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ANNUAL EEPORT
OF THE
COMPTROLLER OF THE CURRENCY
TO THE
FIRST SESSION OF THE FIFTY-FOURTH CONGRESS
THE UNITED STATES.
DECEMBER 2, 1895.
IE" TWO VOLUMES.
V O L U M E I.
WASHINGTON:
GOVERNMENT PRINTING OFFICE.
1895.
TABLE OF CONTENTS.
Page.
National banks in operation
3
Authorized capital stock of national banks
4
Number of shares and shareholders of national banks
4
Change in national-bank circulation during the year
4
Principal items of resources and liabilities of national banks on September 28
4
Geographical distribution of banks as indicated by number and capital
4
Number, capital, and circulation of banks organized during the year
4
Changes during the year, as shown by the number and capital of banks the corporate existence
of which was extended and of those terminated
4
Number and capital of banks placed in charge of receivers
5
Comparison with 1894 of the number and capital of banks organized and liquidated for various
purposes
5
Summary of the condition of all national banks reporting at date of each call during 1893,1894,
and 1895
6, 7, 8
Analysis of the reports made in 1895
,
9
Comparison of the reports of 1895 with those of 1894
10
Comparison of the reports of 1893 with those of 1895
11
Earnings and dividends of national banks
11
Percentages of net earnings, losses, expenses, taxes, and gross earnings of national banks to
capital and surplus for the year ended September 1, 1895
12
State banks and banking associations
13
Principal items of resources and liabilities of State banks and banking associations in 1893,1894,
and 1895
14
Changes in the principal items of resources and liabilities in State banks and banking associations as compared with 1894 and 1893
14
Dividends paid by State banks
14
Principal items of resources and liabilities of savings banks and comparison with prior year 14,15
Deposits and depositors in savings banks
15
Principal items of resources and liabilities of State, savings, and private banks and loan and
trust companies
15
Condensed statement of principal items of resources and liabilities of national and other banks
15
Capital stock of national banks on July 11, and of all otter banks on or about that date
15
Aggregate banking funds of national and all other banks on or about June 1
15
Cash holdings by national banks on July 11, and of all other banks on or about the same date
15
Assets and liabilities of insolvent banks, other than national, in 1894 and 1895
16
Number and percentage of failures of national and other banks during the year
16
State and national banks in the State of New York
16
Withdrawals and receipts of national banks in New Yjrk
17
Insolvent national banks
17
Capital, assets, and liabilities of each national bank placed in the charge of receivers during
the year
18
Number, capital, assets, and liabilities of national banks in each State placed in the charge of
receivers during the year
19
Receiverships
19
Dividends paid to creditors of insolvent national banls during 1894 and 1895
19
Total number of national-bank receiverships during 1*94 and 1895
19
Total number of national-bank receiverships; numbe: closed and number still active
19
Assets and liabilities of insolvent national banks
19,20
Assessments levied on shareholders of insolvent national banks
20
Nominal assets of insolvent national banks
20
Bank receiverships other than national
20
Number, capital, assets, liabilities, dividends paid, and astimated amount of dividends to be paid
of insolvent banks other than national in each State
21
II
TABLE OF CONTENTS.
AMENDMENTS OF THE NATIONAL-BANK ACT RECOMMENDED :
Removal of officers and directors of national banks
Restrictions on loans by national banks to officers and employees
Authorizing assistant cashiers to sign circulating notes and reports of condition
Empowering some class of public officers to administer oaths
Requiring national-bank examiners to take an oath and execute a bond
Requiring directors of national banks to submit a special report of bank's condition
Authorizing national banking associations to issue circulation to the amount of the bond
deposit
Reducing the tax on circulating notes
Foreign banking systems
State banking systems
Conclusion
Page.
21
21
21
21
22
22
22
22
24
38
60
TABLE OF CONTENTS OF APPENDIX.
Page.
Foreign banking systems
63
State banking systems
m
National-bank act
171
Digest of national-bank decisions
227
Appendix tables:
No. 1. Salaries and personnel of tlie bureau
333
l a . Expenses of the bureau...
334
No. 2. Number of banks organized in liquidation, and number, capital, bonds, and circulation of associations in operation October 31
335
No. 3. Number of national banks organized, in voluntary liquidation, insolvent, and number
and capital of banks in operation on January 1, from 1864 to 1895
336
No. 4. Number of national banks ic operation, in liquidation, and insolvent, in each Stat©
and Territory, since the organization of the system
336
No. 5. Number of national banks organized, in operation, and number passed out of the system since 1863
337
No. 6. Number and capital of national banks organized, in liquidation, insolvent, and yearly
increase or decrease, annualy, 1863 to 1895
337
No. 7. Number and capital of national banks organized in each State during the last year.. 338
No. 8. Number and capital of nation*! banks extended in each State during the year
338
No. 9. Number, capital, and circulation of banks the corporate existence of which will
expire in each year from ] 896 to 1905
338
No. 10. Capital and circulation of associations the corporate existence of which expired
during the year, and of succeeding; associations
339
No. 11. Number, capital, and circulation of banks extended in each State during the year.. 339
No. 12. Capital and circulation of associations closed to business by voluntary liquidation
or otherwise, during the year
339
No. 13. Capital, bonds, and circulation of associations the corporate existence of which will
expire during the year ending Octcber 31, 1896
342
No. 14. Authorized capital stock of national banks on the first of each month from January
1, 1874, to November 1, 1895, bonds leposited, circulation secured by bonds, lawful
money on deposit, and circulation oitstanding
343
No. 15. Changes in capital, bonds, and circulation, by States and geographical divisions
347
No. 16. Decrease or increase of national-bank circulation on October 31, 1888, to October 31,
1895
352
No. 17. Circulation issued, lawful money deposited to retire circulation, from June 20, 1874,
to October 31, 1895, by States
353
No. 18. Circulation outstanding, lawful money on deposit to redeem circulation, and bonds
deposited to secure circulation, on October 31, 1894 and September 30,1895
354
No. 19. Profit on circulating notes during the past two years
355
No. 20. Quarterly increase or decrease of circulating notes from January 14, 1875, to October
31, 1895
356
No. 21. Amount, by denominations, of circulation issued, redeemed, and outstanding on
October 31, from 1864 to 1895
358
No. 22. National gold bank notes issued, redeemed, and outstanding, October 31,1895
361
TABLE OF CONTENTS.
Ill
Appendix tables—Continued.
Page.
No. 23. National-bank notes issued during the year and the total amount issued, redeemed,
and outstanding
361
No. 24. Additional circulation issued monthly on bonds, 1883 to 1895
361
No. 25. Number and amount of national-bank notes issued since the organization of the
system
362
No. 26. Vault account of national-bank notes received and issued during thejyear
362
No. 27. "Additional circulation" issued and retired by States during the year
363
No. 28. Monthly redemption of national-bank notes during the year
364
No. 29. Amount of national-bank notes destroyed yearly since establishment of the system. 364
No. 30. Vault account of national-bank notes received and destroyed during the year
365
No. 31. Tax on circulation, etc., for the year
365
No. 32. Taxes paid as semiannual duty on national-bank circulation, cost of redemption,
plates, examiners' fees, annually from 1883 to 1895
365
No. 33. Tax collected on capital, deposits, and circulation to June 30, 1895
365
No. 34. Capital and bonds of associations which do not issue circulation
365
No. 35. Specie and bank-note circulation of the United States from 1800 to 1859
366
No. 36. Coin and paper circulation of the United States from 1860 to 1895
367
No. 37. Bonds deposited as security for circulation and held for other purposes by national
banks on June 30, from 1865 to 1895
368
No. 38. Bonds deposited as security for circulation and amount held for other purposes by
national banks on October 31,1882, to 1895
369
No. 39. Interest-bearing bonded debt of the United States from 1865 to 1895
370
No. 40. Opening highest and lowest market price of United States registered bonds by
weeks during year ended October 31, 1895
371
No. 41. Investment value of United States bonds from 1885 to 1895
373
No. 42. Balances due to and from savings and State banks and loan and trust companies in
New York, and withdrawals and receipts as reported by national banks in that
State
374
No. 43. Capital, United States bonds held, and minimum required on September 28, 1895;
excess of bonds held on September 28, 1895, and October 2, 1894
376
No. 44. Number and capital of national banks in each State and reserve city and Territory
with capital of $150,000 and under, 1894 and 1895
378
No. 45. Number and capital of national banks in each State and Territory with capital
exceeding $150,000, 1894 and 1895
380
No. 46. Condensed statement of resources and liabilities of national banks from 1864 to 1895. 382
No. 47. Abstract of reports of national banks in New Toik City, the central reserve cities,
etc., on September 28, 1895
384
No. 48. Highest and lowest points reached in the principal items of the resources and liabilities of the national banks during the existence jf the system
385
No. 49. Percentage of loans, United States bonds, and specie to the aggregate funds of the
national banks, 1866 and 1887 to 1895
385
No. 50. Classification of loans made by national bants on five dates
385
No. 51. Classification of loans by national banks in New York City in the last ten years
387
No. 52. Classification of loans and discounts made by national banks in each reserve city,
State, and Territory on September 28,1895
388
No. 53. Coin and coin certificates held by national bcnks in each State on September 28,1895. 390
No. 54. Coin and coin certificates held by national banks in each State on or about October
1, 1891, to 1895
392
No. 55. Deposits and classification of reserve held by national banks on or about October 1,
1874, to 1895
394
No. 56. Lawful-money reserve of national banks oi September 28,1895
396
No. 57. Deposits and reserve required and held by lational banks at date of each report from
December 19, 1894, to September 28, 1895
398
No. 58. Net deposits and reserve required and held by national banks on three dates in each
of the past six years
399
No. 59. Net deposits and reserve required and heH by national banks at date of each report
from September 30, 1889, to September 23, 1895
402
No. 60. Lawful-money reserve required and helc by national banks in each geographical
division from March 1, 1886, to September 28, 1895
404
No. 61. Weekly deposits, circulation, and reserve of the national banks in New York City,
1889 to 1895
414
No. 62. Classification of the reserve held by national banks in New York during October for
the past sixteen years
415
No. 63. Earnings and dividends of national bants, by States, etc., from September 1,1894, to
September 1, 1895
416
IV
TABLE OF CONTENTS.
Appendix tables—Continued.
Page.
No. 64. Ratios to capital and to capital and surplus of the earnings and dividends of national
banks by States, etc., March 1, 1891, to September 1, 1895
424
No. 65. Earnings and dividends of national banks arranged by geographical divisions, from
September, 1886, to September, 1895
426
No. 66. Capital, surplus, dividends, and earnings of national banks annually, from 1870 to
1895
428
Nos. 67,68,69, and 70. National banks, dates of liquidation, capital, and circulation, issued,
retired, and outstanding, which have gone into voluntary liquidation under the
various provisions of the Revised Statutes
429
No. 71. National banks which have been placed in the hands of receivers, capital and surplus at date of organization and date of failure, cause of failure, dividends paid
while solvent, circulation issued, lawful money deposited to redeem circulation,
the amount redeemed and the amount outstanding on October 31, 1895
448
No. 72. Insolvent national banks, dates of organization, appointment of receiver and closing,
nominal and additional assets, collections from all sonrces, loans paid and other
disbursements, loss on assets, expenses of receivership, claims proved, dividends
paid, and assets returned to stockholders
462
No. 73. National banks which failed during the year, with their capital, surplus, and other
liabilities
480
No. 74. National-bank receiverships in an inactive condition
481
No. 75. Insolvent national bank, the affairs of which were closed during the year
481
No. 76. Dividends paid to creditors of insolvent national banks during the year, etc
482
No. 77. Transactions of the Nev York Clearing House for the years ended on October 31,
1894 and 1895
484
No. 78. Transactions of the New York Clearing House for forty-two years
485
No. 79. Clearing-house transactions of the assistant treasurer United States, New York, for
the year
485
No. 80. Exchanges of the clearing houses of the United States for the month of October,
1894 and 1895
486
No. 81. Exchanges of the clearing houses of the United States for the weeks ended October
26, 1895, and October 27, 1*94
487
No. 82. Exchanges of the clearing bouses of the United States for the years ended September 30, 1895 and 1894
488
Abstract of reports of condition of the State banks, loan and trust companies, savings and private banks, 1894 and 1895
489
Number, assets, and liabilities of banks other than national which failed during the year in
each State
515
Abstract of the resources and liabilities of the loan and trust companies in the District of
Columbia on September 28, 1895!
516
Summary of the condition of the Canadian banks on August 31, 1895
517
Aggregate resources and liabilities of the national banks from October, 1863, to October, 1895... 519
Summary of the State and condition of ^he national banks at date of each report since October 2, 1894, arranged by States and Territories and reserve cities
543
Insolvent national banks which have beenfinallyclosed
603
Index to the text of the report
613
Index to the appendix
619
ADDENDA.
Page 37, under Costa Rica, for "100,000 and 150,000 pesos," read "1,000,000 and 1,500,000 pesos,"
respectively.
Page 38 for "British Columbia" read " Unitet States of Columbia."
REPORT
OP
THE COMPTROLLER OF THE CURRENCY.
TREASURY DEPARTMENT,
OFFICE OF THE COMPTROLLER OF THE CURRENCY,
Washington, December 2, 1895.
SIR : I have the honor, pursuant to law, to herewith submit for the
consideration of Congress the report of the Comptroller of the Currency
for the year ended October 31? 1895, constituting the thirty-third made
since the creation of the Bureau. In accordance with the provisions of
the act prescribing the duties of the Comptroller it exhibits:
First. A summary of the state and condition of every association
from which reports have been received during the preceding year,
with an abstract of the whole amount of banking capital returned by
them, the amount of their debts and liabilities, the amount of their
circulating notes outstanding, their total resources, and the amount of
lawful money held by them at the time of the several calls made upon
them during the year, together with such other information as is deemed
necessary and useful to be given.
Second. A statement exhibiting, under appropriate heads, the
resources, liabilities, and condition of the banks, banking companies,
and savings banks organized under the laws of the several States and
Territories.
Third. A statement of the associations whose business has been closed
during the year, with the amount of their circulation redeemed and
outstanding.
Fourth. Suggested amendments to the law by which it is believed
the system may be improved.
In addition thereto it has been deemed advisable to incorporate the
result of inquiries undertaken under the auspices of this office, showing
briefly the various systems of banking in operation in foreign countries and in the States and Territories comprising the Union. The
information thus obtained, though, in a number of instances, incomplete and imperfect, will be of benefit in a measure, at least, in giving
a better knowledge of the different methods employed to facilitate commercial exchanges and sustain a bank-note circulation.
The records of this office show that from the date of the granting of
the first certificate of authority on June 20, 1863, to the close of the
year embraced in this report the total number of national banks organized has been 5,0.23, making an average for each year of 152. Of this
total number there were in active operation on October 31 last 3,715?
3
4
REPORT OF THE COMPTROLLER OF THE CURRENCY.
having an authorized capital stock of $064,136,915, represented by
285,11)0 shareholders, making for each bank in the system an average
capital stock of $178,772, the number of shares to each 2,136, and shareholders 77. The total amount of their circulating notes outstanding
was $213,887,030. Of this amount $190,180,901 was secured by United
States bonds and $23,706,609 by lawful money deposited with the
Treasurer of the United States.
The net increase in the amount of circulation secured by bonds during the year was $10,779,597, and the gross increase in the total circulation $6,322,540.
On September 28,1895, the date of their last report of condition, the
total resources of the 3,712 banks then reporting was $3,423,629,343.03.
of which $2,059,408,402.27 represented their loans and discounts and
$356,577,580.61 money of all kinds in bank.
Of their liabilities, $1,701,653,521.28 represented individual deposits.
$336,888,350.86 surplus and net undivided profits, and $182,481,610.50
outstanding circulating notes secured by bonds.
In geographical divisions the 3,715 banks in active operation arc
divided as follows: Two thousand nine hundred and one, with a capi
tal stock of $536,725,832, in the northern and northwestern half of the
country, and 814, with a capital stock of $126,848,950, in the South and
Southwest.
East of the Mississippi Eiver 2,611 national banks are located, with
a capital stock of $527,612,792, while 1,104, with a capital stock of
$135,961,990, are west of it.
In point of number of active banks Pennsylvania, New York, Massachusetts, Ohio, Illinois, and Texas lead, with 412,334,268, 248,220, and
214 respectively. Arranged according to capital stock, Massachusetts
is first, with $97,017,500; New York second, with $87,136,060; Penn
sylvania third, with $74,233,129; followed by Ohio, with $45,645,338:
Illinois, $38,696,000, and Texas, $22,523,090.
There were organized during the report year 43 banks, located in
20 different States, with an aggregate capital stock of $4,890,000. Oi
this number 8 were in Pennsylvania, 5 each in New York and Texas,
and 3 each in Illinois and Iowa. The number located east of the Mis
sissippi Eiver was 24, aggregating in capital stock $2,310,000, and west
of it 19, whose combined capital stock was $2,580,000. The State of
Missouri is first in amount of capital stock represented by new banks,
having $1,400,000; Pennsylvania has $800,000, Ohio $550,000, New
York $400,000, and Texas $350,000.
There are 28 of these banks, with a capital stock of $2,530,000, in the
northern and northwestern section of the country, and 15, with a capi
tal stock of $2,360,000, in the South and Southwest.
The number of banks organized was less than 30 per cent of the
yearly average.
The corporate existence of 71 national banks in 16 States, with a
capital stock of $10,662,000 and a total circulation of $3,226,275, has
been extended during the year. Pennsylvania has 21; Massachusetts,
14; Maine and Vermont, 5 each; with 4 each in New York and New
Jersey. Of the total capital of such banks, that in Massachusetts
aggregates $3,280,000; in Pennsylvania, $2,882,000; Maine, $875,000:
Vermont, $725,000.
Under the act of July 12,1882, providing for the extension of national
banks, the corporate existence of 1,607 banks, representing an aggregate capital stock of $400,193,315, has been extended. Of these, New
York has 232, with a capital stock of $73,497,460; Massachusetts 227.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
5
with a capital stock of $92,492,200; Pennsylvania 199, with a capital
stock of $53,086,000, followed by Ohio, with 111 and aggregated capital
of $17,879,000.
The number of banks leaving the system by reason of the expiration
of their corporate existence was 4, having a capital stock of $300,000
and a circulation of $123,700. Two of these were located in New York,
1 in Maine, and 1 in Pennsylvania. A new association, with a capital
stock of $50,000 and circulation of $22,500, succeeded to 1 of the 2 in
New York.
Dining the year ending October 31, 1896, the corporate existence of
28 banks, with a capital stock aggregating $3,453,800 and circulation
of $1,310,400, will expire. They are located in 17 States, 5 of them
being in Pennsylvania and 3 each in Illinois, New Jersey, and North
Carolina. In the succeeding ten years, from 1896 to 1905, the corporate
existence of 889 banks, having a capital stock of $129,694,950 and a
circulation of $34,011,887, will expire.
The number of banks leaving the system during the year through
voluntary liquidation was 51, having a capital stock of $6,093,100 and
circulation of $1,152,000.
It has been found necessary to appoint receivers for 36 banks during
the year. Their aggregate capital stock was $5,235,020 and circulation
$1,003,402. Of this number 2, with a capital stock of $450,000, were
reported last year as being in voluntary liquidation, and 9, with a
capital stock of $2,750,000, were of the number of banks which closed
their doors in 1893 and subsequently resumed business, but through
continued business depression and the slow character of their assets
were unable to meet their obligations, and were thus compelled to go
into insolvency.
A comparison of the data of this year with that set forth in the report
of this Bureau for the year 1894 shows the number of active banks to
have decreased 41, with a corresponding decrease in capital stock of
$6,438,120. The number of banks organized is 7 less and the number
going into voluntary liquidation 28 less. There has been an increase
of 15 in the number of receivers appointed and an increase of 30 in the
number of extensions of corporate existence granted. The loss through
expiration of charters decreased 2 and the number of banks organized
to succeed expiring associations decreased 4.
The following abstracts of the reports made by the banks in response
to the five calls required by law indicate the changes which have characterized the status of the banks at different periods covered by this
report. In addition thereto are given abstracts of the reports of 1894
and 1893 for purposes of comparison. Those of 1893 are given as
showing the extreme conditions of the year of greatest financial depression and serious banking loss.
G
REPORT OF THE COMPTROLLER OF THE CURRENCY.
SUMMARY OF THE STATE AND CONDITION OF EVERY NATIONAL BANK REPORTING
DURING THE YEAR ENDED SEPTEMBER 28, 1895.
D e c 19, 1894.
Mar. 5, 1895.
M a y 7,1895.
J u l y 11, 1895.
3,73 7 banks.
3,728 banks.
3,711 banks.
3,715 banks.
Sept.
28, 1895.
3,712 b a n k s .
KESOUItCES.
Loans and discounts. $1,991 913,123. 45 #1,965,375,308. 9i|$l,989,4U 201. 90'$2,01G,639,535. 53,82,059,408,402. 27
17. S. bonds to secure
circulation
195, 735,950.00 195,787,200.00, 203, 648,150.00i 200,227,150.00 208,082,765.00
U. S. bonds to .secure
deposits
20, 405, 350. OO: 28. 615, 550. 00J 15,878,000.00
15,323,000.00
15, 051, 000. 00
U. S. bonds on hand..
17, 734, 200. 00J 14, 465, 400. 001 10, 790, 350. 00
20, 700, 350. 00; 25,115, 540. 00;
Premiums on U. S.
bonds
10,469,109.73
10, 130,000.09!
10,511,917.36
17,451,432.71]
16,440,418.57
Stocks, securities,etc 197, 328,354.09; 196,927,758.03 193,841.727.63 19-1,160,466.61 195, 028, 085. 35
Banking house, furniture, and fixtures
400, 970. 70J 77,075,488.01
77,340,348.27!
77,856,597.68
78,244,849.75
Other real estate and,
258,812.77,
mortgages owned..
24,193,994.18;
21,
674,154.
09
j
25,
082,
548.
41
j
25,527,027.04
23,
Due from national
banks (not reserve
j
agents)
124, 798,322.39: 114, 702, 531. 22 117, 720, 533.90 127,329,742.98 123,521,087.26 .
Due from State banks
31,089,231.72
30,830,482.60
and bankers
30, 248, 003. C8
30, 902,557.31
29, 273, 68S.
i
00
Due from approved
reserve agents
234. 331,340.54: 222, 407, 685. 14 218, 799, 491. 90 235, 30S, 761.15| 222, 287, 251. 45
Checks and other
cash items
12, 557, 910. 30
13.598.841.41j
13,056,424.53
13, 05J.055.461
12, 424, 519 77
Exchanges for clearI
83
ing house
972
82,868,297.07!
57,506,787.60
77,
343,!
17
833,
118.09
80,
S69, 202. 29:
Bills of other nai
19 247 043.GO
tional banks
18, 436.;815 00
18,
19, 402,179. 00!
15, 537,100. 00
522, 590. 00
Fractional p a p e r
currency, nickels,
936, 484. 44
and rents
885,072.59'
1,002, 373. 06!
1,007,760.10.
1,023,441.43
Gold coin
123, 258, 436. 89! 117,476,837.32 110, 378, 360. 22
114,:
:> 898, 047. 13; 120, 855, 575. 38
Gold Treasury certificates
29,677,720.00!
25,400,860.00!
23,182,950.00!
22,425,600. CO! 21,525,930.00
Gold clearing-house
30, 823, 000. 00: 31, 315, 000. 00; 31,021,000.00
219, 000. 00! 31,904, 009. 00
certificates
5, 505, 459. 00
7, 245, 537. 00J
7, 248, 059.00)
954, 778. 00;
7, 203, 610. 00]
Silver dollars
Silver Treasury cer22,914,180.00
29, 743, 446. 001 29, 550. 637. 00! 28, 519, 277. 00! 30,127,457.00
tificates
.
4, 892, 381. 95
5, 956, 9.~>0. 18!
5, 617, .'398. 9l|
5,834,241.11
Silver fraction al coin.
5, 548, 231. 02
93, 940, 685. 00
Legal-tender notes.. 119, 513, 472. 00: 113,281, 0 2 2 . 00i 118, 529, 158. CO; 123,185.172. 00
TCS. certificates of
deposit for legal', 090 000. 00'
31, G55, 000.00;
20. 930 000. 00'. 45, 330, 000.00! 49, 920, 000. 00
tender notes. „
Five per cent reI
d e m p t i o n fund
542, 386. 94:
8, 748, 23D. 53
9, 094, 047. 82!
9, 085, 606. OS
with Treasurer
8. 527, 580. 65
Due from U.S.TreasI
j
1,080,461.66
urer
289, 077.14:
1,017,832.04!
1,146.281.471
1,285,534.36
Total
3, 423, 474, 873.11 3, 378, 520, 536. 75 3, 410, 002, 491. 24 3, 470, 553, 307. 28 3, 423, 629, 343. 63
LIABILITIES.
Capital stock paid in. C66, 271, 045. 00, 662,1U0,100. 00 053,14('», 756. 00j
Surplus fund
244,937,179.48. 2-16,180,005.97, 240,740,237.34
Undivided profits,
less expenses and
taxes paid
95, 887, 430. 80, 83, 920, 338. 80. 80, 571, 194. 99;
National-bank notes
outstanding
169, 337, 071. 00, 163, 755, 091.50* 175. 653, 500. 50!
State-banknotes outI
60, 200. 50;
standing
66, 173. 50;
66, 144. 50
Due to other national
334,619,221.24' 314, 430, 137.22 313, 314, 314. 80
banks
Due to State banks
180, 345, 566. 56: 180, 970, 705. 84 180, 360, 713.93J
and hankers
1,130, 300. 38|
Dividends u n p a i d . . . j
1,287, 568. 67;
2, 387, 221.94!
Individual deposits.. 1, 695, 489. 346. 08|l , 607, 843,286.28 1, 600,96], 299.0311
195.79
U . S . deposits
I 10, 151,402.66
24, 563,
23, 501, 952. 80
Deposits of U . S . dis3, 745, 923. 09
bursing officers
3 865, 339. 58
3,491,787.60
Notes and bills re- |
1
682,
509.
06
6,
853,
317.
73
8, 944, 917. 94
discounted..
)
7,
13, 645, 026.23
13, 603, 610. 99
Bills payable
| 11, 471, 551. 05
Liabilities other thanj
those above stated. I
2, 220,523,72
3,413,741.62|
5,004,703.39
Total
058, 224,179. 05; 657,135, 49S. 65
247,782,176.23! 246,448,426.38
221 980. 54
90, 439. 924. 48
;, 815, 801.00
182,481, 610. 50
66, 133. 50!
336,!
66, 133.50
956. 521 320,228, 677. 38
190, 447, 130. 70 174, 708, 672.
1, 670. 927.
3, 033, 371.57
736, 022, 000.83J1, 701, 653, 521.
9,114 372.
10, 075, 924. 97
3, 091, 408. 55
88
89
28
65
4, 426, 906, 48
697, 555. 94
13, 396, 107. 85
17, 813, 360. 01
671. 25
250,
3,
030.03
4, 045,143. 70
602,
3, 423, 474, 873. 11J3, 378, 520, 536. 753, 410, 002, 491. 24 3,470,
307. 28 3,423, 629, 343. 63
553,
REPORT OF THE COMPTROLLER OF THE CURRENCY.
7
SUMMARY OF THE STATE AND CONDITION OF EVERY NATIONAL BANK REPORTING
DURING THE YEAR ENDED OCTOBER 2, 1894.
RESOURCES.
Dec. 19,1893.
Feb. 28,1894.
May 4,1894.
J u l y IS, 1894. !
3,787 b a n k s .
3,777 b a n k s .
3,774 b a n k s .
3,770 b a n k s .
|
Oct. 2,1894.
3,755 b a n k s .
I
96;$1,926,686,824.98 $1,944,441,315.10 ; $2,007,122,191. 30
Loans and discounts. $1,871,574, 709. 95J$1,872,402
If. S. bonds to secure
00 200,469,250.00! 201,335,150.00
199,642,500.00
circulation
00!
200,808,
204, 809, 350
U. S. bonds to secure
00i
14,
720,
000.
00
14,
920,
000.
00
15. 226, 000. 00
00
14,445,
U. S. deposits
14, 430,
00
14, 805, 200. 00
12, 875,100. 00
10, 662, 200. 00
V. S. bonds on h a n d . .
00
17,250,
3, 049,
Premiums on U. S.
15,, GOO,, 780.13jj 15,133,458.23
14,930,890.78
14, G24, 279. 03
bonds
13, 800, 4/3 .18
, ,
74 305,552. 50! 185,
185 324, 549.
549 07
Stocks, securities, etc. 159, 749, 363. 92 174,
07 191,137, 435. 00 193, 300, 072.44
Banking house, furniture, and fixtures
74,143, 833.
74, 802, 950. 73
74, 929, 982. 52;
75,183, 745. 64
73, G42,
Other real estate and
20,145, 599.
21, 877, 508. 22
mortgages owned..
21,174, 855.07
22, 708, 391. 20
18, 079,
Duo from national
banks (not reserve
agents)
75! 112,072,823.41! 119,303,798.52' 111, 775,552.18j 122,479,067.98
108, 205,
Due from Statebanks
C4i
27,335,317.15
29,028.495.01 :
27,003,816.38
27,973,911.86
and bankers
28, 682,
Duo from approved
i
t
reserve agents
212 030,
Checks and other
30! 240,891,920.031 257,854,100.32 258,089,227.51! 248,849,007.59
cash items
13, 519,
Exchanges for clear51
12,033.797.31
12,549,014.34
11,805,939.23
15,570,975.25
inghouse
71, 943,
Bills of other na75;
70,299,053.02;
70,002,055.47!
6(5,511,835.77;
88,524,052.17
tional banks
21, 497,
Fractional
paper
00;
19,800,010. OOj 20,734,988.001
19,050,333.00
18,580,577.00
currency, nickels,
and cents
1, 041, 030. 44
952, 932. 95
791
1,014,037.51
1,061,
98S.
124, 904,
Gold coin
143 , 928,
09| 128,180,158.
1 2 8 1 8 0 1 5 8 30
125, 051, 077.14 123, 020, 290. 92
Gold Treasury cer41, 928, 330. 00
tificates . . . . ' .
44, 877,100. 00;
41, 516,110.
40, 500,490. 00!
37, 810, 940. 00
Gold clearing-house
32, 705,
34,721,000.00;
14., 702,
certificates
34, 023, 000. OOj 34, 090, 000. 00
7, 741,
7, 489, 931. 00
, 530,
Silver dollars
Silver Treasury cer7, 010, 489. 00!
0,116, 354. 00
41, 580, 054. 00! 38, 075, 412. 00
34, 77G,
23, 784, 897. 00
43,181.
00!
tificates
25i
6, 041, 850.15!
5, 943. 584.19
0, 058,
Silver fractional coin
5, 439,
5, 422,172. 58
142, 70S,
001 140,131, 292. 00; 138, 216, 318. 00 120, 544, 028. 00
Legal-tender n o t e s . . 131, 620,
U. JS. certificates of
deposit for legal50, 045, 000. 00|
45.100, 000. 00
46, 030, 000. 00:
31, 255, 000. 00!
35, 045, 000, OOj
tender not G s
Five per cent rei
demption
fund
8, 713, 498. 44 J 8, 791, 940. 90
!, 876,
25;
8,751,, 434. 40j
8, 723, 223.1G
with Treasurer
D tie from U.S. Treas!, 029,
92
2,132, !
09
2, 301, 480.28;
1,920,783.311
8G7, 045. 20
urer......
Total
S3, 242, 315, 326. 70(3, 324, 734, 901. 89J3, 433, 342, 378. 083, 422, 090,423. 33 3, 473, 922, 055. 27
LIABILITIES.
Capital stock paid i n . 081,812,900. OOj
Surplus fund
246,739,602.09!
Und i vid e d
profits,
less expenses and
100, 288, 008. 05|
t a x e s paid
National-bank notes
179, 973, 150. 50'
outstanding
State-bank notes out75, 059. 50!
standing
Duo to other national
298, 805, 834. 50
banks
D u e to State b a n k s
151, 313, 715.25!
an d b a n k e r s
Dividends u n p a i d . . .
1, 217, 903. 991
Individual d e p o s i t s . . , 539, 399, 795. 23 1
U. S. deposits
10, 391, 460. 00!
Deposits of U. S. dis3, 4G9, 398. 77
bursin g oiTi cers
Notes a n d bills re11, 405, 546.18
discounted
14, 388, 362. 94i
Bills payable
Liabilities other t h a n
2, 973, 863. 64
those above s t a t e d .
Total
678, 536, 910. 00| 675,868,815.00!
240,594,715. 961 246, 314,185. C3;
80, 874, 385.
80, 394, 202.20
671,091,165.00
245, 727, 673.7l!
668,861,847.00
245,197,517.00
84, 5G9, 294. 40;
88, 023, 564. 50
I
174, 430, 289. 10| 172, 020,
171,714. 552. 50! 172, 331, 978. 00
!
013. 50:
CO, 290. 50|
71, 483. 50
CO, 290. 50
71,
I
480. 50
343,143, 745. 59 359, 539,
352, 002, 081.10J
343, 692, 316. 03
488. 04
173, 942. 000. 98 182, 937,
307.10 i 181, 791, 900. 23- 183,107, 779. 02
1, 530, 354. 03!
2, 332. 506. 97!
2, 586, 504. 77j
2. 570, 245. 95
580, 800,444. 501, 070, 958, 709. 071 ,677,801, 200.85(1, 728,418,819.12
0, 925, 967. 44
10,538, 305. 04)
11,029, 017. 291
10, 024, 909. 02
3, 643, 346. 71
3, 317, 341. 85!
3, 099. 504,08i
3, 710. 537.8
7, 729,558.
9, 234, 205.
7, 905, 541.10
9, 224, 404. 78
8, 195, 566.99
9,909, 098.81
11. 453,427.95
12J 552, 277.78
2,265,513.731
70
2,313,830.70
2,422,507.04
2,938,543.20
3, 242, 315, 326. 70 3, 324, 734, 901.89J3, 433, 342, 378. 08!3,422, 030, 423. 33J3, 473, 922, 055. 27
8
REPORT OF THE COMPTROLLER OF THE CURRENCY.
SUMMARY OF THE STATE AND CONDITION OF EVERY NATIONAL BANK
DURING THE YEAR ENDED OCTOBER 3, 1893.
REPORTING
Dec. 9, 1892.
Mar. 0, 1893.
M a y 4,1S93.
J u l y 12, 1893.
Oct. 3,1893.
3,784 banks.
3,80G banks.
3,830 b a n k s .
3,807 b a n k s .
3,781 b a n k s .
RESOURCES.
Loans and discounts. $2,166,015,720.28$: 1,159,614,092.48 $2,161,401 858 $2,020,483,671.04 $1,843,634,167
U. S. bonds to secun
circulation
166, 449, 250. 00 170, 096, 550.
172,412,550.
176, 588, 050. 00 206, 463; 850.
U. S. bonds to secure
deposits
15,351,000.
15,321,000.00
14, 816, 000.
15, 201,C
15, 250, 000. 00
,000.
TJ. S. bonds on hand..
3, 078, 050. 00
2, 760, 950.
3, 519,,550.
E
4, 372, 600.
4,148, GOU. 00
Stocks, securities, etc
149, 690, 701. 61! 148, 569, 950.
150, 747, 802,
Due from approved
153, 648,180. 71 153, 420, 770.
reserve agents
174,312,119.
159, 352, 677. 33 158,499,644.
Due irora other na204, 948,159. 79 202, 612, 051.
tional banks
121, 673, 794.
I l l , 956, 506.
94, 740, 014.
Due from S t a t e
142, 623,106. 36' 124, 384, 884.
banks and bankers.
32, 681,
24, 229,106.
27, 211, 234.
Banking house, fur34, 403, 231. 75| 30,126, 3C0.
niture, and fixtures
72, 322, 826.
73, 386, 921.
72, 750,830.
Other real estate and
72, 294, 364. 78 72, 680, 344.
16, 828, 949.
mortgages owned..
16, 646, 853.
16, 632,446.
C u r r e n t expenses
15, 926, 687. 47 17, 030, 064.
11,071,996.
and taxes paid
11, 746, 470.
4, 892, 772,
Premiums on TJ. S.
14, 204, 970. 25, 10, 992, 932.
13, 981, 867.
bonds
11, 933, 004.
12, 935, 077.
I 13,270,691.
Checks and other
13, 913, 289. 7l!
15, 359, 764.
16, 707, 680.
cash items
17, 546, 973.
18, 755, 010.
16, 755, 332.09'
Exchanges for clearI
106,181, 394.
ing house
114,977, 271.
107, 765, 890.
125,142, 839.
Bills of other na110,522,668.49
22, 402, 611.
tional banks
20, 085, 688.
20,135, 054.
18, 248, 7CG.
Fraction al currency,
20,488,781.00
945, 532.
nickels, and cents.
1, 026, 813.
952, 810. {
952, 632.
893,909.82
99, 857, 235.
G old coin
101,006, 531. £
95, 799, 801.
129, 740, 438.
94, 754, 328.05
Gold Treasury cer69,198, 790. 00
tificates
50, 550,100. 00
62, 783, 410. 00
47, 522, 510. 00
73,118, 480. 00
Gold clearing-house
4, 939, 000.
6, 237, 000. 00
5, 073, 000.
4.285,000.
5, 080, 000.
certificates
7, 212, 800.
7, 380, 457.
7, G15, 574.
7, 965, 844.
Silver coin, dollars..
7, 593, 084. 00
Silver Treasury cer21,695,114.00
22, 550, 689. 00
24, 603, 511. 00
22, 626,180. 00
28, 385, 889. 00
tificates
Silver coin, frac5, 438, 877.
5, 635, 679. 71
6,140,115.
6,119,574.
6, 009,178. 8Q
tional
90, 935, 774.
114, 709, 352. O.i
103,511,163.
95, 833, 677.
Legal-tender notes.. 102, 276. 335. 00
U. S. certificates of
14, 075, 000.
6, 470, 000. 00
6, 660, 000.
12,130, 000. 00
7, 020, 000. 0'.)
deposit
Five per cent re7,282,413.90
7, 401, 830.
7, 600, G04.
8, 977, 414.18
demption fund
7, 467, 989.
Due from Treasurer,
other than 5 per
1, 322, 444. 60
1, 268,405. 03
1,019,074.42
1, 550, 891. 28
1, 262, 749. 85
cent fund
Total.
3, 480, 349, 667.19 3, 459, 721, 235. 78 3, 432,170, 697. 25 3, 213, 261, 731. 94 3,109, 563, 284. 36
LIABILITIES.
685,
718.50 678, 540, 338. 93
Capital stock paid in. 689, 698, 017. 50 688, 642, 876. 00; 088, 701, 200.
239, 931, 932. 08] 245, 478, 362. 77; 246, 139,133.
249,
300. 30 246, 750, 781. 32
Surplus fund
93,
Undivided profits . . . 114, 603, 884. 52' 103, 067, 550.15 106, 966, 733.
G49. 73 103, 474, 662. 87
National-bank notes
145,669, 499.00: 149,124,818. 00 151,694,110.00 155, 070, 821. 50 182, 959, 725. 90
outstanding
State-bank notes out75, 075. 50
74,176.50
75,075.
072.50
75, 069. 50
standing
1, 308,137. 97
1, 350, 392.19
673. 50
2, 874, 697. 5!)
579, 556.
Dividends u n p a i d . . .
3,
230.17 1, 451,124, 330. 55
930, 817.
Individual deposits. 1,764,456,177.11 1, 751,439, 374.14 1,
,556,
842. 66
10, 546, 135. 51
762.17
657, 243.
9, 673, 349. 92
U. S. deposits
10,
9-, 813,
Deposits of U. S. dis760.44
271.84
3, 776, 438. 21
4, 034, 240. 37
4,:, 293, 739.
bursing officers
3,
3, 927,
D ue to other national
336. 62 27; ., 127, 229.
573. 51 226,423, 979. 00
banks
- 323, 339, 449.03
238,
304, 785,
Due to State banks
054. 78 153, 500,923.
422.16 122,891, 098.21
160, 778,117.18
125,
and bankers
166, 901,
Notes and bills ro14,021, 596. 43
438. 56
21, 066, 737. 01
15,775,618.
953, 306.
29,
discounted
18,180, 228. 71
451. 27
27, 426, 937. 54
9, 318, 249. 82j
50G, 247.
Bills payable
31,
265.68
31, 632, 352.16
2,
913,
047.
88
1,
688,
817.
56
051,
379.
Other liabilities
28,
Aggregate
3, 480, 349, 667.19,3, 459,721, 235. 78 3, 432,176, 697. 25 3, 213, 261, 731. 943,109, 563, 284. 36
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ANALYSIS OF REPORTS OF 1895.
Aii analysis of the reports of condition submitted during the year
shows at each date a greater or less change from the preceding one in
each item constituting the same.
Individual deposits declined from $1,728,418,819 on October 2, 1894,
to $1,667,843,286 on March 5, 1895; rose to $1,736,022,006 on July 11,
and declined on September 28 to $1,701,653,521. The number of banks
holding these deposits on October 2, 1894, was 3,755, with a capital
stock of $668,861,847, and on September 28, 1895, 8,712, with a capital
stock of $657,135,498.
On October 2, 1894, the surplus fund was $245,197,517 and net
undivided profits $88,923,564, which items had on September 28,1895,
increased to $246,448,426 surplus fund and $90,439,924 net undivided
profits.
National-bank notes outstanding, secured by bonds deposited, on
October 2, 1894, were $172,331,978, which decreased to $169,337,071 on
December 19, 1894, and afterward gradually increased until September 28, 1895, when the amount was $182,481,610.
The amount due to other national banks on October 2, 1894, was
$343,692,316, and gradually decreased to $313,314,314 on May 7, 1895;
increased to $336,225,956 on July 11, 1895, and again decreased t(
$320,228,677 on September 28, 1895.
The amount due to State banks and bankers, which on October 2.
1894, was $183,167,779, decreased to $180,360,713 on May 7, 1895, then
increased to $190,447,130 on July 11, 1895, and on September 28, 1895,
decreased to $174,708,672.
Liabilities for money borrowed in different forms, which on October
2, 1894, aggregated $26,944,248, declined on December 19, 1894, to
$21,374,583; afterward increased to $27,553,232 on May 7, 1895,
decreased on July 11, 1895, to $25,550,257, and again increased on Sep
tember 28, 1895, to $35,254,611.
The total liabilities, which on October 2, 1894, were $3,473,922,055.
decreased on March 5, 1895, to $3,378,520,536; afterward increased tc
$3,470,553,307 on July 11, and on September 28 had again decreased to
$3,423,629,343.
On the side of resources, the loans and discounts, which on October 2, 1894, amounted to $2,007,122,191, decreased to $1,965,375,368 on
March 5, 1895, and afterward steadily increased to $2,059,408,402 on
September 28, 1895, an amount about $52,000,000 greater than the
aggregate of loans and discounts on October 2, 1894.
United States bonds to secure circulation on October 2, 1894, were
$199,642,500; decreased on December 19, 1894, to $195,735,950, after
which the amount gradually increased to $208,082,765 on September
28,1895.
United States bonds other than those securing circulation held by
the banks amounted on October 2, 1894, to $25,888,200; increased to
$51,520,890 on March 5, 1895, after which date the amount gradually
decreased to $26,118,350 on September 28, 1895.
The amount invested in stocks, securities, etc., which on October 2.
1894, was $193,300,072, increased on December 19,1894, to $197,328,354;
decreased by May 7, 1895, to $193,841,727, and afterward slightly
increased again to $195,028,085 on September 28, 1895.
10
REPORT OF THE COMPTROLLER OF THE CURRENCY.
The amount invested in banking house, furniture, and fixtures, which
on October 2, 1894, was $75,183,745, gradually increased to $78,244,849
on September 28,1895.
The amount of other real estate and mortgages owned on October 2,
1894, was $22,708,391, and gradually increased until on September 28,
1895, it was $25,527,027.
The amount due from other national banks (not reserve agents) on
October 2, 1894, was $122,479,067; increased on December 19, 1894,
to $124,798,322; decreased on March 5, 1895, to $114,702,531; then
increased on July 11, 1895, to $127,329,742, and afterward decreased
to $123,521,087 on September 28, 1895.
The amount due from State banks and bankers on October 2, 1894,
was $27,973,911, after which it slightly increased and, with slight variations during 1895, stood at $30,830,482 on September 28, 1895.
The amount due from approved reserve agents, which on October
2, 1894, was $248,849,607, gradually decreased on May 7, 1895, to
$218,799,491; increased on July 11 to $235,308,761, and afterward
decreased on September 28, 1895, to ¥222,287,251.
Exchanges for clearing house, which on October 2,1894, amounted to
$38,524,052, decreased to $77,343,972 on March 5, 1895, then increased
to $83,833,118 on May 7, stood at $82,868,297 on July 11, and decreased
on September 28, to $57,506,787.
The specie held by the banks on October 2, 1894, was $237,250,654.
On December 19,1894, it decreased to $218,041,222. It then increased on
March 5, 1895, to $220,931,641, but gradually decreased to $214,427,194
on July 11, and by September 28 had further decreased to $196,237,311,
the smallest amount held at any report date since July 12, 1893, when
the amount was $186,761,173.
The amount of legal-tender notes and United States certificates of
deposit for such notes on October 2, 1894, aggregated $165,644,028,
gradually decreased to $144,936,622 on March 5, 1895, then gradually
increased to $108,515,172 on July 11, 1895, but by September 28 had
again decreased to $143,866,685. In other words, the lawful-money
reserve held by the banks, composed of specie, legal-tender notes, and
United States certificates of deposit for legal-tender notes, which
on October 2, 1894, was $402,894,682, decreased on May 7, 1895, to
$361,105,757, then increased on July 11 to §382,942,306, but by September 28 had sharply decreased to $340,103,996, the smallest amount of
lawful-money reserve held since July 12, 1893, when it amounted to
$289,254,850.
KEPOKTS FOK 1895 AND 1894 COMPAKED.
Summarizing the changes disclosed by a comparison of the resources
and liabilities of the national banks on September 28, 1895, with those
on October 2,1894, about a year previous, the material increase in loans
and discounts, and the decrease in lawful-money reserve and the
amount due from reserve agents, indicate clearly the larger demand
for loanable funds, further evidence of which is found on the side of
liabilities in the increase in the volume of circulating notes outstanding,
and in the amount of money borrowed by the banks. This further
appears by the decrease in the amount due to other banks and bankers
and the amount due to individual depositors, which amounts have
been withdrawn from the banks where they remained idle during the
period of financial depression, for investment in more profitable forms.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
11
REPORTS OF 1893 AND 1895 COMPARED.
By comparing the figures showing the aggregate resources and liabilities of the national banks on October 3, 1893, with those of September 28, 1895, the following changes are to be noted:
On the side of resources, loans and discounts at the latter date had
increased $216,000,000, United States bonds held to secure circulation
$3,000,000, United States bonds held for other purposes $9,000,000,
stocks, securities, etc., $47,000,000, amounts due from reserve agents
$64,000,000, amounts due from other banks and bankers $35,000,000,
legal-tender notes and United States certificates for these notes $22,000,000, while checks and other cash items had decreased $2,000,000,
exchanges for clearing house $49,000,000, bills of other national banks
$7,000,000, and specie $29,000,000.
On the side of liabilities capital stock decreased $21,000,000, undivided profits $2,000,000, national-bank circulation outstanding $1,000,000, and money borrowed in different forms $45,000,000, while amounts
due to other banks and bankers increased $146,000,000, and iudividual deposits $250,000,000.
EARNINGS AND DIVIDENDS.
The law requiring dividend reports from national banks went into
effect in March, 1869, and since that date the abstracts for semiannual
periods have been incorporated in the annual reports issued by this
Bureau. The number, capital, surplus, dividends, net earnings, and
ratios of dividends to capital, dividends to capital and surplus, and net
earnings to capital and surplus semiannually from September, 1880, to
September, 1895, are shown by such abstracts. To these abstracts has
been appended a table exhibiting similar information for each year
ended on March 1 from 1870 to 1895.
The average annual capital and surplus for the twenty-six years were
$528,256,187 and $153,611,141, respectively; the average annual dividends paid amount to $44,428,765 and the net earnings to $54,885,257.
The rate per cent of dividends paid varies from 10.5 in the year ended
on March 1, 1870, to 6.8 in 1891, the average for the twenty-six years
being 8.4. The total amount of dividends paid and the net earnings
for the period referred to are shown to amount to $1,155,147,903 and
$1,426,406,670, respectively.
By means of a special circular addressed to national banks an effort
has been made to ascertain what percentage of current expenses paid
by the banks during the year ended September 1,1895, was represented
by taxes paid, and the result of such information as has been obtained
will be found in the table appearing on the next page, showing ratios of
net earnings, losses, expenses, taxes, and gross earnings, respectively,
to capital and surplus for the year ended September 1,1895.
It will be observed from this table that great variations in the figures
showing these ratios appear. These variations are accounted for as
follows: In the matter of taxes paid the ratio in some cases represents
the tax on circulating notes only, in others to this is added taxes on
real estate held, and in others again the tax on shares is paid by the
banks for their shareholders, while in other cases this tax is paid by
each shareholder individually and not by the bank.
While, necessarily, the rate of taxation on shares of national-bank
stock varies in the different States and Territories, the explanation suggested will account for the extreme variations shown in the table. It
12
KEPOKT OF THE COMPTROLLER OF THE CURRENCY.
was found impossible with the means at hand to obviate the difficulties,
and to that extent the investigation was unsatisfactory. It ? however,
is of value in other directions, and the results are therefore given.
The variations in the ratios showing gross earnings are accounted for
by the fact that in the West and Southwest rates of interest are very
much higher than they are in the Eastern and Middle States, while
another important feature in determining the ratio is the holding of
deposits large in proportion to the capital and surplus.
The difference in ratios representing expenses are in some measure
accounted for by the difference in rates of salaries paid and other
expenses prevailing in different sections of the country, and also by the
fact that where interest is paid upon deposits or for money borrowed
by the banks the amount of this interest paid is included with the current operating expenses.
The ratios in the column of losses represent the measure of losses
developed and charged off during the year, which, like the years of
1893 and 1894, has been one of severe liquidation in some sections oi
the country.
In referring to the ratios of net earnings, while the figures undoubtedly show that investments in shares of national banks are more profitable in some sections than in others, still it must be borne in mind thai
the ratios in some cases represent net earnings after taxes on shares
have been paid by the banks, while in others these taxes are paid by
shareholders individually, and to this extent the percentage of profit
on investments in these shares is reduced.
The table herewith given sets forth the results as they were collected
by this office. The statist who desires to analyze in their completeness
the different items of percentage of net earnings, losses^ expenses,
taxes, and gross earnings of the various States and cities can supple
ment the information thus given by that which he can gather upon
these subjects from the particular locality which he may have under
consideration.
PERCENTAGES OF NET EARNINGS, LOSSES, EXPENSES, TAXES, AND GROSS EARNINGS,
RESPECTIVELY, TO CAPITAL AND SURPLUS FOR THE YEAR ENDED SEPTEMBER 1,
1895.
States, etc.
Maine
New Hampshire
Vermont
Massachusetts
Boston
Rhode Island.
Connecticut
New York
New York City...
Albany
Brooklyn
New Jersey
Pennsylvania
Philadelphia
Pittsburg
Delaware
Maryland
Baltimore
District of Columbia.
Washington
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Savannah
Net earnings.
Per ct.
5.98
2.97
5.55
3.98
3.10
3.64
5.43
4.94
5.17
7.03
0. 32
7.37
G. 05
5.02
G. 53
0.91
5.99
5.42
8.43
5.53
0.49
3! 92
3.10
7.41
1.30
Losses. lExpenses.j
Per
ct.
2.45
6.25
1.86
2.55
1.93
2.41
1.98
3.03
3.02
1.70
3.42
2.88
2.76
1.83
1. 22
1.60
1.68
1.32
1.15
1.50
1.57
7.46
5.04
2.15
5.35
Per ct.
2.93
4.00
3.79
2.76
3.21
1.93
2.86
5.47
7.75
9.03
5.35
5.67
4.22
5.26
4.73
3.65
5.75
2.75
5.49
6.57
6.00
4.57
0.03
7.24
0.03
3.84
Taxes.
Per
ct.
0.39
.08
.36
1.81
1.27
.31
.28
1.00
1.73
1.46
1.54
.52
.75
.04
.69
.60
1.20
1.54
.51
.39
1.25
1.30
.58
2.11
2.04
1.66
Gross
earnings.
Per ct.
11. 7;".
13. 90
11. 5o
11. 10
9.51
8. 29
10.55
15.64
18. 27
- 19.22
16.63
16.44
13.78
12. 75
13.17
12.70
14.62
11.03
14.43
13. 64
15.24
15.16
17.99
17. 55
17. 63
12.15
KEPOET OP THE COMPTROLLER OF THE CURRENCY.
13
PERCENTAGES OF NET EARNINGS, LOSSES, EXPENSES, TAXES, ETC.—Continued.
States, etc.
Florida
....
Alabama
Mississippi
Louisiana.
Now Orleans..
Texas
Arkansas
Kentucky
Louisville
Tennessee
Ohio
Cincinnati
Cleveland
Indiana
Illinois
Chicago
Michigan
Detroit
"Wisconsin
Milwaukee
Iowa
Des Moines
Minnesota
St. Paul
Minneapolis - Missouri
St. Louis
,
Kansa3 City ...
St. Joseph....
Kansas
Nebraska
Omaha
Lincoln
Colorado
Nevada
California
San Francisco.
Oregon
Arizona
North Dakota
South Dakota
Idaho
Montana
New Mexico
Utah
Washington
Wyoming
Oklahoma
Indian Territory..
Net earn-: Losses. lExpenses.
Per ct.
10.72
2.24
5.17
8.09
5.11
7.73
7.52
6.33
5.37
4.48
5.72
5.29
5.46 j
G.81 !
6.70
5.57
6.16
7.61
6.33
8.59
6.87
3.78
5.21
1.97
.63
6.00
4.99
6.97
2.54
4.93
3.20
2.13
2.95
3.68
2.76
6. &3
8.43
3.43
11.37
4.77
.14
5.46
5.34
4.13
3.81 j
.95
1.65
11.13
14.86
Per ct.
5.40
4.86
3.81
2,50
8.68
3.54
1.81
2.42
2.13
7.62
3.09
3.65
.74
2.68
2. 22
2.96
3.21
1.32
2.85
3.27
2.07
4.79
3.15
5.14
14. 27
2.24
2.65
4.01
7.10
3.59
4.52
3.80
9.36
6.51
5.55
4.86
2.40
10.45
1.61
3.49
5.04
4.85
19.68
9.73
3.30
6.46
5.47
2.80
1.47
Per ct.
13. 43
6.06
7.20
7.09
8.01
6.53
5.92
3.76 j
4.56
5.22
4.66
5.14
3.91
5.30
5.79
6. 22
5.99
1.63
6.36
10.25
6.39
6.32
6.18
3.96
4.80
5.96
6.85
10.62
7.51
6.85
7.89
10.90
9.15
10.36
7.26
6.04
3.47
6.63
10.77
7.80
8.99
8.70
12.74
10.70
4.49
6.92
7.80
10.43
8.39
Taxes.
Per ct.
1.14
1.42
1.37
1.47
2,54
1.35
.88
1.09 j
1.28
1.30
1.91 I
2.05
1.64
1.68
1.36
1.50
.96
.30
1.42
2.08
1.50
1.53
1.98
1.55
1.32
1.45
1.41
.88
1.78
1.40
1.23
1.18
.91
1.58
1.21
.60
.10
.51
.38
2,22
2.10
2.44
2.09
2.23
1.71
1.10
1.75
2,27
.16
Gross
earnings.
Per ct.
30. 69
14.58
17. 55
19.15
24.34
19.15
36. i:,
13. 60
13. 31
18. 68
15.38
16.13
11. 75
16.47
16. 07
16. 2.»
16. 3'J
10. 8(i
16.9(5
24.19
16. s:;
16. 4'J
16. 52
12.62
21.08
15. 65
15. 9 »
22. 48
18. m
16. 8u
16.84
18.01
16.47
22.13
16. 7F
18. 31
14. 40
21. 02
24.13
18.34
15.99
21. 45
29.17
26. 71)
13. 31
13. 53
16.67
26. 61
24. 8t
N O T E . — F i g u r e s p r i n t e d in bold-face t y p e signify loss.
STATE BANKS AND BANKING ASSOCIATIONS.
Such information as the Comptroller has been able to obtain with
respect to the resources, liabilities, and condition of banks, banking
companies, and savings institutions organized under laws of the several
States and Territories is herewith presented, and is substantially com
plete, except as to the following States: Delaware, Maryland, South
Carolina, Georgia, Alabama, Louisiana, Texas, Arkansas, Tennessee,
Nevada, Oregon, Idaho, Utah, New Mexico, Arizona, Oklahoma, and
Indian Territory.
The information furnished by State officials is supplemented by the
returns courteously made to this office by the bank officials doing business in the States and Territories above mentioned.
The number of banks incorporated under State authority and in
active operation on or about the close of the fiscal year ended June 30,
1895, was 5,066; and the number from which reports of condition have
been received is 5,033. Abstracts of these reports, tabulated by classes
JREPORT OF THE COMPTROLLER OF THE CURRENCY.
and States, with the sources of iuforrnation indicated, will be found in
the appendix.
Reports of condition have been received from 1,070 private banks
and bankers and 5,033 State and savings banks and loan and trust
companies, an increase of 305 over 1894.
A comparison of the returns in 1894 with those of 1893 shows a
decrease in the following items: Loans, nearly $207,000,000; capital,
$7,000,000; deposits, $97,000,000, and total resources,over $110,000,000.
The returns for this year show not only an increase in every item,
except cash on hand, over 1894, but also an increase in corresponding
items reported in 1893, prior to the monetary stringency of that year.
The following statement shows the principal items of resources and
liabilities of these banks in 1893,1894, and 1895:
Items.
Loans
Jiomls.
Cash
Capital
Surplus and undivided profits.
Deposits
Kesources
,
1893.
! $2,348,193,077 I
1, 009, 004, 350
205,G45, 203
40G, 007, 240
340, 206, 287
3, 070, 462, G80
3, 979, 008, 533
1895.
$2,133,628,978 $2,417, 468, 494
1, 010, 248, 230 1, 375, 026, 025
229, 373, 004
227, 743, 303
398, 735, 390
422, 052, 618
352,424, 784
370. 397. 003
2,973,414,101
3,185, 245. 810
3, 868,474, 997 4,138. 990, 529
From the foregoing statement it will be observed that there has been
an increase in 1895 over 1894 in the following items: Loans, $283,839,516;
bonds and stocks, $304,777,795; capital, $23,317,228; surplus and
undivided profits, $17,972,219; deposits, $211,831,709; total resources,
$270,515,532; the only decrease noted being in cash items, and is only
$1,029,701. The increase in 1895 over 1893 is as follows: Loans and discounts, $09,275,417; bonds and stocks, $305,421,075; cash and cash items,
$22,098,100; capital, $10,045,378; surplus and net undivided profits,
$24,190,710; deposits, $114,783,130; and total resources, $159,981,990.
State banks to the number of 3,774 reported, being an increase in
number and capital of 188 and $5,905,722, respectively. The capital
of these banks aggregates $250,341,295; deposits, $712,410,423; loans,
$097,088,008; bonds and stocks, $91,988,090, and total resources,
$1,147,545,818. The increase in deposits over 1894 is about $54,000,000;
in loans, $20,000,000; in bonds and stocks, $7,000,000, and in total
resources, $70,000,000.
Reports of dividends paid by this class of banks have been received
from 928 associations, located in 24 States. The total capital of the
reporting banks is $50,590,382, and the amount and average rate per
cent of dividends paid, $4,088,752 and 7.2, respectively.
Savings banks to the number of 1,017, of which 004 are mutual, that
is, associations conducted for the sole benefit of the depositors, and 353
stock savings banks, operated for the benefit of both shareholders and
depositors, have submitted reports of condition. The resources of the
stock savings banks are less than 15 per cent of those of all savings
associations,
With the exception of 10 banks in Ohio, Indiana, and Wisconsin,
mutual savings banks are confined to the Eastern and Middle States.
Loans of this class of banks amount to $823,030,954; bonds and stocks,
$801,044,935; deposits, $1,597,343,100, and total resources, $1,750,740,953.
The total loans of all savings banks are $1,035,597,142; bonds and
stocks, $841,807,099; deposits subject to cheek, f 33,700,775; savings
deposits, $1,810,597,023, and aggregate resources/$2,053,704?328. Comparing these items with those reported in 1894, an increase is noted in
REPORT OF THE COMPTROLLER OF THE CURRENCY.
15
each as follows: Loans, $S,059,334; bonds and stocks, $03,219,833;
deposits, $06,424,556; total resources, $73,020,139.
The number of depositors has increased 97,832, and the average
amount due each depositor from $365.86 to $371.36. Interest paid to
depositors varies from 3 to 4.5 per cent, the average being apparently a
trifle less than 4 per cent.
The number of loan and trust companies submitting reports of condition was 242. Their loans aggregate $433,508,510; bonds and stocks,
$177,080,555; capital, $108,963,905; deposits, $540,052,057, and total
resources, $807,003,041.
Returns have been received from 1,070 private banks, with capital
aggregating $33,281,845; deposits, $81,824,932; loans, $85,489,000;
bonds and stocks, $7,270,159, and total resources, $130,017,342.
A condensed statement is herewith given for the purpose of comparison, exhibiting the principal items of resources and liabilities of each
class of banks referred to:
Items.
Loan and trust
companies, j Savings banks.
State banks.
Loans
United States bonds
Other bond3
Capital
Surplu s and profits
Deposits
Total resources
$097,688,068
883, 885
91,104, 811
250, 341, 295
!
101, 042, 34C
712, 410, 423
1,147, 515, 818
!
$433, 508, 516 $1, 035, 597,142
39, 607, 593
123,196, 914
137, 478, 962
718, 010, 785
108, 963, 905
29, 465, 573
84,801.698 I 174,109,899
546,652,657 I 1,844,357,798
807,003,041 i 2,053,764,328
Private
banks.
$85, 489, 066
1, 497, 310
5, 778, 849
33, 281, 845
10, 443, 060
81, 824, 932
130. 017, 342
Similar information relative to national banks, banks other than
national, and the total of all banks appears in the following table:
Items.
Loans
United States bonds
Other bonds, etc
Capital. Surplus and profits
Deposits
Total resources
,
I 3,712 national
I
banks.
0,103 all otter I Q Q , r , , ,
banks.
9,bio total.
$2, 059, 408, 402 $2, 252, 282, 792 I $4, 311, 691,194
234,801,115
165,185,702
i, 986, 817
952, 973, 407 i 1,16 i, 470, 602
211,497,195
422, 052, 618 ! 1, 079,188,117
657,135, 4C9
370,397,003 j
336, 888, 351
707, 285, 354
1,715,194,860 3,185, 245, 810 | 4, 900, 440, 670
4,138, 990, 529 ! 7, 502, 619, 873
3, 423, 029, 344
The capital stock of national banks on July 11,1895, and of all other
banks at the date of the latest returns to this Bureau amounts to
$1,080,270,798, an increase during the year of $10,450,243. The average per capita is $15.44.
The population of the United States on June 1,1895, as estimated by
the Government actuary, was 09,954,000 and the total banking funds,
namely, capital, surplus, undivided profits, and deposits of national and
all other banks, $0,703,544,084, making the average per capita $95.83.
These funds in 1894 amounted to $0,407,003,338, being $290,540,740 less
than this year.
The cash held by national banks on July 11, and by other banks at
about that date, amounted to $031,111,290, classified as follows: Gold,
$127,021,099,- silver, $15,594,037; specie, not classified, $19,298,303;
paper currency, $342,739,129; fractional currency, $1,023,442, and cash,
not classified, $124,835,220.
In the appendix will be found abstracts of the reports of each class
of banks, by States and geographical divisions, for the past and prior
years and statistics in detail covering the subjects hereinbefore referred
to. To this has also been added a summary of the condition of the
Canadian banks on August 31, 1895, and the latest reports of the loan
trust companies in the District of Columbia.
Digitized forand
FRASER
16
REPORT OF THE COMPTROLLER OF THE CURRENCY.
INSOLVENT BANKS OTHER THAN NATIONAL.
Mr. Albert 0. Stevens, editor of Bradstreet's, has courteously placed
this Bureau iu possession of a statement showing the number of banks
other than national, and the amount of their assets and liabilities,which
failed during the year ended August 31, 1895, which appears in detail
in the appendix. An abstract of this information, with similar returns
for 1894, is herewith given.
1894.
Class.
No.
State banlis
Savings banks
Loan and trust companies.
Mortgage companies
Private banks
Total
Assets.
1895.
Liabilities. No.
Assets.
Liabilities.
27 $1, 773. G78
009 967
9 2 646, 008 2, 677 943
5
420. 000
477 000
3 33, 00C,000 37, 500 000
21 1,749, 600 2, 235 600
46 $2, 555, 356 $3, 444, 675
8 4, 653, 323 4, 818, 199
1
80, 000
90, 000
5 4, 027,100
5,753, 500
25 1, 388, 301 1,804, 619
G5 39 589, 286 44, 900 510
85 12, 704, 080
15 910 993
The number of national banks in existence on July 1,1895, and of all
other banks at the date of the latest returns prior thereto, with the
number and per cent of failures of each class and of all, is shown in the
following table:
Class.
National banks
State banks and trust companies.
Savings banks
Private banks
Total.
Number
doing
business
July 1,
1895.
Failures.
Number. Per cent.
3, 721
4,328
738
4,972
13,759
.97
1.20
.50
121
.87
* Includes 6 trust and mortgage companies.
STATE AND NATIONAL BANKS IN THE STATE OF NEW YORK.
A question arising during the year which made it desirable to obtain
information showing the relations existing between the various State
banking institutions and the national banks of the State of New York,
a special call was made on August 6 on the national banks for statements
of balances with State, private, and savings banks and with loan and
trust companies. While the information was obtained for a special
purpose, the results of it are of sufficient interest to warrant the publishing of them in this report.
The returns from the 50 national banks of the city of New York
showed average daily credits for the month of June of $61,380,569, due
to State banking institutions, and an amount on July 11 of $54,485,412,
while the daily balances due the national banks averaged for June
$1,526,842, and on July 11 amounted to $1,586,258.
The 5 national banks in Brooklyn, the 6 in Albany, and the 273 located
in the State outside of the cities named reported the average daily
credits for June at $10,658,493, and the amount on July 11 as $11,544,328.
The same banks reported daily balances due them averaging for June
$1,036,998, and the amount on July 11, $1,156,401.
The total for the 334 national banks in the State averaged daily balances for these banks during June, $72,039,062; amount on July 11,
$66,029,740. Average daily balances due from the State institutions
for June, $2,563,840; on July 11, $2,742,659.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
17
Included in the special call was a request for data concerning the
receipts and withdrawals of every kind in which these banks participated.
For the 50 national banks in the city of Kew York the average
daily receipts for June were $124,503,693; receipts on July 11 were
$121,061,069. For the remaining 284 banks the average daily receipts
for June were $11,988,577, and on July 11, $11,980,788.
Withdrawals from the 50 national banks of the city of New York for
June averaged $119,308,833 a day, and on July 11, $122,769,213. Withdrawals from the 284 banks outside of New York City averaged foi
June $13,914,367 per day, and for July 11 were $12,006,343.
Combining all the reports for both items makes the average
daily receipts of the 334 banks for June $136,492,270; withdrawals,
$133,223,200; a daily balance in favor of the banks of $3,269,070, or
$98,072,100 for the month. On July 11 receipts aggregated $133,042,452
and withdrawals had risen to $134,775,556, reversing the balance to
$1,733,104 of withdrawals over receipts.
From these results it maybe effectually argued that the interests of
State and national banks are not antagonistic. No better ground for
investigation could be found than in the financial center where the
strongest banks of each class are competitors for business. The exhibit
made not only shows how baseless is the claim of friction between them,
but renders the refutation more emphatic by the very close relations
which are seen to exist by the returns made.
INSOLVENT NATIONAL BANKS.
The number of banks placed in the hands of receivers during the
year was 36, located in 15 States, having an aggregate capital stock of
$5,235,020 and circulation of $1,003,402, of which amount $205,146 has
been destroyed and $798,256 is yet outstanding. The increase thus
shown over the number of receivers appointed in 1894 is due to the fact
that 9 banks which closed temporarily during the stress of 1893 were
unable to reduce their assets to an extent sufficient to meet their maturing obligations, and therefore passed under the administration of this
office. The banks of this character, with the amount of their capital
stock, are shown in the following table:
Kamc of bank.
Citizen's National Bank
Tacoma National Bank
First National Bank
Pnget Sound National Bank
Union National Bank
National Bank of Kansas City
Buffalo County National Bank
First National Bank
Kearney National Bank
,
Location.
.•
Total .
Spokane Falls, Wash.
Tacoma, Wash
Port Angeles, Wash..
Everett, Wash
Denver, Colo
Kansas City, Mo
Kearney, Nebr
San Bernardino, Cal ..
Kearney, Nebr
Capital.
$150,000
200,000
50,000
50,000
1, 000, 000
1,000, 000
100, 000
100, 000
100,000
2, 750,0G<
In addition to the number thus added were 2, the First National
Bank of Ida Grove, Iowa, with a capital stock of $150,000, and the State
National Bank of Denver, Colo., with a capital stock of $300,000, which
had, prior to October 31, gone into voluntary liquidation, but through
failure to comply with the statute were placed in the hands of receivers.
By deducting the number of the banks and the amount of the capital
stock represented by them coming into the hands of receivers, under
the circumstances named, the total number of receiverships for the year
is reduced to 25 and the amount of capital stock involved to $2,035,020.
CUR, PT 1
2
18
REPORT OF THE COMPTROLLER OF THE CURRENCY.
The following table sets forth in detail the names, location, capital
stock, and condition of the assets of the failed banks of the year at the
time of the appointment of receivers therefor:
THE NATIONAL BANKS IN EACH STATE AND GEOGRAPHICAL DIVISION, WHICH
WERE PLACED IN THE HANDS OF RECEIVERS DURING THE YEAR ENDED OCTOBER
31, 1895, WITH THEIR CAPITAL, NOMINAL ASSETS, AND LIABILITIES AT 33ATE OF
SUSPENSION.
Assets.
Isamo and location of bank.
Dover National Bant, Dover, N. H
$100,000
First National Bank, Willimantic, i
Coi
100, 000
Eastern States.
Central National Bank, Homo, N. Y . . .
National Broorao County Bank, Binghamton, N. Y
Middle States.
Estimated
doubtful.
Estimated
good.
j Capital.
i
Estimated
worthless.
iG5,170 ! $10, 586
$112,052
LiabiliTotal.*
$137, 803
ties, t
$174, 670
132.643 i 149,279
115,137
397,059
338, 292
200, 000
244, G95
214,449
125,723 j
584,867
512, 068
100, 020
316, 229
117,870 | 141,196
575, 295
100,000
248, 967
171,033 j 172,598
592, 598
200, 020
565, 196
288,903 | 313,794
1,167, 893
976,351
475,063
191,770
First National Bank, Ocala, Fla
50, 000
100,000
73,172
City National Bank, Quanali, Tex
50, 000
17, 836
First National Bank, Texarkana, A r k .
City National Bank, Fort "Worth, Tex. 300, 000 264, 516
9,545
First National Bank, Dublin, Tex
j 50, 000 j
First National Bank, Johnson City, j
50,
000
I
17,
502
Tenn
•
145, 036
89, 269
9,154
267, 362
28,203
100, 207
58,162
61,216
401, 422
25, 720
437, 019
220,603
88, 206
933, 300
63, 468
343, 301
134, 077
39, 583
542, 229
14, 249
70,589
61,803
149, 954
102, 243
574,407
609, 613
708, 530
1, 892, 550
1,175, 742
Southern States
; 600, 000
National Bank of Kansas City, Mo
1. 000, 000 | 427, 082 ! 1, 029, 928 ! 600, 608 2, 058, 518 1, 054, 655
Superior National Bank, West Superior, j
!
j
j
A7is
! 135,000 ! 59;799! 44,130! 128,975
100, 486
232,904
Keystone National Bank of Superior,
200,000 150,291 ; 61,998 j 225,654
West Superior, Wis
_216,048
437,943
First National Bank, Ida Grove, Iowa. 150,000
8,751
50,000 ,"23*290*;" 7,774 I 28,074 " " 5 9 , " 138"
First National Bank, Pella, Iowa
73, 021
Citizens' National Bank, Madison, S.
50, 000 ! 7,265 I 90,709 i
65,624
129,751
Dak
50,000 | 39,777 : 101,319 j 23,514 I 104,610
113,848
First National Bank, Redfield, S. Dak..
50, 000 | 13,078
126, 614
FirstNationalBank, Wellington, Kans.
67,288 | 46,248
61,276
Buffalo County National Bank, Kear100, 000 I 18,886 \ 170,201 ! 39,735
234,822
ney, Nebr
99, 097
North Tlatto National Bank, North ;|
183,954
111,160
Platte, Nebr
75,000 | 54,544 114,488 ! 14,922
Holdrege National Bank, Holdrege, {
141,496
75,000 ] 11,396
80,115 i 49, 985
59, 301
Nebr
28, 059
First National Bank, Ravenna. Nebr...; 50,000 i 26,224: 46,205 i 10,544
82,973
146, 450
35,603
35,131
Kearney National Bank, Kearney, Nebr. I 100, 000
265,031
194,297 !
I
Western States
2,085, 000 808,135 2,014,452 1,235,367 4,117, 754 i 2,138, 376
Union National Bank, Denver, Colo
State National Bank, Denver, Colo
'
Citizens' National Bank, S p o k a n e i
Wash
'
Tacoma National Bank, Tacoma, Wash. I
Browne National Bank, Spokane W ash. j
First National Bank. Anacortes, Wash
First National Bank, Port Angeles,
Wash
Merchants' National Bank, Seattle.
Wash
Piuiet Sound National Bank, Everett,
Wash
First National Bank, South Bend,
Wash
Columbia National Bank, Tacoma,
Wash
Needles National Bank, Needles, Cal...
First National Bank, San Bernardino,
Cal
Pacific States and Territories.
United States
500, 000
300, 000
150, 000
200, 000
100, 000
523,057 ; 816, 389
43, 977 j 221,774
63,963 i 170,192
50,006 ! 306, 705
39, 248 1 3 22, 829
10,934 I 45, 637
212,158
68, 380
20, 590
12,332
446,
425,
182.
68,
313
091
667
903
030, 083
170, 481
264,410
212, 888
79, 972
16, 493
37, 990
18, 5S1 I
57, 872
11,719
173,689 | 313, 874
54,131 j
541, 694
315, 358
1,301 I
'..
178,049 | 1,517,495
510, 661
244,910 •
I
6, 962
24, 639
75,175
106, 776
53, 277
6, 847
69, 338
24,022
100,207
51,932
2,540
47, 268
56,025 \
6,456
61,279 I 208,054
61. 242
330,575 i
170.484
6,217 |
987, 4S0 2,339,961 |l, 016, 838 4, 344, 279
. 5, 235, 020 3,239,913 5,467,378 13,400, 052 12,107,343
* Exclusive of United States bonds on deposit to secure circulation,
http://fraser.stlouisfed.org/ f Exclusive of capital, circulation, surplus, and undivided profits.
Federal Reserve Bank of St. Louis
2, 292, 555
7,095,$;
REPORT OP THE COMPTROLLER OF THE CURRENCY.
19
The number, capital, assets and liabilities of national banks, in each.
State, which failed daring the past year are shown in the following
table :
Assets.
State.
Now Hampshire.
Connecticut
Isew \Tork
Florida
Texas
Tennessee
Missouri
Wisconsin
Iowa.
South Dakota...
Kansas
^Nebraska
Colorado
Washington
California
Total.
Banks. Capital.
1 $100, 000
1
100, 000
2
200,020
50, 000
1
500, 000
4
50, 000
1
1 1, 000, 000
o
335, 000
200, 000
2
100, 000
2
50. 000
1
400, 000
5
2
800, 000
(j 1,200,000
150, 000
2
Estimated
good.
Estimated
doubtful.
$112, 052
$65,170
132, 643
149, 279
565, 196
288, 903
191, 776
145,036
365, 069
393, 988
17,562
70, 589
427, 982 1, 029, 928
210,090
10(5, 128
23, 290
7,774
47, 042
192, 028
13, 07S
67, 288
146, 653
611,306
5G7, 034 1, 038,163
352, 950 1,091,204
67, 490
210, 594
Estimated
worthless.
Total.
$10, 586 $187, 808
115,137
397, 059
313, 794 1, 167, 893
100, 207
437,019
510, 520 1, 305, 577
61, 803
149, 954
Liahilities.
2, 058, 518
670, 847
59, 138
294, 361
126, 614
908, 276
2, 028,156
1,929,523
386, 600
$174, 676
338, 292
976, 351
343, 361
730,138
102, 243
1, 054. 655
316, 534
81,772
179, 472
61, 276
444, 667
1,106, 564
1, 009, 051
176, 940
36 5, 235, 020 3,239,913 5, 467, 378 3, 400, 052 |12,107, 343
7, 095, 992
COO, 608
354, 629
28, 074
55, 291
46, 248
150, 317
422, 959
485, 369
108,510
RECEIVERSHIPS.
The difficulties attendant upon the liquidation of banks now in the
hands of receivers have been largely augmented during the year by
the character of the assets to be reduced and the complications arising
from the business depression of the i)ast two years. In the majority
of instances no bank closes its doors while it is possessed of quickly
convertible paper, and therefore there comes into the possession of the
Comptroller only that which is slow, doubtful, bad, or absolutely worthless. It thus follows that with little or no cash received, but debts
which are slow of payment and much involved in or necessitating litigation, the closing of trusts is prolonged and the expense attendant
thereon increased. The records of the office, however, show that such
expense, as compared with any other class of receiverships, is greatly
less and the results attained far more substantial. Notwithstanding
the conditions which have followed the year 1803 there were paid in
dividends to creditors of failed banks in 1894 the sum of $5,124,577.94,
and during the year just closed $3,380,552.05, represented by 101 dividends.
On October 31, 1894, there were 125 banks in the hands of receivers.
Since then 30 receivers have been appointed, making 101 trusts open
during the year; 11 trusts have been closed and 1 bank has been
restored to solvency and has resumed business. This leaves 149 banks
in charge of receivers on October 31, 1895.
A total of 303 banks have been under the charge of receivers. Of
these, 13 have resumed business, leaving the assets of 290 to be collected and distributed under the supervision of this office.
The following data relate to 289 insolvent banks, as the report of
1 bank, for which a receiver was appointed on October 30? was not
received in time to include it in this summary:
The nominal value of the assets coming into the hands of receivers was $155,825,372; scheduled as "good," $60,751,700; "doubtful,"
$55,888,525; "worthless," $39,185,141. In addition, receivers have
recovered assets of the nominal value of $10,294,040 after taking charge
20
REPORT OF THE COMPTROLLER OF THE CURRENCY.
of their trusts, thus increasing the assets of the insolvent banks to
$172,119,412. Assessments have been ordered against the shareholders of these banks amounting* to §26,770,070, making the total nominal
resources of the 289 receiverships $198,889,482. The total liabilities
of these banks were $107,538,151.
There have been cash, collections from the assets amounting to
$G9,(]86,G1(), and from shareholders $10,990,861; total, $80,677,477.
Offset settlements, etc., amounting to $12,904,089 have been adjusted.
Assets have been sold and doubtful or worthless claims compromised,
under order of court, at a loss from nominal value of $35,362,748.
Eeceivers of banks which have paid all claims infull have, in addition
thereto, returned to shareholders $1,116,438 cash and assets of the
nominal value of $4,720,995. The number of receiverships acting
under the Comptroller's supervision at the close of the report year
was 149, with assets of the nominal value of $50,005,200.
33ANK RECEIVERSHIPS OTHER THAN NATIONAL.
During the past year an effort has been made to obtain information
relative to insolvent State banks and receiverships. A large amount
of correspondence was had with State officers, bank officers, bank examiners and others in order to obtain some data bearing upon the subject.
While the returns have to a large degree been fragmentary, and to such
extent of doubtful utility, yet it is believed that something of value
may be gathered from them.
Reports, more or less defective, have been, received concerning 471
banks, located in 38 States and Territories, the dates of failure going
back to 1843. A large number of others were reported, but no data
given that would be available in this connection. Nothing has been
received from the States of Delaware, Kansas, Mississippi, Nevada,
New Jersey, Oregon, Pennsylvania, Vermont, Virginia, West Virginia,
Indian Territory, or the District of Columbia. The reports from New
York (furnished by the New York State banking department) and from
Ohio (furnished by Mr. W. A. Graham, of the Citizens Bank, Sidney,
Ohio) are remarkably complete.
The amount of capital reported was $25,053,638; nominal assets,
$06,154,382, and liabilities, $124,481,807. Dividends on claims already
paid amount to $55,018,121, or 44 per cent. Additional dividends are
estimated at $4,659^678, or 3 per cent.
It is but just to say, in this connection, that the returns from the
different banks are so exceedingly meager that if correct data could be
obtained from each of the banks reported the amount of dividends paid
would be considerably increased. In a large number of cases no estimates were given as to future dividends, but if an estimate should be
obtained based on correct data the percentage of further dividends
would, it is safe to say, also be increased. A further investigation will
be pursued.
The number, capital, assets, liabilities, dividends paid, etc., of banks
reported are shown in the following table:
EEPORT OF THE COMPTROLLER OF THE CURRENCY.
State or Territory.
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Florida
Georgia
Idaho
Illinois
Iiidiana
Iowa
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
New Hampshire
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
•Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Washington
"Wisconsin
Wyoming
Total
No. of
banks.
46
2
2
7
2
6
9
4
0
5
8
1
16
3
10
15
1
33
6
11
103
2
7
94
5
9
4
8
3
1
4
2
7
471
Capital.
Assets.
$1, 099, 329
6,019
8, 924, 764
6, 794, 481
724, 549
427, 630
80, 000
301,293
5, 933, 939
981,871
248, 236
3,121,328
206, 745
1, 457, 476
1,159,011
140, 000
729, 500
204,150
5,000
746, 500
100, 000
425, 000
13,629,128
300, 000
407,134
864, 589
2, 240, 736
973, 068
55, 596
2, 034, 581
841, 452
1, 248, 398
47, 944, 726
1, 307, 786
1, 058, 662
784,184
52,61U
1,164, 623
$762, 524
47,890
6, 393, 480
5, 006, 405
649, 673
39, 365
1,130, 000
241, 468
4, 308, 545
671, 870
886, 842
1, 676, 072
104,825
1, 376, 350
1,159, 011
10, 440, 805
700, 000
1,452,428
902,898
48, 363
1,189, 481
687, 494
1,132,438
62, 569,116
1,551,410
1,058,919
11, 562,175
70, 371
3, 309, 449
484, 613
1,340,979
50, 000
o23, 339
270, 254
463, 943
1,183, 491
334, 225
1, 305, 909
75, 000
256, 662
129,123
498, 014
753. 201
6,590
577, 225
155, 000
158, 615
130, 000
350,
110,
256,
314,
000
000
000
048
25, 053, 638
D i v i d e n d s paid.
Estimated dividends.
Amounts.
Per
1 Pe
Amounts.'
$105,985
13
13.9
Liabilities.
$200, 000
23,000
1, 616, 048
1, 744, 500
51,600
75, 000
220,000
100, 000
100,000
310, 000
19, 000
1, 493, 600
280,000
75, 000
21
2, 231, 054
991, 025
490, 000
$13,611
34.9 1,604, 351
163, 572
19.5
313, 295
1.7
26. C
3.2
48.2
43.4
1,481,162
401, 744
58, 526
276, 967
34. 3
59.5
6.5
16.5
103,077
14, 681
37,184
315,330
2.3
2.1
4.1
18.8
1, 018, 923
139, 081
8,488,109
350, 000
270, 084
148, 349
13, 295
160, 728
292, 843
390,939
30, 245, 404
434,396
42, 461
4, 491, 049
2,000
1, 740, 805
74
12.1
80
50
18.7
16.4
27.5
13.5
42.5
34.4
48
28
4
39.7
54, 510
57, 951
37, 894
140, 000
212, 516
58,941
29, 017
3.0
5
O.t
20
)4.6
6.5
59.9
186,200
75,990
2.7
186, 700
31, 731
260,900
12
3
2.2
51
207, 212
6.2
60, 034
355,193
30, 000
137, 661
18,863
17.9
27.1
40
53.6
14.6
25, 239
77,113
151,441
21.4
7.2
5.8
4.C
85.4
38.7
18.2
96,154,382 '124,481,807 55,018,121
44
11, 900
110, 259
193,159
137,345
4, 659, 678
3
AMENDMENTS HE COMMENDED.
In the reports of this Bureau heretofore submitted have been suggested amendments to the laws governing national banks which, if
made, it is believed would tend to the betterment of the system. All
of the suggestions of this character for several years last past yet
remain unacted ux^on. It is respectfully suggested that, as the General
Government is in complete control of this system of banks, its legislative branch should give to the system the benefit of all proper enactments. In this view of the case the attention of Congress is again
called to the following suggested amendments and action looking
toward their incorporation into the banking laws strenuously urged:
First. That the Comptroller, with the approval of the Secretary of
the Treasury, be empowered in all proper cases to remove officers and
directors of national banks for violations of law and mismanagement^
first according them a hearing on charges preferred.
Second. That the loans of any bank to its executive officers and
employes be restricted and made only upon the approval of the board
of directors, a separate written record thereof being kept.
Third. That the assistant cashier in the absence of the cashier be
authorized to sign the circulating notes of the bank and reports of
condition.
Fourth. That some class of public officers be empowered to administer the general oaths required by the national-bank act.
22
EEPORT OF THE COMPTROLLER OF THE CURRENCY.
Fifth. That bank examiners be required to take an oath of office and
execute a bond before entering* upon the discharge of their duties.
Sixth. That upon a day in each year, to be designated by the Comptroller, the directors of national banks shall be required to make an
examination of the affairs of the bunks and submit to the Comptroller
a report thereon upon blanks to be furnished for such purpose.
Seventh. That the Comptroller be authorized to issue to national
banking associations circulating notes to the par value of the bonds
deposited by them with the Treasurer of the United States to secure
such notes.
Eighth. That the semiannual tax levied on account of the circulating notes of national banks be reduced so as to equal but one-fourth of
1 per cent per annum.
hi support of all of the foregoing suggestions, excepting the sixth
one, reasons have in previous reports been given. Amendment six is
deemed advisable that directors of national banks maybe compelled to
know from an examination required at their hands of the condition of
the banks in whose management they participate and for which they
should bear a full share of responsibility. Such a law would lead to
better banking methods, less carelessness in extending loans, and make
less liable the long continuance of any dishonesty which might be undertaken by any executive officer or employe of banks. It would also
enable the Comptroller, in case of the failure of any national bank, to
^.x the responsibility more clearly for negligence of duty on the part of
directors.
The issuing of circulating notes to the par value of bonds deposited
to secure the same and the reducing of the per cent of semiannual
tax levied upon such notes has been urged by all the Secretaries of the
Treasury who have touched upon the subject at all and by every
Comptroller from the time of and including Comptroller Knox. The
provision of the law prohibiting the former and the provision of the law
governing the amount of the latter, however, are still unchanged upon
the statute book.
At a time when the desire is so frequently expressed that there be a
larger issue of bank notes and complaint is made that national banks
are indifferent to the note-issuing function vested in them, it may well
be considered by Congress whether it would not be wise to do that
which will make it of sufficient interest to the national banks to pay
greater attention to note issues. The proiit of banking in the United
States is now largely in the deposit feature of it and thus it is of
greater concern under existing circumstances to the banks to secure
deposits than it is to issue notes upon a return so small as to scarcely
justify the expense and trouble entailed thereby.
Banks are not eleemosynary institutions, and therefore engage only
in that which promises a margin of profit. While on the one hand
entitled to no more favors than are granted to other corporations or
enterprises carried on by associated individuals, on the other they
should not be denied any privileges which they may justly claim, and
for the denial of which no possible excuse can be given. It is unquestionably true that national banks would largely increase their note circulation if the embarrassment arising from the needless locking up of a
large part of their capital, available for other purposes, and the lessened
profit through excessive taxation now imposed did not confront them.
They certainly would do so if the legal-tender issues of the Government
were paid and canceled and the channel now clogged by them freed for
bank-note circulation.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
23
The experience of this and other countries conclusively demonstrates
that the best and most rational note issues are those put forth by banks
properly and safely conducted. It likewise demonstrates that issues
made direct by governments are always expensive, and under every
circumstance a source of danger to such governments and loss to
their people's business interests. No clearer proof of this could be had
than that furnished by the difficulties which we have witnessed on the
part of this Government in its efforts to maintain the full credit of its
practically limitless amount of demand obligations.
The granting of even the small measure of relief as indicated would
undoubtedly aid in bringing about a solution of this, the gravest question now demanding legislative attention. It would at least point the
way out and tend to avoid any real or imaginary danger which might
exist through fear of a contraction of the volume of the circulating
medium by the cancellation of the legal-tender issues. Under such
provisions of law, unhampered by unwise restraints and rid of unwholesome competition, the banks now in the national system alone could
and undoubtedly would put in circulation a sufficient amount of bank
notes to prevent any approach to sudden contraction by the payment
and permanent cancellation of this part of the Government's debts.
The advantage accruing to the Government by the substitution of a
bank-note for a Treasury-note currency "would be immeasurably great.
The need of maintaining a gold reserve to meet the recurring demand
obligations, now never retired, would, within a reasonable time, be
obviated and delivered from this vexatious and expensive difficulty,
the Treasury Department could return to its legitimate function of
collecting the revenues of the Government needful to meet governmental expenses and disbursing the same.
With the relief gained to it through the removal of this burden would
come a greater one to the business interests of the individual citizen,
whose every operation would no longer be harassed by the uncertainty
springing from a fear that either in the present or the future the currency obligations now forced by his Government through the provisions
of an inflexible law into the avenues of trade and commerce may be
discredited and dishonored. The relegating of note issuing entirely to
the banks would give a better guarantee of meeting the varying wants
of trade, which is impossible with a legal mandate decreeing an amount
of Treasury issues of no greater and no less volume at one season of the
year than another, whether or no there be a corresponding increase or
lessening of the demand for currency to transact the business in hand.
It is respectfully suggested that, as a necessary element to the securing of proper elasticity of issue in our bank-note currency, section 9
of the act of July 12, 1882, regulating the retirement and issuing of
circulation to banks within a fixed period of time, should be repealed,
and also that such amendment should be made to the law as will necessitate the banks keeping in the office of the Comptroller of the Currency a sufficient amount of blank notes as will enable them to secure
circulation at once? instead of after a period of delay, frequently of
sufficient duration as to make the issue unavailable to relieve the
pressure existing at the time of ordering.
It is in view of these and other reasons which will unquestionably
suggest themselves to those to whom this report is submitted that
action is recommended looking toward the enlargement of the country's bank-note circulation,
24
REPORT OF THE COMPTROLLER OF THE CURRENCY.
FOREIGN BANKING- SYSTEMS.
The attention throughout the year attracted to all matters pertaining to banks and the varied opinions which the discussion of them has
called forth warranted the attempt to secure such information as could
be had both at home and abroad bearing upon the general subject. It
has been done under the belief that a comparative study of such of the
foreign and State banking systems as could be readily investigated
would be of considerable value, and the effort has been made to collect
information bearing upon the salient points of the different systems
now in actual existence. Through the courtesy of the State Department each of the ambassadors, ministers, and consuls of the United
States was asked to aid in this work by forwarding statements concerning the countries to which they were accredited. The following
questions, calling for the desired information, were forwarded to each:
1. Give the different classes or kinds of banks.
2. What requirements must be met in order to enable each class of banks to transact business?
3. Who determines when these conditions liavo been satisfied?
4. Give regulations, if any, governing each class of banks as to (a) capital stock,
(b) management of the bank, (c) liability of shareholders for claims against the bank,
(d) reports of condition of the bank, (e) examination by Government official, (/) restrictions on tho amount of loans, (g) restrictions of any other character on loans by the
bank, (h) security for loans, (i) cash reserve required, (j) accumulation of surplus.
5. Give the regulations, if any, governing the receipt of deposits, and state if it
is the custom of the banks to allow interest on deposits.
6. To what extent is the Government interested as a shareholder in the banks?
7. Are any of the banks permitted to conduct branch banks or officesf
8. To what extent and by what medium is information as to the coudition of the
banks given to the public?
9. What taxes or burdens are imposed upon the banks in return for the privileges
granted them?
10. Give as full information as possible as to the closing up of the business of
insolvent banks.
11. To what extent and under what conditions are the banks allowed to issue bank
notes?
12. What provision is made for the redemption of such notes?
13. Please give any additional information which you think will bo of interest
concerning the banks.
Replies have "been received thus far from twenty-three' countries, viz:
Belgium, Canada, Chile, China, Denmark, Ecuador, France, Germany,
GuatemaIa,Haiti, Hawaii, Italy, Korea, Liberia, Netherlands, Paraguay,
Peru, Portugal, Russia, Switzerland, Turkey, Uruguay, and Venezuela.
Of the countries reporting, Liberia is stated to be entirely destitute of
banking privileges. Korea has no banks except those of the Japanese,
which are conducted according to the legal provisions of Japan.
An abstract, as correct as the information obtained will permit, has
been prepared from the replies received from the remaining twenty-one.
Ten of them have banks which perform functions so closely related to
the government as to justify the designation of u government banks."
Most of them have the ordinary banks of discount and deposit; several
have savings or "cooperative" banks, while two have postal savings
banks in successful operation. Twenty have banks privileged to issue
bank notes for circulation. Some of these are limited to this particular
business, and others are privileged to conduct a general banking business in addition to the note-issuing powers. Several countries are
reported to have corporations similar to trust and mortgage companies
here. One country has a class of banks which makes loans only on
chattel security.
* Since tho first edition of this report was issued replies have been received from
Digitized forGreece,
FRASER
Salvador, and Siani, which will be found in full in the appendix.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
25
Special charters are required in most of the countries, which are
obtained from the legislative bodies or by proclamation of the ruling
prince. The banks are generally authorized to begin business as soon
as they have filed the necessary papers with the proper official in proof
of their organization. A few governments seem to have no officer
charged with the duty of passing upon the organization proceedings.
In some cases the capital stock is required to be paid up in part or in
full, but in most cases it is left, both as to amount and as to payment,
to be regulated by the "statutes" or by-laws and rules under which
the bank is to be conducted or by the conditions specified in the charter.
The management is sometimes left to representatives, and again is
confided to a board composed of government officials, or a mixed
board of officials and directors chosen by the stockholders. In nearly
all the countries heard from the liability of the shareholders is limited
to the amount they have invested in the banks. Two countries report
exceptions, one of which attaches special liability only to those holding the stock of savings banks. Special mention should be made of
the excellent requirements of the seventeen countries reporting as to
furnishing public information of the condition of the banks. In addition to the monthly, quarterly, semiannual, or annual reports, four
countries require weekly statements from some or all classes of banks.
These are published either in local newspapers, in the official journal,
or in reports, so that the public is amply provided with information.
This feature is in very marked contrast to the lax requirements of several
of our States.
The subject of loans does not appear to have received as careful
attention as it merits. Yery many of the bank failures in the United
States have been caused by the abuse of the loaning powers of the banks,
yet only five countries are reported as having restrictions of any special
value upon the loaning ability of the banks. The matter seems to have
been left almost entirely to the judgment and discretion of the managingofficers.
The majority of the countries reporting have no special provisions
regarding cash reserve; and the accumulation of a surplus fund,except
for banks allowed to issue circulation, seems to be j)ractically subject to
the wisdom of the directors or managers. Some slight limitations have
been placed upon the receipt of deposits. Usually the banks pay interest on time deposits, although three reports show that interest is not
allowed.
In but four countries reported is the government interested as a
shareholder in banks.
It is notable that every country reporting allows the banks to maintain branch offices or banks. This is worthy of much consideration, as
it appears that branches are thought to be necessary adjuncts to the
banks to enable them to exercise their function to the greatest benefit
of their governments and patrons. One country even goes so far as to
absolutely require that branch banks must be established and operated
for the convenience of the public. Our national banking act has been
construed as prohibiting all branches, except for converted State banks
having them in operation at the time of entering the national system.
It is worthy of serious consideration whether many communities here
would not be better served with banking facilities if branch banks,
limited to a deposit and commercial business, under the national banking act, were to be allowed.
License fees must be paid in six of the countries for the privilege
of engaging in banking. Capital, net profits, and circulation are taxed
2G
REPORT OF THE COMPTROLLER OF THE CURRENCY.
by most, and ra few require the expenses of the bureau of banking to
be borne by the banks.
Insolvent banks are treated the same as other insolvents in five countries. Iu three others government officials are appointed to close the
bank's business. In one country x>referred claims in order of preference
are: (1) Government claims; (2) claims of employes, bills of exchange,
brokerage, and commission, and (3) depositors. One government bank
reported as being insolvent and in the hands of a committee of three;
one representing the directors, another the shareholders, and the third
the government. No information on this branch of the subject came
from many of the countries. In several countries the banks provide
the entire supply of currency. Provisions apparently adequate have
been made by law in fourteen countries to redeem the bank notes as
they are presented.
Herewith is given a brief summary of the reports received. The full
reports will be found in the appendix.
UELGHM.
Kinds of banks: The Banque Rationale, commercial and cooperative
banks, and mortgage companies, J^O public officer passes upon organization; there are no legal provisions governing deposits; interest may
be allowed by all banks except Banque Rationale; the State is not
interested as a shareholder; branch banks are permitted; annual statements are required to be published by some banks and monthly statements by others; a license fee is required to be paid, based on earnings,
by all except the Banque Rationale, which pays special taxes on account
of issuing circulation; circulation is not permitted in excess of three
times the amount of coin reserve of Banque Nationale, unless approved
by the minister of finance; bank notes are guaranteed by available
assets of Banque Rationale.
Government and postal savings banks, commercial banks, mortgage
companies, and private bankers. A special act of Parliament and proof
of contribution of capital is required before commencing business; the
treasury board pass upon organization proceedings; the system advocates a large capital—part must be paid in; an act of Parliament regulates the payment and fixes the amount of capital; the bank is managed by directors; except in two cases double liability is imposed upon
shareholders for claims against the bank; monthly reports of condition
arc required, and other reports when called for; there are no examinations by Government officials; loans can not be made on the stock of
Canadian banks, real estate, or completed ships; no reserve is required;
a surplus of 30 per cent of the paid-up capital may be acquired, which
is called a "rest" fund; interest is usually paid on time deposits; the
Government is not interested as a shareholder in the banks; branch
banks or offices are allowed; monthly reports of condition are published; in case of insolvency bank notes are a first lien upon the assets,
claims of dominion and provincial governments the second, and depositors the third; banks, with two exceptions, may issue circulating notes
to the amount of their paid-up capital; the circulation notes have the
first lien on assets, and a redemption fund is provided by all the banks
to redeem any notes beyond the value of the assets. l$o notes less
than §5 are issued.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
27
CHILE.
Hypothecary or mortgage banks and banks of issue in operation.
Both classes of banks, in order to begin business, must satisfy provisions of civil and commercial code applying to joint stock companies;
articles of association must be filed with the proper officers and also
published in newspaper; President of the Republic determines AY lien
conditions as to organization have been satisfied; capital stock must
be paid in part prior to beginning business; banks are managed by
directors; hypothecary banks also have a manager appointed by the
President of the Republic; shareholders are not liable for more than
stock investment; directors are responsible for obligations contracted
while serving in that capacity; reports of condition are made by banks
of issue to the minister of finance monthly, in addition to filing annual
inventory, etc.; reports of other banks are tiled annually with the Government; banks of issue subject to examination at any time by the
President of Republic through agents for that purpose; it is customary
to allow interest; Government is not interested as a shareholder in any
bank; branch banks permitted; information given to the public by
reports published in the official journal; no taxes or burdens are
imposed in return for banking privileges; the general insolvency laws
apply to insolvent banks; circulating notes can be issued not to exceed
150 per cent of capital stock and are guaranteed by an ample deposit
of securities in the mint.
CHINA.
