

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Text of Annual Report of the Comptroller of the Currency, Volume 1 1892

Annual Report of the Comptroller of the Currency, Volume 1 1892OF
TREASURY DEPARTMENT,
Comptroller of the Currency,
TABLE OF CONTENTS,
Page, Report submit ted to Congress 3 Trade balance and condition of the national banks 3,4 Cash held by national banks 5 Currency and exchanges , 5 Paper money in circulation 6 Coinage of silver 6,7 Profit on circulation of national banks 8 F u n d i n g of the national debt 10 Stat is t ical information wi th respect to financial inst i tut ions organized under State s ta tu tes 11-16 Clean money 16 Statement of national banks organized dur ing the year 17 States leading in numerical accessions, capital, and deposits 17 Number and capital of national banks organized and closed since establishment of system 18 Amendments to present laws 18 United States at torneys as s ta tu tory counsel for receivers 19-21 Closed national banks 22 Domestic exchanges 24 Amount of drafts drawn by national banks, comparison for throe years and rates of ex-
change 25-31 Subst i tu tes for money 31-39 Impruden t methods of bank ing 39 Directors and officers 40 Excessive loans 41 Examiners 43 Comparative s tatements of the national banks 45 Extension of the corporate existeuce of national banks 48 Circulating notes 49 Increase or decrease of circulation 50 Banks wi thout circulation 51 Security for circulating notes 52 Interest-bear ing funded debt of the Uni ted States and amount held by national banks 54 Marke t prices of United States bonds 55 Inves tmen t value of Uni ted States bonds 56 Issues and redemptions. . . , - 57 Additional circulation issued and retired dur ing the year 58 National-bank notes received and destroyed yearly since the establishment of the system 59, CO Redemption of notes of banks reducing circulation, and of failed and l iquidat ing banks 60 Tax upon circulation, redemption charges, assessments, and amounts collected 61 Loans by national banks in reserve cities and country 61 Failed banks 65 Causes of failure 60 Dividends paid to creditors of failed banks 73 Inact ive receiverships 74 Banks in l iquidation 75 Legislation 75 Legal decisions 77 Clearing-house associations 77-83 State, savings, pr iva te banks, loan and t rus t companies 83-89 Conclusion 89
I
II TABLE OF CONTENTS.
APPENDIX. Pa^e.
Names and compensation of officers and clerks „ 93 Expenses of the office for the fiscal year 94 Names and addresses of national-bank examiners 94 Index to digest of decisions of the courts in cases afflding national banks 95 Digest 97 National banks organized, in liquidation, and in operation, with capital, bonds, and circula-
tion October 31, 1892 127 Summary of the state and condition of national banks reporting during the year ended Septem-
ber 30, 1892 128 Comparative statements of the national banks for fifteen years from 18(54 129 Authorized capital stock each month from January 1,1871, to November 1, 1892, with amount
of bonds, circulation, and lawful money deposited for redemption 130 Changes in capital, bonds, and circulation by geographical divisions , 134 Additional circulation issued and lawful money deposited to October 31,1892 139 National-bank notes outstanding and the amount and kind of United States bonds on deposit. 140 Increase or decrease of circulation quarterly and for the year ended October 31, 1892 141 National-bank notes issued, redeemed, and outstanding, by denominations, since the establish-
ment of the system 142 National gold bank notes issued, redeemed, and outstanding 145 National-bank notes issued during the year 145 Minimum amount of bonds required and the amount actually held September 30, 1892 146 National banks with capital of $150,000, under and over, and the increase or decrease of capital
during the year 148-151 Classification of loans and discounts 152 Amounts of coin and coin certificates held in 1888,1889,1890,1891, and 1892 153-159 Lawful money reserve 100 Liabilities and required reserve 162 State of the lawful money reserve from 1886 164 Reserve held and classification by geographical divisions 166 Deposits, circulation, and reserve of national banks in New York City by months 176 Movement of reserve of national banks in New York City for sixteen years 177 Abstract of earnings and dividends, September 1, 1891, to September 1, 1892 178-185 Ratios of capital and surplus to earnings and dividends 186 Earnings and dividends for semiannual periods 188 National banks in voluntary liquidation under sections 5220 and 5221, Revised Statutes 190 National banks in liquidation succeeded by associations with same or different titles 202 National banks in liquidation for the purpose of reorganization 203 National banks in liquidation under section 7 of the act of July 12, 1882 205 National banks in the hands of receivers 206 Insolvent national banks, assets, collections, disbursements, expenses of receiverships, divi-
dends paid 214 Abstract of reports of condition of State banks, loan and trust companies, savings and private
banks 227 Reports of condition of the National Savings Bank, The National Safe Deposit Company, The
Washington Loan and Trust Company, and The American Security and Trust Company, of the District of Columbia , 249-252
Condition of the Canadian banks .' 252 Statements of condition of the banks of the United States and State banks, 1774 to 1892 253 Aggregate resources and liabilities of national bank s from 1863 to 18D2 325-345 Summary of the state and condition of national banks on dates of report during past year 347-397 General index „.. 399 Condition of each, national bank at close of business September 30, 1892 Vol. II
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REPORT
OF
THE COMPTROLLER OF THE CURRENCY.
