Section 15. For cause deemed sufficient by the associated banks, any bank may be expelled from the association and debarred from all the privileges of the clearing house, by a majority vote, at any meeting of the association.

By-laws, section 11. Each member of the association shall furnish as often as five times a year a sworn statement of its condition, * * * and at such other times and of such dates as the clearing house may require, open to the inspection of members only.

*

NEW YORK, NEW YORK.

Section 2. Acts as an agent only.

Section 8. May examine any bank member of the association. May require security of such amount and character, etc.

Section 16. Every bank member shall furnish a weekly statement of its condition, etc., for publication, showing the average amount of— 1. Loans and discounts.

Section 17. May receive by an appointed bank in special trust

Coin or

United States legal-tender notes

from any association for safe-keeping, or may appoint the assistant treasurer of the United States at New York a depositary, etc.; certificates to be issued in exchange for such deposit, negotiable among members only.

Section 21. Standing committee may suspend any bank, but must immediately call a meeting of the association to act on the case, etc. Page 11, resolution of April 8, 1872. That the clearing-house committee be, and is hereby, directed, whenever it appears, in its judgment, that legal-tender notes have been withdrawn from use through the agency of any bank, member of the association, to make an immediate examination of the bank in question, and should there appear to be complicity on the part of the bank or its officers, to suspend said bank from the clearing house until action of the association shall be taken thereon.

Page 13. Adopted February 14, 1872.

1. The New York Clearing House Association or any members thereof may unite for the purpose of clearing checks payable in gold.

6. The adoption of this system shall not prohibit any bank from presenting gold checks for payment to the banks on which they are drawn, etc.

B & C- -19

H. R. 7879.-FIFTY-FIFTH CONGRESS, SECOND SESSION.

IN THE HOUSE OF REPRESENTATIVES.

FEBRUARY 8, 1898.-Mr. Brosius introduced the following bill; which was referred to the Committee on Banking and Currency and ordered to be printed.

A Bill To increase the circulation of national banks.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That upon deposits by national banking associations of United States bonds, bearing interest, as provided by law under the provisions of sections fifty-one hundred and fifty-nine and fifty-one and sixty of the Revised Statutes, such_associations shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations in blank, registered and countersigned as provided by existing law, equal in face value to the full par value of the bonds so deposited; and national banking associations now having bonds on deposit for the security of circulating notes less in face value than the par value of the bonds, or which may hereafter have such bonds on deposit, shall be entitled, upon due application to the Comptroller of the Currency, to receive additional circulating notes in blank to an amount which will increase the aggregate value of the circulating notes held by such association to the par value of the bonds deposited, such additional notes to be held and treated in the same way as circulating notes of national banking associations heretofore issued, and subject to all the provisions of existing law affecting such notes: Provided, That nothing herein contained shall be construed to modify or repeal the provisions of section fifty-one hundred and sixty-seven and fifty-one hundred and seventy-one of the Revised Statutes, authorizing the Comptroller of the Currency to require additional deposits of bonds or of lawful money in case the market value of the bonds held to secure the circulating notes shall fall below the par value of the circulating notes outstanding for which such bonds may be deposited as security.

SEC. 2. That every national banking association shall pay to the Treasurer of the United States each half year, in the months of January and July, on or before the thirtieth day thereof, a duty of oneeighth of one per centum upon the value of its franchise as measured by the aggregate amount of its capital, surplus, and undivided profits upon the last day of the calendar month next preceding. Sections fifty-two hundred and fourteen, fifty-two hundred and fifteen, fifty-two hundred and sixteen, and fifty-two hundred and seventeen of the Revised Statutes of the United States are hereby repealed. But nothing in this section contained shall be so construed as in any manner to release any national banking association from any liability for taxes or penalties incurred prior to the passage of this Act.

SEC. 3. That section fifty-one hundred and thirty-eight of the Revised Statutes is hereby so amended as to read as follows:

"SEC. 5138. No association shall be organized with a less capital than one hundred thousand dollars; except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants, and except that banks with a capital of not less than twenty-five thousand dollars may, with the

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."