No incorporated banks; private banks are in existence, also foreign
banks, chiefly the Hongkong and Shanghai banking corporation; a
bank can be opened upon reporting its organization to local officials,
who pass upon the matter; no limitation with respect to deposits; interest is allowed on deposits; the Government is not interested as a shareholder in any bank; branch banks are allowed; no provision is made for
reporting the condition of banks to the public; no taxes or burdens are
imposed; banks are expected to aid the Government in emergencies by
loans and subsidies; a special officer is appointed to wind up insolvent
banks; there are no restrictions as to issuing of circulation, and no legal
provisions governing redemption of bank notes; a private bank in each
province performs the functions of the treasury of the Government and
receives taxes, payment of which is required in silver purer than the
coin circulating in the locality, the bank thereby making 2 per cent as
compensation for its services; banks guarantee paper of their customers;
Government moneys are deposited in banks: letters of credit are issued
by banks.
DEXMAKK.
The National Bank of Copenhagen, and private and savings banks.
The national bank was established by a special act, its capital
being provided from taxes levied upon real estate; shareholders own
stock to the extent of taxes; private banks are required to notify the
proper officer of their formation and file by-laws; if by-laws are not
filed the Government takes no cognizance of the corporation; savings
banks are organized under special act, and their by-laws must be sanctioned by the King; the minister of the interior passes upon the organization papers of the other banks; banks are managed by directors;
the national bank is managed by fifteen representatives and four directors, one of the latter being appointed by the King; shareholders of
banks, except savings banks, are only liable for their stock investment;
28
REPORT OF THE COMPTROLLER OF THE CURRENCY.
reports of condition are made monthly and annually by savings banks
to the savings banks' inspector, and by other banks to the bank commissioner; banks are examined by Government officers; loans are
restricted as to time and securities; the national bank is required to
keep a cash reserve of 25 per cent in legal coin of the amount of bank
notes in circulation; the accumulation of surplus is left to the management of the banks; deposits are received by all banks and interest is
usually paid; the Government is not interested as a, shareholder in any
bank; all banks are permitted to operate branch offices; copies of the
monthly and annual reports may be had by the public upon application
to the proper officer; the affairs of insolvent banks are closed the same
as those of other insolvent corporations; the National Bank of Copenhagen is alone permitted to issue national-bank notes, which are secured
by metal reserve or other securities and must be redeemed upon presentation or demand in gold coin; savings banks have a few special
provisions.
ECUADOR.
Commercial banks and mortgage companies. Forty per cent of the
capital is required to be paid in to enable each class of banks to begin
business; the Government officials determine when requirements liave
been complied with; a board of directors is required to manage banks;
shareholders are not liable beyond their investment; reports of condition
are required whenever called for by the Government; examinations are
made by Government officials whenever deemed advisable; restrictions
on amount of loans are left to judgment of directors and also with
respect to security for loans, cash reserve, and surplus fund; there is no
special provision as to receipt of deposits; interest is allowed on time
deposits; the Government is not interested in the banks as a shareholder; branch banks are allowed; reports of condition are occasionally
published in newspapers; a tax of 4 sucres per 1,000 is imposed on circulation issued; Government officers wind up insolvent banks; bank
notes may be issued to three times the amount of silver held; no provision is made for the redemption of bank notes beyond the assets oi
the bank; note holders do not appear to be preferred creditors.
FRANCE.
The Bank of France, commercial, provincial, and colonial banks. The
Bank of France is chartered by a vote of the Chambers; the capital
stock is fixed by statute at 182,500,000 francs (market value nearly four
times that amount); the management of the bank consists of a governor, two deputy governors, a general council of fifteen councilors and
three inpectors; shareholders are not liable beyond their investment:
weekly, semiannual, and animal reports of condition are required; con
stant supervision is required by the governor, his deputies, and the
minister of finance may also examine by inspectors of finance; loans are
restricted to 80 per cent on Government securities, 75 per cent on other
securities, no loans are made on foreign securities; loans are limited to
ninety days and are renewable; advances on accounts current are made
for five days; all securities must be registered in the name of the bank;
a reserve fund is fixed by law at 10,000,000 francs in addition to real
estate for banking purposes; surplus fund is provided for; accounts are
opened by deposit of 500 francs; all deposits are payable at sight at
the bank or any branch; no interest is paid; the Government is not
REPORT OF THE COMPTROLLER OF THE CURRENCY.
29
interested as a shareholder; branch banks are compulsory; the condition of the bank is made public by a weekly balance sheet published
and posted in Bourse and by an annual public statement; a tax of 4
per cent on dividends and special services and privileges are received
from the banks; no special provisions are made for closing up insolvent
banks; circulation is authorized to the extent of 4,000,000,000 francs;
all circulation is guaranteed by a deposit of coin or securities at the
bank; notes are payable in coin on demand and are redeemed in gold.
GERMANY.
The Imperial Bank, commercial and circulation banks, and mortgage
companies. Banks are required to comply with the statute before
transacting business; there is a special statute for the Imperial Bank
and circulation banks, a grant from the States for mortgage banks, and
an eutryin the commercial register for commercial banks; the imperial
chancellor or federal council determines when the conditions ?OY beginning business have been complied with by banks of issue, the^state
governments for mortgage companies, and the commercial court for
commercial banks; the imperial law regulates the capital of banks of
issue and bank statutes fix the capital for other banks; the Imperial
Bank is governed by Imperial bank directors with the president under
the chancellor, the other banks by statutes of the bank and by the business law book; shareholders are not liable beyond the stock fully paid
in; banks of issue are required to make weekly reports and annual
statements; other banks yearly reports; the Imperial Bank is supervised by bank curators, consisting of the chancellor and four members:
other circulation banks by the chancellor and state officers; mortgage banks by state officers; there are no restrictions on the amount
of loans; circulation banks are restricted as to loans; mortgage banks
are required to have real estate security for loans; there are special
provisions for loans of circulation banks; a cash reserve of one-third
of circulation issued is required; circulation banks are required to
have a surplus of one fourth of their capital; other banks have special
provisions; the Imperial Bank must not pay interest on more than its
capital and reserve; interest is allowed in some cases; the Government
shares the profits of the Imperial Bank; Bavaria is interested as a
shareholder in one bank; branch banks are permitted; reports of condition are published when made; there is no tax or fee for granting a
bank charter; the states share in the profits of banks of issue; the
general bankruptcy law applies to the winding up of insolvent banks;
circulation banks may issue notes in various amounts; no new circulating banks can be organized; the redemption of notes is secured by onethird cash or bullion and the remainder by discounts payable in three
months, with at least two solvent sureties.
GUATEMALA.
Commercial banks and banks of circulation. The rules and regulations for the transaction of business must be filed and approved by
the Government; the capital stock and management are governed
by the statutes of the banks; reports of condition and balance statements required to be made semiannually; examinations are made by
Government experts; restrictions on loans are left to the judgment
of the directors; in some banks no cash reserve is required,in others,
two-thirds of the circulation must be held; the accumulation of a surplus fund is left to the judgment of the board of directors; no legal
provision is made governing receipt of deposits; interest is usually
30
REPORT OF THE COMPTROLLER OF THE CURRENCY,
allowed, on time deposits; the Government is not interested as a shareholder in banks; branch banks are permitted; semiannual reports of
condition are required to be published; no taxes or burdens are imposed
on the banks for the privilege of banking; banks are allowed to issue
bank notes to an unlimited amount; sufficient funds must be held by
the banks for redemption of their notes.
HAITI.
The National Bank of Haiti and private banks. Requirements for
organization and management of the national bank are covered by
special statutes; deposits of Haiti currency and American gold arereceived; no interest is allowed on deposits; the Government is not
interested as a shareholder in the bank; branch banks are permitted;
reports of condition are published once a month in an official journal;
the bank pays no taxes for the privilege of banking, but is the fiscal
agent of the Government; private banking firms pay a foreigner's
license; method of winding up insolvent banks provided for by statute; national bank only may issue currency; redemption of currency
in American gold is provided for.
HAWAII.
Private and postal savings banks. A license fee and the filing of a
list of shareholders are required in order to begin banking business;
the minister of the interior determines when the conditions for banking
are complied with; no interest is paid, except by the postal savings
bank, which pays 5 percent; the Government is not interested as a
shareholder; branch banks are permitted; a license fee of $500 and 1
per cent on actual cash held July 1 are required; insolvent banks are
treated as other insolvents; no bank notes are issued; no banks have
gone into liquidation; correspondent banks in San Francisco.
ITALY.
Information furnished as to banks of issue only. Requirements as
to banking provided for by law; no officer appears to be charged with
duty of determining when requirements have been complied with; the
capital of banks of issue must be currency or gold ingots held in bank;
members of Parliament are prohibited from participating in the management of banks; banks are under the supervision of the ministry of
agriculture, industry, and commerce, and the treasury department;
every two years extraordinary examinations are made; loans are
restricted as to time and value of security; real estate mortgages are
taken only for doubtful debts and must be disposed of within three
years; the Bank of Italy can not take its own shares as security; interest is allowed at a restricted rate; the Government is not interested as
a shareholder in banks; branch banks are permitted; a tax of one-half
of 1 per cent semiannually on all circulation in excess of capital is
required; three banks may issue notes for twenty-five years to the
amount of three times their capital; banks are required to redeem their
notes in currency. The security for circulation is currency or gold
ingots to the amount of their capital.
NETHERLANDS.
The Bank of Netherlands and private banks. A deed of foundation is required to be filed and the royal sanction obtained to enable
banks to begin business; no special provision as to the liability of share
REPORT OF THE COMPTROLLER OF THE CURRENCY.
31
holders; the Government is not interested in banks as a shareholder "but
shares in the profits of the Bank of the Netherlands which only is
allowed to issue circulation; branch banks are permitted; annual
reports required to be made, and weekly balances to be stated.
PARAGUAY.
Government, commercial, and private banks in operation. Articles of
association required to be filed upon making application to Government
for permission to do banking business: Government determines when
conditions as to organization have been satisfied; no provisions with.
respect to capital, except when bank enjoys Government privileges its
stock is subject to special arrangement with the Government; all banks
managed by directors, excepting private institutions; in certain cases
the Government selects the directors; shareholders are liable only to
extent of stock held; reports of condition are required to be printed,
published, and distributed annually among shareholders, depositors,
etc: circulation banks are subject to official examination; the directors
of the different banks regulate amount of loans; no restrictions as to
receipt of deposits; interest allowed in most cases; Government interested largely in some banks and also as stockholder, in consideration
of which certain taxes are imposed; branch banks are permitted; information as to condition of banks furnished to the public through the
press and printed reports; one bank pays 5 per cent of its profits annually to the Government; private banks are required to pay a yearly
license of about $170 in gold; the court appoints receivers to liquidate
the affairs of insolvent banks; issuance of circulation allowed in some
cases to the extent of three times the amount of the silver in bank; circulating notes redeemed through the custom-house, 5 per cent of the
custom-house receipts being set aside monthly for that purpose.
PEHU.
Commercial banks and loan companies. Banks are required to file
a copy of their statutes for inspection and the municipality, through its
proper officer, determines when the requirements have been complied
with; the stockholders are not liable beyond their stock investment;
the security for loans is left to the discretion of the bank officers; interest is allowed; the Government is not interested as a shareholder;
branch banks are permitted; reports of condition are published monthly
and semiannual reports are made to local shareholders; a tax of 5 per
cent is imposed on the net profits.
PORTUGAL.
Bank of Portugal and commercial banks. They must obtain the consent of the Government to commence business; the commercial section
of the department of public works determines when conditions have
been satisfied; capital must be fully paid in before a bank is authorized to do business; the management of the Bank of Portugal is vested
in the governor, board of directors of ten, and a fiscal board of seven,
and other banks by a board of directors; shareholders are liable only
for stock investment; the Bank of Portugal reports its condition each
week, other banks once a month; the Bank of Portugal is examined by
the governor of the bank, and the other banks are examined by the
commercial section of the department of public works; there are no
restrictions as to loans so long as the reserve is sufficient, except loans
secured by shares of bank stock are restricted to an amount not exceed
32
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ing 15 per cent of the capital; the security for loans is left to the judg
merit of the management; the Bank of Portugal is required to have 20
per cent of its capital paid in and 10 per cent to make good losses;
other banks are required to reserve 20 per cent of deposits; interest
is allowed at a restricted rate; the Government is not interested as
a shareholder; banks are permitted to conduct branch offices; reports
of condition are published in the official journal; no taxes are imposed
on the banks; the Government commissioner and directors administer the affairs of insolvent banks; the Bank of Portugal, which is the
fiscal agent of the Government, issues all currency in circulation; there
is no provision for redemption, but issue is supposed to be protected
by metal money in the bank vaults.
RUSSIA.
The Imperial Bank, commercial and discount banks, savings and
cooperative banks, loan and mortgage companies. The general rules
or by-laws prescribed in the charter of each bank must be met before
the bank can transact business; the Emperor, through the ministry of
finance, determines when these conditions have been satisfied: there
are special requirements as to capital stock for each bank; they are
managed by a council of administration elected by the shareholders;
shareholders are liable only to the extent of their stock investment;
report of condition is made monthly to the ministry of finance; a public
officer examines the bank at the discretion of the ministry of finance;
various restrictions as to the amount and security of loans are imposed;
there is no uniform requirement as to accumulation of surplus—it is
subject to the discretion of the ministry of finance; the amount of
deposits is limited by the bank's charter; interest may be allowed; the
Government is interested in no bank except the Imperial Bank, which
is a part of the treasury department; banks are permitted to conduct
branch offices; they are required to publish monthly statements of
condition; the net profits of the bank are taxed from 3 to 5 per cent;
insolvent banks are governed by generalT insolvency laws; claims against
insolvent banks are preferred as follow s: (1) Government, (2)employes,
bills of exchange, brokerage, and commission, (3) depositors; no bank
except the Imperial Bank is allowed to issue circulating notes; they
are redeemable in gold or silver, but this provision is not carried out;
Finland is excepted from the foregoing pro visions.
SWITZERLAND.
State and private banks. Banks of issue must have paid-up capital
of at least 500,000 francs and may receive deposits and pay interest;
the Confederation is not interested as a shareholder—some Cantons are;
banks are permitted to conduct branch offices or banks, and are required
to publish weekly, monthly, and annual reports; 1 per cent tax is imposed on average circulation, and Cantons may levy a tax of not more
than G per cent; there is a general law for insolvents; the banks may
issue notes equal to double the amount of endowment capital; the conBent to issue must be obtained from the Federal Council; the Federal
treasury redeems the circulation of banks which have retired from
business.
TURKEY.
Imperial Ottoman Bank, private banks, and limited liability companies are in operation. An imperial firman is required for limited liability companies; the Turkish Government passes upon organization
proceedings; the capital stock, management, and liability of share
REPORT OF THE COMPTROLLER OF THE CURRENCY.
33
holders are fixed by the statutes of the bank; no reports of condition
are required; the Imperial Ottoman Bank is under the nominal supervision of the imperial commissioner; no provisions for examination of
the other banks; there are no restrictions on loans except those contained in the bank statutes; reserve and surplus are determined by the
statutes of each bank or company; interest is allowed on deposits, the
receipt of which is governed by each bank's statutes; the Government
is in no way interested as a stockholder; branch banks are allowed;
information is given to the public usually by semiannual or annual
reports; the Imperial Ottoman Bank is obliged to pay a certain special
tax for the privilege of issuing bank notes; provisions vary for insolvent banks; the Imperial Ottoman Bank alone has power to issue circulating notes to a limit fixed by its statutes; a cash reserve to the
amount of 33 per cent of the face value of the notes must be held in
the bank.
URUGUAY.
Private banks and a national bank (now insolvent). Banks must file
statutes in orderto begin business; the Government, after consulting with
the attorney general, determines when conditions have been complied
with; the statutes must declare the amount of capital stock of the bank
and must provide for its management; shareholders are liable only for
the amount of their shares; only banks of issue publish balance sheets;
a Government inspector certifies the balance sheets; there are no restrictions as to the amount or character of loans, nor as to security therefor;
no provisions for a cash reserve or the accumulation of surplus; there
are no legal provisions governing the receipt of deposits; it is the custom
to allow interest on time deposits; the Government was interested as a
shareholder in the insolvent national bank; banks are permitted to
conduct branch banks or offices; monthly balance sheets of banks of issue
are published; banks of issue are taxed $2,000, others $1,000 per annum,
and $6.50 per annum for all banks on each $1,000 of declared capital;
the insolvent bank is being liquidated by a committee of three, one
appointed by the directors, one by the shareholders, and the third by the
Government; the right to issue circulation, restricted to double the
amount of capital stock, is now limited to two banks; circulating
notes are redeemable in gold; circulating notes of insolvent banks are
preferred claims.
VENEZUELA.
Commercial banks, circulation banks, and mortgage companies.
Banks must pay a license fee and file a deed and rules before beginning
business; the minister of progress determines when conditions have been
complied with; the capital stock must be paid in full before beginning
business; banks are managed by boards of directors; banks are examined by inspector; loans by banks of issue can not be extended to tie
up the capital beyond six months; a cash reserve of 25 per cent of the
capital of circulation banks and mortgage companies is required; accumulation of surplus of 50 per cent of capital, including reserve, is
required; interest is customarily allowed on deposits; the Government
is not interested as a shareholder in the banks; banks are permitted
to conduct branches or offices, and are required to make and publish
quarterly reports of condition; the banks are taxed for the salary of the
inspector and a fee for permit is required; insolvent banks are liquidated by the ministry of progress; banks may issue notes to an amount
not exceeding 50 per cent of their capital; such notes must be redeemed
in currency by the banks.
34
REPORT OF THE COMPTROLLER OF THE CURRENCY.
INFORMATION FROM SOURCE OTHER THAN OFFICIAL.
The information sought at tlie hands of American representatives
abroad not having been received as to all countries at the date of the
writing of the text of this report, other sources have been relied upon
relative to the banking systems of the countries following. In some
instances such information was courteously given by the representative
of the country in question at Washington, and in others it has been
obtained from published works, documents, and reports. In not a few
the facts have been gleaned from Monetary Systems of the World, a
publication recently issued by Maurice L. Muhleman, deputy assistant
treasurer of the United States at Xew York.
All reports received too late to be briefed so as to appear in the text
will be found in full in the appendix.
THE UNITED KINGDOM.
Ill addition to the Bank of England, joint stock and private banks
are permitted, the regulations for organization being contained in
special statutes. The Bank of England is the chief depository of the
Government, which maintains no public treasury; it keeps the registry
of the public debt and pays the interest thereon; it is a private corporation, managed by its own officers, in whose selection the Government
has no share, and whose responsibility is to the stockholders alone, the
Government's interest being limited to the loans secured from the bank;
the circulating notes issued by this bank are the only legal-tender notes
in circulation in the United Kingdom; it is managed by 24 directors, a
governor, and deputy governor; its circulation is secured by a mixture
of securities and specie; the bank is at all times obliged to carry a reserve
sufficient to meet all its demand liabilities, including circulation; there
is no limit upon the liability of shareholders except the amount of claims
against the banks; branch banks are permitted. The Bank of England
is rapidly acquiring all of the note-issuing powers in the United Kingdom, for which its issues department holds specie or securities to the
full amount; its notes must be redeemed in gold; no note is issued for
less than £5, although the Scotch banks' circulation is nearly all of
£1 notes. The Bank of England was founded in 1694, and with various
renewals of charter, until 1S44, given for an indefinite period; the
ordinary banking business and the issues department are entirely separate, although being under the same management; there is no limit
to the amount of notes which may be issued, except as it is limited
in acquiring precious metals. On January 2, 1895, the circulation
rested upon the following securitiy: Gold and bullion, £30,849,895;
Government debt, £11,015,100; other securities, £5,784,900; total
issues, £47,049,895. At the same date the banking department reported
capital, £14,553,000; surplus, £3,192,427; deposits, £44,797,537; other
liabilities, £143,9G7; total liabilities, £G2,G8G%931. Government securities, £14,089,099; other securities, £24,025,528; notes, £21,731,120; coin,
£2,241,184; total assets, £62,G8G,931. The metallic reserve and securities of the issues department are not subject to the other liabilities of the
bank. Notes may be issued upon silver bullion to the extent of onefifth of its metallic reserve. On the same date, January 2 last, there
were 104 joint stock banks in England and Wales, with a capital of
£43,802,887. These banks had 2,4G8 branches or agencies. Ten Scotch
banks, 9 Irish banks, and 41 private banks reported, the 10 Scotch
banks having 995 branches and the 9 Irish banks 484 branches. The
REPORT OF THE COMPTROLLER OF THE CURRENCY.
35
total capital and reserve of these banks in the United Kingdom amounts
to £123,910,000; deposits, £647,391,000. The Colonial banks are 32 in
number, there being 1,733 branches. Of these 17 are in Australia and
New Zealand, 3 in Canada, 4 in Africa, and 8 elsewhere, with capital and reserve amounting to £34,810,252, and deposits aggregating
£161,589,685. Twenty-four banks incorporated in England are doing
business in foreign countries, with capital and reserve of £26,458,576
and deposits of £58,250,057.
GREECE.
Greece has 3 banks which issue notes, apparently without security
SWEDEN.
The Bank of Sweden issues circulation and is managed by officers
appointed by the legislative body of the Kingdom,- circulation is also
issued by private and joint stock banks.
NORWAY.
The Bank of Norway has exclusive note-issuing power; the State
is the principal shareholder and controls its management.
AUSTiUA-IlUXGARY.
The Austro-Hungarian Bank has exclusive note-issuing powers.
The Government is not a shareholder, but is interested in the way of
loans from the bank; its notes are secured cv metallic reserve or
commercial paper or security.
The Bank of Spain is the only one authorized to issue notes,* the
Government is not interested as a stockholder but the bank is used
for Treasury purposes,- business is transacted through branches; a
metallic reserve of one-fourth of the circulation must be maintained.
ROUMANIA.
The National Bank of Roumania is vested with note-issuing powers;
its notes outstanding approximate 116,000,000 leis; circulation is permitted to two and a half times the amount of coin reserve.
SERVIA.
The National Bank of Servia is authorized to issue circulating notes
to the amount of three times its metallic reserve.
BULGARIA.
The National Bank of Bulgaria has power to issue circulation; a
statement in 1894 shows the capital, in lews, 10,000,000; reserve, 750,000;
circulation, 1,600,000, and deposits, 35,000,000.
INDIA.
Bank circulation has been prohibited in India since 1861; there are
10 large banks, with branches, doing a general banking business; the
aggregate capital of 5 of these banks is £2,331,926.
36
REPORT OF THE COMPTROLLER OF THE CURRENCY.
JAPAN.
A system of national banks in Japan is in existence, closely resembling the national banks in this country; they are authorized to issue
circulation secured by a deposit of bonds, but it is intended that the
Bank of Japan shall ^oon be vested with the exclusive power to issue
circulation; the last available report from this bank shows circulation
to the extent of 134,505,140 yen; it may issue circulation equal to its
actual deposits of specie or bullion and also upon certain securities.
Its total reserve of precious metals and securities at last report was
145,572,739 yen; it is compelled to redeem its notes in silver yen;
there are many incorporated private banks doing business in Japan;
the combined capital of 100 of these is 02,910,100 yen, with surplus
and profits exceeding 42,000,000 yen; 004 private banks report capital
and surplus exceeding 31,000,000 yen.
PERSIA.
The Imperial Bank of Persia and its branches have power to issue
circulation; a recent report shows its capital to be £1,000,000; reserve,
-£100,000; circulation, £59,107, and deposits, etc., of £904,570.
EGYPT.
A large number of banks are in existence in Egypt, but none have
power to issue circulation.
ALGERIA.
The Bank of Algeria and its branches is conducted in a manner similar to that of the Bank of France, and has authority to issue circulation.
REUNION.
The National Bank of Reunion issues bank circulation estimated at
12,000,000 francs.
CAPE COLONY.
In Cape Colony there are 3 banks which issue circulation; branch
banks are permitted; the last available report shows capital and surplus amounting to £2,352,045, circulation, £840,3403 and deposits,
£11,099,015.
NATAL.
The Natal Bank issues circulation; its capital and surplus at last
report aggregated £834,000; its circulation was £190,599, covered by
reserve in specie.
TRANSVAAL.
The National Bank of the South African Republic issues bank circulation which, from last available report, amounts to £130,183; the
capital and surplus of the bank amount to £510,000.
AUSTRALASIA.
Seventeen banks and their branches, chartered by the home Government in England, are authorized to issue circulation; several banks
with local charters are authorized to issue circulation to the extent of
their capital. These banks have assets amounting to £104,000,000,
holding a coin reserve of £19,000,000, and have issued notes to the
REPORT OF THE COMPTROLLER OF THE CURRENCY.
37
amount of £4,671,000. In New Zealand the existing banks are required
to furnish frequent reports, in some cases as often as weekly.
EAST INDIA.
The Bank of Java, having a capital of 6,000,000 guilders, is authorized to issue circulation; it now has outstanding notes to the amount
of 45,500,000 guilders, two fifths of which is covered by specie reserve.
A local bank in the Philippine Islands issues notes which are fully
protected by reserve.
WEST INDIES.
The West Indies are supplied with bank circulation by the Nassau
Bank of the Bahamas and the Colonial Bank of Jamaica.
SANTO DOMINGO.
The National Bank of Santo Domingo issues circulation in a small
amount.
GUADELOUPE.
One bank in Guadeloupe has issued circulation to the amount of
5,500,000 francs, holding a two-fifths specie reserve therefor.
National and State banks. The Federal Government issues grants
and each State has a right to issue charters to banks established
within its own limits; the National Bank of Mexico has the exclusive
right to issue notes to the amount of three times its capital and general
deposits; public officials supervise the issue of bank notes; branch
banks or agencies are permitted; the bank is the fiscal agent of the
Government.
COSTA RIGA.
Costa Eica has 2 banks, with a capital of 100,000 and 150,000 pesos,
respectively.
SALVADOR.
Salvador has 3 incorporated banks and 1 private bank, with a combined capital of 5,300,000 pesos.
The Bank of the Republic of Brazil, with a capital of 190,000,000
milreis, is authorized to issue circulation; most of the banking business
is carried on by branches of the foreign banks.
ARGENTINA.
Argentina has 14 incorporated banks, 38 private banks, and a number of mortgage banks. The Banco Nacional has a number of branches
and a capital of 50,000,000 pesos. The 52 incorporated and private
banks have a combined capital of 102,800,000 pesos and deposits of
87,400,000 pesos and circulation to the amount of 90,000,000 pesos.
BOLIVIA.
The Bank of Bolivia and the Bank of Potosi are vested with noteissuing powers, the notes being partially protected by silver.
38
REPORT OF THE COMPTROLLER OF THE CURRENCY.
R1UTISII COLUMBIA.
The banks of British Columbia have issued circulation to the amount
of about 16,000,000 pesos; a coin reserve of about 3,000,000 pesos is
held.
liRITISH GUIANA.
The Colonial Bank and the British Guiana Bank have issued circulation amounting, respectively, to $300,000 and $380,000.
STATE BANKING- SYSTEMS.
In furtherance of the attempt to collect information on banking systems now iu vogue a personal letter was addressed to the State officer
having the banks in charge, or to the governor of each State and Territory of the Union, requesting from such officer that this Bureau be
furnished with as complete data as possible. While many of the replies
were promptly received and the answers given very satisfactory, yet it
has been almost impossible to secure the information from several, even
with the assistance of the corps of national-bank examiners. An
abstract has been prepared similar to the one relating to the foreign
systems. While it is imperfect in many ways it may serve to show the
strength and weakness of our State systems when considered in the
aggregate. The reports were based upon the following questions which
were inclosed in the letter to the State officers:
1. Give tlic different classes or kinds of banks permitted by law to do business in
your State.
2. What legal requirements must bo met in order to enable each, class of banks to
begin the actual business of banking?
3. What officer determines when these conditions have been satisfied?
4. Give the legal provisions governing each class of banks as to the following, viz :
(a) Amount and payment of capital stock; \h) the management of the bank; (c) liability of shareholders for claims against the bank ; (d) making reports of condition ;
(e) examination or supervision by State officials; (/) restrictions of any character
on loans by the bank; (g) amount of cash reserve required; (h) accumulation of
surplus required.
5. Give the legal provisions, if any, governing the receipt of deposits by each class
of banks, and state if it is generally the custom of the banks to allow interest on
deposits.
6. To what extent, if any, is tho State interested as a shareholder in any of the
banks?
7. Are any of tho banks permitted to conduct branch offices or banks?
8. To what extent and by what medium is information furnished to the public as
to tho condition of any of the banks?
9. What taxes or burdens arc imposed upon the banks in return for the banking
privilege granted them ?
10. Give as full information as possible as to the legal provisions for closing up the
business of insolvent banks.
11. Give the legal provisions covering or referring to the issue of bank circulation.
12. Give a brief sketch showing the principal points in the law of your State
relating to savings banks.
In addition to the national banks the States have made use of the
privileges arising from incorporated State banks, savings banks, private banks, and, in most cases, trust companies. While a small number of them have made no special provision for savings banks, such
institutions hay.e obtained a strong foothold in all of the older States
and many of the newer.
Thirty-three States require a part or all of the capital stock to be paid
in and certificates filed with the proper officers as preliminaries to the
chartering of the banks. Seven States require special acts to authorize
REPORT OF THE COMPTROLLER OF THE CURRENCY.
39
new banks. Six States make no special provision for banks, but they
are organized under the general incorporation laws of the States. The
law in seven States designates no officer to determine when a bank is
entitled to begin business. The secretary of state is named in fifteen States. The auditor, comptroller, treasurer, bank commissioners,
and superintendent are also empowered in several States to charter
new banks. The amount of capital required varies from no provisions
at all, and elsewhere from $5,000 to $100,000 minimum, to a maximum
in some States as high as $10,000,000. While in a few States the law
is very loose in this particular, yet the great majority of them require
a fair amount of capital, half or all paid in, the balance, if any, to be
paid within two years at the most. A few States require savings banks
to have a definite capital on which dividends are paid, if the earnings
justify it. The management of the various kinds of banks under State
laws is vested, in a board of directors, or trustees, who elect the executive officers and are expected to have general supervision over all the
affairs of the banks.
In eighteen States no additional liability is undertaken by the purchaser of bank stock. Twenty States add a double liability, or an
amount equal to the par value of the stock, upon shareholders in banks.
Two States provide for the pro rata liability for all debts incurred
while the party was a stockholder. While most of the banks are
required to make reports as often as quarterly, four of the States and
one Territory do not require any report whatever. Six others require
but one report a year. The remainder range from two to five a year,
and special reports upon call being made for them. Six States make
no provision for giving information to the public. The older States, in
most instances, require reports to be published in local papers. There
is no provision in twelve States for examination by State officials. The
other States appear to authorize examinations as often as once a year,
and additional examinations as deemed advisable.
Seven States have no restrictions at all upon the loaning privileges
of the banks. Several restrict savings banks in amount, security, and
time. Mne States restrict or utterly prohibit loans to officers or
employes. Most of them prohibit loans on security of the bank's own
stock. Twenty-four States do not require any cash reserve at all. The
banking departments of a few others require a reserve of a greater or
smaller amount, although the law is entirely silent on the point.
Twenty-one States require a reserve varying from 10 to 33J per cent
for banks of discount and deposit and from 5 to 50 per cent for banks
of issue.
Twenty of the States have no legal provision relating to the accumulation of a surplus fund. Twenty-three States have such provision
varying from 5 to 25 per cent for commercial banks and most savings
banks. One State has enacted that savings banks shall retain as surplus not less than 3 per cent and not more than 10 per cent of deposits.
The amount of single or total deposits is limited for savings banks
by the laws of thirteen States. The amounts vary from $1,000 to
$5,000 for single depositors, and from ten to twenty times the amount
of capital in the aggregate. Interest is allowed on deposits in forty of
the States, restricted to savings banks and trust companies in one State,
while one State reports that it is not customary to allow any interest.
Forty-one States report no interest in the stock of the banks, while
three States have invested larger or smaller amounts of the public
funds in bank stocks.
40
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Thirteen States do not allow branch banks. Ten States report no law
prohibiting them nor providing for their establishment. In twenty
States branches are permitted, and to some extent encouraged by
favorable legislation.
Thirty States require the reports of the banks to be published in local
newspapers. Twenty States give information concerning the banks in
annual or biennial reports. Six States leave it entirely voluntary with
the banks.
Seven States exact a license or privilege tax for engaging in banking.
Eighteen States have no special provision relating to taxation of banks.
Eight States require the banks to pay the expenses of examination, and
some of these add the expense of the State banking departments. A
few States have special tax provisions which apply only to banks.
In nearly all of the States insolvent banks are managed in the same
manner as other insolvent concerns. In 1 State the officers of the
bank bring its affairs to a close under the supervision of the bank commissioners. Two States i>rovide that claims against savings banks on
insolvency may be scaled down or a receiver appointed. One State prohibits preferences, while 2 States prefer depositors under certain
conditions.
Fourteen States allow banks to issue circulation. Nineteen States
prohibit banks from issuing circulation, and several have no legal provisions touching the question.
The greater number of the States allow savings banks to be incorporated either under a savings-bank law or under the general incorporation acts. A few States require capital stock. One State requires dividends to be paid of not less than 5 per cent. Another State requires
the incorporators to give bonds in amount of $5,000 each. There are
many other special provisions which can not be here enumerated. In
the appendix will be found the reports as submitted. Herewith is given
in brief a synopsis of them, together with a bare outline of the main
pro visions of the national-bank act.
NATIONAL BANKS.
Upon executing and filing with the Comptroller of the Currency
articles of association and organization certificate in accordance with
the requirements of the law, and satisfying him that 50 per cent of the
capital has been paid in in cash, and upon the deposit of the necessary
amount of United States bonds for securing circulation, his certificate
issues authorizing the bank to begin business. Where the population
of the place of location is less than G,000 inhabitants, minimum capital
$50,000; less than 50,000 population, minimum capital $100,000; over
50,000 population, minimum capital $200,000; 50 per cent to be paid in
before bank begins business and remainder 10 per cent a month. Directors (not less than five) manage bank. Shareholders are subjected to
double stock liability.
Five reports of condition are required each year, to be made on call
of the Comptroller of the Currency. Every national bank is subject
to examination by a national-bank examiner whenever the Comptroller
deems it necessary or advisable. Loans to one person or firm in excess
of 10 per cent of capital are prohibited. Real estate and stock of the
bank are not to bo taken as security, unless for the protection of preexisting debts. Twenty-five per cent cash reserve is required in reserve
cities and 15 per cent elsewhere. A surplus of 20 per cent must be
accumulated. There are no special provisions concerning the receipt
REPORT OF THE COMPTROLLER OF THE CURRENCY,
41
of deposits, and many of the banks allow interest. United States not
interested as a shareholder in any of the banks. Branch banks not permitted except for converted State banks. Reports of condition must
be published in local newspapers, and summaries are distributed by the
Comptroller and included in his annual report to Congress. Banks are
taxed one-half of 1 per cent semiaunually upon the outstanding circulation, are assessed for expense of preparing and redeeming circulation, and for examinations, in addition to such taxes as may be placed
upon them under the laws of the various States in which they operate.
Insolvent banks are liquidated by receivers appointed by the Comptroller of the Currency. Any national bank may receive in circulating
notes DO per cent of the par value of its bond deposit, which deposit
must not exceed 7the amount of capital stock. Some national banks
operate a savings department, which is conducted in accordance with
the judgment of the bank directors, so long as the law is not violated.
ALABAMA.
State and private banks. Capital required, $50,000, one-half of which
must be paid in before authority is given to commence business; the
Secretary of State passes upon all organization papers; the minimum
capital allowed is $50,000; the maximum capital of State banks, $500,000 5
not less than three directors are required to manage a bank; no information furnished as to the liability of shareholders, reports of condition,
examinations, or supervision by State officials, restrictions to loans,
whether any reserve or surplus fund is required, nor as to the provisions
governing the receipt of deposits and payment of interest; the State is
not interested as a shareholder in any of the banks; no information
furnished on the subject of branch banks, nor as to the publication of
reports of condition; banks are taxed the same as other corporations;
no information given on the subject of insolvent banks; circulation
redeemable in gold or silver may be issued; no information furnished
on the subject of savings banks.
A RIZONA.
Territorial commercial, savings, and private banks. Banks are organized under general corporation law; the Territorial auditor, who is
ex officio bank comptroller, examines organization papers; the capital
of banks is determined by provisions of the articles of association;
banks are managed as provided in the articles of association; shareholders are liable for double the amount of stock held, unless exempted
by the articles of association; banks make three reports of condition a
year; they are examined once a year by the comptroller or an expert
examiner; savings banks are restricted as to kind and value of security
and time of loan; Territorial commercial banks are required to have a
reserve of 15 per cent of deposits and borrowed money; savings banks
must have 5 per cent of net profits as.a surplus fund; there are no provisions governing deposits; the Territory is not a shareholder in any of
the banks; branch offices or banks are not provided for; banks publish
reports of condition in newspapers; banks pay as taxes a license of $5
and costs of examination; receivers are appointed by the court for
insolvent banks, and proceedings are brought by the attorney-general;
no provision is made for circulation; the time, value, and security of
loans of savings banks are fixed by statute, and three reports a year
are required.
42
REPORT OF THE COMPTROLLER OF THE CURRENCY.
A Jt KANSAS.
State, savings, and private banks. Banks are organized under general
corporation law; organization papers are liled with the Secretary of
State; the capital stock is determined by the certificate of organization;
directors manage the affairs of the bank; shareholders are liable only
for the amount of their stock investment; an annual statement is
required from each bank; they are not subject to examination; there
are no provisions for reserve or surplus; no restrictions as to deposits;
interest is allowed; the State is not a shareholder in any of the
banks; branch banks are permitted if directors desire to conduct them;
the publication as to the condition of the banks is entirely voluntary;
they*are taxed the same as other corporations; insolvent banks are
closed by the chancery court and preferences are forbidden: the issue
of bank circulation is prohibited by the State constitution; there are
no special provisions regarding savings banks.
CALIFORNIA.
State, savings, and private banks. One-half of the capital stock
must be paid in at the organization of a bank; the secretary of state
and board of bank commissioners pass upon organization papers; the
minimum capital allowed is from $5,000 to $200,000, according to population, payable within two years; directors manage the banks, a majority of'whom is a quorum; stockholders are liable pro rata for debts;
banks make reports of condition three times a year upon call of the
bank commissioners; the bank commissioners examine each bank at
least once a year; savings banks are restricted as to time and security of
loans; there is no provision for cash reserve; 25 per cent of the capital
is required as a surplus fund: there is no provision as to deposits;
interest is allowed; the State is not a shareholder in any of the banks;
branch offices or banks are allowed; an annual report of condition
of all the banks is published by the bank commissioners; insolvent
banks arc required to be closed by the bank commissioners within four
years unless the time is extended by the proper authorities; bank circulation is i>rohibited; savings banks are subject to special provisions.
COLORADO.
State, savings, and private banks. One-half of the capital stock
must be paid in at organization; there is no officer designated to decide
when the requirements as to organization have been met; the minimum
capital of State banks is $30,000, 50 per cent of which must be paid
in, and the balance within one year; the minimum capital for savings
banks is $25,000, all of which must be paid in; directors manage the
banks; there is a double liability for shareholders; State banks report
as to condition when making dividends; savings banks report their
condition four times a year; banks are not subject to examination;
loans of banks are restricted as to security and amount; 20 per cent
of savings deposits are required as a reserve; there is no provision for
a surplus fund and no restrictions as to the receipt of deposits; interest
is allowed; the State is not a shareholder in any of the banks; branch
offices or banks are prohibited; all reports of condition of banks are
published in the newspapers; banks are taxed the same as other
corporations; depositors are preferred creditors in insolvent savings
banks; employes are preferred creditors to the amount of $50; bank
circulation is not permitted; the capital, loans, etc., of savings banks
are covered by special statutes.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
43
CONNECTICUT.
State, savings, and private banks and trust companies. Banks are
organized under special act of the general assembly 5 the bank commissioners determine when the conditions have been satisfied; the
amount and payment of capital Is provided for in the petition for incorporation; State banks are managed by directors and savings banks by
trustees; stockholders are liable only to the amount of the stock investment ; reports of condition are made by State banks and trust companies
quarterly and by savings banks annually; they are examined by bank
commissioners at least twice a year; banks are restricted as to security
for loans to employes and as to amounts to directors and others; 10
per cent of the liabilities, except capital, is required as a reserve; savings banks must carry at least 8 per cent and not more than 10 per cent
of deposits as a surplus; savings banks are restricted to receiving not
more than $1,000 deposit a year from any one person; interest is
allowed; the State is not a shareholder of any of the banks; branch
offices or banks are not allowed; statements of condition are published
quarterly, and are contained in the annual report of the bank commissioners; banks are taxed 1 per cent on capital stock and must pay the
commissioners' salaries by pro rata assessment on deposits; the court
appoints receivers for insolvent banks; there are no provisions concerning circulation; the organization and conduct of savings banks is
provided for by special statute.
DELAWARE.
State, savings, and private banks and trust companies. Special charter must be obtained from the legislature; no officer is designated to
pass upon organization papers; the amount and manner of payment
of capital is'provided for by special charter; directors manage the affairs
of banks; shareholders are liable only for the amount of their stock
investment; banks make semiannual and annual reports of condition;
they are not subject to examination; they are not restricted as to
loans; no requirements as to the amount of cash reserve; no provisions
as to accumulation of surplus, and none as to the receipt of deposits;
interest is allowed on deposits; the State may be a shareholder; banks
are permitted to conduct branch offices; occasional publication of statements of condition; annual reports of savings banks and one other
bank are required; a tax of 1 i: per cent is imposed on the market value
of shares, except trust companies; receivers are appointed by the chancery court for insolvent banks; one bank can issue circulation not
exceeding twice its capital stock; there are no special provisions of
law relating to savings banks.
DISTRICT OF COLUMBIA.
Trust companies, savings and private banks. Trust companies must
file for record, witli the recorder of deeds, organization certificate, the
District Commissioners' certificate of approval, and the certificate of
the Comptroller of the Currency that the capital has been paid and
securities equal in amount to one-fourth of the capital stock deposited
with him, as required by law; authority to begin business is issued by
the Comptroller; capital stock of at least $1,000,000 is required; directors, not less than nine nor more than thirty, manage; shareholders,
in addition to their stock, are liable to an amount equal to their investment in stock; reports of condition are made to the Comptroller when
called for from national banks and are published in the newspapers
44
REPORT OF THE COMPTROLLER OF THE CURRENCY.
and Comptroller's annual report; examinations are made by direction
of the Comptroller when deemed necessary; the companies allow interest
on deposits; taxes are paid to the amount of 1£ percent of gross earnings during the preceding year; in case of insolvency, the Comptroller
liquidates the trust; preferences in cases of insolvency are given to
claims of a fiduciary character; the other banks are either operated
under special act of Congress or are not subject to any of the provisions
of the Federal statutes.
FL0K1DA.
State, private, and savings banks and trust companies. Five incorporators are required to organize a bank; the State bank comptroller
passes upon organization; $20,000 capital is required for savings banks,
and from $15,000 to $50,000 for State banks, one-half of which must be
paid up and the balance in 10 per cent monthly installments; not less
than five directors are required to manage the affairs of the bank;
shareholders are liable for double the amount of their stock; banks are
required to make at least two reports annually, and as many more as
may be called for; no information given relative to examination by State
official; savings banks only are restricted as to loans; a 20 per cent
cash reserve and a 20 per cent surplus fund is required; savings banks
are not allowed to receive deposits in excess of $1,000 and with accrued
interest in excess of $1,000; no information is given as to whether the
State is interested as a shareholder in any of the banks; banks are permitted to conduct branch offices or banks; no report was made as to
whether banks are required to make a public statement of condition
or whether any tax is imposed on them; the court appoints receivers
for insolvent banks; no report was made as to issue of circulation, and
none as to the provisions of law relating to savings banks.
State and savings banks. Three incorporators are required and
$25,000 of capital must be paid in before banks can commence business;
the secretary of state passes upon the organization papers; in the
case of a bank with $50,000 capital stock one-half is required to be
paid up, but banks with a capital of $25,000 are required to pay up the
full amount before commencing business; not less than five nor more
than twelve directors are required; banks of issue are required to make
reports quarterly, or more frequently if called for; the bank inspector
examines banks of issue; in banks of issue loans to officers are limited
to 25 per cent, and not more than 10 per cent to any one officer; indorsement of officers is prohibited; banks of issue are required to have a
reserve of 50 per cent in capital and 25 per cent of deposits; other
banks must have a reserve of 25 per cent and a surplus fund of 5 per
cent of the net earnings; no information furnished relative to the provisions governing deposits or interest on the same, or whether the State
is a shareholder in the banks, and none as to whether banks are permitted to conduct branch offices; reports of condition are published;
receivers are appointed for insolvent banks; the issue of bank circulation is limited to one and one half times its capital, and is a first lien
on assets redeemable in United States legal coin or currency; there is
no special provision of law relating to savings banks.
IDAHO.
State and private banks. They must file articles of incorporation; the
recorder of the county or secretary of state determines when the conhave been satisfied; the amount and payment of capital stock
Digitized forditions
FRASER
REPORT OF THE COMPTROLLER OF THE CURRENCY.
45
is provided for in the articles of incorporation; not less than five nor
more than eleven directors are required to manage the affairs of the bank;
shareholders are liable only for the amount of their stock investments;
no reports of condition are required; the governor may order an examination or inquiry into the affairs of any corporation; no restrictions of
any character are imposed on loans by the bank; no cash reserve and
no accumulation of surplus are required; there are no provisions governing the receipt of deposits, and interest is usually allowed; the State
is notinterested as a shareholder in any of the banks; there are no legal
provisions as to branch banks or offices; no published reports of condition are made; a tax is imposed on banks based on their capital and
credit; the court appoints receivers to close up the affairs of insolvent
banks; banks are not permitted to issue circulation; there is no special
provision of law relating to savings banks.
ILLINOIS.
State, savings, and private banks and trust companies. Application
for authority to organize banks must be filed and capital stock paid in
in full; the auditor of public accounts determines when the necessary
provisions have been complied with in order to begin business; the
capital stock required for all banks, except private (for which there is
no provision), varies from $25,000 to $200,000, depending upon the population of the place in which located; the management of the banks is
delegated to the directors; the stockholders of incorporated banks are
liable for all claims against associations, in addition to their capital
stock, in amount equal to their investment in stock; incorporated banks
are required to make reports of their condition at least quarterly, and
oftener if called for; private banks make no report; incorporated banks
are examined atleast once a year; private banks are not examined; loans
to one person or firm, by incorporated banks are limited to 10 per cent
of their capital stock; there are no legal provisions with respect to cash
reserve, but the banking department requires the banks to maintain a
reserve of 15 per cent on time and 20 per cent on demand deposits;
there are no provisions of law for the accumulation of surplus funds;
interest is allowed on deposits, but there are no legal provisions relative to deposits; the State is not a shareholder in the banks; branch
banks or offices are not provided for by law, and the banking department does not permit their operation; reports of condition of incorporated banks are published in the newspapers and in the auditor's
periodical statements; private banks make no reports; there are no
special taxes levied on banks, except for examinations and reports;
receivers for insolvent banks are appointed by the court; the issue of
circulating notes is not permitted; there are no special laws governing
savings banks.
INDIANA.
State, savings, and private banks and trust companies. Trust companies are required to have a paid-up capital stock of at least $100,000
and other incorporated banks at least 50 per cent paid in of their capital prior to beginning business; the judge of court determines when the
requirements of law with respect to savings banks have been complied
with and the auditor of State of trust companies; the minimum amount
of capital stock required of banks is $25,000, of which one-half must
be paid in in cash and the balance within six months thereafter; trust
companies before beginning business must pay in $100,000 of their capital stock and the remainder as ordered; the management of State
46
REPORT OF THE COMPTROLLER OF THE CURRENCY.
banks and trust companies is delegated to directors and of savings
banks to trustees; shareholders are liable on claims against the bank
in addition to tbeir stock to an amount equal to their investment in
stock; State banks are required to make live reports and savings and
trust companies one report annually to the State auditor; examinations
of banks are made at the order of the State auditor; loans by savings
banks are restricted as to security, time, and amount; there are no
legal requirements with respect to keeping a cash reserve; State banks
are required to accumulate a surplus amounting to 25 per cent of their
capital and savings banks an amount equal to 10 per cent of their
deposits; there are special provisions of law relative to deposits, and
interest is allowed by the banks; the State is not a shareholder in the
banks; branch banks or offices are not permitted; State-bank reports
are required to be published and, including those of savings banks and
trust companies, are also published in the auditor's annual report; no
special tax is imposed on banks; receivers for insolvent banks are
appointed by the court; the issue c<circulating notes is not permitted;
a special law governs savings banks.
IOWA.
State, savings, and private banks. Each bank must publish a notice
and pay up capital before beginning business; the auditor of the State
passes upon organization; capital from $25,000 to $50,000 for State
banks and from $10,000 to $50,000 for savings banks is required; directors manage the banks; there is a double liability of shareholders; banks
make reports when called for by the State; an examination of State
and savings banks once a year is required; loans to officers are limited
to 20 per cent to one person; there is no legal requirement as to cash
reserve, but the auditor requires 15 per cent of deposits for State banks;
there are no legal provisions for surplus; savings banks are limited in
deposits to ten times the amount of their capital; interest is allowed;
the State is not interested as a shareholder in any of the banks; none
of the banks are permitted to conduct branch offices or banks; quarterly reports are published and an annual report by the auditor; the
expense of examination is borne by the banks, and they are taxed as
other corporations; the court appoints receivers for insolvent banks;
deposits of insolvent T banks are preferred; bank circulation is not permitted; a special law exists in reference to savings banks.
KANSAS.
State, private, and savings banks. All banks must be examined by
the bank commissioner or his agents and receive a certificate from him
before beginning business; the bank commissioner determines when
requirements as to organization have been met; the minimum amount
of capital is $5,000, one-half of which must be paid in and the balance
in monthly installments of 10 per cent; the management of banks is
vested in a board of directors of not less than 5 nor more than 13; shareholders are liable in double the amount of their stock; reports of condition must be made four times a year or oftener, at the discretion of
the bank commissioner; examinations must be made at least once a
year by the commissioner or his deputy; not more than 15 per cent of
the capital and surplus may be loaned to one person, firm, or corporation; there is no restriction as to character of security taken for loans;
a reserve of 20 per cent of the deposits must be kept on hand, one-half
of which may be on deposit with other solvent banks; 10 per cent of
REPORT OP THE COMPTROLLER OF THE CURRENCY.
47
the profits of the six months preceding the dividend period must be
carried to surplus until this fund equals 50 per cent of the capital;
there are no regular provisions governing the receipt of deposits;
interest is generally allowed on time deposits, the rates varying in different parts of the State; the constitution prohibits the State from
holding stock in any banking institution; there is no provision in regard
to branch banks; reports of condition are required to be published at
least four times a year; there are no special taxes imposed except for
expense of examinations; the court appoints a receiver for insolvent
banks on application of the attorney-general; the constitution provides that all banking laws shall require as collateral security for the
redemption of circulating notes a deposit with the auditor of the State
of interest-bearing bonds of the United States or of the several States
at the market prices of the New York Stock Exchange in an amount
equal to the circulation which the bank is authorized to issue, and shall
keep on hand in its vault at all times in cash 10 per cent of the total
amount of its circulating notes; the general banking law governs
savings banks.
KENTUCKY.
State, savings, and private banks and trust companies. They must
obtain a special charter and file a certificate of payment of capital
before commencing business; the Secretary of State passes upon organization; the amount of capital is regulated by charter; the directors
manage the banks; the shareholders are liable only on stock investments; double liability goes into effect September, 1897; reports are
required quarterly and may be called for oftener; there is no supervision by State officers, and no examination required; loans are limited to
20 per cent of the capital; no cash reserve is required; a surplus of 20
per cent of capital must be maintained; there are no provisions relating to dexx)sits; interest is allowed; the State is a shareholder in banks;
several banks have branches; reports of State banks are published;
semiannual reports of private banks are published and are open to
inspection at all times; no special taxes are imposed upon banks; the
assignees distribute the assets of insolvent banks; the banks are not
permitted now to issue circulation; there is no special law relating to
savings banks.
LOUISIANA.
State, savings, and private banks. The banks must comply with the
provisions of the general corporation law
in order to begin business;
no officer is designated to determine wrhen the conditions have been,
complied with; capital for State banks to the amount of $100,000 (with
certain exceptions) is required to be paid in within twelve months,
and capital of savings banks $50,000, of which 20 x>er cent must be
paid in; the directors manage the banks; shareholders are liable only
to the amount of their stock investment, in private banks they are
personally liable for all debts; quarterly reports are required; supervision of banks is delegated to State Treasurer and Secretary of State;
no loans are allowed on the security of a bank's own stock; a reserve
of one-third of their cash liabilities is required to be held in specie, and
the balance in specie or receivables; there are no legal provisions
regarding surplus or deposits; interest is allowed by savings banks;
the State is not interested as a shareholder in any of the banks; there
is no law prohibiting branch banks; quarterly statements of condition
are published; a license tax on capital and surplus is imposed; the
court appoints commissioners to close up insolvent banks; the statutes
provide
for circulation.
48
KEPORT OF THE COMPTROLLER OF THE CURRENCY,
MAINE.
Savings banks and trust companies. Savings banks are organized
tinder general laws and trust companies by special act; the bank examiner passes upon organization papers; the amount and payment of capital stock is regulated by charter; savings banks have no capital; trust
companies are managed by directors, savings banks by trustees; stockholders in trust companies are doubly liable to the amount of their
stock; reports of condition are made by savings banks once a year, trust
companies twice a year, and savings banks and trust companies when
called for; examinations are made by State officials once a year; savings
banks are restricted in various ways; trust companies must maintain
15 per cent on certain deposits as a cash reserve, and savings banks a
surplus of one-fourth of 1 per cent of their average deposits; deposits in
savings banks are limited to $2,000 by certain depositors; interest is
allowed; the Stateis not a shareholder in any of thebanks; savin gsbanks
are not permitted to conduct branches; trust companies may do so; the
examiner's report is published in local newspapers and in annual report;
savings banks pay a tax of three-fourths of 1 per cent on average deposits, surplus, and undivided profits; insolvent banks and trust companies
are closed by receivers, savings banks by receivers or scaling down
deposits; there is no issue of bank circulation; a special law governs
savings banks.
MARYLAND.
State, savings, and private banks and trust companies. The capital
stock is required to be paid in full, except for savings banks, and organization papers must be filed; the court grants charters for savings banks;
the amount of capital required for banks other than savings banks in
Baltimore is $300,000; elsewhere, $50,000; the management of banks is
vested in a board of not less than live nor more than seven directors;
shareholders are liable for claims against the bank only to the amount
of their stock investment; annual reports of condition are required;
no provision is made for examination of banks; loans to the State or
the United States are limited to $50,000, to other States prohibited;
there are no legal provisions for a cash reserve or surplus fund, and
none governing the receipt of deposits to each class of banks; interest
is allowed; the State is not interested as a shareholder in any of the
banks; no legal provisions exist for the conduct of branch offices or
banks; reports of condition are published in newspapers; no special
taxes are imposed; assets of insolvent banks are distributed to creditors; the issue of circulation is permitted to the amount of capital
stock; not less than HYG incorporators are required for savings banks.
MASSACHUSETTS.
Savings and trust companies and State and private banks. An act of
incorporation is obtained from the general court; trust companies must
pay in their capital in full: the general court and board of commissioners of savings banks pass upon organization papers; savings banks
have no capital; the amount of capital of trust companies is fixed by
charter and all required to be paid in; directors are required for trust
companies and trustees for savings banks; no liability exists for shareholders of savings banks; shareholders of trust companies are liable
only for the amount of their stock investment; annual reports are
required from savings banks and trust companies, and examination of
banks once a year by the savings-bank commissioners; loans of savings banks are limited to amount, character, and value of security,
REPORT OF THE COMPTROLLER OF THE CURRENCY.
49
loans of trust companies limited to amount and character of security;
15 per cent cash reserve is required for trust companies, no reserve
required for savings banks; savings banks must maintain a surplus
fund of 5 percent of their deposits; savings-bank deposits are limited
to $1,000 for a single depositor; interest is allowed; the State is not a
shareholder in any of the banks; branch offices are not permitted;
semiannual reports of trust companies and7 annual reports of all banks
are published in the bank commissioners report; a tax is imposed on
savings banks to the amount of one-half of 1 per cent on average
deposits, less exemptions; the court appoints receivers for insolvent
banks; no existing bank can issue circulation; savings banks must pay
5 per cent in dividends per annum.
MICHIGAN.
State, savings, and private banks. Articles of association must be
filed; the commissioner of banking determines when conditions have
been satisfied; the amount of capital required is from $15,000 to $50,000,
one-half of which must be paid in and the balance in monthly installments of 10 per cent; the management of a bank is vested in directors,
of whom there must be at least five; double liability is imposed upon
stockholders; four reports of condition a year are made on call of the commissioner and annual examinations are made by the deputy commissioner or clerk of the banking department; loans are restricted to 10 per
cent of capital and surplus and to 20 per cent to one firm or person on
a vote of two-thirds of the directors; a cash reserve of 15 per cent of
deposits is required; reserve cities with a population of 100,000 are
required to keep 20 per cent of commercial deposits and 5 per cent of
savings deposits; a surplus fund of 20 per cent of capital is required ;
no legal provisions exist in regard to the limit of deposits; interest is
allowed; no bank stock can be owned by the State; branch banks are
permitted if the directors desire to conduct one; four reports a year are
published; banks are taxed the same as other corporations; the circuit
court appoints receivers for insolvent banks, who are accountable to
the judge of the district court where the bank is located; no circulation
is provided for; three-fifths of savings deposits may be invested in
municipal bonds or loaned on real estate security.
MINNESOTA.
State, savings, and private banks. Capital stock is required to be
paid up in full; three incorporators are necessary; organization papers
of savings banks are examined by the State auditor and attorneygeneral; of commercial banks by the public examiner; a capital is
required of from $10,000 to $25,000, the minimum according to population; not less than three directors manage the banks; a double liability
is imposed on shareholders; four reports a year are required, and an
annual examination under supervision of the public examiner; ordinary loans are restricted to 15 per cent of the capital and surplus, and
10 per cent to directors or officers; there is no limit to loans on warehouse security for agricultural products; the requirements for reserve
are 20 per cent, half of which must be cash and half bank balances; 20
per cent of capital is required as surplus; there are no legal provisions
relative to deposits; interest is allowed; the State is not a shareholder in the banks; branch offices are not allowed; commercial banks
publish four reports a year, and the reports of condition of the savings
50
REPORT OF THE COMPTROLLER OF THE CURRENCY.
banks are published in the biennial report of tlie banking department; savings banks are taxed on surplus, furniture, and fixtures; the
court appoints receivers for insolvent banks; circulation was formerly
provided for, but the law is now obsolete; incorporators of savings
banks become trustees and must give bonds in the sum of $5,000 each.
MISSISSIPPI.
>7o special requirements have to be complied with as a condition precedent to doing a banking business and no officer is designated to pass
upon organization; no special provision exists as to amount of capital,
management or examination of banks, or liability of shareholders;
four reports a year, on call of the auditor, are required to be made;
loans are limited to 20 per cent for banks of deposit; there is no
special provision relative to cash reserve, surplus fund, or deposits;
the State is not interested as a shareholder in any of the banks; the
conduct of branch offices or banks is permitted; publication of reports
of condition of banks is not provided for; an ad valorem tax on capital,
surplus, and undivided profits is imposed; 6 banks have failed since
1883; there are no legal provisions covering or referring to the issue of
bank circulation or as to savings banks.
MISSOURI.
State, savings, and private banks and trust companies. State banks
must file articles of agreement and incorporation certificate; trust companies are authorized under a special law; the secretary of state determines when conditions have been satisfied; State banks are required to
have a minimum capital of $10,000 and a maximum capital of $5,000,000;
private banks a minimum capital of $5,000 fully paid in; savings banks
a capital of $10,000 fully paid in; incorporated banks are managed by
directors and the shareholders
are liable only for the amount of their
stock investment, partners7 liability in private banks unlimited; reports
arc required twice a year or oftener on call of the secretary of state;
examinations are made annually or oftener by the secretary of state or
his examiners; loans are limited to 20 per cent of capital; of savings
banks to 20 per cent of capital, surplus, and deposits of the borrowing
bank, never in excess of $50,000; loans to officers are prohibited; savings banks must maintain 15 per cent of their entire assets as reserve,
no other legal provision; savings banks one-tenth of their net profits
for a surplus or guarantee fund; deposits in savings banks are limited
to $4,000 for one depositor; total deposits are limited to twenty times
the paid-up capital; the State is not interested as a shareholder in any
of the banks; branch banks are not permitted; no provision is made
for publishing reports of condition, bat abstracts of reports are given
to the press and are accessible to the public; no special taxes are
imposed; the court appoints receivers for insolvent banks; no legal
provisions exist covering the issue of bank circulation and none relating
to savings banks.
MOXTAXA.
State and savings banks and trust companies. The capital of State
banks must be paid in full; that of savings banks and trust companies
to the amount of at least $100,000 before commencing business; the
minimum capital of State banks is $20,000 and of savings banks and
trust companies $100,000; the management of banks is vested in the
directors; shareholders are liable only to the amount of their stock
REPORT OF THE COMPTROLLER OF THE CURRENCY.
51
in vestment; State banks make semiannual reports of condition, other
banks quarterly reports; annual examinations by the State examiner
are required; State-bank loans are limited to 15 per cent of capital and
surplus, savings banks to $10,000; a cash reserve of 20 per cent of
demand liabilities is required to be held by State banks, and a surplus
fund of 20 per cent by savings banks; other banks are not required to
accumulate a surplus; the amount of deposits received by savings
banks from any one depositor is left to the discretion of the directors;
interest is allowed; the State is not interested as a shareholder in any
bank; no provision exists in regard to branch banks; all reports of
condition are published ; licenses are rated according to the volume of
business transacted; no provision is made for the issue of circulation;
stockholders in savings banks participate in the profits after depositors
have received the agreed interest.
NEBRASKA.
State, savings, and private banks. Articles of incorporation must be
filed; the State banking board, composed of the auditor, treasurer, and
attorney-general, determine when legal requirements are satisfied;
banks are required to have from $5,000 to $50,000 capital fully paid up;
savings banks from $12,000 to $25,000; the management of banks is
provided for in the articles of incorporation; shareholders are liable to
double the amount of their stock; four reports of condition a year are
required, and examination at least once a year by the State official;
loans are limited to 20 per cent, and to 50 per cent on total loans to
stockholders; loans to State bank officers require the approval of the
board; loans to private banks are prohibited; savings banks are
required to keep a cash reserve of 5 per cent, and other banks 15 to 20
per cent, according to population; a surplus accumulation of 20 per
cent is required; deposits of savings banks are limited to not more than
ten times the capital and surplus; interest is allowed; the State is not
a shareholder in any bank; banks are not permitted to conduct branch
offices; a summary of the four reports a year is published in local newspaper; no special tax is imposed beyond the examination fee; the court
appoints receivers for insolvent banks, who give a bond; there are no
legal provisions in reference to the issue of bank circulation; there is a
special act of State legislature relating to savings banks.
NEVADA.
State and savings banks. Banks must file a certificate of incorporation, and savings banks a certificate of capital; the bank commissioner
determines whether the capital has been paid in; the amount of capital required is not stated; directors manage the bank, a majority of
whom constitute a quorum; the liability of shareholders, requirement
as to reports of condition, and as to examinations are not stated;
savings banks require real estate security for loans unless otherwise
authorized by a vote of two thirds of the stock; savings banks without
capital must retain 5 per cent of their net profits as a reserve fund;
the requirements as to surplus are not stated; interest on deposits is
allowed; the State is not a shareholder in banks; branch offices are
permitted; the publication of information as to their condition is
entirely voluntary with the banks; license fees are charged based on
the capital, varying from $12 to $200 per month; the requirements as
to insolvent banks are not stated; the State constitution forbids the
circulation of money not authorized by acts of Congress, and the formation of corporations for issuing circulation is prohibited,
52
REPORT OF THE COMPTROLLER OF THE CURRENCY.
NEW HAMPSHIRE.
State and savings banks and trust companies. A special act of the
legislature and capital fully j>aid in are essential to the commencement
of banking; the amount of capital stock is determined by act of the
legislature; directors manage the affairs of the bank under the supervision of the bank commissioner; shareholders are liable only to the
amount of their stock investment; semiannual reports from each bank
are required, and annual examinations; loans are restricted to 10 per
cent for savings banks and trust companies; loans are made to officers
of State banks and trust companies only by unanimous written approval
of the directors; no cash reserve is required; savings banks are
required to keep a surplus of 5 per cent of their deposits; it is customary to allow interest on deposits; the State is not a shareholder in
any of the banks; there are no legal provisions in regard to branch
banks; the annual report of condition of the banks made by the State
commissioner is distributed free; savings banks without a, capital pay a
tax of three-fourths of 1 per cent on deposits, less exemptions; savings
banks with a capital and trust companies pay 1 per cent on capital;
insolvent banks closed by receivers or their deposits scaled-down;
banks may issue currency under act of the legislature; there is a
special provision in regard to savings banks.
NEW JERSEY.
State, savings, and private banks and trust companies. State banks
must have a paid-up capital of $50,000; private banks must file report of condition; commissioners of banking and insurance pass upon
the sufficiency of organization papers; a capital of from $50,000 to
$2,000,000 is required—$50,000 of which must be paid in at time of
organization; savings banks have no capital, and are controlled by
a board of managers; other banks are managed by a board of
directors; shareholders in State banks are liable only to the amount
of their stock investment; banks must make a report of condition four
times a year on call, and an annual report; examination of savings
banks is made every two years and of other banks once a year; there
are no restrictions on State banks as to time and security of their
loans; savings banks are prohibited from making loans to their officers;
real-estate security is limited; no provision is made for cash reserve,
and no requirement as to the amount of surplus; savings banks deposits are limited to $5,000 for one depositor; interest is allowed on deposits; the State is not a shareholder in the banks; with the approval of
the bank commissioner, branch offices are allowed; abstracts of report
of condition are published in the annual reports of the bank commissioner; banks are required to pay an examination fee and $20 on filing
the December report; the court of chancery appoints receivers to wind
up the affairs of insolvent banks; bank circulation is allowed, and there
is a special law as to the incorporation of savings banks.
NEW MEXICO.
State and private banks, savings banks, and trust companies. Fifty
per cent of capital muvst be paid in before commencing business; the
secretary of the Territory passes upon organization; the minimum capital required is $30,000, one-half of which must be paid in before commencing business; the banks are managed by not exceeding nine
directors; stockholders in Territorial banks are liable for all debts of the
bank pro rata on their stock, while those of savings banks are liable to
REPORT OF THE COMPTROLLER OF THE CURRENCY.
53
the amount of their stock investment only; banks report twice a year
or whenever dividends are declared; examinations are made by the
secretary of the Territory or his appointee at any time; savings banks
are limited in amount of their loans and character of their security;
Territorial banks can not loan on their own stock; no requirement is
made for a cash reserve; savings banks are required to keep 10 per cent
of their net profits as a surplus fund; interest is allowed on deposits;
the Territory is not interested in any bank; no legal provision exists
for the establishment or maintenance of branch banks; reports of condition are published in local papers; no special taxes are imposed for
banking privileges; the court appoints receivers for insolvent banks;
there is no legal provision for the issuing of currency; a special act
exists relative to savings banks.
NEW YORK.
State, savings, and private banks and trust companies. Articles of
association must be filed with the banking department; all the capital stock is required to be paid in and $1,000 of State or United States
bonds to be deposited; 13 or more ineorporators are required for savings banks and the filing of a certificate of organization; the superintendent of banks determines when conditions have been satisfied;
$25,000 to $100,000 minimum capital is required, according to population, and must be paid in in full: savings banks have no capital stock;
not less than 5 nor more than 13 directors are required to manage a
bank; shareholders are liable to double the amount of their stock;
reports of condition are required four times a year on call, and annual
and special examinations when necessary by State examiners; loans are
restricted to 20 per cent of capital and surplus; savings banks loans
on personal security are prohibited; savings banks are required to
maintain a reserve of 10 per cent and a surplus fund of not exceeding
15 per cent, other banks a reserve of 15 to 20 per cent, according to
population, and a surplus of 20 per cent; individual deposits in savings banks are limited to $3,000, and deposits of societies, corporations,
etc., to $5,000; interest is allowed; the State is not interested as a
shareholder in banks; branch banks are not permitted; reports of
condition are published in local papers; banks must pay examination
fees and expenses of the banking department; the court appoints
receivers for insolvent banks; banks may issue currency; a special act
governs the conduct of savings banks.
NORTH CAROLINA
State, savings, and private banks. The organization of State and savings banks is regulated by a special act; the State treasurer passes
upon organization; the charter, capital, management, and liability of
shareholders are provided for by special act; savings banks are required
to make an annual report; other banks five times a year, when called
upon by the State treasurer; the examination of State banks by a commissioner is required, other banks annually by the State treasurer;
loans to officers of savings banks are prohibited; the amount of cash
reserve is provided for by special act; a surplus fund of 10 per cent of
deposits is required by savings banks; deposits in savings banks are
limited to $3,000 for each depositor; interest is allowed; the State can
not be a shareholder; branch offices are permitted, but a tax of $25 is
imposed on each bank for each county in which branches are located in
addition to examination fees; reports of condition are published in the
54
REPORT OF THE COMPTROLLER OF THE CURRENCY.
local papers 3 a tax of $50 is imposed upon capital of $25,000 and $2 for
eacli additional $1,0005 receivers for insolvent banks are appointed by
the court; no bank circulation is issued, savings banks are organized
by special acts of the legislature.
XOHTil DAKOTA.
State and private banks. Organization papers must be filed; onehalf of the capital stock must be paid in prior to beginning business,,
the balance at the rate of 10 per cent each succeeding month 5 the
secretary of State determines when the legal requirements have been
complied with; capital stock must not be less than $5,000; the management of banks is left to the directors, of whom there must be at least
three; shareholders are liable for claims against the bank in double
the amount of their stock; reports of condition are made quarterly or
when called for by the State examiner; banks are under the supervision of State officials, who examine them once a year or often er;
loans to one interest are restricted to 15 per cent of the capital stock
of the bank; a cash reserve of 20 per cent of deposits is required, and
a surplus fund of 20 per cent to be accumulated by carrying to the
fund 10 per cent of the net earnings for the preceding half year prior
to the declaration of a dividend; interest on deposits is allowed; the
State is not interested as a shareholder in any of the banks; there are
no legal provisions with respect to branches; reports are published
quarterly each year; a tax of $50 is imposed upon each bank upon
organization;, in addition to fees based upon capital stock; receivers
of insolvent banks are appointed by the court; there are no legal
provisions with respect to issuing circulation, and none relating to
savings banks.
OHIO.
State and private banks. Certificate of organization must be tiled
prior to beginning business; the secretary of State and attorneygeneral determine when the conditions for organization of savings
banks have been complied with, and the governor, auditor, and secretary of State of all other banks; the capital stock of banks must benot less
than 825,000, of which three-fifths must be paid in prior to beginning
business; savings banks must have at least 50 per cent of their capital
stock paid in prior to beginning business; the management of banks
is delegated to the directors; shareholders are liable for claims against
the bank in addition to their stock in amount equal to their stock;
semiannual reports of condition are made to the auditor of the State;
the banks may be examined by public officials; savings banks are
restricted in their loans to 20 per cent of their capital stock and
other banks to 10 per cent; savings banks are required to maintain a
reserve of 15 per cent and other banks 20 per cent; a surplus fund of
20 per cent is required; interest on deposits is allowed; the State is
not a shareholder in any bank; branch offices are permitted; reports
of condition are published in county newspapers and in the auditor's
annual report; banks are taxed the same as other corporations;
receivers for insolvent banks are appointed by the court; the issue of
circulating notes is not permitted; special laws govern the organization,
etc., of savings banks.
OKLAHOMA.
Territorial commercial and private banks. Management of the banks
is delegated to the directors; no reports of condition are required; the
law makes no provision with respect to the examination of banks;
REPORT OF THE COMPTROLLER OF THE CURRENCY.
55
the total loans of a bank must not exceed three times the amount of
the paid-up capital; interest on deposits is allowed; the Territory owns
no stock in any of the banks; the publication of reports of condition
is voluntary; banks are taxed the same as other corporations; there
is no special provision of law with respect to closing the affairs of
insolvent banks; bank circulation is not allowed and there are no savings banks in the Territory.
State, savings, and jnivate banks. Banks are organized under authority of the general incorporation laws of the State; there are no special
provisions with respect to the amount of capital stock required; management of banks is delegated to the directors; shareholders' liability
for claims against banks is limited to their investment in stock; no
reports of condition are required; the law makes no provision with
respect to the examination or supervision of banks by public officials,
loans, reserve, or accumulation of surplus; interest on deposits is allowed;
the State is not a shareholder in any bank; the publication of reports
of condition is voluntary on the part of each association; banks are
taxed at the same rate as other corporations^ the legal provisions concerning other insolvent corporations apply to banks; the issue of circulating notes is not restricted; there is no special law relative to savings
banks.
PENNSYLVANIA.
State and savings oanks and trust companies. Articles of association and organization certificate must be executed prior to beginning
business; the commissioner of banking and the Attorney-General determine when the necessary conditions have been complied with; the capital stock of State banks must be not less than $50,000, one half of which
must be paid in prior to beginning business, and 10 per cent each month
thereafter; savings banks are not limited in the amount of their capital
stock; trust companies must have paid-up capital of at least $125,000;
the management of the banks is delegated to the directors, of whom
there must not be less than five and of savings banks not less than thirteen ; shareholders in State banks are liable for claims against the bank
in addition to their stock to an amount equal to the par value of their
stock; shareholders in savings banks and trust companies are only
liable for their investment in stock; semiannual reports of condition
are required and more may be called for; examinations are made when
deemed necessary by the bank commissioner; loans to directors are
restricted; there are no provisions of l?*w with respect to cash reserve;
a surplus fund of 25 per cent is required; there are no provisions of law
governing deposits, but interest thereon is allowed by trust companies
and savings banks only; branch banks are not permitted; reports of
condition are published in the local papers and in the annual report of
the commissioner of banking; a tax of 4 mills on the appraised value,
and 8 mills on the par value of the shares of stock of State banks and
trust companies is levied, with other provisions for savings banks;
receivers of insolvent banks are appointed by the court of common pleas;
there are no special provisions of law relative to issuing circulating
notes, and none governing savings banks.
EIIODE ISLAND.
State and private banks and trust companies. Savings banks and
trust companies are authorized by a special act of the legislature; no
provision is made for determining when the conditions under which
56
REPORT OF THE COMPTROLLER OF THE CURRENCY.
banking may be commenced have been complied with; the capital is
regulated by the charter; no provision is made for management; shareholders are not liable for claims against the bank; reports of condition
are not provided for; banks are examined only on request of the legislature, officers, and stockholders made to the governor; loans are not
restricted; no provision is made for a reserve and no surplus is required;
interest is allowed on deposits; $8,547,050 of school funds are invested
in national-bank stock; branch banks are not allowed; an annual report
is made concerning banks; a tax of two-fifths of 1 per cent is imposed
on deposits and reserved x>rofits; no provision is made relative to the
legal foreclosing of insolvent banks and none exists as to the issuing
of bank circulation; there is no special law regarding savings banks.
SOUTH CAROLINA.
There are no special requirements as to banking; no officer is designated to approve organization papers; there are no special provisions
as to the amount and manner of payment of capital stock, management
of banks, or liability of stockholders; quarterly statements from each
bank are required; there are no special provisions in regard to examinations, loans, or surplus, and none governiug the receipt of deposits
is stated; the State is not a shareholder in any bank; branch banks are
allowed: quarterly statements of banks must be published; banks are
taxed the same as other corporations; insolvent banks are treated as
other insolvent corporations; special provisions exist for issuing circulation; there are no special laws for savings banks.
SOUTH DAKOTA.
State, private, and savings banks. State banks must file an organization certificate; the secretary of state passes upon organization papers;
the minimum capital of from $5,000 to $25,000 one-half of which must
be paid up for State banks; the provisions governing the management
of banks are not stated; a double liability attaches to shareholders; four
reports of condition a year are required and an examination annually
by the public examiner; loans are restricted to 15 per cent to one person for State banks; a reserve of 20 per cent is required; no provision
is made for a surplus fund and none concerning deposits; interest is
allowed; the State is not a shareholder in any bank; branch banks are
allowed; the biennial report of the public examiner gives information
concerning banks; no special tax is imposed on banks; assignee or
receiver has charge of insolvent banks; no circulation is permitted and
no special provision exists with respect to savings banks.
TENNESSEE.
State and savings banks and trust companies. Banks obtain charters from the secretary of state, who passes upon the organization;
there are no legal provisions relating to capital; directors manage the
banks; shareholders are liable only to the extent of their stock investment; semiannual reports of condition are required; no examinations
are made for want of appropriations; the secretary of State is ex officio
bank inspector; there are no special requirements as to reserve, no provision for surplus, and none concerning deposits; interest is allowed;
the State is not a shareholder in any bank; branch banks are not prohibited; semiannual bank statements are published in the newspapers;
an ad valorem tax is imposed on bank capital; insolvent banks are
treated as other insolvent incorporations; no provision is made for
circulation and no special provisions for savings banks are stated.
Digitized forbank
FRASER
REPORT OF THE COMPTROLLER OF THE CURRENCY.
57
TEXAS.
State and private banks and trust companies. No new bank is now
allowed to organize except under the national-bank act; the secretary
of state passes upon organization; formerly from $50,000 to $100,000
capital was required; banks are under the management of directors;
shareholders are liable only for the amount of their stock investment;
semiannual reports of condition are required; no examination is made
by State officials; there is no restriction to loans, no reserve is required,
and there are no provisions in regard to deposits; interest is allowed;
the State is not a shareholder in any bank; branch banks are permitted; semiannual statements of condition are published in newspapers; banks are taxed as other corporations; insolvent banks are
treated as other insolvent corporations; there are no provisions governing circulation and no special laws for savings banks.
UTAH.
State, private, and savings banks and trust companies. Articles of
association must be filed; the secretary of the Territory determines
when conditions have been complied with; $25,000 to $100,000 capital
is required, 25 per cent of which must be paid up and the balance in
monthly installments of 10 per cent; directors manage the banks; a
double liability attaches to shareholders; quarterly statements and
other reports, not less than one nor more than three a year, are required;
the secretary of the Territory is ex officio bank examiner and may
appoint agents to examine banks; loans to officers are limited to $10,000;
indorsements of officers are prohibited; banks can not loan upon the
security of their own stock; no provisions are made for reserve or surplus; interest is allowed; the Territory is not a shareholder in any bank;
branch banks are not prohibited; quarterly statements give information
concerning the banks; banks are taxed as other corporations; there are
no special provisions applying to insolvent banks; the issuing of circulation is not permitted; there are no special laws essentially different
from the general provisions for savings banks.
VERMONT.
State and savings banks and trust companies. From $50,000 to
$500,000 capital, all paid in, and the filing of an organization certificate
are required; the inspector of finance passes upon organization; management is vested in directors, of whom there must be not less than
five nor more than nine, who are liable for mismanagement; no liability
attaches to stockholders beyond their stock investment unless expressly
stated in the articles of incorporation; savings banks report annually
to the inspector of finance, no other reports are required; the inspector
of finance examines banks once a year; the master in chancery makes
special examinations under special circumstances; loans of savings
banks are limited to 5 per cent to one person, loans on real estate
are limited to 70 per cent of assets; no reserve is required; savings banks
are required to accumulate a surplus of 5 per cent of all liabilities;
deposits in savings banks are limited to $2,000 by one depositor, except
in special cases; the State is not a shareholder in any bank; branch
banks are not allowed; reports of examinations by the insiiector or
master in chancery are published; banks pay 1 per cent tax on capital
semi-annually; the court appoints receivers for insolvent banks; banks
may issue circulation to the amount of bonds deposited with the State
treasurer; each savings bank has a special act.
58
REPORT OF THE COMPTROLLER OF THE CURRENCY.
VI KG IXI A.
State, savings, and private banks. They are chartered by special
act of the legislature or by the court; the secretary of the Commonwealth
determines when the conditions of organization are satisfied; the minimum capital required is from $10,000 to 650,000, one-half of which must
be paid in and the balance in monthly installments of 10 per cent; banks
are managed by a board of directors, not less than five in number, who
must be shareholders; the shareholders are not liable for more than the
amount of their stock investment, unless the bank issues circulation, in
which event they are liable for double the amount of their stock; reports
of condition are required at least five times a year on call, abstracts of
which are published in the local papers; examinations are made by the
auditor when requested by shareholders representing one-fifth of the
stock, also at any time by a committee of the general assembly or a commission appointed by the assembly or the governor; real estate to
secure loans can not beheld longer than ten years; banks of issue
must keep a cash reserve of 25 per cent; surplus of 5 per centis required;
the receipt of deposits is not restricted; interest on time deposits is
usually allowed; the State is not a shareholder in any bank; reports of
condition must be published in the newspapers; a tax is imposed on
bank stock and is paid by the bank for the shareholders, deposits are also
taxed; receivers are appointed by the court for insolvent banks; a
special law governs the issue of circulation, which is limited to 75 per
cent of the par value of State bonds deposited in security therefor; a
special law governs savings banks, which provides that the maximum
capital when not otherwise stated in the charter shall be $100,000; no
stock shall be purchased for less than par value, and no discounts can
be made of more than one-half of 1 per cent for a longer period than
thirty days.
WASHINGTON.
State and private banks are allowed. The minimum capital stock is
$25,000, three-fifths of which must be paid in and articles of incorporation
filed; no officer is designated to determine when conditions have been
satisfied; no information furnished in regard to management nor as to
the liability of shareholders for claims against the bank; banks make
annual reports of condition to State officers; the requirements as to
examination by State officials, restrictions as to loans, or whether any
cash reserve or surplus fund is required are not stated; interest is
allowed on deposits; the State is not a shareholder in banks; there is
no provision concerning branch banks; the biennial report of the
auditor contains the annual bank reports; there is no special provision
for bank taxation and none concerning insolvent or savings banks;
circulation is not permitted.
WEST VIRGINIA.
State and savings banks. Not less than $25,000 nor more than
$500,000 capital stock is required, 10 per cent of which must be paid in
before beginning business and the balance as called for by the directors;
articles of association are required to be filed with the secretary of
state and recorded in the office of the county clerk; the secretary
of state determines when conditions as tp organization have been
satisfied; banks are managed by a board of directors of not less than
five, who must be stockholders; stockholders are liable in double the
amount of stock subscribed for; no reports of condition are required;
REPORT OF THE COMPTROLLER OF THE CURRENCY.
59
examinations are made each year by tlie State bank examiner, who is
appointed by the governor; reports are filed with the auditor of the
State; loans, are governed by the directors; there is no limitation as to a
cash reserve nor requirements as to surplus; there are no legal provisions relative to the receipt of deposits ; it is customary to allow interest
on time deposits; the State is not interested as a shareholder in any
bank; branch banks are prohibited; the auditor of the State publishes
annually in county newspapers a statement of the condition of all banks
located therein and reports also to the legislature; no taxes or burdens
are imposed upon banks, except the fee of the secretary of state for
the certificate of incorporation and $15 each to the State bank examiner in addition to his regular annual salary of $700; the examiner
reports cases of insolvency to the board of public works, by whom the
charter of the bank is revoked; the State then releases control and
the bank is closed up the same as other insolvent joint-stock companies;
no legal provisions exist concerning bank circulation; tiie incorporation
of savings banks is provided for by law.
WISCONSIN.
State, private, and savings banks and trust companies. A capital
of not less than $25,000 is required, at least $15,000 of which must be
paid up and articles of incorporation filed; the State treasurer passes
upon organization papers; banks must have not less than three directors, savings banks not less than ten; double liability attaches to shareholders; banks make semiannual and not less than three other reports;
the bank examiner and his deputy examine the banks; savings banks
can not loan on single-name paper; one-half of deposits may be loaned
on personal security and public stocks of the United States and certain
of the States; real-estate mortgages may be taken for all other loans;
no provision is made for a cash reserve and none for a surplus fund;
savings banks may receive not exceeding $1,000 from a single depositor;
interest is allowed; The State is not a shareholder in any bank; branch
banks are allowed; three reports of condition are published in local
papers and semiannual reports in the State treasurer's semiannual
report; there is no special provision for taxing banks; the circuit
judge appoints receivers for insolvent banks$ banks may issue notes to
the amount of such public stocks of the United States or of the State of
Wisconsin as maybe assigned or transferred to the State treasurer;
savings banks are covered by a special law.
WYOMING.
State, private, and savings banks and trust companies. One-half
of the capital must be paid in and the balance withiL. six months; articles of association are required to be filed; the State examiner determines when requirements have been satisfied; the management of
banks is vested in a board of directors, of whom there must be not
less than five nor more than nine; a double liability is imposed upon
shareholders: reports are made when called for by the State examiner;
the State examiner examines the banks at least once a year; loans to
officers of savings banks are prohibited; loans to one borrower are limited to 10 per cent; there is no legal provision as to reserve, but the
examiner requires a reserve of 25 per cent to be kept by State and private banks, and 10 per cent by savings banks; there are no provisions
fora surplus fund; interest is allowed; the State is not a shareholder in
60
REPORT OF THE COMPTROLLER OF THE CURRENCY.
any bank; branch banks are not allowed; bank reports must be published in newspapers; there is no special provision for taxing banks;
insolvent banks are placed in the hands of receivers; savings-bank
depositors are preferred creditors; circulation is not permitted; a sj)ecial act governs savings banks.
CONCLUSION.
In concluding this report the Comptroller desires to again bear testimony to the character and general efficiency of the employes in the
Bureau, the examiners in the field, and the work accomplished by the
receivers in the management of the trusts in their charge. The record
of thQ Bureau throughout the past year justifies these expressions of
praise.
In the appendix will be found in detail the usual tables, together
with a digest of legal decisions rendered by the various courts of the
country involving questions affecting national banks, and also a carefully revised edition of the national-bank act, which is believed to
contain all the Federal statutes now in force relating to national banks.
In the second volume of this report will be found a detailed statement of the condition of all the national banks, as shown by the report
of condition of September 28, 1895, alphabetically arranged by States
and properly indexed.
Comptroller of the Currency.
The SPEAKER OF THE HOUSE OF EEPRESENTATIVES.
APPENDIX.
61
FOREIGN BANKING SYSTEMS.
Tlio various reports (copies of laws transmitted being necessarily omitted) received
in reference to foreign banking systems are as follows:
[James £. Ewhig, United States minister.]
1. There is in Belgium only one bank of issue, that is La Banque Nationale, organized
under the Jaw of the 5th of May, 1850, and under the law of the 20th of May, 1872.
The texts of these laws and the text of the by-laws of the Banque Nationale will be
found in Appendix A. It is difficult to classify the other banks. There exist banks
of discount, of deposit, of credit foncier (banks that make loans on real estate), and
unions du credit (banks that do the banking business of their members only). With
the exception of tho banks known as credit foncier, all tho banks in Belgium discount bills, receive deposits, and interest themselves in industrial affairs.
2. Banks in Belgium are established under the forms of societe en noni collectif—
partnership societe en commandite simple—partnership in which the active partners
are responsible without limitation and the dormant ones to the extent of their share
of capital only. Socidte* anonyme, joint stock company. Soci6t4 en commandite
par actions, partnership in which the active members are responsible without limitation and in which tho dormant members are stockholders and are responsible for tho
amount of their stock only. Socie"te cooperative, cooperative societies in accordance with the provisions of the law of the 18th of May, 1873, modified by the law of
the 22d of May, 1880. This law, which will bo found in Appendix B, determines the
conditions to be complied with by the banks in order that they may commence their
banking operations. If the provisions of the law bo complied with, the banks above
described may bo organized indefinitely. There is no public officer empowered to
deterraino whether the conditions imposed by law in the organization of a bank
have been complied with or not.
3. The shareholders and interested third parties have the right to protest against
any infraction of law.
4. The provisions of the law of the 18th of May, 1873, found in Appendix P>,
answer these questions fully.
5. The Banque Nationale may receive deposits on current account, but without
interest. All private banks may receive voluntary deposits and pay interest on them
or not, as they may agree.
6. The Government is not interested as a shareholder in any of the banks of the
country.
7. Banks may organize subbanks or branch offices as they please in conformity to
their by-laws.
8. Only banks organized as joint stock companies or as societcs en commandite
par actions are required to publish every year a general statement regarding their
condition. This statement must contain an inventory indicating the value of the
personal and real property and a balance sheet showing all the assets and liabilities
of the society, with an annex containing a list of its contracts, and must be published in the Moniteur Beige (the official paper) fifteen days after its approval by tho
members composing tho annual general assembly, and at the expense of the society.
The Banque Nationale, governed, as has been stated, by a special law, has to furnish
every month to the Government a statement as to its condition as well as to the condition of its branch offices. This statement is also published in the official paper of
the country. The cooperative societies must deposit the annual statement ns to
their condition, fifteen days after its approval, at the registry office of the tribunal
du commerce of the district to which the society belongs.
9. Except the Banque Nationale, the banks are not taxed on account of any privileges they enjoy, but all pay a license fee according to the amount of their earnings.
Tho Banque Nationale, which alone is authorized to issue bank notes, is subject on
that account to various charges, determined by law.
10. Tho law of 1873 provides for the closing up of the business of insolvent banks.
(See section VIII, Appendix B.)
63
64
REPORT OF THE COMPTROLLER OF THE CURRENCY.
11. Witli exception of tlie Banque Nationalo; no bank is authorized by law to issuo
bank notes. The amount of bank notes in circulation and of obligations payable at
sight mnst not be in excess of three times the amount of the reserve in coin of the
Banque Nationale. The amount of the bank notes in circulation may be increased
by the authority of the minister of finance to more than three times the amount of
the reserve in coin. On the 31st of December, 1894, the bank notes in circulation
amounted to 469,662,000 francs, and the balances of current accounts to 78,558,169.29
francs; total, 548,220,169.29 francs. The available assets comprised the public funds
of the bank and of the reserve, 74,382,512.05 francs; cash in bank, 130,756,515.01
francs; bills due and in account current, 41,847,875 francs; bills not due, 346,590,227.84
francs; loans on public funds, 13,469,529.90 francs; total, 607,046,529.90 francs.
12. See answer to question 11 for the redemption of bank notes. The payment of
the latter is guaranteed by the available assets of the bank.
13. See Appendixes A and B.
[John B. Hiley, consul-general.]
1. (a) The chartered banks, which alone can issuo notes for circulation in denominations of $5 and upward, the smaller currency being issued by the Dominion Government. These banks are governed by the provisions of the act 53 Viet., cap. 31,
"The Bank Act," a copy of which is sent herewith marked A. (b) Two savings
banks in the province of Quebec, the City and District Savings Bank of Montreal,
and La Caisse d'Economie do Notre Dame of Quobec, which are doing business under
special act 53 Viet., cap. 32., a copy of which is annexed marked B. These banks do
not issue notes for circulation and are not banks within the meaning of the bank
act (vide sec. 29). They furnish monthly returns to the Government of the state of
their affairs and annual returns of their shareholders and of dividends, etc., unclaimed
for five years (vide sees, 31, 32, and 33). Their stockholders are only liable for the
unpaid amount of their stock (vide sec. 8). These banks have been in existence
since before confederation, (c) The Government savings banks: These are under
control of two departments of the Dominion, viz, the Post-Office Savings Banks
authorized by sections 65 to 77 of the post-office act R. S. C, cap. 35 (act herewith
marked C and regulations marked D), and the Government Savings Bank under control of the finance department, under R. S. C, cap. 121 (act herewith marked E and
regulations thereunder marked F). These banks are simply savings banks to encourage the deposit of small savings. The limit of deposit is $1,000 in any financial
year and a maximum deposit of $3,000 exclusive of interest. The rate of interest
paid is 3| per cent compounded yearly, (d) The loan and savings companies, a
copy df the latest report as to which is" sent herewith marked G. (e) The private
bankers, with reference to whom there is no Dominion legislation except that they
cannot issue notes nor use the title of "bank," "banking company," etc. (Seesections 60 and 100 of the bank act.)
NOTE.—The answers to the following questions refer only to the chartered banks,
and the references are to sections of "the bank act," 53 Viet., cap. 31.
2. They must procure an act of incorporation from the Dominion Parliament, and
then comply with the sections 9 to 17.
3. The treasury board, which is a subcommittee of the Queen's Privy Council for
Canada, consisting of the minister of linance, ex officio chairman, and five other
ministers appointed by the governor-general in council.
4. (a) Capital stock: At least $500,000, all of which must be subscribed and at
least $250,000 paid up before the bank can commence business (sec. 13). The stock
may be reduced but not below $250,000 paid up (sec. 28). (&) Management of the
bank: See sections 18 to 25. (c) Liability of shareholders for claims against the
bank—"double liability"—that is, to an amount equal to the par value of the shares
held in addition to any amount not paid up on the shares (sec. 89). (d) Reports of
condition of the bank: (a) Monthly (sec. 85). (b) Special when called for by the minister of finance (sec. 86). (c) Yearly as to shareholders (sec. 87). (d) Yearly statement of dividends, etc., unpaid for five years (sec. 88). The above are to the Government, and in addition an annual statement has to be made to the shareholders on the
occasion of the election of directors (see sec. 45). (e) Examination by Government
official, none, (f) The amount of discounts and loans to directors, either jointly or
severally, or to any one firm or person, or to any shareholder, or to corporations, may
be regulated by the shareholders by by-law (sec. 18). The amount of discounted notes
and of the loans are exhibited in the annual statement to the shareholders (sec. 45),
and in the monthly returns to the Government (Schedule D), and in the monthly
returns special mention is made of the aggregate amount of loans to directors and
firms of which they are partners. (G) The bank can not lend money—(a) on notes
of a bank (sec. 52); (b) on a share of its own capital stock, or of the capital stock of
another bank (sec. 64) j (c) on the security of land, ships, or of any goods, wares, and
KEPORT OF THE COMPTROLLER OF THE CURRENCY.
65
merchandise (sec. 64). See, however, section 72 as to advances in aid of the buildingofaship. (H) Security for loans: {a) Bills of exchange, promissory, etc. (sec, 64,
(b) Has lien on its own shares, and may decline to allow transfer (sees. 65 and Q6).
(c) Mortgages upon real or personal property by way of additional security for debts
contracted (sec. 68). (d) May purchase and acquire title to lands offered for sale
under execution, etc., belonging to debtor to the bank, but such lands must be sold
within seven years (sees. 69 to 71). (e) Warehouse receipts or bills of lading as
security (sec. 73). (/) Goods, etc., to secure advances to wholesale merchants, etc.,
in certain cases (sees. 74 to 78). (E) Cash reserve required: None, the only provisions being (a) that no division exceeding 8 per cent per annum is to be made,
unless after making it the bank has a rest or reserve fund equal to at least 30 per
cent of its paid up capital after deducting all bad and doubtful debts (sec. 49), and
(6) that of whatever reserves are held at least 40 per cent must be held in Dominion
notes (sec. 50). (F) Accumulation of surplus, none. No dividend is allowed to be
made to impair the paid up capital, and if the paid up capital is impaired all net
profits must be applied to make good the loss.
5. See section 84 as to receipt of deposits. Most of the banks have savings-bank
departments attached.
6. The Government holds no bank shares.
7. All are. See section 64.
8. Monthly returns to Government published in Canada Gazette. (Latest return
transmitted.) List of shareholders and unclaimed balances, returned to Parliament
and printed in Blue Book from latest issues, herewith marked I and J. Annual
statements to shareholders—generally printed and published in the financial papers—
latest semiannual return of Bank of Montreal, herewith marked K.
9. The banks do not pay any taxes to the Government in any way. They are,
however, debarred from charging any discount or commission on official checks of
the Government of Canada (sec. 103). They have to make arrangements to insure
the circulation of their notes in every part of Canada at par (sec. 55); and they contribute to the circulation redemption fund (sec. 54).
10. See sections 89 to 96 of the bank, and the winding-up act, R. S. C, cap. 129
(herewith marked L), and 52 Vic, c. 32, in amendment thereof annexed thereto.
11. To the extent of unimpaired paid-up capital, except in the Banque du Peuple
and the Bank of British North America, which can only issue to extent of 75 per
cent of unimpaired paid-up capital. See, in this connection, section 51, subsections
1 and 2. See subsection 3 of section 51 for penalties for noncirculation. They can
only issue notes of the denomination of $5, or multiples of $5 (see subsection 4).
12. They are a first charge upon the assets of the bank, and in case of insolvency
they bear interest at 6 per cent from date of insolvency until date named for
redemption. There is the further security of the " double liability" of the shareholders and of the "bank circulation redemption fund" (see sees. 53, 54, and 89).
13. The only points to which attention may be called, in addition to the foregoing, are that all sales and transfers of shares must be of bona fide shares, actually
in the possession of the transferrer, this being with the view of preventing speculative sales of shares (sec. 37); that counterfeit notes must be stamped as such when
presented at the bank (section 62); and that heavy penalties are imposed for violation of the provisions of the act. Special attention is directed to the system of
note circulation, which is a very elastic one, the circulation expanding and contracting as the business of the country requires, while at the same time the issue is
fully protected. In the last act (1890) three new provisions were made: (1) The
establishment of the bank circulation redemption fund, to give additional security
for the redemption of the circulation in case of insolvency; (2) the notes bear
interest at the rate of 6 per cent in case of insolvency, the intention being to prevent the notes going under par, and (3) compelling the bank to establish agencies
throughout the Dominion, so as to prevent a discount being charged on their notes.
The charters of the banks will expire on the 1st of July, 1901, and further legislation will be required before that time. The Dominion Government, under certain
restrictions, may issue Dominion notes to any amount. (See act respecting Dominion
notes, and amendments thereto, marked M.) As to the currency, see act respecting
the currency, marked N.
CHILE.
[Edward H. Strobel, United States minister.]
1. There are two classes of banks, namely, the hypothecary or mortgage banks (bancos
Mpotecarios) and the banks of issue (bancos deemision). The former were authorized by the act of Congress of August 29,1855, which provided for the establishment
of a bank called the Caja de Cre'dito Hipotecario (Bank of Mortgage Credit) in Santiago, and permitted the founding of like institutions throughout the country, provided there should not be more than one in each Province. These banks are in
CUR, PT 1
5
66
REPORT OF THE COMPTROLLER OF THE CURRENCY.
imitation of tlio French, banques hypothecates. They give loans upon real estate
in return for certain annual payments (anualidades), first, not exceeding 8 per cent
for interest; second, not less than 1 nor more than 2 per cent for the sinking fund;
third, not more than one-half per cent for the reseivo fund and expenses. The loan
is given by tho bank in notes of credit (letras de credito), the payment of which is
guaranteed hy the bank, and for which payment they are drawn by lot every six
months (or sooner, if the bank so decides), to the amount of the sinking fund v/hich
the bank lias for the purpose These notes belong to different series, according to
tho amount of interest they bear, which is fixed at 8,1, 6, and 5 per cent per annum.
They are, of course, negotiable, and are quoted daily in the open market, being
made out payable to order or to bearer, according to the wishes of tho borrower.
As stated above, this sinking fund for the paying off of these notes was derived from
part of tho annual payment fixed by law of not less than 1 nor more than 2 per cent,
mado by the borrower on the amount of the loan, and at the time of tho passage of
the act it was calculated that by this arrangement the paying off of tho notes would
be effected as follows: Those of 8 per cent in 21 years; those of 7 per cent in 22
years; those of 6 per cent in 23A years; those of 5 per cent in 25| years. (See Appendix, note 1.) The hypothecary bank, therefore, plays the part of middleman between
the lender and tho borrower, and begins with littlo or no capital. Banks of issue
(bancos de cmision) are banks in the ordinary sense of the word. They are authorized
by act of Congress of July 23, I860, and are called banks of issue because, besides
doing ordinary banking business, they are allowed to issue notes payable at sight and
to bearer. Banks of issue are also permitted to engage in the business of hypothecary banks (bancos hipotecarios), but through a special department (seccion), which
is entirely independent of their other business. In like manner several of the
hypothecary banks have availed themselves of the act allowing banks to issue notes
at sight and payable to bearer. In both cases the two classes of business, although
managed by the same banking institution, are kept entirely distinct, and in many
cases even to the extent of having separate capital stock for each class of business.
This latter is done in order to enable the shares of each section to be quoted according to business done by the bank. As tho two classes of business are authorized by
two entirely separate and distinct acts of Congress, mentioned above, and as the
credit notes of tho hypothecary banks are amply secured by the real estate mortgaged
to tho bank, while, as will bo seen, tho notes of the banks of issue payable at sight
and to bearer were issued without proper security, the shares of both sections are
quoted in the market independently of each other, and generally at widely differing
rates.