DEPARTMENT OF THE TREASURY, OFFICE OF THE COMPTROLLER OF THE CURRENCY,
Washington, D. (7., December 5, 1892. SIR: I have the honor to submit for the consideration of Congress?
in compliance with the provisions of section 333 of the Eevised Stat- utes of the United States, the thirtieth annual report of the Comp- troller of the Currency.
The year covered by this report ended October 31,1892. The crop of 1891 was phenomenal in all the great staples produced by this coun- try, and at the same time a partial failure of the cereal crop in Europe created an unusual demand for our food products. The total value of our merchandise exports for the fiscal year ended July 1, 1892, ex- ceeded one billion dollars—$1,030,335,000.
1891. 1892.
The merchandise balance of the United States (excess of exports over imports) for the fiscal year ended July 1 J $39,565,000 ! $202,934,000
Excess of exports over imports, gold and silver I 72,703,000 i 13,352,000
Trade balance j 112,268,000 i 216,266,000
The remarkable feature is that we were compelled to add to an export merchandise balance of $242,000,000 over $86,000,000 in gold and silver.
Europe's short crop followed a serious financial crisis, which un- settled values, disturbed confidence, and entailed heavy losses. Instead of paying for our cereals from their surplus, they were obliged to draw upon their principal.
In a normal condition of affairs this large merchandise balance in our favor would have resulted in large gold imports; instead, they sent us our securities.
The interest upon American securities held abroad aggregates a large amount, and its payment forms a continuous factor in international balances. The return of any portion of our securities increases our wealth at home, and the reieptjpn $f the earnings of guofa securities
3
REPORT OF THE COMPTROLLER OF THE CURRENCY.
adds to our home prosperity. The absorption and assimilation of so large an amount in so short a period of time may have produced tem- porary disturbance, but the permanent effect is beneficial.
The financial needs of Bussia, and the accumulations of gold by Austria-Hungary, with a view to the resumption of specie payments upon a gold basis, caused a premium to be paid for gold exports, and was an important cause of its outflow.
Distrust of our monetary legislation, and the fear on the part of Europe that we were drifting towards a silver basis, also had an impor- tant influence upon gold exports.
The national banks held on September 30, 1892, nearly $22,000,000 more gold than on September 25, 1891. This, coupled with the known fact that many State banks and trust companies have also fortified themselves with a gold reserve during the year, shows that the fear that we were drifting towards a silver basis was not confined to foreigners.
All periods of monetary stringency, which necessarily restrain and curtail business ventures, are followed by a plethora of money.
On June 18, 1892, the total deposits in the associated banks of the city of New York were $543,663,100. The highest amount ever reached before was $455,306,300 on December 26,1891. The same plethora of money existed in all money centers 5 the rate of interest for the year averaged, on demand loans, 1 £ per cent to 3 per cent, and time loans and commercial paper ranged about 2 per cent higher.
The cholera at home and abroad, with attendant quarantine restric- tions, has held trade in fetters, and, to some extent, impaired the busi- ness of the year. The vigorous measures adopted by our authorities reduced it to control and kept its baleful influence at a'ininimuin.
With conditions in the United States favorable for a year of unusual, prosperity, speculation has been held in check and business kept within conservative limits. The lessons taught by the monetary stringency of 1890-?91, which fell so heavily upon all whose business was too much extended, have not yet been forgotten. Ahardening proc- ess has obtained, and yet the record of the year covered by the re- port characterizes it as one of growth and prosperity.
