approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed two thousand inhabitants. No association shall be organized in a city the population of which exceeds fifty thousand persons with a capital of less than two hundred thousand dollars." SEC. 4. That all acts and parts of acts inconsistent with the provisions of this Act are hereby repealed. H. REPORT 1883, FIFTY-FIFTH CONGRESS, THIRD SESSION. CIRCULATION OF NATIONAL BANKS. FEBRUARY 1, 1899.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed. Mr. VAN VOORHIS, from the Committee on Banking and Currency, submitted the following REPORT. [To accompany H. R. 7879.] The Committee on Banking and Currency, to whom was referred the bill (H. R. 7879) to increase the circulation of national banks, having duly considered the same, respectfully report as follows: Existing law authorizes national banks to issue circulation to the amount of 90 per cent of the par value of the bonds deposited with the Treasurer of the United States to secure circulation. By this bill it is proposed to amend existing law so as to authorize national banks to issue circulation to the par value of the bonds deposited to secure the same. On the 30th day of January, 1899, there was deposited to secure national-bank circulation United States bonds amounting to $236,445,840. The circulation possible under existing law on the bonds so deposited amounts to $212,801,256. The circulation possible under a law permitting an issue up to the par of the bonds would be $236,445,840, an increase over that of existing law of $23,644,584. The wisdom of amending the law so as to provide for this increased circulation does not seem to the committee to admit of doubt. There are no United States bonds now out excepting the 2 per cent bonds which are not selling in the market at a considerable premium, and therefore no possible loss could occur to the note holder by the amendment proposed, even if there was no other recourse; but when we consider that the note holders have a first lien upon all the assets of the bank in addition to the security of the bonds deposited, there can exist in no case the possibility of loss. Under existing law the banks are deprived of a portion of their available capital for loaning purposes, and to that extent accommodations to business are withheld which otherwise might be available. It seems clear that when the banks find so little profit in their circulation as now limited that it scarcely pays to take it out, there ought to be an enlargement of their rights to issue notes so as to afford an inducement to furnish as large a measure of accommodation to the community as is compatible with entire safety to note holders. The issuing of circulating notes to the par value of bonds deposited to secure the same is recommended by the Comptroller of the Currency, and has been heretofore recommended by every comptroller from the time of and including Comptroller Knox. The committee is of opinion that if this bill becomes a law there will be an increase in the amount of circulation issued when the demands of business require it, and thus a distinct benefit will come both to the banks and to the community, without in the slightest degree endangering note holders. Under existing law the only tax assessed against national banks is a tax of 1 per cent on circulation. The Comptroller of the Currency has recommended from time to time that the law assessing the tax upon circulation should be repealed, for the reason that with this additional burden there was little or no profit to the banks in issuing notes. By this bill it is proposed to amend existing law so that the tax on national banks shall be assessed upon the franchise of the banks measured by their capital, surplus, and undivided profits. A tax of oneeighth of 1 per cent each six months will realize to the Government somewhat more than the present tax on circulation, and will be equally distributed. The tax of 1 per cent on circulation outstanding January 30, 1899, would amount to $2,111,289. The tax assessed by this proposed amendment on capital, surplus, and undivided profits, as shown by bank statement of December 1, 1898, would amount to $2,408,953. Under the existing law the minimum capital stock required for the organization of a national bank is $50,000. In some sections of the country there has been a growing need for bank issues, as well as for other banking accommodations, in small towns in which the amount of $50,000 can not readily be raised for banking purposes. The inequality in the distribution of national banks is one of the marked features of our national banking system. In the Eastern and Middle States banks are abundant and this alteration in the law would not be availed of to any considerable extent; but in the Western and Southern States there is a dearth of banks in many sections, due, no doubt, to the lack of capital in those sections. The following statement illustrates the situation: Statement of banks, bank stock, and bank circulation in the States named. It thus appears that a marked discrepancy exists in the bank circulation and accommodations in the different sections of the country. This inequality may be remedied in part, at least, and the existing need met to some extent in the sections where there is a dearth of bank issues and banks are so remote from each other as to afford grossly inadequate accommodations. Relief of this character has been recommended by those best qualified to judge, and meets the approval of the Comptroller of the Currency, who is most familiar with the banking needs of the country. Your committee therefore recommend the passage of the bill, with the following amendment: In line 12, page 3, strike out the word "two" and insert " three," making it read "three thousand inhabitants." INDEX. Page. BARTHOLDT, HON. RICHARD (a Representative from the State of Missouri), BROSIUS, HON. MARRIOTT (a member of the committee), bill H. R. 7879, 290 Report on. Clearing Houses in the Country, The, a statement prepared by the chairman.. statement of Theodore Gilman concerning. Gilman, Theodore (a banker of New York City), statement by. Report on bill H. R. 7879 (House Report 1883). Subcommittee, special, bill prepared by (H. R. 9725). VAN VOORHIS, HON. HENRY C. (a member of the committee), bill H. R. 7879 284 3 9, 25 255 9, 25 42 291 9725 (prepared by the special subcommittee) 56 91 42 56 291 Views of the minority (Mr. Walker) on bill H. R. 10289. 129 75 240 10339, introduced by. Clearing houses, statement concerning, prepared by. Comparison of H. R. 10289 with H. R. 10333, prepared by 241 284 255 129 295 |