2. The act of Congress of August 29, 1855, makes no special requirements for the
establishment of hypothecary banks; but tho latter are subject to the provisions of
the Commercial Code (Codigo de Comercio) applying to the organization of joint
stock companies, given below. The act of July 23, I860, provides that tho following
requirements must be met in order to establish a bank of issue: Those who intend
to found a bank of issue are obliged to deposit beforehand in tho ministry of finance
a declaration stating the name, domicile, number of branch offices, and capital of
the same, as well as tho date on which it is intended to begin operations. They must
also deposit a copy of tho by-laws and regulations. This is all that is contained on
this point in tho above special banking act. Both classes of banks, in order to transact business, must satisfy the provisions of the Civil Code (Codigo Civil) and. of the
Commercial Code (Codigo de Comercio) applying to joint stock companies (sociedades
anonimas). According to articles 350 and 355 of tlio Commercial Code, the proof of
the formation of a joint stock company must bo a document to that effect prepared,
before a notary, inscribed in tho commercial register, posted for three months in the
office of tho secretary of tho jndgo of the department, and published ten times in a
newspaper of tho department. If there is no newspaper in the department, tho publication must bo made by posters in three of the most conspicuous places in tho domicile of the company. Tho document must declare, first, the name, surname, profession, and domicile of the founders; second, tho domicile of the company; third, the
business tho company intends undertaking, and tho reason for its name, with clear
and complete details; fourth, tho capital of tho company, tho number of shares, and
tho periods in which the stockholders should pay in the amount of their subscription;
fifth, tho date for making inventory, balance, and declaring dividends; sixth, duration of tho company; seventh, tho manner of administration, powers of directors,
and tho rights reserved to tho general assembly of stockholders; eighth, the amount
of profit which should remain in the treasury of tho company to form a reserve fund;
ninth, the amount of deficit in tho capital sufficient to cause dissolution of tho company; tenth, in case of dissolution, the form in which tho company shall be wound
up and the assets divided; eleventh, whether difficulties which arise during tho
duration of the company should or should not be submitted to tho decision of arbitrators, and if they are so to bo submitted, tho manner in which tho appointment of
REPORT OF THE COMPTROLLER OF THE CURRENCY.
67
arbitrators should "be made; twelfth, any other agreements made between the stockholders. No petition for the formation of a joint stock company shall be received if
not signed by a number of subscribers to the stock equal to at least one-third of the
whole, accompanied by a statement in which the above details, as well as the by-laws,
are approved by the subscribers to the stock at a general meeting,
3. By article 427 of the Commercial Code joint stock companies exist by virtue of
a decree of the President of the Republic. As already stated, the petition for this
decree must be signed by subscribers to at least one-third of the capital stock. On
granting the petition and issuing the decree establishing the company the President
of the Republic decides whether a sufficient amount of the capital subscribed has
been paid in to warrant the company's beginning business; and if this has not been
done he fixes the amount that should be paid in. When proof has been furnished
that the amount has been paid in the President will issue the corresponding decree.
These general provisions of the code apply to banks. The only special provision on this
subject is article 5 of the act of July 23, 1860, establishing banks of issue, which is as
follows: "Before the date indicated for beginning its operations, the President of
the Republic must ascertain7 the manner in which he considers best the existence of the
capital of the future bank. ' As will be seen, therefore, the President of the Republic
is the only one having authority to determino whether the legal conditions for the
establishment of a bank have been satisfied.
4. (A) Capital stock: Article 6 of the act of July 23, 1860 (banks of issue), provides that the capital stock of a bank must consist of legal money of tho country,
bars of gold or silver, or any obligations or documents signed by persons who are
notoriously solvent, payable at six months or less. Real estate and ordinary obligations with mortgage security may bo regarded as security for tho capital stock, but
in no case as constituting it; and the bank directors are prohibited from mentioning
the said values or guaranties as constituting the capital of tho bank, in the notices
or prospectuses which they publish, under a penalty of $100 for each publication.
It is also provided by article 7 of the same act, that the director or directors of a
bank must declare under oath, to the agent appointed by the President for the purpose of ascertaining whether the capital stock exists, that the capital really belongs
to the persons or company proposing to establish the said bank, and that it is to be
truly and faithfully employed in its operations. As I have already stated, the capital stock to be paid in before beginning operations must be fixed by tho President
of the Republic before issuing the decree authorizing tho establishment of the bank.
These aro the regulations in the act of July 23, I860, regarding the capital stock of
banks of issue. The act of August 29, 1855, makes no reference to the amount which
shall constitute the capital of hypothecary banks, which, as before mentioned, aro
mere middlemen, and begin with little or no capital. (B) Management of the bank:
The management of a joint-stock company is in the hands of a board of directors
(eonsejo de administracion) elected, in accordance with the by-laws (estatutos), by
the stockholders (Commercial Code, article 457). Tho Bank of Chile—tho leading
bank in this country—is managed by a board of eleven directors (eonsejo general),
composed of eleven stockholders living in Santiago, and eleven residing in Valparaiso. The directors, with the exception of the president, aro elected at the general
meeting of stockholders. Tho president of tho bank is annually elected by the
board of directors, and may bo reelected indefinitely. In addition, the board of
directors may appoint as many managing directors as they regard necessary. By
the act of August 29,1855, which established the bank of mortgage credit (caja hipotecaria), tho management of this institution is placed in tho hands of a manager
appointed by tho President of the Republic, and a board of four directors, two of
which are appointed by the Senate and two by the Chamber of Deputies. Tho other
banks of tho same class authorized by this act have the right to elect their own
board of directors, but the manager must bo appointed by tho President of the
Republic, and from a list of candidates submitted by the board. It will therefore be
seen that tho Government only exercises supervision in the choice of officers of the
hypothecary banks, but not in tho case of banks of issue. (C) Liability of shareholders for claims against the bank: No ordinary shareholder is liable for claims against a
bank beyond tho amount of his unpaid subscription. According to article 452 of the
Commercial Code, the shareholder was liable to a third party having claims against
the bank to tho extent of his unpaid subscription even after the transfer of his
stock; but this section of the code has been repealed by tho act of September 6,1878,
which provides that the liability of the transferrer shall bo only secondary, primary
liability resting with tho transferee. Article 9 of the act of July 23, 1860, makes a
director of a bank responsible for all obligations contracted by the bank during
his term of office. It also requires him to hold a number of shares equal to 10 per
cent of the capital, or an interest in the profits of not less than 10 per cent; but
whatever may bo the capital of the bank, it is sufficient for the director to hold
shares to the extent of $40,000; or to have an interest of not less than 10,000 pesos
68
REPORT OF THE COMPTROLLER OF THE CURRENCY.
in the profits. Tho shares of the director shall be registered in his name, and shall
"be free of all obligations toward third parties not creditors of the bank during
his term of office. They shall be deposited in the bank during that time and for
six months afterwards as a guarantee. During this period the creditors of the
bank shall be preferred creditors with reference to tho attachment of this guarantee
over the personal creditors of the director. (D) Reports of the condition of the
bank: Article 8 of the act of July 23, 1860 (banks of issue), provides that the
directors of a bank of issue must, in the first fifteen days of each month, send to
the minister of finance a balance giving a summary of the condition of tho bank
at the end of the preceding month. By article 30 there must appear in this
balance, on the credit side, the assets with the value given in legal currency,
bars of gold or silver, documents, promissory notes, accounts current, advances or
debts of agents or employees, and notes of other banks; and on the debit side there
must appear the capital of the bank, the reserve fund, the notes in circulation, and
deposits with and without interest. By article 4, there must also be deposited with
the minister of finance a copy of the regulations and statutes of the bank, the annual
inventories, the minutes of the meetings of the shareholders and resolutions adopted
at the same, especially of those resolutions that have for an object the augmentation
or diminution of the bank's capital stock. By article 25, delay in the transmission of
documents and accounts to the minister of finance, as required by this act, will be punished by a fine of $20 for each day's delay. Article 5 of the act of August 29,1855
(hypothecary banks), provides that every credit note issued must be entered in the register of the mint. There must be at the same time an authorized copy of every mortgage
contracted in favor of the bank, and the notes of credit must be equal in value to that of
the mortgage. By article 27 of the same act, the board of directors must send to the
Government a full report of all the operations of the preceding year, and the results
obtained, so that the bank's condition may be fully known. (E) Examination by Government official: Article 13 of the act of July 23,1860 (banks of issue), provides that
the President of the Republic may, through one or more agents appointed by him
for the purpose, at any interval of time he thinks convenient, cause an examination
to be made of the books, and the cash, and other assets of the banks of issue.
By article 23, any director or agent of a bank who, after having been duly notified
by the agent appointed for the purpose by the Government, refuses at once to exhibit
to such Government agent the books, cash, and other assets of the bank, will be
punished by a fine of $1,000, to be paid into the public treasury by the bank. By
article 24, any bank director or manager who knowingly makes a false declaration
regarding the property and the employment of the capital of the bank, or who has
furnished a falge balance, or has concealed by fraudulent documents the situation of
the bank, especially the sums advanced by the bank to its directors or any other
officers, whether directly or by discounting documents under their signature, shall
be punished with a fine not exceeding 10,000 pesos. No provision is made in the
act of August 29, 1855, for the examination of the affairs of a hypothecary bank by
a Government official. It will be remembered that certain officials of these banks
are appointed by the President of the Republic, which is not the case with banks of
issue. (F) Restrictions on the amount of loans: There is no provision in the act
of July 23, 1860, restricting the amount of loans of a bank of issue. The question
does not arise in the case of hypothecary banks, which, as has been stated, give
their own notes for the value of their loans or mortgages, these notes being sold
in the open market by the borrower. (G) Restrictions of any other character on
loans by the bank: By article 10, of the act of July 23, 1860 (banks of issue), all
loans or discounts made by a bank in favor of its directors or any other officers, or
any agent of any kind who may take part in the administration of a bank, must be
entered in a special account in the books and in the statement of the bank's balance. By article 11, every bank of issue is prohibited from making loans on its own
shares. These are the only restrictions of any kind upon loans by the banks, contained in the act. (H) Security for loans: The act of July 23, 1860 (banks of issue),
makes no provisions for the security for loans. The act of August 29, 1855 (hypothecary banks), provides that the loans given by a hypothecary bank in the form of its
credit notes (letras de credito) must not be for more than 50 per cent of the value of
the property mortgaged to the bank. The value of the property mortgaged may not
be less than $2,000, nor the value of the loan less than $500. (I) Cash reserve required:
There are no provisions regarding the amount of cash reserve. (J) Accumulation of
surplus: There are no provisions regarding the accumulation of surplus.
5. Receipt of deposits: There are no regulations established by law governing the
receipt of deposits by the bank. It is the custom all over Chile for banks to allow
interest on deposits. The following statement, showing the variations in the rates
of interest allowed on deposits from 1865 to 1883, may be of interest:
REPORT OF THE COMPTROLLER OF THE CURRENCY.
I At six months or
At three months. | thirty days' sight.
At si£;ht,
Dale.
18G5,
I860,
1867,
1868,
1870,
1872,
1872,
1872,
1873,
]876,
1879,
1879,
1879,
1880,
1883,
Sept, 30
Aut;. 31
July 8
Nov. 28
Aug. 1
Dec. 16
Dec. 18
Dec. 31
May 18
July 4
June 1
July 15
Dec, 1
Sept, 1
Jan. 8
Per
cent.
Date.
6
5
4
3
4
5
1865, Sept, 30
1867, M a y 15
1867, Oct. 18
1868, NOT. 28
1870, Aug. 1
1872, Dec, 16
1872, Dec. 31
4 1873, Mar. 18
5 | 1876, July
6 1879, July
4 1879, Dec.
3 1880, Sept.
2 1881, Jan.
1 1883, Jan.
•2
Date.
1865, Sept. 30
1867, May 15
1867. Oct. 18
1868, Nov. 28
1870, Aug. 1
1872, Dec. 16
1872, Dec. 31
1873, Mar. 18
1876, July 4
1879, July 15
1879, Aug. 2
1879, Dec. 1
1880, Sept, 1
1881, Jan. 1
1883, Jan. 4
Per
cent.
8
7
G
5
For rates ruling since and to-day, see Appendix, note 2.
6. The Government is not interested as a shareholder in any of the banks, The
Bank of Mortgage Credit (Caja de Credito Hipotecario), the first hypothecary bank
established by the act of August 29, 1855, was established under the supervision of
Government, but the Government is not a shareholder, nor has it any interest in the
bank's operations.
7. By article 355 of the Commercial Code any stock company can establish branch
offices in any part of the Republic by fulfilling the conditions referred to under No. 2,
regarding the publication and registration, the same as in the case of the company
itself. These forms must be complied with in at least fifteen days before the opening
of the new office. As already stated, article 3 of the act of July 23, 1860 (banks of
issue), the declaration to be filed with the minister of finance fifteen days at least
before the bank begins its operations must state the number of branch offices (if the
bank intends to have branch offices), and the place in which it is intended to establish them,
8. The information, which, as already explained under No. 4 (D), must be given to
the minister of finance within the first fifteen days of each month, is published in the
Diario Oficial, the official journal of the Republic. As an example that may be of
interest, I give below a statement of the Bank of Chile, the leading bank of the
country, on August 31,1895. The statements of all the banks of issue are published
in this form.
[From the Diario Oficial of September 30, 1895.]
Ministry offinance—Movementof private capital—Bank of Chile—Balance on August
31, 1895.
DR.
Notes in circulation
$10,639,595.00
Notes of the late Consolidated Bank of Chile (Banco Consolidado de
Chile)
-12, 320. 00
Ditto ditto Alliance (Alianza)
14, 722. 00
Deposits
50, 705, 626. 62
Deposits of bonds and documents
78, 004, 786. 33
Acceptances
»-.-154,052.23
Agencies
2,209,182.88
Pending business
»
2, 265, 757. Go
Savings
30,739.87
Interest, commissions, etc
«,
=
55, 214. 62
Due to the public
Paid-up capital
Conversion fund
Reserve fund
Fund for dividends
Dividends payable
Due to shareholders ...
144,091,997.21
=
20,000,000.00
500, 000. 00
700,000.00
194, 455. 87
464, 006. 00
21, 858, 461. 87
165, 950^459. 08
70
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Cash:
Treasury notes
Government notes
CR.
$30, 700. 00
2, 213, 228. 50
Notes of other "banks
Checks and A^alues disposable of other banks
Coin
Bonds and titles:
Guarantee for notes deposited in the mint
Bonds and documents given in guarantee
Real estate
Other securities
Material
Advances and amounts receivable
Ditto, ditto, article 10 of the banking law
$2,243,928.50
853,966.00
4, 058, 239. 88
1,839,179.07
8, 995, 213. 45
$11, 750, 385. 59
89, 790. 96
$63, 616, 249. 49
758, 730. 01
Expenses of management
11, 840,176. 55
78, 004, 786. 33
2,094,325.70
257, 740. 36
193,157.47
64,374,979.50
190, 079. 72
165, 950, 459, 08
I also give a general summary, published in the same number of the Diario Oficial,
of the balances of all the banks of issue on August 31, 1895. By article 27 of the
act of August 29, 1855, tho board of directors (consejo de administracion) of the
hypothecary banks must every six months present to the Government a statement of
the operations of the bank, and must publish this statement in the Diario Oficial,
and one annual balance must also be published.
Balance of tlie hanks on the 31st of August, 1S95.
Cash.
Bants.
Banco do Chile
Santiago
Comercial do Chile
I n t e r n a t i o n a l (Cliile)
Mobiliario
A . E d w a r d s i C. a
Talca
D. M a t t e i C . a
Union
Concepcion
:
Curico
Melipilla
Nuble...
P o p u l a r Hipotecario
Jos6 Bunster
Popular
San F e r n a n d o
Llanquilme
Cochagua
Aranco
Serena
Tacna
Total
ISTotes in circulation.
Deposits.
Gold.
Coin.
Gore rum out
notes.
c$10,639, 595. 00 i$50. 705, 626. 62
$1, 839,179. 07 $2, 213, 228. 50
2, 07(3, 834. 50 15. 726, 770. 55
2, 609, 335. 56
523, 501. 00
' 535, 901. 59 $1, 354, 540. 85
2, 217, 090. 00
518, 588. S6
343, 448. 00
5, 431, 637. 03
843, 997. 83
496, 436. 00
1,309,
216, 378.14
105, 230. 00
13,168.30
113, 452. 00
48,
286, 416. 05 1,002,791.27
25, 029.10
85, 960. 00
416,
641, 623.57
47, 201. 66
74,218.81
121, 929. 00
556
418,381.88
575, 990. 00
15, 810. 25
19, 063. 00
552, 226. 61
405,
3, 314. 05
31, 500. 00
718, 830.38
208,
76, 716.19
112,194. 50
389, 220. 50
165.
7, 210. 33
19, 470. 00
GO, 274. 00
787, 486. 84
268,
5,226.05
85, 643. 33
20, 623.00
159, 005. 51
116,
4, 206.15
15,150.00
5, 692. 00
95, 588. 89
219,
1, 267. 01
19, 833. 34
119,102. 94
108,
1,851.45
"""i"325!66
988, 951. 29
5, 500. 02
8, 585. 00
069,351.52
3, 875. 39
1C6,
3, 696. 00
218, 654. 07
21.
1, 025. 00
12,810.10
12, 988. 00
(*
65, 573. 34
10,
1,552,856.40
204, 240. 00
30,195. 57
82, 733. 00
195,
848,
698. 66
95, 080. 39
6, 811. 40
30, 000.00
153,
10,304,386.50 114, 228, 282. 38
3, 557, 695. 84
6, 098, 311. 59
4, 280, 016. 00
alias further $12,320 in notes of the cx-Consolidatcd Bank and $14,722 of the ex-Bank of tho
Alliance.
*Has not forwarded its balanco.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
71
Balance of tlie banks on the 81st of August, 1895—Continued.
Cash.
Banks.
Banco de Chile
Santiago
Comercial de Chile
International (Chile)
Mobiliario
A Ed wards iC A
Talc a
D. Matte iC. a
Union
Concepcion
Curico
Melipilla .
!Nuble
Popular Hipotecario
JoseBunster
Popular
San Fernando
Cocha^ua
T r e a s u r y notes.
Notes of other
banks.
$30, 700
900
$853, 966. 00
196, 289.90
384, 834. 00
96, 568. 00
900
400
200
Serena
Tacna
33,100
Total
Total.
Checks disposable in other banks.
$4, 937,073. 57
3, 330, 026.46
2,601,411.81
1, 436, 991. 83
231, 850. 30
1,165, 461. 37
313, 315. 47
765, 610.15
149, 382. 05
225, 896. 69
6171,922.33
cl23,854.38
33, 068.15
28,350.35
4,416.45
26, 085. 02
26 199.39
cl 34, 373. 10
$4, 058,139. 88
152, 711. 98
118, 218. 09
278, 988. 63
45, 424. 20
46,185. 75
16, 482. 07
38, 767. 00
25, 206. 45
e5, 306. 40
355, 935. 57
/ 1 6 7 , 222. 62
806. 38
6, 803. 22
96-1, 630. 94
2,126, 781. 25
16,133, 746. 46
5, 899,182. 91
51,681. 00
69, 066. 00
al53,846.90
114, 568. 00
36, 986. 00
44, 301. 00
9, 340. 00
8, 020. 00
7, 250. 00
840. 00
12, 000. 00
18, 421. CO
4, 830. 00
6, 307. 24
10,000. 98
18, 395. 77
79,618.41
1, 904. 48
90, 564. 89
4, 000. 00
a Figures under the heading of bills and checks of other banks.
b In this total figure $10,667 of its own notes.
c In this total figure $3,024 of its own notes.
din this total are included $2,720 of its own notes.
e Not detailed in the cash.
/ I n this total figure $10,124.38 of its own notes.
9. There are no general taxes or burdens imposed on the banks for the privileges
granted them. In certain crises in the history of the country, however, special
privileges have been given to the banks in return for favors to the Government, and
it is necessary, for the understanding of the banking system which has existed in
this country, to give some of the most important cases in which, these arrangements
have been made between the Government and the banks. Although the act of July
23, 1860, required at that time that bank notes should be redeemed on their presentation, by acts passed on December 20,1865, and February 1, 1886, in consequence of
the war with Spain, in return for a loan of about 4,500,000 pesos to the Government
of Chile, the Bank of Chile and four other banks were permitted to defer the
redemption of their notes until six months after the close of the war, or at any rate
until not later than July 30,1867. The inconvertible paper, however, did not extend
later than August 31, 1866, and under these acts the bank notes were also to be
received by the Government at their face value in payment of all Government debts.
In 1878, the Government being again in need of funds, by the act of July 25 of that
year—now known as the act establishing irredeemable paper currency—eleven banks,
which subscribed for a certain amount of 9-per-cent bonds issued by the Government, were authorized to defer the redemption of their paper until August 31, 1879.
The issue of the paper was not to exceed 15,000,000 pesos. This amount was divided
up proportionately among the eleven banks subscribing to the loan, and was about
four times the total amount subscribed. These notes were received by the treasury
at their face value in payment of all Government debts. The financial crisis at the
time and the necessities of the war with Peru and Bolivia, which broke out during
the same year, not only required continual postponements of the date of redemption by the banks, by further acts of Congress, but also necessitated the issue by the
Government of its own irredeemable paper. This system of irredeemable paper
lasted until June 1 last, when specie payment was resumed in accordance with the
act of February 11 of the present year providing for the redemption of the paper
money on June 1, at the rate of 18 pence per peso, worth formerly 48 pence. Since
that time and up to the present date specie payment has been sustained, but exchange
in London, at ninety days'sight, has not risen above 17f pence, with much exportation of gold.
10. There are no special provisions for the closing up of the business of insolvent
banks. The same rules of law apply as to the failure of a firm or an individual.
The following summary regarding bankruptcy laws must therefore be made up from
72
REPORT OF THE COMPTROLLER OF THE CURRENCY.
the somewhat complicated sections of book 4 of the Commercial Code (Libro 4 del
Codigo de Comercio): There are three kinds of bankruptcy—accidental (fortuita),
culpable (culpable), and fraudulent (fraudulento). The last two are cases where
there has been either fraud or concealment, and in the case of a bank the responsibility would rest upon the managers or directors. The rules here given apply to the
case of accidental bankruptcy, as the other two kinds are subject to the jurisdiction
of the criminal court (juzgado del crimen). The declaration of bankruptcy must be
made before the commercial court (juzgado del comercio), and may be made on the
petition of the bankrupt or his heirs, or on the petition of any creditor, or of a
Government attorney (fiscal). As soon as the declaration of the inability of the
individual or company to pay the debts is made, the individual or the company's
agent must present himself within three days before the* court, bringing with him a
statement of the affairs and the explanation of the causes of the bankruptcy. The
judge then makes a declaration of bankruptcy, and fixes the day on which all payments must cease, suspends the operations of the bankrupt, summons his creditors,
and appoints two or three provisional administrators or receivers (sindicos) of his
property. The decision of the judge is published in the newspapers, and effect is
given to it in spite of a pending appeal. The declaration of bankruptcy acts as an
attachment upon all the property of the bankrupt, and all suits against him are
suspended, excepting suits regarding real property, such as mortgages, etc. An
appeal can be taken against the declaration of bankruptcy either by the bankrupt
or his creditors. The court of appeal in such case decides, within twenty days,
whether there is a case for bankruptcy or not. As already stated, however, the
proceedings begun do not cease during this appeal. The judge, at the time of
the declaration of bankruptcy, causes an inventory to be made of the property of
the bankrupt, puts his seal upon the latter's office and books, and delivers everything to the receiver or receivers. The creditors are summoned as soon as possible
by the judge, and they agree upon the number of permanent receivers to be appointed.
The resolutions of the creditors are made by a simple majority of their number, representing three-fifths of the debts against the bankrupt. The correspondence of the
bankrupt is opened in his presence, and within fifteen days the permanent receivers
must present to the judge a record setting forth the causes of the bankruptcy and
state of the bankrupt's affairs. On the day following the appointment of the permanent receivers, the judge summons the creditors, in order that they should present
their claims against the bankrupt. Creditors can raise objections to claims against
the estate and the bankrupt can also raise objections to such claims, and whatever doubts may arise the judge must decide within eight days following the
application presented to him by the parties interested. At this stage of the failure,
the bankrupt may propose a settlement (convenio) to his creditors, either for the
purpose of obtaining from them a reduction of their claims, or time for the payment of the same. This plan should be discussed at an open meeting of the creditors, and the agreement can only be accepted by a majority of the votes of the
creditors. Each creditor has but a single vote, regardless of the number, and
amount of his claims. Whenever an agreement is made, the affairs of the individual bankrupt or the bankrupt company are wound up in accordance with this
agreement. When no agreement is made, the receivers sell the property of the
bankrupt at public auction, collect all the debts due to the bankrupt, and notify
the judge of the amount that should be paid to each of the creditors, reserving the
proportion belonging to any creditors domiciled abroad. Having realized all the
property and settled with the creditors, they present their accounts to the judge.
Any property of third parties in the possession of the bankrupt at the time of the
failure is returned to its owners on proof of ownership. When the amount to be
paid to the creditors is fixed, the judge orders the payment of certain preferred
claims, such as those of the treasury, those of the municipality, employees, creditors
secured by pledges, common carriers, insurance companies, etc. The foregoing is a
short summary of the bankruptcy law of Chile, and of course the same proceedings
must follow in the case of an insolvent bank. It is the usual custom here, however,
in the case of an insolvent bank, to have one of the other banks, such as, for instance,
the Bank of Chile (Banco de Chile), appointed receiver. It is necessary also to refer
again to the articles of the Commercial Code quoted in answer to No. 12, which provide that in the case of the insolvency of a bank, after the passage of that act, the
Government shall dispose of the guaranty deposited for the notes issued by the
bank, and shall pay off those notes. In the case of the insolvency of a bank of issue
at the present time, the Government therefore assumes the responsibility of redeeming the paper of the insolvent bank.
11. Article 29 of the act of July 23, 1860, establishing banks of issue, allowed any
bank to issue notes payable at sight and to bearer to an amount not greater than 150
per cent of its capital stock, the stock being defined as above under No. 4 (A). Bank
notes, by article 14, must be numbered and have a double stub, and must bear the
signature and seal of the superintendent of the mint. One of the stubs must remain
EEPORT OF THE COMPTROLLER OP THE CURRENCY.
73
In the mint. Article 27 of the same act required that bank notes should be paid in
gold or silver, but, as I have explained under No. 9, this article of the act was virtually repealed by various other acts, so that the system of irredeemable paper existed
in this country from July 22, 1878, to June 1 of the present year.
12. The act of July 23, 1860, to which I have so often referred, made absolutely no
provision for the redemption of the bank notes. With the exception of the period
of the war with Spain, above mentioned under answer to No. 9, the banknotes, however, were promptly redeemed in this country down to the act of July 23, 1878. One of
the conditions of the successful resumption of specie payment was, of course, provision for the redemption of bank notes. The resumption act of February 11 of the present year makes the following requirements of the banks, which are of sufficient importance to be mentioned here in full: "Article 6. The banks shall guarantee the total
value of their issue by depositing, in the mint, gold, Government bills, Government
bonds, municipal bonds payable by the Government, treasury notes, and bonds of
banks which are exclusively hypotheeary. These values shall be appraised monthly
at an estimate fixed by the President of the Republic. The said guaranty shall be
deposited in the following form: Seventy per cent within three months following the
promulgation of this act, and the remaining 30 per cent at the rate of 5 per cent per
month for the following six months. In case of the insolvency of the bank, the
Government shall realize the guaranty, which shall be regarded as a pledge, and
shall pay in full the notes of the bank through the Government offices. Banknotes
shall, besides, enjoy preference over all other claims against the insolvent bank, except
judicial costs and the fee of the receiver (sindico liquidadorj. Article 7. The bank
notes guaranteed in the form prescribed in the preceding article shall be received
by the Government in payment of taxes, credits, and for all other purposes until
December 31, 1897. Article 8. Until the date mentioned in the preceding article,
the total emission of bank notes is limited to 24,000,000 pesos, divided proportionately among the banks according to their paid-up capital." All the banks of issue
have complied with the above requirements of the law.
13. The Chilean banking act of July 23, 1860, establishing banks of issue, on
which the banking system of the country down to the resumption of specie payment on June 1, 1895, was based, was distinguished by a certain careless liberality
toward the banks. No provision was made for the redemption of bank notes, no
provision for a reserve fund,, and no limit to the amount of loans which the managers
of the institutions might make to themselves. The result has been that profits
which, under the banking systems of other countries, would go into the reserve
fund, have been expended in "dividends paid to the stockholders; and the financial
history of the country shows large dividends paid by the banks, while at the same
time the stock of the banks has been below par. The Bank of Chile in twelve years
and a half, that is, from the date of its foundation down to June 30,1878, the month
in which the law making paper irredeemable was passed, had paid 228 per cent in
dividends, an average of more than 18 per cent a year. In 1872 it distributed a dividend of 24 per cent; in 1873 of 22 per cent; in 1875 of 20 per cent; and in December
of 1875 it had only $2,452,000 (pesos) cash on hand to meet 2,555,000 pesos of notes
and over 20,000,000 of deposits; and at the same date the bank had the precaution
to accumulate a special fund for dividends, which amounted to 319,000 pesos. I give
below the average rate of dividends paid by some of the principal banks between
the periods I mention:
Banks.
Bank of Chile
»
Banco Agricola (which coalesced in 1894 with the Bank of Chile).
Bank of Talca
Bank of the Union
Bank of Concepcion
Bank of Curico
Bank of Santiago
Years.
I Semiannual.
1865-1894
1869-1894
1885-1895
1885-1895
1872-1894
1882-1894 I.
1884-1893 |.
Per cent.
8.54
5.91
Annual.
Per cent.
17.08
11.82
9.31
9.62
14.062
11.08
13
As a contrast to the large dividends paid I give at random the value of the shares
of certain banks quoted in 1888: Bank of Chile, 50; Valparaiso, 50; Banco Agricola,
60; Bank of the Union, 50. The quotations to-day are as follows: Bank of Chile,
86; Santiago, 90; Bank of the Union, 63; the Commercial Bank, 71. The values of
the notes of the hypotheeary banks have fluctuated as follows: eight per cent between
73 and 105, 7 per cent between 70 and 104, 6 per cent between 89 and 102, 5 per
cent between 65 and 93. If the Chilean law has been liberal toward the banks, it
must also be said that the banks have shown great liberality toward their customers. Every person in this country of good credit who has a deposit in one of the
74
REPORT OF THE COMPTROLLER OF THE CURRENCY.
"banks is allowed to overdraw his account. This agreement is known as an account
current contract (contrato de cuenta corriento). Of course the bank charges interest on the amount overdrawn, so that it is really equivalent to an unsecured loan by
the bank to the depositor. The following shows the variation in interest collected
on advances in account current from 1868 to 1893:
Date.
Per cent.
Date.
Per cent.
Date.
Per cent.
i
1868,
1868
1860,
1870
1871
1873
Oct. 1
Nov. 28
Dec, 31
Get 15
Set)t 1
Mar 18
8 1874,
7 1876,
8 1877,
9 ! 1879
8 1 1880,
9 | 1881,
I
Oct. 1
Sept. 1
Jim. 15
July 15
Sept. 1
Jan. 1
10 j 1888 Jan 1
11 1889, Jan. 1
10 1890, Jan. 1
9 i 1891 Jan 1
7 1892 Jan 1
G ' 1893 Jan. 1
6
G
G
6
G
7
In addition to the interest, the condition of the contract is that the depositor shall
pay a commission of one-half per cent on the amount of the credit given him by the
bank, payable every six months. Owing to the contraction caused by the resumption of specie payment the present rate is much higher, and has reached 10 per cent.
To-day the rate quoted is 9 per cent.
APPENDIX.
Note No. 1.—By the act of January 10, 1884, the provision of the law of August 29,
1855, establishing hypothecary banks, and fixing the portion of the annual payment
to bo devoted to the sinking fund at not less than 1 nor moiv» than 2 per cent, has
been repealed. The amount to be devoted to the sinking fund may now be the
subject of contract between the bank and tho borrower.
Note No. 2.—In the year 1888 this interest was quoted as follows: At sight, 2 j>er
cent; at a fixed term of two to three months, 3 per cent; at a iixed term of four
mouths or less, subject to thirty days'notice after two months, 4 per cent; at a
fixed term of six months or less, with thirty days' notice 7after four months, \\ per
cent; at a fixed term of one year, 5 per cent; at sixty days notice after six months,
5 per cent; at thirty days7 sight after two months, 4 per cent. Tho last two classes
of deposits are received for indefinite terms, and the interest is payable on June 30
and December 31 of each year. To-day (October 18, 1895) the quotations are as
follows: At sight and 7in account current, 2 per cent per annum; at two months, or
subject to fifteen days
notice after the first month, 4 per cent; at three months,
subject to thirty
days7 notice after one month, 5 per cent; at four months, subject to
thirty days7 notice after two months, 6 per cent; at six months, subject to7 thirty
days' notice after four months, 7 per cent; at one year, subject to sixty days
notice
after six months, 8 per cent. Deposits at fifteen, thirty, and sixty days7 notice are
received for indefinite terms, and the interest is payable., at the option of the interested
party, either on the withdrawal of the funds or on the 30th of June and 3ist of
December of each year.
CHIXA.
[Charles Dcnl>y, "United States minister.]
1. Native chartered banking companies are unknown. Private bankers are found
in all large towns. They are chielly banks of discount and deposit. There are several foreign banks which are organized under the laws of their own countries, of
which tho chief is the Hongkong and Shanghai Banking Corporation.
2. A bank can be opened by any person or company on reporting its organization
to the local officials. There are no special laws appertaining to banks.
3. See answer No. 2.
4. There are no regulations such as are specified in this interrogatory.
5. Tho Chinese bank is a bank of discount and deposit. There is no limit to the
receipt of deposits. It is the custom to allow interest thereon, except at Peking.
6. The Government is not interested as a shareholder in banks.
7. All banks are permitted to conduct branch banks or offices.
8. There is no system by which information as to the condition of banks is given
to the public.
9. Thero are no taxes or burdens imposed on the banks in return for privileges.
In times of emergency, however, they are expected to aid the Government by loans
or subsidies.
10. Insolvent banks are taken possession of by a special officer appointed for that
purpose, who winds them up and sees that their assets are properly administered and
the proceeds paid to the bill holders.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
75
11. There are private banks of emission, but tliey are not numerous. They exist
cliieily at Peking. The banks at Peking issue notes as low as 10 cents, but their
circulation is local. There is no limit as to the right to issue notes.
12. There is no legal provision made for the redemption of these notes. Usually
when disaster comes the banker disappears with the assets and the loss is total. If
any assets are available the Government takes possession of them.
13. There is no State bank in China. The issue of paper money dates back to the
earliest historic period. Five hundred years before Christ Government bills, which
were utterly worthless, were in circulation. In 1445 the issue was suspended and,
except during the Taiping rebellion in 1858, no bills have been issued since. As a
State China has nothing to do with banking, but there is in each province a private
bank which performs the functions of the treasury for the Government and receives
the taxes. It requires payment in silver purer than the silver of the locality and
thereby makes 2 per cent as a compensation for its services. The Chinese banks
stand high in popular confidence. Banks for a consideration guarantee the paper of
their customers. A clearing house exists at Peking. Immediate payment of bills is
not demanded. Government moneys are deposited in the banks to prevent failures.
There is little counterfeiting of bills. Bills are made out to the depositor as he
requires them. Circular letters of credit are issued, which are good wherever the
banks have agencies. Rates are higher than with us, as transportation is costly. In
my opinion our banking system would work perfectly in China and would, greatly
benefit the country. What China ought to do, and what some day she will do, is to
intrust the subject of banking and of finance to a competent American financier.
If ho succeeded in establishing a good system of collection and distribution of
revenues he would be a great public benefactor.
DEN
[John E. Iiisley, United States minister.]
1. There are three classes of banks, namely, the national, the private, and savings
banks. There is only one bank of the first class, viz, the National Bank of Copenhagen, and it alone is authorized to issue bills to circulate as money. Of the second
class there are several, of which the largest are: (1) "Den Danske Landmandsbank," (2) "Handelsbanken," (3) " Privatbanken." The third class, savings banks,
is the most numerous of the banks of Denmark.
2. The National Bank was established in 1818 to succeed the State Bank (Rigsban ken). The latter, which was established by the Government in 1813, did not succeed in promoting the objects for which it was created, namely, to give new life to
the broken-down financial and commercial condition of the country, subsequent to
the wars and unhappy circumstances of that period. While the State Bank was
owned by the Government, the National Bank is a, joint stock company, owned
by individuals; but the original shareholders did not enter voluntarily upon this
affair. By royal ordinance all real estate in the towns was taxed to 6 per cent of
its value, and till this payment was effected this debt bore an interest of 6| per
cent; all farm lands were taxed to 1 per cent, bearing the above-mentioned interest.
In return the proprietors became shareholders for the amount of the tax; but as the
new bank should redeem all the notes as well as the bonds issued by the old bank
before any profit could be gained, for many years no dividend could be paid to the
shareholders. From 1845, however, the bank began to pay a dividend, which on an
average has amounted to 7 per cent per annum. The shares are of course transferable.
By octroi of July 4, 1818, the bank is granted the rights and privileges of the old
State Bank (Rigsbank), whose assets and liabilities it assumed, so that transactions
pending with the latter were transferred to the former for a term of ninety years, from
1818 to 1908. When the term shall have expired the octroi shall be renewed or revoked,
as the case may be. The private banks are also stock companies. Every joint stock
company is by law required to notify the proper authority of its foundation and
state (1) the date of the by-law, (2) the business, (3) the amount of capital subscribed for, (4) the number of shares issued and whether they are payable to the
holder or issued upon name, (5) whether the full face value of the certificate is paid,
or if not, when payment may bo demanded, (6) in what newspapers notices to the
the shareholders will be published, (7) names and domiciles of the administrators,
(8) the locality in which the office is situated, and (9) the name of the manager, whose
signature binds the company. (Law of March 1,1889.) Otherwise there are no laws
in Denmark governing or controlling stock companies. Any three or more persons
may unite by private agreement and form a joint stock company for the business
of banking or any other business, and a company so formed, having complied with
the law above mentioned, carries on its business in its own way, being liable only
under the general penal statutes for any wrongdoing. But such companies may
make for themselves by-laws, and may file a copy of the same in the ministry of the
76
REPORT OF THE COMPTROLLER OF THE CURRENCY.
interior and ol)tain tlic sanction of tlie ministry thereto, and thereupon it becomes
the duty of that ministry to see to it that such by-laws are faithfully observed. It
is not obligatory to so tile their by-laws, and in ease it is not done the Government
takes no cognizance of the doing's of the company, except to punish its managers for
any dishonest or unfair dealing, but companies formed for banking business usually
do it for the purpose of strengthen ing their credit and gaining public confidence.
The savings banks are subject to the law of May 28, 1880, and their by-laws must be
sanctioned by the King. Two copies of the law are sent herewith, and a translation
of the principal sections is appended below.
3. The minister of the interior, so far as any authorization is required.
4. (a) For the National Bank the capital stock was determined as above mentioned.
(b) They are managed by directors chosen from their shareholders. The number of
such directors is fixed by by-laws. For the National Bank one of the directors is
appointed by the King, and it is managed by fifteen so-called representatives and
four directors, (c) There is no legal liability of shareholders. The savings banks
are conducted in conformity to the law of May 28, 1880, as said before, section 12 of
which provides for the responsibility of the proper parties, (d) Reports of condition of the bank are made monthly and annually—the National Bank and such private banking companies as have had their by-laws sanctioned by the ministry to the
bank commissioner, and by the savings banks to the savings-bank inspector, (e) At
the National Bank the minister of justice is commissioner; at each of the three other
great banks the minister of interior appoints a commissioner, who exercises the control of the Government. For the savings bank is the inspector appointed by the King
for such banks. (/) The National Bank can loan for periods of from one to six months,
on such securities as its managers may deem safe, at not exceeding 6 per cent interest
per annum. There are no restrictions on the other banks, except such as are imposed
by their respective by-laws. The bank doing the largest loaning business is the
""Landmandsbank." The loans are made partly on pledge of stocks or bonds, but
mostly in mortgages on real estate, but personal security and bond is also accepted.
The by-laws of the "Handelsbank" reads that "the bank gives loans on security,
advances money on merchandise, procures capital for railroads and other enterprises.*'
{g) Answered above, (h) Answered above, (i) The National Bank is required to
keep 25 per cent in legal coins of the amount of bank notes in circulation, if the latter
is less than 48,000,000; if 48,000,000 or more the amount in coins rnust; not be less
than 12,000,000 kroner. The larger part of the banking business of the country is
done by the private banking companies above named ; as to them, there is no requirement by public law for a cash reserve, (j) The by-laws of the Landmandsbank provide that the surplus fund shall not exceed 4,000,000 kroner, but there is no public
law or regulation to determine the amount of the surplus. All private banking companies fix the amount of surplus to be accumulated to suit themselves by their by-laws.
The usual mode of accumulating the surplus is this: Ten per cent of the net earnings
are placed to the credit of the surplus fund annually until the amount is reached, as
fixed by the by-laws of the bank; 4 per cent dividend is paid to the shareholder, and
when there is still a surplus the same is disposed of in an extra dividend. The dividends paid by the principal banks have of late years been 6 to 7 per cent, and sometimes more.
5. There are no regulations by public law. Deposits are received by all the banks,
and an interest of 1 per cent as a rule is paid. But savings banks allow 3, and sometimes 3} per cent.
6. The Government is not interested in any bank as shareholder.
7. Yes, all the banks may have branch offices. The National Bank alone requires
the sanction of the Government to open other offices.
8. Monthly and annual reports are made and printed by the national and savings
banks and by such private banks as have had their by-laws sanctioned by the minister of interior. A copy of such report is sent to the royal bank commissioner by the
National Bank, to the ministry of interior by the private banks, and to the royal savings bank inspector by the savings banks. Any person may have a copy of these
reports on application to the bank making them. In addition to this the minister of
the interior may at his discretion cause an examination to be made of any of the private banks, whose by-laws have been sanctioned by the ministry.
9. There are no taxes nor burdens; neither are the banks (except the National
Bank) granted any other privileges than to carry on business like any other stock
company or business concern.
10. The r>roeeedings are the same as in the case of any other business, i. e., by action
in the courts by any person. The savings banks alone are subject to a special provision of the law of May 28, 1880, section 8 (see under No. 2).
11. The National Bank of Copenhagen alone is allowed to issue bank notes. The
octroy of July 4, 1818, grants the privilege to the bank, and a royal proclamation of
December 20, 1873, determines the conditions upon which the privilege shall remain
in force. The proclamation of 1873 reads: "Section 1. The National Bank is author
REPORT OF THE COMPTROLLER OF THE CURRENCY.
77
izcd to issue as large an amount of bank notes as the "business may make necessary,
provided, however, (1) that the bank is in possession of a metal fund to the A~aluo of
the amount which the bank notes exceed 27,000,000 kroner, and never to a less value
than three-eights of the face value of the bank notes; (2) that the bank owns, as
security for that part of the bank notes, which are not covered by the metal fund,
easily realizable, good and secure assets'in the proportion of 150 kroner in assets to
evcr7y 100 kroner in bank notes. Section 2. The metal fund, which the National
Bank, according to the foregoing provision, must be in possession of at all times,
shall alone consist of (1) coins of legal currency according to the face value; (2) gold
in bars or foreign gold coins to the value of 2,480 kroner per kilogram fine gold; and
(3) to a limited extent only, which at present is fixed at one-third of the amount of
the fund, silver bars and foreign silver coins at a purchase price, not exceeding the
relation of the value to gold of 1 to 15.675. That part of the metal fund which consists of legal currency must not sink below 12,000,000 kroner if the circulating bank
notes amount to 48,000,000 kroner. If the circulating amount of the bank notes is less,
then the aforesaid metal fund in legal currency must amount to at least one-fourth
of the value of the bank notes. Gold bars, which the National Bank has delivered
to the Royal mint for coinage, may be included in the metal fund of coins of the bank.
Section 3. The following assets serve to secure the amount of bank notes which is
not covered by the metal fund: Notes for loans against security, bills of exchange
upon Denmark and foreign countries, money payable on demand with foreign correspondents, public stocks according to the market value, and mortgages for direct
loans on real estate; the last named, however, not to exceed the value of 6,000,000
kroner. Section 4. The bank notes must not be of a smaller denomination than 10
kroner. Section 5. The bank shall pay on demand the face value of the bank [notes ?]
in gold of legal currency, and shall also purchase of anybody who may wish it line
gold bars at a price of 2,480 kroner for each kilogram fine gold, deducting, however,
one-fourth of 1 per cent for coinage expenses. Section 6. It is the duty of the directors
of the bank to make a monthly report to the Royal bank commissioner, on the relations
between the bank notes in circulation and the assets and metal funds, which serve
as security for same. Section 7. Should it ever, against all expectations, be found
that the report aforesaid shows a discrepancy in the relations between the assets
and the bank notes, it shall be the duty of the directors to prove to the Royal bank
commissioner, before the end of the following month, that the proper relations have
"been absolutely restored. Section 8. These provisions go into effect from the time
when gold coin, in conformity to the law of May 23, 1873, section 16, is made legal
currency. The bank, however, is authorized to pay bank notes issued with the
coins, coined heretofore, until the latter have ceased to be legal currency. Section 9.
All previous rescripts and resolutions are canceled from the time when these provisions go into effect." (Signed by the King). By a Royal resolution of November 2,
1877, permission is granted to the National Bank to increase the amount, 27,000,000
kroner, which is not covered by a metal fund, to 30,000,000 kroner, by forming an
extra reserve fund of 3,000,000 kroner from the surplus of the earnings, but this
amount shall not be decreased, as long as the octroi remains in force, without the
sanction of the King. This resolution is,found on pages 60 and 61 of the octroi
sent herewith. The circulation of the National Bank, under the provisions of the
octroi and subsequent decrees, has been increased, and on July 31,1895, was 83,000,000
kroner.
12. They are redeemable on presentation and demand in gold coin of the realm.
13 I transmit herewith two copies of the octroi, regulations and decrees relating
to the National Bank, the statutes or by-laws of the u Landmandsbank " and the
" Handel sbank," also two copies of the law of May 28, 1880, regulating savings
banks; also annual report for 1894 of the National Bank, Landmandsbank, and
Handelsbank, under another cover. A translation of the principal sections of the
law of May 28, 1880, and of section 262 of the penal code I subjoin below.
[Translation of the law of May 28, 1880, sections 1, 2, 5, 7, 8, 12.]
Section 1. Under the ministry of interior a savings bank inspector is appointed by
the King. He is the immediate subordinate to the minister. Section 2. Savings
banks which shall be established hereafter must, before starting, transmit a copy
of their by-laws to the savings bank inspector, together with a list of the persons
who constitute the board of managers of the bank. Amendments to the by-laws
and changes in the personnel of the board must be announced within one month of
their taking effect. Section 5. The annual account shall be revised by the auditors
of the savings bank, Avho must not be members of the board of management, nor
elected by same. The auditors shall compare the accounts of the depositors with
the amount put down in the chief account, subject the assets and liabilities to a
careful examination, and see that the bank has been conducted in conformity to the
statutes. The revision must be over within two months of the receipt of the
account. Section 7. The accounts shall always be laid before the savings bank
78
REPORT OF THE COMPTROLLER OF THE CURRENCY.
inspector as soon as they have been revised by the auditors. It is also the duty of
the inspector to satisfy himself as to the standing and proper management of the
bank by personal investigations on the spot, when the managers are required to
answer all questions concerning the affairs of the bank. The inspector shall make
an annual report to the minister of the interior concerning the affairs of all the savings banks. Section 8. When a savings bank has not only lost its reserve fund, but
sustains a deficit amounting to 5 per cent of the amount due depositors, the savings bank inspector is authorized to suspend the transactions of the bank. When
the management gives security for the deficit, and such security is approved by
the minister of the interior, the suspension shall cease; otherwise the bank shall
make an assignment. Section 12. The managing members of the savings banks, who
are liable to punishment and to pay damages according to the usual rules of the law
concerning losses which are sustained by the banks or depositors by reason of willful
or undue neglect, may also be subject to section 262 of the penal code in case of the
bankruptcy of the banks when proper charges of disorder in bookkeeping and
accounting can be made against all or any of them. (Sanctioned by the King.)
Section 262 of the penal code reads: "When a person who is required to keep
proper books of account, and has been declared bankrupt, is found to have falsified,
destroyed, or taken away such books, or has kept the books in a dishonest manner,
or has, with fraudulent intent, not kept them, ho shall be punished with imprisonment, on bread and water or with hard labor, for a term not exceeding two years.
If such person is guilty of having kept his books in an. improper manner, he shall be
imprisoned for a term not exceeding six months."
ECUADOR.
[James I). Tillman, United States minister.]
1. All the banks are organized nnder the laws of the Congress, and are denominated "Sociedades Anoniinas," or corporations, and all have a right to issue notes to
be circulated as money, except the two hereafter named as "Bancos Hipotecarios," to
discount commercial paper and may lend money on mortgages.
2. The requirements before going into business are the payment of 40 per cent of
the capital stock and satisfactory proof of it to a Government official.
3. A Government officer is appointed to determine when these conditions have
been complied with by the bank.
4. (&) The bank is managed by a board of directors, (c) There is no personal
liability of shareholders, (d) Reports on condition must be made and published as
often as called for, and the Government may call for these reports at any time.
(e) They are subject to examination at any time by Government officials. The whole
question of loans, security, amount cash reserve and surplus is in the discretion of
the directors.
5. Small interest on deposits i3 allowed, ranging from 2 per cent for short time to
5 per cent for twelve months.
6. The Government has no stock in the banks.
7. Some of the banks have agents at places different from the sites of the bank.
8. Statements of the condition of the banks are published occasionally in a newspaper. A. statement of the Bank of the Union will be found in this report.
9. The Government tax on the banks is 4 sucres per 1,000 on the amount of circulating notes issued. These notes are nearly all printed or lithographed by the
American Bank Note Company, New York.
10. Government officials may take charge of the banks for the purpose of closing
them.
11. The banks may issue 3 sucres of circulating notes for every sucre of silver
held by the bank.
• 12. No provision is made for the redemption of the notes other than the proper
management of the bank by the officials (banking and Government), whose duty it
is to conduct its affairs. There are in the Republic five banks, with an aggregate
capital of 8,140,000 sucres, as follows: First. The Bank of Ecuador, established in
1867, in Guayaquil; capital, 2,000,000 sucres. Second. The Bank of Commerce and
Agriculture/recently established in Guayaquil; capital, 5,000,000 sucres. Third.
The Bank of Hipotecario (mortgage bank), with a capital of 400,000 sucres, established in 1881 in Guayaquil. Fourth. The "Bank of Hipotecario Territorial/ 7
with a capital of 500^000
sucres, founded in Guayaquil in 1887. Fifth. The
"Banco de la Union/7 with a capital of 240,000 sucres, founded in Quito in 1881.
This bank is now in a state of suspension and its notes are at a large discount.
In a communication addressed to the public on the 30th of September, 1895, by
the president and which concludes "Dios guardo a V." (God protect you), there is
given a statement of the condition of the bank. Among the assets there appears:
Silver, 200,233.68 sucres; overchecks, 249,324.68; unpaid stock, 37,200; various
REPORT OF THE COMPTROLLER OF THE CURRENCY.
79
accounts;, 43,019.68. I understand this to bo that uncertain account, "cash items."
In the list of liabilities there appears: Demand certificate deposits, 97,167.38;
time certificate deposits, 48,150.52; deposits subject to check, 79,923.12; circulating
notes outstanding, 575,259. It will thus bo seen that the amount of overchecks
exceeds the total amount of deposits. Many of the bills of this bank were printed
for "pesos," 5 pesos, or 1 or 20 pesos, and afterwards, when the Sucre was made
the unit of value, these bills were raised to a sucre by stamping on the face with
an india-rubber stamp the word "Fuerte," meaning " h a r d " or "strong;" "full
measure;" and they afterwards circulated as sucros. This bank, it is said, has been
largely used by the Government and its officials during the late political troubles
here. It is now in the hands of the de facto authorities, General Alfaro and his
executive ministers. The notes of the "Bank of Ecuador" and of the "International Bank" are preferred to silver, and these banks deservedly have high character at home and abroad. The "Banco Internacionai" has been merged with the
"Bank of Commerce and Agriculture" recently founded at Guayaquil.
[J. B. Eustis, United States ambassador.]
1. The Bank of France is the only bank of issue in France. There are also the Bank
of Algeria and colonial banks, but they are regulated by special laws, and any privilege accorded is limited to the colony whose names they bear.
2. The Bank of France is a private institution, but a privileged one; its charter is
voted by the Chambers. Since the foundation of the bank, nearly a century ago,
it has been renewed many times. The present one expires in December, 1895. It
can engage in no other transactions but those allowed by the laws authorizing its
establishment and by its statutes, viz, (a) to issue bank notes payable on demand;
(&) to discount bankers' drafts and commercial bills drawn at a fixed usance not
exceeding three months and bearing the names of business people and others well
known to be solvent; (c) to collect bills remitted them by private parties or public
establishments; (d) to receive in account current sums for deposit with the bank by
private individuals or public institutions and to pay amount drawn to extent of
funds deposited; (/) to keep a record of voluntary deposits of all securities, bullion,
and all kinds of gold and silver money; (g) to make advances upon French hills and
French securities, upon bullion and foreign coins in accordance with a certain proportion fixed by law and to terms fixed by the statutes of the bank; (h) to deliver
to any person applying therefor orders from Paris on their branch offices, and orders
on Paris from the branch offices.
3. The bank being a privileged institution is, as such, under the control of the
Government. This control is exercised by the representatives of the Government in
the hoard of managers of the hank, who are the governor of the bank and two deputy
governors, all three appointed by the State and removable at its will. Their functions
and duties are determined by law. The minister of finance, through whom they are
appointed, can report to the special jurisdiction of the council of state any action of
the bank which he may deem contrary to the laws and regulations governing the
institution.
4. (A) Originally fixed at 45,000,000 francs it has been increased in successive
amounts to 182,500,000 francs, made up of 182,500 shares of 1,000 francs each. (Nominal value; it is worth nearly four times as much on the market.) (B) It is confided
to the governor, aided by the two deputy governors, and to a general council (conseil general), made up of fifteen councilors (regents), and of three inspectors or auitors (censeurs). As stated above, the governor and the two deputy governors are
appointed by the State. The councilors, or regents, and the inspectors, or censeurs,
are elected at a general meeting of the stockholders. The three inspectors and five
of the councilors are chosen from the business portion of the shareholders—industriels, fabricants, manufacturers, and merchants. Three of the councilors are selected
from the treasury disbursing agents (tr6soriers-payeurs gendraux). The particular
functions assigned to the councilors are much the same as those of the directors of
limited stock companies. The inspectors, or auditors, exorcise a control and surveillance over all transactions of the hanks. The general council (conseil ge"ne"ral)
of the bank is divided into five committees, viz, the discount committee (coinite
d'escompte), which examines the papers handed to the bank for discount; the note
committee (comite" des billets), having the making, signing, and registration of the
notes; the hooks and portfolio committee (comite des livres et du portfolio), having
the bank books under its charge, and the treasury committee (comite des relations
avec le trdsor public) looking after whatever matters affecting the treasury.
(C) Stockholders are liable only to the extent of the amount of their shares.
(D) Every six months the bank furnishes to the Government a statement of its operations and of the payment of its dividends. In January of each year there is a gen
80
REPORT OF THE COMPTROLLER OF THE CURRENCY.
eral meeting of the two hundred largest) shareholders, when a statement is rendered
of the general position of the bank's affairs. It is printed and at the disposal of the
public. Every Friday the bank publishes in the Journal Officiel a return of its transactions. (E) See reply to No. 3. The minister of finance has the right to have the
books of the bank examined by its inspectors of finances. (F, G) The bank can
make loans to any amount. In so doing it is governed by certain rules. It can not
lend more than 80 per cent on Government securities, and not more than 75 per cent
on other securities. It makes no loans on foreign securities. The loans are made
for a period of ninety days, bnt they can be renewed. Advances of money on current
account are made for five days. (H) Securities deposited in guaranty for loans
obtained from the bank must be registered in the name of the bank. (I) The bank
reserve fund (fonds de reserve de la Banque de France) is fixed bylaw at 10,000,000
francs, besides the amount paid for the buildings of the bank. (J) That fund
amounts at present to eight millions and a fraction. It is derived from certain specified profits.
5. Anyone can open an account with the Bank of France by making a deposit of
500 francs. Deposits are payable at sight either at the bank or at any of its branches.
No interest is paid on them.
6. The Government has no interest as a shareholder.
7. The bank is obliged to conduct branch offices. It has now ninety-four branch
offices and thirty-eight auxiliary offices in different parts of larger cities. The
branch banks (succursales), are created by decree of the State upon proposals of the
bank's council, and a like decree is necessary before such branches can be abolished.
Each branch is under control of a director appointed by decree by the chief of State
on a proposition to that effect from the bank's governor and by managers appointed
by the governor of the bank. These branches are examined into by a special body
of inspectors from the Bank of France and by Government inspectors commissioned
to that effect by the minister of finances.
8. By the balance sheet published every week and posted up in the bourse and by
the annual statement which is furnished to the press.
9. The State has no share in the business of the bank, but the bank performs for
the Government, without charge, important Treasury operations, amounting every
year to 6,000,000,000 or 7,000,000,000 francs. Another advantage obtained by the
State in return for the charter accorded to the bank is an advance of 140,000,000
francs made to the Treasury at alow rate of interest (3 per cent on the 60,000,000 formerly advanced by the bank and 1 per cent on the balance). The State gets, besides,
the proceeds of the stamp duty on the notes issued by the bank and of a tax of 4
per cent on its dividends. Last year the proceeds derived from these two sources
amounted to over 2,500,000. It is further necessary to take into consideration the
important advantages assured to a large country in the matter of its credit, at home
and abroad, by the excellent working of a first-class establishment, such as the Bank
of France, and the consequent feeling of security that such a bank must everywhere
inspire.
10. No information obtained. It seems that there is no special provision of law
applicable to such case.
11. The issue of bank notes is regulated by law. The extent of the authorized
note circulation of the Bank of France, limited by decree of March 15, 1848, to
350,000,000 francs, was increased by subsequent legislation as follows: December
10, 1849, to 526,000,000; August 12, 1870, to 1,800,000,000; December 29, 1871, to
2,800,000,000; July 15, 1872, to 3,200,000,000; July 30, 1884, to 3,500,000,000, and
finally the law of January 25, 1893, raised the amount to 4,000,000,000 francs. The
bank issues notes of 1,000, 500, 100, 25, 10, and 5 francs. But notes of the last three
denominations are no longer in use. Bank notes, as soon as placed in circulation,
constitute a legal tender in France and in all French possessions. They have to be
guaranteed by deposit at the bank, by gold or silver coin, or by loans made upon
securities or public funds, or, finally, by loans made to the State, or drafts discounted upon terms prescribed by the fundamental laws and regulations of the
bank. The notes of the bank are payable in coin on demand. The bank may pay
in silver if it chooses, but in fact it pays in gold.
12. It belongs to the council-general of the bank to proportion the circulation of
its notes with its cash in hand and securities. In times of crisis, the Government
can give to the notes of the bank forced circulation (cours force"), in which case the
bank is relieved from the obligation of redeeming its notes in coin.
13. To accompany the above report I transmit the following printed documents,
in which additional information can be found: (1) Banque de France Compte rendu.
(2) Lois et Statuts de la Banque de France.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
81
[Theodore llunyan, United States ambassador.]
1. Banks issuing bills with the privilege of circulatiDg them : The Imperial Bank;,
private banks issuing bills, mortgage banks, or banks granting credit on real estate,
which grant loans on mortgages or other loans* and issue mortgage bonds thereon;
all other kinds of banks which are embraced under the customary name of 'credit
banks" (Kreditbanken).
2. This is regulated by the Imperial law of March 14, 1875, inclosed herewith, as
regards the Imperial Bank and the private banks issuing notes (Privatiiotenbanken).
The conditions for establishing and carrying on mortgage banks and the mortgage
and bond system (Pfandbriefwesen) not being regulated by Imperial law up to this
time vary in the individual confederated States. In most of the confederated Stales
it is necessary to have a grant from the State for the carrying on of a mortgage bank
empowered to issue bonds payable to bearer. The conditions under which gi ants for
mortgage banks in Prussia may be obtained are
contained in the inclosed "Standard
regulations for the Prussian mortgage banks' 7 of June 27,1893. For the other banks
(credit banks) regulations of the General German Business Law Book govern, which
simply require tho entry in the commercial register. (Compare articles 110, 1G3,178,
and 211 of the Business Law Book.)
3. As to the banks issuing bills, the Imperial chancellor or the Federal Council
(sections 44-54 of tho banking law of March 14, 1875). As to mortgage banks which
receive their grant from the State, the State government. As to mortgage banks
which do nob, according to State law, require a grant from the Government- and as
to the credit banks which do not require a permit from the State for their establishment (Law of the Confederated States (Bundesgesetz) of June 11, 1870; Banking
Law Sheet, p. 375), the appropriate commercial court (Handelsgericht) in whose
commercial register the company is entered according to the German Business Law
Book.
4. (a) The capital stock of the Imperial Bank amounts to 120,000,000 marks,
divided into 40,000 shares of 3,000 marks each, bearing the names of the owners.
This capital is raised out of private means without participation of the Empire or
the confederated States. (Banking law of March 14, 1875, sec.
23.) The capital
stock of the other banks is fixed in the statute of each bank. TsTo regulations regard
ing the amount of the same exist, (b) The management of the Imperial Bank is with
the imperial chancellor. The current management and its representation in business
rests with the Imperial bank directors (banking law of March 14, 1875, sees. 12, 25,
26, 27), who have at their head the bank president. (Banking law of March 14, 1875,
sees. 27, 31, 32a.) The standard for the management of all other banks is, so far as
they are business companies, open business partnerships, joint stock companies,
joint stock companies with shares or stock companies, contained in the second book
of the Business Law Book and in the corporation statutes, (c) The stockholders of
joint stock companies or stock companies are only held liable to the amount of the
face value of their stocks. To what extent the original subscribers and subsequent
owners of stocks that have not been paid up in full are held liable as to the unpaid
amount is regulated by articles 184, 184a-c, and 219 of the Business Law Book, (d)
The Imperial Bank and the private banks issuing billls must publish an account on
the 7th, 15th, 23d, and last day of each month of their profit and loss, and must draw
up a balance sheet of protit and loss at the end of each business year, and must
also publish in the Imperial Gazette the yearly account of profit and loss. (Banking
law of March 14, 1875, sec. 8.) Furthermore, they are to furnish to the supervising
authority (imperial chancellor), in order to enable it to collect the bill tax, a statement of the cash on hand (coin) and of the bills in circulation. (Banking law of
March 14,1875, sec. 10.) For the weekly reports and the annual statements of management the regulations of the banking law of the 14th of March, 1875, sections 15,
32, and 40-44, are also to be regarded. The report of management of the Imperial
Bank for 1894 is inclosed herewith. For the balance sheets, as well as the profit and
loss calculations of the stock banks and the publication thereof, the regulations,
articles 185a-c and 239b of the German Business Law Book, govern. Besides this,
for the Prussian mortgage banks there is also section 10 of the standard regulations
of June 27,1893. (e) The supervision of the Imperial Bank is with the Empire, and
is done by the bank curators, which body consists of the imperial chancellor, as
chairman, and four members. (Banking law of March 3, 1875, sec. 25.) The private
banks issuing bills are also placed under the supervision of the Imperial Government through the imperial chancellor. (Banking law of March 14,1875, sees. 48,10.)
Besides this, the confederated States have the right of supervision of the private
banks issuing bills. (Compare banking law, sec. 48, chap. 2.) For the supervision
of the mortgage banks various State regulations, issued by State government, exist.
(Compare, for Prussia, the standard regulation of June 27, 1893, sec. 2, last chapter;
CUR, PT 1
6
82
REPORT OF THE COMPTROLLER OF THE CURRENCY.
and sec. 11.) (/) No restriction "bylaw of the amount of loans, as to the maximum
limit, exists with regard to any of the banks, (g) The granting of credit by the
Imperial Bank and by the private banks issuing bills is limited by the regulations of
sections 13 and 44 of tho banking law. (Compare, also, tho general regulations
regarding business transactions of the Imperial Bank herewith inclosed.) The
mortgage banks grant loans on mortgage of real estate, which, according to its value
as ascertained by appraisal, etc., must be in a iixed proportion with the mortgaged
property. They are generally also empowered to invest their available means in
other profitable ways. (Compare section 1 of the standard regulations for the Prussian mortgage banks of June 27,1893.) Tho granting of loans by other banks is not
restricted by law. (h) Compare under question 4g as regards banks issuing bills.
(Banking law of March 11, 1875, sees. 13, No. 3, and 44, No. 1.) (i) The having
on hand of a cash reserve of at least one-third, of tho amount of tho bills in circulation is only prescribed for the banks issuing bills (so-called metallic third security).
(Banking law of March 14, 1875, sees. 17 and 44-3.) (j) In the case of the Imperial
Bank the annual net proiit is divided between the Empire and the stockholders,
according to section 24 of the banking Law of March 14,1875, and the supplement of
December 18, 1889. iSinco December 31,1891, the lawful limit of the reserve—onefourth of the original capital, 30,000,000 marks—has been reached. (See banking
law of March 14,1875, sec. 24.) The private banks issuing bills must place at least
20 per cent of the net profit beyond 4} per cent of the original capital for tho accumulation of a reserve fund until the latter reaches one-fourth of the original capital,
(Banking lav/ of March 14,1875, sec. 44-2.) For stock banks the regulations regarding tho creation of a reserve fund are contained in article 185b-c and 239b of the
Business Law Book.
5. The Imperial Bank is authorized to accept on deposit money on which interest
is to bo paid and money without interest. The amount of the deposits on which
interest is to bo paid is not to exceed the amount of tho capital stock and the reserve
fund of the bank. (Banking law of March 14,1875, sec. 13, sub. 7.) The Imperial Bank,
however, has not, since 1879, accei>ted any deposits on interest. On deposits to be withdrawn at pleasure it pays no interest. The regulations for money to be withdrawn at
pleasure aro to be found in the inclosed " General regulations regarding tho business
transactions of tho Imperial Bank,'*' pages 39 to 47. As regards the acceptance of
money on deposit by the Prussian mortgage banks, compare the standard regulations
of June 27, 1893, sections 1 and 2. For all other banks no legal regulations exist as
regards their acceptance of money on deposit. On deposits which may be withdrawn
daily without notice, tho larger banks generally pay from 1 to 2 per cent, according
to the condition of the money market, while on deposits with a longer time of notice a
comparatively higher rate of interest is granted.
6. The Empire has no interest in any bank as stockholder (owner of shares). It,
however, participates in tho profits of the Imperial Bank according to article 24 of
the banking law of March 14,1875. The Bavarian State is a stockholder to the
extent of 5,000 shares of 500 marks each of the Bavarian Bank, which is a bank issuing
bills.
7. According to banking law of March 14, 1875, sections 12, 36, 37, the Imperial
Bank may establish branch ollices at any place throughout the Empire. The regulations of sections 42, 44, chapters 3 and 45, of the banking law of March 14, 1875, govern
the private banks issuing bills. There are no restrictions as regards the establishment of branches by the other banks.
8. As regards banks issuing billy, compare interrogatory 4 D. The balance sheet
and proiit and loss account of stock banks are to be published in the papers specified
by statute, and are to be forwarded to tho commercial register. (Arts. 185c and 239b
of tho Business Law Book.)
9. The banks issuing bills, whose bills in circulation exceed the amount of cash on
hand and the amount allowed in accordance with section 0 of the inclosed banking
law (sec. 32 of the printed mclosuro) are required io pay 5 per cent annually of the
surplus to the imperial treasury. (Banking law of March 14, 1875, sec. 9.) Besides
this, the Imperial Government participates in the net profits of the Imperial Bank in
accordance with section 21 of the banking law of March 14, 1875 ; in a like manner
individual confederated States participate in the profits of the private banks issuing
bills, doing business within their territory.
10. In the case of bankruptcy of an insolvent bank the general bankruptcy proceeding is applicable, as regulated by the German imperial bankruptcy regulation of
February 10, 1877. Not only the debtors, but each of the directors is authorized to
make the request for the declaration of bankruptcy. (As regards the stock banks,
compare sections 193 and 194 of the bankruptcy regulation.) As to actual stock companies (not joint stock companies with shares) the special regulation exists that the
board of directors must givenotico of the bankruptcy before actual insolvency takes
place, whenever the balance sheet shows that the capital is not sufficient to cover the
debts, (Art. 240 of the Business Law Book.)
REPORT OF THE COMPTROLLER OF THE CURRENCY.
83
11. Tlio amount of tlio Lank bills in circulation of the individual banks issuing bills
is not absolutely restricted by the Empire; it is, however, fixed by inclosure, section Oof the banking law of March 14, 1875, up to what amount each bank may issue
bills free from lax which are not covered by cash reserve. For individual banks the
confederated States have issued regulations as to tho limit of the bills which may be
issued by the banks located in their territory, and the limit of tho notes to be circulated amounts to : In the case of the Baden Bank, 27,000,000 marks; Bank for Southern Germany, 36,981,000 marks; Bavarian Bank issuing bills, 70,000,000 marks; Brunswick Bank, 10,500,000 marks; Frankfort Bank, 34,285,700 marks, and the Wurtemberg
Bank issuing bills, 25,714,200 marks.
12. The banks issuing bills are required to have in their treasury as security for
the amount of their bills in circulation, at all times, at least one-third in German
current money, Imperial bank bills, or in gold bullion or foreign coin (tho pound
fine of bullion to be calculated at 1,392 marks) and the remainder in discounted
paper, payable within three months, and which as a rule is to have three or at least
two solvent sureties. (Banking law of March 14, 1875, sees. 17 and 44-3.) Loans by
tho bank (Lombard Forderungen), notes, stocks, etc. (Werthpapiere), are not competent as security for bank bills.
13. Detailed information regarding the banking system of Germany will be found
in the j>ublications transmitted.
GREECE.
[E. Alexander, "United States minister.]
1. There are three privileged banks—the National Bank of Greece, the Ionian Bank,
and the Epeiro-Thessalian Bank. They do a general banking business in discounts,
loans, etc., and are the only banks in Greece which are permitted to issue bank
notes. There are also other banks which transact every kind of banking business,
except the issue of bank notes. Loans on mortgage are made chiefly by the three
privileged banks, whose regulations require them to make such loans. Most of the
banks are limited,
2. All limited banks, before beginning business, must submit to tho ministry of the
interior their proposed regulations, specifying the amount of capital stock, the number of shares into which"the same is to be divided, the object for which they are
formed, and the provisions which may seem fit for the regulation of their business
and the conduct of their affairs. A copy of tho regulations is forwarded to the ministry of the interior, which, if it approves them, asks for a royal decree. The royal
decree, together with the regulations of the bank, is published in the official gazette,
thus sanctioning the formation of the bank. Other banks deposit their regulations
at the court of first instance.
3. The ministry of the interior determines when the required conditions have been
satisfied.
4. (A) The regulations of each bank determine tho capital stock. (B) All banks
have a manager, or managers, and a council elected at the annual meeting of the
shareholders. At the same meeting the auditors are chosen, who examine the accounts of the past year and make a report on the condition of the bank. The
councillors are usually elected for two or three years, but are eligible for reelection.
Every councillor or manager is required to own, in his own right, a certain number
of shares of tho capital stock, as designated by the regulations of each bank. (C)
The liability of shareholders is determined by the regulations of each bank, but
shareholders are usually liable only for the amount invested in their shares. (D)
Every year the manager reads, at the meeting of tho shareholders, a report on the
affairs of the bank for the preceding year. (See, also, No. 8.) (E) Each of the three
privileged banks has a royal commissioner, appointed by the Government. All other
banks are under the control of the ministry of the interior. (F) There are no fixed
restrictions on the amount of loans. (G) As regards restrictions of any other character, the regulations of the National Bank require that three-fourths of tho capital
stock be invested in mortgages; of the Epeiro-Thessalian Bank, that three-fourths
of the capital stock and reserve fund be so invested. (II) Bank loans are made only
on first mortgages or on approved securities. (I) Tho regulations of each bank
determine the cash reserve required. The National Bank and the Epeiro-Thessalian
Bank set aside 5 per centum for their reserve fund. (J) Tho accumulation of surplus
is determined by the banks' regulations.
5. All banks receive deposits bearing interest. The interest varies from 1£ per
cent to 5£ per cent, according to the time that money is to be left on deposit. Certain banks allow as much as G per cent; the National Bank allows 4 per cent. All
of tho banks receive deposits not bearing interest, which can be withdrawn at any
time.
6. The Government is not interested as a shareholder in any of the banks.
7. All of the banks are permitted to conduct branch banks or offices. The
National Bank, for example, has branches in 26 towns of Greece, the principal estab
84
REPOKT OF THE COMPTROLLER OF THE CURRENCY.
lishment being at Athens; and the Ionian Bank, whose head office is in London, has
branches at Athens, Corfu, Patras, Cephalonia, and Zante.
8, Informatiou as to the condition of banks is given to the public by monthly or
semimonthly balance sheets, and by the annual reports of the managers and auditors.
0. In return for the privileges granted them, the banks pay a tax of 5 per cent on
their dividends, the customary house tax, and transport the money of the Government free of charge.
10. The closing up of its business, when insolvent, is determined by the regulations of each bank. In general, it may be said that when a bank has lost one-half or
two-thirds of its capital stock a meeting of its shareholders is held; three examiners
appointed i\t this meeting examine the books of the bank and make a detailed report
to the shareholders, who then decide whether the bank shall close up or continue its
business. In other cases the court of first instance is called upon to decide any
matters relating to insolvent banks which may be brought before it.
11. Since October 1, 1885, Greece has had forced currency. Only the three privileged banks are permitted to issue bank notes. Under the agreement for forced
currency the National Bank can issue 70,000,000 drachmas for the Government and
60,000,000 for its own account; the Ionian Bank, 2,000,000 drachmas for the Government and 5,000,000 for its own account; the Epeiro-Thessalian Bank 800,000 drachmas
for the Government and 4.200,000 for its own account. By special agreement the
three privileged banks have been authorized to issue also 14,000,000 drachmas in
fractional currency (notes of 1 and 2 drachmas). Of this amount 7,000,000 are issued
by the National Bank, 3,500,000 by the Ionian Bank, and 3,500,000 by the EpeiroThessalian Bank.
12. No provision is made for the redemption of bank notes.
13. Balance sheets issued by two banks are here given, in the way of additional
information.
National Bank of Greece, established 1842; capital subscribed and paid up, 20,000,000
drachmas, in shares of 1,000 drachmas. Balance sheet October 12, 1895:
LIABILITIES.
Drachmas.*
Capital subscribed and paid up
Reserve fund
Notes in circulation
Deposit and current accounts
Savings bank
Dividends payable and credit
Profit and loss, sundry liabilities
Deposits without interest
Notes of 1 and 2 drachmas
Bills payable
Government deposits
Service of bank's loan
Different accounts
20, 000, 000. 00
11, 500, 000. 00
106, 252, 864. 37
88, 629, 015. 06
1, 413, 011. 26
607,172. 80
263, 544. 29
6, 098, 709. 48
7, 000, 000. 00
3, 034, 712. 05
126, 737. 50
1, 372, 480. 00
954, 848. 76
Total
247,253,095.57
ASSETS.
Cash
,
Notes of other banks
Current accounts a broad
Shares in other companies
„...
Advances to Government
Government bonds
Sundry loans to public bodies.
Bills
Agricultural bills
Bills overdue
Advances on first mortgage
Advances on securities
Bank premises
Eeal estate
Sun dry assets
Loan to Government on forced currency and notes of 1 and 2
drachmas
Different accounts
Total
1, 852, 396. 05
2, 965, 500. 95
8, 938, 462. 14
2, 972, 325. 19
10, 430, 598. 02
38, 487, 457. 83
28, 435, 445. 38
12,091,897.65
1, 479, 633. 95
4, 989, 219. 35
38, 818, 548. 61
3, 928, 738. 74
5, 817, 628. 76
976, 082. 41
1, 433,106. 43
77, 787, 754. 19
5,868,299.92
247,253,095.57
* The paper drachma is now worth between 11 and 12 cents.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
85
Ionian Bank, established in 1839, capital subscribed and paid up, £315,507 10s,;
amount of each share and paid up, £25; liability of shareholders up to £50 per share.
Balance sheet September 12, 1895:
LIABILITIES.
Drachmas.
Capital paid
Notes in circulation
Notes of 1 and 2 drachmas
Current accounts
Deposits bearing interest
Bills payable
Different accounts
Undivi ded profits
Provision for doubtful debts
7, 887, 687. 50
8, 566, 061. 97
3, 495, 298. 00
3, 831, 876. 69
8,150, 292. 84
397, 360. 76
47, 510. 69
827, 581.23
560, 310. 28
Total
33,763,979.96
ASSETS.
Cash on hand
Cash on hand in London
Notes of National Bank of Greece
Notes of Epeiro-Thessalian Bank
Loan to Government under agreement for forced currency
Loan to Government, 1 and 2 drachma notes
Government treasury bills
Investments in London
Investments in Athens
Bills receivable, London
Bills discounted (commercial, proprietors, etc.)
Advances on securities
Advances on mortgages
Loans and current accounts
Mortgaged property foreclosed
Doubtful debts
Freehold premises
Total
402, 578. 99
230, 874. 80
1, 356, 864. 58
5, 958. 00
3, 894, 280. 94
3, 499, 999. 00
767, 587. 50
3, 670, 669. 79
251, 750. 00
613, 707. 81
5, 412, 908. 41
2, 965, 288. 44
7, 498, 359. 95
1, 774, 561. 42
232, 482.17
582, 894. 20
603, 213. 96
33,763,979.96
& U A T E 1 M A JL,J±.
[D. Lynch Pringle, charge d'affaires.]
1. Banks of circulation and deposit.
2. The promoters of the concern hrst solicit concessions from the Government,
then draw up a set of rules and regulations and present them to the Government for
approval.
3. The Government.
4. (a) According to the statutes of the banks as may be set forth in No. 2. (b)
Same, (d) Report and balance sheet published half-yearly, (e) An expert is
appointed by the Government, who should periodically examine the banks' transactions, etc. ( / ) Directed by the board of directors, (g) Same, (h) Same. (I) In
some banks no limit is set; others are required to hold a reserve of two-thirds in
cash to meet their notes in circulation, (j) Same as / , g, h.
5. None. Banks generally allow interest on term deposits only; or even on sight
deposits by special arrangement, or when money is scarce.
6. The Government haa no interest as shareholder; i. e., it holds no shares in any
of the existing banks.
7. Yes.
8. By means of the half-yearly reports and balance sheet. Shareholders can obtain
at any time information as to the standing of the bank.
9. None.
10. See articles 284 to 295 of the Commercial Code.
11. Unlimited.
12. The banks hold sufficient funds for the redemption.
86
REPORT OF THE COMPTROLLER OF THE CURRENCY.
HAITI.
[John 15. Ferris, United Slates minister.]
1. Tliero is only one bank existing in Haiti. It is a privileged Government bank,
under the title of "The National Bank of Haiti/' performing all the treasury service
of the State.
2, 3, 4. The bank is a French establishment; formed according to the accompanying law and statutes (inclosure No. 1) by French capitalists.
5. The bank receives deposits in paper inoney (Haitien currency) as well as in
American gold, but allows no interest on such deposits, according to amended regulation (inclosnre No. 2).
6. The Government has no share in the bank.
7. The bank has branch establishments in all the open ports of Haiti.
8. The bank publishes once a month in the official journal (Le Moniteur) its
monthly balance.
9. No taxes are paid in return for the privileges.
10 to 13. See law and amended statutes (inclosure No. 1). By a new agreement
tho bank has now the exclusive privilege of issuing bank notes, redeemable in
American gold. Inclosure No. 1 gives all the information as to tho working and
privileges of the bank. When iirst established the bank issued a few $5 notes; at
present there are none of these in circulation, and they have no issue at present,
either of gold, silver, or notes. Tho Government has had $6,200,000 of paper money
in circulation in $1 and $2 bills, which have been gradually redeemed and destroyed.
Tho amount at present in circulation is about $1,200,000. This redemption is effected
by a tax amounting to 50 per cent on every 100 pounds of coffee exported, which is
set aside for the purpose. Besides this amount in paper the Government has $3,584,000
in silver in $1, 50, 20, and 10 cent pieces, which have the same intrinsic value as the
French silver coins. This money remains in circulation and is not being redeemed.
The only guaranty for this silver is tho current value of silver. They have also in
circulation $1GO,OOO in copper coin of 1 and 2 cent pieces, which are equal in value
to the French copper coins. We have hero in circulation American gold and silver
estimated at about $3,000,000, which rates at from 12 to 25 per cent above- the Haitien
currency. The rato of exchange depends on tho season of tho year. During tho dull
season, which is from about June to October, exchange is high, and this year it has
run up to 25 per cent, and is now at 21 per cent and will gradually fall during the
coffee season and may decline to 12 or 15 per cent. A great deal of tho fluctuation
of exchange depends also on tho indebtedness of the Government. If the Government is heavily involved by loans made from the bank and other sources, exchange
keeps high. From the decree (inclosuro No. 1) it will be seen that the bank receives
all inoney for the Government and pays all indebtedness for it, as far as the receipts
will allow. If the receipts are not sufficient the Government negotiates loans with
the bank or other sources. Besides the National Bank of Haiti and its branches
there are in every city commercial houses that transact banking business. They
advance money on loans to the Government, buy and sell drafts on Europe and the
United States, and speculate iu all kinds of Government paper. The only tax on
these commercial houses is the local tax on all foreigners doing business. The head
of tho firm pays $300, Haitien currency, per year for a liceuse, and all foreign clerks
employed pay $50. That is tho extent of the taxes on commercial houses, on payment of which they can transact all kinds of banking business with the exception of
issuing money. The Government has an internal debt on the different loans made
during the past five years amounting to about $4,000,000 in American gold, on which
they pay interest at the rate of 1^ per cent in gold per month. These debts are- secured
b5r a- certain portion of the exportation duty on coffee, and it takes about three years
to pay off one of these loans. They have been repeatedly made at different times
during the past iivo years; thus, a loan is made, say for .$500,000 at a time, and they
find no difficulty in obtaining any amount they may ask for on the terms given.
The interest is paid regularly every month, and tho principal gradually reduced.
To give an example, a loan was negotiated for $500,000 last November; this loan has
been reduced to less than one-half, and the interest has been, regularly paid. I will
also state that in making these loans if gold is at 120 against Haitien money the
Government accepts it at 110, which really makes 28 per cent per year interest for the
first year. Tho present session of the Haitien legislature has passed a bill authorizing the Government to contract a loan (all loans made by the Government must be
sanctioned by the legislature) for 50,000,000 francs ($10,000,000), to bo obtained in
Europe at 8 per cent per year, for the purpose of paying off the$4,000,000 of the internal loans, redeeming the paper money at present in circulation, and with the balance
to issue a gold currency. I have been informed that they will have no difficulty iu
obtaining the money on the terms mentioned, secured by i\> tax on coffee, in Europe.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
87
HAWAII
[Albert S. Willis, United States minister.j
1. Commercial banks only.
2. By payment of a license fee of $500 to the Hawaiian treasury, and a list of partners in the proposed bank.
3. The minister of the interior.
4. As there are no incorporated banks answers to interrogatory 4 are not required.
5. There are no regulations governing the receipt of deposits, and it is not the
custom for the banks to allow interest on deposits.
6. The Government is in no way interested as a shareholder in the banks.
7. Banks may, if they desire, conduct branch offices; none such exist at present.
8. The banks being private concerns there is no public information given.
9. A tax of 1 per cent is levied upon the actual cash in hand on the 1st of July,
10. In the case of insolvent banks they would be treated as an ordinary insolvent
partnership.
11. The banks here are not banks of issue.
12. Not being banks of issue no provision is necessary.
13. The banks carrying on business in Hawaii have maintained a high reputation,
and there has been no instance of a bank going into liquidation. The principal connections of the banks in Hawaii are with the banks in San Francisco, with whom
they correspond and secure advances. In connection with the general post-office is
a postal savings bank with an aggregate deposit of $725,000. Depositors are allowed
5 per cent.
ITALY.
[Larz Anderson, secretary of embassy.]
The banks of issue in Italy are, "The Bank of Italy," "The Bank of Naples," and
"The Bank of Sicily." The Bank of Italy dates back to the year 1849. It was iirst
constituted under the name of "'Sardinian Bank,;; with a, capital of 8,000,000 lire,
and was afterwards called " Sardinian National Bank," and at the time of the proclamation of the Kingdom of Italy was called u National Bank of the Kingdom of Italy."
Lately, by the law of the year 1893, the bank was transformed into the "Bank" of
Italy," with a nominal capital of 300,000,OP0, of which 210,000,000 were paid in. The
capital is formed of shares of 900 lire, of which 600 are paid in. The Bank of Naples
is the oldest institute of credit in Europe. It has its own capital; therefore it pays
no interest on the capital which forms its patrimony. The capital of the Bank of
Naples, comprising the reserve fund, amounts to about 170.000,000 lire. The Bank
of Sicily is of the same nature of the Bank of Naples, it being created in the year
1843.
Capital and reserve fund amount to about 50,000,000 lire. The faculty of
making banking transactions, the modalities, modifications, and privileges granted
to or withdrawn from the institutes of issue are regulated by law. The faculty of
issuing bank notes is granted to the three institutes for a period of twenty-live years,
beginning with the year 1893. The issue of banknotes is limited to each institute to
triple its real capital. However, up to 1897 the exceptional limit of circulation for
the three institutes is 1,090,000,000 lire, divided as follows: Bank of Italy, 800,000,000
lire; Bank of Naples, 242,000,000 lire; Bank of Sicily, 48,000,000 lire. The institutes
are under obligations, however, to gradually reduce their circulation, bringing it,
within fourteen years from 1893, to the legal limit—that is, after fourteen years the
capital or patrimony of each institute must correspond to the third part of the
circulation. The bearers of bank notes are entitled to have them exchanged for currency by the institute issuing them. Tho notes of the Bank of Italy, Bank of Naples,
and Bank of Sicily have legal course in the districts where there is a branch office or
agent of the bank which issued them. The Government officials and l^ank officers
jointly supervise the issuance of bank notes. The expense connected with tho preparation of the bank notes are defrayed by the institutes. The Government tax on
circulation is 1 per cent per annum on bills issued for free- circulation and which are
not guaranteed by the capital of tho bank. The tax is payable to the Government
on January 20 and July 20 of each year. The capital required as a guarantee of
the circulation (i. e., the third part of the circulation itself) must consist of currency and golden ingots. The institutes are authorized to issue checks or bonds
payable at sight in all principal or branch offices of each institute, but the debt corresponding to the issuance of such checks or bonds must bo guaranteed by currency
equal in amount to 40 per cent of the debt itself. The three institutes can make the
following business transactions: (a) Advances for a period not to exceed three
months upon acceptances bearing the signatures of three persons unquestionably
solvent; (b) advances for a period not to exceed four months, and for three
88
REPORT OF THE COMPTROLLER OF THE CURRENCY.
quarters of the rate of exchange upon bonds of the public debt of any state, or
guaranteed by the state, as well as upon shares of the institutes of land security;
(c) advances upon golden and silver valuables or golden ingots; (d) advances upon
raw and woven silks and silver ingots for two-thirds of their value; (e) purchase
and sale, in ready money and for their own account, of foreign bills of exchange
payable in gold. The Bank of Italy can not make any business transactions upon
its own shares. The institutes can receive deposits in account current bearing
interest, such interest not to exceed one-half of the rate of discount. The discount
may bo modified on demand of the institutes with the authorization of the Government. The institutes can accept properties or mortgages as securities for doubtful credits, the same to be disposed of within three years. Inspection of institutes
of issue rests with the ministry of agriculture, industry, and commerce, together
with the treasury department, public officials making extraordinary examinations
every two years. If such officials fail to disclose the exact findings of the examination, punishment is provided for by imprisonment for from three months to five years.
Members of Parliament are not permitted to be administrators nor occupy any other
honorary or remunerative office in the institutes of issue. Authority to issue bank
cotes was formerly granted to the National Bank, Bank of Naples, Bank of Sicily,
Roman Bank, National Tuscan Bank, and the Tuscan Bank of Credit. Under the
law of 1893 the National Bank, National Tuscan Bank, and the Tuscan Bank of
Credit were authorized to consolidate for the purpose of constituting a new bank of
issue under the title of Bank of Italy. The Roman Bank, on account of grave irregularities and consequent penal prosecutions, was liquidated by the Bank of Italy.
The shares of the Bank of Italy are but nominal, i. e., made out to the bearer.
KOREA.
[H. 1ST. Allen, charge d' affaires.]
Korea has no banking system or anything to take the place of one. The Japanese
banks operate here, but they will be fully covered by the reports from Japan.
LIBERIA.
A dispatch from the United States minister at Monrovia, Liberia, states that there
is no banking system in that country.
MEXICO.
[M. Romero, Mexican minister.]
As in the United States, banking in Mexico is a State affair—that is, the Federal
Government issues grants to several banks in the Federal district, which includes
the city of Mexico, and in the territories, and each State has a right to issue a charter
to banks established within her own limits; but the Federal Government, by taxation and other means, can monopolize banking. The Federal Government chartered
several banks previous to 1882, but only one was successful and is still in existence,
formerly called the Bank of London, Mexico and South America, which has been
reorganized and is now called the Bank of London and Mexico. The other few
chartered banks were consolidated in 1884 into one, called the National Bank of
Mexico, which has the exclusive right to issue notes, which are received in payment
of all taxes, but the Government does not guarantee them and only authorizes the
bank to make that issue. The bank can issue notes for three times the amount of
its capital and deposits not of a confidential character. To supervise the amount of
the notes issued by the bank, so that they shall not exceed the amount allowed, the
Government appoints two officers to act as supervisors of the bank for the purpose
aforesaid. That bank has a right to establish agencies all over the country and has
actually established them in all the principal cities of the Republic. The bank
started with a capital of $20,000,000, of which 40 per cent was paid up, and the
balance to be called upon by the subscribers, the bank having a right to increase its
capital to any amount that they thought convenient. The bank agreed to advance
the Mexican Government from $6,000,000 to $8,000,000 at 6 per cent interest, and to
collect some of the Federal revenues, charging a small commission for that service.
The Mexican Government appointed the bank its agent to pay the interest of the
public debt. The bank enjoys all those privileges for fifty years from the date of
the charter, which was May 31, 1884. You will see by this brief synopsis that we
have really only one bank in Mexico, and that it stands in very much the same
position as the Bank of England stands to the British Government.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
89
NETHERLANDS.
[William E. Quinby, United States minister.]
I, 2, and 3. The Bank of The Netherlands is the only institution subject to Government interference. All other banks are of an entirely private nature. Like all
liability companies, they are required by the Commercial Code to submit their deed
of foundation for the Royal sanction and to observe the provisions of that code, but
for the rest they are perfectly free in their operations. Hence these replies refer to
the Bank of the Netherlands only.
4. (a) See article 3 of the statutes; (&) see article 18 and following of the statutes;
(c) there are no special provisions; (d) see article 21 of the law, the weekly balance,
and article 20 of the statutes; (e) see article 20 of the law; (/, g, It) see article 7 of
the law; (i) see article 16 of the law and the explanatory note.at the bottom of the
page; (j) see articles 8 and 9 of the law.
5. See the regulations relating to current accounts.
6. The state is not a shareholder; it has, however, a share in the profits of the
Bank of the Netherlands (see article 22 of the law).
7. See article 5 of the law. In addition to the principal establishment at Amsterdam and the branch bank at Rotterdam there are eighteen branches and many corresponding bureaus.
8. By the annual report and the weekly balance (see article 40 of the statutes,
article 21 of the law, and the accompanying copy of the weekly balance sheet),
9. See articles 10, 11, and 11 bis of the law.
II. One restriction only exists in the provision of article 16 of the law (see also
article 12 of the law).
12. See article 43 of the statutes.
13. The bank notes of the Bank of The Netherlands are of 1,000, 300, 200, 100, 60,
40, and 25 florins. (See also article 12 of the law.) Further paper money of the value
of francs, issued by the Government, is also in circulation.
N. B.—No other bank in The Netherlands issues bank notes.
Accompanying documents: (1) The law relating to the Bank of The Netherlands
and also the'statutes (in French text). (2) Regulations and conditions upon which
the Bank of The Netherlands undertakes the charge of valuables (in French text).
(3) Regulations respecting current account (in Dutch text). (4) A copy of the
Weekly Balance Sheet (in Dutch text).
[Eben M. Flagg, United States vice-consul.]
1. The following banks are in actual existence in Paraguay to-day: Banco Agricola, Banco Paraguay y Rio de la Plata, Banco Territorial, Banco Mercantil, and
Banco Milleres & Co. They may be classified as follows, translating as literally as
possible from their statutes: Banco Agricola, to stir up and protect agriculture
(Government bank). Banco Paraguay y Rio de la Plata, an incorporated society
under law of June 25, 1889. The Government is a heavy shareholder. Banco Territorial, an incorporated society having for its object to speculate in land, purchasing
areas that may be presented for subdivision under the security of an increase in value
of the property; to form districts (wards) in those places that are already set apart,
selling the ground on easy conditions of payment, putting it within the reach of all;
to exploit the markets of Buenos Ay res, La Plata, Montevideo, and other centers of
population; to cause unproductive land to produce income (such land as the society
shall purchase and consider convenient to retain); to fence, build, and mortgage; to
make leases, form savings bank, give money on bill of sale of properties, and to perform all other operations, civil or mercantile, as shall tend to increase land values.
Moreover, it has the following objects: (1) Receive deposits at interest, in current
account at sight or on time; (2) to discount and loan; (3) to realize any class of
credit operations; (4) give and take exchange upon markets at home and abroad,
and (5) finally, to practice whatever banking operations, civil or mercantile, that
its administrative council may find convenient. The bank is free of Government
control. Banco Mercantile del Paraguay, an incorporated society whose object is
to aid the commerce of Paraguay by banking and commission operations: To fulfill
this object the society may practice the following operations: (a) Receive deposits
with or without interest; (b) discount documents with two or more indorsements,
exchange received, collect promissory notes or other commercial titles, always
giving preference to the discounting of commercial paper; (c) do every class of
exchange; (d) make advances and establish credits upon titles and precious metals,
general merchandise, products of the country—harvested or about to be, present
or future—with such guarantees as the directory shall esteem convenient; (e) buy
90
REPORT OF THE COMPTROLLER OF THE CURRENCY.
and sell on commission products of tlio country; (/) make advances on consignments to brokers; (7/) receive and fulfill every kind of commercial order or commission; (It) to perform any other operation that shall not bo prohibited by the
general law, and that appertains by its nature to a banking establishment. The
bank is not under Government control. Banco Milleres &. Co., devoted to discounts
and exchange. A commercial partnership, Miller & Rieva, doing principally a business in yerbamate (paraguayan tea) grown on their own estate, and the credit of the
iirm pledged to the fulfillment of its banking obligations, and entirely independent
of Government.
2 and 3. A banking institution may bo established in Paraguay with the same
facility that any other corporation, society, partnership, or individual enterprise may
be. On application to the Government (Congress) stating the object of the corporation and the internal organization which, is to govern it, and which should not
contravene any organic law of the Republic, permission will be issued to the banking company to establish itself under full recognition by the law. The bank will
then bo entered in the commercial register and from that moment may proceed to
business. In case the bank is to enjoy any special privilege under Government, such
special privilege is made the subject of special legislation, tho Government and the
bank entering into such contract with one another as they may find to be mutually
agreeable.
4. (A) In the nongovernment banks the directory of the bank emits its share of
capital stock in such proportions and at such times as it considers to be convenient,
and in accordance with tho best business interests of the institution. The Government, as such, has no more control over the bank's capital than it would have over
tho capital of a mercantile house. When the bank enjoys a Government privilege,
the launching of its stock may be made the subject of special arrangement with the
Government. In the case of the Banco Paraguay y Rio de la Plata, where the Government was a heavy shareholder and gave said bank right to issue notes, the regulations governing its capital stock were as follows: Capital of bank $8,000,000,
Paraguayan money (at the time of opening the bank the dollar was worth silver, or
about G6| cents gold; it is now worth about 18 cents gold), divided into 80,000 shares
of $100 each—$70,000 intended for subscription, $10,000 for compensation of initiators and founders, to bo delivered
to them and considered as paid up, tho burden of
such full payment being il distributed at so much per share and paid proportionally
on installments paid in advance by shareholders." Of tho 70,000 shares intended for
subscription, 20,000 to bo taken up by Government, and Government to give a bond
for £400,000 to bo negotiated at G per cent; 30,000 to be taken by the syndicate (tho
syndicate must not bo confounded with the initiators); 20,000 offered for public subscription—shares to bo paid as follows : Twenty per cent previously to tho opening
of tho bank; 30 per cent by three installments of 10 per cent, in three, six, and nine
months; 50 per cent when so determined by tho general meeting of shareholders in
conformity of the law. (B) (Translation.) Articled. " The Banco Agricola shall
bo in charge of a directory of five members, of which one shall be president. They
shall bo named by tho Executive with consent of the senate, and preferably those
who aro in the farming trade." Tho Banco Paraguay y Rio de la Plata is managed
by a board of nine directors, of which five aro named by the bank and four by the
Government. Tho Banco Territorial is managed by a board of eleven directors;
Banco Mercantil by seven, and Banco Milleres &, Co. is managed by the two partners. (C) Tho liability of shareholders for claims against the bank is limited to
the value and amount of their shares. That is to say, the creditors of a bank could
not force any payment nor encroach upon any property owned by the shareholder
other than was invested in the bank shares. (D) Reports of the condition of the
bank aro printed and published yearly by the management and distributed among
shareholders, depositors, etc., and often a balance sheet is advertised in the public
prints. (E) Nongovernment banks are not subjected to any official espionage. The
Banco Paraguay y Rio do la Plata was permitted to issue three paper dollars for
every silver dollar in its vaults, and n Government official, whom tho bank paid $200
per month, made tho examination monthly, in order to report that the paper note
emission was not in excess of what was allowed by law. (F and G) Tho directories
of the different banks, either at their general or special meetings, decide upon the
advisability of diminishing, restricting, or suspending loans, and it should be
remarked that they generally lean to tho side of conservatism, and all the banks act
in unison, so that frequently tho money market is tied up and speculators obtain
enormous interest. (H) Already answered in question 1. (I) With, the exception
of tho case of tho Banco Paraguay y Rio de la Plata, above reported, no cash reserve
is exacted. (J) Have never known such a contingency to occur as the accumulation of surplus.
5. The regulation governing receipt of deposits is to never reject it, but always
receive it, and tho following is allowed by all the banks: Paper, current account, 4
per cent annual; paper, thirty days deposit, 5 per cent annual; paper, sixty days
REPORT OF THE COMPTROLLER OF THE CURRENCY.
91
deposit^ 7 per cent annual; paper, ninety days deposit, 9 per cent annual; paper,
one hundred and eighty days deposit, 10 per cent annual. Gold coin, current account,
no interest; gold coin, ninety days deposit, 4 per cent annualy; gold coin, one
hundred and eighty days deposit, 6 per cent annually. It will be remarked from
the above that gold coin has not one-half the interest-drawing power that Paraguayan paper has.
6. The interest of the Government as a shareholder in the Banco Paraguay y
Rio do la Plata has already been mentioned. In compensation for this interest, 5
per cent of the profits of the bank were to go to the Government. For the beneiit
of the Banco Agricola, which is more closely allied with the Government, the folowing taxes aro imposed: A specific exportation tax of 2 cents for every 25 pounds
of yerba mat6 or tobacco; 2 cents for every liido exported; 1^ cents for every vara
32 inches) of hard wood 10 by 10 square; one-half cent for every vara of boards 1
inch thick and over; 3 cents for every railroad sleeper; 50 cents for every beef that
is butchered for public consumption. What beneiit the Government is to derive
from these tax-gathering powers accorded to the Banco Agricola it is difficult to
see, unless it is supposed to find its compensation in the improvement of the agricultural business which the bank is expected to "stir up "and "protect." However,
Paraguay is not the only country whose people aro supposed to be " stirred up" and
"protected" by having burdens laid upon them, and probably it does not make
much difference to the people, so long as they are "protected," whether they are
prevented from buying or whether they are prevented from selling.