COMPARATIVE STATEMENT OF THE CONDITION OF THE NATIONAL BANKS WITH RE- SPECT TO CERTAIN ITEMS AT NEARLY CORRESPONDING DATES FOR THE YEARS 1891 AND 1892.
1891.
Number of banks in existence October 31 Capital stock Bonds deposited to secure circulation | Bank notes outstanding j Lawful money deposited with the Treas-
urer, United States to redeem circula- tion outstanding
Surplus and undivided profits September 25 and 30, respectively
Individual deposits September 25 and 30, respectively .
Bank deposits September 25 and 30, re- spectively
Total resources September 25 and 30, re- spectively
3,694 $684, 755, 865 152,950, 350 172,184, 558
35, 430, 721
25,191,083
Increase. I Decrease.
247,588 j
430, 594, 774 I 530, 653, 202 100, 058, 428
3, 213,080, 271 i 3, 510, 094, 897 j 297,014,626
The above table shows a large decrease in the lawfnl money deposit to redeem circulation. The net circulation outstanding has increased 110,487,226 during the year,
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REPORT OF THE COMPTROLLER OF THE CURRENCY. 5
The following table shows the total cash held by national banks in- cluding 5 per cent, redemption fund, and mutilated currency in process of redemption for the years 1891 and 1892.
Bills of other national banks Fractional paper currency, nickels and
cents Specie, viz:
Legal-tender notes United States certificates of deposit
for legal-tender notes Five per cent redemption fund Due from United States Treasurer,
mutilated currency
7, 300, 000. 00 . 6, 348, 573.00
20, 409, 735.00 4, 818, 750.67
97,615, 608.00
1,457,807. 85
325, 704,052.64
7, 860, 000. 00 6, 785, 084. 00
22,993,4M. 00 5, 405, 71tt. 92
104, 267, 945.00
1,106, 987. 93
560, 000. 00 436, 511. 00
2, 583, 716. 00 586, 960. 25
6, 652, 337. 00
30,413,946.04 |
CURRENCY.
The business of banking is exchanging a generally known value or credit for a local value or credit. This definition applies equally to the money changers of the temple and to the banks of to-day. In the wonderful development of commerce and manufactures which has fol- lowed increased facilities for communication and transportation, bank- ing, though hand in hand with trade, is ever in the lead; for credit, or money, is the motor which moves the wheels of progress, and all financial transactions, whether local, national, or international, have become mainly a matter of bookkeeping. Throughout the United States every locality has its bank, and most people, however limited their business transactions, have bank accounts, through which they pay their indebtedness. Bank accounts are generally used as the most convenient and most accurate method of keeping a cash account. This practice does not obtain in European countries in any such proportion. In this country, in the village having a single bank, the artisan pays the merchant by check, or vice versa, and the payment is usually consummated by a transfer of credit upon the books of the bank. Thus does the single bank become a clearing house for the community, and the actual transfer of money is minimized.
The day's exchanges in our larger cities are adjusted through a clearing house, where each bank is credited with the total demands it holds against all other banks, in the same place, and is debited with the total demands which the other banks hold against it, and either pay§ or receives the balance, simply,, in money. The aggregate clear- ing-house transactions for the year ended October 31, 1892, in 57 clear- ing-house cities, were $61,017,839,067, the balances were (partly esti- mated) $4,881,777,289. Thus, by a simple device of bookkeeping, this immense volume of business was done by means of 8 per cent of actual money.
Our international banking and commercial transactions are settled upon a system of balances through a few leading banks and banking houses that deal in foreign exchange. When the exchange market affords no bill of exchange to be remitted, gold is shipped to settle the
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6 REPORT OF THE COMPTROLLER OF THE CURRENCY.
balance of trade existing against such nation, and when so shipped, whether bars or coin, it goes simply as commodity, at its market value, precisely like merchandise.
Thus it appears that the bulk of the world's business transactions is done upon credit, witnessed by bookkeeping, and the percentage rep- resented by actual money transfer is very small, in the United States less than 8 per cent.