7. The banks arc permitted to conduct branch offices and spine of them have
opened such in the larger towns outside tho capital, but what seems strange to
the writer is that in view of the enormous interest that the very best security
yields to capital, no foreign banking institution has opened a branch in Paraguay.
I could only account for it on the supposition that there must bo some specific
restriction operating to prevent it, and so addressed a note to the secretary of state
on the subject. It will be seen by the note and answer, which, together with translation, is hereto annexed, that such an institution as I describe would meet with no
legal disqualifications, so the reason must bo sought in the fact that Paraguay is so
far out of the way of capitalistic ventures that the large interest which capital
draws is not known abroad, and that, with some other facts to be mentioned at the
close of this article, will explain what would otherwise bo considered an anomalous
condition.
8. Information as to tho condition of the banks is given through the medium of
the public press and reports printed in pamphlet form that aro issued under the
name of "memorials" every year.
9. The Banco Paraguay"j Rio do la Plata pays annually 5 per cent of her
profits to the Government in compensation for the concession she obtained. Private
banks pay biennially a patent or license for permission to work, and it amounts to
1,000 Paraguayan paper dollars yearly, or about $170 United States gold.
10. As to the closing up of the business of insovent banks, Mr. Schantens, attorney
for the syndicate of the Banco Paraguay y Rio dela Plata (in liquidation), writes me
as follows: " I n the same manner as bankrupt merchants. The court appoints a
receiver and tho liquidation follows. The Government does not interfere. The
responsibility of directors exist only on paper (in name)." Tho writer regards tho
case as only partially stated. What the learned attorney states may be the theory
from a lei>al point of view, but what has actually occurred and is occurring may be
inferred by reading a description of tho liquidation of the Banco Nacional, which
is here appended. When tho writer camo to Paraguay ten years ago, this bank,
backed by tho Government, was emitting all tho paper currency then extant. Its
notes read, " Tho Banco Nacional will pay to tho bearer and at sight
dollars, in
gold or silver coin, legally current according io law," etc. The monetary gold
standard was the £. It stood for $5, and no one thought of paying any moro than
five paper dollars for a British sovereign. Paraguay was then in intimate commercial relations with Argentina, and on tho 1st of January, 1885, Argentina suspended specie payments, or rather permitted its National Bank to d.o so, and the
Argentine National Bank was then accounted the third richest bank in tho world.
To the astonishment of everybody, Paraguayan paper did not depreciate. The same
causes that had produced the financial crisis in Argentina (which will bo described
later on) had not yet commenced to operate in Paraguay, and month after month
went on without much depreciation of her currency. At length, toward the end of
1885. certain events occurred which drove up the gold premium to nearly 50 per cent.
But the National Bank of Paraguay was not considered on that account insolvent,
for by an interpretation of tho law tho expression "will pay in gold or silver coin"
was understood to mean that tho bank had the option of redeeming in silver coin
but the holder of the note had not the option of demanding gold coin; and so
silver coin was at a discount of about 33£ per cent—it corresponded with a gold
premium of 50 per cent—and so matters stood till 1889, about which time the
92
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Banco Paraguay y Rio <le la Plata was founded,, redeeming its notes in silver, "but
the following year both banks were subjected to a "run." Their silver reserve was
drawn out by holders of notes anxious to realize, and gold went speedily to
300 per cent. There was now no pretext for declaring that the National Bank was
not insolvent, for any society or individual who does not fulfill the conditions subscribrd to in their commercial paper can not be considered solvent. An individual
under such circumstances would in any honest community have been instantly
and legally confronted by their liabilities, and their assets demanded. But the
Banco Nacional explained that large sums were owing to them by many i>eople, some
of them officials high in authority, who were perfectly solvent and only suffering from temporary pecuniary embarrassments that no doubt would soon pass over;
that these people were large landowners, and the price of land was sure to go
up after the financial crisis had passed over. So, instead of demanding the bank to
show what it could pay, and—even if it were only 20 cents on the dollar—forcing it
to pay, the bank was granted a ten years' extension of time (movatorio), and
all its debtors were expected to pay off their indebtedness in ten years, at 12 per
cent a year, quarterly payments. Nearly all the money had been borrowed from the
bank during the time of specie payments, but the bank was to receive the money
back in depreciated paper, for by 1891 gold had reached a premium of COO per cent;
but the payments were not made, and in August of 1894 the bank agreed to compromise with its debtors for 50 per cent. Some debtors did pay up at that rate and
received discharge of their obligation, but there was such a rush for money, for the
offer did not last but three months, that interest rose enormously, and many could
not in the straightened condition of the money market avail themselves of the opportunity. The price of gold remained virtually the same, though tho bank did get in
some hundreds of thousands of dollars. What debts it has not been able to collect
are now about to be handed over to a syndicate, but it is not certain when the business will be finally settled, and a liquidation that was commenced four years ago
may drag on two years more, producing in the commercial community a continual
doubt about the value of tho circulating medium, which will prevent, the making of
contracts, since no man can prophesy how they may turn out.
11. The banks, such as were allowed to issue notes, issued, as I have already stated,
three paper dollars to one silver dollar.
12. The only provision now made for the redemption of the notes is through the
custom-house. Custom-house taxes arc either paid directly in gold coin or in paper
money at the quotation furnished by the Government and 5 per cent of the customhouse receipts are set apart for tho redemption of the notes each month. This business is conducted by tho Banco Agricola, and there is still some question as to the
best means of carrying out the provisions of the law—some contending that it would
be better to burn the notes coining in from this source, and others not to burn them
but buy gold with them, which gold should be deposited in reserve. There must
always remain, however, this objection to a custom-house tax for silch a purpose,
that it lacks the element of steadiness. A general 25 per cent tax that passes off
very well this year when the harvest is good and no locusts to eat it, may prove a
serious burden next year if the country suffers from drought and locusts. The merchants will complain loudly against the tax, not so much on account of its amount
as upon their inability to re-collect it from the consumer, and they will stop importing, thereby crippling the resources of a Government that depends more for its existence upon taxing commerce than any other means. The merchants have done so
before, compelling the Government to yield, and there would be nothing to prevent
them from doing so again.
13. In 1885 the population of Paraguay was only 250,000, while it is to-day (1895)
more than 600,000. In 1885 the paper emission was $4,000,000 and redeemable in gold;
to-day (1895) it is about $5,000,000, but its gold value is only $850,000, or about $1.35
gold per capita. The foreign debt, counting accumulated interest for several years,
is only $5,000,000 gold. The home debt is about $1,000,000 gold, The country,
besides possessing rare beauty in the way of natural scenery, has most abundant
natural wealth, requiring only the application of labor to develop it. The constitution (with the exception of one clause, that dictates what theological opinions the
chief magistrate shall profess) is considered to be as fair to mankind as any constitution can be. The climate is mild and the soil productive. On the best security,
such as bond and first mortgage, the capitalist can get 1^ per cent a month, or 18 per
cent per annum. This large'interest is not due to insecurity of the circulating
medium, for the loan can be made on a gold basis if desired. In stating 18 per cent
per annum as the rate of interest the writer is well within the limit, as many loans
are made at 24 and 36 per cent per annum, and bills discounted at the same rate, with
interest paid in advance every three months. Under such circumstances it may well
be asked Avhy capital is not pouring into the country and the banks flourishing.
The answer may be dated back to 1885. At that time the war of extermination
had been closed for more than twelve years. The country, no longer under a dicta
REPORT OF THE COMPTROLLER OF THE CURRENCY.
93
torship, was in possession of a constitution and liad entered the family of nations as
a sovereign State, fully recognized as such, sending to and receiving from all the
principal nations her consular and diplomatic representatives. At this time the Government had in its possession a large quantity—many square leagues—of fiscal land,
-which amount was considerably increased by the concession of the ParaguayanChaco
through the arbitration award of President Hayes. Instead of retaining these lands
for the benefit of actual settlers the Government was induced to make sale of them
to speculators under the belief that they would colonize them. It is needless to say
that all hopes of that nature have proven fallacious, and the speculator is doing as
much to prevent the settlement of the land as though he were an enemy to the progress of the country, for he manages to keep at least one step in advance of the immigrant, so that if the land is not actually monopolized it is relatively so, while the
absorption of so large a quantity of the element that everyone must make use of in
one form or another operated at first to drive up rents to an enormous price, and
landowners, capitalizing their possessions on this fictitious basis, were enabled to
borrow from banks on bond and mortgage sums that actually amounted to far more
than the intrinsic value of their pledge. It was useless at the time to point out the
danger of the situation; if one bank would not lend the money another would, and
the banks soon became swamped with lands whose actual value was worth hardly
one-fourth of what had been loaned on them. The same thing had happened before
in Argentina, but Paraguay, in the fever of excitement, did not heed the warning.
Had the lands been in the possession of actual settlers, of laborers whose work was
producing wealth, and whose wants were employing the wealth produced by others,
Paraguay would soon have been in possession of sufficient collateral, not only to have
redeemed the notes of her banks, but to have warranted an increased emission. As it
was, some squatters were driven off the lands, and vagabonds drifted into the cities,
immigration ceased, and merchants who had to pay their outside debts in gold coin soon
found that there was little in the country to attract that gold coin, so that $2, $3, and
very soon $4 in paper was required to pay for $1 in gold. While labor was thus suffering, it was at the same time bearing all the burdens of Government and privilege
was going scot-free. Any person might own a million dollars' worth of land in the
heart of the capital, levying rent in every direction on the labor of others, and for
that enormous privilege did not return one cent to the community. In fact, to make
matters worse, labor had to bear an increased burden of taxes by raising the license
fees that a man had to pay for permission to work at his trade or profession. No
one was exempt—physicians, dentists, carpenters, down to boatmen, porters, and
washerwomen were all taxed as though industry were so heinous a crime that if it
dared to show itself it must be immediately punished by a fine. At this crisis, some
few men in Congress, witfr Don Jos^ Segundo Decoud at their head, succeeded in
obtaining the passage of a law imposing a tax on land values in the hope that
owners of valuable land would be stimulated to put it to some use and give employment to labor. The land of the country was valued by Government assessors without much difficulty, improvements being valued separately, and though the tax was
only $3 per thousand, its beneficial effect was immediately apparent. Fences were
erected, fields planted, and deserts artificially created were being redeemed. Soon
after the passage of the law Congress adjourned. It had taken months of labor to
frame and pass the law, but when Congress met the following April it took only ten
minutes to repeal it, and matters relapsed into their former condition, gold reaching
700 per cent premium at one time last year. However, there is now another proj ect for
a land tax before Congress, and since its agitation commenced gold has fallen more
than 100 points. One would think that this fact alone should indicate the direction
that legislation ought to take in order to increase the prosperity of the country and
establish the banks once more in the position of security that such institutions
must necessarily occupy for the well-being of the citizen and the credit of the nation.
[In closure]
CONSULATE OF THE UNITED STATES,
Ascuncion, Paraguay, October 3, 1895.
SIR: Can you kindly inform me if there is any legal impediment in the Republic
of Paraguay to the establishment of a bank here that is a branch of a foreign bank ?
During the ten years since I have been a resident of your country I have never known
of any banking corporation having its principal establishment in another country to
open a branch in Paraguay, notwithstanding the high rate of interest that has obtained
here.
This information is requested most respectfully for the Department of State of the
United States, and your answer at the foot of the present document will be most
gratefully appreciated by
Your obedient servant,
Hon.JOSE SEGUNDO DECOUD,
/Secretary of State for the Republic of
EBEN M. FLAGG,
Vice-Consul of the United States.
Paraguay.
94
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Ascuxciox, October 3, 1895.
Distinguished Scnor Vice-Consul :
In reply to tlio request tliat you make mo in the preceding note I should inform you
that in my opinion there exists no law or disposition that prohibits the establishment
in this country of a branch of any foreign bank. To enjoy the rights that the Commercial Code accords, it should solicit the approval of its statutes by the Executive
and its consequent inscription in the respective commercial register. It is understood that the banks do not possess tho privilege of emitting paper money without
the authority of Congress.
JOSE S. DECOUD.
PERU.
[Eichard It. Xoill, United States charge d'affaires.]
1. Tho three banks established in Lima may be classified as loan and discount
banks. One of these banks, the " Banco del Callao" has a u Seccion Hipolecaria."
2. A license from the municipality would be necessary to establish a bank; and for
obtaining same a copy of the statutes should be presented for inspection.
3. The municipality.
4. There are no regulations for banks. The liability of the shareholders does not
go beyond the nominal value of the shares. A statement showing tho general
balances on the last day of each month has to be published in one of the local
papers. There i3 no examination by Government official; no restrictions on the
amount of loans. Tho securities for loans are generally shares of companies domiciled here, like gas, water, internal debt, railways, or any kind of document which,
to tho judgment of the banker, could be considered as good. Tho amount of cash
held by each of the banks is 1,000,000 (national money) soles, but it is owing to tho
bad state of business that a good part of this sum is not invested. There are no
restrictions in regard to cash reserve, but of course all banks are careful to have
enough to meet their requirements.
5. The banks receive money in current accounts and allow 2 per cent per annum;
for deposits at sight, 2 per cent per annum; for six months, 3 per cent per annuity and
one year, 4 per cent.
6. The Government is not interested in any of the banks as shareholder.
7. All banks are allowed to conduct branches.
8. By tho monthly statement published and by the half-yearly reports presented
to tho local shareholders.
9. Five per cent of the net profits is paid for patent. «
10. Nothing can be said about this.
11 and 12. These matters should have to be put before Congress and discussed.
PORTUGAL.
[George William Caruth, United States minister.]
1. The banking system of the Kingdom of Portugal is conducted by the Bank of
Portugal, which is the iiscal agent of the Government, and such other banks as may
bo organized and conducted under tho decree of July 12, 1894.
2. The Bank of Portugal has been in operation many years. The organization of
other banks consists in obtaining the special permission of the Government to so
organize, and in the subscription of a capital stock, the amount to be determined by
the shareholders, which must bo paid in.
3. This is determined by the commercial section of the department of public works,
which is charged with the control of the entire banking system.
4. (a) The capital stock of the Bank of Portugal was fixed by the law of its creation at 13,500,000$000 reis, divided into 135;C00 shares of 100$000 reis each. As to
other banks, it is determined by tho shareholders at the time of organization what
the capital stock shall be. (&) The Bank of Portugal is managed by: (1) A governor
appointed by the Government, and who holds his office for three years, subject to
removal; (2) a board of directors composed of ten members, presided over by the governor, and elected by the shareholders at the annual general meeting; (3) a iiscal
board composed of seven members, elected by the shareholders at tho annual general
meeting, charged with the duty of examining the weekly balance sheets of the bank,
seeing that the statutes, rules, and orders relating to the administration of the bank
are duly complied with, and to examine tho books and accounts, the safes, vaults,
etc., of the bank whenever deemed necessary, with tho securities on which loans have
been made. As to the other banks organized under the general banking law, known
as the decree of July 12, 1894, a different rule as to the management obtains. They
are managed simply by a board of directors selected by the shareholders. The law,
REPORT OF THE COMPTROLLER OF THE CURRENCY.
95
however, disqualifies tlie following persons from serving on the board: (1) Any person having a relative engaged in any of the managing departments of the same bank;
(2) any person who is a partner of any other member of the board; (3) any person
who is a member of tho board of directors of any other bank, (c) Shareholders are
not liable in the event of insolvency of the bank; they lose their investment and
nothing more, (d) Reports as to the condition of the Bank of Portugal are made
weekly. Other banks make monthly reports to the commercial section of the department of public works. These reports are then published in the official journal,
(c) The examination of the condition of the Bank of Portugal is made by the governor of the bank; who is appointed by the Government as a general supervisor of the
business of the bank. Examination of all other banks is made by the commercial
section of the department of public works, being the same office to which the monthly
reports are made. (/) There are no restrictions on the amount of loans made by the
Bank of Portugal except the provision requiring certain reserves, to bo mentioned
hereafter. In the case of other banks, in addition to th e reserve required, to bo set out
hereafter, the law provides that when tho balance sheets show securities for loans of a
fluctuating character there shall accompany them a detailed account of each security.
(</) There are no other restrictions on loans except loans secured by the shares of tho
bank shall not exceed 15 per cent of the capital. (It) The law does not provide for
any particular class of securities to be accepted on loans; that is left to the judgment
and discretion of the management, (i) Tho Bank of Portugal is required to have
two reserve funds, viz: 20 per cent of the paid-up capital, formed by a yearly contribution of not less than 5 per cent taken from the net profits, which is destined to constitute a supplementary capital as the bank's permanent reserve, and a fluctuating
reserve limited to 10 per cent of the capital, formed by a yearly contribution of not
less than 5 per cent taken from the net profits, for the purpose of making good any
losses or depreciations. Other banks are required to maintain a reserve of at least
20 per cent of the amount of the deposits, (j) There is no provision as to accumulation of a surplus except that mentioned in a preceding section in relation to the Bank
of Portugal.
5. Tho banks may and do allow interest on deposits, but the law requires that the
amount allowed shall never exceed half the average rate of discount at the Bank of
Portugal during the half year preceding the settlement of the interest.
6. The Government is not a shareholder in any of the banks.
7. The law permits the banks, if they see proper, to conduct branch banks or offices.
8. The public is advised as to the condition of the banks by the publication of
the reports in the official journal, the Diario de Governo.
9. There are no special taxes or burdens imposed upon the banks in return for the
privileges granted them.
10. When a bank fails to fulfill entirely or in part tho obligations incurred in the
course of its operations, the Government appoints a commissioner of its own, whose
duty it is to act with tho directors until tho settlement of the crisis, either by
restoring the normal state of affairs or by a declaration of bankruptcy.
11. The only bank issuing baok notes is tho Bank of Portugal. The entire paper
currency of the Kingdom, and there is no other sort of money in circulation, is issued
by that institution.
12. There is no provision for the redemption of their paper currency. It is supposed, however, to be in some way protected by gold, silver, and bronze coins in the
vaults of the bank.
13. Banks are forbidden to buy on their own account their own shares. Shareholders having shares pledged at the bank are not qualified to take part in general
meetings to represent such shares. Banks are forbidden to draw from the reserve
fund in order to complete a dividend any sum exceeding one-tenth of the amount of
the reserve, and this deduction must be replaced, as far as possible, in the next succeeding year. Balance sheets must be signed by an acting director and by the manager or bookkeeper, who shall certify as to its accuracy. The present charter of the
Bank of Portugal dates from January 1, 1888, and is to*" continue for the term of forty
years.
RUSSIA.
[Clifton II. Brockinridgo, United States minister.]
1. The different classes or kinds of banks are seven in number. First, there is the
Imperial or State Bank, which is not a sliarehold bank, but is a part of the treasury
machinery of the Government. It issues the Government notes, similar to our greenbacks, has branches in various parts of the Empire, and does a general banking
business, such as receiving deposits, discounting paper, and dealing in bills of
exchange. This is the only bank of issue. All other banks are sharehold or stock
banks, and the Government, while it has control over them, which will be explained
96
REPORT OF THE COMPTROLLER OF THE CURRENCY.
farther on, has no stock or interest in any of them. The second class is the commercial banks, which do a general banking "business. The third class is the discount banks, which make a specialty of discounting paper and making loans on
stock, bonds, etc. They are closely akin to commercial banks, but are nevertheless
classed separately. The fourth class is the Lombard banks. These make loans only
on movable property. They are virtually pawn shops, though the business is upon
a far more extended scale than the pawn business is supposed to be in the United
States. They are said to be closely overlooked by the Government, and admirably
conducted. The fifth class is the mutual credit banks. In banks of this class the
interested parties are associated by membership. They are also called mutual credit
societies. New members are accepted upon being properly recommended, and at
the time of joining they are given a certain amount of credit, which they can use
by giving their notes whenever they wish to do so. They are required, upon joining,
to deposit, as a part of the permanent capital of the bank, 10 per cent of the credit
that they will be entitled to command. This is equivalent to holding paid-up stock
to the extent of 10 yer cent of the credit the bank is permitted to give them. This
deposit, however, is not deducted from their line of credit, and the working capital
of the bank is made up of such deposits from those who make them simply as an
investment, and of the current deposits of the members. The»principal business of
these banks is discounting paper, which, as indicated, is restricted to their own
membership. The sixth class is known as the land property banks. They are permitted to make advances only upon lands in the provinces, and are equivalent to
our farm-mortgage companies, with this distinction, that they issue 4 and 4j per cent
bonds to the borrower to tho extent of the loan, and the borrower gets his money by
selling these bonds. He can also make his payments to the bank either in money or
in bonds. Sometimes the borrower makes and sometimes he loses by this operation.
Much information in regard to the business of these banks is contained in dispatch
No. 90, of June 12, 1895, by Mr. Pierce, charge d'affairs, to which reference is made
at the State Department. The seventh class is the town credit banks. They are
limited to making loans upon city and town real estate, improved or to be improved,
and they issue 4|- per cent bonds to the extent of their loans, as the land banks do.
The above exhausts the list of the different classes or kinds of banks.
2. The requirements which must be met to enable a bank of any class to begin
business are not definitely fixed, and hence they can not be definitely stated. In a
general sense, the proposal must come within one or another of the foregoing classes,
unless those desiring to organize a bank can devise some new branch of tho business. They form their plan and make their rules or statutes for their own government, and submit the whole to the ministry of finance. It is accepted, with or
without change, or rejected, by the ministry, or, officially speaking, by the Emperor,
as may appear advisable at the time. There are doubtless some general rules which
serve as a guide in the matter, and which are not lightly departed from, but the latitude appears to be largely one of broad and varying discretion, according as the
proposition may commend itself at the time.
3. A bank having been authorized to begin business, the right to continue is practically determined by the ministry of finance, to whom it is required to send monthly
reports of its transactions, a report of shareholders' meetings, and a copy of all published statements of its affairs.
4. The regulations governing each class of banks are too numerous and varied to
admit of reply, except by noting a few leading points and referring to the accompanying translation of statutes for fuller details. This follows from what is stated
about the requirements to begin and continue the transaction of business in Nos. 2
and 3; but I take up your points in their order and remark upon them separately as the
facts may seem to warrant. (A) Capital stock is not subject to any regulations that
I know of except such as may determine the amount and time of payments prior to
beginning business. (B) As to the management of banks, reference must be had to
the accompanying statutes. (C) The liability of shareholders for claims against a
bank is always limited to the amount of their paid-up shares, they being the last to
realize in case of failure, but not subject to any further liability or assessment.
(D) Reports of tho condition of the bank are covered by reports of transactions and
condition, as stated in No. 3. Newspaper publication therein referred to is general
and obligatory. (E) Government officials examine the books and affairs of a bank
at the discretion of the ministry of finance, but such an examination is seldom made
if a bank appears to bo going on successfully and satisfactorily. (F) As to restrictions on the amount of loans, they are of a varied character. "Land and loan credit
banks, which issue bonds to the extent of their loans and there stop, are under a
very clear, though liberal, restriction. In the case of a commercial bank, the oldest
in the Empire, it can not exceed, as regards the relation between loans and security,
80 per cent of the market value of merchandise, 80 per cent of the same value of
stocks., and 90 per cent of Government bonds. No relation is specified between loans
REPORT OF THE COMPTROLLER OF THE CURRENCY.
97
and deposits and capital, except such as may be embraced in a general restriction
that all business at any given time must not exceed ten times the volume of the paid-up
capital and surplus. While it does not bear strictly upon this point, yet I will add
that in buying and selling exchange it must not exceed at any time one-fourth its
paid-up capital, plus one-half its surplus or "reserve," as they call it, there being
in this case, and generally, so far as I am now informed, no definite reserve in the
sense in which the word is used in the United States. (G), (H), and (I) are practically covered, as far as I am able to cover them, by (F). I think what is there said
states the general policy as definitely as it permits of being stated, and that it will
be more satisfactory to you to refer to the inclosures for further details than for me
to attempt to enumerate them or to generalize upon them. (J) There are no uniform
regulations about the accumulation of surplus. Having finished this list of interrogations, I will add that all of these points, of course, have such judgment passed
upon them as can be exercised by the ministry of finance, which oversight, being
backed by peremptory power, combined with the natural prudence of the interested
parties who have been permitted to do business, secures much better results than
would be supposed. By way of illustration, I am told that only one bank has failed
in St. Petersburg, where thirty are doing business, within the past ten years.
5. The only regulation in regard to the receipt of deposits, of which I am aware,
is as to the amount. In one charter the limit the bank can receive is five times the
surplus and paid-up capital. It varies with other banks. Interest is allowed on
deposits at the discretion of the bank management, as the current profits and the
state of the monthly market may justify.
6. The Government is not interested as a shareholder in any bank except the State
Bank, and the State Bank is exclusively a Government concern. It is as if we had a
bureau in the Treasury Department with power to do a great and varied banking
business, and with branches all over the country.
7. Banks are permitted to have branch banks, and most commercial banks find it
to their interest to have a few branch establishments.
8. They publish monthly statements in the newspapers.
9. A tax of from 3 to 5 per cent is imposed upon the net profit of banks.
10. Insolvent banks are closed up under the general insolvency law like any other
insolvents, a translation of the essential parts of which law is herewith inclosed.
I will briefly state that, in making settlement, debts due the Government are preferred above all others. Then come amounts due employees, outstanding bills of
exchange, and liabilities for brokerage and commission. Depositors come third, and
shareholders come last.
11. No banks are permitted to issue notes. The only bank of issue is the State
Bank, or, in other words, the Government.
12. The jDrovision for the redemption of these notes can best be explained by first
stating what is said upon that subject, and then by stating how it works. Taking one
of the ruble notes, I find tbe contract or promise printed upon the note. Upon one
side it reads as follows: "Imperial credit note. On presentation there will be paid
at the exchange cash room of the Imperial Bank one ruble [or more] in silver or
gold." Upon the other side these words are used: "Extract from the Imperial manifesto concerning credit notes : First. The Imperial credit notes are guaranteed by the
whole property of the realm, without detention at any time, to be exchanged against
ringing (hard, pure) metal of the above-mentioned fund. Second. These credit notes
enjoy the right of circulation throughout the Empire on an equality with silver coin.
Third. For the counterfeiting of credit notes the guilty party is liable to the loss of
all rights and will be sentenced to hard labor." There are UOAV reported outstanding
4,194,800,000 francs of ruble notes, amounting, when reduced to gold, to roundly
one-half, say 2,100,000,000 francs. The "redemption" fund is reported at 1,403,252,000
francs in gold, including the "ordinary" and "extraordinary." This large fund is
not used, however, for purposes of redemption, and the result is that the ruble notes are
not even at par with silver. Practically, then, there is no provision for redemption.
Translations of the law relating to insolvents, including insolvent banks, and of
the statutes of the St. Petersburg Toula Land Bank, the Russian Bank for Foreign
Trade, and the Discount Bank of St. Petersburg were inclosed.
The following information relates to the
GRAND DUCHY OF FINLAND:
1. The Bank of the States, "Finlands Bank," is the sole bank of circulation, and
it also transacts discount, loan, and other kinds of banking; joint-stock banks for
deposit, discount, loan, and other banking; joint-stock banks for loans granted upon
mortgage in town estates; the mortgage bank, "Finlantls Hypoteksforening," for
loans on country estates; savings banks in most parishes of the country, and postoffice savings banks at the post-offices. The two last-mentioned classes are formed
CUR? PT 1-
98
REPORT OF THE COMPTROLLER OF THE CURRENCY.
to promote saving, and are not allowed, to bo managed with any purpose of profit
for the founders.
2. The Finlands Bank is guaranteed and supervised by the States of Finland.
The other banks are allowed to transact banking after obtaining license from the
Imperial Senate of Finland. Before beginning banking one-fourth part of the joint
stock bank's capital must be paid in, and the remaining three-fourths within one
year. The managers must be Finlanders.
3. The Imperial Senate of Finland, after receiving reports'from the public bank
controllers appointed by them for the joint-stock banks, and the supervisor for the
savings banks.
4. (A; The capital of the various banks is as follows: the Finlands Bank,
10,000,000 Finnish marks; in joint-stock banks the fixed and invested funds; and in
the savings banks not less than 1,000 marks. (B) The Finlands Bank is governed
by four deputies for the States and managers nominated by these deputies and
appointed by the Emperor, Grand Prince of Finland. Controllers are elected by the
States. The managers and revisers of the joint-stock banks are appointed, reelected,
or dismissed by the meeting of shareholders. The savings banks are managed by at
least five principals and a board of managers. The post-office savings banks are
administered in connection with the post. (C) Shareholders are not liable for
claims against the banks to a greater extent than the amount of their invested
shares. (D) The Bank of the States and the joint-stock banks every month publish
their reports in the official journal and in the most widely read paper of the country.
(E) A public controller appointed for each bank by the Senate supervises the jointstock banks. (F and G) The discounted bills and loans from the Finlands Bank are
not considered a security for the circulation. (H) The loans are given upon security
in stock, bonds, mortgage, and merchandise, and in the joint-stock banks also upon
personal credit. (I) Most banks have reserve funds. (J) The surplus or net profits
for each year are, first of all, to be used for the accumulation or increase of the reserve
fund; to the reserve fund of the Bank of the States is yearly added one-fourth of the
net profits until this fund amounts to 15,000,000 marks. The remainder of the profits
is then disposed of by the States for various useful purposes. In the case of jointstock banks 10 per cent of the net profits is annually carried to the reserve fund,
until this fund has reached a fixed amount, this varying with the different banks.
The remainder of the net profits is divided among the shareholders, or becomes a
part of the pension fund for clerks, etc.
5. Deposits are received iii the joint-stock banks,, and interest allowed. Should
the legally fixed capital stock of such a bank be diminished by losses to 90 per cent
of its original amount, and its liabilities exceed five times such amount, unless
this deficit is made good by the shareholders before the lapse of three months the
bank is allowed to transact no further business until such losses are replaced. No
interest is allowed on deposits by the Finlands Bank.
6. The Government is not a partner or shareholder in any of the banks.
7. The Finlands Bank is licensed to conduct branch offices by the Imperial Senate.
The States issue licenses to other banks to conduct branches.
8. Full reports of the condition of the banks are published monthly in the most
widely read papers of the country.
9. No separate taxes or burdens are imposed on the banks.
10. Should the capital stock of any bank be diminished by losses to 75 per cent of
the original amount such bank is compelled to stop business and to liquidate its
liabilities. The amount remaining after this is done is divided among the shareholders.
11. Finlands Bank, the Bank of the States, is now the sole authorized bank of
issue of this country.
12. The total amount of notes in circulation and other liabilities of the bank payable on demand is not allowed to exceed 35,000,000 marks, and the total amount of
the gold coin and bullion in the bank is fixed at not less than 20,000,000 marks, the
silver coin in cash, the claims due to the bank from abroad, and the bonds and coupons in foreign money possessed by the bank. The amount of circulation not disposed of amounted on'the 30th of last September to 32,500,000 marks.
13. License to issue bonds is given by the Senate only where a bank has a paid-up
capital for that purpose of at least 1,000,000 marks, and as security for the proper
payment of these bonds when due, in the custody of the public controller, Government or municipal bonds, the sum of which must exceed at least 10 per cent of the
amount of bonds issued. Loans on mortgage are given only for half the value of
the mortgaged estate. Bonds on foreign money issued by the mortgage bank,
"Finlands Hypoteksforening," are guaranteed by the State up to 30,000,000 marks.
Finland has never had a bank failure. The following summary is extracted from
the reports of September 30 last of the Bank of the States and of six of the jointstock banks:
REPOBT OF THE COMPTROLLER OP THE CURRENCY.
99
[Amounts stated in Finnish marks.]
Finlands
Bank.
Capital funds
Reserve funds
Notes in circulation ,
Deposits
Gold in If inlands Bank
Bonds
I n our favor abroad
Inland bills
Loans
000,
458,
547,
369,
860,
177,
008,
298,
389,
Foreningsbanken i
Finland.
Xordiska
Aktiebanken.
Akties
Bank.
Kansallis
Osakepankki.
Aktiebolasd
Ny lands HelsingAktiefors
bank.
Folkbank.
000 3, 000, 000! 8,000,000 1,500,000 4,000,000 1,000,000
700, 000
C00 5, 113, 000 1, G17, 000; 6A4, 000 10, 000
;9, ooo
0001
70. ooo'
i
000:59, 192|
00056, 971, 000
000
.!23, 322, 000
i 23, 955, 000J 5, 715, 000! 2, 2G0, 000
112," 000 7,447,000 2,459,000 1, 374, 000 962, 000 792,000
000
119, 000 3. 840, 000 2, 160, 0003, 619, 000 193, 000
000
31, 000
000 19, 027, 00019,""
228, """
000 8, 262,
"""
000 11, 706, 000' 2, 331, 000711,000
000:21, 222, 000 25,392,000, 7, 663, OOOJ 6,308,000' 2,782,000 ., 870, 000
Present rate of discount, 4 and 4£ per cent.
Translation of the charter of the Helsingfors Public Bank transmitted.
SALVADOR.
[Lewis Baker, United States minister.]
I am gathering the necessary data for a report on the financial situation in Costa
Bica, in which country there are but two banks, and but one bank of issue. In Nicaragua there is no bank other than a branch of the London Bank of Central America,
"with headquarters in London, England. Of its operation here it is rather difficult to
gain accurate and trustworthy information. But I will, at a later day, send you a
report covering such information of a reliable nature as I can gather.
1. There is only one class of banks in the Republic of Salvador—banks of emission.
In order of date of their creation: The Banco Internacional del Salvador, capital
$3,000,000, divided in 3,000 shares of $1,000 each, 2,100 shares emitted, $1,050,000 paid
in; reserve fund, $566,000; present quotation of shares, $1,300; probable dividend, $60
per half year, February and August; headquarters, San Salvador. The Banco Occidental, nominal capital $2,000,000, divided in 1,000 shares, alLissued, of $2,000 each;
$500,000 paid in; reserve fund, about $230,000; present quotation of shares,'$1,400;
probable dividend, $60 half yearly, January and July; best-managed bank in the
Republic; headquarters, Santa Ana. The Banco Salvadoreno, nominal capital,
$3,000,000, in 3,000 shares of $1,000 each, 1,800 issued; paid in, $%0,000; reserve fund,
$200,000; present quotations, $800; probable dividend, $30 per half year, January and
July; headquarters in San Salvavor; for a long time a Government bank, it has
taken a new impetus lately. The Banco Industrial del Salvador, nominal capital
$2,000,000, in 2,000 shares of $1,000, all subscribed, one-fourth called in, is beginning
operations on November 3 with $500,000 paid in; headquarters, Santa Ana; shares
command $100 premium before beginning of operations. The London Bank of Central America, with headquarters in London and a capital of £600,000, shares of £10
each, has also a branch in the capital and agencies in other parts of the Republic.
The amount of money with which it operates in Salvador is unknown.
2. In order to transact business the banks must operate under a concession granted
by the Government. To become a body politic it must make an escritura social, the
concessionnaires forming a. company in accordance with the codex governing stock
companies, viz, presenting their statutes, deeds, public documents, by-laws, and
books to the juez de comercio (judge of commerce) of the respective districts.
3. That official determines whether the conditions of the concession have been
complied with, the statements being sworn to before him by the manager of the
bank, elected by a majority of the stockholders at the meeting of organization.
4. (A) Each concession specifies the regulations as to the capital stock. The
approval of two-thirds of the stockholders and of the Government is required to
change the statutes or to increase the capital stock. The amount paid in as maximum is 50 per cent of the nominal value of the stock, the other half being the
responsibility of the stockholder. As a rule a bank may begin operations when onefourth of the subscribed capital is paid in. (B) The management of the bank is in
the hands of a gerente (gerant) or manager. He is elected by the general meeting,
and is the official head and representative of the bank, his powers being denned by
the by-laws of each institution. In the International Bank, for instance, the management consists of three
directors, who instruct the gerente, the latter merely representing the board writh the public; while in all the other banks the manager is the
actual head of the bank, and in cases of need advises with the consulting director.
100
REPORT OF THE COMPTROLLER OF THE CURRENCY.
The board in those banks consists of the first and second director and of the manager.
(C) In all coses, and under the general law of anonymous societies aa well as under
specification of the different statutes the liability of the stockholders is limited to
the nominal value of their shares. (D) Reports of the condition of the bank aro
made in all the institutions semiannually to the shareholders, and published in open
sheets accessible to the public. (E) The sole examination of banks by Government
officials consists: First. Of astatutorily compulsive examination every half year as to
the relative proportion of bills issued and of the silver coin existing in each institution. Second. Of an examination which may be made at any tinieas regards the same
subject. No other examination may be made except by the competent courts as to
the books of the bank, and that only upon mandate of the court. (F) There are no
restrictions as to the amount of loans except such as provided by the rules adopted
by the board of directors of each institution, such as limit of qualification of a certain signature. (G) Two of the banks, the Occidental and the Industrial, prescribe
in'the by-laws that no loan may be made to Government, municipalities, or charitable institutions without the approval of a majority of the general meeting, be these
loans with or without guaranties. The others haverepeatedly made loans of this character, which have in some cases assumed the shapo-of permanent loans. (H) Loans
are given against two or more acceptable signatures to the same note of hand for a
time of three months commercial, and up to six months agricultural. In very few
cases mortgages on rural or urban real estate have been accepted. It is the intention
of the new Industrial Bank and of another bank now in process of formation, the
Agricola-Commercial, to lend money on mortgages, the first for a period not exceeding three years, the latter for a minimum of ten years—a clause in its concession
which endangers the progress of the bank. Bank shares, market and pier shares,
and any other similar collateral guaranties are also readily accepted by the banks to
supply the aval of another signature. The want of another signature may also be
supplied by any document or note of hand legally indorsable and of recognized
value. (I and J) In most cases the statutes provide that 5 per cent of the net profits
of each half year should be placed to a reserve fund. In some cases the banks, in
view of extraordinary profits, have distributed only certain dividends, placing the
remainder to an extraordinary reserve fund or to a fund for future dividends.
5. The receipt of deposits is not governed by any special regulation. The bylaws of the banks provide the method of making the deposit, the kind of currency
insisted upon, and the mode of taking note of the depositor's signature. Check
books, pass books, etc., are provided free of cost, and little care is exercised generally as to identification, most checks being extended " t o bearer." The banks allow
interest on deposits when there is a stringency or when their portefenille is complete,
the rate varying from 1 to 3 per cent on sight deposits or current accounts; on time
deposits it ranges from 3 to 5 per cent and from three mouths to one year.
6. The Government is interested in no bank as a shareholder.
7. All of the banks are authorized to and do conduct branch banks or offices in the
principal towns of the Republic.
8. The examination referred to above, made by the minister of finance or his
subordinates, as to the relative existence of paper and bullion, is published in the
official paper; and, as said before, the banks publish semiannually their estado, or
report, in loose sheets, which are available to the public.
9. Far from there being any taxes or burdens imposed upon the banks, they are,
as a rule, exempt by their concessions from any taxes, general or municipal, and
from stamp dues, and are not liable to imposts in time of peace nor to reprisals in
case of war.
10. In each concession an article provided for the duration of the privileges of the
bank twenty-five years, unless: "The general meeting should decide to liquidate it
beforehand, and three-fourths of the shares must concur in favor of such a resolution. It will forcibly enter into liquidation in case any of its half-yearly balances
should show the loss of its reserve and of 40 per cent of its capital. In that case the
general meeting shall dispose as to the person who shall have charge of the liquidation, and of the method of conducting it." This is the extent of the statutory provisions as to insolvency. Any other contingency would be covered by the existing
laws as to individuals.
11. In all cases, I believe the banks have been allowed to issue bills under their
concessions up to twice the amount of their subscribed capital, the only condition
being that they shall at all times have in their vaults coin to the amount of 40 per
cent of the value of the bills in circulation. In the concession of the Banco Industrial 50 per cent is the amount insisted upon, but 30 per cent of the mortgages in
portefenille is considered as bullion, a rather unwise measure, as no guarantee would
be less easy to realize in case of need. Some of the bank notes are made in England;
of late years some were engraved by the American Bank Note Company of New York.
12. The notes are all redeemable in silver coin, Peruvian, Chilean soles, Guatemala
pesos, or the dollar of the Salvador coinage known as the colon, of the same fineness
REPORT OF THE COMPTROLLER OF THE CURRENCY.
101
(900) and weight (25 gr.) as the other Spanish-American standards. The only provision made for their redemption lies in the 40 per cent reserve of silver, and in
the responsibility of the stockholders. So far this has been more than sufficient, but
the time may come when, owing to the great competition between banks and the
excessive desire to increase business at the expense of safety, the circulation of bills
will be increased for the purpose of augmenting credits not easily withdrawn. A
run on any bank would naturally precipitate a general crisis, the depositor class
being in the minority, and, as a rule, very timid.
13. All the banks use their reserve fund for general business, thus exposing it to
all the risks of their capital and counting it as cash reserve when it should be solely
a bank reserve immobilized by being invested as much as possible in the safest
investments, such as consol or gold bonds. The greatest object of the bank managements seems to be the increase of the circulation and the paying of the largest dividends irrespective of safety. Similar speculation on the part of the Internacional,
added to otherwise indifferent management, caused a loss of at least $350,000 in their
reserves at one fell swoop. Notwithstanding this, the quotation price of shares are
not affected by any means. To resume: For a population of 700,000, scattered over
an area of 7,225 square miles (Salvador is in territory the smallest of the Central
American republics), we have the banking facilities expansible to $10,000,000 among
four banks, the Internacional, the Occidental, Salvadoreno, and the Industrial.
Limit of issue of bills is $20,000,000. Add to this the capital and circulation of the
London Bank of Central America (available capital in Salvador unknown) and that
of the new mortgage bank when it shall begin operations ($5,000,000). These figures are silver dollars, which, at the mean rate of exchange, would rate 50 cents
gold to the sol. The actual circulation of bills between the four banks is about
$5,000,000, or $2,500,000 gold to a present cash capital of $3,450,000, not including reserves amounting to about $950,000. The amounts loaned to the Government
on such securities as pledging of — per cent from the customs dues, etc. (interest
varying from 10 to 12 per cent annually), are, more or less: Internacional, $400,000;
Salvadoreno, $325,000; London Bank of Central America, $200,000. These loans are
dangerous because they assume, as a rule, the nature of permanent loans, upon which
Government after Government pays the interest, but which immobilize a goodly
amount of the banks' capital, this being unavailable in a critical moment. A number of capitalists, one firm especially with a capital larger than that of any of the
banks, give money out at interest on long time, or make loans on mortgages. Under
a fairly good government the situation of Salvador is excellent, and will continue
so as long as coffee, its chief article of export, will command good prices. The balance of trade is always in favor of the country and wealth is somewhat disseminated.
It is undoubtedly the richest of the CentraltAmerican States, without any foreign debt
and burdened only by an interior debt^ arising from late revolutions, with their
accruing array of claims, just or unjust, forced loans, etc., in settlement of which the
Government has created bonds more or less in the following denominations and quantities : Twelve per cent bonds, about $1,000,000, $100nominal; 6 per centTbonds, about
$4,000,000, $100 nominal; 3 percent bonds, $6,000,000, $100 nominal. The 12 per
cents were a forced loan of the other Government; the 6 per cents a railway loan
and a funding of a former debt; the 3 per cents are the result of claims, etc., arising
from the last revolution. There are other obligations of the Government—bonds
against a certain percentage of the customs receipts—as a rule transactions ruinous
to the country by the pledging or sale of papers to foreign firms doing business in
the Republic. The interest has been paid monthly on all this paper and with great
regularity, the Banco Internacional doing the service of the debt; moreover, every
month there is a public auction of a certain amount of each class of bonds, the Government buying them, in lots from $100 to $5,000, at a maximum rate below the
nominal value, from the lowest bidder. The situation of the country is virtually a
good one. The rate of discounts of the banks has ranged within the year from 4 to
12 per cent; a mean rate of 8 or 9 per cent being really the normal rate in the country,
the one which, if upheld by the banks, would be the one best calculated to give the
necessary banking facilities under present circumstances. Competition, however,
and animosities between the various circles controlling the different institutions
have created, and will, I fear, continue to create these fluctuations, to the detriment
of safety. It would be useless, however, to theorize against fiat money and the
silver standard in a country which has so long worked purely under a silver standard, and for which a gold standard, suddenly imposed by legislation or otherwise,
would mean utter ruin.
102
REPORT OF THE COMPTROLLER OF THE CURRENCY.
SIAM.
[John Barrett, United States minister.]
Siam has no regular banking system. There are, however, excellent hanking facilities in Bangkok, the capital. To one who is told that the commerce of Siam amounts
to $40,000,000 a year, and that nearly 600 ships, mostly steamers, enter this port in
twelve months it might at first appear surprising that there is no system under the
control or guidance of the Siamese Government. This may he accounted for in several ways: First, the Siamese as a people are not commercially inclined, and the
"business of the country that demands hanks is largely in the hands of Europeans
and wealthy Chinese; second, under the provisions and protection of extraterritoriality the great British hanks, the Hongkong and Shanghai Banking Corporation,
and the Chartered Bank of India, Australia, and China, have established permanent
branches here, while the Mercantile Bank of India has a lesser agency; third, in the
interior there is little need as yet of banks, as there are no large commercial centers
aside from Bangkok, and all products are brought to this port for a market; fourth,
tbe feeling of uncertainty as to the future of Siam, whether it will maintain its autonomy or become a dependency may deter the Government from establishing its own
banks or adopting a banking system. It is therefore impossible to answer satisfactorily the questions asked by the Comptroller of the Currency.
The consul at Hongkong in his report will give the rules governing the Hongkong
and Shanghai Banking Corporation, which apply equally here, as Siam has no jurisdiction over it whatever. As part of this report I append a letter from tbe resident
manager of the Hongkong and Shanghai Banking Corporation which, though brief,
may be of interest and applicable. By that it will be seen that there is a note issue
of this bank in the currency of the realm, but that again is part of its general issue
allowed by its British charter. These notes are not necessarily legal tender, but they
arc accepted for most transactions in Bangkok. At first the natives were not prone
to accept notes instead of coin, but now they are looking upon them with more
favor. The money of Siam is silver, of which the principal unit is the " tical,"
which is exactly equal to 60 cents of a "Mexican" dollar. By imperial order live
"ticals" make three "Mexicans," and "ticals" are chieily coined from melted
"Mexicans." This " t i c a l " ia in turn subdivided into 64 "atts." The actual " a t t "
is a copper piece about the size of the United States cent. Larger divisions of the
" t i c a l " are the ""sailing" (silver) of 16 "atts," and the "fuang" (silver) of 8 "atts."
These are all coined by the Siamese mint and come into circulation in three ways—
first, by direct payment of the Government for all classes of work, contracts, and
purchases, etc.; second, by exchange of Mexicans, minus a small seigniorage charge
if presented at the mint for coining; and, third, through the local banking institutions above mentioned. In a previous report to the Secretary of the Treasury, dated
June 19, I had the honor to report more specifically upon the amount of silver in
circulation. This report, therefore, on the banking system that obtains in Siam
would come principally under the last question of the Comptroller's circular, but in
order to comply strictly with the request the following answers are given:
1. There is only one class of banks in Siam, branches of main institutions having
British charters.
2. Compliance with the regulations of*the British charter.
3. British officials.
4. Same as main institutions not located in Siam.
5. Deposits receive interest the same as in the main institutions.
6. The Government has no interest whatever as a shareholder.
7. Branches regulated by provisions of main charters.
8. 9, 10, 11, 12. Branches here are governed by regulations of main banks.
13. Answered in first part of this report.
A semiannual report and balance sheet of the Hongkong and Shanghai Banking
Corporation was inclosed with a copy of the following letter addressed to Minister
Barrett:
" I have the honor to acknowledge your letter of yesterday's date, handing me a
list of questions regarding the present system of banking in Siam.
"To begin with, it is difficult to answer the questions, as they refer to countries which
have national banks. As yet Siam has not any native owned banks, nor are institutions of this kind required in any part of Siam with the exception of the capital,
Bangkok, as the country is not yet used to commercial ways, being satisfied with the
primitive mode of barter. With the port of Bangkok a large rice trade is carried on
with Europe, Hongkong, and Singapore, and the necessary banking facilities are
rendered by two branch banks, namely, Hongkong and Shanghai Banking Corporation and the Chartered Bank of India, Australia, and China. The first of these institutions has a note issue in the currency of the country, i. e., ticals, but this issue,
being a part of the bank's issue under British charter, is consequently not under
EEPORT OF THE COMPTROLLER OF THE CURRENCY.
103
Siamese control. These two banks receive deposits for periods of one year, six months,
and three months, allowing interest at the rate of 4, 3-£, and 2 | per cent, respectively;
also receiving current dex>osits and allowing interest at lx>er cent per annum on the
daily balances.
" I hand you a statement of the Hongkong and Shanghai Banking Corporation
for the half year ended 30th of June last, which may he of assistance in answering
some of the questions; but 1 should say that this institution will be treated by your
country's representative so obtained at Hongkong. Should there be any other information you may think I can give you I shall be happy to do so to the best of my
ability.
" I am, sir, your obedient servant,
7
"T. McC. BROWNE, Agent:
SWITZEELAND,
[James O. Broadliead, United States minister.]
The bank system of Switzerland, and especially the financial institutions based
on shares, are subject to the provisions of the federal law of June 14, 1881 (titles
23-26), concerning the force of bonds. We have not at our disposal any official data
with regard to the several institutions. In Switzerland only those banks which
issue notes are under the control of the Government, and consequently the following
information refers to that class alone:
1. They are divided, according to the manner in which their capital stock is
created, into (a) cantonal, and therefore State institutions; (&) private institutions;
(c) institutions of mixed system.
2. All banks of issue have to make public reports. In addition to this essential
requirement they are subject, as to everything else, not only to the above-cited provisions of the bond law, but to those of the federal law of March 8, 1881, concerning
the issue and redemption of bank notes, to those of the ordinance of December 21,
1881. for carrying the same into effect, and to those of various regulations.
3. The authority controlling these banks is "the inspectorate of the banks of
issue," under the jurisdiction of the federal department of finance, to which the
banks are obliged to make regular reports, such as weekly statements of their condition, monthly balance sheets, annual reports, and business reports for examination,
statistical use, and. publication.
4. The existing provisions regarding capital stock, the management of the banks,
liabilities of the stockholders for claims against the banks, theT methods of management on the part of the officials, restrictions of other kinds w ith reference to loans
made by the banks, securities for loans, compulsory reserves of coin, accumulation
of surplus (reserves), etc., are contained partly in the statutes and regulations of
the banks themselves, so far as they are consistent with the provisions of the abovecited laws and regulations, and partly in legal provisions. A special restriction as
to management is laid upon those banks which protect their circulation, not by the
deposit of securities, but by putting up their negotiable paper as collateral security.
The kinds of business prohibited these banks are: (a) Giving credit without security ; (b) purchase and sale of chattels or securities on their own account or for others
on time, or guaranteeing the fulfillment of such engagements; (c) purchase of real
estate, except such as is needed for the transaction of their own business; (d) industrial, trade, and commercial enterprises and investments, excepting trade in the
precious metals; (e) insurance business; (/) issues of redeemable stocks and bonds,
except in the case of Swiss national and communal loans; (g) partnership in firms
carrying on such prohibited kinds of business.
5. With regard to the receiving of deposits,, the provisions of the statutes and
regulations of the banks themselves on the subject have exclusive authority. All
institutions of issue are authorized to receive deposits, and, with very few exceptions
(checks and negotiable paper), pay interest on the deposits.
6. Under the now existing system of having a number of banks of issue the State
or Federation is in no way interested in these banks as a stockholder, although some
of the Cantons are. There are at present in Switzerland eighteen cantonal institutions—that is to say, institutions whose capital stock is exclusively furnished by the
respective Cantons, and for all whose liabilities the respective Cantons are responsible; thirteen purely private institutions, in which the Cantons have no interest;
three banks of mixed system, the State (cantonal) interest in which varies. In one
of them it amounts to one-half (of the stock), in another to six-tenths, in the third
to only 200 shares out of 24,000. The respective Cantons are liable only to the amount
of their stock. Their share in the administration varies in the three cases.
7. All these thirty-four banks are authorized to establish branches or agencies,
and twelve of them now have one or more branches.
104
REPORT OF THE COMPTROLLER OF THE CURRENCY.
8. The condition of tho banks is communicated, to the public in regular publications of the weekly statements, monthly balance sheets, and annual reports made to
the controlling authority by the banks in an official organ, the Swiss Commercial
Gazette. These publications are made, as above stated, by the inspectorate of the
banks of issue.
9. The State (the federation) imposes upon all the banks of issue a yearly tax of
1 per cent of the average circulation (bank note control tax). The Cantons are
allowed on their part to lay a tax of not more than 6 per cent of the average circulation on the banks of issue within their limits.
10. With regard to proceedings in stoppages of business in cases of insolvency,
we refer to articles 26-34 of the bank-note law, and to the provisions of the federal
law concerning prosecution for debt and apportionment of assets (of the insolvent).
11. The banks are allowed to issue notes to double the amount of their endowment
capital. They must obtain permission to issue notes from the Federal Council,
which gives it as soon as the conditions prescribed by the law of obligations and the
bank-note law have been fulfilled by the banks. Only those financial institutions
can be authorized to issue notes which (a) have their principal seat in Swiss territory and whose title (name) has been approved expressly by the Federal Council,
(Z>) those which are legally constituted as cantonal institutions or as joint stock companies, (c) those which make public reports, (d) those which possess an actual,
paid-up capital of at least 500,000 francs, exclusively liable for their own transactions, (c) those which bind themselves to accept in payment the notes of the other
Swiss banks of issue. The notes are prepared through the inspectorate of the
banks of issue; they are kept in the custody of the inspectorate and delivered to
the banks as they need them; they are of the same identical type for all the banks.
12. If a bank wishes to renounce the right of issue which it has acquired it must
notify the Federal Council, which thereupon, by public proclamation, calls in part or
all of the notes. The case of insolvency is excepted; in that case the notes are
called in by a commissioner appointed by the federal court. The notes called in
are destroyed under the supervision of the federal authorities as worthless notes.
At the expiration of the term fixed for the redemption of notes which have been
called in the bank calling them in must pay the coin equivalent of the still outstanding notes into the federal treasury, which undertakes to redeem in coin the
still outstanding notes, during a period of thirty years from the date of the calling
in. At the expiration of this period the equivalent of the notes which have not
been presented for redemption will be paid into the Swiss invalid fund.
13. Asfcoall points not given here in detail, the bank-note law, which we inclose
you, together with the ordinance for carrying the same into execution, and all the
regulations, will give you, together with the above-designated passages of the law
of obligations, sufficient information as to the Swiss bank-note system. For further
information wo inclose one copy each of "the inspectorate's business reports for
1892, 1893, and 1894, and a copy of the law concerning debt and insolvency. It
remains for us to state, in conclusion, that a central bank-note institution with the
exclusive right to issue notes is projected and will probably be founded in the form
of a Swiss national bank, in which case, of course, the thirty-four independent
banks of issue now in existence will be abolished.
TURKEY.
[Alexander W. Terrell, United States minister.]
1. Private banks and limited liability companies.
2. An imperial firman for limited liability.
3. The Turkish Government.
4. (a, J), c) Their own statutes only, (d) None, (e) The Imperial Ottoman Bank
being the State bank is under the nominal supervision of an imperial commissioner.
There are no regulations for the others. (/) None, (g, h) None save their own
statutes, (i, j) Are determined by the statutes of the particular company.
5. The statute regulations of the particular bank or company. Various rates of
interest are generally allowed on sums deposited for fixed periods. The Imperial
Ottoman Bank allows 2 | per cent on sums deposited for one year or longer, i% per
cent on sums deposited for six months, 1 per cent on sums deposited lor three months.
6. In no way.
7. The Imperial Ottoman Bank is free to establish branches in any town in the
Empire. As regards other banks, permission must be obtained.
8. Generally by half yearly or yearly reports.
9. Certain obligations are imposed on the Imperial Ottoman Bank in return for
permission to issue bank notes.
10. Formalities vary with nationality.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
105
11. The Imperial Ottoman Bank only is allowed to issue banknotes to extent fixed
by the statutes.
12. A cash reserve is kept (33 per cent of face value of notes).
[Granville Stuart, United States minister.]
1. The existing banks are all private, the National Bank being in a state of liquidation which is likely to prove disastrous, as they will probably be unable to pay
their emission (some $500,000 which does not circulate) and an equal amount of judicial deposits, both of which are supposed to be privileged debts.
2. To enable a private bank to transact business the statutes of same must be presented to the Government for approval.
3. The Government after consultation with the attorney-general.
4. The only regulations which govern the private banks are those contained in
their statutes, which must declare, (A) the amount of capital and (B) the management of the bank, in which Government has no interference; (C) the banks being
limited shareholders are only liable for the amount of their shares; (D) only banks
of emission are obliged to publish their balance sheets; (E) Government inspector
is required to certify the balance sheets of the banks of emission only, and has no
interference in the rest; (F) there is no restriction on loans of any of the banks; (G)
there are no restrictions of any character on loans; (H) nor on security for loans;
(I) no restrictions for reserve; (J) nor for the accumulation of surplus.
5. There are no Government regulations regarding deposits. The principal banks
do not allow any interest on deposits at sight, but receive deposits at from thirty
days to twelve months with scaling rates, which vary according to the standing of
the bank.
6. The Government is not interested as a shareholder in any of the existing banks,
but is responsible for the ruins of the extinct National Bank.
7. Any of the private banks are allowed to open branches in any part of the
country, but the only instance is that of the London and River Plate Bank, which
has a branch in Paysandie.
8. The only medium of information given to the public as to the condition of the
banks is the monthly publication of the balance sheets of the two banks of emission.
The condition of the rest of the banks is only made public when they present their
accounts to their shareholders, six monthly.
9. Banks of emission pay yearly $2,000. Banks which do not emit pay yearly
$1,000. Both classes of banks pay besides $6.50 per annum on each $1,000 of their
declared capital.
10. In the case of the English Bank of the River Plate, which became insolvent,
a liquidating committee of three persons, one named by the directors, another by
the shareholders, aud a third by the Government, was formed to carry out the
liquidation by mutual consent.
11. The law permitting emission has been repealed, but there exist two banks of
emission, the London and River Plate Bank and the Italian Bank of the River
Plate, which acquired their rights before the repeal and still preserve them. They
are allowed to emit notes of not less than $10 up to double the amount of their
respective capitals, but the notes of neither of these two banks are of legal tender,
the only legal tender in the country being gold.
12. Each bank makes its own provision for the redemption of its notes, which
must be converted into gold on presentation, or if not, the bank be declared insolvent, in which case the notes are considered a privileged debt, and must be paid in
full before any other creditor.
13. There are at present no State banks existing. The private banks are mostly
established by British capital and governed by private boards of directors in London.
They are entirely independent of Government intervention, except in so far as the
emission of notes is concerned. All banks hitherto established with State intervention have proved a signal failure, and have been ruined by flagrant mismanagement.
VENEZUELA.
[Seneca Haselton, United States minister.]
1. Banks of deposit, drafts, loans, and discounts, circulation banks, and banks of
mortgage credit. (See article 1 of the law.)
2. They must be established according to the law. (See articles 22, 23, 24, 25, and 28.)
3. An inspector appointed by the Government in accordance with the law. (See
article 31.)
106
REPORT OF THE COMPTROLLER OF THE CURRENCY.
4. The whole "banking law explains.
5. Deposits are received at sight in account current and for a fixed term, and tlie
same draw interest according to the conditions of the deposit.
6. The Government is not at all interested as shareholder in any of the existing
banks, but always maintains a special contract with one of the banks for the collection of the national revenues and for the purpose of supplying funds.
7. The law entitles the banks to establish branches or agencies, but always in
accordance with the corresponding stipulations. (See articles 22 and 27.)
8. The law establishes the quarterly publication of a balance of each bank, and
points out the conditions upon which, such balance is to be published. (See
article 24.)
9. Only the payment for a permit, which varies according to the capital of each
bank, and the obligation to pay for the salary of the inspector appointed by the
Government. (See article 31.)
10. No practical case established the rule in this matter, but it is understood that
the banks are under the same regulations established for any other commercial
institution.
11. According to the new law the banks can only issue bank notes for one-half
their capital. (See articles 5 and 6.)
12. The law does not establish any, but at least 33$- per cent of the amount of the
issue is generally reserved in cash.
A copy of the laws inclosed.
[Lewis Baker, minister.]
1. There is but one class of banks in Nicaragua. This is provided for under a
general banking law, and may be denominated banks of issue and deposit. They
are authorized to do a general banking business, such as issuing bills for circulation,
receiving deposits with or without interest, discounting notes, buying and selling
exchange, etc.
2. The chief requirement in order to do business is for the officers of the proposed,
bank to satisfy the Government that they have in hand not less than $100,000 in silver
as a basis of credit. (Gold is not known in the currency of this country.)
3. The state treasurer is the official on whom devolves the duty of determining if
the law's requirements have been met.
4. There is but one class of banks in Nicaragua, and there is but one of the class.
(A) This institution is now known as the "London Bank of Central America,
Limited." It. was founded in 1888 and began operations under the name of the
"Bank of Nicaragua." It has n nominal capital stock of £600,000, divided into
shares of £10 each. Only 19,567 of its 60,000 shares of capital have been issued,
upon which 50 per cent has been paid in. Of the shares, one-third have been
allotted to Central America and two-thirds are reserved in Europe. (B) The management of the bank is conducted at the headquarters in London, where all meetings
of the directors are held. There is, besides, a local board, with limited powers and
with two local managers. The latter are sent out from the London house. (C)
The shareholders are liable for claims against the bank only to the extent of face
value of their respective shares. (D) Reports of the condition of the bank are
made annually and are published in the official paper of the Government. (E) The
proper official of the Government may, at any time and without previous notice,
make an examination of the condition of the bank. (F) There are no legal restrictions as to the amount of loans, so long as the proper reserve is maintained in the
bank for the redemption of its own bills. (G) Under the bank's own regulations
loans are made only on two good signatures, and for three months—being payable
or renewable as may be agreed at the time of falling due; interest in all cases to be
paid in advance for the period stipulated in the note. This was, four years ago, 24
per cent, at which rate this bank loaned this Government $400,000. Later the prevailing bank rate was 18 per cent, and this rate continued until a few months ago,
when it was reduced to 12 per cent per annum. (H) Neither the shares of the bank
nor the bonds of the Government are accepted as security or collateral for a loan;
nor are mortgages on real estate accepted. (I) A cash reserve in silver must always
be in the safe of the bank up to 40 per cent of the amount of notes issued for circulation. (J) The surplus of this bank equals less than 13 per cent of the paid-up capital.
The surplus, as well as the annual dividends to the stockholders, is determined by
the directors in London.
5. Deposits on call are accepted, but no interest on them or on daily balances is
allowed. Interest on time deposits now paid ranges, owing to length of time, from 5
to 6-} per cent.
6. The Government is not interested in the bank as a shareholder.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
107
7. This bank is itself but a branch of the London Bank of Nicaragua, Limited; but
it lnis also a branch in Leon, one in Granada, Nicaragua, and one in San Salvador.
Under the state banking law branches may be established at any point in Central
America.
8. The annual report of the condition of the bank is printed for the benefit of the
public in the official newspaper in Managua.
9. Banks are not taxed on their capital, circulation, profits, or on any character
of property. No import duty is levied upon any of its imports. It has the right to
transfer money or property of the national railroad and steamship lines free, and it
has the free use of the telegraph and telephone lines.
10. In case of insolvency, banks wind up their business in accordance with the
mercantile code. There are no special provisions of law applicable to banks. The
directors alone determine when and by whom the affairs shall be administered.
11. The bank is permitted to issue notes up to 60 per cent of the amount of silver
in its safes.
12. There is no stipulation for the redemption of its notes by the bank other than
that it must retain not less than 40 per cent in silver of the whole amount of paper
money placed in circulation for redemption purposes.
13. Bank notes, before they are signed by the manager of the bank and issued, are
registered in the state treasury. It is claimed by the bank management here that
this institution has suffered no considerable loss from its clients. Many people here
claim that there is not only room but a demand for another bank and a greater
amount of banking capital. I am inclined to this opinion, especially in view of the
considerable increase now taking place, and which must take place in the near
future, from the recent planting of the coffee crop, and the consequent need of money
to handle the exchange, etc. The raising of coffee is exceedingly profitable, and the
planters are often justified in paying a large interest on temporary loans for the
extension of their plantings and for handling their crops, I herewith hand you as
an inclosure a copy of the last report* made public by the directors of the*" bank
located in this city. The item uDepreciation in exchange" has, I understand,
cut quite an important figure in the affairs of the bank, and Accounts for the meager
dividends paid "to the stockholders during the early years of the bank's existence.
At the time of the founding of the bank the price of exchange against this country
was but a few cents. As the price of exchange mounted higher, the bank set apart
a "Reserve fund for depreciation in exchange," and divided it from time to time
among those original stockholders the value of whose shares was constantly diminishing. For the past year there has been no material advance in the value of gold
here; hence the price of the bank shares has gone up. The shares of this bank now
command a premium of 50 per cent upon the amount paid in.
[Bartlett Tripp, United States minister.}
1. Thero are three classes of banks in Austria-Hungary: First, the Austro-Hungarian Bank, the only bank of issue, was created by an act of parliament June 27,
1878; second, the bank companies, which are all limited joint-stock companies or
associations; third, the private banking firms. In addition to the above there are
Government postal deposit and savings banks*
2. The Austro-Hungarian Bank transacts the general banking business of the
Government, floats all Government loans, discounts drafts of the department of
finance, undertakes commissions for the Government, and has the exclusive right
of issuing notes of the value of 10 florins and upward. Two-fifths of the amount of
such issue must be covered by a gold or silver reserve, and three-fifths by other firstclass securities. The banking companies and associations must present their articles of incorporation, by-laws, and general system by which they propose to operate
to the Government, and must obtain a concession from the latter before being permitted to transact business. Private banking firms are only required to register
their name with the ministry of interior. Their business is treated as contracts
between private persons, over which there is no Government supervision and no
special laws governing them other than the general commercial code governing all
commercial transactions.
* From this report it appears that the total liabilities of the bank on December 31,
1894, were £319,956, of which the paid-in capital amounted to £97,835; the reserve
fund and fund for depreciation in exchange, £23,734; unclaimed dividends, £347;
deposits, £89,752; bills payable, £492; notes in circulation, £99,270; profit ancj
loss, £8,525. The assets wrere: Cash on hand and with bankers, £154;075; bills
receivable, £88,526; loans, etc., £68,759; bank premises, etc., £8,595.
108
REPORT OF THE COMPTROLLER OF THE CURRENCY.
3. Two Government comptrollers are appointed, one by Austria and one by Hungary. They are required to examine into the condition of the Austro-Hungarian
Bank from time to time and report to the Government. They have the right to
attend all meetings, to exercise a supervision over all acts and resolutions, and can
veto the latter, provided they be contrary to the articles of incorporation and its
agreement with the Government. In the case of other bank companies, a board, one
member of which is appointed from each of the ministries of the Government, have
full power to grant or refuse concessions to the companies applying for same.
4. (A) The capital stock of the Austro-Hungarian Bank is 90,000,000 florins, and is
divided into 150,000 shares. In the case of other banks the capital stock varies.
The amount is, however, stated in the articles of incorporation and is solely an
arrangement between the bank directors and the stockholders, subject to the terms
of concession. The concession from the Government also usually permits a company
to increase its stock, if deemed advisable, by the directors and stockholders. (B) The
Austro-Hungarian Bank is managed by a governor, two vice-governors, and twelve
general councilmen, acting as a board of directors. The governor is appointed by
the Emperor on the joint recommendations of the ministers of finance of both divisions of the monarchy. The two vice-governors are appointed by the ministers of
finance of Austria and Hungary, respectively. Eight of the board of directors are
elected by the shareholders at the annual meeting, and four are appointed by the
management of the bank, two from Austria and two from Hungary. The board
elects six of its members to act as an executive committee, and one member to act
as general secretary. Other banks are generally managed by one governor or president, two vice-governors, one general secretary and board of directors, all elected
by the shareholders. (C) All stock companies in Austria-Hungary are limited-liability companies, stockholders are liable only to the amount of their shares. They
are not liable to assessments for claims against the bank. (D) Tho Austro-Hungarian
Bank is required to publish a report of its condition on the 7th, 15th, 23d, and last
of each month, and in addition a yearly statement. The other bank companies are
required to publish yearly balance-sheets. Private bankers are not required to publish any reports or statements of their condition. (E) The weekly reports of the
Austro-Hungarian Bank are submitted to the ministry of finance, and the two Government comptrollers are required to examine the condition of the bank and report
from time to time to the ministry of finance. In the case of other bank companies
the Government has the right to send a, commissioner to every meeting of the board
to exercise a supervision over the business of the company and report to the Government any irregularities or deviation from the system or by-laws as laid down in
the concession under which the bank company is permitted to transact business.
(F) In the case of the Austro-Hungarian Bank the amount of individual loans on
real estate must not exceed 50 per cent of the valuation of the property hypothecated. The amount to be loaned on other securities is not limited by statute. There
are no laws placing restrictions on the character or amount of loans of other bank
companies; this is left to the managers of the companies and the stockholders, and
is a matter of agreement between the bank and the party procuring the loan. (G)
The Austro-Hungarian Bank is required to pay to the Government 5 per cent of the
amount of all notes which it may issue above 200,000,000 florins. (H) Any coin,
stock, or bonds listed on tho exchange are accepted as security for loans, also first
mortgages on real estate, as maybe agreed between the bank and those dealing with
it. (I, J) In the case of the Austro-Hungarian Bank two-fifths of the amount of
notes issued by the bank must be covered by a cash reserve in coin, the remaining
three-fifths by first-class securities upon which cash can be immediately realized.
In addition to this reserve covering notes issued, there is another or additional fund,
which is in reality part of the surplus, as the term is understood in the United States.
When this reserve fund reaches the amount of 20 per cent of the capital, it shall not
be further augmented, but tho pension fund for retired employes shall then be
increased by the addition of 5 per cent of the accumulated profits of the year. Tho
balance, if any, is added to what is called accumulated surplus. Other bank companies and associations are not required by law to carry a cash reserve or retain a
surplus. The amount of the surplus or reserve accordingly varies in different institutions and is entirely a matter to be decided by the management under the terms of
the concession.
5. The Austro-Hungarian Bank does not receive cash deposits subject to check,
only special deposits of stocks, bonds, and other valuables. The other bank companies receive cash deposits and allow 2 to 24- per cent on open accounts subject to
check, and 3 to 3£ per cent on closed accounts, but their deposits are not large, for
the reason that the Government postal banks have almost a monopoly of the open
deposit account business subject to check.
6. The Government is not interested in either the Austro-Hungarian Bank or any
bank company.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
109
7. The Austro-Hungarian Bank has branch offices in all the principal cities of
Austria-Hungary. The hank companies have branches when necessary, if their concession contains a clause to this effect, not otherwise.
8. Official financial newspapers in Vienna, Prague, and Budapest publish full
information of the condition of the banks from time to time, in addition to which
an official book of reference is published annually containing balance sheets and
general condition of all banks and stock companies.
9. The Austro-Hungarian Bank pays only a tax of 5 per cent on the amount of its
notes which it issues above 200,000,000 florins. The bank companies pay the same
annual taxes as all the commercial or financial companies and stock associations.
10. There are no special laws governing the closing up of the business of insolvent
banks. The procedure is the same as in case of other bankrupt and insolvent
corporations.
11. The Austro-Hungarian Bank has the exclusive privilege of issuing notes of
the amounts of 10 florins and upward, which issue must be covered by a reserve,
two-fifths of which must be in gold or silver and three-fifths in first-class securities
which can be immediately converted into cash. Smaller notes of 5 florins are issued
by the Government payable in the currency of the Government. This constitutes
ail the paper currency in circulation.
12. If called upon, the Austro-Hungarian Bank is required to redeem its notes
within twenty-four hours under penalty of forfeiture of its franchise. In case of
the winding up of the business of the bank, all outstanding notes must be paid, but
they are forfeited if not presented for payment within six years after the date of
liquidation.
13. The banking business in Austria-Hungary is yet in its infancy and is, in general, governed by the same laws and regulations that govern other financial and
commercial corporations. The country being in the past an agricultural rather
than a commercial one, its banking capital was comparatively small, and the same
attention has not been given the legislative and administrative regulation of the
business in its different departments as was found necessary in the great banking and
commercial centers of western Europe, so that, outside of the special charter granted
to the Austro-Hungarian Bank and the administrative discretion exercised over
banking corporations and associations by the ministry in granting concessions, but
little control is exercised over this business in Austria-Hungary, and no control is
exercised over private banking other than is exercised over other private business
transactions. In addition to the banks of Austria-Hungary above described there
is another different and distinct class of banks known as the postal and savings bank,
which must be separately described.
The postal deposit and savings bank is a Government institution under the control of the postal department, with a general office in Vienna and branch offices at
every post-office throughout the monarchy. On opening an account the depositor is
assigned a certain number, which, together with his name and address, appears
upon all checks, deposit receipts, statements of account, and all papers relating to
the transactions of such depositor with the bank. The depositor purchases from
the bank a check book costing about $1 per hundred checks, a book of deposit
blanks, costing about 40 cents per hundred blanks, the name, address, and number
of the depositor being printed on each check and deposit blank; in addition to these
the depositor is furnished with special envelopes addressed to the general office of the
bank in Vienna, at the cost of about 10 cents per hundred. The depositor uses
the postal bank not only as an ordinary bank of deposit, which allows the depositor
2 per cent on open accounts, but also as a means of paying all bills and collecting
all indebtedness in every part of the city or country, free of all postage or charges
to the depositor. The system in vogue, which is both simple and practical, is
briefly as follows: If a depositor wishes to pay a debt to a creditor in any part of
Austria-Hungary, he simply fills out a postal check to the order of his creditor, with
address of same, together with the date and amount, incloses it in one of the special
envelopes addressed to the general office in Vienna, and the post-office authorities
find the payee, |)ay the amount, and take his receipt for same. Within twenty-four
hours the depositor receives through the post-office, from the central office of the bank
in Vienna, a statement showing the transaction. It contains date, name of depositor,
number of the check, amount and name of post-office where it has been paid; also
cash balance of the depositor. These statements reach the depositor after every transaction. If there have been several transactions in one day, they all appear on the
statement of the day. The depositor is thus kept informed as to the condition of his
account every twenty-four hours, provided he has drawn or made a deposit during
the previous day. The check of the depositor, forwarded as above, thus becomes a
post-office order without incurring the trouble, time, and expense which the latter
system involves. The depositors pay all their bills in this manner, whether in the
same city or in different parts of Austria-Hungary. The receiver of the money sends
his usual receipt by mail to the payer, and in addition the latter has the daily state
110
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ment from the postal bank that suet a numbered check for such an amount was paid
on such a day. Furthermore, if the creditor, to whose order the check is paid, is
also a depositor in the postal bank as it is the custom for all business houses who
are depositors in the postal bank, to have their deposit number printed on all their
bills, statements, receipts, and business cards, the debtor fills in the check with the
name and deposit number of his creditor, forwards it in the same manner free of
postage to the general office in Vienna, and the creditor receives his daily statement
that his account has been credited by so much from depositor No.
(giving
number of debtor) and likewise the debtor or issuer of check receives his daily
statement that his account has been debited by a like amount paid to account
of depositor No.
(giving the number of creditor). Thus an enormous amount
of transactions take place without the cash being withdrawn from the bank. The
deposit blanks consist of two parts, each containing the name, address, and number of depositor printed on their face, in addition to which each blank contains
its special number in its order in the book, which number appears on both divisions
of the blank. The blanks are used in two ways: If a depositor wishes to make
a cash deposit, he fills in a blank with the amount and date, presents it with
the cash in person or otherwise, at the nearest post-office (there are 125 post-offices
in Vienna alone). The postmaster or his deputy receives the deposit, places the
date stamp of the post-office on both portions of the blank, separates the latter,
affixes his signature to one portion, which he gives to the depositor as a receipt. The
other portion is turned into the general office with the cash at the end of the day.
Within twenty-four hours the depositor receives his daily statement, showing his
account credited w4th the above transaction and inclosing the other half of the
deposit blank. If a depositor sends a bill to one of his debtors he usually incloses
one of his deposit blanks; the person receiving the bill fills in tho amount of the bill
on both portions of the deposit blank, adds his name and address, and presents
it or sends it with the money to the nearest post-office, receiving half of the
deposit blank, signed and stamped as above, which he attaches to the original
bill as a receipt. When the depositor receives his next daily statement from the
bank, ho sees at once that his account has been credited by the amount of the bill
he has sent to his debtor, and with tho statement he receives the other half of
the deposit blank which was presented by his debtor at the post-office when the
latter made the deposit in his favor. In order that the depositors may enjoy all of
the above privileges and conveniences, together with free postage and 2 per cent
interest on deposit, each depositor is required to keep a constant balance of 100
florins on deposit unless he express a desire to close up his account; therefore the
daily statements are most useful and necessary. Any check he may draw, the payment of which would reduce his balance to 1 kreutzer below 100 florins, would be
refused payment; therefore all payments are made direct from the one central office
in Vienna, though they may be made through any post-office in the monarchy. As
there are upward of 1,000,000 depositors, the Government has tho rise of 100,000,000
florins permanently, and it is not an exaggerated estimate to calculate the average
balance of each depositor at l;000 florins, so that the Government has an average
sum of 1,000,000,000 florins constantly at its disposal.
STATE BANKING SYSTEMS.
Reports received relative to State banking systems are given herewith. Portions
of the reports and of the laws accompanying them have been omitted for the sake of
brevity.
ALABAMA.
[W. H. S. Burg-R-yn, national-bank examiner.]
Article 14, section 14? of the constitution prohibits the general assembly from incorporating banks to issue bills of credit except under conditions prescribed by the constitution. Section 15: No banks to be established otherwise than under a general
banking law or upon a special basis. Section 16: Bills and notes issued as money
must be redeemable in gold and silver. No law to be passed sanctioning suspension
of specie payments. Section 20: State prohibited from being stockholder. "Nor
shall credit of the State be given or loaned to bank."
Section 1522, Code of Alabama, 1886: Banks of deposit and discount authorized;
must have at least three shareholders, at least $50,000 capital, of which not less than
$25,000 must be actually paid in. Section 1523: Subscribers must file, in the office of
the judge of probate of the county where the bank is to be located, a declaration in
writing signed by each, stating their names and residences, amount of capital stock,
number of shares into which it is divided, etc. Said declaration must be accompanied
by the affidavits of the subscribers, verified before the judge of probate, that $25,000 of
the capital has been paid. Section 1524 : Certified copy of declaration and affidavit
to be filed in office of secretary of state, whereupon he must issue a certificate of
incorporation, under the seal of the State, certifying * * * that the subscribers,
their associates and successors, are a body politic and corporate, * * * and thereafter
such corporation shall be deemed fully organized. Section 1526: Management to
be by board of directors, not less than three, to be elected as provided by the bylaws. Section 1527: Capital may be increased to $500,000 and decreased to $50,000.
Section 1528: Existing banks and loan associations may be reorganized under this
law. Section 1529: No certificate of dej^osit for which interest is to be paid can be
reissued, but on its return must be canceled. Section 453, sub. 8: Each share of
stock to be assessed and tax collected in the county, city, town, or village where the
bank is located or doing business.
ARIZONA*
[Joseph T. Talbert, national-bank examiner.]
1. State banks, savings banks, and private banks.
2. Banks of discount and deposit are incorporated under the statute relating to
incorporations in general; which provides that any number of persons may associate
themselves together for the transaction of lawful business, and shall have power:
(1) Perpetual succession; (2) to sue and be sued; (3) to have a common seal; (4) to
render the interest of stockholders transferable, and to prescribe the mode of making
such transfers; (5) to exempt the private property of members from the liability
of corporate debts; (6) to make contracts, acquire and transfer property; (7) to establish by-laws, make rules and regulations for the management of their business.
Before commencing business, except that of organization, they must adopt articles
of incorporation, which must be signed and acknowledged by them, and be recorded
in the office of the county recorder of the couoty where the principal place of business is located. The articles of association must contain: The names of incorporators; the name of corporation, and its place of business; the general nature of the
business to be transacted; the amount of capital stock authorized, and the time
when and conditions upon which the same is to be paid; the time of the commencement and termination of corporate existence; by what officers and persons the
affairs of the corporation are to be conducted, and the times at which they are to
be elected; the highest amount of indebtedness or liability to which the corporation
is at any time to subject itself, and whether the private property of incorporators is
111
112
REPORT OF THE COMPTROLLER OF THE CURRENCY.
to be exempt from corporate debts. Before commencing business banks must also
obtain a license from the bank comptroller.
3. The territorial auditor, who is exofficio bank comptroller.
4. (A) There are no provisions in regard to the amount and payment of capital
stock. (B) No provisions a3 to management except such as stated in articles of
association. (C) Shareholders are individually liable for the indebtedness of the
incorporation in the proportion which the amount of stock owned by them bears to
the whole amount of the capital, unless the liability is limited in the articles of association to the amount of their respective holdings of stock; or unless it is stated in
the articles that private property of in corporators shall not be liable for debts of the
corporation. (D) Every bank shall make to the comptroller not less than three
reports during each year, under oath ; and said report shall state the amount of capital stock and number of shares; the names of directors and shares held by each; the
amount of capital paid in; the amount of reserve fund (if any); the amount due to
depositors; the amount and character of all liabilities; the value of its real estate;
the amount loaned on real estate; the amount invested in bonds, designating the particular class and amount; the amount loaned on stocks and bonds; the amount loaned
on other securities; the actual amount of money on hand or deposited in any other
bank or place, and the amount in each place; the amount of property held, or any
amount of money loaned, deposited, invested, or placed not otherwise enumerated.
The bank comptroller makes a general report of the business of his office to the legislature at each session. (E) The bank comptroller personally, or by a competent expert
appointed by him, shall, once in each year or often or, if necessary, without previous
notice, visit and make a full examination of each bank and banking institution, and
inspect all its books, papers, notes, bonds, securities, etc., and report same to the
attorney-general. Said bank comptroller or examiner must examine under oath officers and servants of the bank in relation to its affairs, and such officers and servants
must answer the questions put to them on oath, or be guilty of misdemeanor. (F) Savings banks are restricted to loan on real estate, unless their capital stock or reserve
amounts to not less than $100,000. No loans must be made for a longer period than
six years, and loans made upon real estate must not exceed 50 per cent of the market
value of the security, except when made for the purpose of facilitating the sale of
property owned by the corporation. Savings banks shall not loan or invest their
own capital or the money of their depositors in any mining shares or mining stocks.
Where the capital stock of the savings bank or reserve fund is greater than $100,000
they may purchase and hold securities and evidences of indebtedness not secured by
real estate. There are no restrictions in regard to loans of banks other than savings
banks. (G) State banks are required to keep on hand at all times in cash 15 per cent
of the aggregate amount of their deposits, including borrowed money. Failure to
do this authorizes the bank comptroller to declare the bank insolvent. This law does
not apply to savings banks. (H) There are no requirements in regard to the accumulation of surplus, except that each savings association which has no capital shall,
on each dividend day, retain at least 5 per cent of the net profits to constitute a fund
for the payment of losses.
5. None.
6. Not at all.
7. Branch offices not provided for.
8. Reports of condition are published in the newspapers.
9. A license fee of $5 is paid for the privilege. A charge of from $15 to $25 is made
by the bank comptroller for each examination. In addition to this, banks are taxed
on their capital stock in the same proportion as other corporations; usually assessed
on a basis of about 50 per cent.
10. When the bank comptroller is informed that any bank is insolvent or unsafe,
it is his duty to report in writing the fact of such insolvency to the attorney-general,
and his neglect to do so shall bo deemed a felony. It is the attorney-general's duty
thereupon to bring suit in the district court of the Territory, and if the bank is
found to be insolvent or in an unsafe condition to do business, the court will appoint
a receiver to wind up its affairs.
11. There are no legal provisions in regard to or referring to the issue of bank
circulation.
12. The principal points regarding the law relative to savings banks are embraced
in the above answers.
ARKANSAS.
[Edward I. Johnson, national-bank examiner.]
1. Banking may be carried on by individuals or by corporations composed of three
or more persons organized under the general incorporation law of the State. The
State law prescribes no special regulations for banking.
2, 3. Corporations are organized only under general incorporation laws. Business
corporations must consist of not less than three persons, who shall elect a board of
REPORT OF THE COMPTROLLER OF THE CURRENCY.
113
directors. The president and secretary are to be elected by the board, and the president must be a member of it. The secretary and treasurer must reside and keep the
books of the company within the State. The articles of association must be signed
by the president and a majority of the directors, and must be accompanied by a
certificate, signed in like manner, and sworn to by the president and a majority of
the directors, setting forth the purpose of the corporation, the amount of its capital
stock, the amount actually paid in, the names of its stockholders, and the number of
shares held by each, respectively, and the articles and certificate must bo filed in the
office of the secretary of state, and a duplicate with the clerk of the county in which
the corporation is to transact business. The stock can be transferred only upon the
company's books, and a record of the transfer has to be deposited with the county
clerk in order to be valid as against creditors of the transferrer. The corporation has
alien on its stock for debts due from the stockholders. The president and secretary
are required to file with the county clerk an annual statement of its financial condition, and, in case of a failure to do so, become liable for its debts. If the directors
declare a dividend when the corporation is insolvent they become liable for all the
corporate debts. Any corporation which is insolvent or has ceased to do business
may be wound up on the suit of any creditor or stockholder by a decree of the chancery
court. Preferences by insolvent corporations are forbidden. Shares of stock are in
denominations of $25 to $100.
4. (C) Shareholders liable only for amount of holdings. (E) Not subject to examination.
5. No legal provisions governing the receipt of deposits; allow interest on deposits
to about the same extent as national banks.
6. The State is not interested in any of the banks.
7. Yes, if they so desire, there being no restrictions.
8. No channel, except voluntary.
9. Same as others.
10. See answer to 2, 3, and 4.
11. Prohibited by the State constitution.
12. No law relrting to savings banks.
CALIFORNIA.
[Board of bank commissioners of California.]
1. There are three classes of banks permitted to do business in this State, viz, commercial, savings, and private banks.
2. Articles of incorporation must be prepared by commercial or savings banks,
setting forth (1) the name of the incorporation; (2) the purpose for which it is
formed; (3) the place where its principal business is to be transacted; (4) the term
for which it is to exist, not exceeding fifty years; (5) the number of its directors or
trustees, which shall not be less than live nor more than eleven, and the names and
residences of those who are appointed for the first year; (6) the amount of its capital
stock and the number of shares Into which it is divided; (7) if there is capital stock,
the amount actually subscribed ani by whom. The articles of incorporation must
be subscribed by five or more persons, a majority of whom must be residents of this
State, and acknowledged by each before some officer authorized to take and certify
acknowledgments of conveyances of real property. Upon filing the articles of incorporation in the office of the county clerk o* the county in which the principal business of the company is to be transacted, and a 5copy thereof, certified by the county
clerk, with the secratary of state, and the aff davit mentioned in the last section
where such affidavit is required, the secretary of state must issue to the corporation,
over the great seal of the State, a certificate thai a, copy of the articles containing
the required statement of facts has been filed in his office; and thereupon the person
signing the articles, and their associates and successors, shall be a body politic
and corporate, by the name stated in the certificate, and for the term of fifty years,
unless it is in the articles of incorporation otherwise stated or in this code otherwise
specially provided. A copy of any articles of incorporation filed in. pursuance of
this chapter and certified by the secretary of state must be received in all tho courts
and other places as prima facie evidence of the facts therein stated.
3. Secretary of state and board of bank commissioners.
4. (A) No savings bank, or bank, or banking corporation shall he incorporated in
this State and conduct such banking business in a city or town of 5,000 inhabitants
or under with a capital stock of less than $25,000, or in a city or town of over 5,000
and not exceeding 10,000 inhabitants with a capital stock of less than $50,000, or in
a city or town of over 10,000 and not exceeding 25,000 inhabitants with c- capital
stock of less than $100,000, or in a city or town of over 25,000 inhabitants vith a
capital stock of less than $200,000. Before the secretary of state issues*to any vor^
poration that proposes to do a banking business his certificate of the filing of the
CUR PT 1
8
114
REPORT OF THE COMPTROLLER OF THE CURRENCY.
articles of incorporation there must be filed in his office tlio affidavit of the persons
named in said articles as the lirst directors of the corporation that all the capital
stock has been actually and in good, faith subscribed, and at least 50 per cent thereof
paid in lawful money of the United States to a person in such affidavit named for the
benefit of the corporation. The remainder of the capital stock must be paid in
within two years after the said banking corporation receives from the commissioners
its first license to transact business, and if not so paid no further license shall be
issued to it: Provided, however, That the provisions of this section shall not apply to
corporations now in existence. (13) Immediately after their election the directors
inu.st organize by the election of a president, who must be one of their number, a
secretary, and treasurer. They must perform the duties enjoined on them by law
and the by-laws of the corporation. A majority of the directors is a sufficient
number to form a board for the transaction of business, and every decision of a
majority of the directors forming such board made when duly assembled is valid as
a corporate act. (C) Each stockholder of a corporation or joint-stock association
shall be individually and personally liable for such portion of all its debts and liabilities contracted or incurred during the time he was a stockholder as the amount
of stock or shares owned by him bear to the "whole of the subscribed capital, stock,
or shares of the corporation or association. The directors or trustees of corporations
and joint-stock associations shall be jointly and severally liable to the creditors and
stockholders for all moneys embezzled or misappropriated by the officers of such
corporation or joint-stock association during the term of office of such director or
trustee. (D) Any corporation mentioned in section 3 of this act, including banks in
liquidation or insolvency, shall, whenever required by the board of bank commissioners, make a report iii writing to the commissioners, verified by the oath of its
president and its secretary or cashier, or its two principal officers. Said report shall
show the actual financial condition of the corporation making the report at the close
of any past day by the commissioners specified ; (2) the names of the directors, and the
number of shares of stock held by each. The oaths of the officers to the statements
above required shall state that they, and each of them, have a personal knowledge
of the matters therein contained, and that they believe every allegation, statement,
matter, and thing therein contained is true; and any willfully false statement
in the premises shall be perjury and shall be punished as such. The reports, as
provided for by this section, shall by the commissioners be required from each and
every corporation herein mentioned at least three times in each year, and shall be
transmitted to the commissioners within fifteen days after the receipt from them of
a request or requisition therefor. Any corporation mentioned in section 3 of this act
failing to furnish the bank commissioners any report by them required under the provisions of this act within the time herein specified shall forfeit the sum of $100 per
day during the time of such default. (E) It shall be the duty of one or more of the
bank commissioners, as designated by the commissioners, once each year, and as
often as in their judgment may be deemed necessary, without previous notice, to visit
and make, personally, a full examination of each and every corporation mentioned
in section 3 of this act; to inspect all books, papers, notes, bonds, or evidences of
debt of such corporation, and all securities; to ascertain the condition of every such
corporation, its solvency, its ability to fulfill its obligations, and, if in their opinion
it is deemed necessary, report its condition to the attorney-general as soon as practicable after such examination. (F) No restriction by law regarding commercial
banks. Corporations organized for the purpose of accumulating and loaning the
funds of their members, stockholders, and depositors may loan and invest the funds
thereof, receive deposits of money, loan, invest, and collect the same with interest,
and may repay depositors with or without interest. No such corporation must loan
money except on adequate security on real or personal property, and such loan must
not be for a longer period than six years. No savings bank shall receive the license in
this act provided for unless at least 50 per cent of its loans shall be secured by first
mortgage, or other prior lien upon real estate situate within this State; such loans, at
the date when made, hereafter not to exceed 60 per cent of the market value of the
security, except when made for the purpose of facilitating the sale of property OAvned
by the corporation. And it shall be unlawful for any savings and loan society, or
savings bank, to purchase, invest, orloari its capital, or the money of its depositors, or
any part of either, in mining shares or stocks. Any president or managing officer
who knowingly consents to a violation of the above provisions shall be deemed guilty
of a felony. (G) No legal provision governing cash reserve. (H) The directors of
any savings bank, bank, or banking corporation having a capital stock may semiannually declare a dividend of so much of the net profits of the stockholders as they
shall judge expedient; but every such corporation shall, before the declaration of
such dividend, carry at least one-tenth part of the net profits of the stockholders for
the preceding half year to its surplus or reserve fund until the same shall amount to
25 per cent of its paid-up capital stock. But the whole or any part of such surplus or reserve fund, if held as the exclusive property of stockholders, may at any
REPORT OF THE COMPTROLLER OF THE CURRENCY.
115
time be converted into paid-up capital stock, in which event such surplus or reserve
fund shall be restored in manner as above provided until it amounts to 25 per cent
of the aggregate paid-up capital stock. A larger surplus or reserve fund may be
created, and nothing herein contained shall bo construed as prohibitory thereof.
5. There is no legal provision governing the receipt of deposits. It is the custom
of savings banks to pay interest on deposits. Some commercial banks pay interest
on term deposits.
6. The State is not interested as a shareholder in any of the banks.
7. There are some banks which have branch offices.
8. Commissioners make, on or before the 1st of October in each year, a report to
the governor of the State, containing a tabular statement and synopsis of the several
reports which have been filed in their offices since their last report, and any other
proceedings had or done by them under this act, showing generally the condition of
the respective savings, commercial, and other banking corporations or institutions
of this State and such other matters as in their opinion may be of interest to the
public, with a detailed statement, verified by their oaths, of all moneys and fees of
office received by them during the same period. Copy provided each member of
the legislature. Reports are public, and delivered to citizens free of charge upon
application.
9. There are no taxes imposed upon banks other than those assessed upon all
classes of property, except to pay the salaries and all other necessary expenses of
the commissioners, as provided for by this act. Every corporation receiving a license
shall pay annually, in advance, to the commissioners, in gold coin, its share of the
amount required to pay such salaries and expenses; the share to be paid by any corporation to be determined by the proportion which its deposits bear to the aggregate
deposits of all such corporations receiving licenses, as shown by the latest reports
of such corporations to the commissioners.
10. If the bank commissioners, on the examination of the affairs of any corporation
mentioned in section 3 of this act, shall iind that any such corporation has been
guilty of violating its charter, the laws of this State, or any of the provisions of this
act, or is conducting business in an unsafe manner, they shall, by an order addressed
to the corporation so offending, direct discontinuance of such illegal and unsafe practices and a conformity with the requirements of the law and its charter and of the
provisions of this act. And if such corporation shall refuse or neglect to conform with
such requirements before the expiration of the time in the order specified, or if it
shall appear to said commissioners and they shall unanimously decide that it is unsafe
for any such corporation to transact business, it shall be the duty of the commissioners immediately to take such control of such corporation, and all the property and
effects thereof as may be necessary to prevent waste or diversion of assets, and to hold
possession of the same until the order of court hereinafter mentioned, and to immediately notify the attorney-general of their action; and it is hereby made the duty
of the attorney-general, upon receiving such notification, to immediately commence
suit in the proper court against such corporation and all the directors or trustees
thereof to enjoin and prohibit them from the transaction of any further business. If,
upon the hearing of the case, the court shall find that it is unsafe for such corporation to continue business, and that such corporation or institution is insolvent, said
court shall issue the injunction applied for, and shall cause the same to be served
according to law, and shall order the commissioners to surrender to the corporation
the property thereof in their possession for the purpose of liquidation ; or if the court
shall find that such corporation is solvent and may safely continue business, it shall
dismiss the action and order that the corporation be restored to the possession of its
property. The issuance of the injunction hereinabove provided for shall by operation of law dissolve any and all attachments levied upon any property of such
corporation within one month next preceding the date of the notification by the
commissioners to the attorney-general, as provided for in this section, and no attachment or execution shall, after the issuance of such injunction and during the process of liquidation hereinafter provided for, be levied upon any property of said
corporation, nor shall any lien be created thereon. And if it shall appear to the
court at such hearing or at any time during the liquidation hereinafter provided
for, on the petition of one or more of the bank commissioners or any other interested
party, that any of the directors or trustees or officers of said corporation have been
guilty of fraud, malversation, or criminal carelessness or negligence, and that any of
them are not the proper persons to be intrusted with the closing of the affairs and
business of such corporation in the interest of the depositors, creditors, and stockholders thereof, the said court shall cause to be issued in said action and served
upon said directors or trustees or officers, or any of them, an order to show cause why
they, or any of them, should not be removed from office, which order shall briefly
recite the grounds of the application, and shall be returnable at a time to be fixed by
the court; and if on the hearing the court shall find that such directors or trustees or officers, or any of them, ought to be removed from office it shall enter its
116
REPORT OF THE COMPTROLLER OF THE CURRENCY.
order of removal accordingly, which order shall be final in the premises; and if the
"board of directors or trustees of the corporation shall neglect for the period of ten
days after such removal to elect or appoint a successor or successors to the person or persons so removed, then the court, by an order entered in said cause, shall
appoint such successor or successors; and the court shall also have power in like
manner to fill all vacancies occurring in the board, and to appoint directors or trustees in their stead whenever from any cause there are no directors or trustees, or
not a sufficient number thereof to constitute a quorum for the transaction of business, or when from any cause there are no directors or trustees, the court may order
an election by the stockholders, to be held according to law. Subject to this right
of removal and appointment, the directors or trustees of all banking corporations in
liquidation shall be permitted to continue the management of the affairs of such
corporations during the process of liquidation, under the direction of the bank commissioners, as hereinafter provided. The affairs of every corporation mentioned
in this act which is hereafter forced into liquidation under the provisions of this
act or otherwise goes into liquidation shall be closed, and the business thereof settled within four years from the time it shall enter into liquidation, unless at the
expiration of such time it shall obtain the consent in writing from a majority of
the board of bank commissioners to continue in liquidation for a longer period.
The bank commissioners shall, however, have no power to grant a continuance
for such purpose for a longer period than one year at each time, and the affairs
of any corporation in process of liquidation at the time of the adoption of this
section as amended shall be closed within a time to be designated by such bank
commissioners. Any corporation mentioned herein now in liquidation, or that hereafter goes into liquidation, shall make reports of the condition of its affairs to the
bank commissioners, in the same manner as the solvent banks mentioned in this
act, and, in addition thereto, shall state the amount of dividends paid, debts collected, and the amounts realized on property sold, if any, since the previous report.
The bank commissioners shall have the power, and it is hereby made their duty,
to examine the condition of every such corporation in liquidation, in the same manner as in the case of solvent banks, and they shall have a general supervision of
any such corporation. They shall have the power to limit the number of employees
necessary to close up the business of any such corporation, and to also limit the salaries of the same, and shall do all in their power to make such liquidation economical
and as expeditious as the interests of the depositors and stockholders will admit. If
any officer or employee of any corporation, insolvent or in liquidation, mentioned in
this act, shall refuse to comply with the provisions of this section, or disregard or
refuse to obey the directions of said bank commissioners, given in accordance with
the provisions of this act, such officer or employee shall be punished by a fine of not
exceeding $5,000, or by imprisonment in the county jail for not exceeding one year, or
by both such fine and imprisonment, as a court of competent jurisdiction may
determine.
11. Constitution of State prohibits issue and circulation of money by State banks.
12. Covered under section 4.
(Copy of banking laws transmitted).
COLORADO.
[Joseph T. Talbert, national-bank examiner.]
1. The different classes of banks permitted by law to do business in Colorado are:
(a) National banks; (&) banks incorporated under State laws other than savings
banks; (c) savings banks incorporated under State laws; (d) private banks unincorporated.
2. Banks incorporated under State laws must file a certificate with the secretary of
state and another certificate with the county clerk and recorder of the county where
the bank is located, specifying as follows: First. The name assumed to distinguish
such corporation or association and to be used in all its dealings. Second. The place
where the operations of discount and deposit of such banking corporation or association are to be carried on, designating the particular county, city, or town, at which
place such association shall keep an office for the transaction of its business. Third.
The amount of the capital stock of such association and the number of shares into
which the same is divided. Fourth. The names and places of residence of the stockholders and the number of shares held and owned by each of them resx>ectively.
Fifth. The period at which such association shall commence and terminate. Sixth.
The names and places of residence of the several directors and officers and the number of shares of the capital stock of such corporation or association owned and held
by each of such directors and officers, which certificate shall be acknowledged. Private savings banks not incorporated are not permitted to do business in Colorado.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
117
3. There is no provision making it the duty of any particular officer to determine
when the conditions have been satisfied.
4. An ordinary State bank must have a capital of not less than $30,000, and is not
permitted to transact any business until at least 50 per cent of its capital has been
paid into the treasury of the bank in cash, nor until a certificate to that effect,
under oath of the president and cashier, shall have been filed in the office of the
recorder of deeds of the county where such bank is located; nor is such bank permitted to continue to transact business beyond the period of one year unless the
entire capital stock has been fully paid up in cash, and a certificate to that
effect filed in said offices. Savings banks must have a capital of not less than
$25,000, all of which must be paid m cash. The management of incorporates banks
is in the hands of the directors. Shareholders in banks and savings banks are held
individually responsible for debts, contracts, and engagements of said associations
in double the amount of the par value of stock owned by them respectively. The
directors of an ordinary bank, whenever a dividend is declared, shall make a full,
clear, and accurate statement to the State treasurer of the condition of the bank at
that time, and the same must be published at least once a week for three successive
weeks in some newspaper of the county in which such bank is located. The directors of savings banks are required to make similar statements to the State treasurer
quarterly, which statement must be published, as in the case of other banks. There
is no provision for examination of banks by State officials. Banks are not permitted
to take as security for any loan or discount alien upon any part of their capital stock.
In case of ordinary State banks the stockholders collectively of any bank shall at
no time be liable to such ban*?, either as principal debtors or sureties, or both, to an
amount greater than two-fifths of the amount of the capital stock actually paid in
and remaining nndiminished by losses or otherwise. No officer of a savings bank
shall be a borrower or surety for a borrower of any of its funds, nor shall any savings bank discount any paper made, accepted, or indorsed by its cashier or any of
its clerks, or by any partnership of which either is a member. The following additional provision with reference to savings banks is found among our laws: "Section 523. The board of directors or trustees may invest one-half of the deposits
made with them upon personal security, or in the bonds or stock of this State or of
the United States, or in the bonds of any county, city, town, or school district in
this State legally authorized to issue such bonds, or loan the same upon bonds
secured by mortgage upon unincumbered real estate worth at least double the
amount loaned, or in such other manner as is authorized by this act; and from the
remainder of said deposits temporary deposits may be made by said board in any
national bank, or in any banks of this State which may be incorporated under the
general banking laws, said deposits not to exceed $25,000 in any one bank; or they
may keep the whole or any part of the said remainder to meet the current payments
of such bank, and which may by them be kept on deposit, interest or otherwise, or
in such suitable form as the directors or trustees may direct." Savings banks and
other banks are required to at all times hold, either in their own keeping or on
deposit subject to call with some national bank or with other banks organized
tinder general laws, at least 20 per cent of the savings deposits of such bank or
association. There is no provision requiring the accumulation of a surplus. Section 223, Mills' Annotated Statute, is as follows: "No corporation organized under
the laws of this State and doing business in this State shall loan its money or the
money deposited with it to any individual, corporation, firm, or company, directly
or indirectly, or permit any individaal, corporation, firm, or company to become
indebted to it in a sum exceeding 25 per cent of its capital stock actually paid in,
or permit a line of loans to any greater amount to any individual, corporation, firm,
or company, nor shall any such corporation loan to any officer or director of the
same as principal or surety or indorser upon paper for an amount greater than 90
per cent of the capital stock of such corporation actually paid in and owned by
such director or officer, unless such borrower deposit with such corporation collateral security or execute a deed of trust or mortgage upon real or personal property
which at the time is assessed or77 assessable for taxable purposes at a valuation 10
per cent in excess of such loan.
5. Section 222, Mills' Annotated Statutes, is as follows; " I f any banker, or any
president, director, manager, cashier or other officer, or any agent, clerk or employee
of any banker, bank or banking institution doing business in this State shall receive
or assent to the reception of any deposit of money or other valuable thing by such
banker or in such bank or banking institution, or if any such banker, officer or agent
shall create or assent to the creation of any debts or indebtedness by such banker, bank
or banking institution, in consideration or by reason of which indebtedness any money
or other valuable property shall be received by such banker, or into such bank or banking institution after he shall have had knowledge of the fact that such banker, bank
or banking institution is insolvent, he shall be deemed guilty of larceny, and on conviction thereof be punished by imprisonment in the penitentiary for not less than one
118
REPORT OF THE COMPTROLLER OF THE CURRENCY.
year nor more than ten years. And upon the trial of any person charged with an
offense under this section, evidence of the failure of any such banker, bank or banking
institution at any time -within thirty days after the reception of such deposit or the
creation of such indebtedness shall be received as prima facie evidence of knowledge
on the part of the person charged that such banker, bank or banking institution was
insolvent at the time of the reception of such deposit or the creation of such indebtedness." Section 224, Mills' Annotated Statutes, is as follows: "No president, director, manager, cashier or other officer, agent or employee of any bank or banking
institution, organized and doing business under any laws of this State, shall receive
or assent to the reception of deposits or create or assent to the creation of any indebtedness by such bank or banking institution after he shall have had knowledge of the
fact that ifc is insolvent or in failing circumstances. Every person violating the provisions of this section shall be individually responsible for such deposits so received
and such indebtedness so contracted." Section 225, Mills' Annotated Statutes, is as
follows: '* In all suits brought for the recovery of any deposits received or debts contracted in violation of the provisions of section 2 of this act all officers, agents or
managers, or the executors or administrators of such as may be deceased of such
bank or banking institution, may be joined as defendants, or proceeded against severally, and the fact that such bank or banking institution was insolvent or in failing
circumstances at the time of the reception of such deposit or the contracting of such
indebtedness shall be prima facie evidence of knowledge of such fact and of assent
to such reception or contracting on the part of such officer, agent or manager so
charged therewith." It is generally the custom of savings banks to allow interest on
deposits, and we believe also of other banks where the deposit is left with the bank
for as long a time as one year, in case of special agreement to that effect.
6. The State is not in any manner interested as a shareholder in any bank.
7. There is no provision of law permitting banks to conduct branch offices.
8. State banks are not required to furnish information to the public as to their
condition, except as stated above in answer to question 4.
9. The shares of stock in national banks doing business in Colorado are subject to
taxation in the county where the bank is located, whether the owner resides there
or elsewhere, and the bank is required to pay such tax as agent for the shareholders.
10. The usual method of closing up business of insolvent banks organized under
State law is by deed of general assignment, all creditors standing upon an equal
footing, except employees to the extent of $50 each, and in the case of the insoh'-ency
of savings banks the savings depositors are entitled to preference in the payment
over other creditors.
11. State banks are not permitted to issue notes, bills, or other evidence of indebtedness for circulation as money.
12. The principal points in the Colorado law concerning savings banks have
already been mentioned.
CONNECTICUT.
[Edward Ii. Doyle, "bank commissioner.]
1. State, savings, and private banks, trust companies.
2. Must be incorporated by general assembly.
3. General assembly and bank commissioners.
4. (A and B) Stated in petition for incorporation. (C) No double liability.
(D) Reports made by State banks and trust companies quarter^, savings banks
annually—no supervision of private banks. (E) Examinations made by bank commissioners semiannually or oftener. (P) No bank shall discount any paper made,
accepted, or indorsed by its cashier or any of its clerks, or by any partnership of
which either is a member. No director in any bank shall bo obligated to such bank
to an amount exceeding 5 per centum of the capital actually paid in and surplus
combined, and no bank shall permit the directors to becomeobligated to it to an
amount at any time exceeding in the "whole the sum of 20 per centum on its capital
stock actually paid in and surplus combined. Any bank which shall violate the
provisions of this section shall forfeit to the State not less than $500 nor more than
$1,000. If any director of any bank shall receive any compensation for indorsing
any paper discounted by such bank, he shall forfeit to the State the full amount of
such paper. (G) Every bank and trust company shall always keep in its banking
office gold and silver coin, bullion, bonds, legal-tender notes of the United States,
or national-bank currency, to an amount not less than one-tenth of all its liabilities
except its capital stock, but the bonds of the United States so included in sai...
reserve fund shall never exceed one-twentieth of said liabilities. (H) Savings
banks at least 3 per cent of deposits and no more than 10 per cent.
5. Savings banks not to exceed $1,000 in one year. Savings banks allow interest;
State and trust companies, in certain cases.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
119
6. Do not know.
7. No.
8. Reports issued by bank comaiissioners and statements published in newspapers
quarterly.
9. One per cent on capital stock; bank commissioners' salaries apportioned according to deposits.
10. Forward copies of law.
[Michael F. Dooley, national-bank examiner.]
1. Banks of discount. Trust companies which exercise the same functions and
enjoy the additional privilege of receiving and investing trust funds, acting as
receivers, administrators, etc. Savings banks of a, purely mutual character which
receive deposits, from whose investment the depositors are paid dividends.
2. They must obtain a special charter from the legislature of the State. In the
early charters certain conditions were needed to be complied with before banks began
business. For instance, one bank had to pay for its franchise a bonus of $10,000 to
erect a normal school, and another had to build a fence around the State House yard,
etc. But such requirements have not been exacted in recent years. One provision
was that one-half of the capital stock had to be paid in before beginning business.
Now the full capital has to be paid in.
3. This is governed by the provisions of the charter. Formerly it was generally
provided that commissioners named in the charter should receive subscriptions for
the capital, and when this was fully subscribed said commissioners called the subscribers together to elect directors, and when 50 per cent of the capital stock was
paid in the bank was allowed to commence business. Under recent charters commissioners are named therein to receive subscriptions, and when capital is fully paid
in the banks are allowed to begin business.
4. (A) This is regulated by charter. Capital stock is required to be actually paid
in before beginning business. (B) This is also fixed by charter. A board of directors
manages each bank, and trustees manage savings banks. (C) There is no such liability. (D) Banks and trust companies make quarterly sworn statements to the bank
commissioners. Savings banks make annual reports to the same officials, who in turn
make an annual report to the governor of the condition of each bank, trust company, and savings bank. (E) There are two bank commissioners appointed by the
governor, with the consent of the senate, who are obliged to make two examinations
a year of each bank, trust company, and savings bank. (F) No bank or trust company shall loan to any party more than 15 per cent of its capital stock actually paid
in together with the surplus. No bank or trust company shall discount any paper
made, accepted or indorsed by cashier or any of its clerks or by any partnership of
which either is a member. No director of any bank or trust company shall borrow
to an amount exceeding 5 per cent of the capital actually paid in and surplus combined, and no bank or trust company shall permit the directors to become obligated
to it to an amount at any one time exceeding in the whole the sum of 20 per cent on
its capital stock actually paid in and surplus combined. No loan shall be made by
any bank or trust company on a pledge of its own stock. No loan shall be made
by any savings bank to a manufacturing corporation or ecclesiastical society secured
by mortgage upon its property, unless the same shall be accompanied by the individual guaranty of some responsible party or parties or by collateral security of
equal value to the amount of the loan. No savings bank shall loan any money upon
any obligation on which only one person or firm shall bo holden without taking additional security for the same equivalent to the guaranty of some other responsible
party. No officer of a savings bank can borrow its funds. (G) Every bank or trust
company shall always keep in its banking office gold and silver coin, bullion, bonds,
legal tender notes of United States, or national-bank currency to an amount not
less than one-tenth of all its liabilities except its capital stock, but the bonds of the
United States so included in its reserve fund shall never exceed one-twentieth of
said liabilities. (H) No accumulation of surplus is required for banks or trust companies except that no dividend shall be declared unless from its net earnings after
deducting all losses, overdrafts, and obligations suspended or overdue. No savings
banks shall make any dividend until its surplus shall have accumulated to an amount
equal to 3 per cent of its deposits, but no savings bank shall carry to its surplus or
contingent fund a sum larger than 10 per cent of its deposits, and any surplus above
that sum shall be divided among the depositors entitled to it in sums of not Jess
than 1 per cent of its deposits.
5. There are no restrictions as to deposits in banks or trust companies, but no
savings bank can receive more than $1,000 on deposit from one depositor in one year.
Interest is paid on many accounts by banks and trust companies, but generally on
those where the funds are left on deposit for some specified time or on accounts
where the average balance is large. Hartford banks, State and national, are as a
120
REPORT OF THE COMPTROLLER OF THE CURRENCY.
rule more generally doing this than oilier hanks in the State, but the evil of interestpaying has grown greatly during the past ten years, until to-day concentrated effort
on the part of both banks and trust companies here is made to mitigate, if not
entirely to eradicate it. Outside of Hartford little interest is paid on deposits.
6. The State and every educational, ecclesiastical, and charitable corporation, in
addition to the authorized capital stock, may subscribe for stock to the extent, in the
aggregate, of one-tenth of the ctipital stock actually paid in. The State, through
its school fund, is interested in some of the banks as stockholder.
7. No branch offices are permitted.
8. Banks and trust companies inform the public of their condition by reports published four times a year in newspapers printed in the towns and counties where
the banks are located, and by the annual reports of the bank commissioners to the
governor. In these last reports appear the statements of the savings banks.
9. The stockholders of banks and trust conrpanies, if residents of the State, pay
taxes on their stock in the towns where they reside; and if nonresidents, a tax of
1 per cent is collected by the State. Every cashier of such bank or trust company
must forward annually to each town a list of its shareholders resident therein, and
must also make to the State treasurer a return of all the nonresident stockholders.
Taxation is based upon the market value of the stock after deducting therefrom the
amount invested in real estate, upon which bank or trust company pays tax.
Savings banks pay one-fourth, of 1 per cent on their deposits, certain deductions for
real estate owned and taxable, bonds issued by towns in favor of railroads, and
$50,000 in addition being permitted.
10. When in the opinion of the bank commissioners a bank has impaired its capital or the public are in danger of being defrauded, the commissioners may apply to
the superior court for a receiver. Upon hearing and for cause shown the court has
power to appoint a receiver to wind up the affairs of such bank.
11. In the revision of 1866 there appears a law specifying that a bank may issue bills
to an amount equal to 75 per cent of its capital actually paid in and unimpaired by
losses. In the revision of 1888 this law does not appear. There are no provisions
that I can find.
12. The answer to this question is largely embodied in much of what appears in
the other answers. To summarize, savings banks are created by charter. They are
managed by trustees and entirely distinct in their powers from banks of discount.
Treasurer must give a bond for not less than $10,000. All loans must be approved
by trustees and a record kept, showing names of those assenting. No officer can
borrow money from a savings bank. At least one-half of the deposits must be loaned
upon unincumbered real estate in this State. Bonds issued by the State of Connecticut or any municipality therein may be classed as real estate. Net earnings, except
a small reserve fund, are divided in form of dividends twice a year among the depositors. In declaring dividends the trustees may discriminate to an amount not
exceeding 1 per cent in favor of depositors having less than $2,000 on deposit.
DKLAWARE.
[Francis N. Buck, national-lbank examiner.]
1. There is no general law under which banking corporations can be organized;
must be under special charter by act of assembly, and privileges granted are only
such as are embraced in charter or in subsequent amendments. Private banks,
receiving deposits and granting discounts, do not exist because of practical prohibition by taxation on deposits. There are one State bank (principal bank and three
branches), two trust companies, and two savings banks, all of which are organized
and conduct business under special charters.
2. As required in charter.
3. None.
4. (A) Farmers' Bank, Dover (principal), $224,000; New Castle (branch), $100,000;
Georgetown (branch), $120,000; Wilmington (branch), $236,000; total, $680,000.
Equitable Guarantee and Trust Company, Wilmington, $500,000; Security Trust
and Safe Deposit Company, Wilmington, $500,000, all fully paid. Savings banks
are conducted on the mutual plan; both of these are strong and conservative, with
large guarantor funds. (B) By directors. (C) None. (D) None, except semiannual
and annual publications of statements, and in case of Farmers' Bank, of annual
report to governor, for transmission to general assembly. (E) None. (F) None, or
nominal if at all. (G) None. (H) None.
5. No legal provision; interest seldom paid by banks, but paid by trust companies and savings banks.
6. State owns: Farmers' Bank, general fund, 1,275 shares, par value $50; school
fund, 2,439 shares, par value $50; school fund, 5,000 shares, $36 paid. National Bank
of Delaware, Wilmington, general fund, 20 shares, par value $200; school fund, 37
REPORT OF THE COMPTROLLER OF THE CURRENCY.
121
shares, par value $200. National Bank of Smyrna, school fund, 114 shares, par value
$50. Union National Bank, Wilmington, 254 shares.
7. Farmers' Bank has principal hank at Dover, hranches at Georgetown, New Castle, and Wilmington; organized and conducted at these specifically designated
places, under charter and amendments.
8. Only hy occasional publication of summarized statements and in case of savings funds, publication of annual statements. Farmers' Bank makes annual report
to governor.
9. State tax of 1\ per cent on market value of shares, hut not levied on trust
companies.
10. None, except those governing all corporations, usually chancery proceedings
for appointment of receiver.
11. None, other than in Farmers' Bank charter, which provides that circulation
shall not he greater than double the amount of capital stock.
12. No general provisions.
NOTE.—The trust companies practically do a banking business, taking paper and
paying and receiving currency over their counters.
FLORIDA.
[W. H. S. Burgwyn, national bank examiner.]
Transmits copy of bank act of 1889, a summary of which appears in the text of
this report.
GEORGIA.
[W. H. S. Burgwyn, national-bank examiner.]
Acts 1893, chapter 343, section 1: Any three persons may form a corporation to do
a banking business by filing in the office of the secretary of state a declaration in
writing stating * * *. Such declaration must be accompanied by the affidavit
of the subscribers, verified by the ordinary of the county in which it is proposed to do business, that $25,000 of the capital subscribed has been actually paid
in. Section 2: Said declaration to be filed in the office of the secretary of state,
whose duty it shall be to certify and deliver to said subscribers a copy of such
declaration and affidavit; and it shall be the duty of said subscribers to cause such
certified copy, declaration, and affidavit to be published once a week for four weeks
in the official organ of the county. Section 3: When said declaration and affidavit
has been published as above it shall be the duty of the ordinary to certify the fact
to the secretary of state, who shall then issue a certificate of incorporation * * *
and he shall then and there record the declaration, affidavit, and certificate of the
ordinary and the certificate of incorporation in the order named. Section 4: Such
corporation, when organized, shall have power * * *. None given in this act to
issue its notes to circulate as money. (See act of same year below giving this power.)
Section 5: Management by board of not less than five or more than twelve directors,
holders of one or more shares of stock. Section 6: Capital stock may be increased
to any amount, or may be decreased to a sum not less than $50,000. Section 7: Capital must be $50,000, and $25,000 must be paid in cash before the filing of the declaration. Section 8: Corporation liable to the extent of its capital and assets, and each
stockholder individually liable to the extent of his or her unpaid shares, "and shall
be further and additionally individually liable equally and ratably (and not for
another as surety) to depositors in an amount equal to the face value of their respective shares." Chapter 355, section 1: "The stock of each stockholder shall be bound
for any debts matured or maturing that the stockholder may owe or be liable for to
the company, either by indorsement, acceptance, or otherwise." Chapter 344, section 1: Authorizes circulating notes to be money to be issued to banks. Section 2:
Governor, treasurer, and comptroller-general of the State to be a commission to have
notes engraved and printed, to be numbered and registered, and countersigned by
comptroller-general. Section 3: Banks wanting notes to make application to said
commission. Application must contain * * * and that said bank has complied with
all other conditions and requirements of the act to authorize it to become a bank of
issue. Section 4: Commission to inquire into the truth of the recitals in the application. Sections: Capital of bank to be not less than $25,000, all paid in. Section 6:
One-half of bank's capital to be keptondeposifinthe bank as a fund for the redemption
of the notes issued to the bank. Section 7: Other half to be invested in valid county,
municipal, State or United States bonds, provided none of said bonds are below par of
their face value, and provided the commission approves such bonds. Section 8: Said
bonds to be deposited with the State treasurer. Section 9: Said commission to issue
to said bank notes to an amount three times the amount of United States legal-ten
122
REPORT OF THE COMPTROLLER OF THE CURRENCY.
der coin or currency deposited in said Lank under section 6, said notes to be a firsfc
lien on all the assets of the bank. Section 10: Said notes to be promptly redeemed
in United States legal-tender coin or currency. Section 11: The bonds deposited
with the State treasurer, and the United States legal-tender coin and currency set
apart and kept on deposit in the vaults of the bank, and all other assets of the bank,
shall each and both be and remain security in pledge for the redemption of the notes.
Stockholders also doubly liable for the redemption of said notes. Section 12: Such
double liability of stockholder not to cease until sixty days from date of any transfer of such share. Section 13: Banks to keep as a reserve fund in cash 25 per cent of
the aggregate of deposits. Section 14: Should bank fail or neglect for thirty days
to make good its reserve as aforesaid, the governor shall direct the attorney-general
to institute proceedings for appointment of receiver, * * * Section 15 : Depreciation of bonds in possession of treasurer of the State to be made good by substitution of other bonds. * * * Section 16: Banks to have the right to receive the
interest due on the bonds deposited with the treasurer, unless. * * * Section 17.
Said bonds may be withdrawn by paying to said commission, to be turned into the
State treasury, an amount of lawful money of the United States equal to "bank's outstanding circulating notes. Section 18: Banks to make quarterly reports to the commission; commission also authorized to call for special reports. Section 19: Duty
of bank inspector to visit every bank as often as directed by the commission. Section 20: Unlawful for the bank to loan in the aggregate more than 25 per cent of its
capital to the officers and directors, or more than 10 per cent to any one officer or
director. Sectiou 21: Unlawful to loan money on the indorsement of its officers or
directors. Section 22: Penalty for violating sections 6, 20, and 21 a felony, and punished by confinement in the penitentiary not less than one nor more than twenty
years. Section 23: No dividends to be declared until net earnings shall equal 5 per
cent of the capital, which shall bo a surplus, to which shall be added annually thereafter 5 per cent of net earnings; and no dividends to be declared except from the
net earnings after deducting therefrom 5 per cent to be added to the surplus. Section 24: Cashier of said bank to furnish the governor a bond in an amount equal to
the redemption fund held in the vaults of the bank, conditioned on the good and
faithful stewardship of said redemption fund, said bond to be made payable to the
State treasurer and deposited with him. Act of 1894, chapter 90, section 1: All
banks incorporated under the laws of Georgia are authorized to issue circulating notes
under such terms and conditions as may hereafter be prescribed by the Congress of
the United States. Sectionr 2: That in the event of an act of Congress requiring
that a deposit be made w ith some designated officer of the State as a condition
precedent to a bank issuing circulating notes, the treasurer of the State is hereby
designated as the officer with whom said deposit should be made, and he is hereby
authorized to receipt for and assume safe-keeping of the same. Chapter 81, section
1: Banks required to make statement, under oath, at least four times each year to
State bank examiner, and to publish the same at expense of bank, said statements
to be made when requested by State bank examiner, to be transmitted within ten
days. Penalty for no°iect or failure to comply, line of $50 for each violation.
IDAHO.
[S. 11. Flynn, national-bank examiner.]
1. Idaho has no State banking law. Incorporated banking associations are governed by the general corporation laws. There is no restriction as to classes or kinds
of banks, except that a special partnership can not be formed for the purpose of
entering the banking business. Banking business is done by private parties without incorporation and without capital.
2. No requirements in case of unincorporated concerns. Five or more persons, of
whom a majority shall be bona fide residents of the State, can form any private corporation. Articles of incorporation must be prepared, setting forth (1) name of corporation; (2) purpose for which it is formed; (3) place where its principal business
is to be transacted; (4) term for which it is to exist, not exceeding fifty years; (5)
the names of its directors and trustees and the names and residences of those who
are appointed for the first year; (6) the amount of capital stock and the number of
shares into which it is divided; (7) if there is capital stock, the amount actually
subscribed and by whom. The articles of incorporation must be subscribed by five
or more persons, a majority of whom must be resident freeholders of the State, and
acknowledged by each before some o facer authorized to take and certify acknowledgments of conveyances of real property. Before the secretary of state or the
recorder of a county issues a certificate of incorporation, there must be filed in his
office an affidavit of the president, secretary, or treasurer named in the articles that
the amount of the capital stock required by law has been actually subscribed; but the
only corporations required to have a specified amount of capital subscribed are railroad, wagon road, or telegraph corporations.
EEPORT OF THE COMPTROLLER OF THE CURRENCY.
123
3. Recorder of county in which corporation does business, or secretary of state
must issue certificate when requirements are complied with.
4. (A) No requirement except as to railroad, wagon road, or telegraph corporations. (B) Not less than five nor more than eleven directors. (C) Each stockholder
is individually and personally liable for its liabilities to the full amount unpaid upon
the par cr face value of the stock or shares owned by him. The liability of each
stockholder is determined by the amount of stock or shares owned by him at the
time the debt or liability was incurred by the corporation; and such liability is not
released or discharged by any subsequent transfer of stock. Any creditor of the
corporation may institute actions against any of its stockholders jointly or severally,
and in such action the court must determine the amount unpaid upon the stock held
or owned by each defendant, and a several judgment must bo entered against him
for a. sum not exceeding such amount. (D) None required. (E) The governor may
order an inquiry into the affairs or management of any corporation. (F) No restrictions, except that officers and employees of savings banks who knowingly overdraw
their accounts are declared guilty of misdemeanor. (G) No requirement. (H) No
requirement.
5. No provisions, except that any officer, agent, teller, or clerk of any bank, and
every individual banker or agent, teller or clerk of any individual banker, who
receives any deposits, knowing that such bank or banker is insolvent, is guilty of a
misdemeanor. It is customary to allow interest on deposits.
6. Not interested.
7. Nothing in the laiv to prevent.
8. No information furnished the public through any regular channel.
9. No taxes, except such as are imposed on capital stock and credits. Private and
incorporated banking associations have a distinct advantage in the matter of taxation over national banks in this: In estimating assessable property all credits secured
by real or personal property are deducted, or rather not included in such estimates.
10. Upon the dissolution of any corporation, the district court of the county in
which the corporation carries on its business or has its principal place of business,
on application of any creditor of the corporation, or a member or stockholder
thereof, may appoint one or more persons to be receivers or trustees of the corporation, to take charge of the estate and effects thereof, and to collect 1 he debts and
property duo and belonging to the corporation, and to pay the outstanding debts
thereof, and to divide the moneys and other property that shall remain over among
the stockholders or members. The receiver has, under the control of the court,
power to bring and defend actions in his own name as receiver, to take and keep possession of the property, to receive rents and collect debts, or to compound for or
compromise the same, to make transfers, and generally to do such acts respecting
the property as the court may authorize. Funds in the hands of a receiver may be
invested upon interest by order of the court, but no such order can be made exeex>t
upon the consent of all the parties to the action.
11. No corporation shall emit paper money or create or issue bills, notes, or other
evidences of debt, upon loans or otherwise, for circulation as money.
12. No provision of law regarding the organization of savings banks, and there
are none doing business in the State.
ILLINOIS.
[David Gore, auditor of public accounts.]
1. Under the general banking act entiled "An act concerning corporations with
banking powers," approved June 16, 1887, as amended by act approved June 3,1889,
banks may be formed "for the purpose of discount and deposit, buying and selling
exchange, and doing a general banking business, excepting the issuing of bills to
circulate as money, and such banks or banking associations shall have the power to
loan money on personal and real-estate security and to accept and execute trusts."
2. First, application must be made for permit to organize, stating place of business, amount of capital, the name under which they desire to organize, and the duration of the association. When permit is issued they may proceed to take subscriptions
to stock, and when all subscribed for the stockholders meet and determine upon the
number of directors and proceed to elect same. The directors then meet and organize
by the election of officers. The capital stock must be paid in in full in cash, and the
directors make affidavit to that effect, and the auditor of public accounts also verifies
this by an examination into their affairs, and if satisfied that the organization has
been legally effected and the association has on hand in cash the full amount of the
capital and is otherwise equipped for business, the auditor issues his certificate,
authorizing them to commence business. Upon filing with the county recorder of
deeds this certificate and the permit previously issued they may open their doors for
business.
3. The auditor of public accounts.
124
REPORT OF THE COMPTROLLER OF THE CURRENCY.
4. (A) The amount of capital stock is regulated "by tlio population of the place
where "bank is located, as follows: Under 5,000 inhabitants, $25,000 capital; over
5,000 and less than 10,000 inhabitants, $50,000 capital; over 10,000 and less than
50,000 inhabitants, $100,000 capital; over 50,000 inhabitants, $200,000 capital. The
above is the minimum amount of capital allowed by the law. The entire amount of
capital must be paid in in cash before the bank commences business. (B) The
directors elect officers to carry on the business of the bank. (C) A stockholder is
liable for double the amount of his stock for all liabilities accruing while he remains
a stockholder, and no transfer of stock operates as a release from such liability.
(I)) Reports of condition under oath are made at least once in each three months,
and as often as the auditor of public accounts may call for the same. (E) Each bank
is examined at least once in each year, and as often as the auditor of public accounts
may determine, by some competent person appointed by him. (F) The restriction
as to loans is covered by section 10 of the banking act, as follows: "The total
liabilities to any association, of any person or of any company or firm, for money
borrowed, including in the liabilities of a company or firm the liabilities of the
several members thereof, shall at no time exceed one-tenth part of the amount of
capital of such association actually |)aid in. But the discount of bills of exchange
drawn, in good faith, against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not
be considered as money borrowed.77 (G) The law fixes no amount of required
reserve. The department rule has been 15 per cent of deposits subject to notice,
and 20 per cent of other deposits. (H) The law does not require the accumulation
of a surplus.
5. The law contains no provisions governing the receipt of deposits. Banks having a savings department and issuing time certificates of deposit i)ay interest. It is
not the practice to pay interest upon commercial accounts or individual deposits
subject to check.
6. The State is interested to no extent whatever as a shareholder in any bank.
7. The law contains no reference to branch banks; they are neither specifically
permitted nor prohibited. In practice this department rules that they are not permissible.
8. The reports called for by the auditor of public accounts are required to be published in a newspaper published where the bank is located. The auditor also issues
and distributes after each call a tabulated statement showing the condition of each
bank.
9. Banks, of course, pay taxes on their assets. There are no special taxes or burdens imposed, however, except the expense of examination, wrhich is $10 per day for
each day employed, and mileage for necessary travel at the rate of 8 cents per mile;
also a fee of $5 to accompany each report of condition, and the cost of publishing
report.
10. The following are the provisions of section 11 of the banking la w: " Should the
capital stock of any bank organized under this act become impaired the auditor shall
give notice to the president to have the impairment made good by assessment of the
stockholders or a reduction of the capital stock of such bank, if the reduction should
not bring the capital below the provisions of this section; and if the capital stock
of said bank shall remain impaired for thirty days after notice by the auditor, lie
shall have power, and it is hereby made his duty, to enter suit against each stockholder, in the name of the people of the State of Illinois, for the use of said bank, for
his or her pro rata proportion of such impairment, and when collected shall pay over
the amount thereof to said bank, and the judgment in such case shall be for the
amount claimed, with all costs and reasonable attorneys' fees, which fees shall be
fixed by the court; or he may, in his discretion, file a bill in the circuit court of the
county in which said bank is located, in the name of the people of the State of Illinois,
against said bank: and its stockholders for the appointment of a receiver for the winding up of the affairs of said bank. And said court, upon the presentation of said bill,
and upon being made satisfied that the capital of said bank has become impaired, shall
immediately appoint a competent and disinterested person as such receiver, and shall
determine and fix his bonds, and shall prescribe his duties. And said cause shall proceed as other cases in equity.''
11. A bank circulation is not permitted.
12. The general banking law makes no reference to savings banks. We have no
law governing savings banks, as such. A bank formed under the general banking law
may be exclusively a savings bank.
I will add that the information given applies to State banks only. Private banking is fully recognized in this State; indeed, three-fifths of all the banks in the State
are private banks. These have never been brought under supervision of any kind,
and carry on their business without regulations as to capital, publication of reports,
or other requirements common to incorporated banks.
(Incloses copy of banking law.)
REPORT OF THE COMPTROLLER OF THE CURRENCY.
125
[A. C. Daily, State auditor.]
1. There are authorized under the laws of this State, banks of discount and deposit,
savings hanks, and trust companies, although the latter could not properly he termed
hanks. Of course private hanks are not prohibited, although they are under no kind
of supervision, but their business is conducted the same as any other ordinary busi
ness partnership.
2. The State banks, or banks of discount, are required, before beginning business,
to iile articles of incorporation entered into by not less than five j)ersons, and also to
pay in cash one half of the amount of their capital stock, which capital can not he
less than $25,000. Savings banks are required to file certificate under the hands of
the incorporators, who can not be less than seven nor more than twenty-one, and who
must have resided for at least five years next preceding the incorporation in this
State, and who must severally own unincumbered real estate therein, worth at least
$5,000, and must obtain a certificate from the judge of the circuit court in the county
in which the bank is to be established that they are qualified to act under the provisions above stated. Trust companies are required to file articles of incorporation
entered into by not less than ten persons, and before beginning business must obtain
a certificate of the auditor of state that $100,000 of its capital stock has been subscribed and paid in, and is in the custody of his office.
3. I have answered this question practically in answering question 2.
4. State banks of discount can not have a capital of less than $25,000, and one-half
of this amount must be paid in before beginning business, and the other half writhin
six months. Savings banks have no capital. Trust companies are required to pay
in $100,000 of their capital before beginning business, and the remainder can be paid
as ordered by the stockholders or directors. State banks are under the management of a board of directors, which shall not be less than three. Savings banks are
managed by the trustees who incorporate the same. Trust companies are managed
"by a board of directors consisting of not less than six nor more than twelve. All of
these banks have authority to appoint other officers to assist them in the management. State banks are required to make and publish at least five reports to the
auditor of state, at such times as he may call for the same, and to make and publish
an annual statement, the time for which is fixed by the fiscal year of the bank.
Savings banks make an annual report to the auditor of state of their condition on the
1st day of January of each year. Trust companies make an annual report to the
auditor of state on or before the 1st day of April in each year. Shareholders in
"banks of discount and trust companies are liable for double the amount of the
capital stock held by them. All these banks are under the supervision of and subject to examination by, the auditor of state, or by an examiner appointed by him.
There are practically no restrictions in the character of loans by State banks. Savings banks are limited in their investments to stock or bonds or Treasury notes of
the United States; orders or bonds of any county, city, or town in this State issued
pursuant to law; stocks or bonds of any State in the Union that has, for five
years previous to such investment being made, regularly paid the interest on
its legal bonded debt in lawful money of the United States; bonds or notes secured
by mortgages on unincumbered real estate-in Indiana, worth, exclusive of perishable improvements, at least twice the" amount loaned thereon; promissory notes or
bills of exchange before their maturity, payable at some chartered bank in.this
State, and not having to exceed twelve months to run from the date of the loan
or purchase, made or indorsed by two or more responsible freeholders of the State
of Indiana, provided that any such notes or bills shall not exceed the sum of $10,000,
and that no more than $10,000 shall be loaned upon the same security; in real
estate for the purpose of a banking house, or in such that it may be required to purchase under mortgages executed to it. No amount of cash reserve is required to
be held by any of these banks. State banks are required to set apart 10 per cent of
the annual net profits for a surplus fund, until the same shall amount to 25 per cent
of its capital stock. Savings banks are required to set aside not less than one-half
of 1 per cent per annum from its gross profits, until the same amounts to 10 per
cent of its deposits.
5. There are various provisions concerning receipt of deposits in these banks, and
I inclose you a copy of the law under which they operate, as it would require a good
deal of space to- answer this question in full. It has been the custom to allow interest on deposits, but in the last year or two a good many of the State hanks have
ceased doing this.
6. The State has no interest as a shareholder in any of these banks.
7. There is no provision in the law authorizing any of these banks to conduct
"branch offices or banks.
126
REPORT OF THE COMPTROLLER OF THE CURRENCY.
8. All reports of the condition of State banks are published in a paper printed in
the county in which the bank is located. The reports of savings banks and trust
companies are not required to be printed, but it is the custom of these banks to do so.
9. There are no special taxes or burdens imposed upon any of these banks for
banking privileges granted them. They are subject to taxation the same as an
individual or other corporation.
10. Insolvent banks are closed up as a rule by receiver appointed by the court
having jurisdiction over them. By recent amendment of the State bank law, the
auditor of State is authorized to take charge of a failing bank pending the appointment of a receiver, and it is made the duty of the president or cashier of said bank
to imnediately notify him of the failure or suspension. He is also authorized by
same amendment) to take charge of any bank found upon examination to be in an
insolvent or failing condition, and to make application to the proper court for a
receiver for the same.
11. There are no provisions in the banking law for the issuing of bank circulation.
12. In answer to this question a co}>y of the law is inclosed.
IOWA.
[C. G. McCarthy, auditor of state.]
1. State and savings banks are the only class of banks under State supervision in
Iowa. Private banks are authorized to do business; but are not subject to State
supervision or regulation.
2. State banks must adopt articles of incorporation, file and record the same in the
offices of the county recorder and secretary of state, publish notice of such incorporation for four consecutive weeks in some newspaper published in the county where
the business is done, and furnish the auditor of state with a schedule, duly sworn
to. of its capital stock, setting forth that the same has been fully paid up. Savings
banks must pursue substantially the same method in organizing as State banks do,
with this difference, that in the organization of State banks one or more persons
may constitute the corporation, while in that of savings banks any number of persons not les? than five may organize the corporation. The directors of a savings
bank must also take an oath as to the discharge of their duties, a copy of which
must be filed in the office of the auditor of state.
3. The auditor of state is charged with the supervision of the State and savings
banks and must bo fully satisfied that the requirements of law have been complied
with before they are authorized to commence business.
4. First, State banks. (A) State banks may be organized with not less than a
capital of $50,000, except in cities and towns having a population not exceeding 3,000,
when such associations may be organized with a paid-up capital of not less than
$25,000. (B) The State banks are managed by a board of directors elected by the
stockholders, which board selects the officers of the bank. (C) Stockholders or shareholders in all banking associations are individually and severally liable to the creditors
of such association over and above the amount of stock by them held therein to an
amount equal to their respective shares so held for all its liabilities accruing while
they remain such stockholders. (D) State banks are required to make reports of their
condition, under oath, to the auditor of state, whenever that officer may call upon
them to do so, but not oftener than four times a year, which reports must also be published in some newspaper published in the county, for one week. (E) State banks
are subject to examinations by bank examiners appointed by the auditor of state,
which examination takes place whenever, in the opinion of the auditor, it is necessary.
Usually this examination is made once a year, unless there are reasons why it should
bo made oftener. (F) State banks are prohibited from loaning to a director or trustee
except upon such securities as are required of other borrowers, and, furthermore, all
loans made to directors or trustees must be passed upon by the board of directors of
the bank in the absence of the person making application therefor. The total liabilities to any State bank of any person, or of any company, corporation, orfirm,for money
borrowed, including the liabilities of a company orfirm,the liabilities of the several
members thereof, shall at no time exceed 20 per cent of the capital stock. (G) The
law fixes no specific amount of cash reserve to be held by the State banks, although
the auditor of state insists upon the reserve of at least 15 per cent of the deposits.
(H) There is no legal provision regarding the accumulation of a surplus fund. Savings
banks. (A) Savings banks may organize with a paid-up capital of not less than $10,000,
in cities and towns of 10,000 inhabitants or under, and a xiaid-up capital stock of not
less than $50,000 in cities of over 10,000. (B) The business of savings banks is managed by a board of directors or trustees of not less than five nor more than nine members, all of whom must be shareholders and citizens of the State of Iowa. (C) The
liability of shareholders in savings banks for claims against the bank is the same as
that of shareholders in State banksnoted above. (D) Savings banks are required to
REPORT OF THE COMPTROLLER OF THE CURRENCY.
127
make the same reports of condition as State banks. (E) Savings banks are subject
to examination and supervision the same as State banks. (F) Savings banks are
restricted in their loans to the same extent as State banks. Savings banks are further
prohibited from borrov/ing money for any purpose whatever except for the payment
of depositors and the necessary running expenses of the bank. (G) No amount of
cash reserve required, nor is there any legal requirement as to the accumulation of
surplus.
5. State banks have a general common law power of receiving deposits and discounting commercial paper without any particular restrictions or limitations as to
the amount. Savings banks may receive deposits amounting to ten times their capital
stock, under such regulations as the board of directors or trustees shall from time
to time prescribe. As a general rule both State and savings banks allow interest on
time deposits.
6. The State is not interested to any extent as a shareholder in any of the banks
doing business therein.
7. State and savings banks are not permitted by law to conduct branch offices or
banks.
8. State and savings banks are required to publish their quarterly reports made to
this office in some paper published in the county where they do business. In addition
thereto the auditor of state is required to publish a report every year setting forth
the condition of the State and savings banks under his supervision.
9. The capital invested in State and savings banks is subject to the same rates of
taxation for State, county, and municipal purposes as other property. In addition
thereto the banks are required to pay the examiner's fees whenever an examination
is made.
10. Whenever the auditor of state is satisfied, from an examination, or reports,
that a banking institution under his supervision is insolvent, it becomes his duty to
direct the attorney-general to commence the proper proceedings to have a receiver
appointed and the affairs of said institution wound up and the assets thereof ratably
distributed among the creditors thereof, giving preference to the depositors.
11. State and savings banks are prohibited by the laws of this State from issuing
any bills to circulate as money.
12. I can best answer your question by forwarding to your address, under another
cover, a copy of the laws of this State relating to the organization and management
of savings bank. On pages 13 to 24, inclusive, you will find full answers to this
question.
[Charles M. Sawyer, national-bank examiner.]
1. Private and incorporated banks.
2. A State bank may be incorporated by five or more persons. Its existence dates
from the filing of its charter. No business shall be transacted except that incidental
to the organization until it has been examined by the proper officer and a certificate
has been issued by him authorizing it to transact a banking business. Private banks
must also be examined by the same officer and authorized to do business in the same
way before they can commence the business of banking.
3= Bank commissioner.
4. (A) The capital stock can not be less than $5,000, one-half of which must be
paid before the bank is authorized to do business; 10 per cent of the balance must
be paid each month until the full amount is paid in. (B) The management of the
bank is vested in a board of directors of not less than five or more than thirteen
members. (C) Stockholders are liable for an amount equal to the amount of the
stock owned in addition thereto. (D) Reports of condition must be made four times
a year or oftener at the discretion of the commissioner. (E) It must be examined at
least once a year by the commissioner or his deputy. (F) No more than 15 per cent
of the capital and surplus shall be loaned to one person, firm, or corporation. There
is no restriction as to the character of the security to be taken for loans. (G) A
reserve of 20 per cent of the deposits must bo kept on hand, one-half of which may
be on deposit with solvent banks. (H) Ten per cent of the profits of the six months
preceding the dividend period must be carried to the surplus fund until this fund
equals 50 per cent of the eapistal.
5. There are no regular provisions covering the receipts of deposits. It is the
general practice of banks in the State to allow interest on public funds and on individual deposits if left a specified time. The rates vary in different parts of the State.
6. The constitution provides that the State shall not be a shareholder in any banking institution.
7. There are no provisions in the law in regard to banks conducting branch offices.
8. Information in regard to the condition of banks is furnished only by way of
published statements at least four times a year.
128
REPORT OE THE COMPTROLLER OF THE CURRENCY
9. No taxes are imposed upon banks by the State in return for the banking privileges except the expense of examinations.
10. Where the bank commissioner finds that a bank is insolvent he immediately
notifies the attorney-general, who applies to the proper court for a receiver, and the
bank is then without the jurisdiction of the banking department.
11. The constitution provides that all banking laws shall require as collateral
security for the redemption of circulating notes a deposit with the auditor of state
of the interest-paying^bonds of the several States or the United States at the market
prices of the New York Stock Exchange, in amount equal to the amount of circulating notes which the bank is authorized to issue and shall keep on hand in the vault
at all times in cash 10 per cent of the total amount of circulating notes.
12. Savings banks are operated in the same way as other State banks.
KENTUCKY.
[John W. Headley, secretary of state.1
6. The State is interested to the extent of $28,420 in the stock of the Bank of Louisville, located in Louisville.
7. The Northern Bank of Kentucky; Lexington, has branches in Paris and Covington; the Farmers7 Bank of Kentucky, Frankfort, has branches in Georgetown and
Henderson; the Bank of Kentucky, Louisville, has a branch in Frankfort; the O wensboro Banking Company, Owensboro, has a branch at West Louisville; Wilson &
Muir, Bardstown, have a branch at Bloomfield. I know of no restriction as to the
number of branches a bank may have.
8. State-chartered banks make quarterly reports to the secretary of state of their
condition. Each alternate report is published by the banks in the newspapers.
Private banks make semiannual reports, which are published. The reports are kept
as public records in the office of the secretary of state, and are open to public inspection at any time. The secretary of state publishes no report.
9. Under the present constitution banks are taxed as any other property, an allowance being made for franchise. Under the old law they wrere taxed 75 cents on the$100
on the face of their capital stock. They claim that under this law they had a contract
with the State, and refuse to pay in accordance with the iirst law mentioned. They
have been sustained by a recent decision of the court of appeals, but a motion for a
new trial has been entered.
11. No banks are allowed t© issue circulation in the State except of course national
banks, but some of the old State banks still have some notes out that have not been
redeemed.
12. No laws especially relating to savings banks.
(Copy of corporation law inclosed.)
[James S. Escott, national-bank examiner.]
I. Banks of deposit and discount, savings banks, and trust companies.
r 2. A charter from the legislature granted to reputable persons and a sworn statement to the secretary of state as to payment of capital stock.
3. The secretary of state.
4. (A) Regulated by charter. (B) Devolves upon board of directors. (C) Are
only liable to extent of holdings of stock. Double-liability laws go into effect September, 1897. (D) Five sworn statements' are made annually to secretary of state
upon call from that official. (E) There are no examinations and no supervision by
State officials. (F) Loans to any one individual or interest are restricted to 20 per
cent of capital stock paid in. (G) Amount of cash reserve not fixed. (H) Accumulation of surplus required but not rigidly enforced.
5. No legal provisions govern the receipt of deposits. It is almost a universal
custom to allow interest on time deposits and very often on open account. Rate
varies from 2£ to 6 per cent.
6. The State is not interested as shareholder in any bank.
7. By special provision of charter banks are permitted to conduct branch banks.
There are three such institutions at present.
8. The statements called for by the secretary of state are similar in general form
to that called for by the Comptroller of the Currency, and are published in the local
newspapers.
9. A tax of 75 cents per $100 on capital and surplus is levied on all banking institutions, both national and State. This tax goes into the State treasury. There are
no city or county taxes.
10. Insolvent banks are wound up by the assignee without special legal provisions.
II. There is no special provision referring to the issue of bank circulation.
12. There are no special points in the law relating to savings banks.
(Copy of laws inclosed.)
REPORT OF THE COMPTROLLER OF THE CURRENCY.
129
[Edward I. Johnson, national-bank examiner.]
1. In Louisiana there is no limit to the kinds or classes of banks permitted by law
to do business. Under the law of this State any person, or association of persons,
or corporation formed in compliance with the provisions given in answer 2 maytransact the business of banking in this State, and establish offices of discount,
deposit, and circulation for that purpose.
2. So far as any individual is concerned, the law allows him to carry on the business of banking as in the case of corporations. Corporations established to carry
on the business of banking have power to discount bills, notes, and other evidences
of debt; to receive deposits; to buy and sell gold and silver bullion, foreign coin, and
bills of exchange; to lend money on real and personal security, and to exercise all
incidental powers necessary to carry on the business. Since 1879 the constitution
of this State forbids the legislature from passing any local or special law creating corporations or amending, renewing, extending, or explaining the charter
thereof; and, in consequence, all banking corporations now must be chartered under
the general laws of the State. This is done by written articles of association executed by notarial act. There must not be less than six persons organizing the corporation. The existence of any banking corporation is limited to ninety-nine years.
The act of incorporation must be recorded in the office of the recorder of mortgages
or other officer exercising the functions of recording of mortgages at the place named
in the act as the place of business or domicile of the corporation. A certified copy
of the act must be deposited in the office of the auditor of public accounts. It must
be published once a week for four weeks in the official journal of the State and afc
least one daily newspaper of the city of New Orleans, and also in a newspaper at
ihe place named in the act as the place of business, if there be one published there.
This act of incorporation should contain, under the signatures of the subscribers and
associates, (1) the name of the bank; (2) the place where the banking business is to
be carried on; (3) the amount of capital stock and number of shares into which it
is divided; (4) the names and places of residence of shareholders; the number of
shares held by each, respectively; the time when and the manner in which payments
on stock subscribed shall be made; (5) the period at which the association shall
commence and the period of its duration; (6) the number of its directors and its
managers and mode of their election, and (7) mode of liquidation at end of term.
3. In Louisiana banking corporations can begin and carry on their business without
the approval of any officer. There is no officer to determine when they have complied with the legal provisions.
4. (A) The aggregate amount of the capital stock of the banker or banking corporation shall not be less than $100,000. AH stock subscribed must be paid up in full
in specie within twelve months after the company shall commence business.
(B) The corporation is managed by its directors and managers prescribed by its
charter. These must all be citizens of Louisiana. (C) No shareholder is liable for
the bank's debts to a greater amount than the whole of his shares. Unincorporated
bankers are liable to the full amount of their obligations and contracts. (D) The
only legal provision for any character of report of condition to be made by banks is
that given in answer to question 8. (E) There is no examination or supervision by
any State official. (F) No loans of any banking company shall be made to any of
its stockholders on a pledge of its own stock. There are no other restrictions on
loans by the bank save such as prevent the managers, under the penalty of criminal
or civil personal responsibility, from making loans when the bank is in insolvent
condition. (G) Every banker or banking company is required to have on hand at
all times in specie an amount equal to one-third of all their other cash liabilities;
and for the other two-thirds of said liabilities an equal amount in specie, specie
funds, bills of exchange, or discounted paper maturing within ninety days and not
renewable. (H) No surplus is required to be accumulated.
5. There is nothing peculiar to the law of Louisiana governing the receipt of
deposits by banks of this State. Banks in insolvent conditions are forbidden to
receive deposits. Except savings banks, banks do not generally allow any interest
on deposits. Savings banks allow after four months 3 per cent interest.
6. There is no law forbidding banks from conducting branch offices.
7. Since 1879 the State is prohibited from subscribing to or purchasing the capital
stock of any corporation or association whatever.
8. Banks are required to make quarterly statements of their condition under oath
and publish the same in one or more of the daily journals of the city of New Orleans,
and banks in any incorporated town or city in the State must publish such a statement in any daily paper published in the town or city in which the bank is situated,
and if there is no daily paper in such place in a weekly paper.
CUR? PT 1
9
130
REPORT OF THE COMPTROLLER OF THE CURRENCY.
9. Banks liavo to pay a license tax to curry on the business in this State, as any
other corporation, any trading firm, or "business man. This license is based on the
declared or nominal capital and surplus, whether the surplus is owned or in use or on
deposit in tho State or elsewhere.
10. Banking incorporations, on proof of insolvency, are wound up "by commissioners
appointed by tho district court where the corporation is situated, at the instance of
any creditor or of tho auditor of public accounts, and the duties of such liquidating
commissioners are to convert into cash as speedily as possible, under the court's
direction, the assets of the corporation, including the sum that may have remained
unpaid by the stockholders upon their respective shares of the capital stock, and to
distribute tho funds as provided by law in the case of the insolvencies of individuals.
11. There are numbers of provisions for bank circulation, but the Federal Government has virtually taxed such circulation out of existence.
12. Savings, safe-deposit, and trust banks, without power to issue bank notes,
may bo organized under the banking laws of the State. Tho capital must be not
less than $50,000, of which $10,000 must be paid up before the business is begun.
[I-1. E. Timberlako, State bank examiner.]
1. Savings banks and trust companies.
2. Savings banks maybe organized under the general l a w trust companies are
chartered by the State legislature.
3. The bank examiner.
4. (A) Savings banks have no capital stock. The only funds of tho bank are the
deposits and their accumulations. Trust companies: The amount of capital stock
is fixed by their charters. (B) Savings banks are managed by a board of trustees
elected by corporators annually, and a president and treasurer elected by that board,
and trust companies by a board of directors elected annually by stockholders the
same as in national banks. (C) Savings hanks have no stockholders as already
stated. Trust companies: Liability of the stockholders the same a3 in national
banks. (D) Savings banks: The trustees and treasurer each make at least one
report to the bank examiner in each year, and each in addition reporting as often as
required so to do by the bank. Examiner: Trust companies are under the supervision of the bank examiner, and arc required by law to report condition of bank to
him as often as ho may direct, and by custom are required to make such report twice
in each year. (E) The law provides that both classes of banks shall be examined at
leant once in each year by the bank examiner. (F) Savings banks arc restricted in
their loans and investments as shown by copy of statute hereto attached. Trust
companies are not restricted by law in making loans and investments, but can invest
in ail kinds of stocks and securities and loan money upon notes, collateral, or mortgages of real estate. (G) Savings banks arc- not required to keep a cash reserve.
Trust companies are required by law to keep a cash reserve equal to 15 per cent of
tho aggregate amount of all deposits which are subject to withdrawal upon demand
or within ten clays. (H) Savings banks are required semiannually, before declaring
a dividend, to carry one-fourth of 1 per cent of tho average deposits for the preceding six months to a surplus account to bo held as a guarantee for the protection of
depositors. Trust companies are not required by lawto accumulate a surplus.
5. Savings banks are not allowed to receive over $2,000 from any one person, excepting from widows, orphans, administrators, executors, guardians, charitable institutions, and trusts funds, and pay such dividends, not exceeding 5 per cent per annum,
as tho profits will allow. Trust companies are not restricted in any way as to what
deposits they shall or may receive, such contracts for the payment of interest as they
please, but usually pay from 2 to 4 per cent per annum on time deposits.
(5. Tho State has no direct pecuniary interest in any of these institutions.
7. Savings banks are not permitted to conduct branch offices or banks. A part of
tho trust companies arc authorized by their charters to conduct branch offices or
banks, and two of them have such branches established that do a small amount
of business, making report of the same daily to the borne office.
8. Tho law provides that all examinations by the bank examiner shall be published
in some newspaper printed in tho locality of the bank, and all returns and examinations are, at tho close of the year, incorporated into a report to the governor and
council, and that report is printed and distributed through the State.
9. Savings banks pay a tax direct to the State of about three-fourths of 1 per
cent upon the average amount of their deposits, surplus, and undivided profits for
the year. This tax is by law so regulated that it gives a discrimination in favor of
such portion of their funds as may be invested within the State of Maine. Trust
companies pay no tax, except upon such real estate or other corporeal property as it
REPORT OF THE COMPTROLLER OF THE CURRENCY.
131
t
may own. Tlio stockholders are liable to municipal taxation, the same as stockholders in national banks.
10. When the hank examiner is of the opinion that a savings hank is insolvent, or
that further proceedings by the bank will be hazardous to the public, he may apply
to the supreme court of the State for an injunction restraining it from doing further
business, and after hearing in court a receiver may be appointed to close up its affairs,
or the court may, on application of the trustees of the bank, reduce the deposit
account of each depositor to an amount necessary to make the bank solvent. Trust
companies, if insolvent, on application to the courts, a; receiver may be appointed to
settle the affairs of the bank.
11. No State bank has authority to issue 'bank circulation.
12. A savings bank in this State has no stockholders to share in the profits and
losses of the institution. The officers receive a iixed salary for services performed.
The corporators forming the corporation are usually taken from among the leading
business men of the section where the bank is located, and they contribute their
services to maintain the bank to furnish a safe and convenient placo for the laboring
people to deposit and invest their savings.
(Copy of State banking law transmitted,)
MARYLAND.
[Frank Brown, governor.]
1. Savings banks. Associations for carrying on the business of banking.
2. In the case of savings banks the only requirement is to have not less than five
incorporators, and apply to the clerk of the court for a charter, mentioning the
names of those who will serve as directors for the first year.
In the case of regular commercial banks the law states that the capital stock of
said corporation, when located in the city of Baltimore, shall consist of not less than
$300,000, divided into shares of $100 each, and when $300,000 of said
capital stock
shall have been fully paid in the "lawful money of the United States/*7 and so certified
by a majority of the said commissioners or directors to the treasury and comptroller
of the State, and a certificate of their organization be transmitted to the clerk of
the court of appeals, to be by him recorded among the records of his office. When
the corporation is located other than in the city of Baltimore, the capital stock may
bo not less than $50,000.
3. No special officer only as indicated above.
4. (A) As specified above for commercial banks. Savings banks have no capital
stock. (B) And be it enacted, that tho affairs of the several singular corporations
herein provided for shall be managed by a president and directors in each of said
corporations, and the number of directors in any of the said corporations shall not be
greater than seven, nor less than live, and the number of directors in any of said corporations may be changed by tho stockholders from time to time, within the limits
as to number aforesaid; and no person shall be a director in any of the said corporations who is not a stockholder thereof and who is not also a citizen of tho State of
Maryland. (C) And be it enacted that the continuance of the said several corporations shall be on the condition that the stockholders and directors of each of said
colorations shall be liable to the amount of their respective share or shares of stock
in such corporation, for all its debts and liabilities upon note, bill, or otherwise; and
upon this further condition that this act, and every part of it, may bo altered from
time to time, or repealed by the legislature. (D) The treasurer of this State shall
bo furnished with statements of the amount of the capital stock of the corporation,
and of the debts duo to and from tho same, specifying those due to and from other
banks, of the moneys deposited therein, of the notes in circulation, of the cash on
hand, specifying the amount of coin, and of the notes of other banks, of the value of
the real estate held by tho corporation, and of tho amount and value of public or
other stocks owned by the corporation; said statement to bo furnished twice in each
year, and to show the condition of tho corporation in the said particulars as they
may appear at the close of the business transactions of the day in settlement thereof,
on the first Monday of January and the first Monday of July; raid each of the said
corporations shall publish said statement so made to the treasurer in at least one of
the daily newspapers published in the city of Baltimore, if the corporation be located
in said city, or in a newspaper published in the county in which the corporation may
be located, if not located in said city, said statements in all cases to be verified by
the oath or affirmation of the president or cashier of the corporation. (E) No provision made. (F) That the corporation shall not deal or trade in anything except bills
of exchange, promissory notes, and bullion; or in tho produce of their lands, or of
such goods and effects as shall have been bona fide pledged or mortgaged to it by
way of security, or conveyed to it in satisfaction of debts contracted in tho course of
132
REPORT OF THE COMPTROLLER OF THE CURRENCY.
its dealings, or purchased at gales upon judgments which shall have been obtained
for such debts; Provided, however, that nothing herein contained shall be construed
to prevent the said corporation from making temporary investments of its funds in
purchase of the public debt of the United States, or any one of the United States,
or of the city of Baltimore, or of the county or other city in which said corporation
may be located, as the president and directors for the time being may deem safe and
beneficial. No loan shall be made by the said corporation for the use on account of
this State, or the United States, to an amount exceeding $50,000, or to any other state
of this Union, or to any foreign prince or State, to any amount whatever, without the
previous consent of the legislature. (G) No provision made. (II) No provision
made.
5. There are no legal provisions governing receipt of deposits. It is not generally
the custom to allow interest on deposits, though a great many of the banks allow
interest from 2 to 3 per cent for bank balances, and some of them about 2-J and 3 per
cent in special cases. It largely depends upon the character of the business the bank
wishes to do, though it is not thought that any of the four State banks in Baltimore
City ever allow any interest.
6. The State is not interested as a shareholder in any of the banks.
7. No provision is made for the banks to have any branch offices, nor is there any
prohibition of it.
8. By the publication of a statement of the condition of the banks twice each year
as is mentioned in answer 4 (D).
9. No special taxes are put upon the banks.
10. And be it enacted, that if the said corporation shall at any time suspend its
payments the assets which said corporation may hold or be in anywise entitled to at
the time of such suspension of payment shall beratably distributed to and among all
the persons who shall be its creditors at such time and to their assigns respectively.
11. The issues or notes, usually denominated bank notes, which it shall be lawful
for the corporation to issue, shall not afc any time exceed the amount of its capital
stock actually paid in, and no note shall be issued of a less amount or denomination
than $5, nor of any amount intermediate between $5 and $10; and the general assembly may at any time restrict the issue of such notes, both in the amount which may
be issued and in the denominations of the notes. That all bills or notes which
may be issued by order of the said corporation, signed by the president and countersigned by the principal cashier or treasurer thereof, promising the payment of
money to any person or persons, his, her, or their orders, or bearer, though not under
the seal of the corporation, shall be binding and obligatory upon the same, in the
like manner and with the like force and effect as upon any private person or persons,
if issued by him or them in his, her, or their private or natural capacity or capacities; and shall be assignable and negotiable in like manner as if they were so issued
by such private person or persons, that is to say, those which shall be payable to
any person or persons, his, her, or their order, shall be assignable by indorsement in
like manner and with the like effect as foreign bills of exchange now are, and those
which are payable to bearer shall be negotiable or assignable by delivery only.
And be it enacted that if at any time any of the said corporatious shall neglect or
refuse to pay in gold and silver, or lawful money of the United States, any of its
notes, bills, obligations, or money received on deposit, in violation of the contract,
promise, or undertaking of said corporation, the person or persons entitled to demand
and receive such payment shall respectively receive and recover interest on said
bills, notes, obligations, and deposits, until the same shall be fully paid and satisfied, at the rate of 6 per cent per annum from the time of such demand. And be it
enacted that if the said corporation shall neglect or refuse to pay as aforesaid any
of its notes, bills, obligations, or money received on deposit the holder of such
note, bill, or obligation, or the person or persons entitled to demand and receive
such money, shall be respectively entitled only to demand and receive as creditor or
as debtor, to claim and set off such part of the sum of its assets as shall be actually
distributable and payable to such creditor or debtor at the time when such claim or
demand may be made.
[Board of commissioners of savings banks.]
1. Savings banks, cooperative banks (known elsewhere as building and loan associations), and trust companies. The provisions of chapter 118, Public Statutes,
permit the formation of banks of deposit and discount, with right to issue circulating
notes, but there are no such institutions now in existence in the Commonwealth.
2. Savings banks and trust companies are required to obtain an act of incorporation
from the general court. Cooperative banks can, by and with the consent of this
board, be organized under the provisions of a general law, (Chapter 117 of the Public
Statutes.)
-REPORT OF THE COMPTROLLER OF THE CURRENCY.
133
3. See answer to No. 4.
4. The legal provisions governing each class of "banks is given in full in the copies
of statutes sent herewith, viz, (A) relating to savings banks, (B) relating to cooperative banks, (C) relating to trust companies.
5. The legal provisions governing the receipt of deposits is shown in the copies of
statutes referred to, as is also the interest to be allowed in the savings banks. The
trust companies usually allow interest on deposits upon such terms as maybe agreed
upon. In some cases interest is allowed on all daily balances; in others only upon
balances of or exceeding certain sums, varying in the different institutions from $200
to $1,000.
6. The Commonwealth is not interested at all as a shareholder in any of the institutions.
7. None of the institutions are permitted to have branch offices.
8. All of the institutions are required to make annual reports to this board showing their condition at the close of business on the last business day of October, and
these reports are published in the annual report of this board made to the general
court in the January following. Copy of our last report is sent you by to-day's
mail. The trust companies also make semiannual reports, which are published in
some newspaper approved by this board, at the time, as are also their annual reports.
9. Savings banks are annually taxed by the Commonwealth one-half of 1 per cent
on the average amount of deposits computed each six months, the amounts invested
in bank stock, in real estate, and in loans on real estate being deducted. The capital stock of the trust companies is taxed by the Commonwealth upon its market
value at the same rate as other corporations, the amounts invested in bank stock and
real estate being deducted from the market value of the stock, the property deducted
in each case being subject to local taxation at its fair cash value. Cooperative banks
are not taxed.
10. See provisions of sections 6, 7, and 51 of the statutes regulating savings banks
(Exhibit A).
11. See Public Statutes, chapter 118, sections 60-79; but, as previously stated, there
are not any State banks in existence in this Commonwealth.
12. See Exhibit A.
(Incloses (A) statutes relating to savings banks and institutions for savings;
(B) statutes relating to cooperative banks and to foreign corporations; (C) statutes
relating to safe deposit, loan, and trust companies.)
[J. Gatchell, national-bank examiner.]
1. Banks permitted by law are State banks, savings banks, trust companies, and
cooperative banks.
2. State banks, savings banks, and trust companies are chartered by the legislature, and cooperative banks by approval of commissioners of savings banks. Each
class comes under the provisions of a general law; State banks and trust companies
are required to have capital stock paid in full; savings banks and cooperative banks
commence when a legal organization of the trustees named has been accomplished.
3. The board of commissioners of savings banks.
4. No State bank has been organized since the passage of the national-bank act,
and none are now doing business. The present law is practically inoperative, and
unsuccessful efforts have been made to legislate on revision. Savings banks: (A)
No capital stock. (B) Management intrusted to persons named in act of incorporation, who elect their successors. (C) No liability. (D) Report annually to commissioners of savings banks. (E) Examined at least annually by commissioners of
savings banks. (F) Investments allowed; no limit on United States bonds, bonds
of New England States, New York, Illinois, Pennsylvania, Ohio, Indiana, Iowa,
Wisconsin, Michigan, District of Columbia; bonds or notes of any county, city or
town in Massachusetts; bonds or notes of incorporated districts in Massachusetts
whose net indebtedness does not exceed 5 per cent of valuation; bonds or notes of
any city of the State of Maine, New Hampshire, Vermont, Rhode Island, or Connecticut, whose indebtedness does not exceed 5 per cent of last valuation; bonds or
notes of any county or town of the States of Maine, New Hampshire, Vermont,
Rhode Island, or Connecticut whose net indebtedness does not exceed 3 per cent;
bonds of cities in New York, Ohio, Illinois, Pennsylvania, Indiana, Michigan, Iowa,
and Wisconsin, of more than 30,000 inhabitants, debt not exceeding 5 per cent of
valuation. First-mortgage bonds of any railroad incorporated in New England
States, operating its own road and paying dividends two years preceding; bonds of
roads in this State unencumbered by mortgage, paying dividend two years preceding,
and special authority for bonds of the Old Colony, Fitchburg, Boston and Lowell,
Concord and Montreal, Maine Central, Boston and Maine, and New York and New
England railroads. Not exceeding 35 per cent of dej>osits may be invested in stocks
of banks of this State and national banks of the New England States; 5 per cent of
134
REPOUT OF THE COMPTROLLER OF THE CURRENCY.
deposits, but not exceeding $200,000 in banking house; real estate acquired by foreclosure to bo held not exceeding live years; loan not exceeding 70 per cent of value
on real estate in this State, not exceeding one-third of deposit in personal notes, with
at least two sureties, all residents of this State; loans to citizens of this State, with
pledge as collateral, any of securities authorized for purchase and stocks of railroads
in the New England States paying dividends not less than 5 per cent, said loans not
exceeding 70 per cent of market value. All loans not named prohibited. (G) No
reserve required. (H) Guaranty fund not less than one-eighth nor more than onefourth of 1 per cent per year until 5 per cent of deposits has accumulated. Trust
companies: (A) Amount fixed by charter, shares $100 each, full payment before commencing business. (B) Directors elected annually by stockholders. (C) Previous
to 1888 the liability was fixed in each charter, and in several instances there is
none. Under general law of 1888 it is 100 per cent of par value. (D) Annual to
commissioners of savings banks. (E) At least once each year by commissioners of
savings banks. (F) Trust departments when established restricted to class of investments, other loans not to exceed one-fifth of capital in corporations since 1888;
previous corporations not uniform. (G) Under law of 1888 15 per cent, two-thirds of
which may bo in national banks; previous corporations not uniform. (H) Optional.
Cooperative banks only loan to shareholders and do not do a commercial business.
5. Savings banks are limited to $1,000 for each depositor; dividends semiannually.
Trust companies: No limit to deposits and nearly all pay interest on daily balances.
Cooperative banks sell shares, receiving monthly payments of $2 each.
6.
7. No branch offices allowed.
8. All make annual reports to the coiumissioners of savings banks and are required
to publish same.
9. Savings banks pay one-fourth of 1 per cent on deposits. Trust companies, same
as assessed on other corporations.
10. Commissioners of savings banks file information in equity court asking injunction, which is granted, and a hearing ordered; if cause is shown a receiver is
appointed by the court who is authorized to liquidate and distribute assets among
creditors or depositors.
11. No institution now doing business in this Stato is acting under a law authorizing circulation.
12. Savings banks are created by special charter, but are governed by a general
law which carefully restricts loans to a class of securities thought most secure and
free from speculative influences. The amount of deposits is restricted to not exceeding $1,000, with permission to accumulate to $1,600 by dividends. Dividends are
restricted to 5 per cent x>er annum with requirement of an extra dividend once in
five years, if a surplus is accumulated. The corporators are named in the original
charter and elect their successors, and they elect from their number a board of
trustees, but the law holds them rigidly to the discharge of their duties and provides that absence from two successive quarterly meetings shall cause a vacancy.
MICXIIG-AK".
[George T». Cakhvell, national-bank examiner.]
1. Two kinds of banks are provided for under the State law in Michigan—commercial
and savings. Either may be operated, having a separate capital, or both may be
operated upon one capital. The latter method prevails.
2. Tho legal requirements are that 50 per cent of the subscribed capital must be
paid in and a board of at least five directors elected to get a charter, and that articles of association shall be executed and filed with the secretary of state. The
minimum capital lequired is $15,000 in a town where the population does not exceed
1,500, and $50,000 in a city of 20,000 people.
3. The commissioner of banking determines when these conditions are complied
with.
4. (A) Fifty per cent paid in when organized and 10 per cent each month thereafter
until paid up. (B) At least five directors. (C) Liable for twice their stock. (D)
Reports of condition are made to banking department but four times a year on call
by commissioner, usually at same dates as called by Comptroller of tho Currency.
(E) Examinations yearly by deputy commissioner or clerk of banking department.
(F) Loans arc restricted to 10 per cent of bank's capital, except the surplus is figured
as part of the capital, and upon a vote of two-thirds of all directors 20 per cent of
bank's capital is loanable to one firm or person. (G) Fifteen per cent of commercial
or savings deposits, except in reserve cities or cities of over 100,000 population, where
20 per cent of commercial deposits is required—one-third of 15 per cent, or 5 per cent,
on savings deposits is all that is required in cash. (H) One-tenth of net profits
shall be passed to surplus until surplus equals 20 per cent of capital.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
135
5. Either commercial or savings banks are allowed (and have been encouraged)
by commissioner to pay interest on deposits. There is no legal provision fixing the
rate or compelling payment of interest.
6. The State is in no way a shareholder.
7. Branch, banks are permitted. There are four branches to savings banks in
Detroit—the Dime Savings has two, City Savings Bank one, and Home Savings
Bank one.
8. The four published statements of condition are for information of the public.
9. No fees or taxes are imposed upon banks for a charter. Their stock is considered
as personal property and assessed as such.
10. Ninety days are gi%ven for making good any deficiency of capital found to exist
by the commissioner. If not made good, the commissioner, in concurrence with the
attorney-general, applies to a- circuit judge for the appointment of receivers. Receivers give bonds and are accountable to the judge of the circuit court in the district where the bank is located.
11. No bank circulation provided for.
12. The growth of State banks here is largely due, first, to the small capital aa
compared to that required for national banks for a given population; second, because
of the more liberal advantages for making loans (commercial banks may loan 50 per
cent of their capital upon mortgage security and 20 per cent to one person or firm;
three-fifths of all savings deposits are to be invested either in municipal bonds or
notes, bonds or mortgages upon unencumbered real estate worth at least double the
amount loaned; the remainder of savings deposits shall consist of bank balances
and loans upon negotiable paper approved by directors); third, the dual business of
commercial and savings banks upon one capital.
(T. C. Sherwood, commissioner, Stato banking department, transmitted copy of
banking law and an address on resources, banking law, and finances of Michigan.)
[M. I). Kenyon, public examiner and superintendent of Lanka.]
1. Commercial and savings banks are the kind that are incorporated in this State.
Private banks are common in this State as personal or firm enterprises.
2. Incorporated commercial banks must have three persons as incorporators.
3. The superintendent of banks determines when the conditions have been satisfied as to commercial banks, and the public examiner, who is ex officio superintendent
of banks, and the attorney-general and the State auditor determine when savings
banks may become incorporated.
4. (A) Banks in towns of 1,000 inhabitants or less, must have a capital of $10,000;
in towns of more than 1,000 and not exceeding 1,500 inhabitants, must have a capital
of $15,000; in towns of more than 1,500 and not exceeding 2,000 inhabitants, must
have a capital of $20,000; in towns of more than 2,000 inhabitants, $25,000 capital
is required. The capital must be paid in cash before the banks can be allowed to
commence business. (B) The affairs of the bank are to be managed by a board of
not less than three directors, to bo elected by the shareholders. (C) A shareholder's
liability is an additional amount equal to the amount of his stock. (D) Banks are
required to make not less than four reports during each year to the superintendent
of banks, and are required to publish the same at the place where the oank is located.
(E) Each bank is to bo examined once a year under the supervision of the superintendent of banks. The superintendent has power to take possession of the assets
of the bank in cases where there is an insolvency or where its capital stock has
become impaired and has not been restored. (F) Loans are restricted to 15 per cent
of capital stock and surplus to ordinary customers, and to 10 per cent of same to
directors and officers, except in certain cases where there is collateral security of
warehouse receipts covering agricultural products in store, on which products there
is no limit to loans. (G) There must bo a cash reserve of 10 per cent of the immediate liabilities and an additional reserve in banks of 10 per cent, making a total
reserve of 20 per cent. (II) One-tenth of the net profits of the bank for each dividend period is to bo carried to the surplus fund until such surplus fund amounts to
20 per cent of its capital stock, and that amount of surplus must bo maintained.
5. Deposits may not be received by insolvent banks; otherwise there are no laws
governing deposits. It is the custom of banks generally to allow interest on time
deposits.
6. The State is not a shareholder in any class of banks.
7. Banks are not authorized to conduct branch offices.
8. Commercial banks are required to publish each report made to the department.
Savings banks have to report to the department, and such reports are published
biennially in the department reports.
9. Commercial banks are taxed upon their capital stock and surplus in the locality
where they are situated. Savings banks are taxed practically upon what might be
surplus accumulation, and furniture and fixtures, office buildings, and real estate.
Digitized fora FRASER
136
REPORT OF TPIE COMPTROLLER OF THE CURRENCY.
10. Herewith are transmitted copy of the printed sections of the law in regard to
commercial banks. Savings hanks are closed under the general insolvency act.
11. The old banking law provided for pledge of public stocks for the protection of
bank circulation. As that law has become obsolete, if not repealed (of which there
may bo some doubt), it is hardly necessary to give the full details.
12. Savings banks: Seven persons may unite to form a savings bank. Such bank
has (1) perpetual succession; (2) may sue and be sued, etc.; (3) make and use a seal;
(4) appoint officers, etc.; (5) make by-laws; (6) contract and be contracted with;
(7) receive money on deposit and invest same; (8) exercise corporate powers necessary to carry out the objects of the corporation. Each incorporator becomes a
trustee of the bank, and must give a bond of $5,000 conditioned for the faithful discharge of his duties as trustee. Deposits in savings banks may be invested (1) in stocks
or securities of the United States; (2) in the stocks or bonds of any State in the
Union; (3) in the stocks or bonds of any city, county, town, village, or school district
in the States of Minnesota, Wisconsin, North or South Dakota, or in any warrants
issued by the State, or any city, county, town, village, or school district in which
such bank is situated, or in any town, city, county, or school district in the United
States which has at least 10,000 inhabitants, such bonds to be limited to 10 per cent
of the assessed valuation of such city, county, town, village, or school district;
(4) in notes secured by mortgages on real estate, worth at least twice the amount of
the loan, but not to exceed 70 per cent of the capital of the bank, and in case the
loan is on unimproved or unproductive real estate, the amount loaned thereon shall
not exceed 30 per cent of the actual value; (5) an amount not to exceed one-fourth
part of the deposits may be loaned, on personal securities with at least two sureties
not to exceed $5,000, to any one person.
MISSISSIPPI.
[\V. W. Stone, auditor of public accounts.]
There is no banking law in this State and no supervision by the State. The
auditor makes calls for statements not less than four times each year. They begin
business as any individual or company, are closed up in a similar manner, pay ad
valorem tax on capital, surplus, and all undivided profits. Several have branches.
[W. II. S. Burgwyn, national-bank examiner^]
Code of 1892, section 246: Banks shall make balanced statements to auditor of
public accounts at least four times each year and shall publish the same. Section
247: Auditor shall, at least four times each year, make requisition for such statement. Section 248: Penalty for bank's refusal or neglect, without excuse, to return
such statement: auditor shall cause suit for forfeiture at once, and shall also, after
ten days, publish the fact of the failure to make the statement. Section 3750:
Banks to be assessed in the county in which its principal place of business is situated
or where the business is carried on. Section 851: Banks of deposit not to loan to
any one person or firm more than one-fifth its capital. Section 1088: "If the president, manager, cashier, clerk, * * * or other employ6 or agent of a bank
* * * shall receive any deposit knowing or having good reason to believe the
establishment to be insolvent, without informing the depositor of such condition,
on conviction he shall be imprisoned in the penitentiary not longer than five years,"
MISSOURI.
[A. A. Lesucur, secretary of state.]
1. State incorporated banks, State private banks, State incorporated trust companies.
2. State incorporated banks must file articles of agreement with the secretary of
state containing (1) the corporate name of the proposed corporation, which shall not
be the name of any corporation heretofore incorporated in this State for similar purposes, or an imitation of such name; (2) the name of the city or town and county in
which the corporation is to be located; (3) the amount of capital stock of the corporation, the number of shares into which it is divided, and the par value thereof; that
the same has been bonafide subscribed and one-half thereof actually paid up in lawful money of the United States and is in the custody of the persons named as the
first board of directors or managers; (4) the names, places of residence of the several
shareholders, and the number of shares subscribed by each; (5) the number of directors or managers and the names of those agreed upon for the first year; (6) the num
REPORT OF THE COMPTROLLER OF THE CURRENCY.
137
ber of years the corporation is to continue, which in no case shall exceed fifty years.
The articles of agreement must be signed by and acknowledged by the parties thereto,
and must have been recorded in the office of the recorder of deeds of the county or
city in which the corporation is to be located, and a certified copy of such recorded
instrument is the paper to be filed in the office of the secretary of state. If incorporated by the secretary of state, a certified copy of the certificate of incorporation must
also be placed on record with the recorder of the county (or city of St. Louis) where
the bank is located. The cash capital of such corporation can in no case be less than
$10,000 nor more than $5,000,000. In a city haying a population of 150,000 inhabitants or more, the cash capital of such corporation can be no less than $100,000. All
of the capital stock must be paid up within one year next after the date of the certificate of incorporation, at such times and in such amounts as the board of directors
may require. As to private banks: These must file with the secretary of state a
statement of their intention to engage in the business of banking, subscribed and
sworn to before a notary public, which must set forth (1) the names of all persons
interested in the business and the amount of capital invested, and (2) the name under
which the business is to be conducted and the place it is to be carried on, which statement must 1)0 acknowledged, recorded, and fi]ed in the same manner as provided for
articles of incorporation, supra. The paid up capital of such banks must be not less
than $5,000. Trust companies are organized as corporations under a special law
granting them certain powers which include a savings-bank feature. The management of the incorporated banks is in the hands of the directors. In incorporated
banks the shareholders are liable only for the amount subscribed for their shares.
In private banks the partners are liable for all their possessions. All banks and trust
companies are subjected to examination by the secretary of state or examiners
appointed by him at least once a year, or as many times oftener as the secretary of
state may deem necessary. No banking institution is permitted to make a larger
loan than an amount equal to 25 per cent of its capital stock. There is no provision
of laAV regulating the cash reserve or accumulation of surplus.
5. The legal provisions governing the receipt of deposits by banks are in these
words: "Section 2760. * * * No president, director, manager, cashier, or other
officer or agent of any bank or banking institution organized and doing business
under the provisions of this article or of any law of this State, shall receive or
assent to the reception of deposits, or create or assent to the creation of any debts
by such bank or banking institution, after ho shall have knowledge of the fact that
it is insolvent or in failing circumstances. Every person violating tho provisions of
this section shall be individually responsible for such deposits so received and all
such debts so contracted: Provided, Any director who may have paid more than his
share of the liabilities mentioned in this section may have the proper remedy at law
against such other persons as shall not have paid their full share of such liabilities:
And provided, further, That in case of the insolvency of one or more of such officers,
agents, or managers, the same shall be paid, for the time being, by those who are
solvent, in equal proportions. Section 2761. In all suits brought for the recovery of
the amount of any deposits received or debts so created, all officers, agents, or managers of any such banking institutions charged with having so assented to the
reception of such deposit, or the creation of such debt, may be joined as defendants
or proceeded against severally, and the fact that such banking institution was so
insolvent or in failing circumstances at the time of tho reception of the deposit
charged to have been so received, or the creation of tho debt charged to have been
so created, shall be prima facie evidence of such knowledge and assent to such
deposit or creation of such debt on the part of such officer, agent, or manager so
charged therewith. Section 2762. * * * This article shall extend to and may be
enforced by and against the executors and administrators of such deceased officers,
agents, and managers." There is no law limiting the amount of interest to be paid
on deposits, but this department objects to the payment of more than 4 per cent on
time deposits. In passing upon this question the amount of such deposits and the
circumstances surrounding them are taken into consideration, and no absolute rule
is enforced.
6. The State of Missouri is not a shareholder in any bank.
7. Branch banks are not authorized by the laws of Missouri, and are not permitted
to do business in the State.
8. The law requires each bank, at least twice j)er year and as much oftener as the
secretary of state may require, to make a sworn statement of its condition at a
time set by the secretary of state, which must be a day previous to the call. These
reports are accessible to the public, but there is no provision made for their publication. The totals or abstracts of the statements are given to the press and sent to
the Comptroller of the Currency at Washington.
9. Corporations generally in Missouri are assessed upon the property they have,
just as individuals are assessed. Banks are assessed on their capital and surplus.
It is unfortunately true that the manner of assessing banks in Missouri is not an
138
REPORT OF THK COMPTROLLER OF THE CURRENCY.
equitable one, as the various counties assess them at different rates, running from
40 per cent to more than 100 per cent upon eapital stock; but tlio laws as they now
stand can not be corrected by tho state board of equalization as is done in the case
of other property. The levies for taxation upon banks are the same as those upon
other property in tho various counties.
10. In case a State bank examiner finds a hank to be in a failing or unlawful condition, or perpetrating fraud, he makes a full report of the condition of the bank to
the secretary of state/who then, through the attorney-general, brings an injunction
proceeding in the circuit court of the county in which the bank is situate, requesting
the closing of the bank and the appomtnient of a receiver. This system, while it
divides responsibility and is protective against an abuse of power, is wanting inflexibility and occasionally in adaptation to the situation. As a rule it works without
friction, but in some cases delays occur which are detrimental to the interests of the
innocent depositor who is uninformed as to the failing condition of tho bank. When
a bank is once closed it is under the control of the court through the receiver
appointed thereby. Up to this time no provision has been made to keep the department of state informed as to tho progress of settlement of the affairs of the bank.
For statistical and other useful purposes this should be done, and probably will be
arranged by common consent, even before the law can be amended.
11. There are now no legal provisions covering or referring to the issue of bank
circulation.
12. While the State of Missouri has upon its statute books an elaborate and carefully drawn savings-bank law, yet it is true that under this law there has been but
one such bank organized. This" is a very successful institution. While this is a fact,
it is not to be understood that no other banks do a savings business. Very many of
tho banks have lines of deposit of this kind. Probably fifteen of the trust companies of the State have a savings bank department. In this State, owing to a
provision in the constitution, savings banks have a» capital stock. The shares must
bo divided at a par value of $100. Tho entire amount must bo subscribed and
1
actually paid up in lawful money of tho United States. The other provisions for
incorporating are somewhat similar to those mentioned for banks. The capital stock
can bo not less than $10,000 in cities having a population of 50,000 or under, and not
less than $50,000 in cities having a population of more than 50,000 and less than
150,000, and not less than $100,000 in cities having a iiopulation of 150,000 or over.
This capital stock must be invested in certain bonds and stocks, as set out rather
voluminously in the law. It is made unlawful for such banks to deal or trade in
real estate, except under certain sp-cci.fic conditions laid down in the statutes. Banks
of this kind having a capital of $10r000 may receive deposits to the amount of
$200,000. Those having a capital of $257OOO may receive deposits to tho amount
of $500,000; those having a capital of $50,000 may receive to the amount of
$1,000,000, and no greater amount'of deposits shall be received without a like proportionate increase of cash capital. No such bank shall have a capital stock of more
than $5,000,000. Strict regulation is made in the law for the declaring of dividends.
The aggregate amount that may be received from any one individual or corporation
shall not exceed $1,000. The law makes it tho duty of the board of directors to
regulate from time to time tho rate of interest to be allowed the depositors out of
the net profits, and to pay or credit the same semi-annually on dates to be fixed by
the by-laws. No dividends can be declared or paid until at least ©ne-tenth of the
net profits of the corporation shall have been carried to the credit of the guarantee
fund. The available cash fund of these banks must at all times be maintained at
over 15 per cent of tho whole amount of its assets. The deposits of the funds of the
bank in any one bank, safe deposit, or trust company can not exceed 20 p.er cent of
the total deposits, capital, and surplus of the deposit bank. No director or officer
of such bank can be an indorser or surety or in any manner an obligor for moneys
loaned or borrowed of the bank. Boards of directors of such banks must meet at least
onco in each month.
M O JN" T A N ^V.
[S. 11. i'lyim, national-bank examiner.]
1. Corporate Stato banks, savings banks, trust, deposit, security, and loaning corporations. Corporations organized under section 604, as follows: First, to receive
moneys in trust and to accumulate the same at such rates of interest as may be obtained
or agreed on, or to allow such interest thereon as may be agreed upon. Second, to
accept and execute all such trusts and perform such duties of every description as
may bo committed to them by any person or persons whatsoever, or any corporations,
or may be committed or transferred to them by order of any of the courts of record
in this State or any other State, or of tho United States. Third, to take and accept
by grant, assignment, transfer, devise, or bequest and hold any real or personal
estate or trust created in accordance with tho laws of this State or any other State,
KEPOKT OF THE COMPTROLLER OF THE CURRENCY.
139
or of the United States, and execute such legal trusts in regard to tlie same, on such
terms as may be declared; established, or agreed upon in regard thereto, or to execute
or guarantee any "bond or bonds required by law to bo given in any proceedings in
law or equity in any of the courts of this State or other State, or of the United States.
Fourth, to act as agent for the investment of money for other persons or corporations and as agent for persons and corporations for the purpose of issuing, registering, transferring, or countersigning the certificates of stock, bonds, or other evidence
of debt of any corporation, association, municipality, State, or public authority on
such terms as may be agreed upon. Fifth, to accept from and execute trusts for
married women in respect to their separate property, whether real or personal, and
act as agents for them in the management of such property, and generally to have
and exercise such powers as aro usually had and exercised by trust companies. Sixth,
to act as trustee, assignee, or receiver in all cases were it shall be lawful for any
court of record, officer, corporation, or person to appoint a trustee, assignee, or
receiver, and to bo appointed, commissioned, and act as administrator of any estate,
executor of any last will and testament of any deceased person, and as guardian of
the person and estate of any minor or minors, or of the estate of any lunatic, imbecile, spendthrift, habitual drunkard, or other persons disqualified or unable from
any cause to manage their estate. Seventh, to guarantee the fidelity and diligent
performance of the duty of persons holding public or private trust and to certify
and guarantee title to real estate. Eighth, to loan money upon real estate and collateral security, and execute and issue its notes, debentures, payable at a future date,
and to pledge its mortgages upon real estate and other securities as security therefor. Ninth, to buy and sell Government, State, county, municipal, and other bonds,
and all kinds of negotiable, nonnegotiable, and commercial paper, stocks, and other
investment securities. Tenth, to become indorser and surety, and to secure indorsees
and sureties, for a condensation, upon such terms and conditions as shall be agreed
upon by the trustees of such corporation. Eleventh, to take and receive from any
individual or corporation on deposit, for safe-keeping and storage, gold and silver
plate, jewelry, stocks and securities, and other valuable and personal property, and
to collect coupons, interest, and dividends on said above-described securities, and to
rent out the use of the safes and other receptacles on their premises upon such terms
and for such compensation as may be agreed upon.
2. State banks: Capital stock must be paid into the treasury in cash, and certificate
to that effect filed with State auditor and in county clerk's office. Can transact no
business until authorized by the State auditor. Certificate of auditor must be
published in city or county newspaper, at least four insertions, immediately after
issuing certificate. Savings banks: Capital must be not less than $100,000, and
paid in cash, but such corporation may bo organized with not exceeding $500,000
capital, of which at least $100,000 must be paid in before deposits are received, balance upon call of directors within fivo years from date of filing articles of incorporation, but not more that 25 per 7cent must bo called in during any ono year. All
calls to be made upon thirty days notice. Trust-deposit, security, and loaning business : When $100,000 has been subscribed for and paid in in cash such corporation
may proceed to business. They must commence within ninety days after filing
articles of incorporation. Banks organized under section 604: Three or more persons
can associate themselves by articles of agreement, in writing, as jjrovided by law,
for one or more purposes, included under the above section, and may become incorporated under title designating such business. The articles of agreement shall be
signed and acknowledged and shall bo filed in the office of tho secretary of state,
and a duplicate thereof recorded with the recorder of deeds in the county in which
the corporation has its principal place of business.
3. State banks: State auditor. Savings banks: Find no special provision. Trustdeposit, security, and loaning business: Secretary of state. Banks organized under
section 604: Secretary of state.
4. (A) State banks: Not less than $20,000. Can be increased, but must be paid
up in. cash. Savings banks: Not less than $100,000. Maybe organized on a basis
of $500,000, of which at least $100,000 must be paid up, and the balance upon the
call of the directors. Trust-deposit, security, and loaning business: Not less than
$100,000, nor exceeding $500,000. The amount is fixed by articles of incorporation.
Banks organized under section 604: Not less than $100,000 paid in, nor $10,000,000
subscribed. (B) State banks: Stockholders elect directors, who appoint officers.
Savings banks: Stockholders elect directors, who appoint officers. Trust-deposit,
security, and loaning business: Managed by not less than three directors. Banks
organized under section 604: Managed by not less than three, nor more than twentyfive directors. (C) State banks: Liable"for all debts contracted during terra as officers or stockholders, equally and ratably to extent of their holdings. When stock
is sold liability ceases at the end of six months from sale and transfer. Savings
banks: Liability the same as above. Trust, deposit, security, and loaning business:
Liability the same as above. Banks organized under section 604: Liability same as
140
REPORT OF THE COMPTROLLER OF THE CURRENCY.
above. (D) State banks: First Mondays in January and July to State auditor
Savings banks: First Mondays in January, April, July, and October to State auditor, and any other time auditor calls for it. Trust-deposit, security, and loaning
business: Same as above. Banks organized under section 604: Same as above.
(E) It is the duty of the State examiner to visit each year, without previous notice,
each of the banks and banking corporations, and savings banks, investment and
loan companies incorporated under the laws of this State, or doing business under
any law of the State concerning corporations, and to examine into their affairs and
ascertain their financial condition; to inspect and verify the amount of their securities and assets, and to inquire into any violations of laws governing such banks and
institutions. (F) State banks: The total liability to any bank, including the liability of members of firms, is restricted to 15 per cent of actual paid capital and permanent surplus. Purchase of commercial paper is not considered as money borrowed.
Savings banks: At least one-half of the capital paid in and one-half of the deposits
must bo invested in bonds or other securities of the United States, or any of the
States or Territories, or county or city, town or school district of this State, on which
interest is regularly paid, or loaned on unincumbered real estate, worth at least
double the amount to be secured. The remainder may be invested in said bonds or
loans as aforesaid, but no loan must be made on personal security of less than two
responsible persons, or collateral security to be approved by the directors. No loan
upon personal security shall be made to any one person or partnership exceeding
$10,000. Trust-deposit, security, and loaning business: Find no special provison of
restrictions. Banks organized under section 604: Organized for special purposes.
(G) State banks: At least 20 per cent of immediate liabilities. One-half of this maybe due from solvent banks. Savings banks: Find no special provisions. Trustdeposit, security, and loaning business: Find no special provisions. Banks organized under section 604: Find no special provisions. (H) State banks: None. Savings banks: Must set aside annually at least 5 per cent of its net profits, until such
surplus amounts to 20 per cent of the capital stock. Trust-deposit, security, and
loaning business: Find no special provision. Banks organized under section 604:
Find no special provision.
5. State banks: No provision. Allows interest. Savings banks: Section 624 provides that savings banks must receive on deposit all sums of money which may be
offered, but have a right to limit the aggregate amount which any one person or
society may deposit to such sum as it may deem expedient, and also provides that it
may refuse to receive any deposits. The board of directors has a right to regulate
the payment of deposits, and regulations must be posted in some conspicuous place
in the room in which such corporation transacts its business, and must also print
the regulations in its pass books delivered to depositors. Allows interest. Trustdeposit, security, and loaning business: Receives trust deposits for the purpose of
loaning and investment. Allows interest. Banks organized under section 604:
Organized for special purposes.
6. Find no special provision.
7. Find no special provision.
8. State banks: First Mondays in January and July. Statements signed by president or cashier on oath, attested by at least two directors, showing plainly resources
and liabilities, amount of each kind thereof. Must be published once in some newspaper of the county where such bank is located, if any newspaper be published
therein. Proof of such publication shall be furnished to State auditor. Savings
banks: Report to State auditor first Mondays in January, April, July, and October,
and publish same as State banks. Trust-deposit, security, and loaning business:
Same as above. Banks organized under section 604: Same as above.
9. State banks: Taxed as national banks. Savings banks: Licenses scaled according to business transaction. Trust, deposit, security, and loaning business: Taxed
as national banks. Banks organized under section 604: Taxed as national banks.
10. No special provision for closing up the business of insolvent banks. It would
come under the general head of insolvent incorporations.
11. Find no provision referring to the issue of bank circulation.
12. Savings banks: Any number of persons, not less than three, may incorporate.
Capital must be held by the bank as a guaranty to its depositors. Must be
invested as provided. Stockholders participate in profits after depositors have been
paid such rates of interest as may be provided by the by-laws. Stockholders elect
not to exceed thirteen directors. Directors elect such officers as their business
requires, and remove at their pleasure. Directors hold office until the first Monday
. in January next after their election or appointment and until their successors are
elected and qualified. Elections must be held on the first Monday in January of
each year. Directors must be citizens of the United States, and at least threefourths of them must be residents of the State. Every director must own, in his
own right, at least ten shares of the capital stock. If he ceases to be the owner of
these ten shares, or becomes in any manner disqualified, he shall cease to be a direc
REPORT OF THE COMPTROLLER OF THE CURRENCY
141
tor. A majority vote of the members of the board of directors is required in making
any order for or authorizing any investment of money, or the sale or transfer of any
stock or securities, or other real or personal property belonging to the corporation,
or the appointment of any officer receiving any salary. Section 627 says no president, vice-president, director, or other officer, or servant of such corporation, shall
directly or indirectly borrow any of the funds of such corporation or of its deposits,
or in any manner use the same in their private affairs or business, nor shall any
director receive any pay, salary, or emolument until after such interest as the directors shall have determined to allow depositors shall be provided for in accordance
with the regulations of the corporation. The corporation may purchase, hold, and
convey real estate as follows: Such as may be necessary for their business, not
exceeding the value of $150,000. Such as is mortgaged, to wit: For moneys loaned
or given as security for money loaned or advanced; such as is purchased at sale on
judgment or decree obtained, etc. Said corporation shall not buy or sell any personal property, except such as may be necessary for the proper transaction "of its
business. Must at all times, during business hours, submit to an examination by
the State auditor, or such other person or persons as the legislative assembly or the
State auditor designates or appoints for this purpose. Any officer or clerk of such
corporation who willfully makes a false oath or affidavit relative to the financial condition of such corporation is guilty of perjury, and upon conviction thereof must
be punished accordingly. No greater sum than $50,000 shall be at any time deposited
in any one bank or corporation.
NEBRASKA.
[R. H. Townley, secretary State banking departrnont.]
1. Incorporated and private banks. Permitted to transact either a commercial or
a savings bank business. May be a corporation, a partnership, afirm,or an individual.
2. Every bank, corporation, partnership, firm, or individual, organized for and
desiring to transact a banking business, shall, before commencing such business,
make, under oath, and transmit to the State banking board a full, complete, and
detailed statement of, first, the name of the proposed bank; second, if incorporated,
a certified copy of the articles of incorporation; third, the names of the incorporators,
partners, firm, or individuals ; fourth, the county, city, town, or village in which the
said proposed bank is located; fifth, the nature of proposed banking business, whether
commercial or savings; sixth, the amount of paid-up capital stock. Whenever, after
the examination and approval by the State banking board of the statement provided for in section 6 of this act, the corporation, partnership, firm, or individual
shall file with the State banking board the oath of the president, cashier, partner,
member of the firm, or individual, that the capital stock has been paid in as provided for, and in compliance with section 4 of this act, then the State banking board
shall, without unnecessary delay, issue to said corporation, j)artnership, firm, or
individual a charter for the same purpose, and in the same manner as in section 5.
On receipt of said charter the proposed bank may begin to transact a banking
business.
3. The auditor of public accounts, the State treasurer, and the attorney-general shall
be, and they are hereby, made a board which shall be designated and known as the
State banking board.
4. (A) It shall be unlawful for any corporation, partnership, firm, or individual to
transact a banking business unless such corporation, partnership, firm, or individual
has property of cash value as follows: In cities, villages, and communities having a
population of less than 1,000 inhabitants, $5,000; more than 1,000 and less than 1,500,
$10,000; less than 2,000 and more than 1,500, $15,000; less than 3,000 and more than
2,000, $20,000; less than 5,000 and more than 3,000, $25,000; less than 10,000 and more
than 5,000, $30,000; more than 10,000, $50,000. (B) As specified in articles of incorporation for corpora«ted banks; no legal requirements for private banks. ( C) Every stockholder in any banking corporation transacting a banking business in this State shall be
liable to the creditors of such bank for an amount, over and above the share or shares
of stock so held, equal to the paid-up value thereof, for all liabilities accruing while
sucli stock is owned or held by such shareholder. (D) Every bank and every corporation, partnership, firm, or individual transacting a banking business shall make
to the State banking board not less than four reports during each year. Each report
shall state such resources and liabilities at the close of business on any past day by
the State banking board specified, and shall be transmitted to said board within five
days after the receipt of a request or a requisition therefor. And a summary of such,
report in the form prescribed by the State banking board shall be published in a
newspaper published in the place where such banking business is transacted, or if
there is no newspaper in the place, then in one published in the same county, at the
expense of such bank, corporation, firm, or individual; and proof of such publication
142
.REPORT OF THE COMPTROLLER OF THE CURRENCY.
shall be transmitted to tlio State banking Doarcr within twenty days from the date
fixed for such report. (E) The State banking board shall appoint a suitable person
or persons having at least three years' actual experience in the banking business, or
with the affairs of the Stato banking department, to make an examination of and
into tho affairs of every bank, and every corporation, partnership, firm, or individual
transacting a banking business, as often as shall be deemed necessary and proper
and at least once in every year. (F) No corporation conducting a banking business
shall make any loan or discount on tho security of the shares of its own capital stock,
nor be the purchaser or holder of any such shares, unless such security or purchase shall
be necessary to prevent loss upon a debt previously contracted in good faith; and
stock so purchased or acquired shall within six months from the time of its purchase
bo sold or disposed of at public or private sale; or in default thereof, a receiver may
be appointed to close up the business of the bank. Provided, that in no case shall the
amount of stock so held exceed 10 per cent of the paid-up capital of such bank. No
paitership, firm, or individual transacting a banking business in this State shall be permitted to carry any note or obligation of any such partnership, firm, or individual, or
any of tho members of such partnership or firm, as any part of the assets of the bank.