A man goes to his bank with his note, a local credit, and procures its discount, receiving the proceeds in a generally known credit or value, namely, a bank draft, or certificate of deposit, or money—something available for the contemplated business. The bulk of all business trans- actions is adjusted by the contracting parties, whether banking or other- wise. It is the portion in which money passes that appeals to the Gov- ernment for regulation. It is the recognized constitutional duty of government to furnish for its citizens a circulating medium adequate to their needs and convenient for their use. Gold and silver are the recognized money of the world, because they possess value in them- selves, are conveniently coined, not easily counterfeited, exist in quan- tity sufficient to supply the demand, and are not so redundant as to unduly impair their value. Such money is adequate to the public want, but not convenient for public use, except in small change transactions. Paper money is a business necessity. Paper money possesses no value, simply represents value.
A currency to serve the demands of business must be sound—no doubt of its redemption. It should be elastic, that it may expand and contract, as the tide of business ebbs and flows. If supplied by the Government, the expense is borne by the taxpayers. If supplied by banks, it must possess an element of profit. It will readily issue so long as there is a profit. It may be made to contract by fixing a stand- ard of issue and taxing the excess, so that the excessive issue would be retired with the cessation of the necessity which called it into ex- istence.
The amount of paper money in circulation October 31, 1892,was: National-banknotes $172,432,146 United States notes (greenbacks) 332,080,234 Treasury notes 114, 567,423 Gold certificates 120,255,349 Silver certificates 324, 552,532 Currency certificates 10,550,000
1, 074,437,684 Per cent of national-bank notes, 16.04.
The Government can not issue money gratuitously. It can only put it in circulation in exchange for some value or obligation. It can not pay its bonds in anything other than coin of standard value.
By the terms of the act of February 28, 1878, the Secretary of the Treasury was directed to purchase and coin into silver dollars silver bullion not less in value than $2,000,000 worth and not more than §4,000,000 worth monthly. This act was supplanted by the act of July 14, 1890. While in force the Government purchased silver and coined 378,166,793 standard dollars, the seigniorage on which (that is, the difference between the price paid for the silver and the face value of the coinage) was $69,967,531. Total coinage of silver dollars under act of February 28, 1878 $378,166, 793 Total cost of silver bullion used in such coinage 308,199,262 Seigniorage or apparent profit 69, 967,531 Bullion value of such silver October 31, 1892 250, 493,936 Difference between actua] cost and market value October 31, 1892 57, 705,326
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REPORT OF THE COMPTROLLER OF THE CURRENCY. 7
This coinage accumulated in the Treasury vaults until the happy device was conceived of putting it in circulation by the use of paper substitute. As shown above, $324,552,532 are serving the people by proxy.
Under the act of July 14, 1890, the Government purchases monthly 4,500,000 ounces of silver, and pays for the same in Treasury notes issued for that purpose and equal at par to the cost of such silver. Thus the currency of the country is arbitrarily increased monthly. Up to November 1, 1892, the total issue of such notes has been $116,611,233. The present market value of the silver purchased is $102,648,944, showing a depreciation in value of $14,134,646. This act was a compromise measure, designed to prevent the unlimited coinage of a dollar of full debt-paying power containing less than a dollar's worth of silver. From its nature (arbitrarily adding a large amount to the currency monthly) it is evident that it was intended to be tem- porary. The severest commentary upon our silver coinage is the fact that it offers an inducement to the counterfeiter to coin a dollar exactly reproducing the genuine in quality and intrinsic worth, as well as form and design, the profit to the counterfeiter being represented by the difference between the market value of the silver contained in the coin and its face value, which was October 31, 1892, 33J cents.
In view of the above statistics, the silver currency furnished by the Government will hardly commend itself to the public on the score of economy. It is in sharp contrast with the national-bank currency, which has paid into the Treasury in taxes $72,670,412.30.
What the settled policy of Congress as to the future currency may be remains to be seen. If furnished by the Government, it will possess the quality of soundness, for nothing can be better than the Govern- ment under which we live; but it cannot possess elasticity. Elasticity means conformity to business wants, the supply quickly responding to the demand, and not conformity to fixed rules and statutory laws. The Government in the very nature of things cannot supply such currency as the public requires. The national banks can and with proper legisla- tion would supply this want fully and completely. Large appreciation of the price of United States bonds, the basis for circulation, large depre- ciation of the rates of interest, and onerous taxation have made circulation unprofitable, and the volume has fallen from $362,889,134, September 30, 1882—the highest amount…