And no officer, director, or employee of any corporation transacting a banking business
in this State shall be permitted to borrow apy of the funds of the bank upon his own
note or obligation, or upon any note or obligation made to him for accommodation,
without having first obtained the approval of a majority of the board of directors of
the bank, and the approval, if obtained, shall bo made a part of tho records of the
bank. Any individual member of a firm, partner, officer, director, or employee who
shall violate the provisions of this section shall be deemed guilty of the embezzlement
of the funds of said bank to tho extent of said notes or obligations so given, and on
conviction thereof shall be punished by a fine not exceeding $1,000, or imprisonment
in the penitentiary not to exceed five years, or both, at the discretion of the court. No
individual, firm, or corporation transacting a banking business in this State shall loan
to any single corporation, firm, or individual, including in such loan all loans made
to the several members or shareholders of such firm or corporation, more than 20 per
cent of the paid-up capital of such bank. And in no case shall the total liabilities of tho several stockholders of an incorporated bank to such bank exceed 50 per
cent of the paid-up capital of such bank. But the discount of bills of exchange drawn
in good faith against actually existing values, and the discount of commercial paper
actually owned by tho person negotiating tho same, shall not be considered as money
borrowed. Any officer, director, or employee- of any corporation transacting a, banking business in this State, who shall knowingly permit or allow the shareholders of
such bank to at any one time become indebted to such banking corporation in a total
sum exceeding 50 per cent of tho paid-up capital of such banking corporation shall
be deemed guilty of felony, and upon conviction thereof shall beVubject to a fine of
not to exceed $500, or by imprisonment not to exceed three years in the State penitentiary, or bothj at the discretion of the court. (G) Every bank shall at all times
have on hand as a reserve in available funds an amount equal to at least 15 per cent
of tho aggregate amount of its deposits. Two-fifths of said 15 per cent shall be in
cash in tho vaults of tho bank; provided, that in cities having a population of moro
than 25,000 said reserve shall bo 20 percent of tho aggregate amount of the deposits;
provided further, that savings banks shall have on hand at all times as a reserve in
available funds an amount equal to at least 5 per cent of their aggregate deposits.
(H) Any corporation, partnership, firm, or individual transacting a banking business
may semiannually declaro a dividend of so much of the net profits as it, they, or ho
may judge expedient, but such corporation, partnership, firm, or individual shall,
before the declaration of a dividend, carry one-tenth part of its net profits to its surplus fund until the same shall amount to 20 per cent of its paid-up capital stock.
No corporation, partnership, iirm, or individual transacting a banking business in
this State shall withdraw, or i>ermit to bo withdrawn, either in the form of dividends
or otherwise, any part of its capital. If losses have at any time been sustained,
equal to or exceeding undivided profits on hand, no dividend shall be made; and no
dividend shall be made by any bank transacting a banking business under the laws
of this State to an amount greater than the net profits on hand less the losses and
bad debts.
5. No bank, corporation, partnership, firm, or individual transacting a banking
business in this State shall accept or receive on deposit for any purpose any money,
bank bills, United States Treasury notes or currency, or other notes, bills, checks,
drafts, credits, or currency, when such bank, corporation, partnership, firm, or individual is insolvent. Savings bank shall receive deposits to an amount not exceeding
ten times the aggregate amount of its paid-up capital and surplus. Interest paid
on timo certificates of deposit, also on public moneys under depository law of this
State, for which bond is required.
6. None.
7. No.
REPORT OF THE COMPTROLLER OF THE CURRENCY,
143
8. Summary of report under call of State banking "board published in local newspaper at least four times annually. List of shareholders "with number of shares
owned by each, subject to public inspection.
9. None except for examination fees.
10. Whenever it shall appear to the Stato banking board from an examination or
report provided for by this act that the capital of any corporation, partnership, firm,
or individual transacting a banking business in this State is impaired, * * *
tho said Stato banking board shall communicate the facts to tho attorney-genera],
who shall thereupon cause an application to bo made to the district court of the
county where such corporation, etc., is located, or to any judge of such court, for
the appointment of a suitable person an receiver to take charge of the business and
affairs of and wind up such bank.
11. None.
12. Any corporation, partnership, firm, or individual designating its, their, or his
business as that of a savings bank, shall have power to carry on a savings bank
business as prescribed and limited in this act. Any savings bank may receive
deposits from the general public. The funds of any savings bank, except the reserve
provided for in this act, shall bo invested in bonds of tho United States, or of
any State in the United States, or in tho public debt or bonds of any city, county,
township, village, or school district of any State of tho United States which shall
have been authorized by tho legislature of the State, or shall bo loaned on negotiable paper, secured by any of the above-mentioned classes of security, or upon notes
or bonds secured by mortgage lien upon unincumbered real estate (provided that
second-mortgage loans may bo made on improved farm lands, but no loan shall bo
made on such improved farm lands or other real estate which, including the aggregate amount of incumbranco thereon, shall exceed 50 per cent of the cash value
thereof), or upon notes secured by collateral security of known marketable value,
or held as cash, or shall be deposited in good solvent banks; provided, that chattel
mortgages shall not bo deemed collateral security, and savings banks aro hereby
prohibited from investing their funds in them, except chattel loans on cattle.
Nothing in this section shall prohibit n. savings bank from issuing certificates for
legitimate deposits. Savings banks shall not be subject to the provisions of section
4 of this act relating to capital, but it shall bo unlawful for any savings bank to
transact a savings bank business in this State with a paid-up capital of less than
$12,000, one-third of which may be invested in bank building and the lot or lots on
which the same aro situated and the necessary bank furniture and fixtures; provided that on and after the passage of this act ifc shall be unlawful for any savings
bank to organize and commence a savings bank business with a paid-up capital of
less than $25,000 in cities having more "than 25,000 population; provided, further,
that no savings bank in this State shall receive deposits to an amount exceeding ten
times tho aggregate amount of its paid-up capital and surplus. Any corporation
transacting a banking business in this State may purchase, hold, and convey real
estate for the following purposes only: Such as is necessary for convenient transaction of its business, not exceeding in value one-third of the paid-up capital; such
as shall bo conveyed to ifc for debts duo tho bank, and such as it shall purchase at
salo under judgments or decrees upon its securities, but the bank at such sale shall
not bid a larger amount than to satisfy its debt. No real estate so acquired in
satisfaction of debts or at a. salo upon its judgments or decrees shall be held longer
than five years, and within thirty days thereafter must be sold at private or public
sale, and at no time shall tho total amount of real estate held by any bank for any
purpose exceed 50 per cent of tho paid-up capital of such bank. Savings banks shall
not be subject to tho provisions of this section.
(Copy of the banking law transmitted.)
[John E. Jones, governor. ]
1. Under act of Nevada State legislature, approved March 23, 1891, banks are
organized and are divided into seven classes, viz : Class 1, those doing business in the
aggregate to the amount of $500,000 or more per month; class 2, $300,000 and less
than $500,000 per month; class 3, $200,000 and less than $300,000 per month; class 4,
$100,000 and less than $200,000 per month ; class 5, $50,000 and less than $100,000 per
month; class 6, $25,000 and less than $50,000 per month; class 7, any sum less than
$25,000 per month.
2, 3, and 4. See copy of act approved March 5 ; 1869.
5. See copy of act approved March 5, 1869, and interest allowed at bank's option
of 4 per cent per annum.
G. The State is not interested as a shareholder in any bank.
7. At option of the bank corporations.
144
REPORT OF THE COMPTROLLER OF THE CURRENCY.
8. Banks sometimes publish statements, but do so voluntarily.
9. Banks of the first class pay license of $200 -per month; banks of the second class
pay license of $150 per month; banks of the third class pay license of $100 per
month; banks of the fourth class pay license of $75 per month; banks of the fifth
class pay license of $50 per month; banks of the sixth class pay license of $25 per
month; banks of the seventh class pay license of $12 per month.
10. Refer to act approved March 5, 1869.
11. Section 6, of article 8, of the constitution of the State of Nevada: "No bank
notes or paper of any kind shall ever be permitted to circulate as money in this
State, except the Federal currency and the notes of banks authorized under the
laws of Congress."
12. Refer to act approved March 5, 1869.
(Copy of act inclosed.)
INTICW
HAMPSHIRE.
[James O. Lyforcl, bank coniraissioner.]
1. The different kinds of banks permitted to do business in this State are as follows : Mutual savings banks, governed by trustees elected by the incorporators, the
incorporators having power to perpetuate themselves by filling vacancies as they
occur; the depositors have no voice in the management of the banks. Guaranty
savings banks, with a guaranty fund or capital stock paid in, which must at all
times be equal to 10 per cent of the general deposits; the control of these banks is
in the hands of the stockholders who elect the board of trustees, and the depositors
have no voice in the management. State banks of discount, with a capital stock,
controlled by the stockholders. Trust companies, having authority to do both a
discount and a savings bank business, as well as the business of trust companies.
The savings department is required by law to be kept as a separate department,
and is amenable by the laws governing the savings banks of the State.
2. All banking institutions are incorporated by act of the legislature, and there
is no general law under which they can incorporate. Having obtained the charter,
the incorporators organize for business, with no other requirements than that
guaranty savings banks and trust companies have to satisfy the bank commissioners
that their capital or guaranty fund has been paid in in cash.
3. The answer to this question is contained in the preceding paragraph.
4. (A) The amount of capital stock is determined by the legislature in each case,
and the payment of the capital stock must be in cash, to the satisfaction of the bank
commissioners. (B) The management of all these classes of banks is in control of
their trustees or directors, subject to the laws of the State and the supervision of
the bank commissioners. As the reply to this inquiry might bo elaborated at any
length, I refer you to the law, copy herewith. (C) The liability of the shareholders
extends only to the amount of their capital stock. (D) Semiannual reports of condition are required by statute to be made to the bank commissioners. (E) At least
annual examinations must be made by the commissioners of all these institutions;
and the bank commissioners are authorized to apply to the court for the protection
of the stockholders and depositors. (F) The restrictions of investments of savings
banks are to be found largely in chapter 114 of the session laws of 1895, on page 45
of the pamphlet, which prescribes the class of investments that savings banks may
take. The trust companies and State banks are prohibited from making any loan to
an officer and director except by the unanimous approval of the board of directors
in writing. No savings bank, State bank, or trust company can hire money or give
the note of such institution except by vote of the trustees or directors thereof, duly
recorded. No savings bank or trust company can loan to any person, firm, or its
individual members an amount in excess of 10 per cent of its deposits or capital
stock, nor purchase or hold, both by way of investment and security for loans, the
stock and bonds of any corporation to an amount in excess of said 10 per cent. (G)
No amount of cash reserve is required. In explanation of this it perhaps should be
said that we have only two State banks of discount, and but very few trust companies doing a discount business. (H) The savings banks are required to pass to the
credit of the guaranty fund annually an amount equal to 10 per cent of their net
earnings until the guaranty fund is equal to 5 per cent of the deposits.
5. There are no restrictions upon the receipt of deposits by either savings banks,
State banks, or trust companies, and it is not the custom of the State banks and trust
companies to allow interest on deposits.
6. The State is not interested as a shareholder in any of the banks of the State.
7. No banks are permitted to conduct branch offices or banks, although there is no
statute on the subject.
8. The public is furnished with an annual report of the condition of the banks of
the State, published at the expense of the State and distributed to those who ask
for it.
KEPORT OF THE COMPTROLLER OF THE CURRENCY.
145
9. The savings banks pay a tax of three-fourths of 1 per cent on the amount of their
deposits, and are permitted to deduct from the gross amount of deposits the amount
of real estate owned by the bank, whether acquired by purchase or foreclosure, and
also the amount of all real-estate loans made at a rate of 5 per cent or less. The
guaranty banks pay in addition a tax of 1 per cent on their guaranty fund or capital
stock; and the same is true of the trust companies. While this tax is collected by
the State it is redistributed by the State to the towns of the State in the proportion
that the deposits of those towns in the savings banks bear to the total amount of
savings deposits. The capital stock of the State banks of discount is taxed locally
in the towns where the banks are situated at the local rate, with certain reductions
on account of real estate held by the bank, and such other property as would not be
subject to taxation if held by an individual owner, or it is by law exempt from taxation when owned by individuals.
10. If the bank commissioners are satisfied that it is not for the public safety that
a banking institution should continue to transact business, they present the facts by
petition to some justice of the supremo court, who is empowered to issue an injunction restraining the institution in whole or in part from the transaction of further
business. If, in the judgment of the court or the commissioners, it is better for the
creditors that the institution should continue under its existing managment, that
may be done, or, if it is thought advisable, a receiver can be appointed by the court.
Another method of dealing with insolvent savings banks is to reduce the deposit
accounts of each depositor such, a percentage that the assets will pay out the reduced
amount. The bank continues to transact business, and ivhen it has realized all that
can be realized from the depreciated assets, the surplus thus accumulated is distributed among the depositors. If the bank takes new deposits they must be kept separate and invested separately, so that the old institution could be wound up and the
new institution go on. To illustrate: The bank commissioners, from an examination,
are of the opinion that a bank can with safety only pay its depositors 75 per cent of
their deposit accounts. The deposits are accordingly reduced 25 per cent. Any
depositor can then withdraw 75 per cent of his deposit at the date of reduction. If
the bank is to be finally closed up because of loss of confidence in its management,
each depositor receives the 75 per cent in the liquidation and as much more as the
assets realize. The statute relating to this subject may be found on page 39 of the
pamphlet, sections 26, 27, 28, and 29.
11. The legal provisions referring to the issue of bank circulation will be found in
chapter 163 of the Public Statutes, on page 27 of the pamphlet above referred to.
12. By reading chapter 165 of the Public Statutes, on page 33 of the pamphlet
above referred to, chapter 105 of the Session Laws of 1895, on page 42, and chapter
114 of the Session Laws of 1895, on page 45, you will find an answer to this inquiry.
(Copy of banking laws inclosed.)
JERSEY.
[George S. Duryee, bank commissioner.]
1. Banks of discount, deposit, and circulation, individual or private bankers, savings banks, safe deposit and trust companies. Individual bankers are subject to the
same control and supervision as incorporated banks of discount, deposit, and circulation, but are not required to become incorporated. .They are not authorized to
issue their " notes, bills, currency, or other circulating medium of exchange." No
individual banker can legally transact a banking business in the State until he has
filed a report of his condition, in form similar to that required of incorporated
banks, nor until the commissioner of banking and insurance shall have made an
examination of his affairs and ascertained that he is then solvent and able to pay
his debts at maturity, and shall have issued his certificate to that effect. In case of
the insolvency of any such banker, said commissioner may institute proceedings in
the court of chancery as provided by law in the case of insolvent banking corporations, the court haying the same power to appoint receivers, make distribution of
the assets, etc., as in the latter instance. Safe deposit and trust companies have
the trust powers usually conferred upon such institutions, and may " receive money
on deposit to be repaid on demand, or otherwise, as may be agreed upon by and between the depositor and the company, and with or without interest, as they agree."
They are distinguished from banks in that they are not given the power to "discount
bills, etc., unless located in a city or village having no national or State bank of discount and deposit (but two of the companies being so situated), nor have they the
privilege of issuing notes to circulate as money. For the statutes governing the
same see the accompanying pamphlet, marked A. The following answers, from 2 to 11,
inclusive, relate to the incorporated banks of discount, deposit, and circulation.
2. A certificate of association must be executed, acknowledged, and recorded, in
the office of the clerk of the county where the bank is to be located and in the office
CUB, PT 1
10
146
REPORT OF THE COMPTROLLER OF THE CURRENCY.
of the commissioner of banking and insurance. Not less than $50,COO of the capital
stock must bo paid in. A certificate of authority by the commissioner of banking
and insurance must be obtained. The commissioner is not authorized to issue such
certificate except after due inquiry and information, from which he shall be satisfied
that the institution is required for the public benefit; also that it has complied with
all preliminary requirements of law, which comprehend the due execution and recording of the certificate of association and the i>aynicnt of the prescribed minimum of
capital. Evidence as to the latter is required to be submitted in the form of an affidavit signed by the president and cashier and a majority of the directors. The details
as to organization and such payment are then inquired into by said commissioner, or
someone appointed by him, and report filed.
3. The commissioner of banking and insurance. (See answer to preceding question.)
4. (A) The maximum of capital authorized by the general banking law is $2,000,000
and the minimum $50,000. At least the latter amount must be fully x>aid in before
a bank is permitted to commence business. As the additional capital is called and
paid in certificates thereof must be filed in the department of banking and insurance. By subsequent enactments amendatory of the general corporation law, corporations organized under any law of the State, general or special (except railroad
or canal companies), aro authorized to increase their capital stock to such amount
as the board of directors may determine, with the consent of stockholders owning
at least two-thirds in value of the existing capital stock, upon filing a certificate
that such action has been taken and consent given. (B) The conduct of the business
is vested in a board of directors, elected as may be provided in the articles of association or by-laws. Each director must bo a bona fide holder of some of the stock,
but not of any specified amount thereof or number of shares. No provision as to
the number of directors, but the requirement that the number of incorporators
must not be less than seven, citizens of the State, must be considered in this connection. The directors may choose from their number a president, cashier, and other
officers and agents, and remove such officers and agents at pleasure; also may establish by-laws for their government and exercise such other incidental powers as shall
be necessary to carry on the banking business. (C) Stockholders are not liable
beyond the amount invested in their shares. (No personal liability in addition
thereto.) They are liable for their unpaid subscriptions. (D) The institutions have
one fixed time for reporting, viz, December 31, annually; but under the authority
vested in the commissioner of banking and insurance to call for additional reports
at any time,.returns are required to be rendered quarterly. Such reports must be
filed within five days after receipt of notice, under penalty of $250. (E) The commissioner of banking and insurance is the supervising officer. He has full authority
himself, or by such person or persons as he may appoint for the purpose, to investigate
the affairs of any bank whenever he may deem it expedient, or at the request of the
bank, or like request in writing by three or more of its creditors, depositors, or stockholders. Examinations are frequently made, one examiner being regularly employed
by the commissioner. He receives a stated salary, which is paid by check of the
State treasurer. The necessary expenses of all examinations must be paid by the
institutions examined. These are paid to the commissioner of banking and insurance, and by him to the State treasurer, less the necessary traveling and incidental
expenses of the examiners, which are paid by check of the commissioner upon proper
vouchers. (F) The banks may loan money on real and personal security. No
restrictions. (G) No cash-reserve requirement, (H) No provision for the accumulation of surplus. Dividends may be declared from the surplus or net profits (interchangeable terms) only.
5. No special regulations upon the subject. Some ten of the twenty-one banks
now doing business allow interest on deposits, but in several instances only on
special-deposit accounts.
6. None whatever.
7. The general banking act directs that the business must be carried on at the
place specified in the certificate of association, and not elsewhere; but by subsequent
legislation it is provided that no such corporation shall establish or maintain any
branch or agency nor more than one place of business without the approval of the
commissioner of banking and insurance. With a singio exception, the required
consent has not been granted.
8. By publication of abstracts of the reports of condition in the annual report of
the commissioner of banking and insurance to the legislature. In addition, it has
been the practice to issue printed summaries of the quarterly returns of each bank
and distribute them to newspapers and persons applying for same, although there is
no provision for this publication. The institutions themselves are not required to
publish, their returns in any newspaper, but some of them do so voluntarily.
9. The stockholders aro taxed for the value of their shares. The tax upon resident stockholders is assessed to them in the township or ward where they may reside,
and in the case of nonresident stockholders the bank is assessed therefor. National
REPORT OF THE COMPTROLLER OF THE CURRENCY.
147
banks arc taxed in the same manner. The fees and other u charges payable "by the
banks are $20 for filing their December 31 report and the necessary expenses" of
any examination of their affairs.
10. Tho court of chancery has jurisdiction in such cases, with authority to appoint
receivers and make distribution of the assets and property among the creditors and
stockholders, according to the prescribed legal rules and the practice of said court.
For the general powers, duties, etc., of such receivers, see Revision of New Jersey,
1709-1877; title Corporations, sections 60, 61, 62, 72 to 85, pages 187, etc.
11. The existing provisions of the old general banking law, as reenacted in the
"revision" of 1875, are substantially as follows: The State treasurer is authorized
and required to cause to be engraved and printed in the best manner to guard against
counterfeiting, at the request ai d expense of any bank organized under the act,
such quantity of notes for circulation in the similitude of bank notes, in blank, and
of different denominations not less than $1, as he may from time to time deem necessary to carry into effect the provisions of the act, and of such form as ho may prescribe. Such notes must bo countersigned, numbered, and registered in proper books
to be provided and kept in the office of said treasurer, under his direction, either by
himself or by such clerks or registers as he shall, with the advice and consent of the
governor and attorney-general, appoint for the purpose, so that each denomination
of the notes shall bear the uniform signature of said treasurer or register. The treasurer and every such register or clerk, before entering upon the discharge of their
trusts or duties under the act, must give bond to the State, with sufficient sureties, to
be approved by the governor and chief justice, and in such sum as they shall direct.
Whenever any such bank shall legally transfer to the State treasurer public stocks,
or public stocks and bonds, and mortgages, as prescribed, it is entitled to receive an
equal amount of notes for circulation, registered and countersigned as aforesaid.
Such notes, before delivery by the treasurer, must be exhibited to the State auditor,
who, in a book to be provided for the purpose, must enter the amount delivered, the
time when delivered, the name of the bank, the amount of each denomination, and
a description of the securities deposited therefer. No such bank is required to issue
circulating notes and deposit securities for their redemption unless it shall deem it
proper so to do and shall make tho request as above. The public stocks so to be
transferred and deposited with the State treasurer shall in all cases be, or made to
be, equal to a stock producing not less than 4 per cent per annum; and it is
unlawful for the treasurer to take any such stock at a rate above its par value, or
that shall not be worth "upon a sale made 100 cents on the dollar." Such stocks
must be either the public stocks of the United States or the States of New Jersey, New
York, Massachusetts, Pennsylvania, or Ohio; " and such other bonds as are now or mayhereafter be by law authorized to be used for the purpose," and bonds of the county
"public-road boards" of New Jersey. Instead of securing the whole amount of the
notes by pledge of public stocks, a bank may secure not less than one-third thereof
by bonds and mortgages, bearing at least 6 per cent interest, and covering improved,
productive, unincumbered lands in the State of New Jersey, worth, independently
of any building thereon, at least three times the amount for which they shall be
mortgaged, no one mortgage to be for a greater amount than $5,000. The total
amount of notes issued under the act and remaining outstanding at any time is
limited to $10,000,000. Any bank is liable to pay the holder of every bill or note put
by it in circulation as money, the payment of which shall have been demanded and
refused, damages for nonpayment thereof, in lieu of interest, at the rate of 12 per
cent per annum from the time of such refusal until the payment of the note. The
charters of four of the five specially incorporated banks authorize the issue of
circulating notes, the provisions as to which being substantially the same in each
case. Summarized, these provisions are as follows: Notes may be issued up to twice
the capital stock paid in; no note to be of a less denomination than $1, except,
perhaps, in the case of one bank, whose charter contains no such restriction. Tho
penalty for any willful or intentional overissue is imprisonment for not less than one
nor more than five years. All the notes are payable on demand at the counter of the
bank, and in the event of its refusal or neglect to pay any of the same, after demand
made at the banking house during the regular hours of business, the institution
must cease its banking operations until the notes are fully paid, under penalty of
forfeiture of its charter. The charters of two of the banks make the notes a first
and paramount lien upon all the assets in case of insolvency, but in the case of the
two others the claims of bona-fide judgment and mortgage creditors are given equal
priority with the notes. The directors are made liable for all the notes in circulation
at the time of insolvency, and may be proceeded against to recover the amount of
any deficiency remaining after the assets have been appropriated to their payment.
No director can resign or transfer his shares to avoid this liability. If the assets of
the bank and the property of the directors prove insufficient to pay the notes in full
the stockholders other than such directors are personally liable for the deficiency,
but not, however, for an amount beyond the par value of their shares. They are not
permitted to transfer their shares to avoid this liability.
148
EEPORT OF THE COMPTROLLER OF THE CURRENCY,
12. They are nonstock institutions, conducted by a board of managers of not less
than nine. A majority of the managers must reside in the county where the bank is
located and bo freeholders in the State. All selections to fill vacancies are subject to
the approval of the commissioner of banking and insurance. No manager can have
any interest, directly or indirectly, in the gains or profits of the bank except as a
depositor, or borrow any of its funds, or become an indorser, surety, or obligor in
any manner for money loaned by or borrowed from the bank. It is the duty of the
managers to so regulate the rate of interest or dividends (not to exceed 5 per cent per
annum) that the depositors shall receive all the profits of the institution, after deducting necessary expenses and reserving such sum as they may deem expedient as a
surplus fund, which, to the amount of 15 per cent of the deposits, the managers are
authorized to gradually accumulate and to hold to meet any contingency or loss by
depreciation of securities or otherwise. Investments are restricted to bonds of the
United States; the State of New Jersey and the cities, counties, etc., therein; bonds
of other States in the United States, or of any city or county thereof, whose net
indebtedness is limited by law to 10 per cent of the assessed valuation of property
therein, and first-mortgage bonds of railroad companies that have paid dividends
regularly on their entire capital stock for the five years preceding, or the consolidated
mortgage bonds issued by any such company to retire its entire bonded debt. Loans
on personal securities can not be made except upon the additional pledge of specified
collaterals having a market-value margin of 20 per cent. Not more than 15 per cent
of the deposits can be so loaned. Mortgage loans may be made, up to 80 per cent of
the deposits, on real estate in New Jersey worth 50 per cent more than the amount
loaned thereon, but if the real estate is unimproved or unproductive the margin of
value must be 70 per cent. The cost of office building is restricted to 50 per cent
of the net surplus of the bank, based on par values of securities. The managers are
required to invest the moneys deposited as soon as practicable after their receipt,
except that for the purpose of meeting current payments in excess of the receipts
they may keep an available fund of not exceeding 10 per cent of the deposits, either
on hand or deposited on call in designated banks or trust companies, or loaned on
demand on sx^ecified collaterals. The aggregate deposit of any one individual or corporation is limited to $5,000, exclusive of accrued interest, unless made prior to 1876
or by order of a court of record or surrogate. Deposits of less than $1 need not be
received. A deposit made not later than the third day commencing any interest
period or month may draw interest for the whole of the period or month. Depositors
may be classified according to the duration and nature of their dealings with the
bank, and interest may be allowed them accordingly. Deposits are repayable after
demand, in such manner and under such regulations as the managers may prescribe.
The institutions must be examined at least once in every two years, and oftener if
deemed expedient by the commissioner of banking and insurance. Reports of condition on January 1 and transactions for the year must be filed annually, within one
month from said date, under penalty of $200 for each day's delay, for which the
managers are personally liable. Savings banks having no capital stock are taxed
upon all their "property and valuable assets," but the depositors therein are exempt
from taxation on their personal estate to the amount of their deposits. No such
institution can be established without a certificate of authority by the commissioner
of banking and insurance, which he is not authorized to issue in any case until he
has ascertained from the best sources of information at his command (1) whether
greater convenience of access to a savings bank will be afforded to any considerable
number of depositors by opening such a bank at the place proposed; (2) whether the
density of the population in the particular neighborhood and in the surrounding
country gives reasonable promise of adequate support to the enterprise, and (3)
whether the responsibility, character, and general fitness for the discharge of such a
trust of the persons named in the certificate of association are such as to command
the confidence of the community in which the bank is to be located.
USTICW M E X I C O .
[Joseph T. Talbert, national-"bank examiner.]
1. State banks and savings banks and trust associations.
2. Any number of persons not less than three may associate to establish a State
bank, the capital of which must not be less than $30,000. No bank shall transact
business until at least 50 per cent of its capital has been paid into the treasury of
the bank in cash and until a certificate to that effect under oath of the president
or cashier, shall be filed in the office of the secretary of the Territory and in the
office of the probate clerk in the county where such bank is located; nor shall such
bank continue to transact business beyond the period of one year unless the capital
is fully paid up in cash and a sworn statement to that effect filed with the aforesaid
officers. The same law applies to savings banks.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
149
3. The secretary of the Territory.
4. (A) For both State and savings banks the least amount of capital required is
$30,000, one-half of which must be paid in before commencement of business, the
remainder at the expiration of one year from date of commencing business. (B) For
both State and savings banks there must be a board of directors, not exceeding nine,
who elect a president and vice-president and appoint a cashier or treasurer.
(C) For State banks stockholders are liable for all debts of the bank contracted
during the term of their being stockholders equally and ratably to the extent of
their respective shares, such liability to continue for one year after the transfer
of such shares. For savings banks the stockholders are liable to the extent of the
par value of the shares of stock held by them. (D) For both State and savings
banks statements are required to be made (to the treasurer for State banks and to
the secretary for savings banks) at least twice a year, or whenever dividends are
declared, the statements to be published once a week for three weeks in the nearest
paper. (E) The secretary of the Territory may at any time make an examination in
person or by an appointee. (F) For State banks there is no restriction on loans
except that they are not allowed to loan on their own stock, nor is the stock permitted to be transferred while the stockholder owes the bank. For savings banks
the last clause of the foregoing applies. They are also restricted to loans of 10 per
cent of capital and to 5 per cent to officers or stockholders, unless on deed of trust
or collateral. They may loan on real estate on a value of 50 per cent on improved
and 30 per cent on unimproved appraisement, not to exceed valuation for taxes,
(G) No requirement as to cash reserve. (H) For State banks no requirement as to
surplus. Savings banks are required to apply to surplus 10 per cent of earnings
semiannually.
5. The reception of deposits after the insolvency of savings banks renders the
directors liable for such deposits. The fact that such insolvency existed is prima
facie evidence of the knowledge of it. It is the custom of savings banks to allow
interest on deposits.
6. The State is in no way interested as a shareholder in the bank.
7. There is no law bearing on this.
8. By statements, as above explained.
9. None.
10. When a bank appears insolvent on examination the secretary reports it to the
attorney-general, who shall take such steps as the nature of the case may require,
and may bring suit in the name of the Territory or a creditor of the bank before
any court of competent jurisdiction, and on satisfactory evidence of such insolvency
the court shall at once appoint a receiver.
11. Savings banks may issue their own evidence of indebtedness and negotiate the
same to an amount not exceeding 90 per cent of the aggregate loans mad9 and held
by such association secured by mortgages or deeds of trust on real estate; which
shall not be construed to empower the association to issue notes for circulation.
12. The reason for the wide difference in the law governing State banks and savings banks is that the law under which savings banks are organized was passed at a
much later date than the one under which State banks are authorized. The last law
provided only for the savings banks and only repealed such laws as were in conflict.
The principal points in the law governing savings banks has been cited in the above
with the exception of the law governing the purchase of real estate, which is, first,
a plat of ground for the purpose of erecting a building for the transaction of business, the cost of which shall not exceed 50 per cent of the net surplus (this includes
the building); second, such as it may have to purchase to secure it for loans previously contracted, which shall not be held longer than five years.
INTEW Y O R K .
[Charles M. Preston, superintendent of banks.]
1. Banks of discount and deposit, individual bankers, private bankers having no
supervision.
2. Filing certificate of organization in county clerk's office and banking department. Prepayment in full of capital in cash. Deposit of $1,000 in State or United
States stocks in banking department as pledge of good faith and compliance with
statutes. Oath of office of directors. Letters of authority to commence business
from superintendent of banks. Individual banker must file certificate in office of
superintendent of banks, stating town, city, or village in which he resides. (Sec.
42, revised banking law of 1892.) Before letters of authority from superintendent
issue proofs of amount of capital to be specially used and paid in, resources of individual, or of the several partners, are required. Private bankers do business on personal credit in their own way.
150
REPORT OF THE COMPTROLLER OF THE CURRENCY.
3. Superintendent of banks. In liis absence or inability, deputy superintendent.
4. (A) In villages whose population does not exceed 2,000, $25,000; in cities, villages,
or towns exceeding 2,000, not exceeding 30,000, $50,000; not less than $100,000 elsewhere. Payment in full of all capital stock in cash required in advance after November 1, 1895. (B) Management by board of directors, not less than five, who elect
executive officers: President, vice-president, cashier, etc. (C) Shareholders liable
to extent of amount of their stock, in addition to amount
invested in such shares.
(D) Four times a year, once in each quarter, time named bjr superintendent of banks,
in form and manner prescribed by superintendent of banks. (E) Regular annual
examinations; special examinations when ordered by superintendent. (F) Loans to
individual, iirm, or corporation restricted to 20 per cent of capital and surplus of
bank; bona ride commercial paper excepted. (G) Reserve of 15 per cent required in
cities of 800,000 and over, and elsewhere 10 per cent, one-half of such reserve in
cash and one-half in depository approved by superintendent of banks. (H) Surplus
of 20 per ceiit of capital provided for by requiring one-tenth of net profits carried
to surplus fund until such fund is 20 per cent.
5. No limit as to amount. Banks can not advertise for or receive deposits as savings banks. Deposits from savings banks preferred liability. It is a general rule to
allow interest on deposits where certificates of deposit are issued. Some banks
allow interest on balances of account.
6. The State is not interested as a shareholder in any of the banks.
7. Banks are not permitted to conduct branches.
8. Quarterly statements containing substance of quarterly reports are published
in local paper. Superintendent of banks publishes annual summary statement in
State paper at Albany, and in book form.
9. General assessment for support of banking department, annual, apportioned on
resources, with savings banks, trust companies, and safe deposit companies. Special
assessments for per diem allowances and expenses of examiners for regular annual
and all special examinations.
10. (A) Section 18 (revised banking law of 1892), proceedings against delinquent
corporations: If any such corporation or individual banker shall refuse to submit its
books, papers, and concerns to the inspection of any examiner, or if any officer
thereof shall refuse to submit to be examined upon oath touching the concerns of
such corporation or individual banker, or if it shall bo found to have violated its
charter, or any law of the State binding upon it, the superintendent may report the
fact to the attorney-general, who shall institute such action or proceeding against
such corporation or individual banker as is authorized in case of insolvent corporations. If it shall appear to the superintendent that any such corporation or banker
has violated its charter or any law of this State, or is conducting business in an
unsafe or unauthorized manner, he shall, by an order under his hand and official seal,
addressed to such corporation or banker, direct a discontinuance of such illegal or
unsafe practices, and conformity with the requirements of its charter, and with
safety and se'eurity in its transactions, and whenever it shall appear to the superintendent that it is unsafe and inexpedient for such corporation or banker to continue
business he shall communicate the facts to the attorney-general, who shall thereupon institute such proceedings against the corporation or banker as are authorized
in the case of insolvent corporations, or such other proceedings as the nature of the
case may require. (B) Voluntary liquidation: Majority of directors may petition
supreme court, praying for final order of dissolution. * (Code of Civil Procedure,
Title XL)
11. In addition to the powers conferred by the general and stock corporation laws
every bank shall have power: * * * (Of) obtaining, issuing, and circulating
notes. * * * (Sec. 43, revised banking law, 1892.) Reference is made to sections
64 to 86, inclusive, of revised banking law, 1892, transmitted.
12. Savings banks have no capital stock. Thirteen or more persons, two-thirds
resident of county, may establish a savings bank by executing under their hands
and seals and acknowledging a certificate in duplicate, one to be filed in county
clerk's office and one in banking department, within sixty days after acknowledgment,
setting forth (1) name of corporation ; (2) place where business is to be transacted;
(3) name, residence, occupation, and post-office address of each incorporator; (4)
declaration of all of acceptance of responsibilities and of faithful discharge of
duties. (Sec 100, revised banking law, 1892.) Notice of intention to organize
published for four weeks in newspaper of largest circulation of locality and served
on all other savings banks in county fifteen days before filing certificate. Superintendent of banks, on receiviug certificate, indorses same "Filed for examination."
Sixty days allowed superintendent to examine as to convenience of locality, etc.,
needs of the population, responsibility, character, and general fitness of persons
named in certificate. If satisfied superintendent issues certificate of authorization,
on filing of which in county clerk's office such savings bank becomes a corporation.
Must begin business within a year. Board of trustees, not less than thirteen, have
entire management and control and fill vacancies in their number j also make by-laws.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
151
Quorum, seven, including president or vice-president. Have power to require
security from officers. No trustee to have interest in gains or profits, Deposits of
individuals limited to $3.000; of societies and corporations limited to $5,000 exclusive
of interest. Courts may direct deposits in trust in larger amounts. Investments
limited by chapter 813, Laws of New York for 1895 (copy annexed). Powers of trustees and limitations referred to in chapter 415, laws of 1895, annexed. Dealings and
holding in real estate limited to banking house and lot, one-fourth in value of surplus, except excess approved by superintendent of banks and to properties acquired
hy foreclosure, or judgment, sales or settlements to secure debts to be sold within
live years, except when time is extended by superintendent of banks. Available
funds for current payments and expenses fixed at 10 per cent of whole amount of
deposits. Loans on personal security prohibited. Buying or selling gold or silver
(except such as received in payment of interest or principal of obligations or from
depositors in regular course of business), exchange and collection of promissory
notes or time bills of exchange prohibited. Issuing certificates of deposit on demand
or at a fixed day prohibited. Payments to depositors prohibited except on presentation of depositor's pass book, unless loss of same, when regulations provide manner.
Dividends or interests to depositors not to exceed 5 per cent. Surplus not to exceed
15 per cent of deposits. Debts due savings banks from insolvent banks preferred.
When it appears to superintendent of banks that a savings bank has violated its
charter or the laws, or is conducting its business in an unsafe or unauthorized manner, or is insolvent, he may take possession of said bank, report the facts to the
attorney-general, who may bring an action for dissolution. Two-thirds of trustees
may declare by resolution determination to close business, file resolution in banking
department, publish notice to depositors and creditors, realize upon investments, pay
off depositors and petition supreme court, on notice to attorney-general, for order
declaring franchise surrendered and corporation terminated. (For further information and details refer to article 3, chapter 689, laws 1892.) Trust companies have
many of the powers and privileges of banks.
(Revised banking law, State of New York, 1892, transmitted.)
NORTH
CAROLINA,
[W. N. "Worth, State treasurer.]
1. The different classes of banks doing business in the State are national banks,
State banks, savings and private banks.
2. The legal requirements for the national banks are such as hold good in all the
States. The State and savings banks must secure a charter from the general
assembly, in which is stated the amount of capital stock, the amount required to bo
subscribed, and the amount paid up at the time of organizing, the place of business
and the general line of business they intend to follow. Private banks begin business as persons or firms in other lines of trade, submitting to the laws as to taxation
and supervision.
3. The State treasurer determines when the conditions of their doing business are
complied with.
4. There are no legal provisions as to the points here involved, except that the
banks must of course do as required in their charters; and, except as to (D), reports
of their condition must be made over affidavit to State treasurer when required,
which will be when the national banks are required to report to the Comptroller of
the Currency; and these statements must be published in condensed form in newspaper in nearest city or town; and except also as to (E) examinations are made
annually by direction of the State treasurer, the expense of which is borne by the
banks severally.
5. There are no legal provisions in regard to receipt of deposits, except as below,
in regard to savings banks. The banks allow interest at their own discretion and
by agreement on deposits left with them a sufficient time.
6. The State is not interested as shareholder in any bank.
7. The banks conduct branch offices at their own discretion.
8. The public receive the published statements in newspapers provided for in
No. 4.
9. The bank tax is laid on capital stock as follows: On $25,000 or less, $50, and
$2 each for every $1,000 in excess of $25,000; and $25 additional for each county in
which they have an agency.
10. If the condition of any bank is thought to be precarious or unsatisfactory, after
due notice to them to make good the deficiency or losses, the State treasurer shall
order a special examination; and if convinced "of the necessity he shall institute
proceedings in the superior court of Wake County (in which Raleigh is situated) for
settling the affairs of such bank and appointment of a receiver.
11. The State banks have no circulation.
152
REPORT OF TPIE COMPTROLLER OF THE CURRENCY.
12. The main points in the law relative to savings banks are as follows: Every
savings bank sha1! have a commissioner, appointed by the governor, who shall visit
it at least once a year, with full power to investigate its affairs completely, and shall
do so when required by five or more who are interested to have an extra examination, and shall, if he deem its condition hazardous, restrain it by injunction from
further proceeding until a hearing before court, and he shall report to the attorneygeneral and have a prosecation issued on behalf of the State. Every continuous
depositor of $1,000 is a member of the corporation. Deposits drawing interest shall
not exceed $3,000 in one name, except by religious or charitable corporations. Its
officers and members of committees of investments shall not borrow its funds, nor be
surety for loans, nor take a fee on account of such loans. The bank shall reserve a
guarantee fund not less than one-eighth nor more than one-fourth of 1 per cent of
deposits every six months till the whole amounts to 10 per cent of the deposits.
Dividends are carefully regulated by the law. The treasurer of the bank must
make annual reports to the commissioner.
DAKOTA.
[II. A. Langlic, State examiner.]
1. The law of the State of North Dakota provides for only one class of banks,
such as are authorized to carry on a general banking business only.
2, 3. Before authorized to do business three or more persons, two-thirds of whom
must be residents of the State, may organize under the provisions of the law; such
organization papers must be recorded in the office of the register of deeds of the
county in which the bank is located, then filed with the secretary of state.
4. (A) Banks can be organized with a capital not less than $5,000, but upward
according to the population of the town in which it is located. At least half of
the capital must be paid in cash, and the balance in monthly installments of 10 per
cent. (B) Not less than three directors, one president, vice-president, cashier, and
assistant cashier, and such other help as may be required, to constitute the management of a bank, (C) The shareholders are liable for double the amount of the
capital for claims against the bank. (D) Upon call by the State examiner, the
banks must render four reports during the year in such form as said officer prescribes, and any special report that may be requested by saia officer. (E) The State
examiner is ex officio superintendent of banks, who must examine same at least once
a year, and oftener if he deems it necessary. (F) They are restricted from making
loans to any one person, company, or firm to exceed 15 per centum of their capital.
(G) Cash reserve not to be less than 20 per cent of deposits, half of which may be
in other banks and half in cash on hand.
5. There are no provisions governing the receipts of deposits, except in case of
insolvency. Interest is paid on time deposits as a rule.
6. The State has no interest whatsoever as a shareholder in the banks.
7. Branch offices are not provided for by law.
8. The public is kept informed as to the condition of the banks by publication of
the statements rendered upon the call of the State examiner four times a year.
9. When organizing, $50 is paid to the State as a tax, and a fee, regulated by the
amount of the capital, is collected by the State examiner once a year and turned
over to the State.
10. The law is weak on the point of closing up the business of insolvent banks, in
that the examiner has no power to take control of the affairs of the association, but
must apply to the courts for the appointment of a receiver.
11. There are no provisions covering or referring to the issue of bank circulation.
12. We have no law relating to savings banks.
(Copy of laws transmitted.)
OHIO.
[Madison Betts, national-bank examiner.]
1. Unincorporated banks, savings and loan associations, and free banking.
2. Unincorporated banks are simply copartnerships subserving no other laws or
restrictions than those generally regulating sucn companies. Savings and loan associations must file articles of incorporation with the secretary of state, to be approved
by the attorney-general of state (section 3797). Free banking. Certificate to be
made and deposited with the secretary of state and governor, auditor and secretary
of state to furnish company a certificate (sections 7626 and 7629).
3. For savings and loan associations, secretary of state, and attorney-general
(section 3797). For free banking, governor, auditor, and secretary of state (section
7629).
REPORT OF THE COMPTROLLER OF THE CURRENCY.
153
4. (A) Amount and payment of capital stock: For savings and loan associations,
not less than $25,000, one-half to be fully paid up (section 3797). For free "banks at
least $25,000, and not to exceed $500,000, 60 per cent of the same to be paid in (sections 7627 and 7628). (B) Management: Savings and loan associations, by board of
directors, as provided for in section 3798. Free banks by board of directors, not less
than three nor more than five, provided for in section 7634. (C) Liability of shareholders for claims against the bank: Stockholders are liable over and above the stock
owned by each in the further sum of an amount equal to the amount of stock. This
is a provision of the constitution and relates to all corporations in Ohio. (D) Making reports of condition: Every banking institution incorporated or engaged in the
business of banking under the laws of this State shall report to the auditor of state
on the first Monday of the months of April and October of each year, (section 3817),
which shall be published, as provided for in section 3818. (E) Examination or supervision by State official: Savings and loan associations, as provided for in sections
3816 and 3817. Free banks, as provided for in sections 7603 to 7606, inclusive. (F)
Limit of loans: Savings and loan associations to one-fifth part of the actual capital
stock actually paid in (section 3807). Free banks to one-tenth of the amount of capital stock actually paid in (section 7641). (G) Reserve required: Savings and loan
associations, 15 per cent of deposits (section 3821 B). Free banks, 20 per cent of
deposits ''section 7637). (H) Surplus: Savings and loan associations to set aside from
net profits one-tenth part thereof until such surplus equals 20 percent of the capital
stock (section 3808). Free banks to set aside one-tenth part of its net profits of the
preceding half year to its surplus fund until the same shall amount to 20 per cent of
its capital stock (section 7640).
5. The board of directors of savings and loan associations may prescribe the terms
on which deposits shall be received and paid out (section 5799). For free banking,
no special provisions regulating deposits. It is common for banks to allow interest
on deposits.
6. The State has no interest in any bank.
7. There are some of the unincorporated banks or partnerships that have branch
offices, but there are no provisions of law regulating branch offices of incorporated
banks now in active operation.
8. Reports shall be made to auditor of state for examination and publication, as
provided for in sections 3816 to 3818, inclusive, and October reports shall be compiled by auditor of state and transmitted to general assembly.
9. The shares of incorporated banks shall be listed for taxation, as provided in
section 2762. Unincorporated banks are to be taxed, as provided for in sections 2759
and 2761, inclusive.
10. Section 3809 provides for the distribution of the assets of savings and loan
associations when the same cease to do business.
11. No banks of issue in the State of Ohio.
12. See pages 1089 to 1098, inclusive.
(Copy of law inclosed.)
OKLAHOMA.
[William C. Kcnfrow, governor.]
It is hardly practicable for me to take up your list of questions in their order and
give separate reply to each, for the reason that there are very meager provisions in
our statutes relative to the subject of banking. The organic act of the Territoryprovides "that the provisions of title 62 of the Revised Statutes of the United States
relating to national banks, and all amendments thereto, shall have the same force
and effect in the Territory of Oklahoma as elsewhere in the United States: Provided,
That persons otherwise qualified to act as directors shall not be required to reside
in said Territory for more than three months immediately preceding their election
as such." Under the corporation laws of the Territory private corporations are permitted to be organized for the purpose of conducting the business of u banks of
discount and deposit, but not of issue." The property of banks and banking corporations under the revenue laws of the Territory are taxed the same as the property
of other persons. Some of the provisions of the statutes on this subject are as follows : " Every bank located within the Territory, whether such bank has been organized under the banking laws of the Territory or any other Territory or State or of
the United States, shall be assessed and taxed on the value of their shares of stock
therein in the county, town, district, village, or city where such bank or banking
association is located, and not elsewhere, whether such stockholder resides in such
place or not. Such shares shall bo listed and assessed with regard to the ownership
and value thereof as they exist on the 1st day of February annually, subject, however, to the restriction that taxation of such shares shall not be at a greater rate than
is assessed upon any other moneyed capital in the hands of the individual citizens of
this Territory, in the county, town, district, village, or city where such bank is
154
REPORT OF THE COMPTROLLER OF THE CURRENCY.
located. The shares of capital slock of national banks not located in this Territory
held in this Territory shall not be required to be listed under the provisions of this
act." In the crimes act of the statutes, various penalties are prescribed for irregular
banking, one of them making it a felony for any oi'iicer or employee of any banking
institution to receive on deposit any money or other thing of value at the time "when
he knows said bank to be insolvent. Another provision makes it a misdemeanor for
any director of any banking corporation to consent to or make any loans and discounts by which, the -whole amount of the loans or discounts of the corporation is
made to exceed three times the capital stock then paid in and actually possessed, or
to niako any loan or discount to any director of such corporation to an amount
exceeding in the aggregate one-third of the capital stock then paid in and actually
possessed. There arc in the Territory three classes of banks, viz, national banks,
private corporations organized under the laws of the Territory for banking purposes,
and private banks conducted by individuals or partnerships. There is no law
requiring statements from private banks. All the information the public can obtain
from the last two classes of banks is that which may bo voluntarily given by the
managers thereof. The Territory is not interested as shareholder in any banking
institution. There are no provisions of statute for closing up the business of insolvent banks other than the general provisions of law applicable to other insolvent
partnerships and private corporations. The only banks of issue in the Territory are
national banks. There are no savings banks in the Territory. It is the custom of
some banks to pay interest on time deposits, but this is not the rule. In my mes-
ent meager provisions of the statutes on this subject are very unsatisfactory, and
have been taken advantage of by certain dishonest persons engaged in the banking business to obtain j>ossession of and carry away the funds of their credulous
depositors.
OBEGON.
[William P. Lord, governor.]
The constitution of the State of Oregon provides: The legislative assembly shall
not have the power to establish or incorporate any bank or banking company or
moneyed institution whatever, nor shall any bank, company, or institution exist in
the State with the privilege of making, issuing, or putting into circulation any bill,
check, certificate, promissory note, or" other paper, or the paper of any bank, company, or person to circulate "as money. Corporations may be formed under general
laws, but shall not be created by special laws, except for municipal purposes. All
laws passed pursuant to this section may be altered, amended, or repealed, but not
so as to impair or destroy any vested corporate rights. The stockholders of all corporations find joint-stock companies shall be liable for the indebtedness of said corporation to th'o amount of their stock subscribed and unpaid, and no more. The
State shall not subscribe to or be interested in the stock of any company, association,
or corporation. There are private banks and corporations doing a general banking
business under the general incorporation laws of the State, neither being subject to
any legislative supervision or restrictions or otherwise—banking being placed on
the same footing as other legitimate business. Nor has there been any legislation in
relation to savings banks, they being also organized under the general incorporation
laws of the State. As to taxation, officers of banks are required to furnish the
assessor with a list of stockholders, who are taxed upon the value of the shares as
other property is valued, nonresident stock being taxed where the bank is located.
No special tax is imposed on banks. There is an old law requiring banks to furnish
a list of depositors and amounts to the assessor for taxation, but it seems to be inoperative, as it has never been enforced in any instance. Inferior courts have refused
to enforce it, but I think the supreme court has never passed upon its validity. It
is not generally the custom of banks to allow interest on deposits, except those represented by time certificates. There are no legal provisions for closing up insolvent
banks, except the general laws applicable to all insolvent debtors.
[C. F. Gilkeson, commissioner of banking.]
1. The different kinds of banks permitted to do business in the State of Pennsylvania are classified by the banking department as follows: Banks (having discounting privileges), savings institutions (with or without capital, having no discounting
privileges), to which is added trust companies, for the reason that they transact a
general or quasi banking business in addition to that of trusts. The variance in
charters of our different classes of institutions, as banks, saving fund, and trust
REPORT OF THE COMPTROLLER OF THE CURRENCY.
155
companies, with their multiplicity of specialties and accumulation of securities,
makes examination of their condition and report far more laborious and tedious than
that of banks created under our national system, where general rules apply to all.
A large proportion of our banking institutions have been created by special acts of
assembly, with powers and restrictions greatly varying, and with titles that do not
indicate the character (which also applies to a- number of corporations chartered
under general acts) of the business conducted by them, banks of discount being
indiscriminately confused with savings banks and savings banks mixed up with
banks without "powers of discount, and both further confused by the addition to
their corporate name the title "trust company."
2. To secure corporate privileges banks are required, before application is made for
their creation, to advertise in two newspapers printed in the county where proposed
to be located once a week for three months, setting forth name and stylo, the loeationj the specific object for which created, and the amount of capital. Articles of
association must be entered into by not less than three persons, specifying the object
forr wThich the association is formed, and may contain any provisions not inconsistent
w ith the general banking act approved May 13, 187G, said articles to be approved
by the attorney-general. The said persons forming the association, under their
hands, are to make a certificate specifying: (1) Name (subject to the approval of
the commissioner of banking), (2) location or place of business, (3) amount of capital and number of shares, (4) names and residences of shareholders with number of
shares held by each, (5) a statement that the certificate is mado to enable the persons
named to form a corporation for banking purposes under the act. The aforesaid certificate to be acknowledged before a judge or notary public. After its receipt and
approval
by the commissioner of banking a copy is to be certified to the governor,
wTho causes" letters patent to be issued, under seal of the Commonwealth. Similar
and additional requirements are requisite in the matter of savings institutions;
information as to which you are respectfully referred to the act of May 20, 1889,
inclosed herewith in pamphlet form.
3. Commissioner of banking (formerly auditor-general) and the attorney-general.
4. (A) See sections 5 and 9 of the act of May 13, copy inclosed, (B) See section
12 of the act of May 13, copy inclosed. (C) See section 5 of the act of May 13, copy
inclosed. (D) See section 5 of act of February 11, 1895, copy inclosed. (E) See
section 4 of act of February 11, 1895, copy inclosed. (F) See section 21 of act of
May 13, 1876, copy inclosed. (G) None. (H) See section 16 of act of May 13, 1876,
copy inclosed. Please observe that the answers to the foregoing refer"to banks
under the general laws. Banks under special laws vary as to privileges and
restrictions. The legal provisions governing the same must be arrived at by
reference to the several acts themselves. Specially incorporated banks form the
larger portion of that class of corporations.
5. No legal provisions under the general law. It is the custom of banks to allow
interest on deposits.
6. None.
7. No.
8. Through publications in newspapers, under call of commissioner of banking
and the annual report.
9 It is elective for the banks to pay the State 4 mills tax on appraised value of
shares in addition to local taxation on same, or 8 mills on the par value of shares
of stock.
10. See section 9 of the act of February 11, 1895, copy inclosed.
11. Refer to Purdon's Digest of the Laws of Pennsylvania, Vol. I, pages 166 and
167.
12. Refer to act of May 20, 1889, copy inclosed.
[William M. Hardt, national-bank examiner.]
1. State and savings banks and trust companies.
2. Application for charter must be made to the secretary of state, who refers the
same to the commissioner of banking, and after his inspection it is sent to the attorney-general and then to the governor for their approval. Corporations for carrying on the business of banking may be formed by any number of persons not less
than three, who shall enter into articles of association which shall specify the object
for which formed, and being signed by the persons forming such association. They
shall also under their hands make a certificate which shall specify the name; location
or place of business, designating the county, city, borough, or village; amount of capital stock and number of shares in which divided; the names and places of residence
of shareholders, and number of shares held by each. Savings banks may be formed
by any number of persons not less than thirteen, and under the same general form
of application for articles of association. The trust companies generally are operating under special charters granted by the legislature, the provisions of which differ materially. This is also the case with many of the savings banks.
156
REPORT OF THE COMPTROLLER OF THE CURRENCY.
3. Commissioner of banking.
4. (A) Banks of discount and deposit must have capital stock of not less than
$50,000, and before commencing business at least 50 per cent of its capital stock
shall be paid in, and tlie remainder of the capital stock shall be paid in installments
of at least 10 per cent on the whole amount of capital per month from the time of
commencing business. Savings banks are unrestricted as to the amount of capital,
but the trust companies shall have $125,000 of paid-up capital. (B) The affairs
of every bank shall be managed by not less than five directors, one of whom shall
be president and another vice-president. No cashier, clerk, or teller shall be eligible as a director. Savings banks shall have at least thirteen directors, and trust
companies are unrestricted in this particular. (C) Banks of deposit and discount
shareholders are liable, equally and ratably, but not one for the other, for all contracts, debts, and engagements of such corporations to the amount of their stock
at the par value, in addition to the par value of such share. No liability of this
character is imposed on shareholders of savings banks or trust companies. (D) All
corporations mentioned shall make not less than two reports of its condition during
each year according to the form and manner prescribed by the commissioner of
banking, which reports shall be verified by the oath or affirmation of the president,
cashier, or treasurer, attested as correct by the signatures of at least three of the
directors, trustees, or managers. Each such report of condition shall exhibit in
detail and under appropriate heads the resources and liabilities of the corporation
at the close of business on any past day specified, and an abstract summary shall
forthwith be published in a newspaper, in the place where the corporation is located,
at least three times. (E) It is the duty of the commissioner of banking, as often
as he shall deem proper, to examine or cause to be examined the affairs of every corporation of the several classes mentioned. (F) None, except that no director of
any corporation shall receive as a loan from such corporation an amount greater than
10 per cent of the capital stock actually paid in, and the gross amount loaned
to all the officers and directors of such corporation, and to the houses or firms in
which they may be interested, directly or indirectly, shall not exceed at any time
the sum of 25 per cent of the capital stock paid in; and no shareholder shall sell or
transfer any shares in the capital stock held in his own right so long as he shall
be liable, either as principal, debtor, surety, or otherwise, to the corporation, for
any debt, without the consent of a majority of the directors; nor shall such shareholder, when liable to the corporation for any debt that is overdue and unpaid, be
entitled to receive any dividend, interest, or profit on such shares as long as such,
liabilities shall so continue. (G) None. (H) Banks of discount and deposit are
required to carry one-tenth of the net profits of the preceding dividend period to
its surplus fund" until such surplus fund shall amount to 25 per cent of its capital
stock.
5. Banks of discount and deposit are prohibited by law from paying interest on
deposits. It is the custom, however, to allow interest on deposits, and it is not prohibited on the part of trust companies and savings banks.
6. Not interested.
7. No.
8. By publication of two reports yearly.
9. The regular State tax is imposed upon the shareholders of each corporation,
and in addition the corporations are required to pay the sum of $25 each, and for
each $100,000 of capital stock, or fractional part in excess, of $100,000, the sum of $5
shall be paid annually; and all such corporations shall pay annually the sum of 2
cents for each $1,000 of assets. Savings institutions without capital stock shall
annually pay, in addition to the taxes imposed, the sum of $25, and for each $100,000
of assets, or fractional part, the sum of $1.
10. If the commissioner of banking shall have reason at any time to conclude
that any banking corporation is in an insolvent condition, he shall forthwith communicate the facts to the attorney-general, who shall immediately make application
to the court of common pleas of Dauphin County, or to a law judge thereof, for the
appointment of a receiver to take charge of such corporation's property and wind
np its business. Such receiver shall proceed under and subject to the orders of the
court of common pleas. If the commissioner of banking should deem it necessary
for the immediate protection of the depositors and other creditors, he may, after
hearing before the attorney-general (of which hearing the corporation shall have
notice) appoint a temporary receiver. He also has power to withdraw the temporary receiver and surrender possession and property to the corporation. When a
corj>oration denies that there is good reason for the institution of either of the proceedings it shall file its answer in the court of common pleas.
11. An act passed about 1860 makes it illegal for banks to issue circulation.
12. Many of the savings banks are operating under special charters granted by
the legislature, which have different and varied privileges. Savings institutioDS
for the encouragement of savings, having no capital stock, are not very numerous, but
.REPORT OF THE COMPTROLLER OP THE CURRENCY.
157
the law under which they operate contains the following principal points: To receive
deposits, and to invest the same, credit and pay interest thereon. The sums may be
limited in the aggregate which any person or corporation may deposit. The aggregate amount of deposits to the credit of any one individual or corporation shall not
exceed $5,000. Investment of funds may be made in stocks or "bonds of the United
States, Commonwealth of Pennsylvania, or of any State in the Union that has not
within 10 years previous to making such investment defaulted in the payment of principal or interest of State debt; in the stocks or bonds of any city, county, town, or
village of any State of the United States issued pursuant to the authority of any
law of the State; in bonds or mortgages, or unencumbered improved real estate in
this State. Loans upon notes, bills of exchange, or drafts are prohibited, as is also
the discounting of them. Interest or dividends to depositors not to exceed 5 per cent
per annum. When surplus amounts to 15 per cent of the deposits, at least once in
three years the accumulation beyond such surplus (15 per cent) shall be divided
among the depositors in excess of the regular dividends.
RHODE
[A. C. Sanders, State auditor.]
1. State banks, savings institutions, and trust companies.
2. After receiving a charter from the legislature the following requirements must
be met: (See chapter 153, sections 1 to 8.) The foregoing, you will note, does not
include the organizations of savings institutions or trust companies. We have no
legal requirements by which institutions for savings and trust companies are organized. The incorporators are given the power by charter (which is a special act) to
perfect an organization.
3. In the case of State banks the commissioner is appointed by the governor.
Institutions for savings and trust companies, no officer.
4. (A) Amount of capital stock and payment thereof fixed by provisions of charter.
(B) See banking laws, chapter 153, sections 9 to 37, inclusive. (C) Not specifically
stated in banking laws; stockholders in other corporations for amount of stock owned.
Sections 22. 23, and 24 of chapter 153 may answer your question. (D) Reports must bo
made within ten days from time of receiving notice to the State auditor. (E) Banks
are not examined except by request of the legislature or by one or more persons, who
shall be officers or stockholders, making a statement in writing to the governor, setting forth their interest (see sections 38 and 39, chapter 154). (F) No restriction
whatever (see chapter 568, section 52, amended). (G) None. (H) None.
5. In relation to provision governing the receipt of deposits, there are none. I am
not positive, but think that some banks allow interest on deposits.
6. None except the school fund in the following-named banks: Dividends on the
school fund—National Exchange
Bank, Newport, $28; Globe National Bank, Providence, $1,000; Merchants7 National Bank, Providence, $461.50; National Bank of
Commerce, Providence, $2,032.50; American National Bank, Providence, $1,430;
National Bank of North America, Providence, $2,532; Mechanics' National Bank,
Providence, $996; Rhode Island National Bank, Providence $67.50; total, $8,547.50.
7. They are not (see section 11, chapter 153).
8. By the annual report.
9. A tax of 40 cents on each $100 of deposits and on each $100 of reserve profits (see
chapter 1215).
10 and 11. See banking laws.
12. A copy of the act incorporating the Centerville Savings Bank transmitted.
SOUTH
CAROLINA.
[James Norton, comptroller-general.]
1. Law does not limit the kind of banks.
2. No special legal requirements.
3. No officer created by law for this special purpose.
4. No special requirements as to A, B, C, D, E, F, G, and H clauses.
5. None.
6. None.
7. Yes; as suits the management.
8. Sworn quarterly statements must be published.
9. No special tax—taxed as are other corporations.
10. Same that apply to receivers for other corporations.
11. These sections are full and complete, but are fully inoperative under the present
United States laws. Ten per cent tax kills.
12. No special advantages given.
158
REPORT OF THE COMPTROLLER OF THE CURRENCY,
SOUTH
[E. E. Hemingway, State public examiner.]
1. State and private banks.
2. State banks must file certificate of organization with secretary of state, and
must publish same, together with secretary of state's certificate of authorization, in
some newspaper for four consecutive weeks. Private banks can begin business without filing anything, even a bond, and without getting certificate or permission from,
any official.
3. The secretary of state.
4. (A) State banks in towns containing 500 inhabitants or less must have $5,000
capital; 500 to 1,000, $10,000 capital; over 2,000, $25,000 capital. At least 50 per cent
must be paid in before banks are authorized to commence business. Private banks
can begin business without any capital. (13) Under supervision of public examiner.
(C) Shareholders liable for twice the value of the stock. (D) Must report four times
a year to public examiner, under penalty of $100 to $250 and cancellation of charter.
(E) Examination at least once each year by public examiner. (F) State banks can not
loan over 15 per cent of amount of capital stock to any one person or firm. (G) Twenty
per cent of deposits, 10 per cent of which must be in cash and 10 per cent may be in
"other banks." (H) No provisions.
5. No legal provision for receipt of deposits. It is not the general custom of banks
in this State to allow interest on deposits.
6. None to my knowledge.
7. Yes; private banks.
8. By the biennial report of public examiner.
9. None.
10. No special provision. It can be done by appointment of a receiver or by making an assignment.
11. None.
12. None; they are same as private banks.
[William S. Morgan, secretary of state.]
1. Discount and savings banks and trust companies.
2. Obtain charter from secretary of state's office.
3. Secretary of state.
4. (A) No amount required to be given in charter, but the president and cashier
must certify under oath the amount of capital stock to the comptroller. (B) President and board of directors. (C) Liable for the amount of stock subscribed. (D)
Conditions sworn to required to bo published in a newspaper every six months.
(E, F, G, and H) None. These answers apply to both kinds of banks.
5. No legal provisions governing the receipt of deposits. It is not generally the
custom to allow interest on deposits, although it is done in some instances.
6. The State is not interested as a shareholder.
7. The law does not prohibit branch banks.
8. Each bank is required to make a semiannual statement and have the same
published in a newspaper where it is located.
9. The banks are required to pay an ad valorem tax on their capital.
10. To be enforced in the manner provided by law for the application of property
of natural persons to the payment of their debts, engagements, and contracts.
11. No provisions.
TIGXA.S.
[Allison Mayfield, secretary of state.]
Section 16, article 16, of the constitution of this State, adopted in 1876, provides
as follows: "No corporate body shall hereafter be created, renewed, or extended
with banking or discounting privileges." A few institutions known as State banks
are carrying on a banking business in this State, which procured their charters prior
to the adoption of the above-named constitutional provision. In addition, there are
a few institutions conducting a banking business as private individuals or partnerships,
not, however, in any sense antagonistic to the constitutional provision mentioned.
In the main, however, the banking business of this State is transacted by banks
incorporated under the Federal laws.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
159
[Jolin <T. Gannon, national-bank examiner.]
1. State and sayings banks.
2. The president and cashier must certify to the secretary of state that 10x>er cent
of the proposed capital has been paid in in cash.
3. The secretary of state.
4. (A) Capital stock must be not less than $50,000 or more than $500,000, of vfhich
10 per cent must be paid in before commencing business, the balance being subject
to call of directors." (B) Vested in board of directors. (C) None outside of their
original investment. (D) Reports of condition to be published in local newspaper
in January and July of each year. (E, F, G, and H) None.
5. None. As a rule they do not pay interest on individual deposits.
6. None.
7. Yes.
8. By the published reports of condition in January and July of each year.
9. None outside the regular tax on capital invested.
10. 11. None.
12. The savings banks were governed by laws very similar to the above.
(The foregoing information relates to State banks now in existence operating
under charters obtained prior to 1876.)
[Caleb W. "West, governor.]
1. Commercial and savings banks, loan, trust, or guaranty companies, and private
banks.
2. I inclose copies of acts authorizing the organization and management of commercial and savings banks and loan, trust, or guaranty companies. There is no
provision relating to private banks.
3. 4. Answered by the law.
5. Answered by the law in part. No interest allowed on commercial deposits.
Four and five per cent allowed on savings deposits and time certificates.
G. The Territory has no interest as a shareholder in any of the banks.
7. No provision relative thereto.
8. Answered by the law.
9. None whatever.
10. Answered by the law.
11. Territorial banking institutions have no issue.
12. Answered by the law.
(Copy of acts transmitted.)
[Joseph T. Talbert, national-bauk examiner.]
1. Banks and savings institutions.
2. Subscribers, after four days' notice from treasurer appointed from among their
own number, may meet and adopt articles of association and may elect not less than
five directors. Each stockholder shall personally subscribe to such articles of association his name, place of residence, and the number of shares of stock taken by
him in such company: Provided, in case a person having duly paid 25 per cent
required upon subscription, said articles may be signed by written proxy or power
of attorney to that effect, and there shall bo indorsed and attached to said articles
so subscribed an affidavit made by any three or more of the subscribers named
therein, before a judge of some court of record or notary public, setting forth in
substance the amount of stock which had been subscribed, and that 25 per cent in
cash has been paid thereon, as aforesaid, and that the subscribers to said articles
are personally known to them, and that they believe such subscribers are able to and
will pay the amount by them subscribed. The articles of association formed in pursuance of the foregoing sections shall bo filed in the office of the clerk of the probate
court (or in the office of the clerk of the district court), who shall issue under the
seal of said court a certificate to the effect that the articles of association have been
filed in his office, which certificate, together with a copy of the articles, must be
filed in the office of the secretary of the Territory, who shall issue, under the great
seal of the Territory, a certificate of incorporation, and thereupon the persons who
have subscribed said articles, and all persons who may from time to time become
stockholders in said company shall be a body politic and corporate, by the name
stated in its articles of association. No association shall be organized under this
law with a capital stock of less than $25,000, and as is provided in section 2 of this
act. The capital stock of the association shall be divided into shares of not to
exceed $100 each nor less than $50, and shall be deemed to be personal property, and
160
REPORT OF THE COMPTROLLER OF THE CURRENCY.
shall bo transferred on tlio books of the association in such manner as may be prescribed by the by-laws and articles of association.
3. Secretary of Territory. (See 2.)
4. (A) Cities of 20,000 inhabitants and over, capital stock to amount of $100,000
must be subscribed. More than 10,000 and less than 20,000 inhabitants, $50,000 must
be subscribed. Less than 10,000, $25,000 must be subscribed. Twenty-live per
cent in cash must be paid prior to incorporation, balance in installments of not less
than 10 per cent per month. (B) Board of directors. (C) Same as national banks.
(D) As often as once and not to exceed three times a year. Statement must be furnished every quarter. (E) Secretary of Territory, ex-officio bank examiner. He
may appoint an agent to act in his place. (F) No official can borrow from his bank
to exceed $10,000, and then only on security in double value, and maturity must not
exceed three months. Stock of bank shall not be taken as security. No officer shall
be an indorser or security for others. There appears to be no other limitations.
(G, H) No provision requiring any.
5. Have power to receive deposits; usually allowed from 4 to 6 per cent on time
deposits.
6. Not at all.
7. There are no restrictions against.
8. Statement must be published in local newspaper every quarter.
9. None.
10,11. There are none.
12. There is only the one act. Above information covers everything.
YERMONT.
[Elisha May, national-bank examiner.]
Vermont permits three kinds of banks organized under the laws of the State, and
certain loan and investment companies not organized under her laws, to do business
in her borders. First, banks of circulation, discount, and deposit; second, savings
banks, strictly, and third, savings institutions and trust companies. Loan and
investment companies are not allowed to do a general banking business, but only to
sell their choses in action, or to sell, guarantee, or negotiate those of other persons or
corporations as investments or as a business, and are under the supervision of the
inspector of finance or his deputy. Banks of circulation, etc.: Of this class of
banks none at present are doing business in this State, but may be organized under
a general law in this manner: Five or more persons, residents of the State, may form
an association to carry on the business of banking "for the purpose of discounting
bills, notes, and other evidences of debt, receiving deposits, buying and selling gold
and silver bullion, foreign coin, and bills of exchange; loaning money on real and
personal security, and exercising such incidental powers as are necessary to carry on
such business.'' A certificate must be prepared in accordance with a statutory form
and filed with the secretary of state. The capital stock shall not be less than $50,000
nor more than $500,000. Directors to number not less than five nor more than nine,
and each share to count one at all meetings of shareholders. The officers to bo a
president, vice-president, cashier, and such officers and agents as the business
requires. The basis of banking are bonds and stocks of the United States, or guaranteed by the United States, not bearing less than 3 per cent, and bonds of the States
of Vermont, Maine, New Hampshire, Rhode Island, New York, New Jersey, and Ohio,
not bearing less than 4 per cent interest. These bonds are to be deposited with the
State treasurer. The capital stock must all be paid in, and the inspector of finance
must examine the bank before it may begin business. The inspector of finance is the
officer whose determination is final. The management of the affairs of the bank is given
to its board of directors. No stockholder " is liable, in his individual capacity, for a
contract, debt, or engagement of the bank, unless the articles, by him signed, declare
that the shareholders shall be so liable." But a director is liable to the bank's creditors and stockholders "for all losses sustained by violation by such directors of the
provisions of the law or other unfaithfulness in. the discharge of their official duties."
Such banks are not required to make reports of their condition to anyone, but the
inspector of finance is required to at least once a year examine all such banks and
report to the auditor of accounts. Upon application of creditors or shareholders in
any such bank, whose debts or shares amount to $1,000, verified by oath, any chancellor, in his discretion, could order " a strict examination to be made by a master in
chancery of the affairs of the association for the purpose of ascertaining the safety of
its investments and the prudence of its management." No provisions are made as to
the matter of loans, except power is given to each bank to purchase, hold, and convey real estate necessary for its business purposes in the transaction of its business
or to take mortgages, in good faith, as security for loans made by it or money due to
it, or in satisfaction of debts previously contracted in the course of its dealings, or
REPORT OF THE COMPTROLLER OF THE CURRENCY.
161
sucli as it acquires by way of execution. But it "shall
not purchase, hold, or convey
real estate in any other case or for any other purpose.'7 It is not permitted to employ
its money directly or indirectly in trade or commerce other than as above stated^
or deal or trade in buying or selling goods, chattels, wares, or merchandise, but it
may sell property that comes into its possession in the collection of its debts. Tkelaw does not require any cash reserve or any accumulation of surplus. There is no
provision as to the receipt of deposits by such bank. The State is not interested in any
such banks as a shareholder, and can not be under the law. Branch offices of such
banks are not permitted; and the only information the public is furnished comes.
from the reports of the inspector of finance furnished to and published by the auditor of accounts, or obtained by an investigation by a master appointed by the chancellor, the findings of whom and the decision of the chancellor thereon "shall be
published in such manner as the chancellor directs." The law requires each bank
to pay semiannually 1 per cent of its capital stock into the State treasury. Upon,
failure for ten days after notice by the State treasurer to redeem any of its notes,
and upon notice duly published, the State treasurer may forthwith sell the bondsand stock and redeem the circulating notes of any such bank pro rata. A bank may,
by a voluntary proceeding, also close up its affairs. The inspector of finance, if he,
believes any such bank insolvent, or that it has violated any provision of law relating to banking, or if it refuses to submit its books, papers, and affairs to his inspection, or if its officers refuse to be examined on oath by him as to its business and
affairs, may apply for an injunction, the appointment of a receiver, and the winding,
up of the business of such bank.
Savings banks and trust companies: All these institutions are chartered by tlie>
legislature. There is no general law under which they can be organized. Each
bank has certain general provisions under which it must act; others are accorded
greater powers, but in substance all are nearly alike. The trustees of such banks,
etc., have general management of the affairs of the corporation, but may act through
committees. They must meet once in three months. The treasurer of every such
bank, etc, must annually make a report to the inspector of finance, showing accurately the condition of the same as it was on the close of business June 30 of each,
year and must give in detail all the assets of the bank and the liabilities. The
statute gives the items required in the treasurer's report. Deposits may be madebut not by the same depositor in a sum exceeding $2,000; but this does not apply t a
deposits by widows, orphans, administrators, executors, guardians, charitable or
religious institutions, or trust funds deposited by order of court. Books must be verified each five years by some person other than the treasurer or his clerk, and a list
of all deposits not changing for ten years is to be returned to the inspector of finances
and published by him in the newspapers of the State. Investments and loans: Banks
are allowed to accept only first mortgages of unencumbered real estate not exceeding three-fifths of its cash value. One-sixth in value of all such mortgages shall be
upon real estate in this State; and not more than 70 per cent of its assets shall be in
mortgages; nor shall over 50 per cent of its assets be invested in mortgages outside,
the State. On unimproved or unproductive real estate banks may not loan over 50
per cent of its cash value. Loans on personal securities can not be made unless upon*
at least two approved names of persons, two at least residing within 50 miles*
of the institution making the investment. Investments may be made in public,
funds of the United States, in the bonds and notes of towns, counties, cities, villages, and school districts of the New England States, New York, Pennsylvania,,
Ohio, Michigan, Indiana, Illinois, and Iowa; in the stocks of any national bank in the
New England States, New York, and certain named cities. No bank can loan more,
than 5 per cent to any one person or corporation, etc. The law requires each savings bank to reserve from its net earnings during the six months preceding not les&
than one-eighth nor more than one-fourth of 1 per cent of its deposits as a surplus
fund until it amounts to 5 per cent of the amount of deposits and other liabilities,
"which fund shall be thereafter maintained and held to meet losses in its business,,
etc." The methods of winding up the affairs of an insolvent savings bank or trust
company are substantially the same as heretofore given under the head of bank of.
deposits. In point of fact, until recently no savings bank in this State took deposits
subject to check nor issued certificates of deposit, but recently several savings banks
have done substantially a regular banking business.
VIRGINIA.
[Holmes Conrad, Solicitor General United States.]
1. Banks of discount and deposit, savings banks. These banks can be chartered
by the circuit court of the county, or of the corporation, or by the hustings court
of the corporation in which the principal office is located, or by the judge thereof in
vacation. The courts and judges are prohibited from granting charters to banks of
CUR, PT 1
11
162
REPORT OF THE COMPTROLLER OF THE CURRENCY.
circulation, but the legislature can grant them. All the "banks of circulation heretofore chartered have been wound up. None have been chartered, so far as I know,
since the war.
2. Five or more persons apply to the court or judge in vacation for a charter, and
the application must set forth, (a) name of company, (6) its purposes, (c) amount of
capital stock, minimum and maximum can be stated, (d) its division into shares,
(e) amount of real estate to be held, (/) place of principal office, {g) chief business
to be transacted, (h) names and residences of the officers who are to manage it for
the first year. When the proper judge or court grants the charter, it is recorded in
the clerk's office of his court, and a copy filed in the office of the secretary of the
Commonwealth, and when this is done it is a corporation.
3. There is no officer to determine when the conditions have been complied, with.
The certificate of the secretary of the Commonwealth, that a copy of the charter has
been lodged with him is all that is required.
4. (A)'The minimum capital for any corporation (except cemetery or charitable
institution) is $500, but no judge would grant a charter to a bank with $500 as the
minimum capital, for in acting upon application for
charter he has " a discretion to
grant or refuse * * • upon the terms set forth.;; (B) Bank is managed by directors. (C) Shareholders are not liable for claims against the bank beyond their unpaid
subscriptions to the capital stock. (D) Compelled to make reports to auditor of public accounts of the State, on forms similar to those made by national banks, and as
often. These reports in condensed form are published in one or more newspapers.
(E) No general provision for examination of banks, as in case of national banks, but
there may be at" any time an examination made by a committee of the legislature or
of either house or by commissioners appointed by the governor, and on the application of stockholders representing one-iifth of the stock the auditor of public accounts
shall appoint some one to make a special examination and report. (F) The funds
(including deposits) can boused in discounting commercial paper and other evidences
of debt, in loaning on real and personal security, and in purchase of stocks and bonds,
etc., and in real estate for its banking purposes. Can buy real estate in order to save
a debt. (G) No law as to amount of cash reserve required to be kept on hand. (II)
No dividend in excess of G per cent per annum can bo declared until the bank shall
have a surplus of at least 5 per cent of its capital, nor can any dividend bo made by
which the surplus fund is reduced below 5 per cent of the capital.
5. Somo banks allow interest on deposits. No special provision governing the
receipt of deposits.
6. As far as I know, the State is not interested as a shareholder in any of the banks
now in existence.
7. Under our general law governing chartered companies, banks could have
branches, but I know of none.
8. Statements similar to statements of national banks are published. They are
called for by the auditor of public accounts and published in condensed form whenever the Comptroller of the Currency calls for them from national banks.
9. No special taxes imposed. The capital stock is taxed like any personal property
held by an individual and the assessment is according to its market value, and the
bank pays it. There is a tax imposed upon every charter (whether of a bank or
any other company) when granted.
10. No special provision for closing up the business of insolvent banks. In this
respect they are like all other chartered companies.
11. There are no banks of circulation in the State, but they arc authorized under
chap. 850, acts of the general assembly, 1893-94.
12. The directors elect one of their number president, and also appoint the subordinate officers and agents, prescribe their compensation, make by-laws and regulations subject to the power of the members to repeal or modify the same; certificates of deposit not less than $1 may bo issued, and at any rate of interest that
may be agreed upon, not exceeding the legal rate. The deposits and other funds
may be invested in or loaned on any stocks or real security, or be used in purchasing or discounting bonds, bills, notes, or other paper, subject to certain restrictions.
w ^ s
I-I
iis" chrr o nsr .
[L. Pv. (1 rimes, State auditor.]
1. There are no statutory provisions restricting or limiting the departments or
kinds of banking business that may be engaged in in this State. Corporations having capital stock are permitted to engage in a banking business. "Such banking corporations still have power to exercise, by its board of trustees, or duly authorized
officers or agents, all such incidental powers as shall be necessary to carry on the
business of banking by discounting and negotiating promissory notes, drafts, bills
of exchange, and other evidences of debt; by receiving deposits, buying and selling,
EEPORT OF THE COMPTROLLER OF THE CURRENCY,
163
exchange, coin and bullion, by loaning money on real estate or personal security; to
accept and execute all trusts, fiduciary or otherwise, as may be committed to said
bank or corporation by any person, persons, or corporation, or by the order or direction of any court; and may do any other business pertaining to banking."
2. Banks are not classified in the statutory law of this State. Private banks are
required to conform to no statutory regulations in order to transact business. All
corporations are forbidden to commence business until the whole amount of their
capital stock has been subscribed. "The amount of the capital stock of any bank
incorporated under this act shall not be less than $25,000, to be divided into shares
of $100 each, all of which shares shall be subscribed and three-fifths of said capital
stock shall be paid in before tne commencement of business, the remainder to be subject to the call of the trustees; and it shall be the duty of the directors of any such
bank to file with their articles of incorporation their affidavit that three-fifths of the
capital stock of such bank has been actually paid in."
3. The statutes of this State designate no officer to determine when this condition
has been complied with.
4. There are no provisions of law on the subjects embraced in this inquiry except
as set forth in answer No. 2 above.
5. "Any president, director, manager, cashier, or other officer of any banking
institution who shall receive or assent to the reception of deposits after he shall
have knowledge of the fact that such banking institution is insolvent or in failing
circumstances shall be guilty of felony," and shall be punished by imprisonment in
the penitentiary for a period of not less than two nor more than'twenty years. It
is customary for banks to allow interest on deposits.
6. The State is not interested as shareholder in any bank.
7. Banks are not forbidden to conduct branch offices or banks.
8. u All such banking corporations shall file, on the first Monday in June, each
year, with the State auditor, a report, sworn to by its president, vice-president, or
cashier, of the resources and liabilities, stating the amount of deposits, the aggregate of loans and the amount upon each class of securities, the names and residence
of the shareholders and number of their shares, the directors or officers for the time
being, and any other matters affecting the safety of their deposits or the interest of
their creditors." The State auditor, in his biennial report, publishes the statistical
facts thus furnished in tabular form.
9. No special taxes or burdens are imposed upon banks in return for any banking
privileges granted them. " All the shares of stock in banks, whether of issue or not,
existing by authority of the United States or of the State, and located within the
State, shall be assessed to the owners thereof in the cities or towns where such banks
are located, and not elsewhere, in the assessment of all State, county, and municipal
taxes imposed and levied in such place, whether such owner is a resident of said city
or town or not."
10. There are no statutory provisions governing the winding up of insolvent banks.
11. Article 12, section 11, of the State constitution provides as follows: "No corporation, association, or individual shall issue or put in circulation as money anything but the lawful money of the United States." Section 1511 of volume 1 of Hill's
General Statutes provides: "No corporation organized under this chapter shall, by
any implication or construction, be deemed to possess the power of issuing bills,
notes, or other evidence of debt for circulation as money."
12. There are no provisions of our statute law relating to savings banks.
WEST
[B. B. Harding, national-bank examiner.]
1. Excepting savings institutions, banks of deposit and discount are the only class
authorized under our laws.
2. Any number of persons, not fewer than five, desiring to carry on a general
banking business sign an agreement to that effect. At least two who sign such an
agreement make oath to the matters set out therein, and that at least 10 per cent of
the capital subscribed to has been paid in in good faith, etc. The same being
presented to the secretary of state and the law having been complied with, the
secretary issues a certificate of incorporation to such incorporators.
3. The secretary of state is the proper officer to determine when the legal requirements have been met to authorize the issuing of a certificate of incorporation, but
the board of public works has control of the banks after their organization.
4. (A) Capital stock shall not be less than $25,000, nor more than $500,000, with 10
per cent to be paid in before certificate of incorporation is issued, and balance as
called for by directors. (B) The management of the bank in the hands of a board
of directors not fewer than five, and who must be stockholders. (C) Stockholders
are liable for double the amount of shares subscribed for. (D) No reports of condi
164
REPORT OF THE COMPTROLLER OF THE CURRENCY.
tion required. (E) All examinations are made by a State Lank examiner appointed
by the governor, who must be a man of experience and skill. Examination of each
bank must be made between April 1 and September 30 of each year; and each report
made under oath to the auditor of the State prior to September 30. If any bank ia
found in an insolvent or unsound condition or so grossly mismanaged as to jeopardize
the interest of stockholders and depositors therein, the examiner shall report the
same at once to the board of public works, who have power to inquire into and
require such bank to correct all such irregularities at once, and for a failure to do so
the board can revoke the bank's charter. The board can order a special examination of any bank at any time where it thinks the circumstances demand it. (F) No
restrictions on loans by bank. The board of directors governs that. (G) No limitations or restrictions as regards cash reserve. (H) No legal requirements as to
amount of surplus.
5. No legal provisions governing receipt of deposits by banks. It is the custom to
allow 3 or 4 per cent on time deposits, but it is not the custom to allow any interest
on commercial deposits.
6. The State is not interested to any extent as a shareholder in any of the banks.
7. No bank is permitted to conduct branch offices or banks. Each is a bank ia
itself.
8. In the month of October or November of each year the auditor of the State publishes in some newspaper in the county in which the bank is located the condition of
all banks in that county, and in his biennial report to the legislature is incorporated
the reports of the State bank examiner.
9. No taxes or burdens are imposed upon the banks or banking privileges granted
them, except incidentally the fees to secretary of state for issuing certificate of
incorporation, and $15 each to the State bank examiner as pay for his services in addition to his stated stated salary of $700. Taxes are assessed on bank stock, etc., as
upon other property real and personal.
10. The charter of all insolvent banks is revoked by board of public works, composed of governor, auditor, treasurer, superintendent of free schools, and attorneygeneral, after which the State releases all control over same and the business is closed
up, as in case of other joint-stock companies.
11. There being no legislative act providing for banks of issue and. circulation,
there are consequently no legal provisions covering the issue of bank circulation.
12. Any number of persons, not less than thirteen, citizens of the State, whose
responsibility and fitness for the proposed trust shall be certified by the judge, or
judges, of the circuit court of the county where the proposed savings bank is to be
located, may associate themselves together for the purpose of organizing such bank
without being a joint-stock company. At least three-fourths of their number shall
reside in such county. Each member of such association signs an agreement in
which, among other things, he agrees to accept the responsibilities and faithfully
discharge the duties of a trustee in said association. The agreement is acknowledged,
and the requirements of the law otherwise having been conformed with and the secretary of state being satisfied with the responsibility, good character, and general fitness of the persons named in the agreement, shall issue his certificate to such persons
similar to the certificate issued to other bank incorporators. Upon filing of such certificate in county clerk's office of the county in which such savings bank is to be
located the same shall be a corporation for a period of fifty years. The business of the
corporation shall be managed and directed by the board of trustees. No trustee shall receive any compensation for his services as trustee except as hereinafter provided; nor
shall be liable for any loss, except such as may happen from his negligence or willful or
corrupt misconduct. No trustee, officer, cierk, or servant thereof, shall directly or
indirectly, for himself or as the agent or partner of others, borrow any of the funds
of deposits of the corporation, or become an indorser of surety for any moneys loaned
by such corporation. The trustees of any such savings bank shall invest the deposits
of the bank and the income derived therefrom only as follows: First, in first mortgages or deeds of trust on real-estate situated in this State, or in States contiguous
thereto, such real estate in another State not being situated at a distance exceeding
50 miles from such bank to an amount not to exceed 60 per cent of the valuation of
such real estate, but not exceeding 70 per cent of the whole amount of deposits
shall be so invested; and no loan on real-estate security shall be made except upon
the report of not less than two members of the board of trustees. Second, in bonds
or securities of the United States, State, county, district, city, town, or village in
this State. Third, in the notes of any citizen of this State, with a pledge as collateral
of the stock of any bank or banking association incorporated under the authority
of this State, or of the United States, at no more than 80 per cent of the market
value and not exceeding the par value thereof: Provided, that such corporation shall
not hold as security for loans more than one-quarter of the capital stock of any one
bank or banking association. Savings banks may deposit sums not to exceed 20 per
cent of their deposits, on call, in such banks or banking associations, and may receive
interest for the same. Fourth, in loans upon the personal notes of the depositors of
KEPORT OF THE COMPTROLLER OF THE CURRENCY.
165
the corporation, but not exceeding the amount of his deposit to a depositor; and in
such cases the deposit and the book of the depositor shall be held by the corporation
as collateral security for the payment of the loan. Fifth, if such deposits and income
can not be conveniently invested in the modes, hereinbefore prescribed, not exceeding
one-third part thereof may be invested in bonds and other personal securities, payable
at a time not exceeding one year, with at least two sureties, if the principal and
sureties are all citizens of this State and residents therein. Every such savings bank
shall, at the time of making each semiannual dividends reserve as a guaranty fund
from the net profits which have accumulated during the six months then next preceding not less than one-eighth nor more than one-fourth of 1 per cent of the whole
amount of deposits, wiiich fund shall be thereafter maintained and held to meet
losses in its business from depreciation of its securities or otherwise. It shall be the
duty of the trustees of every such savings bank, by a committee of not less than three
of their members, on or before the first day of January and July of each year, to
thoroughly examine the books, vouchers, and assets of such savings bank, and to
make a statement of its assets and liabilities, and to publish the same in a newspaper
of general circulation in the county in which such bank is located at least twice
before or on the first day of February and August in each year, which said statement
shall be verified by the oath of a majority of the trustees making such examination.
The circuit court of the county in which any such savings bank is located may, at
any time, on the application, under oath, of any five or more officers, trustees, or
depositors of any such corporation, and such depositors, representing deposits aggregating at least $2,000, setting forth their interests, and the reasons for making such
examination, for reasons deemed sufficient by said court, appoint two or more persons
to examine into the investments thereof and its affairs and business generally, etc.
WISCONSIN.
[E. I. Kidd, State bank examiner.]
1. Savings, State, and private.
2. Any number of persons may form a corporation for banking purposes by making
a certificate which shall specify the name assumed to distinguish such association
and to be used in all its dealings; place where the business is to be carried on; the
amount of capital of such association and number of shares into which same shall
be divided; name and place of residence of the shareholders and the number of shares
held by each of them, respectively; the period at which such association shall commence and terminate. Such certificate shall be acknowledged and recorded in the
office of the register of deeds of the county wherein the office of such association
tjliall be established, and a copy thereof filed in the office of the State treasurer.
3. State treasurer.
4. (A) No less than $25,000 capital stock, and not less than $15,000 cash capital
paid in. (B) President, vice-president, cashier, board of directors, consisting of not
less than three members. (C) Liability of double the amount of capital stock subscribed. (D) Semiannual reports made to State treasurer on the first Monday in
July and January, and not less than three reports to the bank examiner each year.
(E) Bank examiner and one deputy bank examiner. (F) No. (G) The law is silent
on that question. (H) None required.
5. There are no legal provisions governing receipt of deposits of State and private
banks, except that in case the president, cashier, or any officer of the bank receives
deposits when he or they have reason to believe that the bank is insolvent it is made
a penal offense. It is the general custom of banks to allow interest on deposits.
6. The State is not interested as a shareholder in any of the banks.
7. The laAv is silent upon that question, but the organizing of branch banks is
practiced.
8. The State treasurer semiannually publishes a report of the financial condition
of all banks (State and private) in the State on the first Monday in July and
January, and the reports called for by the bank examiner are published in the local
paper in the town or city in which the bank is located.
9. The only taxation imposed upon banks is the taxation of the shareholders of its
capital stock (which is held as personal property), such property being assessed in
the town, city, or village in which the bank is located.
10. If, upon the examination of any bank, the bank examiner has reason to believe
that its capital is impaired so as to jeopardize the interests of its depositors he may
give thirty days' written notice to the officers of such bank to make good the capital so impaired. If after the expiration of thirty days this has not been done he
may then cause the publication of the exact condition of the bank in a local paper
in the town, city, or village in which such bank is located. Any creditor or any
number of the creditors of the bank may petition the circuit judge of the judicial
circuit in which such bank is located to place said bank in the hands of a receiver
166
REPORT OF THE COMPTROLLER OF THE CURRENCY.
if tlioy have reason to "believe that the hank is insolvent or that their interests are
jeopardized.
11. Banks may issue circulating notes to the full amount of their nominal capital,
provided they shall, before issuing such notes, duly assign and transfer in trust to
the treasurer of the State public stocks issued or to be issued by the United States
or public stocks of the State of Wisconsin. Thereupon such association shall be
entitled to receive from the State treasurer the amount of such circulating notes of
different denominations not exceeding in value the amount of public stocks assigned
and transferred as aforesaid.
12. Any number of persons, not less than twenty, may unite for the purpose of
organizing a savings bank. They must sign and acknowledge before some proper
officer a certificate in writing, in which shall be stated the name of the association,
names of the incorporators, name of the city, village, town, and county in which the
operations of such association are to be conducted. Such certificate shall be filed in
the office of the register of deeds in the county in which the business of the association is to be carried on, and a duplicate thereof deposited in the office of the secretary
of state. Such corporation shall enact by-laws for the government of its affairs.
The incorporators shall elect annually a board of trustees or directors, which shall
consist of not less than ten. The board of trustees shall elect a president, vicepresident, treasurer, and secretary. Their funds maybe invested as follows: Not
exceeding one-half of its deposits making loans on personal security, and in the purchase of the public stocks of the United States, of the Northwestern States, to-wit,
Ohio, Indiana, Michigan, Illinois, Iowa, Wisconsin, and Minnesota; of the authorized
bonds of any incorporated city, village, town, or county in the aforesaid Northwestern States. All other loans shall be secured by mortgage on unincumbered real
estate lying or situated in the aforesaid Northwestern States. They are prohibited
from investing deposits in the stock of any railroad company, and from investing in
any mortgage on real estate except such real estate as lies in the aforesaid Northwestern States. They are prohibited from loaning any of the deposits on any obligation on which only one person or firm shall be holden without additional security
for the same. They are prohibited from receiving a deposit from any one person in
any one year to exceed the amount of $1,000. The net income earned by any such
association shall bo divided semiannually among its depositors to an amount not to
exceed 6 per cent per year on their deposits. ^Surplus earnings above 6 per cent,
after reserving a moderate sum for contingent fund, shall be divided among the
depositors as an extra dividend as often as once every three years. Officers are prohibited from being surety for a borrower under penalty of $1,000 for each violation
of the act. The treasurer to give bond in the sum of not less than $10,000. No
president, director, or trustee shall be surety on the bond of the treasurer.
(Digest of banking laws transmitted.)
AVYOlMHSTGr.
[Harry B. Henderson, State examiner.]
1. National banks, State banks, State savings banks, loan and trust companies,
and private banks.
2. A State bank, savings bank, or loan and trust company may be incorporated
by an association of individuals, not less than five in number, they to execute and
acknowledge according to law a certificate of articles of association, which shall
specifically state: (1) The corporate name of the company; (2) the object for which
the company is organized; (3) the term of its existence; (4) the place or places where
its offices shall be located; (5) the amount of capital stock and number of shares
into which the same is to be divided; (6) the names and places of residence of the
shareholders, and number of shares held by each; (7) the number of directors and
the names of those who shall manage the affairs of the association for the first year;
(8) that this certificate is made to enable such persons to avail themselves of the
advantages of the laws of Wyoming pertaining to banking, such certificate to be
executed in triplicate, one of "which shall bo filed and recorded in the office of the
register of deeds of the county in which the business of the association is to be carried on; one also to bo filed with the secretary of state, and the third to be filed
with the State examiner. There must bo filed with the State examiner a certificate
that all stock has been subscribed for and that at least 50 per cent of such capital
has been fully paid in. Another certificate to be made showing that the bank building or the building in which the business of any banking association is conducted,
and all real estate, together with the furniture and fixtures, does not exceed 25 per
cent of the capital stock of such association; that the commercial paper at the commencement of business does not exceed 35 per cent of the capital stock, and that
the amount of money on hand upon the commencement of business of such bank is
not less than 40 per cent of the capital stock thereof: Provided, lioivever, That in
REPORT OF THE COMPTROLLER OF THE CURRENCY.
167
case the capital stock of any sucli "bank is not fully paid at the commencement of
such business, the valuation of its real estate, furniture, and fixtures, and the amount
of its commercial paper shall be in the same proportion to the amount then actually
paid in as it is herein required that such real estate, commercial paper, etc., shall
bear to the amount of the capital stock. Upon the filing of the certificates aforesaid
the State examiner shall issue his certificate to such association permitting them to
begin the business of banking.
3. The State examiner.
4. (A) At least 50 per cent of the capital stock must bo paid in before any association
may begin business, and the remainder thereof shall be paid in in eqnal monthly
installments, as may be determined by the board of directors, not to exceed a period
of six months. (13) The management of the bank is vested in its officers and board
of directors, the latter being not less than live nor more than nine in number, each
director to own in his own name and right at least 1 per cent of the capital stock of
the company, and he shall during his whole term of service be a citizen of the United
States or have declared his intention to become such, and a majority of such directors shall be residents of the State. Each director shall make oath that he will, so
far as the duty devolves on him, diligently and honestly administer the affairs of
the association"and not knowingly violate or willingly permit to be violated any of
the provisions of the banking law. (C) Shareholders of each and every banking
association, savings bank, and loan and trust company or association organized under
; the laws of Wyoming, shall be held individually responsible equally and ratably
and not one for the other, for all contracts, debts, and engagements of such company
or association to the extent of the amount of their stock therein, at the par value
thereof, in addition to the amount invested in such stock. (D) Every banking association, savings bank, and loan and trust company is required to make sworn statements to the State examiner at such time or times as he shall issue a call therefor.
(E) Banking associations are examined at least once in each year by the State examiner. (F) The total liabilities of any x)erson or of any company or firm (including
the liabilities of the company or iirni and the liabilities of the several members
thereof) to any banking association deriving any of its powers or privileges from
the laws of Wyoming, exclusive of liabilities as acceptor or acceptors of bona fide
bills of exchange, shall at no time exceed one-tenth of the capital stock of the said
association. (Gr) No requirement of law, but the State examiner has insisted that
the amount of cash and available exchange shall be at least 25 per cent of the liabilities of the association. (H) No requirement.
5. There are no legal provisions governing the receipt of deposits by State banks.
It is the custom to allow interest on time deposits only.
6. The State has no interest as a shareholder in any of the banks.
7. No branch offices or banks are permitted.
8. At such times as the banks report upon call of the State examiner their statement must be published at least once in a newspaper of the county in which such
bank is doing business.
9. No burdens or fees other than that of State, county, and municipal taxes are
imposed upon any bank. They are assessed at about 66'per cent of their capital
stock.
10. Upon suspension on account of insolvency the State examiner is to be at once
notified by the president or other officer of the bank, and the examiner as soon as
possible thereafter shall in person, or by an assistant, assume possession and control
of the bank and hold the samo until the due appointment and qualification of a
receiver therefor, to whom the examiner shall turn over all effects and property
coming into his possession. Until the appointment, etc., of the receiver, the examiner to have authority to collect and receive any moneys or other property due or
belonging to such bank.
11. No bank circulation is permitted.
12. Savings associations must pay to depositors a rate of interest not less than 4
per cent per annum before any expense or salary or profit may be paid or accrue to
the bank. They shall invest funds deposited in bonds of the United States in the
State legally authorized and issued, or may loan upon notes or bonds secured by
mortgage or trust deed upon unincumbered real estate or chattels worth at least
double the amount of the loan. A reserve fund of at least 10 per cent is required by
law. Every director shall be the owner of at least $1,000 of the stock of the association, and before entering upon the discharge of his duties shall execute a bond to
the State in the penal sum of $5,000, with two or more sureties, the bond to be
approved by the examiner, conditioned upon the faithful discharge of his duties as
director. Such associations are subject to examination the same as a commercial
bank. All officers and agents to give such bonds for their fidelity and good conduct
as the directors may from time to time require. No officer shall be a borrower of the
funds of such association. In the event of insolvency depositors shall be entitled
to preference in payment over the shareholders, and all other creditors of such
association.
168
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ALASKA.
[Joseph Murray, Treasury agent.]
The Bank of Juneau, at Juneau, Alaska, is the only bank established in the Territory transacting a general banking business, buying and selling bills of exchange on
London, New York, San Francisco, and Seattle. Their correspondents are the AngloCalifornia Bank, London and San Francisco; J. and G. Seligman & Co., New York,
and Boston National Bank, Seattle. Certificates of deposit are issued, collections
made, and commercial and time deposits received and gold dust bought. They have
also made arrangements with their correspondents at Forty Mile, Youkon River, the
North American Transportation and Trading Company, whereby safe facilities are
afforded for the transportation of funds, and remittances can be made by Youkon
miners to all cities of the United States, Canada, and Europe.
INDIAN
TERRITORY.
[D. M. Browning, Indian Commissioner.]
There is no provision of law, so far as I am aware, under which corporations such
as you mention would have a right to engage in business in the Indian country
except under such conditions as other corporations or individuals would be permitted to engage in business. A State banking corporation desiring to operate a
bank in the Indian Territory must comply with all the laws of the nation in which
such bank is proposed to be located, and obtain a permit in accordance therewith,
and must also obtain a license from this office as a trader with said nation.
The foregoing applies to the territory occupied by the Cherokee, Creek, Seminole,
Choctaw, and Chickasaw nations of Indians in the Indian Territory, and commonly
known as the Five Civilized Tribes.
LOUISIANA.
[M. J. Cunningham, attorney-general.]
1. The law in this State relative to banking gives the right to establish banks of
circulation, discount, deposit, safe-deposit, savings, and trust banks.
2. Any number of persons more than five may organize a bank under our State
laws. They must be organized by written articles of association, executed by notarial act and recorded in the office of the recorder of mortgages, or other officer exercising the functions of recorder of mortgages, at the place named in the act as the
place of business or domicile of the corporation; a certified copy must be deposited
in the office of the auditor of public accounts; it must be published once a week for
four weeks in the official journal of the State, and if the official journal of the State
should not be a newspaper in the city of New Orleans the act shall also be published
for the same time in at least one daily newspaper of the city of New Orleans and
also in a newspaper at the place named in the act as the place of business, if there
be one published there. The act of corporation must contain and set forth, under
the signatures of the subscribers and associates, the name assumed to distinguish
such banking company, and to be used in its dealings; the place where the banking
business of such association is to be carried on, designating the particular parish
and city or village in the State; the amount of capital stock of the banking company, and the number of shares into which tho same shall be divided; the names
and places of residence of the shareholders, and the number of shares held by each
of them respectively, and the time when and the manner in which the payments on
stock subscribed shall be made; the period at which the association shall commence,
and the period of its duration; the number of its directors and managers; the mode
of election, and liquidation at tho end of the term. All stock subscribed must be
paid up in full in specie within twelve months after the company shall commence
business.
3. The State treasurer or the secretary of state.
4. (A) The amount of capital stock required is $100,000, except that banks may be
organized in any incorporated town the population of which does not exceed 2,000
inhabitants, with a cash capital of $10,000; where the population does not exceed
4,000 inhabitants, with a cash capital of $15,000; where the population does not
exceed 6,000 inhabitants, with a cash-capital of $20,000; where the population does
not exceed 10,000 inhabitants, with a cash capital of $25,000; where the population does not exceed 15,000 inhabitants, with a cash capital of $30,000, and where
the population does not exceed 25,000 inhabitants, with a cash capital of $50,000.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
169
(B) Tlio banks arc managed by a board of directors. (C) No shareholder is liable for
the debts of the bank beyond the amount of his stock. (D) Reports of the condition of the banks must be published every three months. (E) The supervision of
the banks is delegated to the State treasurer and the secretary of state; whenever
they deem it necessary they shall be furnished with a weekly statement showing
the'condition and affairs of the bank. (F, see G.) (G) Every bank is required to
have on hand at all times, in specie, an amount equal to one-third of all their other
cash and liabilities, and for the other two-thirds of said liabilities an equal amount
in specie, specie funds, bills of exchange, or discounted paper, maturing within
ninety days and not renewable. Should the specie, specie funds, and short paper
fall below the proportions of the cash liabilities; and remain so for a period of ten
days, it shall not be lawful to make any loan or discount whatever until the bank
shall again have the reserve above required. (H) No accumulation of surplus is
required.
5. There are no legal restrictions upon the receipt of deposits; on the contrary, the
law is very liberal; minors and married women are allowed to deposit in savings
banks without any authorization and upon their own order. Interest upon deposits
is the exception rather than the rule.
6. The State is not a shareholder in any of the banks.
7. 8. All banks are required to make only quarterly statements of their condition,
under oath, and publish the same in the daily journals of the city of New Orleans.
Banks which are established in any incorporated town or city of the State shall publish a similar statement in a paper published in the town or city where the bank is
organized.
9. A license tax is imposed upon banks, based upon their declared or nominal capital and surplus, the licenses ranging in amount from $150 to $4,500.
The capital stock of banks is assessed and taxed at their actual value as shown by
the books of the bank, to the shareholders, who appear as such upon the books,
regardless of any transfer not registered or entered upon the books. The president
shall furnish the assessor a complete list of those who are borne upon the books as
shareholders, and all taxes so assessed shall be paid by the bank* which shall be
entitled to collect the amount from the shareholders or" their transferees. All real
estate owned by the bank shall be assessed directly to the bank, and the pro rata of
such direct property taxed, proportioned to each share of capital stock, is to be
deducted from the amount of taxes assessed to the shares. The book value of the
shares is ascertained from a sworn statement by the president, cashier, or secretary,
and chairman of finance committee, or, in the absence of such latter officer, by one of
the directors.
10. Every banking company shall, on proof of any act of insolvency or noncompliance with any of the conditions imposed upon it, forfeit its corporate rights; and it
shall be the duty of the district judge of the district in which such corporation is situated, at the instance of any creditor or of the auditor of public accounts, and on proof
of the alleged facts, to decree such forfeiture and to appoint thereupon commissioners
to effect the liquidation of the affairs of the corporation; to convert into cash, as
speedily as may be, under the direction of the court, all the assets of the corporation, including the sum that may have remained unpaid by stockholders upon their
respective shares of the capital stock; and, after providing for any unpaid balance
which may bo due to the bill holders, to distribute the same as In the insolvency of
individuals.
11. The auditor of public accounts engraves and prints circulating notes, in blank,
of the different denominations, not less than $5 each, which the incorporated banks
are authorized to issue. The blank notes are countersigned, registered, and numbered by the auditor. All circulating notes must have stamped across their face
" Secured by pledge of public stocks." The form and devices are optional with
the banks using them. To obtain the circulating notes the banks requiring them
must deposit with and legally assign to the auditor stocks, at their market value,
equal to the amount of circulating notes withdrawn by them. Should the stocks at
any time fall below the value at which they were deposited with the auditor, the
banks shall make the difference good or surrender enough of the circulating notes
to equalize the values. The securities left with the auditor shall be fully described,
signed by the auditor and the parties, which description shall be filed and recorded
in the office of the auditor and treasurer of the State. The banks receiving such
circulating notes are authorized to execute and sign them in such manner as to make
them obligatory in law as promissory notes, payable to bearer on demand, and without interest, at the place of business of the banker or banking companies. All circulating notes shall be signed by the banker and his cashier, or by the president and
cashier of the banking company issuing them.
12. Savings banks aro required to conform with nearly all of the duties imposed
upon banks of discount, deposit, and circulation, except that they are required to
have a cash capital of $50,000, of which at least $10,000 shall be subscribed before
the bank shall begin business.
THE NATIONAL-BANK ACT, AS AMENDED, WITH OTHER LAWS
RELATING TO NATIONAL BANKS,
CHAPTER ONE.
THE CURRENCY BUREAU.
1.
2.
3.
4.
5.
6.
The national-bank act.
Comptroller of the Currency.
His appointment, term, and salary.
His qualification.
Deputy Comptroller.
Interest in national banks prohibited.
7.
8.
9.
10.
11.
12.
Office clerks.
Seal of office.
Offices, vaults, etc.
Annual report.
When report is printed.
Number of copies to be printed.
1. THE NATIONAL-BANK ACT.—Sec. 1 of the act of June 20, 1874,
provides that the act entitled "An act to provide a national currency
secured by a pledge of United States bonds, and to provide for the
circulation and redemption thereof," approved June third, eighteen
hundred and sixty-four, shall hereafter be known as the "National-Bank
Act."
2. COMPTROLLER OF THE CURRENCY. (SEC. 324.) There shall be in
the Department of the Treasury a Bureau charged with the execution
of all laws passed by Congress relating to the issue and regulation of
a national currency secured by United States bonds, the chief officer
of which Bureau shall be called the Comptroller of the Currency, and
shall perform his duties under the general direction of the Secretary
of the Treasury.
3. His APPOINTMENT, TERM, AND SALARY. (SEC. 325.) The Comptroller of the Currency shall be appointed hy the President, on the
recommendation of the Secretary of the Treasury, by and with the
advice and consent of the Senate, and shall hold his office for the term
of five years, unless sooner removed by the President, upon reasons to
be communicated by him to the Senate; and he shall be entitled to a
salary of five thousand dollars a year.
4. His QUALIFICATION. (SEC. 320.) The Comptroller of the Currency shall, within fifteen days from the time of notice of his appointment, take and subscribe the oath of office; and he shall give to the
United States a bond in the penalty of one hundred thousand dollars,
with not less than two responsible sureties, to be approved by the Secretary of the Treasury, conditioned for the faithful discharge of the
duties of his office.
5. DEPUTY COMPTROLLER. (SEC. 327.) There shall be in the Bureau
of the Comptroller of the Currency a Deputy Comptroller of the Currency, to be appointed by the Secretary, who shall be entitled to a
salary of two thousand eight hundred dollars a year, and who shall
possess the power and perform the duties attached by law to the office
of Comptroller during a vacancy in the office or during the absence or
inability of the Comptroller. The Deputy Comptroller shall also take
171
172
REPORT OF THE COMPTROLLER OF THE CURRENCY.
the oath of office prescribed by the Constitution and laws of the United
States, and shall give a like bond in the penalty of fifty thousand
dollars.
(>. INTEREST IN NATIONAL BANKS PROHIBITED. (SEC. 329.)
It
shall not be lawful for the Comptroller or the Deputy Comptroller of
the Currency, either directly or indirectly, to be interested in any association issuing national currency under the laws of the United States.
7. OFFICE CLERKS. (SEC. 328.) The Comptroller of the Currency
shall employ, from time to time, the necessary clerks, to be appointed
and classified by the Secretary of the Treasury, to discharge such duties
as the Comptroller shall direct.
8. SEAL OF OFFICE. (SEC. 330.) The seal devised by the Comptroller
of the Currency for his office, and approved by the Secretary of the
Treasury, shall continue to be the seal of office of the Comptroller,
and may be renewed when necessary. A description of the seal, with
an impression thereof, and a certificate of approval of the Secretary of
the Treasury, shall be filed in the office of the Secretary of State.
9. OFFICES, VAULTS, ETC. (SEC. 331.) There shall be assigned, from
time to time, to the Comptroller of the Currency, by the Secretary of
the Treasury, suitable rooms in the Treasury building for conducting
the business of the Currency Bureau, containing safe and secure fireproof vaults, in which the Comptroller shall deposit and safely keep all
the plates not necessarily in the possession of engravers or printers,
and other valuable things belonging to his department; and the Comptroller shall from time to time furnish the necessary furniture, stationery, fuel, lights, and other proper conveniences for the transaction of
the business of his office.
10. ANNUAL KEPORT. (SEC. 333.) The Comptroller of the Currency
shall make an annual report to Congress, at the commencement of its
session, exhibiting—
First. Condition of national banks.—A summary of the state and condition of every association from which reports have been received the
preceding year, at the several dates to which such reports refer, with
an abstract of the whole amount of banking capital returned by them,
of the whole amount of their debts and liabilities, the amount of circulating notes outstanding, and the total amount of means and resources,
specifying the amount of lawful money held by them at the times of
their several returns, and such other information in relation to such
associations as in his judgment may be useful.
Second. Closed banks.—A statement of the associations whose business has been closed during the year, with the amount of their circulation redeemed and the amount outstanding.
Third. Amendments proposed.—Any amendment to the laws relative
to banking by which the system may be improved and the security of
the holders of its notes and other creditors may be increased.
Fourth. Condition of other banks.—A statement exhibiting under
appropriate heads the resources and liabilities and condition of the
banks, banking companies, and savings banks organized under the laws
of the several States and Territories, such information to be obtained
by the Comptroller from the reports made by such banks, banking companies, and savings banks to the legislatures or officers of the different
States and Territories, and, where such reports can not be obtained,
the deficiency to be supplied from such other authentic sources as may
be available.
Fifth. Employes and expenses.—The names and compensation of the
clerks employed by him, and the whole amount of the expenses of the
Digitized forbanking
FRASER department during the year.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
173
11. W H E N ANNUAL EEPOKT IS PRINTED. (SEC. 3811.) When the
Annual Eeport of the Comptroller of the Currency upon the national
banks and banks under State and Territorial laws is completed, or
while it is in process of completion, if thereby the business may be
sooner dispatched, the work of printing shall be commenced, under the
superintendence of the Secretary, and the whole shall be printed and
ready for delivery on or before the first day of December next after the
close of the year to which the report relates.
12. NUMBER OF COPIES TO BE PRINTED.—The act of January 12,
1895, provides that there shall be printed of the Annual Report of the
Comptroller of the Currency ten thousand copies; one thousand for the
Senate, two thousand for the House, and seven thousand for distribution by the Comptroller of the Currency.
CHAPTER TWO.
ORGANIZATION AND POWERS OF NATIONAL BANKS.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Articles of association.
Organization certificate.
Execution of organization certificate.
Corporate powers.
Amount of capital stock required.
Shares of stock.
Payment of capital stock.
Enforcing payment of capital.
Restoration of capital.
Examination of organization proceedings.
Certificate of officers and directors.
Deposit of United States bonds.
Comptroller's certificate of authority.
Publication of certificate of authority.
Number and election of directors.
Qualifications of directors.
Qualifications of directors in Oklahoma.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
Qualifications of voters at elections.
Oaths of directors.
Failure to hold annual election.
Vacancies in board of directors.
President shall be a director.
Organization of gold banks.
Conversion of gold banks.
Conversion of State banks.
Capital of State banks.
Converted banks may retain branches.
Personal liability of shareholders.
Exception for trustees, etc.
Amendment of articles restricted.
Increase of capital stock.
When increase becomes valid.
Reduction of capital stock.
Change of title and location.
Status of national banks organized
under the act of February 25; 1863.
13. ARTICLES OF ASSOCIATION. (SEC. 5133.) Associations for carrying on the business of banking under this Title may be formed by any
number of natural persons, not less in any case than five. They shall
enter into articles of association, which shall specify in general terms
the object for which the association is formed, and may contain any
other provisions, not inconsistent with law, which the association may
see fit to adopt for the regulation of its business and the conduct of its
affairs. These articles shall be signed by the persons uniting to form
the association, and a copy of them shall be forwarded to the Comptroller of the Currency, to be filed and preserved in his office.
14. ORGANIZATION CERTIFICATE. (SEC. 5134.) The persons uniting
to form such an association shall, under their hands, make an organization certificate, which shall specifically state—
First. Title.—The name assumed by such association; which name
shall be subject to the approval of the Comptroller of the Currency.
Second. Location.—The place where its operations of discount and
deposit are to be carried on, designating the State, Territory, or District, and the particular county and city, town, or village.
Third. Capital stock.—The amount of capital stock and the number
of shares into which the same is to be divided.
174
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Fourth. Shareholders.—The names and places of residence of the
shareholders and the number of shares held by each of them.
Fifth. Object of certificate.—The fact that the certificate is made to
enable such persons to avail themselves of the advantages of this
Title.
15. EXECUTION OF ORGANIZATION CERTIFICATE. (SEC. 5135.) The
organization certificate shall be acknowledged before a judge of some
court of record or notary public, and shall be, together with the
acknowledgment thereof, authenticated by the seal of such court or
notary, transmitted to the Comptroller of the Currency, who shall
record and carefully preserve the same in his office.
10. CORPORATE POWERS. (SEC. 5130.) Upon duly making and filing
articles of association and an organization certificate, the association
shall become, as from the date of the execution of its organization certificate, a body corporate, and as such, and in the name designated in
the organization certificate, it shall have power—
First. Seal.—To adopt and use a corporate seal.
Second. Term of existence.—To have succession for the period of
twenty years from its organization, unless it is sooner dissolved according to the provisions of its articles of association, or by the act of its
shareholders owning two-thirds of its stock, or unless its franchise
becomes forfeited by some violation of law.
Third. Contracts.—To make contracts.
Fourth. Suits.—To sue and be sued, complain and defend, in any
court of law and [or] equity, as fully as natural persons.
Fifth. Officers.—To elect or appoint directors, and by its board of
directors to appoint a president, vice-president, cashier, and other officers, define their duties, require bonds of them and fix the penalty
thereof, dismiss such officers or any of them at pleasure, and appoint
others to fill their places.
Sixth. By-laics.—To prescribe, by its board of directors, by-laws not
inconsistent with law, regulating the manner in which its stock shall
be transferred, its directors elected or appointed, its officers appointed,
its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed.
Seventh. Incidental powers.—To exercise by its board of directors, or
duly authorized officers or agents, subject to law, all such incidental
powers as shall be necessary to carry on the business of banking; by
discounting and negotiating promissory notes, drafts, bills of exchange,
and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes according to the
provisions of this Title; but no association shall transact any business
except such as is incidental and necessarily preliminary to its organization until it has been authorized by the Comptroller of the Currency
to commence the business of banking.
17. AMOUNT OF CAPITAL STOCK "REQUIRED. (SEC. 5138.) No association shall be organized under this Title 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. Iso association shall be organized in a city the population of which exceeds fifty thousand persons
with a less capital than two hundred thousand dollars.
18. SHARES OF STOCK. (SEC. 5139.) The capital stock of each association shall be divided into shares of one hundred dollars each, and
REPORT OF THE COMPTROLLER OF THE CURRENCY.
175
bo deemed personal property, and transferable on the books of the
association in such manner as may be prescribed in the by-laws or
articles of association. Every person becoming a shareholder by such
transfer shall, in proportion to his shares, succeed to all the rights and
liabilities of the prior holder of such shares.
19. PAYMENT OF CAPITAL STOCK. (SEC. 5140.) At least fifty per
centum of the capital stock of every association shall be paid in before
it shall be authorized to commence business; and the remainder of the
capital stock of such association shall be paid in installments of at least
ten per centum each, on the whole amount of the capital, as frequently
as one installment at the end of each succeeding month from the time
it shall be authorized by the Comptroller of the Currency to commence
business; and the payment of each installment shall be certified to the
Comptroller, under oath, by the president or cashier of the association.
20. ENFORCING- PAYMENT OF CAPITAL. (SEC. 5141.) Whenever any
shareholder, or his assignee, fails to pay any installment on the stock
when the same is required by the preceding section to be paid, the
directors of such association may sell the stock of such delinquent shareholder at public auction, having given three weeks' previous notice
thereof in a newspaper published and of general circulation in the city
or county where the association is located, or if no newspaper is published in said city or county, then in a newspaper published nearest
thereto, to any person who will pay the highest price therefor, to be not
less than the amount then due thereon, with the expenses of advertisement and sale; and the excess, if any, shall be paid to the delinquent
shareholder. If no bidder can be found who will pay for such stock the
amount due thereon to the association, and the cost of advertisement
and sale, the amount previously paid shall be forfeited to the association, and such stock shall be sold as the directors may order, within
six months from the time of such forfeiture, and if not sold it shall be
canceled and deducted from the capital stock of the association.
21. BESTORATION OF CAPITAL. (SEC. 5141.) If any such cancellation
and reduction shall reduce the capital of the association below the minimum of capital required by law, the capital stock shall, within thirty
days from the date of such cancellation, be increased to the required
amount; in default of which a receiver may be appointed, according to
the provisions of section fifty-two hundred and thirty-four, to close up
the business of the association.
22. EXAMINATION
OF ORGANIZATION PROCEEDINGS. (SEC. 5108.)
Whenever a certificate is transmitted to the Comptroller of the Currency, as provided in this Title, and the association transmitting the
same notifies the Comptroller that at least fifty per centum of its capital stock has been duly paid in, and that such association has complied
with all the provisions of this Title required to be complied with before
an association shall be authorized to commence the business of banking, the Comptroller shall examine into the condition of such association, ascertain especially the amount of money paid in on account of
its capital, the name and place of residence of each of its directors, and
the amount of the capital stock of which each is the owner in good faith,
and generally whether such association has complied with all the provisions of this Title required to entitle it to engage in the business of
banking.
23. CERTIFICATE OF OFFICERS AND DIRECTORS. (SEC. 5168.) And
shall cause to be made and attested by the oaths of a majority of the
directors, and by the president or cashier of the association, a statement of all the facts necessary to enable the Comptroller to determine
176
REPORT OF THE COMPTROLLER OF THE CURRENCY.
whether tlie association is lawfully entitled to commence the business
of banking.
24. DEPOSIT OF UNITED STATES BONDS. (SEC. 5159.) Every association, after having complied with the provisions of this Title, preliminary to the commencement of the banking business, and before it shall
be authorized to commence banking business under this Title, shall
transfer and deliver to the Treasurer of the United States, as security
for its circulating notes, any United States registered bonds bearing
interest, to an amount where the capital is one hundred and fifty thousand dollars or less, of not less than one-fourth of the capital, and fifty
thousand dollars where the capital is in excess of one hundred and fifty
thousand dollars. (NOTE.—As amended by sec. 8 of the act of July
12, 1882.)
25. COMPTROLLER'S CERTIFICATE OF AUTHORITY. (SEC. 5169.)
If, upon a careful examination of the facts so reported, and of any
other facts which may come to the knowledge of the Comptroller,
whether by means of a special commission appointed by him for the
purpose of inquiring into the condition of such association, or otherwise, it appears that such association is lawfully entitled to commence
the business of banking, the Comptroller shall give to such association
a certificate, under his hand and official seal, that such association has
complied with all the provisions required to be complied with before
commencing the business of banking, and that such association is
authorized to commence such business. But the Comptroller may
withhold from an association his certificate authorizing the commencement of business whenever he has reason to suppose that the shareholders have formed the same for any other than the legitimate objects
contemplated by this title.
26. PUBLICATION OF CERTIFICATE OF AUTHORITY. (SEC. 5170.)
The association shall cause the certificate issued under the preceding
section to be published in some newspaper printed in the city or county
where the association is located, for at least sixty days next after the
issuing thereof 5 or, if no newspaper is published in such city or county,
then in the newspaper published nearest thereto.
27. NUMBER AND ELECTION OF DIRECTORS. (SEC. 5145.) The affairs
of each association shall be managed by not less than five directors,
who shall be elected by the shareholders at a meeting to be held at any
time before the association is authorized by the Comptroller of the Currency to commence the business of banking, and afterward at meetings
to be held on such day in January of each year as is specified therefor
in the articles of association. The directors shall hold office for one
year, and until their successors are elected and have qualified.
28. QUALIFICATIONS OF DIRECTORS. (SEC. 5146.) Every director
must, during his whole term of service, be a citizen of the United
States, and at least three-fourths of the directors must have resided in
the State, Territory, or District in which the association is located for
at least one year immediately preceding their election, and must be
residents therein during their continuance in office. Every director
must own, in his own right, at least ten shares of the capital stock of
the association of which he is a director. Any director who ceases to
be the owner of ten shares of the stock, or who becomes in any other
manner disqualified, shall thereby vacate his place.
29. QUALIFICATIONS OF DIRECTORS IN OKLAHOMA.—Sec. 17 of the
act of May 2, 1890, provides "that the provisions of Title sixty-two of
the Eevised Statutes of the United States relating to national banks,
and all amendments thereto, shall have the same force and effect in
Territory of Oklahoma as elsewhere in the United States:
Digitized forthe
FRASER
REPORT OF THE COMPTROLLER OF THE CURRENCY.
17?
(^Provided, That persons otherwise qualified to act as directors shall
not be required to have resided in said Territory for more than three
months immediately preceding their election as such."
30. QUALIFICATIONS OF VOTERS AT ELECTIONS. (SEC. 5144.) In
all elections of directors, and in deciding all questions at meetings of
shareholders, each, shareholder shall be entitled to one vote on each
share of stock held by him. Shareholders may vote by proxies duly
authorized in writing; but no officer, clerk, teller, or bookkeeper of such
association shall act as proxy; and no shareholder whose liability is
past due and unpaid shall be allowed to vote.
31. OATHS OF DIRECTORS. (SEC. 5147.) Each director, when appointed or elected, shall take an oath that he will, so far as the duty
devolves on him, diligently and honestly administer the affairs of such
association, and will not kuowingly violate, or willingly permit to be
violated, any of the provisions of this Title, and that he is the owner
in good faith, and in his own right, of the number of shares of stock
required by this Title, subscribed by him, or standing in his name on
the books of the association, and that the same is not hypothecated
or in any way pledged as security for any loan or debt. Such oath, subscribed by the director making it, and certified by the officer before
whom it is taken, shall be immediately transmitted to the Comptroller
of the Currency, and shall be filed and preserved in his office.
32. FAILURE' TO HOLD ANNUAL ELECTION. (SEC. 5149.) If, from
any cause, an election of directors is not made at the time appointed^
the association shall not for that cause be dissolved, but an election
may be held on any subsequent day, thirty days' notice thereof in all
cases having been given in a newspaper published in the city, town, or
county in which the association is located; and if no newspaper is
published in such city, town, or county such notice shall be published
in a newspaper published nearest thereto. If the articles of association do notfixthe day on which the election shall be held, or if no election is held on the day fixed, the day for the election shall be designated
by the board of directors in their by-laws, or otherwise; or if the directors fail to fix the day, shareholders representing two-thirds of the
shares may do so.
33. VACANCIES IN BOARD OF DIRECTORS. (SEC. 5148.) Any vacancy
in the board shall be filled by appointment by the remaining directors^,
and any director so appointed shall hold his place until the next election.
34. PRESIDENT SHALL BE A DIRECTOR. (SEC. 5150.) One of the
directors, to be chosen by the board, shall be the president of the board.
35. ORGANIZATION OF G OLD BANKS. (SEC. 5185.) Associations may
be organized in the manner prescribed by this Title for the purpose*
of issuing notes payable in gold.
30. CONVERSION OF GOLD BANKS.—The act of February 14, 1880^
provides that any national gold bank organized under the provisions
of the laws of the United States may, in the manner and subject to the
provisions prescribed by section fifty-one hundred and fifty-four of the
Eevised Statutes of the United States, for the conversion of banks
incorporated under the laws of any State, cease to be a gold bank and
become such an association as is authorized by section fifty-one hundred
and thirty-three, for carrying on the business of banking, and shall have
the same powers and privileges, and shall be subject to the same duties,
responsibilities, and rules, in all respects, as are by law prescribed for
such associations: Provided, That all certificates of organization which
shall be issued under this act shall bear the date of the original organization of each bank respectively as a gold bank.
CUR, PT 1
12
178
REPORT OF THE COMPTROLLER OF THE CURRENCY.
37. CONVERSION OF STATE BANKS. (SEC. 5154.) Any bank incorporated by special law, or any banking institution organized under a
general law of any State, may become a national association under this
Title by the name prescribed in its organization certificate; and in such
case the articles of association and the organization certificate may be
executed by a majority of the directors of the bank or banking institution; and the certificate shall declare that the owners of two-thirds of
the capital stock have authorized the directors to make such certificate,
and to change and convert the bank or banking institution into a national
association. A majority of the directors, after executing the articles
of association and organization certificate, shall have power to execute
all other papers, and to do whatever may be required to make its organ
ization perfect and complete as a national association. The shares of
any such bank may continue to be for the same amount each as they
were before the conversion, and the directors may continue to be the
directors of the association until others are elected or appointed in
accordance with the provisions of this chapter; and any State bank
which.is a stockholder in any other bank, by authority of State laws,
may continue to hold its stock, although either bank, or both, may be
organized under and have accepted the provisions of this Title. When
the Comptroller of the Currency has given to such association a certificate, under his hand and official seal, that the provisions of this Title
have been complied with, and that it is authorized to commence the
business of banking, the association shall have the same powers and
privileges, and shall be subject to the same duties, responsibilities, and
rules, in all respects, as are prescribed for other associations, originally
organized as national banking associations, and shall be held and
regarded as such an association. But no such association shall have a
less capital than the amount prescribed for associations organized under
this Title.
38. CAPITAL OF STATE BANKS. (SEC. 3410.) The capital of any State
bank or banking association which has ceased or shall cease to exist,
or which has been or shall be converted into a national bank, shall be
assumed to be the capital as it existed immediately before such bank
ceased to exist or was converted as aforesaid.
39. CONVERTED BANKS MAY KETAIN BRANCHES. (SEC. 5155.) It
shall be lawful for any bank or banking association, organized under
State laws and having branches, the capital being joint and assigned
to and used by the mother bank and branches in definite proportions, to
become a national banking association in conformity with existing laws
and to retain and keep in operation its branches, or such one or more
of them as it may elect to retain, the amount of the circulation redeemable at the mother bank and each branch to be regulated by the
amount of capital assigned to and used by each.
40. PERSONAL LIABILITY OF SHAREHOLDERS. (SEC. 5151.) The
shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for
all contracts, debts, and engagements of such association to the extent
of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares, except that shareholders
of any banking association now existing under State laws having not
less than five millions of dollars of capital actually paid in and a surplus of twenty per centum on hand, both to be determined by the
Comptroller of the Currency, shall be liable only to the amount invested
in their shares; and such surplus of twenty per centum shall be kept
undiminished, and be in addition to the surplus irrovided. for in this
REPORT OF THE COMPTROLLER OF THE CURRENCY.
179
Title; and if at any time there is a deficiency in sucli surplus of twenty
per centum such association shall not pay any dividends to its shareholders until the deficiency is made good; and in case of such deficiency the Comptroller of the Currency may compel the association to
close its business and wind up its affairs under the provisions of chapter
four of this Title.
41. EXCEPTION FOR TRUSTEES, ETC. (SEC. 5152.) Persons holding stock as executors, administrators, guardians, or trustees shall not
be personally subject to any liabilities as stockholders; but the estates
and funds in their hands shall be liable in like manner and to the same
extent as the testator,intestate, ward, or person interested in such trust
funds would be if living and competent to act and hold the stock in his
own name.
42. AMENDMENT OF ARTICLES BESTKICTED.—Sec. 5139 provides
that no change shall be made in the articles of association of a national
bank by which the rights, remedies, or security of the existing creditors
of the association shall be impaired.
43. INCREASE OF CAPITAL STOCK. (SEC. 5142.) Any association
formed under this Title may, by its articles of association, provide for
an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this Title. But the maximum of such
increase to be provided in the articles of association shall be determined by the Comptroller of the Currency. Sec. 1 of the act of May 1,
188C, provides that any national banking association may, with the
approval of the Comptroller of the Currency, by the vote of shareholders owning two-thirds of the stock of such association, increase
its capital stock, in accordance with existing laws, to any sum approved
by the said Comptroller, notwithstanding the limit fixed in its original
articles of association and determined by said Comptroller; and no
increase of the capital stock of any national banking association either
within or beyond the limit fixed in its original articles of association
shall be made except in the manner herein provided.
44. W H E N INCEEASE BECOMES YALID. (SEC. 5142.) And no increase
of capital shall be valid until the whole amount of such increase is
paid in, and notice thereof has been transmitted to the Comptroller
of the Currency, and his certificate obtained specifying the amount
of such increase of capital stock, with his approval thereof, and that it
has been duly paid in as part of the capital of such association.
45. BEDUCTION OF CAPITAL STOCK. (SEC. 5143.) Any association
formed under this Title may, by the vote of shareholders owning twothirds of its capital stock, reduce its capital to any sum not below the
amount required by this Title to authorize the formation of associations,
but no such reduction shall be allowable which will reduce the capialof the association below the amount required for its outstanding circut
lation, nor shall any such reduction be made until the amount of the
proposed reduction has been reported to the Comptroller of the Currency and his approval thereof obtained.
46. CHANGE OF TITLE AND LOCATION.—Sees, 2,3, and 4 of the act
of May 1, 1886, provide:
SEC. 2. That any national banking association may change its name
or the place where its operations of discount and deposit are to be carried on to any other place within the same State, not more than thirty
miles distant, with the approval of the Comptroller of the Currency,
by the vote of shareholders owning two-thirds of the stock of such
association. A duly authenticated notice of the vote and of the new
name or location selected shall be sent to the office of the Comptroller
180
REPORT OF THE COMPTROLLER OF THE CURRENCY.
of the Currency, but no change of name or location shall be valid until
the Comptroller shall have issued his certificate of approval of the
same.
SEC. 3. That all debts, liabilities, rights, provisions, and powers of
the association under its old name shall devolve upon and inure to the
association under its new name.
SEC. 4. That nothing in this act contained shall be so construed as
in any manner to release any national banking association under its
old name or at its old location from any liability, or affect any action
or proceeding in law in which said association may be or become a
party or interested.
47. STATUS or NATIONAL BANKS ORGANIZED UNDER THE ACT OF
FEBRUARY 25,1863. (SEC. 5156.) That nothing in this Title shall affect
any appointments made, acts done, or proceedings had or commenced
prior to the third day of June, eighteen hundred and sixty-four, in or
toward the organization of any national banking association under the
act of February twenty-five, eighteen hundred and sixty-three; but all
associations which on the third day of June, eighteen hundred and
sixty-four, were organized or commenced to be organized under that
act shall enjoy all the rights and privileges granted, and be subject to
all the duties, liabilities, and restrictions imposed by this Title, notwithstanding all the steps prescribed by this Title for the organization of
associations were not pursued, if such associations were duly organized
under that act.
CHAPTEE THEEE.
BANK CIRCULATION.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
United States bonds defined.
| 65. Worn-out or mutilated circulation.
Security for circulation.
66. Provisions for redeeming circulation.
Relation of bond deposit to capital.
67. Withdrawing circulation.
Exchange of bonds.
68. General provisions for withdrawing
Bonds held by Treasurer.
circulation.
Record of bond transfers.
69. Circulation of extended banks.
Notice of transfer.
70. Circulation of liquidating banks.
Examination of bonds and records.
71. Circulation of closed banks.
Annual examination of bonds.
72. Regulations for redemption records.
General provisions respecting bonds. 73. Redeemed notes to be canceled.
Amount of circulation obtainable.
74. Redemption in United States notes.
Preparation of bank circulation.
75. Disposition of redemption account.
Circulation shallbear charter number. 76. Redemption of incomplete circulaControl of plates and dies.
tion.
Examination of plates and dies.
77. Banks take circulation at par.
Circulation, for what receivable.
78. Issue of other notes prohibited.
Circulation of gold banks.
| 79. Fraudulent notes to be marked.
48. UNITED STATES BONDS DEFINED. (SEC. 5158.) The term "United
States bonds/7 as used throughout this chapter, shall be construed to
mean registered bonds of the United States.
40. SECURITY FOR CIRCULATION. (SEC. 5159.) Every association,
after having complied with the provisions of this Title, preliminary to
the commencement of the banking business, and before it shall be
authorized to commence banking business under this Title, shall transfer and deliver to the Treasurer of the United States, as security for
its circulating notes, any United States registered bonds, bearing interest, to an amount, where the capital is one hundred and fifty thousand
dollars or less, not less than one-fourth of the capital, and fifty thou
REPORT OF THE COMPTROLLER OF THE CURRENCY.
181
sand dollars where the capital is in excess of one hundred and fifty
thousand dollars. Such bonds shall be received by the Treasurer upon
deposit, and shall be by him safely kept in his office until they shall be
otherwise disposed of in pursuance of the provisions of this Title; and
such of those banks having on deposit bonds in excess of that amount
are authorized to reduce their circulation by the deposit of lawful money
as provided bylaw: Provided, That the amount of such circulating
notes shall not exceed in any case ninety per centum of the par value
of the bonds deposited as herein provided. (NOTE.—As amended by
sec. 4 of the act of June 20,1874, and sec. 8 of the act of July 12,1882.)
50. RELATION OF BOND DEPOSIT TO CAPITAL. (SEC. 5160.) The
deposit of bonds made by each association shall be increased as its capital may be paid up or increased, so that every association shall at all
times have on deposit with the Treasurer registered United States bonds
to the amount required by law. And any association that may desire to
reduce its capital or close up its business and dissolve its organization
may take up its bonds upon returning to the Comptroller its circulating
notes in the proportion hereinafter required, or may take up any excess
of bonds beyond the amount required by law, and upon which no circulating notes have been delivered.
51. EXCHANGE OF BONDS. (SEC. 5161.) To facilitate a compliance
with the two preceding sections, the Secretary of the Treasury is authorized to receive from any association, and cancel, any United States coupon bonds, and to issue in lieu thereof registered bonds of like amount^
bearing a like rate of interest, and having the same time to run.
52. BONDS HELD BY TREASURER. (SEC. 5162.) All transfers of
United States bonds made by any association under the provisions of
this Title shall be made to the Treasurer of the United States in trust
for the association, with a memorandum written or printed on each
bond, and signed by the cashier, or some other officer of the association making the deposit. A receipt shall be given to the association,
by the Comptroller of the Currency, or by a clerk appointed by him
for that purpose, stating that the bond is held in trust for the association on whose behalf the transfer is made, and as security for the
redemption and payment of any circulating notes that have been or
may be delivered to such association. No assignment or transfer of
any such bond by the Treasurer shall be deemed valid unless countersigned by the Comptroller of the Currency.
53. EECORD OF BOND TRANSFERS. (SEC. 5163.) The Comptroller of
the Currency shall keep in his office a book in which he shall cause to
be entered, immediately upon countersigning it, every transfer or
assignment by the Treasurer, of any bonds belonging to a national
banking association, presented for his signature. He shall state in
such entry the name of the association from whose account the transfer
is made, the name of the party to whom it is made, and the par value
of the bonds transferred.
54. NOTICE OF TRANSFER. (SEC. 5164.) The Comptroller of the Currency shall, immediately upon countersigning and entering any transfer or assignment by the Treasurer of any bonds belonging to a national
banking association, advise by mail the association from whose accounts
the transfer is made of the kind and numerical designation of the bonds
and the amount thereof so transferred.
55. EXAMINATION OF BONDS AND EECORDS. (SEC. 5165.) The Comptroller of the Currency shall have at all times, during office hours, access
to the books of the Treasurer of the United States for the purpose of
ascertaining the correctness of any transfer or assignment of the bonds
182
REPORT OF THE COMPTROLLER OF THE CURRENCY.
deposited by an association, presented to the Comptroller to countersign ; and the Treasurer shall have the like access to the book mentioned
in sectionfifty-onehundred and sixty-three, during office hours, to ascertain the correctness of the entries in the same; and the Comptroller
shall also at all times have access to the bonds on deposit with the
Treasurer to ascertain their amount and condition.
56. ANNUAL EXAMINATION OF BONDS. (SEC. 5166.) Every association having bonds deposited in the office of the Treasurer of the United
States shall, once or oftener in each fiscal year, examine and compare
the bonds pledged by the association with the books of the Comptroller
of the Currency and with the accounts of the association, and, if they
are found correct, to execute to the Treasurer a certificate setting forth
the different kinds and the amounts thereof, and that the same are in
the possession and custody of the Treasurer at the date of the certificate.
Such examination shall be made at such time or times during the ordinary business hours as the Treasurer and the Comptroller, respectively,
may select, and maybe made by an officer or agent of such association,
duly appointed in writing for that purpose; and his certificate before
mentioned shall be of like force and validity as if executed by the president or cashier. A duplicate of such certificate, signed bv the Treasurer, shall be retained by the association.
57. GENERAL PROVISIONS RESPECTING BONDS. (SEC. 5167.) The
bonds transferred to and deposited with the Treasurer of the United
States by any association for the security of its circulating notes shall
be held exclusively for that purpose until such notes are redeemed,
except as provided in this Title. The Comptroller of the Currency shall
give to any such association powers of attorney to receive and appropriate to its own use the interest on the bonds which it has so transferred to the Treasurer; but such powers shall become inoperative
whenever such association fails to redeem its circulating notes. Whenever the market or cash value of any bonds thus deposited with the
Treasurer is reduced below the amount of the circulation issued for the
same the Comptroller may demand and receive the amount of such
depreciation in other United States bonds at cash value, or in money,
from the association, to be deposited with the Treasurer as long as such
depreciation continues. And the Comptroller, upon the terms prescribed by the Secretary of the Treasury, may permit an exchange to
be made of any of the bonds deposited with the Treasurer by any association for other bonds of the United States authorized to be received
as security for circulating notes if he is of opinion that such an
exchange can be made without prejudice to the United States; and he
may direct the return of any bonds to the association which transferred
the same, in sums of not less than one thousand dollars, upon the surrender to him and the cancellation of a proportionate amount of such
circulating notes: Provided, That the remaining bonds which shall
have been transferred by the association offering to surrender circulating notes are equal to the amount required for the circulating notes not
surrendered by such association, and that the amount of bonds in the
hands of the Treasurer is not diminished below the amount required to
be kept on deposit with him, and that there has been no failure by the
association to redeem its circulating notes, nor any other violation by
it of the provisions of this Title, and that the market or cash, value of
the remaining bonds is not below the amount required for the circulation issued for the same.
58. AMOUNT OF CIRCULATION OBTAINABLE.—Sec. 10 of the act of
July 12, 1SS2? provides that upon a deposit of bonds as described by
REPORT OF THE COMPTROLLER OF THE CURRENCY.
183
sections fifty-one hundred and fifty-nine and fifty one hundred and
sixty, the association making the same shall be entitled to receive from
the Comptroller of the Currency circulating notes of different denominations, in blank, registered and countersigned as provided by-law,
equal in amount to ninety per centum of the current market value, not
exceeding par, of the United States bonds so transferred and delivered,
and at no time shall the total amount of such notes issued to any such
association exceed ninety per centum of the amount at such time
actually paid in of its capital stock.
59. PREPARATION OF BANK CIRCULATION. (SEC. 5172.) In order to
furnish suitable notes for circulation, the Comptroller of the Currency
shall, under the direction of the Secretary of the Treasury, cause plates
and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and shall have printed therefrom,
and numbered, such quantity of circulating notes, in blank, of the
denominations of five dollars, ten dollars, twenty dollars, fifty dollars,
one hundred dollars, five hundred dollars, and one thousand dollars, as
may be required to supply the associations entitled to receive the same.
Such notes shall express upon their face that they are secured by United
States bonds, deposited with the Treasurer of the United States, by the
written or engraved signatures of the Treasurer and Register, and by
the imprint of the seal of the Treasury; and shall also express upon
their face the promise of the association receiving the same to pay on
demand, attested by the signatures of the president or vice-president
and cashier; and shall bear such devices and such other statements,
and shall be in such form, as the Secretary of the Treasury shall, by
regulation, direct.
60. CIRCULATION SHALL BEAR CHARTER NUMBER.—Sec. 5 of
the
act of June 20,1874, provides that the Comptroller of the Currency
shall, under such rules and regulations as the Secretary of the Treasury
may prescribe, cause the charter numbers of the associations to be
printed upon all national-bank notes which may be hereafter issued
by him.
01. CONTROL OF PLATES AND DIES. (SEC. 5173.) The plates and
special dies to be x>rocured by the Comptroller of the Currency for the
printing of such circulating notes shall remain under his control and
direction.
02. EXAMINATION OF PLATES AND DIES. (SEC. 5174.) The Comptroller of the Currency shall cause to be examined, each year, the
plates, dies, but pieces [bed pieces], and other material from which the
national-bank circulation is printed, in whole or in part, and tile in his
office annually a correct list of the same. Such material as shall have
been used in the printing of the notes of associations which are in
liquidation, or have closed business, shall be destroyed, under such
regulations as shall be prescribed by the Comptroller of the Currency
and approved by the Secretary of the Treasury. The expenses of any
such examination or destruction shall be paid out of any appropriation
made by Congress for the special examination of national banks and
bank-note plates.
03. CIRCULATION, FOB WHAT RECEIVABLE. (SEC. 5182.) After any
association receiving circulating notes under this Title has caused its
promise to pay such notes on demand to be signed by the president or
vice-president and cashier thereof, in such manner as to make them
obligatory promissory notes, payable on demand at its place of business, such association may issue and circulate the same as money.
And the same shall be received at par in all parts of the United States
184
REPORT OF THE COMPTROLLER OF THE CURRENCY.
in payment of taxes, excises, public lands, and all other dues to the
United States, except duties on imports; and also for all salaries and
other debts and demands owing by the United States to individuals,
corporations, and associations within the United States, except interest
on the public debt, and in redemption of the national currency.
61. CIRCULATION OF GOLD BANKS. (SEC. 5185.) Associations may
be organized in the manner prescribed by this Title for the purpose of
issuing notes payable in gold; and upon the deposit of any United
States bonds bearing interest payable in gold with the Treasurer of the
United States, in the manner prescribed for other associations, it shall
be lawful for the Comptroller of the Currency to issue to the association
making the deposit circulating notes of different denominations, but
none of them of less than five dollars, and not exceeding in amount
eighty per centum of the par value of the bonds deposited, which shall
express the promise of the association to pay them, upon presentation
at the office at which they are issued, in gold coin of the United States,
and shall be so redeemable.
65. WORN-OUT OR MUTILATED CIRCULATION. (SEC. 5184.) It shall
be the duty of the Comptroller of the Currency to receive worn-out or
mutilated circulating notes issued by any banking association, and
also, on due proof of the destruction of any such circulating notes, to
deliver in place thereof to the association other blank circulating notes
to an equal amount. Such worn-out or mutilated notes, after a memorandum has been entered in the proper books, in accordance with
such regulations as may be established by the Comptroller, as well as
all circulating notes which shall have been paid or surrendered to be
canceled, shall be macerated in presence of four j)ersons, one to be
appointed by the Secretary of the Treasury, one by the Comptroller of
the Currency, one by the Treasurer of the United States, and one by
the association, under such regulations as the Secretary of the Treasury may prescribe. A certificate of such maceration, signed by the
parties so appointed, shall be made in the books of the Comptroller,
and a duplicate thereof forwarded to the association whose notes are
thus canceled.
66. PROVISIONS FOR REDEEMING CIRCULATION.—Sec. 3 of the
act
of June 20, 1874, provides that every association organized, or to be
organized, under the provisions of the said act, and of the several acts
amendatory thereof, shall at all times keep and have on deposit in the
Treasury of the United States, in lawful money of the United States,
a sum equal to five per centum of its circulation, to be held and used
for the redemption of such circulation; which sum shall be counted as
a part of its lawful reserve, as provided in section two of this act; and
when the circulating notes of any such associations, assorted or unassorted, shall be presented for redemption, in sums of one thousand
dollars or any multiple thereof, to the Treasurer of the United States,
the same shall be redeemed in United States notes. All notes so
redeemed shall be charged by the Treasurer of the United States to the
respective associations issuing the same, and he shall notify them
severally, on the first day of each month, or oftener, at his discretion,
of the amount of such redemptions; and whenever such redemptions
for any association shall amount to the sum of five hundred dollars,
such association so notified shall forthwith deposit with the Treasurer
of the United States a sum in United States notes equal to the amount
of its circulating notes so redeemed. And all notes of national banks,
worn, defaced, mutilated, or otherwise unfit for circulation, shall, when
received by any assistant treasurer, or at any designated depositary of
REPORT OF THE COMPTROLLER OF THE CURRENCY.
185
tlie United States, be forwarded to tiie Treasurer of the United States
for redemption as x>rovided herein. And when such redemptions have
been so reimbursed, the circulating notes so redeemed shall be forwarded to the respective associations by which they were issued; but
if any of such notes are worn, mutilated, defaced, or rendered otherwise unfit for use, they shall be forwarded to the Comptroller of the
Currency and destroyed, and replaced as now provided bylaw: Provided^ That each of said associations shall reimburse to the Treasury
the charges for transportation and the costs for assorting such notes;
and the associations hereafter organized shall also severally reimburse
to the Treasury the cost of engraving such plates as shall be ordered
by each association respectively; and the amount assessed upon each
association shall be in proportion to the circulation redeemed, and be
charged to the fund on deposit with the Treasurer.
67. WITHDRAWING- CIRCULATION.—Sec. 4 of the act of June 20,
1874, provides that any association organized under this act, or any of
the acts of which this is an amendment, desiring to withdraw its circulating notes, in whole or in part, may, upon the deposit of lawful money
with the Treasurer of the United States in sums of not less than nine
thousand dollars, take up the bonds which said association has on
deposit with the Treasurer for the security of such circulating notes,
which bonds shall be assigned to the bank in the manner specified in
the nineteenth section of the national-bank act; and the outstanding
notes of said association, to an amount equal to the legal-tender notes
deposited, shall be redeemed at the Treasury of the United States, and
destroyed as now provided by law: Provided, That the amount of the
bonds on deposit for circulation shall not be reduced belowr fifty thousand dollars.
68. GENERAL PROVISIONS FOR WITHDRAWING CIRCULATION.—
Sees. 8 and 9 of the act of July 12, 1882, provide: (SEC. 8.) That the
national banks which shall hereafter make deposits of lawful money
for the retirement in full of their circulation shall, at the time of their
deposit, be assessed for the cost of transporting and redeeming their
notes then outstanding, a sum equal to the average cost of the redemption of national-bank notes during the preceding year, and shall thereupon pay such assessment; and all national banks which have heretofore made or shall hereafter make deposits of lawful money for the
reduction of their circulation shall be assessed, and shall pay an assessment in the manner specified in section three of the act approved June
twentieth, eighteen hundred and seventy-four, for the cost of transporting and redeeming their notes redeemed from such deposits subsequently to June thirtieth, eighteen hundred and eighty-one.
SEC. 9. That any national banking association now organized, or
hereafter organized, desiring to withdraw its circulating notes, upon a
deposit of lawful money with the Treasurer of the United States, as
provided in section four of the act of June twentieth, eighteen hundred
and seventy-four, or as provided in this act, is authorized to deposit
lawful money and withdraw a proportionate amount of the bonds held
as security for its circulating notes in the order of such deposits; and
no national bank which makes any deposit of lawful money in order to
withdraw its circulating notes shall be entitled to receive any increase
of its circulation for the period of six months from the time it made
such deposit of lawful money for the purpose aforesaid: Provided,
That not more than three millions of dollars of lawful money shall be
deposited during any calendar month for this purpose: And provided
further, That the provisions of this section shall not apply to bonds
186
REPORT OF THE COMPTROLLER OF THE CURRENCY.
called for redemption b$ the Secretary of the Treasury, nor to the withdrawal of circulating notes in consequence thereof.
CO. CIRCULATION OF EXTENDED BANKS.—Sec. G of the act of July
12,1882, provides that the circulating notes of any association so extending the period of its succession which shall have been issued to it prior
to such extension shall be redeemed at the Treasury of the United
States, as provided in section three of the act of June twentieth, eighteen hundred and seventy-four, entitled "An act fixing the amount of
United States notes, providing for redistribution of national bank currency, and for other purposes," and such notes when redeemed shall be
forwarded to the Comptroller of the Currency, and destroyed, as now
provided by law; and at the end of three years from the date of the
extension of the corporate existence of each bank the association so
extended shall deposit lawful money with the Treasury of the United
States sufficient to redeem the remainder of the circulation which was
outstanding at the date of its extension, as provided in sections fifty-two
hundred and twenty-two, fifty-two hundred and twenty-four, and fiftytwo hundred and twenty-five of the Revised Statues; and any gain that
may arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States; and from time to time,
as such notes are redeemed or lawful money deposited therefor as provided herein, new circulating notes shall be issued as provided for by
this act, bearing such devices, to be approved by the Secretary of the
Treasury,
as shall make them readily distinguishable from the circulating1 notes heretofore issued: Provided, however. That each banking association which shall obtain the benefit of this act shall reimburse to the
Treasury the cost of preparing the plate or plates for such new circulating notes as shall be issued to it.
70. CIRCULATION OF LIQUIDATING- BANKS. (SEC. 5225.) Whenever
the Treasurer has redeemed any of the notes of an association which
has commenced to close its affairs, he shall cause the notes to be mutilated and charged to the redemption account of the association; and
all notes so redeemed by the Treasurer shall, every three months, be
certified to and destroyed in the manner prescribed in section fifty-one
hundred and eighty-four.
71. CIRCULATION OF CLOSED BANKS.—Sec. 8 of the act of June 20,
1874, provides: And it shall be the duty of the Treasurer, assistant
treasurers, designated depositaries, and national bank depositaries of
the United States to assort and return to the Treasury for redemption
the notes of such national banks as have failed, or gone into voluntary
liquidation for the purpose of winding up their affairs, and of such as
shall hereafter so fail or go into liquidation.
72. REGULATIONS FOU REDEMPTION RECORDS. (SEC. 5232.) The
Secretary of the Treasury may, from time to time, make such regulations
respecting the disposition to be made of circulating notes after presentation at the Treasury of the United States for payment, and respecting
the perpetuation of the evidence of the payment thereof, as may seem
to him proper.
73. REDEEMED NOTES TO HE CANCELED. (SEC. 5233.) All notes of
national banking associations presented at the Treasury of the United
States for payment shall, on being paid, be canceled.
74. EEDEMPTION IN UNITED STATES NOTES.—Sec. 3 of the
act
approved June 20, 1874, provides that when the circulating notes of
any such associations, assorted or unassorted, shall be presented for
redemption, in sums of one thousand dollars or any multiple thereof, to
the Treasurer of the United States, the same shall be redeemed in
United
States notes.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
187
75. DISPOSITION OF KEDEMPTION ACCOUNT.—Sec. 6 of the act
of
July 14, 1890, i>rovides that upon the passage of this act the balances
standing with the Treasurer of the United States to the respective
credits of national banks for deposits made to redeem the circulating
notes of such banks, and all deposits thereafter received for like purpose, shall be covered into the Treasury as a miscellaneous receipt, and
the Treasury of the United States shall redeem from the general cash
in the Treasury the circulating notes of said banks which may come
into his possession subject to redemption; and upon the certificate of
the Comptroller of the Currency that such notes have been received by
him and that they have been destroyed and that no new notes will be
issued in their place, reimbursement of their amount shall be made to
the Treasurer, under such regulations as the Secretary of the Treasury
may prescribe, from an appropriation hereby created, to be known as
"national-bank notes, redemption account." But the provisions of
this act shall not apply to the deposits received under section three of
the act of June twentieth, eighteen hundred and seventy-four, requiring
every national bank to keep in lawful money with the Treasurer of the
United States a sum equal to five per centum of its circulation, to be
held and used for the redemption of its circulating notes; and the balance remaining of the deposits so covered shall, at the close of each
month, be reported on the monthly public debt statement as debt of
the United States bearing no interest.
70. REDEMPTION OF INCOMPLETE CIRCULATION.—The act of July
28, 1892, provides that the provisions of the Revised Statutes of the
United States, providing for the redemption of national-bank notes,
shall apply to all national bank notes that have been or may be issued
to, or received by, any national bank, notwithstanding such notes may
have been lost by or stolen from the bank and put in circulation without the signature or upon the forged signature of the president or vicepresident and cashier.
77. BANKS TAKE CIRCULATION AT PAR. (SEC. 5196.) Every national banking association formed or existing under this Title shall
take and receive at par, for any debt or liability to it, any and all notes
or bills issued by any lawfully organized national banking association.
But this provision shall not apply to any association organized for the
purpose of issuing notes payable in gold.
78. ISSUE OF OTHER NOTES PROHIBITED. (SEC.5183.) Nonational
banking association shall issue post notes or any other notes to circulate as money than such as are authorized by the provisions of this
Title.
79. FRAUDULENT NOTES TO BE MARKED.—Sec. 5 of the act of June
30,1876, provides that all United States officers charged with the receipt
or disbursement of public moneys, and all officers of national
banks,7
u
shall
stamp
or
write
in
plain
letters
the
word
"
counterfeit,"
altered/
or u worthless" upon all fraudulent notes issued in the form of and
intended to circulate as money which shall be presented at their places
of business; and if such officer shall wrongfully stamp any genuine
note of the United States, or of the national banks, they shall, upon
presentation, redeem such notes at the face value thereof.
188
REPORT OF THE COMPTROLLER OF THE CURRENCY.
CHAPTER FOUR.
TAX ON CIRCULATION.
80.
81.
82.
83.
84.
85.
86.
Tax on circulation.
Semiannual return of circulation.
Proceedings on default.
Enforcing tax on circulation.
Refunding excess tax.
Circulation, when exempt from tax.
Tax on unauthorized circulation.
87. Semiannual return of taxable circulation.
88. Failure to make such return.
89. Tax on converted bank circulation.
90. Tax provisions restricted.
91. Taxation of notes, etc.
80. TAX ON CIRCULATION. (SEC. 5214.) In lieu of all existing taxes,
every association shall pay to the Treasurer of the United States, in the
months of January and July, a duty of one-half of one per centum each
half year upon the average amount of its notes in circulation.
81. SEMIANNUAL KETURN OF CIRCULATION. (SEC. 5215.) In order
to enable the Treasurer to assess the duties imposed by the preceding
section, each association shall, within ten days from the first days of
January and July of each year, make a return, under the oath of its
president or cashier, to the Treasurer of the United States, in such
form as the Treasurer may prescribe, of the average amount of its notes
in circulation for the six months next preceding the most recent first
day of January or July. Every association which fails so to make such
return shall be liable to a penalty of two hundred dollars, to be collected
either out of the interest as it may become due such association on the
bonds deposited with the Treasurer, or, at his option, in the manner in
which penalties are to be collected of other corporations under the laws
of the United States.
82. PROCEEDINGS ON DEFAULT. (SEC. 5216.) Whenever any association fails to make the half-yearly return required by the preceding
section, the duties to be paid by such association shall be assessed upon
the amount of notes delivered to such association by the Comptroller
of the Currency.
83. ENFORCING TAX ON CIRCULATION. (SEC. 5217.) Whenever an
association fails to pay the duties imposed by the three preceding sections, the sums due maybe collected in the manner provided for the collection of United States taxes from other corporations; or the Treasurer
may reserve the amount out of the interest, as it may become due, on
the bonds deposited with him by such defaulting association.
84. EEFUNDING EXCESS TAX. (SEC. 5218.) In all cases where an
association has paid or may pay in excess of what may be or has been
found due from it, on account of the duty required to be paid to the
Treasurer of the United States, the association may state an account
therefor, which, on being certified by the Treasurer of the United
States, and found correct by the Comptroller of the Treasury, shall be
refunded in the ordinary manner by warrant on the Treasury.
85. CIRCULATION, "WHEN EXEMPT FROM TAX. (SEC. 3411.) Whenever the outstanding circulation of any bank, association, corporation,
company, or person is reduced to an amount not exceeding HYQ per centum
of the chartered or declared capital existing at the time the same was
issued, said circulation shall be free from taxation; and whenever any
bank which has ceased to issue notes for circulation deposits in the
Treasury of the United States, in lawful money, the amount of its outstanding circulation, to be redeemed at par, under such regulations as
the Secretary of the Treasury shall prescribe, it shall be exempt from
any tax upon such circulation.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
189
8Q. TAX ON UNAUTHORIZED CIRCULATION.—Sees. 19, 20, and 21 of
the act of February 8,1875, provide:
SEC. 19. That every person, firm, association, other than nationalbank associations, and every corporation, State bank^ or State banking
association shall pay a tax of ten per centum on the amount of their
own notes used for circulation and paid out by them.
SEC. 20. That every such person, firm, association, corporation, State
bank, or State banking association, and also every national banking
association, shall pay a like tax of ten per centum on the amount of
notes of any person, firm, association, other than a national banking
association, or of any corporation, State bank, or State banking association, or of any town, city, or municipal corporation, used for circulation and paid out by them.
SEC, 21. That the amount of such circulating notes, and of the tax
due thereon, shall be returned, and the tax paid at the same time, and
in the same manner, and with like penalties for failure to return and
pay the same, as provided by law for the return and payment of taxes
on deposits, capital, and circulation imposed by the existing provisions
of internal-revenue law.
87. SEMIANNUAL KETURN OF TAXABLE CIRCULATION. (SEC. 3414.)
A true and complete return of the monthly amount of circulation, as
aforesaid, and of the monthly amount of notes of persons, town, city,
or municipal corporation, State banks, or State banking associations
paid out as aforesaid for the previous six months, shall be made and
rendered in duplicate on the first day of December and the first day of
June by each of such banks, associations, corporations, companies, or
persons, with a declaration annexed thereto, under the oath of such
person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the
Commissioner of Internal Kevenue, that the same contains a true and
faithful statement of the amounts subject to tax, as aforesaid; and one
copy shall be transmitted to the collector of the district in which any
such bank, association, corporation, or company is situated, or in which
such person has his place of business, and one copy to the Commissioner
of Internal Eevenue.
88. FAILURE TO MAKE SUCH EETURN. (SEC. 3415.) In default of the
returns provided in the preceding section the amount of circulation,
and notes of persons, town, city, and municipal corporations, State
banks, and State banking associations paid out, as aforesaid, shall be
estimated by the Commissioner of Internal Eevenue, upon the best
information he can obtain. And for any refusal or neglect to make
return and payment any such bank, association, corporation, company,
or person so in default shall x>ay a penalty of two hundred dollars,
besides the additional penalty and forfeitures provided in other cases.
89. TAX ON CONVERTED BANK CIRCULATION. (SEC. 3416.) Whenever any State bank or banking association has been converted into a
national banking association, and such national banking association
has assumed the liabilities of such State bank or banking association,
including the redemption of its bills, by any agreement or understanding whatever with the representatives of such State bank or banking
association, such national banking association shall be held to make
the required return and payment on the circulation outstanding, so long
as such circulation shall exceed five per centum of the capital before
such conversion of such State bank or banking association.
90. TAX PROVISIONS EESTRICTED. (SEC. 3417.) The provisions of
this chapter relating to the tax on the circulation of banks and to
190
REPORT OF THE COMPTROLLER OF THE CURRENCY.
their returns, except as contained in sections thirty-four hundred and
eleven, thirty-four hundred and twelve, thirty-four hundred and thirteen, and thirty-four hundred and sixteen, and such parts of sections
thirty-four hundred and fourteen and thirty-four hundred and fifteen
as relate to the tax of ten per centum on certain notes, shall not apply
to associations which are taxed under and by virtue of Title " NATIONAL
BANKS."
91. TAXATION OF NOTES, ETC. (SEC.
3701.) All stocks, bonds.
Treasury notes, and other obligations of the United States shall be
exempt from taxation by or under State or municipal or local authority.
The act of August 13,1894, provides: (SEC. 1.) That circulating notes of
national banking associations and United States legal-tender notes and
other notes and certificates of the United States, payable on demand
and circulating or intended to circulate as currency, and gold, silver,
or other coin shall be subject to taxation as money on hand or on
deposit under the laws of any State or Territory: Provided, That any
such taxation shall be exercised in the same manner and at the same
rate that any such State or Territory shall tax money or currency circulating as money within its jurisdiction.
SEC. 2. That the provisions of this act shall not be deemed or held
to change existing laws in respect of the taxation of national banking
associations.
CHAPTER FIVE.
REGULATION OF THE BANKING BUSINESS.
92. Laws governing certain associations.
93. Place of business.
94. Reserve cities and reserve requirements.
95. Reserve not maintained.
96. Reserve agents7 balances counted as
reserve.
97. Clearing-house certificates counted
as reserve.
98. Redemption fund counted as reserve.
99. United States note certificates
counted as reserve.
100. Redemption of such certificates.
101. United States gold certificates
counted as reserve.
102. Reserve requirements for gold banks.
103. Reserve deposit in central reserve
city.
104. Additional reserve cities.
105. Additional central reserve cities.
106. Real estate.
107. Interest.
108. Penalty for unlawful interest.
109. Surplus and dividends.
110. Restriction on loans.
111. Associations must not hold their own
stock.
112. Restriction on bank's liability.
113. Improper use of bank circulation.
114. Unearned dividends prohibited.
115. Assessment for impairment of capital.
116. Provision for enforcement of assessment.
117. Prohibition against uncurrent notes.
118. List of shareholders.
119. Reports of condition.
120. Verification of such reports.
121. Reports of dividends and earnings.
122. Penalty for failure to report.
123. Reports of other banks.
124. State taxation of national banks.
125. National-bank examiners.
126. Qualification for examiner.
127. Compensation of examiners.
128. Examinations in District of Columbia.
129. Limitation of visitorial powers.
130. Use of "National" in titles.
92. LAWS GOVERNING CERTAIN ASSOCIATIONS. (SEC. 5157.) The
provisions of chapters two, three, and four [three, live, and seven of this
edition] of this Title, which are expressed without
restrictive words, as
applying to "national banking association/7 or to "associations," apply
to all associations organized to carry on the business of banking under
any act of Congress.
93. PLACE OF BUSINESS. (SEC. 5190.) The usual business of each
national banking association shall be transacted at an office or banking
house
located in the place specified in its organization certificate.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
191
94. EESEKVE CITIES AND EESERVE REQUIREMENTS. (SEC. 5191.)
Every national banking association in either of the following cities:
Albany, Baltimore, Boston, Cincinnati, Chicago, Cleveland, Detroit,
Louisville, Milwaukee, New Orleans, New York, Philadelphia, Pittsburgh, Saint Louis, San Francisco, and Washington, shall at all times
have on hand, in lawful money of the United States, an amount equal
to at least twenty-.five per centum of the aggregate amount of its deposits; and every other association shall at all times have on hand, in lawful money of the United States, an amount equal to at least fifteen per
centum of the aggregate amount of its deposits.
95. RESERVE NOT MAINTAINED. (SEC. 5191.) Whenever the lawful
money of any association in any of the cities named shall be below the
amount of twenty-five per centum of its deposits, and whenever the
lawful money of any other association shall be below fifteen per centum
of its deposits, such association shall not increase its liabilities by making any new loans or discounts otherwise than by discounting or purchasing bills of exchange payable at sight, nor make any dividend of
its profits until the required proportion between the aggregate amount
of its deposits and its lawful money of the United States has been
restored. And the Comptroller of the Currency may notify any association, whose lawful-money reserve shall be below the amount above
required to be kept on hand, to make good such reserve; and if such
association shall fail for thirty days thereafter so to make good its
reserve of lawful money, the Comptroller may, with the concurrence of
the Secretary of the Treasury, appoint a receiver to wind up the business of the association, as provided in section fifty-two hundred and
thirty-four.
90. EESERVE AGENTS 7 BALANCES COUNTED AS EESERVE. (SEG.
5192.) Three-fifths of the reserve of fifteen per centum required by the
preceding section to be kept may consist of balances due to an association from associations approved by the Comptroller of the Currency,
organized under the act of June three, eighteen hundred and sixty-four,
or under this Title, and doing business in the cities of Albany, Baltimore, Boston, Charleston, Chicago, Cincinnati, Cleveland, Detroit,
Louisville, Milwaukee, New Orleans, New York, Philadelphia, Pittsburg, Richmond, Saint Louis, San Francisco, and Washington.
97. CLEARING-HOUSE CERTIFICATES COUNTED AS EESERVE.—
Clearing-house certificates, representing specie or lawful money specially deposited for the purpose, of any clearing-house association shall
also be deemed to be lawful money in the possession of any association
belonging to such clearing house, holding and owning such certificate,
within the preceding section.
98. REDEMPTION FUND COUNTED AS EESERVE.—Sec. 3 of the act
of June 20,1874, provides that the five per cent redemption fund, which
shall at all times be kept on deposit with the Treasurer of the United
States, shall be counted as a part of the lawful reserve.
99. UNITED STATES NOTE CERTIFICATES COUNTED AS EESERVE.
(SEC. 5193.) The Secretary of the Treasury may receive United States
notes on deposit, without interest, from any national banking associations, in sums of not less than ten thousand dollars, and issue certificates therefor in such form as he may prescribe, in denominations of
not less than five thousand dollars, and payable on demand in United
States notes at the place where the deposits were made. The notes so
deposited shall not be counted as part of the lawful-money reserve of
the association; but the certificates issued therefor may be counted as
part of its lawful-money reserve, and may be accepted in the settlement
192
REPORT OF THE COMPTROLLER OF THE CURRENCY.
of clearing-house balances at the places where the deposits therefor
were made.
100. REDEMPTION OF SUCH CERTIFICATES. (SEC. 5194.) The power
conferred on the Secretary of the Treasury, by the preceding section
shall not be exercised so as to create any expansion or contraction of
the currency; and United States notes for which certificates are issued
under that section, or other United States notes of like amount, shall
be held as special dej>osits in the Treasury and used only for redemption of such certificates.
101. UNITED STATES GOLD CERTIFICATES COUNTED AS EESERVE.—
Sec. 12 of the act of July 12, 1882, provides that the Secretary of the
Treasury is authorized and directed to receive deposits of gold coin
with the Treasurer or assistant treasurers of the United States, in sums
not less than twenty dollars, and to issue certificates therefor in denominations of not less than twenty dollars each, corresponding with the
denominations of United States notes. The coin deposited for or representing the certificates of deposit shall be retained in the Treasury
for the payment of the same on demand. Said certificates shall be
receivable for customs, taxes, and all public dues, and when so received
may be reissued; and such certificates, as also silver certificates, when
held by any national banking association, shall be counted as part of
its lawful reserve; and no national banking association shall be a member of any clearing house in which such certificates shall not be receivable in the settlement of clearing-house balances: Provided, That the
Secretary of the Treasury shall suspend the issue of such gold certificates whenever the amount of gold coin and gold bullion in the Treasury
reserved for the redemption of United States notes falls below one
hundred millions of dollars; and the provisions of section fifty-two
hundred and seven of the Revised Statutes shall be applicable to the
certificates herein authorized and directed to be issued.
102. EESERVE EEQUIREMENTS FOR GOLD BANKS. (SEC. 5186.)
Every association organized for the purpose of issuing notes payable
in gold shall at all times keep on hand not less than twenty-five per
centum of its outstanding circulation, in gold or silver coin of the
United States; and shall receive at par in the payment of debts the
gold notes of every other such association which at the time of such
payment is redeeming its circulating notes in gold coin of the United
States, and shall be subject to all the provisions of this Title: Provided, That, in applying the same to associations organized for issuing
gold notes, the terms "lawful money" and "lawful money of the
United States" shall be construed to mean gold or silver coin of the
United States; and the circulation of such association shall not be
within the limitation of circulation mentioned in this Title.
103. EESERVE DEPOSIT IN CENTRAL EESERVE CITY. (SEC. 5195.)
Each association organized in any of the cities named in section fiftyone hundred and ninety-one may keep one-half of its lawful-money
reserve in cash deposits in the city of New York. But the foregoing
provision shall not apply to associations organized and located in the
city of San Francisco for the purpose of issuing notes payable in gold.
This section shall not relieve any association from its liability to redeem
its circulating notes at its own counter at par in lawful money on
demand.
104. ADDITIONAL EESERVE CITIES.—Sec. 1 of the act of March 3,
1887, provides that whenever three-fourths in number of the national
banks located in any city of the United States having a population of
fifty thousand people shall make application to the Comptroller of the
REPORT OF THE COMPTROLLER OF THE CURRENCY.
193
Currency, in writing, asking that the name of the city in which such
banks are located shall be added to the cities named in sectionsfiftyone hundred and ninety-one and fifty-one hundred and ninety-two of
the Be vised Statutes, the Comptroller shall have authority to grant
such request, and every bank located in such city shall at all times
thereafter have on hand, in lawful money of the United States, an
amount equal to at least twenty-live per centum of its deposits, as provided in sections fifty-one hundred and ninety-one andfifty-onehundred
and ninety-live of the EevLsed Statutes.
105. ADDITIONAL CENTRAL EESERVE CITIES.—Sec. 2 of the act of
March 3, 1387, provides that whenever three-fourths in number of the
national banks located in any city of the United States having a population of two hundred thousand people shall make application to the Comptroller of the Currency, in writing, asking that such city may be a central
reserve city, like the city of Kew York, in which one-half of the lawfulmoney reserve of the national banks located in other reserve cities may
be deposited, as provided in section fifty-one hundred and ninety-five of
the Revised Statutes, the Comptroller shall have authority, with the
approval of the Secretary of the Treasury, to grant such request, and
every bank located in such city shall at all times thereafter have on
hand, in lawful money of the United States, twenty-live per centum of
its deposits, as provided in section fifty-one hundred and ninety-one of
the Eevised Statutes.
106. REAL ESTATE. (SEC. 5137.) A national banking association may
purchase, hold, and convey real estate for the following purposes, and
for no others:
First. Such as shall be necessary for its immediate accommodation
in the transaction of its business.
Second. Such as shall be mortgaged to it in good faith by way of
security for debts previously contracted.
Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judgments, decrees,
or mortgages held by the association, or shall i>urcliase to secure debts
due to it.
But no such association shall hold the possession of any real estate
under mortgage, or the title and possession of any real estate purchased
to secure any debts due to it, for a longer period than five years.
107. INTEREST. (SEC. 5197.) Any association may take, receive,
reserve, and charge on any loan or discount made, or upon any note,
bill of exchange, or other evidences of debt, interest at the rate allowed
by the laws of the State, Territory, or District where the bank is
located, and no more, except that where by the laws of any State a
different rate is limited for banks of issue organized under State laws,
the rate so limited shall be allowed for associations organized or existing in any such State under this Title. When no rate is fixed by the
laws of the State, or Territory, or District, the bank may take, receive,
reserve, or charge a rate not exceeding seven per centum, and such
interest may be taken in advance, reckoning the days from which the
note, bill, or other evidence of debt has to run. And the purchase, discount, or sale of a bona fide bill of exchange, payable at another place
than the place of such purchase, discount, or sale, at not more than the
current rate of exchange for sight drafts in addition to the interest,
shall not be considered as taking or receiving a greater rate of interest.
108. PENALTY FOR UNLAWFUL INTEREST. (SEC. 5198.) The taking,
receiving, reserving, or charging a rate of interest greater than is
CUR, PT 1
13
194
REPORT OF THE COMPTROLLER OF THE CURRENCY.
allowed by the preceding' section, when knowingly done, shall be deemed
a forfeiture of the entire interest which the note, bill, or other evidence
of debt carries with it, or which has been agreed to be paid thereon.
In case the greater rate of interest has been paid, the person by whom
it has been paid, or his legal representatives, may recover back, in an
action in th6 nature of an action of debt, twice the amount of the interest thus paid from the association taking or receiving the same, provided such action is commenced within two years from the time the
usurious transaction occurred.
109. SURPLUS AND DIVIDENDS. (SEC. 5199.) The directors of any
association may semiannually declare a dividend of so much of the net
profits of the association as they shall judge expedient; but each association shall, before the declaration of a dividend, carry one-tenth part
of its net profits of the preceding half year to its surplus fund until
the same shall amount to twenty per centum of its capital stock.
110. RESTRICTION ON LOANS. (SEC. 5200.) The total liabilities to
any association, of any person, or of any company, corporation, or firm
for money borrowed, including in the liabilities of a company or firm
the liabilities of the several members thereof, shall at no time exceed
one-tenth part of the amount of the capital stock of such association
actually paid in. But the discount of bills of exchange drawn in good
faith against actually existing values, and the discount of commercial
or business paper actually owned by the person negotiating the same
shall not be considered as money borrowed.
111. ASSOCIATIONS MUST NOT HOLD THEIR OWN STOCK. (SEC.
5201.) ]STo association shall make any loan or discount on the security
of the shares of its own capital stock, nor be the purchaser or holder of
any such shares, unless such security or purchase shall be necessary
to prevent loss upon a debt previously contracted in good faith; and
stock so purchased or acquired shall, within six months from the time
of its purchase, be sold or disposed of at public or private sale; or, in
default thereof, a receiver may be appointed to close up the business of
the association, according to section fifty-two hundred and thirty-four.
112. RESTRICTION ON BANK'S LIABILITY. (SEC. 5202.) No association
shall at any time be indebted, or in any way liable, to an amount
exceeding the amount of its capital stock at such time actually paid in
and remaining undiminished by losses or otherwise, except on account
of demands of the nature following:
First. Notes of circulation.
Second. Moneys deposited with or collected by the association.
Third. Bills of exchange or drafts drawn against money actually on
deposit to the credit of the association, or due thereto.
Fourth. Liabilities to the stockholders of the association for dividends and reserve profits.
113. IMPROPER U S E OF BANK CIRCULATION. (SEC, 5203.) K"o association shall, either directly or indirectly, pledge or hypothecate any of
its notes of circulation for the purpose of procuring money to be paid
in on its capital stock, or to be used in its banking operations, or otherwise; nor shall any association use its circulating notes, or any part
thereof, in any manner or form, to create or increase its capital stock.
114. UNEARNED DIVIDENDS PROHIBITED. (SEC. 5204.) No associa- '
tion, or any member thereof, shall, during the time it shall continue its
banking operations, withdraw, or permit to be withdrawn, either in the
form of dividends or otherwise, any portion of its capital. If losses
have at any time been sustained by any such association equal to or
exceeding its undivided profits then on hand, no dividend shall be
REPORT OF THE COMPTROLLER OF THE CURRENCY.
195
made; and no dividend shall ever be made by any association, while it
continues its banking* operations, to an amount greater than its net
profits then on hand, deducting therefrom its losses and bad debts.
All debts due to any associations, on which interest is past due and
unpaid for a period of six months, unless the same are well secured,
and in process of collection, shall be considered bad debts within the
meaning of this section. But nothing in this section shall prevent
the reduction of the capital stock of the association under section
fifty-one hundred and forty-three.
115. ASSESSMENT FOR IMPAIRMENT OF CAPITAL. (SEC. 5205.)
Every association which shall have failed to pay up its capital stock, as
required by law, and every association whose capital stock shall have
become impaired by losses or otherwise, shall, within three months after
receiving notice thereof from the Comptroller of the Currency, pay the
deficiency in the capital stock, by assessment upon the shareholders
pro rata for the amount of capital stock held by each ; and the Treasurer of the United States shall withhold the interest upon all bonds
held by him in trust for any such association, upon notification from
the Comptroller of the Currency, until otherwise notified by him. If
any such association shall fail to pay up its capital stock, and shall
refuse to go into liquidation, as provided by law, for three months after
receiving notice from the Comptroller, a receiver may be appointed to
close up the business of the association, according to the provisions of
section fifty-two hundred and thirty-four.
116. PROVISION FOR ENFORCEMENT OF ASSESSMENT.—Sec. 4 of the
act of June 30, 1876, provides that if any shareholder or shareholders
of a bank shall neglect or refuse, after three months' notice, to pay the
assessment, as provided in this section, it shall be the duty of the board
of directors to cause a sufficient amount of the capital stock of such
shareholder or shareholders to be sold at public auction (after thirty
days' notice shall be given by posting such notice of sale in the office
of the bank and by publishing such notice in a newspaper of the city
or town in which the bank is located, or in a newspaper published
nearest thereto) to make good the deficiency; and the balance, if any,
shall be returned to such delinquent shareholder or shareholders.
117. PROHIBITION AGAINST UNOURRENT NOTES. (SEC. 5206.) E"o
association shall at any time pay out on loans or discounts, or in purchasing drafts or bills of exchange, or in payment of deposits, or in any
other mode pay or put in circulation the notes of any bank or banking
association which are not, at any such time, receivable, at par, on
deposit, and in payment of debts by the association so paying out or
circulating such notes; nor shall any association knowingly pay out or
put in circulation any notes issued by any bank or banking association
which at the time of such paying out or putting in circulation is not
redeeming its circulating notes in lawful money of the United States.
118. LIST OF SHAREHOLDERS. (SEC. 5210.) The president and
cashier of every national banking association shall cause to be kept at
all times a full and correct list of the names and residences of all the
shareholders in the association, and the number of shares held by each,
in the office where its business is transacted. Such list shall be subject
to the inspection of all the shareholders and creditors of the association,
and the officers authorized to assess taxes under State authority, during business hours of each day in which business may be legally transacted. A copy of such list, on the first Monday of July of each year,
verified by the oath of such president or cashier, shall be transmitted
to the Comptroller of the Currency.
196
REPORT OF THE COMPTROLLER OF THE CURRENCY.
119. REPORTS OF CONDITION. (SEC. 5211.) Every association shall
make to the Comptroller of the Currency not less than five reports during each year, according to the form which maybe prescribed by him,
verified by the oath or affirmation of the president or cashier of such
association, and attested by the signature of at least three of the
directors. Each such report shall exhibit, in detail and under appropriate heads, the resources and liabilities of the associations at the
close of business on any past day by him specified, and shall be transmitted to the Comptroller within five days after the receipt of a request
or requisition therefor from him, and in the same form in which it is
made to the Comptroller shall be published in a newspaper published
in the place where such association is established, or if there is no
newspaper in the place, then in one published nearest thereto in the
same county, at the expense of the association; and such proof of
publication shall be furnished as may be required by the Comptroller.
The Comptroller shall also have power to call for special reports from
any particular association whenever in his judgment the same are
necessary in order to a full and complete knowledge of its condition.
120. VERIFICATION OF SUCH REPORTS.—The act of
February 26,
1881, provides that the oath or affirmation required by section fifty-two
hundred and eleven of the Kevised Statutes, verifying the returns made
by national banks to the Comptroller of the Currency, when taken
before a notary public properly authorized and commissioned by the
State in which such notary resides and the bank is located, or any other
officer having an official seal, authorized in such State to administer
oaths, shall be a sufficient verification as contemplated by said section
fifty-two hundred and eleven: Provided, That the officer administering
the oath is not an officer of the bank.
121. REPORTS OF DIVIDENDS AND EARNINGS. (SEC. 5212.) In addition to the reports required by the preceding section, each association
shall report to the Comptroller of the Currency, within ten days after
declaring any dividend, the amount of such dividend and the amount
of net earnings in excess of such dividend. Such reports shall be
attested by the oath of the president or cashier of the association.
122. PENALTY FOR FAILURE TO REPORT. (SEC. 5213.) Every association which fails to make and transmit any report required under
either of the two preceding sections shall be subject to n> penalty of
one hundred dollars for each day after the periods, respectively, therein
mentioned, that it delays to make and transmit its report. Whenever
any association delays or refuses to pay the penalty herein imposed,
after it has been assessed by the Comptroller of the Currency, the
amount thereof may be retained by the Treasurer of the United States,
upon the order of the Comptroller of the Currency, out of the interest,
as it may become due to the association, on the bonds deposited with
him to secure circulation. All sums of money collected for penalties
under this section shall be paid into the Treasury of the United States.
123. REPORTS OF OTHER BANKS.—Sec. 6 of the act of June 30,1876,
provides that all savings banks or savings and trust companies organized under authority of any act of Congress shall be, and are hereby,
required to make, to the Comptroller of the Currency, and publish, all
the reports which national banking associations are required to make
and publish under the provisions of sectionsfifty-twohundred and eleven,
fifty-two hundred and twelve, and fifty-two hundred and thirteen of the
Revised Statutes, and shall be subject to the same penalties for failure
to make or publish such reports as are therein provided; which penalties may be collected by suit before any court of the United States in
REPORT OF THE COMPTROLLER OF THE CURRENCY.
197
tlie district in which said savings banks or savings and trust companies may be located. And all savings or other banks now organized, or
which shall hereafter be organized in the District of Columbia, under
any act of Congress, which shall have capital stock paid up in whole
or in part, shall be subject to all the provisions of the .Revised Statutes,
and of all acts of Congress applicable to national banking associations,
so far as the same may be applicable to such savings or other banks:
Provided, That such savings banks now established shall not be required
to have a paid-in capital exceeding one hundred thousand dollars.
324. STATE TAXATION OF NATIONAL BANKS. (SEC. 5210.) Nothing
herein shall prevent all the shares in any association from being
included in the valuation of the personal property of the owner or
holder of such shares, in assessing taxes imposed by authority of the
State within which the association is located; but the legislature of
each State may determine and direct the manner and place of taxing
all the shares of national banking associations located within the State,
subject only to the two restrictions, that the taxation shall not be at a
greater rate than is assessed upon other moneyed capital in the hands
of individual citizens of such State, and that the shares of any national
banking association owned by nonresidents of any State shall be taxed
in the city or town where the bank is located, and not elsewhere.
Nothing herein shall be construed to exempt the real property of associations from either State, county, or municipal taxes, to the same
extent, according to its value, as other real property is taxed.
125. NATIONAL-BANK EXAMINERS. (SEC. 5240,) The Comptroller of
the Currency, with the approval of the Secretary of the Treasury,
shall, as often as shall be deemed necessary or proper, appoint a suitable person or persons to make an examination of the affairs of every
banking association, who shall have power to make a thorough examination into all the affairs of the association, and in doing so to examine
any of the officers and agents thereof on oath; and shall make a full
and detailed report of the condition of the association to the Comptroller.
126. QUALIFICATION FOR EXAMINER. (SEC. 5240.) But no person
shall be appointed to examine the affairs of any banking association
of which he is a director or other officer.
127. COMPENSATION OF EXAMINEES. (SEC. 5240.) All persons appointed to be examiners of national banks not located in the redemption cities specified in section five thousand one hundred and ninety-two
of the Revised Statutes of the United States, or in any one of the States
of Oregon, California, and Nevada, or in the Territories, shall receive
compensation for such examination as follows: For examining national
banks having a capital less than one hundred thousand dollars, twenty
dollars; those having a capital of one hundred thousand dollars and less
than three hundred thousand dollars, twenty-live dollars; those having
a capital of three hundred thousand dollars and less than four hundred
thousand dollars, thirty-live dollars; those having a capital of four hundred thousand dollars and less than five hundred thousand dollars,
forty dollars; those having a capital of five hundred thousand dollars
and less than six hundred thousand dollars, fifty dollars; those having
a capital of six hundred thousand dollars and over, seventy-five dollars;
which amounts shall be assessed by the Comptroller of the Currency
upon, and paid by, the respective association so examined, and shall
be in lieu of the compensation and mileage heretofore allowed for making said examinations; and persons appointed to make examinations of
national banks in the cities named in section five thousand one hundred
and ninety-two of the Eevised Statutes of the United States, or in any
198
REPORT OF THE COMPTROLLER OF THE CURRENCY.
one of tlie States of Oregon, California, and Nevada, or in the Territories, shall receive such compensation as may be fixed by the Secretary of the Treasury upon the recommendation of the Comptroller of
the Currency; and the same shall be assessed and paid in the manner
hereinbefore provided.
128. EXAMINATIONS IN DISTRICT OF COLUMBIA. (SEC. 332.)
The
Comptroller of the Currency, in addition to the powers conferred upon
him by law for the examination of national banks, is further authorized,
whenever he may deem it useful, to cause examination to be made into
the condition of any bank in the District of Columbia organized under
act of Congress. The Comptroller, at his discretion, may report to
Congress the results of such examination. The expense necessarily
incurred in any such examination shall be paid out of any appropriation made by Congress for special bank examinations.
129. LIMITATION OF VISITORIAL POWERS. (SEC. 5241.) No association shall be subject to any visitorial powers other than such as are
authorized by this Title, or are vested in the courts of justice.
130. USE OF "NATIONAL" IN TITLES. (SEC. 5243.) All banks not
organized and transacting business under the national currency laws,
or under this Title, and all persons or corporations doing the business
of bankers, brokers, or savings institutions, except savings banks
authorized by Congress to use the word "national" as a part of their
corporate name, are prohibited from using the word "national" as a
portion of the name or title of such bank, corporation, firm, or partnership; and any violation of this prohibition committed after the third
day of September, eighteen hundred and seventy-three, shall subject
the party chargeable therewith to a penalty of fifty dollars for each day
during which it is permitted or repeated.
CITAPTEE SIX.
EXTENSION OF CORPORATE EXISTENCE.
131. Corporate existence may be extended.
132. Consent of two-thirds necessary.
133. Special examination of bank.
134. Status not changed by extension.
135. Dissenting shareholders may withdraw.
131. COIIPORATE EXISTENCE MAY BE EXTENDED.—The act of July
12, 1882, provides: (SEC. 1) That any national banking association
organized under the acts of February twenty-fifth, eighteen hundred
and sixty-three, June third, eighteen hundred and sixty-four, and
February fourteenth, eighteen hundred and eighty, or under sections
fifty-one hundred and thirty-three, fifty-one hundred, and thirty-four,
fifty-one hundred and thirty-five, fifty-one hundred and thirty-six, and
fifty-one hundred and fifty-four of the Eevised Statutes of the United
States, may, at any time within the two years next previous to the
date of the expiration of its corporate existence under present law, and
with the approval of the Comptroller of the Currency, to be granted
as hereinafter provided, extend its period of succession by amending
its articles of association for a term of not more than twenty years
from the expiration of the period of succession named in said articles
of association, and shall have succession for such extended period,
unless sooner dissolved by the act of shareholders owning two-thirds of
its stock, or unless its franchise becomes forfeited by some violation of
law, or unless hereafter modified or repealed.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
199
332. CONSENT OF TWO-THIRDS NECESSARY. (SEC. 2.) That such
amendment of said articles of association shall be authorized by the
consent in writing of shareholders owning not less than two-thirds of
the capital stock of the association 5 and the board of directors shall
cause such consent to be certified under the seal of the association, by
its president or cashier, to the Comptroller of the Currency, accompanied by an application made by the president or cashier for the
approval of the amended articles of association by the Comptroller;
and such amended articles of association shall not be valid until the
Comptroller shall give to such association a certificate under his hand
and seal that the association has complied with all the provisions
required to be complied with and is authorized to have succession for
the extended period named in the amended articles of association.
133. SPECIAL EXAMINATION OF BANK. (SEC. 3.) That upon the
receipt of the application and certificate of the association provided for
in the preceding section, the Comptroller of the Currency shall cause a
special examination to be made, at the expense of the association, to
determine its condition,- and if after such examination or otherwise it
appears to him that said association is in a satisfactory condition, he
shall grant his certificate of approval provided for in the preceding section, or if it appears that the condition of said association is not satisfactory, he shall withhold such certificate of approval.
134. STATUS NOT CHANGED BY EXTENSION. (SEC. 4.) That any association so extending the period of its succession shall continue to enjoy
all the rights and privileges and immunities granted and shall continue
to be subject to all the duties, liabilities, and restrictions imposed by
the Revised Statutes of the United States and other acts having reference to national banking associations, and it shall continue to be in all
respects the identical association it was before the extension of its
period of succession.
135. DISSENTING SHAREHOLDERS MAY WITHDRAW. (SEC. 5.) That
when any national banking association has amended its articles of
association as provided in this act, and the Comptroller has granted his
certificate of approval, any shareholder not assenting to such amendment may give notice in writing to the directors, within thirty days
from the date of the certificate of approval, of his desire to withdraw
from said association, in which case he shall be entitled to receive from
said banking association the value of the shares so held by him, to be
ascertained by an appraisal made by a committee of three persons, one
to be selected by such shareholder, one by the directors, and the third
by the first two; and in case the value so fixed shall not be satisfactory to any such shareholder, he may appeal to the Comptroller of the
Currency, who shall cause a reappraisal to be made, which shall be
final and binding; and if said reappraisal shall exceed the value fixed
by said committee, the bank shall pay the expenses of said reappraisal,
and otherwise the appellant shall pay said expenses; and the value
so ascertained and determined shall be deemed to be a debt due, and
be forthwith paid, to said shareholder, from said bank; and the shares
so surrendered and appraised shall, after due notice, be sold at public
sale, within thirty days after the final appraisal provided in this section:
Provided, That in the organization of any banking association intended
to replace any existing banking association, and retaining the name
thereof, the holders of stock in the expiring association shall be entitled
to preference in the allotment of the shares of the new association in
proportion to the number of shares held by them respectively in the
expiring association.
200
REPORT OF THE COMPTROLLER
OF THE
CURRENCY.
CHAPTER SEVEN.
LIQUIDATION AND RECEIVERSHIP.
136. Two-thirds vote required for liqui- 150. Bonds sold at private sale.
dation.
151. Appointment and duties of receiver.
137. Notice of voluntary liquidation.
152. When receiver may be appointed.
138. Deposit of lawful money.
153. Notice to creditors of insolvent
139. No deposit required for consolida- i
banks.
tion.
154. Distribution of assets of insolvent
140. Bonds of liquidating banks.
banks.
141. Banks whose existence has expired.
155. Expenses of receivership—how paid.
142. Protest of bank circulation.
156. Forfeiture of charter.
143. Bonds forfeited if circulation is dis- 157. Individual liability of directors.
honored.
158. Receiver may purchase property to
144. Bank may enjoin further proceedprotect his trust.
ings.
159. Taxes on insolvent national banks
145. Where proceedings must be brought.
remitted.
146. Suspension of business after default. 160. Appointment and qualification of
147. Notice to present circulation for re- |
shareholders' agent.
demption.
i 161. Duties of shareholders7 agent.
148. Bonds sold at public auction.
162. Illegal preference of creditors.
149. First lien for redeeming circulation.
163. Creditor's bill against shareholders.
136. TWO-THIRDS YOTE KEQUIRED FOR LIQUIDATION. (SEC. 5220.)
Any association may go into liquidation and be closed by the vote of
its shareholders owning two-thirds of its stock.
137. NOTICE OF VOLUNTARY LIQUIDATION. (SEC. 5221.) Whenever a vote is taken to go into liquidation it shall be the duty of the
board of directors to cause notice of this fact to be certified, under the
seal of the association, by its president or cashier, to the Comptroller
of the Currency, and the publication thereof to be made for a period of
two months in a newspaper published in the city of New York, and also
in a newspaper published in the city or town in which the association
is located, or if no newspaper is there published, then in the newspaper
published nearest thereto, that the association is closing up its affairs,
and notifying the holders of its notes and other creditors to present the
notes and other claims against the association for payment.
138. DEPOSIT OF LAWFUL MONEY. (SEC. 5222.) Within six months
from the date of the vote to go into liquidation the association shall
deposit with the Treasurer of the United States lawful money of the
United States sufficient to redeem all its outstanding circulation.
The Treasurer shall execute duplicate receipts for money thus deposited,
and deliver one to the association and the other to the Controller of
the Currency, stating the amount received by him, and the purpose for
which it has been received; and the money shall be paid into the Treasury of the United States, and placed to the credit of such association
upon redemption account.
139. No DEPOSIT EEQUTRED FOR CONSOLIDATION. (SEC. 5223.) An
association which is in good faith winding up its business for the purpose of consolidating with another association shall not be required
to deposit lawful money for its outstanding circulation; but its assets
and liabilities shall be reported by the association with which it is in
process of consolidation.
140. BONDS OF LIQUIDATING^ BANKS. (SEC. 5224.) Whenever a sufficient deposit of lawful money to redeem the outstanding circulation
of an association proposing to close its business has been made, the
bonds deposited by the association to secure payment of its notes shall
be reassigned to it, in the manner prescribed by section fifty-one him
REPORT OF THE COMPTROLLER OF THE CURRENCY.
201
dred and sixty-two. And thereafter the association and its shareholders shall stand discharged from all liabilities upon the circulating notes,
and ihose notes shall be redeemed at the Treasury of the United States.
And if any such bank shall fail to make the deposit and take up its
bonds for thirty days after the expiration of the time specified, the
Comptroller of the Currency shall have power to sell the bonds pledged
for the circulation of said bank at public auction in New York City,
and, after providing for the redemption and cancellation of said circulation, and the necessary expenses of the sale, to pay over any balance
remaining to the bank or its legal representatives,
141. BANKS WHOSE EXISTENCE HAS EXPIRED.—Sec. 7 of the
act
of July 12, 1882, provides that national banking associations whose
corporate existence has expired or shall hereafter expire, and which do
not avail themselves of the provisions of this act, shall be required to
comply with the provisions of sections fifty-two hundred and twentyone and fifty-two hundred and twenty-two of the Eevised Statutes
in the same manner as if the shareholders had voted to go into liquidation, as provided in section fifty-two hundred and twenty of the
Eevised Statutes; and the provisions of sections fifty-two hundred
and twenty-four and fifty-two hundred and twenty five of the Eevised
Statutes shall also be applicable to such associations, except as modified by this act; and the franchise of such associations is hereby
extended for the sole purpose of liquidating their affairs until such
affairs are finally closed.
142. PROTEST OF BANK CIRCULATION. (SEC. 5226.) Whenever any
national banking association fails to redeem in the lawful money of the
United States any of its circulating notes, upon demand of payment
duly made during the usual hours of business, at the office of such
association, the holder may cause the same to be protested, in one package by a notary public, unless the president or cashier of the association whose notes are presented for payment offers to waive demand
and notice of the protest, and, in pursuance of such offer, makes, signs,
and delivers to the party making such demand an admission in writing,
stating the time of the demand, the amount demanded, and the fact of
the nonpayment thereof. The notary public, on making such protest,
or upon receiving such admission, shall forthwith forward such admission or notice of protest to the Comptroller of the Currency, retaining a
copy thereof. If, however, satisfactory proof is produced to the notary
public that the payment of the notes demanded is restrained by order
of any court of competent jurisdiction, he shall not protest the same.
When the holder of any notes causes more than one note or package
to be protested on the same day, he shall not receive pay for more than
one protest.
143. BONDS FORFEITED IF CIRCULATION IS DISHONORED. (SEC.
5227.) On receiving notice that any national banking association has
failed to redeem any of its circulating notes, as specified in the preceding section, the Comptroller of the Currency, with the concurrence of
the Secretary of the Treasury, may appoint a special agent, of whose
appointment immediate notice shall be given to such association, who
shall immediately proceed to ascertain whether it has refused to pay
its circulating notes in the lawful money of the United States, when
demanded, and shall report to the Comptroller the fact so ascertained.
If from such protest, and the report so made, the Comptroller is satisfied
that such association has refused to pay its circulating notes and is in
default, he shall, within thirty days after he has received notice of such
failure, declare the bonds deposited by such association forfeited to the
United States, and they shall thereupon be so forfeited.
202
REPORT OF THE COMPTROLLER OF THE CURRENCY.
144. BANK MAY ENJOIN FURTHER PROCEEDINGS. (SEC. 5237.)
Whenever an association against which proceedings have been instituted, on account of any alleged refusal to redeem its circulating notes
as aforesaid, denies having failed to do so, it may, at any time within
ten days after it has been notified of the appointment of an agent, as
provided in section fifty-two hundred and twenty-seven, api)ly to the
nearest circuit, or district, or Territorial court of the United States to
enjoin further proceedings in the premises; and such court, after citing
the Comptroller of the Currency to show cause why further proceedings should not be enjoined, and after the decision of the court or finding of the jury that such association has not refused to redeem its
circulating notes, when legally presented, in the lawful money of the
United States, shall make an order enjoining the Comptroller, and any
receiver acting under his direction, from all further proceedings on
account of such alleged refusal.
145. W H E R E PROCEEDINGS MUST BE BROUGHT. (SEC. 736.)
All
proceedings by any national banking association to enjoin the Comptroller of the Currency, under the provisions of any law relating to
national banking associations, shall be had in the district wiiere such
association is located.
146. SUSPENSION OF BUSINESS AFTER DEFAULT. (SEC. 5228.) After
a detault on the part of an association to pay any of its circulating notes
has been ascertained by the Comptroller, and notice thereof has been
given by him to the association, it shall not be lawful for the associar
tion suffering the same to pay out any of its notes, discount any notes
or bills, or otherwise prosecute the business of banking, except to
receive and safely keep money belonging to it, and to deliver special
deposits.
147. NOTICE TO PRESENT CIRCULATION FOR REDEMPTION. (SEC.
5229.) Immediately upon declaring the bonds of an association forfeited for nonpayment of its notes, the Comptroller shall give notice,
in such manner as the Secretary of the Treasury shall, by general rules
or otherwise direct, to the holders of the circulating notes of such association, to present them for payment at the Treasury of the United
States; and the same shall be paid as presented in lawful money of the
United States; whereupon the Comptroller may, in his discretion, cancel an amount of bonds pledged by such association equal at current
market rates, not exceeding par, to the notes paid.
148. BONDS SOLD AT PUBLIC AUCTION. (SEC. 5230.) Whenever
the Comptroller has become satisfied, by the protest or the waiver and
admission specified in section fifty-two hundred and twenty-six, or by
the report provided for in section fifty-two hundred and twenty-seven,
that any association has refused to pay its circulating notes, he may,
instead of canceling its bonds, cause so much of them as may be
necessary to redeem its outstanding notes to be sold at public auction
in the city of New York, after giving thirty days' notice of such sale
to the association.
149. FIRST LIEN FOR REDEEMING CIRCULATION. (SEC. 5230.) For
any deficiency in the proceeds of all the bonds of an association, when
thus sold, to reimburse to the United States the amount expended in
paying the circulating notes of the association, the United States shall
have a paramount lien upon all its assets; and such deficiency shall
be made good out of such assets in preference to any and all other
claims whatsoever, except the necessary costs and expenses of administering the same.
150. BONDS SOLD AT PRIVATE SALE. (SEC. 5231.) The Comptroller
if he deems it for the interest of the United States, sell at private
Digitized formay,
FRASER
REPORT OF THE COMPTROLLER OF THE CURRENCY.
203
sale any of the bonds of an association shown to have made default in
paying its notes, and receive therefor either money or the circulating
notes of the association. But no such bonds shall be sold by private
sale for less than par, nor for less than the market value thereof at the
time of sale; and no sales of any such bonds, either public or private,
shall be complete until the transfer of the bonds shall have been made
with the formalities prescribed by sections fifty-one hundred and sixtytwo, fifty-one hundred and sixty-three, and fifty-one hundred and sixtyfour.
151. APPOINTMENT AND DUTIES OF EECEIVEE. (SEC. 5234.) On
becoming satisfied, as specified in sections fifty-two hundred and
twenty-six and fifty-two hundred and twenty-seven, that any association
has refused to pay its circulating notes as therein mentioned, and is in
default, the Comptroller of the Currency may forthwith appoint a
receiver, and require of him such bond and security as he deems proper.
Such receiver, under the direction of the Comptroller, shall take possession of the books, records, and assets of every description of such
association, collect all debts, dues, and claims belonging to it, and,
upon the order of a court of record of competent jurisdiction, may sell
or compound all bad or doubtful debts, and, on a like order, may sell
all the real and personal property of such association, on such terms as
the court shall direct; and may, if necessary to ])ay the debts of such
association, enforce the individual liability of the stockholders. Such
receiver shall pay over all money so made to the Treasurer of the United
States, subject to the order of the Comptroller, and also make report
to the Comptroller of all his acts and proceedings.
152. W H E N EECEIVER MAY EE APPOINTED.—Sec. 1 of the act of
June 30,1870, provides that whenever any national banking association
shall be dissolved, and its rights, privileges, and franchises declared
forfeited, as prescribed in section fifty-two hundred and thirty-nine of
the Eevised Statutes of the United States, or whenever any creditor of
any national banking association shall have obtained a judgment against
it in any court of record, and made application, accompanied by a certificate from the clerk of the court stating that such judgment has been
rendered and has remained unpaid for the space of thirty days, or whenever the Comptroller shall become satisfied of the insolvency of the
national banking association, he may, after due examination of its
affairs, in either case, appoint a receiver, who shall proceed to close up
such association, and enforce the personal liability of the shareholders,
as provided in section fifty-two hundred and thirty-four of said statutes.
A receiver may also be appointed, under the provisions of section fiftytwo hundred and thirty-four of the Eevised Statutes of the United
States, for the following violations of law:
Where the capital stock of a national bank has not been fully paid in
and it is thus reduced below the legal minimum and remains so for
thirty days. (Sec. 5144, E. S.)
For failure to make good the lawful money reserve within thirty days
after notice. (Sec. 5191, E. S.)
Where a bank purchases or acquires its own stock, other than to prevent loss upon a debt previously contracted in good faith, and the same
is not sold or disposed of within six months from the time of its purchase,
(Sec. 5201, E. S.)
Where au association fails to make good any impairment in its capital
stock and refuses to go into liquidation within three months after receiving notice. (Sec. 5205, E. S.)
The act of any officer, clerk, or agent of any association in violation
the provisions relating to the false certification of checks shall subDigitized forofFRASER
ject such bank to the appointment of a receiver. (Sec. 5208, E. S.)
204
REPORT OF THE COMPTROLLER OF THE CURRENCY.
153. NOTICE TO CREDITORS OF INSOLVENT BANKS. (SEC. 5235.) The
Comptroller shall, upon appointing a receiver, cause notice to be given,
by advertisement in such newspapers as he may direct, for three consecutive months, calling on all persons who may have claims against
such association to present the same and to make legal proof thereof.
154. DISTRIBUTION OF ASSETS OF INSOLVENT BANKS. (SEC. 523(3.)
From time to time, after full provision has been first made for refunding to the United States any deficiency in redeeming the notes of such
association, the Comptroller shall make a ratable dividend of the money
so paid over to him by such receiver on all such claims as may have
been proved to his satisfaction or adjudicated in a court of competent
jurisdiction, and, as the jn'oceeds o f the assets of such association are
paid over to him, shall make further dividends on all claims previously
proved or adjudicated; and the remainder of the proceeds, if any, shall
be paid over to the shareholders of such association, or their legal representatives, in proportion to the stock by them respectively held.
155. EXPENSES OF RECEIVERSHIP—How PAID. (SEC. 5238.) All fees
for protesting the notes issued by any national banking association
shall be paid by the person procuring the protest to be made, and such
association shall be liable therefor; but no part of the bonds deposited
by such association shall be applied to the payment of such fees. All
expenses of any preliminary or other examinations into the condition
of any association shall be paid by such association. All expenses of
any receivership shall be paid out of the assets of such association
before distribution of the proceeds thereof.
150. FORFEITURE OF CHARTER, (SEC. 5239.) If the directors of
any national banking association shall knowingly violate, or knowingly
permit any of the officers, agents, or servants of the association to violate, any of the provisions of this Title, all the rights, privileges, and
franchises of the association shall be thereby forfeited. Such violation
shall, however, be determined and adjudged by a proper circuit, district, or Territorial court of the United States, in a suit brought for
that purpose by the Comptroller of the Currency, in his own name,
before the association shall be declared dissolved.
157. INDIVIDUAL LIABILITY OF DIRECTORS. (SEC. 5239.) And in
cases of such violation every director who participated in or assented
to the same shall be held liable in his personal and individual capacity
for all damages which the association, its shareholders, or any other
person shall have sustained in consequence of such violation.
158. EECEIVER MAY PURCHASE PROPERTY TO PROTECT H I S
TRUST.—The act of March 29,1886, provides: (SEC. 1.) That whenever
the receiver of any national bank duly appointed by the Comptroller of
the Currency, and who shall have duly qualified and entered upon the
discharge of his trust, shall find it in his opinion necessary, in order to
fully protect and benefit his said trust, to the extent of any and all
equities that such trust may have in any property, real or personal, by
reason of any bond, mortgage, assignment, or other proper legal claim
attaching thereto, and which said property is to be sold under any
execution, decree of foreclosure, or proper order of any court of jurisdiction, he may certify the facts in the case, together with his opinion as
to the value of the property to be sold and the value of the equity his
said trust may have in the same, to the Comptroller of the Currency,
together with a request for the right and authority to use and employ
so much of the money of said trust as may be necessary to purchase
such property at such sale.
SEC. 2. That such request, if approved by the Comptroller of the
Currency,
shall be, together with the certificate of facts in the case and
REPORT OF THE COMPTROLLER OF THE CURRENCY.
205
his recommendation as to the amount of money which in his judgment
should be so used and employed, submitted to the Secretary of the
Treasury, and if the same shall likewise be approved by him the request shall be by the Comptroller of the Currency allowed, and notice
thereof, with copies of the request., certificate of facts, and indorsement of approvals, shall be filed with the Treasurer of the United
States.
SEC. 3. That whenever any such request shall be allowed as hereinbefore provided, the said Comptroller of the Currency shall be, and is,
empowered to draw upon and from such funds of any such trust as
may be deposited with the Treasurer of the United States for the benefit of the bank in interest to the amount as may be recommended and
allowed and for the purpose for which such allowance was made: Provided, hoioever, That all payments to be made for or on account of the
purchase of any such property and under any such allowance shall be
made by the Comptroller of the Currency direct, with the approval of
the Secretary of the Treasury, for such purpose only and in such manner as he may determine and order,
159. TAXES ON INSOLVENT NATIONAL BANKS REMITTED.—-The act
of March 1, 1879, provides that whenever and after any bank has ceased
to do business by reason of insolvency or bankruptcy no tax shall be
assessed or collected, or paid into the Treasury of the United States, on
account of such bank, which shall diminish the assets thereof necessary
for the full payment of all its depositors; and such tax shall be abated
from such national banks as are found by the Comptroller of the Currency to be insolvent; and the Commissioner of Internal Eevenue, when
the facts shall so appear to him, is authorized to remit so much of said
tax against insolvent State and savings banks as shall be found to
affect the claims of their depositors.
160.
APPOINTMENT
AND
QUALIFICATION
OF
SHAREHOLDERS'
AGENT.—Sec. 3 of the act of June 30, 1876, as amended by act of August 3,1892, provides that whenever any association shall have been or
shall be placed in the hands of a receiver, as provided in section fiftytwo hundred and thirty-four and other sections of the Revised Statutes
of the United States, and when, as provided in section fifty-two hundred
and thirty-six thereof, the Comptroller of the Currency shall have paid
to each and every creditor of such association, not including shareholders, who are creditors of such association, whose claim or claims as such
creditor shall have been proved or allowed as therein prescribed, the
full amount of such claims, and all expenses of the receivership and the
redemption of the circulating notes of such association shall have been
provided for by depositing lawful money of the United States with the
Treasurer of the United States, the Comptroller of the Currency shall
call a meeting of the shareholders of such association by giving notice
thereof for thirty days in a newspaper published in the town, city, or
county where the business of such association was carried on, or if no
newspaper is there published, in the newspaper published nearest
thereto. At such meeting the shareholders shall determine whether
the receiver shall be continued and shall wind up the affairs of such
association, or whether an agent shall be elected for that purpose, and
in so determining the said shareholders shall vote by ballot in person or
by proxy, each share of stock entitling the holder to one vote, and the
majority of the stock in value and number of shares shall be necessary to determine whether the said receiver shall be continued or
whether an agent shall be elected. In case such majority shall determine that the said receiver shall be continued, the said receiver shall
206
REPORT OF THE COMPTROLLER OF THE CURRENCY.
thereupon proceed with the execution of his trust and shall sell, dispose
of, or otherwise rcollect the assets of the said association and shall possess all the pow ers and authority, and be subject to all the duties and
liabilities originally conferred or imposed upon him by his appointment
as such receiver, so far as the same remain applicable. In case the said
meeting shall by the vote of a majority of the stock in value and number
of shares determine that an agent shall be elected, the said meeting
shall thereupon proceed to elect an agent, voting by ballot, in person
or by proxy, each share of stock entitling the holder to one vote, and
the person who shall receive votes representing at least a majority of
stock in value and number shall be declared the agent for the purposes
hereinafter provided, and whenever any of the shareholders of the association shall, after the election of such agent, have executed and filed a
bond to the satisfaction of the Comptroller of the Currency, conditioned
for the payment and discharge in full of each and every claim that may
thereafter'be proved and allowed by and before a competent court, and
for the faithful performance of all and singular the duties of such trust,
the Comptroller and the receiver shall thereupon transfer and deliver
to such agent all the undivided or un collected or other assets of such
association then remaining in the hands or subject to the order and
control of said Comptroller and said receiver, or either of them; and for
this purpose said Comptroller and said receiver are hereby severally
empowered and directed to execute any deed, assignment, transfer, or
other instrument in writing that may be necessary and proper, and
upon the execution and delivery of such instrument to the said agent
the said Comptroller and the said receiver shall by virtue of this act
be discharged from any and all liabilities to such association, and to each
and all the creditors and shareholders thereof.
161. DUTIES OF SHAREHOLDERS' AGENT.—See. 3 of the act of June
30,1876, as amended by act of August 3,1892, provides: Upon receiving
such deed, assignment, transfer, or other instrument, the person elected
such agent shall hold, control, and dispose of the assets and property
of such association which he may receive under the terms hereof, for the
benefit of the shareholders of such association, and he may in his own
name, or in the name of such association, sue and be sued, and do all
other lawful acts and things necessary to finally settle and distribute
the assets and property in his hands, and may sell, compromise, or compound the debts due to such association, with the consent and approval
of the circuit or district court of the United States for the district
where the business of such association was carried on, and shall at the
conclusion of his trust render to such district or circuit court a full
account of all his proceedings, receipts, and expenditures as such agent,
"which court shall, upon due notice, settle and adjust such accounts and
discharge said agent and the sureties upon said bond. At such meeting, held as hereinbefore provided, administrators or executors of
deceased shareholders may act and sign as the decedent might have
done if living, and guardians of minors and trustees of other persons
may so act and sign for their ward or wards or cestui que trust. The
proceeds of the assets or property of any such association which may
be undistributed at the time of such meeting or may be subsequently
received shall be distributed as follows:
" First. To pay the expenses of the execution of the trust to the date
of such payment.
" Secoud. To repay any amount or amounts which have been paid in
by any shareholder or shareholders of such association upon and by
reason of any and all assessments made upon the stock of such asso
REPORT OF THE COMPTROLLER OF THE CURRENCY.
207
ciation by the order of tlie Comptroller of the Currency in. accordance
with
the provisions of the statutes of the United States; and
u
Third. The balance ratably among such stockholders in proportion
to the number of shares held and owned by each. Such distribution
shall be made, from time to time, as the proceeds shall be received and
as shall be deemed advisable by the said Comptroller or said agent.'7
102. ILLEGAL PREFERENCE OF CREDITORS. (SEC. 5242.) All transfers of the notes, bonds, bills of exchange, or other evidences of debt
owing to any national banking association, or of deposits to its credit;
all assignments of mortgages, sureties on real estate, or of judgments
or decrees in its favor; all deposits of money, bullion, or other valuable
thing for its use, or for the use of any of its shareholders or creditors;
and all payments of money to either, made after the commission of an
act of insolvency, or in contemplation thereof, made with a view to
prevent the application of its assets in the manner prescribed by this
chapter, or with a view to the preference of one creditor to another,
except in payment of its circulating notes, shall be utterly null and
void. ~No attachment, injunction, or execution shall be issued against
such association or its property before final judgment in any suit,
action, or proceeding in any State, county, or municipal court.
163. CREDITOR'S B I L L AGAINST SHAREHOLDERS.—Sec. 2 of the
act
of June 30, 1876, provides that when any national banking association
shall have gone into liquidation under the provisions of section five
thousand two hundred and twenty of said statutes, the individual liability of the shareholders provided for by section fifty-one hundred and
fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity in the nature of a creditor's bill, brought by
such creditor on behalf of himself and of all other creditors of the
association, against the shareholders thereof, in any court of the United
States having original jurisdiction in equity for the district in which
such association may have been located or established.
CHAPTEE EIGHT.
CRIMES, JURISDICTION, ETC.
164. Penalty for improper countersigning 175. Penalty for issuing circulation of
or delivering circulation.
expired associations.
165. Penalty for pledging United States 176. False certification of checks.
notes or bank circulation.
177. Penalty for false certification of
166. Penalty for imitating bank circulachecks.
tion for advertising purposes.
178. Penalty for official malfeasance.
167. Penalty for mutilating circulation.
179. Jurisdiction of circuit courts to en168. Penalty for counterfeiting circulajoin Comptroller.
tion.
! 180. General jurisdiction of natioiial169. What are obligations of the United
bank cases.
States.
181. Sealed certificates of Comptroller
170. Penalty for illegal possession or use
are competent evidence.
of material for circulation.
182. Certified copy of organization cer171. Penalty for passing counterfeit cirtiiieate as evidence.
dilation.
183.
Suits
against United States officers
172. Penalty for taking unauthorized
or agents.
impressions of tools.
184. Indian Territory.
173. Penalty for having such impressions.
174. Penalty for dealing in counterfeit
circulation.
164. PENALTY FOE, IMPROPER COUNTERSIGNING OR DELIVERING
CIRCULATION. (SEC. 5187.) H"o officer acting under the provisions of
this Title shall countersign.or deliver to any association, or to any other
any circulating notes contemplated by this Title,
company
or person,
208
REPORT OP THE COMPTROLLER OF THE CURRENCY.
except in accordance with the true intent and meaning of its pro visions.
Every officer who violates this section shall be deemed guilty of a high
misdemeanor, and shall be lined not more than double the amount so
countersigned and delivered, and imprisoned not less than one year
and not more than fifteen years.
165. PENALTY FOR PLEDGING- UNITED STATES NOTES OR BANK
CIRCULATION. (SEC. 5207.) No association shall hereafter offer or receive
United States notes or national-bank notes as security or as collateral
security for any loan of money, or for a consideration agree to withhold
the same from use, or offer or receive the custody or promise of custody
of such notes as security, or as collateral security, or consideration for
any loan of money. Any association offending against the provisions
of this section shall be deemed guilty of a misdemeanor, and shall be
fined not more than one thousand dollars and a further sum equal to
one-third of the money so loaned. The officer or officers of any association who shall make any such loan siiall be liable for a further sum
equal to one-quarter of the money loaned; and any line or penalty incurred by a violation of this section shall be recoverable for the benefit
of the party bringing such suit. Sec. 12 of the act of July 12, 1882,
provides that the provisions of this section shall apply to the United
States certificates of gold and silver coin.
166. PENALTY FOR IMITATING BANK CIRCULATION FOR ADVERTISING PURPOSES. (SEC. 5188.) It shall not be lawful to design,
engrave, print, or in any manner make or execute, or to utter, issue,
distribute, circulate, or use any business or professional card, notice,
placard, circular, handbill, or advertisement in the likeness or similitude of any circulating note or other obligation or security of any banking association organized or acting under the laws of the United States
which has been or may be issued under this Title, or any act of Congress, or to write, print, or otherwise impress upon any such note,
obligation, or security any business or professional card, notice, or
advertisement, or any notice or advertisement of any matter or thing
whatever. Every person who violates this section shall be liable to a
penalty of one hundred dollars, recoverable one-half to the use of the
informer.
167. PENALTY FOR MUTILATING CIRCULATION. (SEC. 5189.) Every
person who mutilates, cuts, defaces, disfigures, or perforates with holes,
or unites or cements together, or does any other thing to any bank bill,
draft, note, or other evidence of debt, issued by any national banking
association, or who causes or procures the same to be done, with intent
to render such bank bill, draft, note, or other evidence of debt unfit to
be reissued by said association, shall be liable to a penalty of fifty
dollars, recoverable by the association.
168. PENALTY FOR COUNTERFEITING CIRCULATION. (SEC. 5415.)
Every person who falsely makes, forges, or counterfeits, or causes or
procures to be made, forged, or counterfeited, or willingly aids or assists
in falsely making, forging, or counterfeiting, any note in imitation of, or
purporting to be in imitation of, the circulating notes issued by any banking association now or hereafter authorized and acting under the laws
of the United States; or who passes, utters, or publishes, or attempts
to pass, utter, or publish, any false, forged, or counterfeited note purporting to be issued by any such association doing a banking business,
knowing the same to be falsely made, forged, or counterfeited, or who
falsely alters, or causes or procures to be falsely altered, or willingly
aids or assists in falsely altering any such circulating notes, or passes,
utters, or publishes, or attempts to pass, utter, or publish as true, any
REPORT OP THE COMPTROLLER OF THE CURRENCY.
209
falsely altered or spurious circulating note issued, or purporting to have
been issued, by any such banking association, knowing the same to be
falsely altered or spurious, shall be imprisoned at hard labor not less
than five years nor more than fifteen years, and fined not more than one
thousand dollars.
169. W H A T A R E
OBLIGATIONS OF THE
UNITED STATES. (SEC.
5413.) The words "obligation or other security of the United States"
shall be held to mean all bonds, certificates of indebtedness, nationalbank currency, coupons, United States notes, Treasury notes, fractional
notes, certificates of deposit, bills, checks, or drafts for money drawn
by or upon authorized officers of the United States, stamps and other
representatives of value, of whatever denomination, which have been
or may [be] issued under any act of Congress.
170. PENALTY FOR ILLEGAL POSSESSION OR U S E OF MATERIAL
FOR CIRCULATION. (SEC. 5430.) Every person having control, cus-
tody, or possession of any plate, or any part thereof, from which has
been printed, or which may be prepared by direction of the Secretary
of the Treasury for the purpose of printing, any obligation or other
security of the United States, who uses such plate, or knowingly
suffers the same to be used for the purpose of printing any such or
similar obligation, or other security, or any part thereof, except as
may be printed for the use of the United States by order of the proper
officer thereof; and every person who engraves, or causes or x>rocures
to be engraved, or assists in engraving, any plate in the likeness of
any plate designed for the printing of such obligation or other security,
or who sells any such plate, or who brings into the United States from
any foreign place any such plate, except under the direction of the Secretary of the Treasury or other proper officer, or with any other intent,
in either case, than that such plate be used for the printing of the obligations or other securities of the United States; or who has in his
control, custody, or possession any metallic plate engraved after the
similitude of any plate from which any such obligation or other security
has been printed, with intent to use such plate, or suffer the same to be
used in forging or counterfeiting any such obligation or other security,
or any part thereof; or who has in his possession or custody, except
under authority from the Secretary of the Treasury or other proper
officer, any obligation or other security, engraved and printed after
the similitude of any obligation or other security issued under the
authority of the United States, with intent to sell or otherwise use the
same; and every person who prints, photographs, or in any other manner makes or executes, or causes to be printed, photographed, made, or
executed, or aids in printing, photographing, making, or executing any
engraving, photograph, print, or impression in the likeness of any such
obligation or other security, or any part thereof, or who sells any such
engraving, photograph, print, or impression, except to the United
States, or who brings into the United States from any foreign place
any such engraving, photograph, print, or impression, except by direction of some proper officer of the United States, or who has or retains
in his control or possession, after a distinctive paper has been adopted
by the Secretary of the Treasury for the obligations and other securities of the United States, any similar paper adapted to the making of
any such obligation or other security, except under the authority of the
Secretary of the Treasury or some other proper officer of the United
States, shall be punished by a fine of not more than five thousand dollars, or by imprisonment at hard labor not more than fifteen years, or
by both.
CUR* PT 1
14
210
REPORT OF THE COMPTROLLER OF THE CURRENCY.
171. PENALTY FOR PASSING COUNTERFEIT CIRCULATION. (SEC.
5431.) Every person who, with intent to defraud, passes, utters,'publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into
the United States with intent to pass, publish, utter, or sell, or kee/ps
in possession or conceals, with like intent, any falsely made, forged,
counterfeited, or altered obligation, or other security of the United
States, shall be punished by a fine of not more than live thousand dollars and by imprisonment at hard labor not more than fifteen years.
172. PENALTY FOR TAKING UNAUTHORIZED IMPRESSIONS OF TOOLS.
(SEC. 5432.) Every person who, without authority from the United
States, takes, procures, or makes, upon lead, foil, wax, plaster, paper,
or any other substance or material, an impression, stamp, or imprint of,
from, or by the use of, any bedplate, bedpiece, die, roll, plate, seal, type,
or other tool, implement, instrument, or thing used or fitted, or intended
to be used, in printing, stamping, or impressing, or in making other
tools, implements, instruments, or things, to be used, or fitted or
intended to be used, in printing, stamping, or impressing any kind or
description of obligation or other security of the United States, now
authorized or hereafter to be authorized by the United States, or circulating note or evidence of debt of any banking association under the
laws thereof, shall be punished by imprisonment at hard labor not more
than ten years, or by a fine of not more than five thousand dollars, or
both.
173. PENALTY FOR HAVING SUCH IMPRESSIONS. (SEC. 5433.) Every
person who, with intent to defraud, has in his possession, keeping,
custody, or control, without authority from the United States, any
imprint, stamp, or impression, taken or made upon any substance or
material whatsoever, of any tool, implement, instrument, or thing used,
or fitted, or intended to be used for any of the purposes mentioned in
the preceding section; or who, with intent to defraud, sells, gives, or
delivers any such imprint, stamp, or impression to any other person,
shall be punished by imprisonment at hard labor not more than ten
years or by a fine of not more than n\e thousand dollars.
174. PENALTY FOR DEALING- IN COUNTERFEIT CIRCULATION. (SEC.
5434.) Every person who buys, sells, exchanges, transfers, receives, or
delivers any false, forged, counterfeited, or altered obligation or other
security of the United States, or circulating note of any banking association organized or acting under the laws thereof, which has been or
may hereafter be issued by virtue of any act of Congress, with the intent
that the same be passed, published, or used as true and genuine, shall
be imprisoned at hard labor not more than ten years, or fined not more
than five thousand dollars, or both.
175. PENALTY FOR ISSUING CIRCULATION OF EXPIRED ASSOCIATIONS. (SEC. 5437.) In all cases where the charter of any corporation
which has been or may be created by act of Congress has expired or
may hereafter expire, if any director, officer, or agent of the corporation, or any trustee thereof or any agent of such trustee, or any person
having in his possession or under his control the property of the corporation for the purpose of paying or redeeming its notes and obligations,
knowingly issues, reissues, or utters as money, or in any other way knowingly puts in circulation any bill, note, check, draft, or other security
purporting to have been made by any such corporation whose charter
has expired, or by any officer thereof, or purporting to have been made
under authority derived therefrom, or if any person knowingly aids in
any such act, he shall be punished by a fine of not more than ten
thousand dollars, or by imprisonment not less than one year nor more
REPORT OF THE COMPTROLLER OF THE CURRENCY.
211
than five years, or by both such fine and imprisonment. But nothing
herein shall be construed to make it unlawful for any person, not beingsuch director, officer, or agent of the corporation, or any trustee thereof,
or any agent of such trustee, or any person having in his possession or
under his control the property of the corporation for the purpose hereinbefore set forth, who has received or may hereafter receive such bill,
note, check, draft, or other security, bona fide and in the ordinary
transactions of business, to utter as money or otherwise circulate the
same.
17G. FALSE CERTIFICATION OF CHECKS. (SEC. 5208.) It shall be
unlawful for any officer, clerk, or agent of any national banking association to certify any check drawn upon the association unless the person
or company drawing the check has on deposit with the association, at
the time such check is certified, an amount of money equal to the
amount specified in such check. Any check so certified by duly
authorized officers shall be a good and valid obligation against the
association; but the act of any officer, clerk, or agent of any association, in violation of this section, shall subject such bank to the liabilities and proceedings on the part of the Comptroller as provided for in
section fifty-two hundred and thirty-four.
177. PENALTY FOR FALSE CERTIFICATION OF CHECKS.—Sec. 13
of the act of July 12,1882, provides that any officer, clerk, or agent of
any national banking association who shall willfully violate the provisions of section fifty-two hundred and eight of the Kevised Statutes of
the United States, or who shall resort to any device, or receive any fictitious obligation, direct or collateral, in order to evade the provisions
thereof, or who shall certify checks before the amount thereof shall have
been regularly entered to the credit of the dealer upon the books of the
banking association, shall be deemed guilty of a misdemeanor, and
shall, on conviction thereof in any circuit or district court of the United
States, be fined not more than live thousand dollars, or shall be imprisoned not more than five years, or both, in the discretion of the court.
178. PENALTY FOR OFFICIAL MALFEASANCE. (SEC. 5209.) Every
president, director, cashier, teller, clerk, or agent of any association
who embezzles, abstracts, or willfully misapplies any of the moneys,
funds, or credits of the association, or who, without authority from
the directors, issues or puts in circulation any of the notes of the association ) or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any
acceptance, assigns any note, bond, draft, bill of exchange, mortgage,
judgment, or decree; or who makes any false entry in any book, report,
or statement of the association, with intent, in either case, to injure or
defraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association or any agent appointed to examine the affairs of any such
association; and every person who with like intent aids or abets any
officer, clerk, or agent in any violation of this section, shall be deemed
guilty of a misdemeanor, and shall be imprisoned not less than ixvQ
years nor more than ten.
179. JURISDICTION OF CIRCUIT COURTS TO ENJOIN COMPTROL-
LER. (SEC. G29.) The circuit courts shall have original jurisdiction of
all suits brought by any banking association established in the district for which the court is held, under the provisions of Title U T H E
NATIONAL BANKS,77 to enjoin the Comptroller of the Currency, or any
receiver acting under his direction, as provided by said Title.
212
REPORT OF THE COMPTROLLER OF THE CURRENCY.
180. GENERAL JURISDICTION OF NATIONAL-BANK OASES.—Sec.
4 of the act of July 12, 1882, provides that the jurisdiction for suits
hereafter brought by or against any association established under any
law providing for national banking associations, except suits between
them and the United States or its officers and agents, shall be the
same as, and not other than, the jurisdiction for suits by or against
banks not organized under any law of the United States which do or
might do banking business where such national banking associations
may be doing business when such suits may be begun. And all laws
and parts of laws of the United States inconsistent with this proviso
be, and the same are hereby, repealed. Sec. 4 of the act of March 3,
1887, provides that all national banking associations established under
the laws of the United States shall, for the purposes of all actions by
or against them, real, personal, or mixed, and all suits in equity, be
deemed citizens of the States in which they are respectively located;
and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual
citizens of the same State. The provisions of this section shall not be
held to affect the jurisdiction of the courts of the United States in
cases commenced by the United States or by direction of any officer
thereof, or cases for winding up the affairs of any such bank.
181. SEALED CERTIFICATES OF COMPTROLLER ARE COMPETENT
EVIDENCE. (SEC. 884.) Every certificate, assignment, and conveyance
executed by the Comptroller of the Currency, in pursuance of law, and
sealed with his seal of office, shall be received in evidence in all places
and courts; and all copies of papers in his office, certified by him and
authenticated by the said seal, shall in all cases be evidence equally
with the originals. An impression of such seal directly on the paper
shall be as valid as if made on wax or wafer.
182. CERTIFIED COPY OF ORGANIZATION CERTIFICATE AS EVIDENCE. (SEC. 885.) Copies of the organization certificate of any national
banking association, duly certified by the Comptroller of the Currency
and authenticated by his seal of office, shall be evidence in all courts
and places within the jurisdiction of the United States of the existence
of the association and of every matter which could be proved by the
production of the original certificate.
183. SUITS AGAINST UNITED STATES OFFICERS OR AGENTS. (SEC.
380.) All suits and proceedings arising out of the provisions of law
governing national banking associations, in which the United States or
any of its officers or agents shall be parties, shall be conducted by the
district attorneys of the several districts under the direction and supervision of the Solicitor of the Treasury.
184. INDIAN TERRITORY.—Sec. 31 of the Act of May 2,1890, provides
that all laws relating to national banking associations shall have the
same force and effect in Indian Territory as elsewhere in the United
States.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
213
CHAPTER NINE.
TRUST COMPANIES, ETC., DISTRICT OF COLUMBIA,
185. Provision for organization.
186. Organization certificate of company.
187. Charter obtained from District Commissioners.
188. Notice of intention to apply for
charter.
189. Charter tiled with recorder of
deeds for the District.
190. Trust companies under Comptroller's
supervision.
191. Powers of these companies.
192. Competent to act as trustee, etc.
193. Qualifications of such trustee, etc.
194. Security for faithful performance of
trust.
195. Privileges extended to existing corporations.
196. Real estate.
197. Period of corporation's existence.
198. Provisions relating to capital stock.
199. Enforcement of "subscriptions to
stock.
200. Annual report to Comptroller.
201. Tax on gross earnings.
202. Liability for failure to report.
, 203.
204.
205.
j 206.
Perjury and larceny.
Transfer of stock.
Liability of stockholders.
Money payment of capital stock
required.
207. Number and election of directors.
208. Appointment of officers.
209. By-laws.
210. Directors liable for payment of unearned dividends.
211. Directors' liability may be avoided.
212. Responsibility of directors for excess
liabilities.
i 213. Trustee, etc., not liable on stock
assessment.
i 214. Increase of capital.
I 215. Certified copy of incorporation certificate competent evidence.
216. No bond or other security required
of trust companies.
217. District supreme court has jurisdiction of trust companies.
218. All similar District corporations
subject to this act.
219. Provisions for amendment.
185. PROVISION FOR ORGANIZATION.-—The act of October 1,1890,
sec. 1, provides that corporations may be formed within the District of
Columbia for the purposes hereinafter mentioned in the following manner: Any time hereafter any number of natural persons, citizens of
the United States, not less than twenty-five, may associate themselves
together to form a company for the purpose of carrying on in the District of Columbia any one of the three classes of business herein specified, to wit:
First. A safe deposit, trust, loan? and mortgage business.
Second. A title insurance, loan, and mortgage business.
Third. A security, guaranty, indemnity, loan, and mortgage business: Provided, That the capital stock of any of said companies shall
not be less than one million of dollars: Provided further. That any of
said companies may also do a storage business when their capital stock
amounts to the sum of not less than one million two hundred thousand
dollars,
186. ORGANIZATION CERTIFICATE OF COMPANY. (SEC. 2.) That
such persons shall, under their hands and seals, execute, before some
officer in said District competent to take the acknowledgment of deeds,
an organization certificate, which shall specifically s t a t e First. Title.—The name of the corporation.
Second. Purposes.—The purposes for which it is formed.
Third. Period of existence.—The term for which it is to exist, which
shall not exceed the term of fifty years, and be subject to alteration,
amendment, or repeal by Congress at any time.
Fourth. Officers.—The number of its directors, and the names and
residences of the officers who for the first year are to manage the affairs
of the company.
Fifth. Capital stock.—The amount of the capital stock and its subdivision into shares.
214
REPORT OF THE COMPTROLLER OF THE CURRENCY.
187. CHARTER OBTAINED FROM DISTRICT COMMISSIONERS. (SEC.
3.) That this certificate shall be presented to the Commissioners of the
District, who shall have power and discretion to grant or to refuse to
said persons a charter of incorporation upon the terms set forth in the
said certificate and the provisions of this act.
188. NOTICE OF INTENTION TO A P P L Y FOR CHARTER. (SEC.
4.)
That previous to the presentation of the said certificate to the said Commissioners notice of the intention to apply for such charter shall be
inserted in two newspapers of general circulation printed in the District
of Columbia at least four times a week for three weeks, setting forth
briefly the name of the proposed company, its character and object, the
names of the proposed corporators, and the intention to make application for a charter on a specified day, and the proof of such publication
shall be presented with said certificate when presentation thereof is
made to said Commissioners.
189. CHARTER FILED WITH BECORDER OF DEEDS FOR THE DISTRICT. (SEC. 5.) That if the charter be granted as aforesaid it, together
with the certificate of the Commissioners granting the same indorsed
thereon, shall be filed for record in the office of the recorder of deeds
for the District of Columbia, and shall be recorded by him. On the
filing of the said certificate with the said recorder of deeds as herein
provided, approved as aforesaid by the said Commissioners, the persons named therein and their successors shall thereupon and thereby be
and become a body corporate and politic, and as such shall be vested
with all the powers and charged with all the liabilities conferred upon
and imposed by this act upon companies organized under the provisions
hereof: Provided, however. That no corporation created and organized
under the provisions hereof, or availing itself of the provisions hereof
as provided in section eleven, shall be authorized to transact the business
of a trust company, or any business of a fiduciary character, until it
shall have filed with the Comptroller of the Currency a copy of its certificate of organization and charter and shall have obtained from him
and filed the same for record with the said recorder of deeds a certificate
that the capital stock of said company has been paid in and the deposit
of securities made with said Comptroller in the manner and to the extent
required by this act,
190.
TRUST COMPANIES UNDER COMPTROLLER'S
SUPERVISION.
(SEC. 6.) That all companies organized hereunder, or which shall under
the provisions hereof become entitled to transact the business of a trust
company, shall report to the Comptroller of the Currency in the manner
prescribed by sections fifty-two hundred and eleven, fifty-two hundred
and twelve, and fifty-two hundred and thirteen, Revised Statutes of the
United States, in the case of national banks, and all acts amendatory
thereof or supplementary thereto, and with similar provisions for compensating examiners, and shall be subject to like penalties for failure
to do so. The Comptroller shall have and exercise the same visitorial
powers over the affairs of the said corporation as is conferred upon him
by section fifty-two hundred and forty of the Eevised Statutes of the
United States in the case of national banks. He shall also have power,
when in his opinion it is necessary, to take possession of any such company for the reasons and in the manner and to the same extent as are provided in the laws of the United States with respect to national banks.
191. POWERS OF THESE COMPANIES. (SEC. 7.) That all companies
organized under this act are hereby declared to be corporations possessed of the powers and functions of corporations generally, and shall
have power—
REPORT OF THE COMPTROLLER OF THE CURRENCY.
215
First. Contracts.—To make contracts.
Second. Suits.—To sue and be sued, implead and be impleaded, in.
any court as fully as natural persons.
Third. Seal.—To make and use a common seal and alter the same at
pleasure.
Fourth. Loans.—To loan money.
Fifth. Special powers.—When organized under subdivision one of the
first section of this act to accept and execute trusts of any and every
description which may be committed or transferred to them, and to
accept the office and perform the duties of a receiver, assignee, executor, administrator, guardian of the estates of minors, with the consent
of the guardian of the person of such minor, and committee of the
estates of lunatics and idiots whenever any trusteeship or any such
office or appointment is committed or transferred to them, with their
consent, by any person, body politic or corporate, or by any court in the
District of Columbia, and all such companies organized under the first
subdivision of section one of this act are further authorized to accept
deposits of money for the purposes designated herein upon such terms
as may be agreed upon from time to time with depositors, and to act as
agent for the purpose of issuing or countersigning the bonds or obligations of any corporation, association, municipality, or State, or other
public authority, and to receive and manage any sinking fund on any
such terms as may be agreed upon, and shall have j>ower to issue its
debenture bonds upon deeds of trust or mortgages of real estate to a
sum not exceeding the face value of said deeds of trust or mortgages,
and which shall not exceed fifty per centum of the fair cash value of
the real estate covered by said deeds or mortgages, to be ascertained
by the Comptroller of the Currency. But no debenture bonds shall be
issued until the securities on which the same are based have been
placed in the actual possession of the trustee named in the debenture
bonds, who shall hold said securities until all of said bonds are paid;
and when organized under the second subdivision of the first section
of this act said company is authorized to insure titles to real estate and
to transact generally the business mentioned in said subdivision; and
when organized under the third subdivision of section one of this act
said company is hereby authorized, in addition to the loan and mortgage business therein mentioned, to secure, guaranty, and insure individuals, bodies politic, associations, and corporations against loss by or
through trustees, agents, servants, or employees, and to guaranty the
faithful performance of contracts and of obligations of whatever kind
entered into by or on the part of any person or persons, association,
corporation or corporations, and against loss of every kind: Provided,
That any corporation formed under the provisions of this act when
acting as trustee shall be liable to account for the amounts actually
earned by the moneys held by it in trust in addition to the principal so
held; but such corporation may be allowed a reasonable condensation
for services performed in the care of the trust estate.
192. COMPETENT TO ACT AS TRUSTEE, ETC. (SEC. 8.) That in all
cases in which application shall be made to any court in the District of
Columbia, or wherever it becomes necessary or proper for said court to
appoint a trustee, receiver, administrator, guardian of the estate of a
minor, or committee of the estate of a lunatic, it shall and may be
lawful for said court (but without prejudice to any preference in the
order of any such appointments required by existing law) to appoint
any such company organized under the first subdivision of section
one of this act, with its assent, such trustee, receiver, administrator,
216
REPORT OF THE COMPTROLLER OF THE CURRENCY.
committee, or guardian, with the consent of the guardian of the person
of such minor: Provided, hoicever, That no court or judge who is an
owner of or in any manner financially interested in the stock or business of such corporation shall commit by order or decree to any such
corporation any trust or fiduciary duty.
193. QUALIFICATIONS OF SUCH TRUSTEE, ETC. (SEC. 0.) That
whenever any corporation operating under this act shall be appointed
such trustee, executor, administrator, receiver, assignee, guardian, or
committee as aforesaid, the president, vice-president, secretary, or treasurer of said company shall take the oath or affirmation now required by
law to be made by any trustee, executor, receiver, assignee, guardian,
or committee.
104. SECURITY FOR FAITHFUL PERFORMANCE OF TRUST. (SEC. 10.)
That when any court shall appoint the said company a trustee, receiver,
administrator, or such guardian, or committee, or shall order the deposit
of money or other valuables with said company, or where any individual
or corporation shall appoint any of said companies a trustee, executor,
assignee, or such guardian, the capital stock of said company subscribed
for or taken, and all property owned by said company, together with
the liability of the stockholders and officers as herein provided, shall
be taken and considered as the security required by law for the faithful performance of its duties, and shall be absolutely liable in case of
any default whatever.
195. PRIVILEGES EXTENDED TO EXISTING CORPORATIONS. (SEC.
11.) That any safe deposit company, trust company, surety or guaranty
company, or title-insurance company now incorporated and operating
under the laws of the United States or of the District of Columbia, or
any of the States, and now doing business in said District, may avail
itself of the provisions of this act on filing in the office of the recorder
of deeds of the District of Columbia, or with the Comptroller of the
Currency, a certificate of its intention to do so, which certificate shall
specify which one of the three classes of business set out in section one
it will carry on, and shall be verified by the oath of its president to the
effect that it has in every respect complied with the requirements of
existing law, especially with the provisions of this act; that its capital
stock is paid in as provided in section twenty-one of this act and is not
impaired, and thereafter such company may exercise all powers and
perform all duties authorized by anyone of the subdivisions of section
one of this act in addition to the powers now lawfully exercised by such
company.
190. EEAL ESTATE. (SEC. 12.) That any company operating under
this act may lease, inirchase, hold, and convey real estate, not exceeding
in value five hundred thousand dollars, and such in addition as it may
acquire in satisfaction of debts due the corporation, under sales,
decrees, judgments, and mortgages. But no such association shall
hold the possession of any real estate under foreclosure of mortgage,
or the title and possession of any real estate purchased to secure any
debts due to it, for a longer period than five years.
197. PERIOD OF CORPORATIONS' EXISTENCE. (SEC. 13.) That the
charters for incorporations named in this act may be made perpetual,
or may be limited in time by their provisions, subject to the approval of
Congress.
198. PROVISIONS RELATING TO CAPITAL STOCK. (SEC. 14.) That
the capital stock of every such company shall be at least one million
dollars, and at least fifty per centum thereof must have been paid in,
in cash or by the transfer of assets as hereinafter provided in section
REPORT OF THE COMPTROLLER OF THE CURRENCY.
217
twenty-one of this act, before any such company shall be entitled to
transact business as a corporation, except with its own members, and
before any company organized hereunder shall be entitled to transact
the business of a trust company, or to become and act as an administrator, executor, guardian of the estate of a minor, or undertake any
other kindred fiduciary duty, it shall deposit, either in money or in
bonds, mortgages, deed of trust, or other securities equal in actual
value to one-fourth of the capital stock paid in, with the Comptroller
of the Currency, to be kept by him upon the trust and for the purposes
hereinafter provided; and the said Comptroller may from time to time
require an additional deposit from any such company, to be held upon
and for the same trust and purposes, not exceeding, however, in value
one-half the paid-in capital stock; and the said Comptroller shall not
issue to any corporation the certificate heretofore provided for until
said deposit with him of securities required by this section. Within
one year after the organization of any corporation under the provisions
of this act, or after any corporation heretofore existing shall have
availed itself of the powers and rights given by this act in the manner
herein provided for, its entire capital stock shall have been paid in.
199.
ENFORCEMENT
OF
SUBSCRIPTIONS
TO STOCK. (SEC.
15.)
That the capital stock of every such company shall be divided into
shares of one hundred dollars each. It shall be lawful for such company to call for and demand from the stockholders, respectively, all
sums of money by them subscribed, at such time and in such proportions as its board of directors shall deem proper, within the time specified in section fourteen, and it may enforce payment by all remedies
provided by law; and if any stockholder shall refuse or neglect to pay
any installment as
required by a resolution of the board of directors,
after thirty days7 notice of the same, the said board of directors may
sell at public auction, to the highest bidder, so many shares of said
stock as shall pay said installment, under such general regulations as
may be adopted in the by-laws of said company, and the highest bidder
shall be taken to be the person who offers to purchase the least number
of shares for the assessment due.
200. ANNUAL EEPORT TO COMPTROLLER. (SEC. 16.) That every
such company shall annually, within twenty days after the first of
January of each year, make a report to the Comptroller of the Currency, which shall be published in a newspaper in the District, which
shall state the amount of capital and of the proportion actually paid,
the amount of debts, and the gross earnings for the year ending December thirty-first then next previous, together with their expenses, which
report shall be signed by the president and a majority of the directors
or trustees, and shall be verified by the oath of the president, secretary,
and at least three of the directors or trustees.
201. TAX ON GROSS EARNINGS. (SEC. 16). And said company shall
pay to the District of Columbia, in lieu of personal taxes for each next
ensuing year, one and a half per centum of its gross earnings for the
preceding year, shown by said verified statement, which amount shall
be payable to the collector of taxes at the times and in the manner that
other taxes are payable.
202. LIABILITY FOR FAILURE TO EEPORT. (SEC. 17.) That if any
company lails to comply with the provisions of the preceding section,
all the directors or trustees of such company shall be jointly and severally liable for the debts of the company then existing, and for all that
shall be contracted before such report shall be made: Provided, That
in case of failure of the company in any year to comply with the pro
218
REPORT OF THE COMPTROLLER OF THE CURRENCY.
visions of section sixteen of this act, and any of the directors shall, on
or before January fifteenth of such year, file his written request for
such compliance with the secretary of the company, the Comptroller of
the Currency, and the recorder of deeds of the District of Columbia, such
director shall be exempt from the liability prescribed in this section.
203. PERJURY AND LARCENY. (SEC. 18.) That any willful false
swearing in regard to any certificate or report or public notice required
by the provisions of this act shall be perjury, and shall be punished as
such according to the laws of the District of Columbia. And any misappropriation of any of the money of any corporation or company formed
under this act, or any money, funds, or property intrusted to it, shall
be held to be larceny, and shall be punished as such under the laws of
said District.
204. TRANSFER OF STOCK. (SEC. 19.) That the stock of such company shall be deemed personal estate, and shall be transferable only on
the books of such company in such manner as shall be prescribed by
the by-laws of the company; but no shares shall be transferable until
all previous calls thereon shall have been fully paid, and the said stock
shall not be taxable, in the hands of individual owners, the tax on the
Capital stock, gross earnings of the company hereinbefore provided
being in lieu of other personal tax. All certificates of the stock of any
company organized under this act shall show upon their face the par
value of each share and the amount paid thereon.
205. LIABILITY OF STOCKHOLDERS. (SEC. 20.) That all stockholders
of every company incorporated under this act, or availing itself of its
provisions under section eleven, shall be severally and individually liable to the creditors of such company to an amount equal to and in
addition to the amount of stock held by them, respectively, for all debts
and contracts made by such company.
206. MONEY PAYMENT OF CAPITAL STOCK EEQUIRED. (SEC. 21.)
That nothing but money shall be considered as payment of any part of
the capital stock, except that in the case of any company now doing
business in the District of Columbia in any of the classes herein provided for, or under any act of Congress or by virtue of the laws of any
of the States, and which company has actually received full payment in
money of at least fifty per centum of the capital stock required by this
act and which company desires to obtain a charter under this act, all
the assets or property may be received and considered as money, at a
value to be appraised and fixed by the Comptroller of the Currency:
Provided, That all such assets and property are also transferred to and
are thereafter owned by the company organized under this act.
207. NUMBER AND ELECTION OF DIRECTORS. (SEC. 22.) That the
stock, property, and concerns of such company shall be managed by not
less than nine nor more than thirty directors or trustees, who shall,
respectively, be stockholders and at least one-half residents and citizens
of the District of Columbia, and shall, except the first year, be annually
elected by the stockholders at such time and place and after such published notice as shall be determined by the by-laws of the company, and
said directors or trustees shall hold until their successors are elected
and qualified.
208. APPOINTMENT OF OFFICERS. (SEC. 23.) That there shall be a
president of the company, who shall be a director, also a secretary and
a treasurer, all of whom shall be chosen by the directors or trustees:
Provided, That only one of the above-named offices shall be held by
the same person at the same time. Subordinate officers may be
appointed by the directors or trustees, and all such officers may be
REPORT OF THE COMPTROLLER OF THE CURRENCY.
219
required to give such security for the faithful performance of the duties
of their office as the directors or trustees may require.
209. BY-LAWS, (SEC. 24.) That the directors or trustees shall have
power to make such by-laws as they deem proper for the management
or disposal of the stock and business affairs of such company, not
inconsistent with the provisions of this act, and prescribing the duties
of officers and servants that may be employed, for the appointment of
all officers, and for carrying on all kinds of business within the objects
and purposes of such company.
210. DIRECTORS LIABLE FOR PAYMENT OF UNEARNED DIVIDENDS. (SEC. 25.) That if the directors or trustees of any company
shall declare or pay any dividend, the x>ayment of which would render
it insolvent, or which would create a debt against such company, they
shall be jointly and severally liable as guarantors for all of the debts
of the company then existing, and for all that shall be thereafter contracted, while they shall, respectively, remain in office.
211. DIRECTORS' LIABILITY MAY BE AVOIDED. (SEC. 20.) That if
any of the directors or trustees shall object to declaring of such dividend or the payment of the same, and shall at any time before the time
fixed for the payment thereof file a certificate of their objection in writing with the secretary of the company and with the recorder of deeds
of tLe District they shall be exempt from liability prescribed in the preceding section.
212.
RESPONSIBILITY OF DIRECTORS FOR EXCESS LIABILITIES.
(SEC. 27.) That if the liabilities of any company shall at any time exceed
the amount of the fair cash value of the assets, the directors or trustees
of such company assenting thereto shall be personally and individually
liable for such excess to the creditors of the company after the additional liability of the stockholders has been enforced.
213. TRUSTEE, ETC., NOT LIABLE ON STOCK ASSESSMENT. (SEC. 28.)
That no person holding stock in such company as executor, administrator, guardian, or trustee shall be personally subject to any liability
as stockholder of such company, but the estate and funds in the hands
of such executor, administrator, guardian, or trustee shall be liable in
like manner and to the same extent as the testator or intestate or the
ward or the person interested in such trust fund would have been if
he had been living and competent to act and hold the stock in his own
name.
214. INCREASE OF CAPITAL. (SEC. 29.) That any corporation which
may be formed under this chapter may increase its capital stock by
complying with the provisions of this chapter to any amount w^hich
may be deemed sufficient and proper for the purposes of the corporation.
215. CERTIFIED COPY OF INCORPORATION CERTIFICATE COMPETENT EVIDENCE. (SEC. 30.) That a copy of any certificate of incor-
poration filed in pursuance of this chapter, certified by the recorder of
deeds to be a true copy and the whole of such certificate, shall be
received in all courts and places as presumptive legal evidence of the
facts therein stated.
216. E"o BOND OR OTHER SECURITY REQUIRED OF TRUST COMPANIES. (SEC. 31.) That no bond or other collateral security, except
as hereinafter stated, shall be required from any trust company incorporated under this act for or in respect to any trust, nor when appointed
trustee, guardian, receiver, executor, or administrator, with or without
the will annexed, committee of the estate of a lunatic or idiot, or other
fiduciary appointment^ but the capital stock subscribed for or taken ;
220
REPORT OF THE COMPTROLLER OF THE
CURRENCY.
and all property owned by said company and the amount for which said
stockholders shall be liable in excess of their stock, shall be taken and
considered as the security required by law for the faithful performance
of its duties and shall be absolutely liable in case of any default whatever; and in case of the insolvency or dissolution of said company the
debts due from the said company as trustee, guardian, receiver, executor, or administrator, committee of the estate of lunatics, idiots, or any
other fiduciary appointment, shall have a preference.
217. DISTRICT SUPREME COURT HAS JURISDICTION OF TRUST COMPANIES. (SEC. 32.) That the supreme court of the District of Columbia,
or any justice thereof, shall have power to make orders respecting such
company whenever it shall have been appointed trustee, guardian,
receiver, executor, or administrator, with or without the will annexed,
committee of the estate of a lunatic, idiot, or any other fiduciary, and
require the said company to render all accounts which might lawfully
be made or required by any court or any justice thereof if such trustee,
guardian, receiver, executor, administrator, with or without the will
annexed, committee of the estate of a lunatic or idiot, or fiduciary
were a natural person. And said court, or any justice thereof, at any
time, on application of any person interested, may appoint some suitable person to examine into the affairs and standing of such companies,
who shall make a full report thereof to the court, and said court, or
any justice thereof, may at any time, in its discretion, require of said
company a bond with sureties or other securities for the faithful performance of its obligations, and such sureties or other security shall be
liable to the same extent and in the same manner as if given or pledged
by a natural person.
218.
A L L SIMILAR DISTRICT CORPORATIONS SUBJECT TO THIS
ACT. (SEC. 33.) That no corporation or company organized by virtue
of the laws of any of the States of this Union and having its principal
place of business within the District of Columbia, shall carry on, in the
District of Columbia, any of the kinds of business named in this act
without strict compliance in all j)articiilars with the provisions of this
act for the government of such corporations formed under it, and each
one of the officers of the corporation or company so offending shall be
punished by fine not exceeding one thousand dollars, or imprisonment
in some State's prison not exceeding one year, or by both fine and
imprisonment, in the discretion of the court. This section shall not
take effect till six months after the approval of this act.
219. PROVISIONS FOR AMENDMENT. (SEC. 34.) That Congress may
at any time alter, amend, or repeal this act, but any such amendment
or repeal shall not, nor shall the dissolution of any company formed
under this act, take away or impair any remedy given against such
corporation, its stockholders or officers, for any liability or penalty
which shall have been previously incurred: Provided, That the courts
of the District of Columbia shall not have power to appoint any trustee,
trustees, guardians, receivers, or other trustee of a fund or property
located outside of the District of Columbia, or belonging to a coloration or person having a legal residence or location outside of said
District.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
221
OHAPTBE TEK
GOVERNMENT DEPOSITARIES.
220. Designation and duties of public I 223. Penalty for misapplication of moneydepositaries,
order funds.
221. Deposit; and withdrawal of public 224. Penalty for unauthorized deposit of
moneys.
|
public money.
222. Provisions for deposits by certain \ 225. Penalty for unauthorized receipt or
postmasters.
use of public money.
220. DESIGNATION AND DUTIES OF PUBLIC DEPOSITARIES. (SEC.
5153.) All national banking associations, designated for that purpose
by the Secretary of the Treasury, shall be depositaries of public money,
except receipts from customs, under such regulations as may be prescribed by the Secretary; and they may also be employed as financial
agents of the Government; and they shall perform all such reasonable duties* as depositaries of public moneys and financial agents of
the Government, as may be required of them. The Secretary of the
Treasury shall require the associations thus designated to give satisfactory security, by the deposit of United States bonds and otherwise,
for the safe-keeping and prompt payment of the public money deposited
with them, and for the faithful performance of their duties as financial
agents of the Government. And every association so designated as
receiver or depositary of the public money shall take and receive at
par all of the national currency bills, by whatever association issued,
which have been paid into the Government for internal revenue, or for
loans or stocks.
221. DEPOSIT AND WITHDRAWAL OF PUBLIC MONEYS. (SEC. 3620.)
It shall be the duty of every disbursing officer having any public
money intrusted to him for disbursement to deposit the same with the
Treasurer or some one of the assistant treasurers of the United States,
and to draw for the same only as it may be required for payments to
be made by him in pursuance of law; and draw from the same only in
favor of the persons to whom payment is made, and all transfers from
the Treasurer of the United States to a disbursing officer shall be
by draft or warrant on the Treasurer or an assistant treasurer of the
United States. In places, however, where there is no Treasurer or
assistant treasurer, the Secretary of the Treasury may, when he deems
it essential to the public interest, specially authorize in writing the
deposit of such public money in any other public depository, or, in
writing, authorize the same to be kept in any other manner and under
such rules and regulations as he may deem most safe and effectual to
facilitate the payments to public creditors.
222. PROVISIONS FOE DEPOSITS BY CERTAIN POSTMASTERS. (SEC.
3847.) Any postmaster, having public money belonging to the Government, at an office within a county where there are no designated depositaries, treasurers of mints, or Treasurer or assistant treasurers of the
United States, may deposit the same, at his own risk and in his official capacity, in any national bank in the town, city, or county where
the said postmaster resides; but no authority or permission is or shall
be given for the demand or receipt by the postmaster, or any other
person, of interest, directly or indirectly, on any deposit made as herein
described; and every x>ostroaster who makes any such deposit shall
report quarterly to the Postmaster-General the name of the bank where
such deposits have been made, and also state the amount which may
stand at the time to his credit.
222
REPORT OF THE COMPTROLLER OF THE CURRENCY.
223. PENALTY FOR MISAPPLICATION OF MONEY-ORDER
FUNDS.
(SEC. 4046.) Every postmaster, assistant, clerk, or other person employed in or connected with the business or operations of any moneyorder office who converts to his own use, in any way whatever, or loans,
or deposits in any bank, except as authorized by this Title, or exchanges
for other funds, any portion of the money-order funds, shall be deemed
guilty of embezzlement, and any such person, as well as every other
person advising or participating therein, shall, for every such offense,
be imprisoned for not less than six months nor more than ten years,
and be fined in a sum equal to the amount embezzled; and any failure
to pay over or produce any money-order funds intrusted to such person
shall be taken to be prima facie evidence of embezzlement; and upon
the trial of any indictment against any person for such embezzlement
it shall be prima facie evidence of a balance against him to produce a
transcript from the money-order account books of the Sixth Auditor.
But nothing herein contained shall be construed to prohibit any postmaster depositing, under the direction of the Postmaster-Greneral, in a
national bank designated by the Secretary of the Treasury for that
purpose, to his own credit as postmaster, any money-order or other
funds in his charge, nor prevent his negotiating drafts or other evidences of debt through such bank, or through United States disbursing
officer, or otherwise, when instructed or required to do so by the Postmaster-General for the purpose of remitting surplus money-order funds
from one post-oilice to another, to be used in payment of money orders.
Disbursing officers of the United States shall issue, under regulations
to be prescribed by the Secretary of the Treasury, duplicates of lost
checks drawn by them in favor of any postmaster on account of moneyorder or other public funds received by them from some other postmaster.
224.
PENALTY FOR UNAUTHORIZED DEPOSIT OP PUBLIC MONEY.
(SEC. 5488.) Every disbursing officer of the United States who deposits
any public money intrusted to him in any place or in any manner,
except as authorized by law, or converts to his own use in any way
whatever, or loans with or without interest, or for any purpose not
prescribed by law withdraws from the Treasurer or any assistant
treasurer, or any authorized depository, or for any purpose not prescribed by law transfers or applies any portion of the public money
intrusted to him, is, in every such act, deemed guilty of an embezzlement of the money so deposited, converted, loaned, withdrawn, transferred, or applied) and shall be punished by imprisonment with hard
labor for a term not less than one year nor more than ten years, or by
a fine of not more than the amount embezzled or less than one thousand
dollars, or by both such fine and imprisonment.
225. PENALTY FOR UNAUTHORIZED E E C E I P T OR U S E OF PUBLIC
MONEY. (SEC. 5497.) Every banker, broker, or other person not an
authorized depositary of public moneys, who knowingly receives from
any disbursing officer, or collector of internal revenue, or other agent
of the United States, any public money on deposit, or by way of
loan or accommodation, with or without interest, or otherwise than in
payment of a debt against the United States, or who uses, transfers,
converts, appropriates, or applies any portion of the public money for
any purpose not prescribed by law, and every president, cashier, teller,
director, or other officer of any bank or banking association, who violates any of the provisions of this section, is guilty of an act of embezzlement of the public money so deposited, loaned, transferred, vised,
converted, appropriated, or applied, and shall be punished as prescribed
in section fifty-four hundred and eighty-eight.
REPORT OF THE COMPTROLLER OF THE CURRENCY
223
OHAPTEE ELEVEN".
MISCELLANEOUS ACTS.
AN" ACT authorizing The Eirst National Bank of Annapolis to change its location and name.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That The First National Bank
of Annapolis, now located in the city of Annapolis and State of Maryland, is hereby authorized to change its location to the city of Baltimore,
in said State. Whenever the stockholders representing three-fourths
of the capital of said bank, at a meeting called for that purpose, determine to make such change, the president and cashier shall execute a
certificate, under the corporate seal of the bank, specifying such determination, and shall cause the same to be recorded in the office of the
Comptroller of the Currency, and thereupon svich change of location
shall be effected, and the operations of discount and deposit of said
bank shall be carried on in the city of Baltimore.
SEC. 2. That nothing in this act contained shall be so construed as in
any manner to release the said bank from any liability or affect any
action or proceeding in law in which the said bank may be a party or
interested. And when such change shall have been determined upon,
as aforesaid, notice thereof, and of such change, shall be published in
two weekly papers in the city of Annapolis not less than four weeks.
SEC. 3. That whenever the location of said bank shall have been
changed from the city of Annapolis to the city of Baltimore, in accordance with the first section of this act, its name shall be changed to The
Traders' National Bank of Baltimore, if the board of directors of said
bank shall accept the new name by resolution of the board, and cause
a copy of such resolution, duly authenticated, to be filed with the
Comptroller of the Currency.
SEC. 4. That all the debts, demands, liabilities, rights, privileges, and
powers of The
First National Bank of Annapolis shall devolve upon
The Traders7 National Bank of Baltimore whenever such change of
name is effected.
SEC. 5. That this act shall take effect and be in force from.and after
its passage.
Approved, June 7,1872.
Acts of a similar nature to the one preceding have been enacted by
Congress for the following purposes:
Authorizing The Manufacturers7 National Bank of New York to
change its location from the city of New York to the city of Brooklyn.
(Approved July 27, 1868.)
Authorizing The City National Bank of New Orleans, Louisiana, to
change its name to The Germania National Bank of New Orleans.
(Approved March 1, 1869.)
Authorizing The Second National Bank of Plattsburgh, New York,
to change its name to The Vilas National Bank of Plattsburgh. (Approved March 1, 1869.)
Authorizing The First National Bank of Delhi, New York, to change
its location and name to The First National Bank of Port Jervis, New
York. (Approved May 5, 1870.)
Authorizing The First National Bank of Fort Smith, Arkansas, to
change its location and name to The First National Bank of Camden,
Arkansas. (Approved July 1, 1870.)
224
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Authorizing The Jersey Shore National Bank, Pennsylvania, to
change its location and name to The Williamsport National Bank,
Pennsylvania. (Approved December 22, 1870.)
Authorizing The Worcester County National Bank of Blackstone,
Massachusetts, to change its location and name to The Franklin
National Bank, Massachusetts. (Approved February 9, 1871.)
Authorizing The Farmers' National Bank of Fort Edward, New York,
to change its location and name to The North Granville National Bank,
New York. (Approved February 18, 1871.)
Authorizing The Worthington National Bank of Cooperstown, New
York, to change its location and name to The First National Bank of
Oneonta, New York. (Approved February 27, 1871.)
Authorizing The Warren National Bank of South Danvers, Massachusetts, to change its name to The Warren National Bank of Peabody,
Massachusetts. (Approved March 12, 1872.)
Authorizing The First National Bank of Seneca, Illinois, to change
its location and name to The First National Bank of Morris, Illinois.
(Two acts, approved April 5, 1872, and June 18, 1874.)
Authorizing The Railroad National Bank of Lowell, Massachusetts,
to change its location and name to The Railroad National Bank of
Boston, Massachusetts. {A pproved May 31, 1872.)
Authorizing The National Bank of Lyons, Michigan, to change its
location and name to The Second National Bank of Ionia, Michigan.
(Approved December 24, 1872.)
Authorizing The East Chester National Bank of Mount Vernon, New
York, to change its location and name to The German National Bank of
Evansville, Indiana. (Approved January 11, 1873.)
Authorizing The First National Bank of Newnan, Georgia, to change
its location and name to The National Bank of Commerce, Atlanta,
Georgia. (Approved January 23, 1873.)
Authorizing The First National Bank of Watkins, New York, to
change its location and name to The First National Bank of Penn Yan,
New York. (Approved February 19, 1873.)
Authorizing The National Bank of Springfield, Missouri, to change its
name to The First National Bank of Springfield, Missouri. (Approved
March 3, 1873.)
Authorizing The Kansas Valley National Bank of Topeka, Kansas, to
change its name to The First National Bank of Topeka, Kansas. (Approved March 3, 1873.)
Authorizing The First National Bank of Saint Anthony, Minnesota,
to change its location and name to The Merchants7 National Bank of
Minneapolis, Minnesota. (Approved January 8,1874.)
Authorizing The Second National Bank of Havana, New York, to
change its name to The Havana National Bank of Havana? New York.
(Approved January 9, 1874.)
Authorizing The Passaic County National Bank of Paterson, New
Jersey, to change its name to The Second National Bank of Paterson,
New Jersey. (Approved April
15,1874.)
Authorizing The Citizens7 National Bank of Hagerstown,
Maryland,
to change its location and name to The Citizens7 National Bank of
Washington City, District of Columbia. (Approved May 1,1874.)
Authorizing The Irasburg National Bank of Orleans, at Irasburg,
Vermont, to change its location and name to The Barton National
Bank, Vermont. (Approved7 June 3,1874.)
Authorizing The Farmers National Bank of Greensburg, Pennsylvania, to change its location and name to The Fifth National Bank of
Pittsburg,
Pennsylvania. (Approved June 23,1874.)
REPORT OF THE COMPTROLLER OF THE CURRENCY.
225
Authorizing The Citizens' National Bank of Sanbornton, New Hampshire, to change its name to The Citizens' National Bank of Tilton,
New Hampshire. (Approved February 19,1875.)
Authorizing The Second National Bank of Jamestown, New York, to
change its name to The City National Bank of Jamestown, New York.
(Approved March 3, 1875.)
Authorizing The Second National Bank of Watkins, New York, to
change its name to The Watkins National Bank; New York. (Approved
March 3, 1875.)
Authorizing The Slater National Bank of North Providence, Rhode
Island, to change its name to The Slater National Bank of Pawtucket,
Rhode Island. (Approved March 3, 1875.)
Authorizing The Auburn City National Bank of Auburn, New York^
to be consolidated with The First National Bank of Auburn, New York.
(Approved March 3, 1875.)
Authorizing The Miners' National Bank of Braidwood, Illinois, to
change its location and name to The Commercial National Bank of
Wilmington, Illinois. (Approved January 31, 1878.)
Authorizing The Windham National Bank, Wind ham, Connecticut,
to change its location to the village of Willimantic, Connecticut. (Approved February 10, 1879.)
Authorizing The National Bank of Commerce of Cincinnati, Ohio,
to change its name to The National Lafayette and Bank of Commerce,
(Approved April 29, 1879.)
Authorizing The City National Bank of Manchester, New Hampshire,
to change its name to The Merchants' National Bank of Manchester.
(Approved June 11, 1880.)
Authorizing The Blue Hill National Bank of Dorchester, Massachusetts, to change its location and name to The Blue Hill National Bank
of Milton, Massachusetts. (Approved January 13, 1881.)
Authorizing The First National Bank of Meriden, West Meriden,
Connecticut, to change its name to The First National Bank of Meriden^
Connecticut. (AiJproved March 1, 1881.)
Authorizing The National Mechanics' Banking Association of New
York, New York, to change its name to Wall Street National Bank.
(Approved February 14, 1882.)
Authorizing The Lancaster National Bank of Lancaster, Massachusetts, to change its location and name to The Lancaster National Bank
of Clinton, Massachusetts. (Approved February 25, 1882.)
Authorizing The National Bank of Kutztown, Pennsylvania, to change
its location and name to The Keystone National Bank of Reading, Pennsylvania. (Approved June 27, 1882.)
Joint resolution authorizing The National Bank of Winterset, Iowa,
to change its name to The First National Bank of Winterset, Iowa*
(Approved January 18, 1883.)
Authorizing The Second National Bank of Xenia, Ohio, to increase
its capital stock. (Approved February 17, 1883.)
Authorizing The First National Bank of West Greenville, Pennsylvania, to change its name to The First National Bank of Greenville,
Pennsylvania. (Approved February 26, 1883.)
Authorizing The West "Waterville National Bank of Oakland, Maine,
to change its title to The Messalonskee National Bank of Oakland,
Maine. (Approved April 15, 1884.)
Authorizing The Hillsborough National Bank, Ohio, to change its
name to The First National Bank of Hillsborough, Ohio. (Approved
December 18, 1884.)
CUB, PT 1
15
226
REPORT OF THE COMPTROLLER OF THE CURRENCY.
Authorizing' The Slater National Bank of North Providence, Rhode
Island, to change its name. (Approved January 8, 1885.)
Authorizing The First National Bank of Omaha, Nebraska, to increase
its capital stock. (Approved January 10, 1885.)
Authorizing The National Bank of Bioomington, Illinois, to change
its name to The First National Bank of Bloomington, Illinois. (Approved
January 27,1885.)
Authorizing The Manufacturers' National Bank of New York to
change its name to The Manufacturers7 National Bank of Brooklyn,
New York. (Approved February 20t 1885.)
Authorizing The Commercial National Bank of Chicago, Illinois, to
increase its capital stock. (Approved February 28, 1885.)
Authorizing The First National Bank of Lamed, Kansas, to increase
its capital stock. (Approved March 3,1885.)
Authorizing The First National Bank of Fort Benton, Montana, to
change its location and name. (Approved December 18, 1890.)
Authorizing a national bank at Chicago, Illinois, to establish a branch
office upon the grounds of the World's Columbian Exposition. (Approved May 12, 1892.)
DIGEST OF NATIONAL BANK DECISIONS.
INDEX.
ABATEMENT.
ACCOMMODATION PAPER.
ACTIONS.
AGENT OF SHAREHOLDERS.
ASSESSMENT.
ATTACHMENT.
BONDS OF OFFICERS.
BOOKS, INSPECTION OF.
BRANCH BANKS.
BROKER.
CAPITAL STOCK.
CASHIER.
CERTIFICATE OF DEPOSIT.
CERTIFICATION OF CHECKS.
CHECKS.
CIRCULATION.
COLLATERAL SECURITIES.
COLLECTIONS.
CONSTITUTIONALITY.
CONSTRUCTION OF LAW.
CONVERSION.
CRIMINAL LAW.
DEPOSITS.
DEPUTY COMPTROLLER.
DIRECTORS.
DISTRICT ATTORNEY.
ESTOPPEL.
EVIDENCE.
EXECUTION.
EXPIRATION.
EXTENSION.
FALSE ENTRIES.
FORFEITURE OF CHARTER.
FORGERIES.
GUARANTY.
INCREASE OF CAPITAL STOCK.
INDICTMENT.
INJUNCTION.
INSOLVENT BANKS.
INTEREST.
JURISDICTION.
LEASE.
LIABILITY OF DANK.
LIEN.
LIQUIDATION.
LOANS.
MANDAMUS.
MARRIED WOMEX.
MORTGAGE.
NEGOTIABLE PAPER.
NOTARY PUBLIC.
NOTICE.
OATH OF DIRECT OK.
OFFICERS.
OFFSET.
PASS BOOK.
PLACE OF BUSINESS.
POST NOTES.
POWERS OF BANK.
PREFERENCE.
PREFERRED CLAIMS.
PRESIDENT.
REAL ESTATE.
RECEIVER.
REDUCTION OF CAPITAL STOCK.
REPORT OF CONDITION.
RESIDENCE.
RESTRAINING ACTS.
SAVINGS BANKS.
SHAREHOLDERS'.
SPECIAL DEPOSITS.
TAXATION.
TRANSFER OF STOCK.
ULTRA VIRES.
USURY.
"VICE-PRESIDENT.
VOTING.
ABATEMENT :
1. An action brought by the creditor of a national bank is abated, by a decree
of a district or circuit court dissolving the corporation and forfeiting its
franchises. First National Bank of Selma v. Colby, 21 Wall., 609.
2. A creditor's bill was filed against a national bank before the passage of the
act of Congress of June 30, 1876 (19 St. at L., 63). and a receiver was
appointed, who took possession of the property of the bank. An amended
bill was filed in the cause, after the passage of that act, to secure the benefits of the act, to which all the stockholders were made parties. Subsequently the Comptroller of the Currency appointed a receiver to wind up
the affairs of the bank, and this suit was brought by him against one of
the stockholders. Held, on demurrer to a plea in abatement, which set
forth these facts, that the defendant is entitled to judgment on the ground
that as the stockholder's liability can be completely enforced in the suit
in equity, the general rule applies that a debtor shall not be vexed by two
suits in the same jurisdiction for the same cause of action. Harvey,
Receiver, etc,, v, Lord, 10 Fed. Hep., 236.
227
228
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ACCOMMODATION PAPER :
1. A national banking association can not guarantee the paper of a customer for
his accommodation. Seligman v. Charlottesnille National Bank, 3 Hughes, 647.
2. The accommodation paper of a national banking association is void in the
hands of one who takes it with knowledge of its character. Johnson v.
Charlottesville National Bank, 3 Hughes, 657.
3. A national bank can not become an accommodation indorser. National Bank
of Commerce v. Atkinson, 55 Fed. Bep., 465.
4. A private corporation can not defend an action on its accommodation note
on the ground of ultra vires, as against a bona fide holder. Florence Bailroad and Improvement Company v. Chase National Bank {Ala.), 17 So., 720.
5. As against a holder for value, a maker of an accommodation note can defend
only on the ground of actual payment. Philler v. Patterson (Pa. Slip.), 32
A., 26.
6. A director and stockholder of a national bank gave an accommodation note
to the bank's president, on the latter's request and representation that the
note was to be put in the hands of his personal creditor as security, and
on condition that no money should be drawn on the note, and that the
note should not be put in the bank. Without the knowledge of the
maker, he being aged and infirm of sight, the note was made payable to
the bank and placed therein, and a certificate of deposit for the amount
thereof issued to the president, and by him deposited with his creditor,
who held the same until the bank's failure. Held, that the maker was
liable on the note to the bank's receiver. Linn County National Bank v.
Crawford (C. C), 69 Fed. Bep., 532.
ACTIONS: See Jurisdiction.
A. Solvent banks—
1. A national banking association is a foreign corporation within the meaning
of a State statute requiring corporations created by the laws of any other
State or country to give security for costs before prosecuting a suit in
the courts of the State. National Park Bank v. Gunst, 1 Abb. N. C, 292.
2. As a national banking association can acquire no title to negotiable paper
purchased by it, it can maintain no action thereon in a State where the
person suing must be owner of the paper. First National Bank of Rochester
v. Pierson, 24 Minn., 140.
3. A stockholder in a national bank can not maintain an action at law against
the officers and directors thereof to recover damages for willful waste of
the assets whereby the value of his shares was decreased and he became
liable to an assessment thereon. His remedy must be sought in equity.
Hirsh v. Jones et al., 56 Fed. Bep., 137.
4. The provision of the banking law. section 5198, Rev. St., which requires
that actions brought against national banking associations in State
courts shall be brought in the county or city in which the association is
located, applies only to transitory actions. It was not intended to apply
to actions local in their character. Casey v. Adams, 102 U. S., 66.
5. Under section 57 of act of 1864, suits may be brought by, as well as against,
any association. Kennedy v. Gibson, 8 Wall,, 498.
6. Actions local in their nature may be maintained in the proper State court
in a county or city other than that where it is established. Casey v. Adams,
102 U. S., '66.
7. A national bank may be sued in any State, county, or municipal court in
county or city where located. Bank of Bethel v. Pahquioque Bank, 14
Wall., 383.
8. Under the original act respecting national banks, and before the act of June
30, 1876, a court of equity had jurisdiction of suit to prevent or redress
maladministration or fraud against creditors, in voluntary liquidation of
such bank, whether contemplated or executed; and such suit by one
creditor must be for all. Richmond v. Irons, 121 U. S.} 27.
B, Insolvent banks—
9. Suit may be brought against a national banking association though it is in
the hands of a receiver. Bank of Bethel v. Pahquioque Bank, 14 Wall., 383;
Security National Bank v. National Bank of the Commonwealth, 2 Hun., 287;
Green v. The Wallkill National Bank, 7 Hun., 63.
10. A shareholder of a national banking association can not maintain an action
against the directors to recover damages sustained for neglect and mismanagement of the affairs of the association whereby it became insolvent
and its stock was rendered worthless. Such an action can be brought only
by the corporation itself. Conway v. Halsey, 15 Vroom., 462; Howe v.
Barney, 45 Fed. Bep., 668.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
229
ACTIONS: See Jurisdiction—Continued.
B. Insolvent banks—Cor.tinued.
11. But where the receiver refuses to bring an action against negligent directors
to recover the amount which the shareholders have been compelled to
contribute- to pay the debts of the association, an action against such
directors may be brought byT a shareholder on behalf of himself and the
other shareholders. Nelson\ . Burroughs, 9 Abb. N. C, 280.
12. And when the receiver is a director and one of the parties charged with
misconduct and against whom a remedy is sought, the action may be
brought by a shareholder on behalf of himself and the other shareholders.
Brinckerhoffv. Bostwick, 88 N Y., 52.
13. A receiver may sue either in his own name or the name of the bank. National
Bankv. Kennedy, 17 Wall., 19.
14. Suits and proceedings under the act in which the United States or their officers or agents are parties, whether commenced before or after the appointment of a receiver, are to be conducted by the district attorney, under the
direction of the Solicitor of the Treasury. Bank of Bethel v. Pahquioque
Bank, 14 Wall., 383.
15. But section 380, Rev. St., is directory merely, and the employment of private
counsel by the receiver can not be made a ground of defense to a suit
brought by him. Ib.
16. Receivers may sue in the courts of the United States by virtue of the act,
without reference to the locality of their personal citizenship. Ib.
17. The provisions of the codes that every action must be brought in the name
of the real party in interest, except in the case of the trustee of an express
trust or of a person authorized by a statute to sue, does not apply to the
receiver of a national banking association suing in a Federal court held
in a State which has adopted the code procedure; for the right of the
receiver to sue is derived from the national banking law. Staunton v.
Wilkeson, 8 Ben., 357.
18. Under section 1001, Rev. St., no bond for the prosecution of the suit, or to
answer in damages or costs, is required on writs of error or appeals issuing
from or brought to the Supreme Court of the United States by direction of
the Comptroller of the Currency in suits by or against insolvent national
banking associations or the receivers thereof. Pacific National Bank v.
Mixter, 114 IT. 8., 463.
19. The State statute of limitations applies to a suit brought by the receiver of
a national bank against a shareholder to recover an assessment upon his
stock to pay the debts of the bank. Bailer v. Boole, 44 Fed. Bep., 5SG.
20. Whether a suit against a director for negligent performance of his duties, as
required by the statutes of the United States and the by-laws of the association, will survive against the executor or administrator depends upon
State laws. Witters v. Foster, 26 Fed. Hep., 737.
21. Such action is not prescribed by the limitation of one year in Louisiana.
Casev. Bank, 100 IT. S., 446.
22. On a bill filed by receiver against stockholders under section 50, where bank
fails to pay its notes, action by Comptroller must precede institution of
suit by receiver, and be set forth therein. Kennedy v. Gibson, 8 Wall., 498.
23. Creditors of the bank are not proper parties to such bill. Ib.
24. A compromise of a suit by the receiver of a national bank and counsel for the
United States will not be opened after a delay of seven years, no fraud
being shown. Henderson v. Myers, 11 Phila., 616; 3 N. B. C, 759.
25. An action may be brought against a national bank, notwithstanding a
receiver of it has been appointed. Security Bank of New York v. National
Bank of the Commonwealth, 4 Thompson <f Cook, 518; 1 N. B. C, 774. Green
v. The"Wallkill National Bank, 7 Hun., 63; 1 N. B. C, 786.
AGENT OF SHAREHOLDERS:
1. The Federal courts have the same jurisdiction of suits by and against the
such banks, each being in the same sense officers of the United States,
and each representing in precisely the same relation the bank in its corporate capacity; and this jurisdiction attaches without regard to any
diversity of citizenship of the parties or the amounts involved. McConville v. Gilmour et ah, 36 Fed. Bep., 277.
2. When the receiver of an insolvent national bank has been displaced by an
"agent" appointed under the acts of Congress in that behalf, it is proper
practice to substitute, upon motion, the " agent" as the plaintiff on the
record in place of the "receiver" in a suit already commenced by the
latter. Ib.
280
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ASSESSMENT: See Insolvent banks; Receiver; Shareholders; Transfer of stock.
1. Where national banking association is insolvent, order of Comptroller of
Currency, declaring to what extent the individual liability of stockholders shall be enforced, is conclusive. Kennedy v. Gibson, 8 Wall., 498; Casey
v.Galli, 94 U.S., 673; National Bank v. Case, 99 U. £., 628.
2. Payments of assessments by stockholder in national bank on increased stock
can not be applied, in law or in equity, to discharge assessments by Comptroller in final liquidation of the bank. PacAfic National Bank Y. Eaton,
141 U. 8., 227; Thayer v. Butler, lb., 234; Butler v. Eaton, Ib.,240.
3. The assessments- made by the Comptroller upon the shareholders of an insolvent association bear interest from the date of the order. Casey v. GalU,
94 U. S., 673.
4. Where shareholders have assessed themselves to the amount of the par value
of. the stock for the purpose of restoring impaired capital, the contributions made in pursuance of such assessment, though all used in paying the
debts of the association, will not so operate as to discharge the shareholders
from their individual liability. Delano v. Butler, 118 ZT. S., 634.
5. Where a married woman is by the State law capable of holding stock in a
national bank in her own right she is liable to an assessment upon her
shares, though the law of the State does not authorize married women to
bind themselves by contracts for the payment of money. The law annexes
her obligations by its own force; no act or capacity to act on her part is
required. Witters v. Sowles, 32 Eed. Rep., 767; 35 Fed. Hep., 640.
6. Married women who are permitted, by the lav/s of the State in which they
reside to become shareholders in national banks are liable to assessments
under the national banking laws. In re. First National Bank of St. Albans,
49 Fed. Rep., 120.
7. The coverture of a married woman who is a. shareholder in a national bank
does not prevent the receiver of the bank from recovering judgment against
her for the amount of an assessment levied upon the shareholders equally
and ratably under the statute. Kcyser v. Hitz, 133 U. S., 138.
8. It is not essential, in an action to enforce the individual liability of the shareholders of an insolvent national banking association, to aver and prove that
the assessment was necessary, for the decision of the Comptroller on this
point is conclusive. Strong v. Southworth, 8 Ben., 331; Kennedy v. Gibson,
8 Wall, 498; Casey v. GalU, 94 U. 8., 673.
9. And. the fact that the title to the stock of a deceased shareholder vests in
his administrator does not relieve the estate from the burden of an assessment. Davis v. Weed, 44 Conn,, 569.
10. Nor will the fact that the administration ia complete, and all the assets have
been distributed, defeat an action brought to recover the assessment. Ib.
11. The question whether there is a deficiency of assets, and when it is necessary to enforce the individual liability of shareholders* is for the Comptroller to determine; and his decision in this matter is final and conclusive. Kennedy v. Gibson, 8 Wall., 49S; National Bank v. Case, 09 U. 8., 628;
Casey v. GalU, 94 U. S., 673.
12. The amount contributed by each shareholder should bear the same proportion to the whole amount of the deficit as his own stock bears to the
whole .amount of the capital stock at its par value. And the solvent
shareholders can not be made to contribute more than their proportion to
make good the deficiency caused by the insolvency of other shareholders.
United States v. Knox, 102 U. S., 422.
13. Where,, to discharge liabilities of an insolvent bank, Comptroller assessed
against shareholders a sufficient per cent on par value of stock held by
each, some being insolvent, he can not provide for deficiency by new
assessment. Ib.
14. The estate of a deceased owner of national-bank stock is liable (Rev. St.,
sec. 5152) to an assessment levied against his executors in consequence of
the failure of the bank after his death.. Wiekhani v. Hull ct ah, 60 Fed.
Rep.f 326.
15. An action was brought against the executors of an estate to establish its
liability for an assessment on certain shares of national-bank stock. The
estate was at the time in possession of an Iowa probate court for purposes
of administration, for whick reason the Federal court could not enforce
the liability, if adjudged to exist. Defendant set up the limitations contained in the Iowa statute (Code, sec. 242.1) regulating the settlement of
estates: Held, That the Federal court would not pass upon the question
whether this provision debarred complainant from sharing in the estate,
for, as the claim, established in the Federal court must be presented for
allowanco in the probate proceedings, the better practice was to remit the
question to the probate court. Ib.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
231
ASSESSMENT: See Insolvent banksj Receiver; Shareholders-, etc.—Continued.
16. Where a national bauk issues certificates of its shares to a subsequent purchaser in lieu of the certificates of the prior owner, without observing its
by-law in regard to a transfer on its books, so far as creditors of the bank
are concerned a party taking and holding such shares of stock will bo
subject to the liabilities imposed by section 5151 of the national banking
law. Lainy v. Burley, 101 III., 591; 3 N. B. C, 369.
17. One to whom stock has been transferred in pledge or as collateral security
for money loaned, and who appears on the books of the corporation as the
owner of the stock, is liable as a stockholder for the benefit of creditors.
Where the owner, holder, or pledgee of stock transfers it out and out for
the purpose of escaping liability as a shareholder to one who is unable to
meet such liability, or when the transfer is colorable and not absolute, the
transfer is ineffective as to creditors, and the transferor will be still liable.
Therefore, when the G. bank loaned money and took as collateral therefor
shares of stock in the C. bank, which were duly transferred in the books
of the C. bank, and afterward the G. bank transferred these shares to one
of its clerks, with an understanding that he should re-transfer on request,
and the C. bank was then in failing condition. Held, that the G. bank was
liable to contribute as r* stockholder to the debts of the C. bank. Gcrmania
National Bank of New Orleans, v. Case, Receiver,. 90 U.S.,628; 2N.B.C.,25.
18. A letter addressed to the receiver, and signed by the Comptroller of the Currency, directing him to institute legal proceedings to enforce the individual
liability of every stockholder, under the statute, is sufficient evidence that
the Comptroller decided, before the suit, that it was necessary to enforce
the personal liability of the stockholders. Boivden v. Johnson, 107 U. S., 251;
3N:B. C.,55.
19. The liability of the stockholders bears interest from the date of said letter.
Ib.
20. Under the national banking act the individual liability of the stockholder
survives as against the personal representatives of a deceased stockholder.
Richmond v. Irons, 121 U. S., 27; 3 N. B. C, 211.
21. A stockholder sold certain stock several months before the insolvency of the
bank, but the transfer was not made' on the books till the date of the
bank's failure.. Held, that the stockholder incurred the statutory liability.
Ib.
22. Fifty shares of the stock of a national bank were transferred to F. on the
books of the bank October 29. A certificate therefor was made out, but
not delivered to him. He knew nothing of
the transfer, and did not
authorize it to be made. On October 30 he wTas appointed a director and
vice-president. On November 21 he was authorized to act as cashier. Ho
acted as vice-president and cashier from that day. On December 12 he
bought and paid for 20 other shares. On January 2 following, while the
bank was insolvent, a dividend on its stock, was fraudulently made, and
$1,750 therefor placed to the credit of F. on its books. He, learning on that
day of the transfer of the 50 shares, ordered D., the president of the bank,
who had directed the transfer of the 50 shares, to re-transfer it, and gave
to D. his check to the order of D. individually for $1,250 of the $1,750.
The bank failed January 22. In a suit by the receiver of the bank against
F. to recover the amount of an assessment of 100 per cent by the Comptroller of the Currency in enforcement of the individual liability of the
shareholders,, and to recover the $1,750, Held, first, in view of provisions of
sections 5146, 5147, and 5210, Rev. St., it must bo presumed conclusively
that F. knew, from November 21, that the books showed ho held 50
shares; second, F. did not get rid of his liability for $1,250 by giving to
D. his check for that sum in favor of D. individually. Finn v. Brown, 142
U. S.f56.
23. In winding up an insolvent national bank, the Comptroller of the Currency
is vested with authority to determine when a deficiency of assets exists,
so that the individual liability of the stockholders may be enforced, and
no appeal lies from his decision. Bailey v. Sawyer, 1 N, B. C, 356; 4 Dill.,
463.
24. The liability of a stockholder of a national bank is several, and is fixed by
his taking stock in the corporation. Ib.
25. When an assessment upon the stockholders is ordered by the Comptroller, a
suit at law is the proper remedy to enforce it. Ib.
26. A trustee holding shares in a national bank can not avail himself of his
exemption from personal liability for debts of the bank, unless his trusteeship appears on the books of the bank. Davis v. Essex Baptist Society, 44
Conn., 582; 2 N, B. C, 110.
232
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ASSESSMENT: See Insolvent "banks; Receiver; Shareholders, etc.—Continued.
27. "With a bequest of money a religious society purchased, and held in its own
name, shares in a national bank. The society had other donations otherwise invested. Held, that the society was not a trustee, but an ordinary
stockholder, and liable to assessment for debts of the insolvent bank. Ib.
28. One who procures a transfer to himself, on the books of a national bank, of
stock in such bank, becomes liable for the engagements of the bank as
prescribed in the national bank act, although such stock was pledged to
him by the owner simply as security for a debt. Moore v. Jones, 3 Woods,
53; 2 N. B. C, 144.
29. One in whose name shares of the stock of a national bank stand on the bank
books is subject to the individual liability of a shareholder, although his
holding of the Btock was originally as collateral security for a loan, and
the loan has been repaid and the stock certificate surrendered with an
executed power of attorney for transfer. Bowdcll v. Farmers and Merchants' National Bank of Baltimore, 14 Bankers1 Magazine, 387; 2 JSr. B. C,
146.
30. The determination of the Comptroller as to the necessity of an assessment
on stockholders of an insolvent national bank for the payment of debts is
conclusive, and in a suit to enforce such an assessment the necessity need
not be alleged. Strong, Receiver, v. Southworth, 8 Ben., 331; 2 N. B. C, 172.
31. S. bought shares in a national bank and caused them to be transferred to E.,
who was iu his employ, S. remaining the real owner. Held, that S. was
liable as stockholder upon the failure of the bank. Davis, Receiver, v.
Stevens, 20 Alb. L. J., 490; 2 N. B. C, 158.
32. In an action by the receiver of a national bank to enforce the liability of a
shareholder, it appeared that the date of the defendant's subscription to
the stock was prior to May, 1866, when the receiver was appointed; that
the Comptroller of the Currency decided on the 28th of June, 1876, that the
enforcement of this liability to its full extent was necessary, and instructed
the receiver accordingly, and that this action was thereupon brought.
Held, that although such decision and order of the Comptroller were necessary preliminaries to a suit against the shareholder, yet, having been
delayed without sufficient apparent reason for more than six years from
the date of the subscription, the statute of limitations was a bar to the
action, the State courts having decided that an act necessarily preliminary
to the commencement of a suit upon a contract must be done within six
years, unless sufficient reason for the delay is shown. Price, Receiver, v.
Yates, 19 Alb. L. J., 295; 2 N. B. C, 204.
33. Actions by the receiver of a national bank against stockholders for assessments on the stock are subject to State statutes of limitation. Butler
v. Boole, 44 Fed. Rep., 586.
34. A court has no power, under sec. 5324, U. S. Rev. St., to order the receiver of
"a national bank to compound debts which are not "bad or doubtful;"
and a composition under such an order of debts not "bad or doubtful,'7
as the debt of a shareholder arising on his subscription to the stock, is
ineffectual. Ib.
. A stockholder of an insolvent national bank, who happens also to be one of
its creditors, can not cancel or diminish the assessment to which the provisions of sec. 5151, Rev. St., make him liable by offsetting his individual
claim against it.
Hobart, Receiver, etc., v. Gould, 8 Fed. Rep., 57.
36. Section 5151, Rev. St., among other things, provides that the shareholders of
every national banking association shall be held individually responsible
for all contracts, etc., to the extent of the amount of their stock therein, at
the par value thereof, in addition to the amount invested in such shares.
Held, that upon the insolvency of such a bank a shareholder who happens
to be one of its creditors can not cancel or diminish the assessment, to
to which the provisions of this section make him liable, by offsetting his
individual claim against it. Ib.
37. The liability which shareholders in national banks incur under section 12 of
the act of 1864, which provides for a liability "to the extent of the amount
of their stock therein, at the par value thereof, in addition to the amount
invested in such shares/' is that of principals, not of sureties. Hobart,
Receiver, etc., v. Johnson, 8 Fed. Rep., 493.
38. Such a liability is not one on a "promise to pay the debt, or answer for the
default or liability, of any other person," within the meaning of the proviso to section 5 of the Revised Statutes of New Jersey of 1874, p. 469. Ib.
39. On the principle of estoppel, one can not take advantage of certain statutory
provisions without incurring thereby the attendant liabilities. Ib.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
§
ASSESSMENT: See Insolvent banks; Receiver; Shareholders, etc.—Continued.
40. Under sec. 5151, Rev. St., owners of stock in a national bank are liable for
its debts, and persons who hold themselves out or allow themselves to be
held out as owners of stock are also liable, whether they own stock or not.
Case, Receiver, v. Small et ah, 10 Fed. Rep., 722.
41. A married woman who owns stock in a national bank is not exempt on
account of her coverture from the liability imposed by the national currency acts upon all stockholders in such banks. Anderson v. Line, 14 Fed.
Hep., 405.
42. After a national bank has become insolvent and has closed its doors for business, its shareholders' liability to creditors is so far fixed that any transfer
of their shares must be held fraudulent and inoperative as against the
creditors of the bank. Irons et al. v. Manufacturers7 National Bank of Chicago et al., 17 Fed. Rep., 308.
43. The Pacific National Bank of Boston was organized in October, 1877, with a
capital of $250,000, with the right to increase it to $1,000,000. In November, 1879, its capital was raised to $500,000; September 13, 1881, the directors voted to increase the capital to $1,000,000. On November 18, 1881,
the bank suspended. On December 13, 1881, the directors voted that as
$38,700 of the increase of capital stock had iiot been paid in the capital
be fixed at $961,300, and the Comptroller of Currency was notified to that
effect, and he notified the bank, under Rev. St., sec. 5205, to pay a deficiency on its capital stock by an assessment of 100 per cent. At the annual
meeting the assessment was voted, and on March 18, 1881, with consent of
the Comptroller and the approval of the directors and the examiner, the
bank resumed business, and continued until May 20, 1881, when it again
suspended and was put in the hands of a receiver. Prior to May 20, 1882,
$742,800 of the voluntary assessment had been paid in. Complainant was
the owner of twenty-five shares of stock on September 13, 1881, and after
the vote to increase the stock took twenty-live shares, for which he paid
$2,500 on October 1, 1881, and received a certificate. He voted for the
assessment at the annual meeting, and in February, 1882, paid the assessment on the old and new stock, and subsequently sought to enjoin the
suit at law against him by the receiver to enforce his individual liability
as a stockholder, under Rev. St., sec. 5151, on the ground that the increase
of capital was illegal and void, and that the voluntary assessment, under
Rev. St., sec. 5205, relieved the stockholders of individual liability. Held,
that he was not entitled to relief, and the bill should be dismissed. Morrison v. Price, Receiver, 23 Fed. Rep., 217.
44. A discharge in bankruptcy releases a shareholder of a national bank from his
statutory individual liability to creditors of the bank where, at the time
of his discharge, the claims of such creditors were provable, not merely
contingent. Irons et al. v. Manufacturers' National Banket al., 27 Fed. Rep.,
591.
45. When bank stock was sold, but not transferred on the books of the bank, and
the bank afterwards failed, the executors of the person in whose name tho
stock stood on the books were held liable for assessment, although said stock
had been paid for by a purchaser buying at the request of the president of
the bank, who gave him a cashier's check for that purpose, placing the
money so furnished to the credit of said purchaser on the books of the bank
as a temporary loan, the intention being ultimately to transfer said shares
to a third party as part of a larger proposed investment in stock, for which
funds had been placed in the hands of the president of the bank. Price,
Receiver, v. Whitney et al., 28 Fed. Rep., 297.
46. Defendant subscribed for new stock in the reorganization of a bank, and
received a certificate on the basis of a total subscription of $500,000. The
actual increase was $461,300. He protested against the same, and refused
to vote on the stock, but retained his certificate until the bank went into
the hands of a receiver several months later: Held, That he was liable to
the receiver on his subscription, and it was too late to claim that the
increase as to him was invalid. Butler, Receiver, v. Aspinwall, 33 Fed.
Rep., 217.
47. A pledgee of shares of stock in a national bank, who does not appear by the
books of the bank or otherwise to be the owner, is not liable for an assessment upon the shares on the insolvency of the bank, under Rev. St., sec.
5151, rendering shareholders liable for the debts of the association to the
extent of the par value of their stock. Welles v. Larraoee el al., 36 Fed.
Rep., 866.
234
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ASSESSMENT: Ste Insolvent banks; Receiver; Shareholders, etc.—Continued.
48. One to whom the shares are assigned in trust as security for a debt due a third
person, and following whose name on the stock book of the bank is the
word "trustee," is not liable for the assessment under section 5151, and is
also within the provision of section 5152, exempting from such liability persons holding stock as trustees. Ib.
49. In an action by the receiver of an insolvent national bank to recover of a
stockholder an assessment on his shares, the defendant alleged as a counterclaim that the Comptroller of the Currency had directed the bank to
restore the value of certain securities held by it which had been reported
worthless by an examiner; that certain of the stockholders, including
defendant, had raised a fund which was placed in the hands of trustees to
apply so much as might be from time to time required by the Comptroller
to retire such securities; that the fund was deposited with the bank with
full notice of the purpose to which it was to be applied; that a portion
had been used to retire the securities designated, and that when the bank
failed the balance of the fund came into the hands of the receiver, and
was now claimed by him as a part of the ordinary assets of the bank; that
a certain portion of this balance belonged to defendant, which amount he
asked to set oif against plaintiff's demand: Held, That a general demurrer
based on the ground that no set-off or counterclaim was available in such
an action would bo overruled, as the claim could be set oft' if it was of such
a nature that the holder would be entitled to receive the full amount
before distribution by the receiver to general creditors, Welles v. Stout, 38
Fed. Hep., 807.
50. Where a shareholder of a national bank makes a bona fide sale of his stock
and. goes with the purchaser to the bank, indorses the certificate, and
delivers it to the cashier of the bank with directions to make the transfer
on the books, ho has done all that is incumbent upon him to discharge his
liability, and ho is not liable, though the cashier failed to make the transfer, upon the subsequent suspension of the bank for an assessment made
by the Comptroller of the Currency, under Rev. St., sec. 5151, to pay the
bank's debts. Hayes v. Shoemaker, 39 Fed. Hep., 319.
51. Defendant, for the purpose of helping a bank, of which complainant was a
stockholder, in a financial crisis, loaned it certain securities belonging to
complainant, and when complainant was informed of the fact she did not
object. She was assured by the bank's officers that if the bank was saved
the securities would be returned, and if it failed the avails would be credited on her assessment as a stockholder. The bank failed, and the securities were not returned: Held, That she was not entitled, as against other
creditors, to set off the value of the securities against her assessment, but
was, as to such value, on the same footing as any other creditor. Soivles
v. Witters ct al., 39 Fed. Hep., 403.
52. Ono who subscribes and pays for a specified number of shares of a "proposed increase" of the capital stock of a national bank, which increase is
in fact never issued, and to whom the bank officials transfer, instead, old
stock of the bank without his knowledge or consent, is not a "shareholder" within the meaning of Rev. St., sec. 5151r imposing individual
liability on tho shareholders for the debts of national banks. Stephens v.
Follett et al.r 43 Fed. Hep., 842.
53. The fact that tho subscriber for the new shares received a dividend on the
old shares- so transferred to him does not estop him from denying his liability as a shareholder, where such dividend was received in the belief
that it was paid to him by virtuo of his subscription to the new stock, lo.
54. A person who becomes a stockholder in a national bank thereby submits himself to the provisions of the national-bank act, and becomes liable to be
assessed to the extent of his statutory liability for all debts of the bank
existing while he holds his stock. Young v. Wempe etal., 46 Fed. Hep., 354.
55. In an action by the receiver of a national bank to enforce an assessment under
Rev. St., sec. 5151, against ono credited on the transfer books as a stockholder, it appeared that nearly a year before the failure he had sold his
stock to a broker for an undisclosed principal; that he indorsed the same,
and requested the broker to inform the cashier of the transaction, and to
have the stock transferred; that the broker accordingly handed the stock
to the cashier, gave him the necessary information, and requested him to
make the transfer. This the cashier promised to do, but in fact the transfer was never made. The certificate recited that it was transferable on
tho books of the company " b y indorsement liereon and surrender of this
certificate:" Held, That in requesting the cashier to make tho transfer
tho broker acted as the seller's agent, and that the latter did all that was
required of him as a prudent business man, and could not be held liable as
a stockholder.
Youny v. McKay, 50 Fed. Hep., 394.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
235
ASSESSMENT: See Insolvent "banks; Receiver; Shareholders, etc.—Continued.
56. A Federal court will not, even if i t has the power under Rev. St., sec. 5234,
grant an order authorizing a receiver of a national bank to con pound the
statutory liability of certain stockholders by accepting payment of a gross
sum, less-than is due r in satisfaction and discharge thereof, although more
money would thus be realized than by proceedings to collect the same in
the usual way, when it appears probable that such stockholders have
fraudulently conveyed their property to avoid their legal obligations as
stockholders, or to shield themselves from injury and exposure by litigation. In re Certain Shareholders of the California National Bank of San
Diego, 53 Fed. Hep., 38.
57. A person who is entered on the books of a national bank as the owner of
stock, but who is admitted to hold the stock in trust for the true owner,
is not liable as a stockholder for the debts of the bank, wrhen the true
owner has been adjudged so liable, although nothing is realized upon the
execution of such judgment. Yardley v. Wilgus, 56 Fed. Bep., 965.
58*. When the full personal liability of shareholders is to be enforced the action
must be at law. Kennedy Y. Gibson, 8 Wall., 498; Casey v. Galli, 94 V. S.,673.
59. And it may be at law, though the assessment is not for the full value of the
shares; for, since the sum each shareholder must contribute is a certain
exact sum, there is no necessity for invoking the aid of a court of equity.
Bailey v. Sawyer, 4 Dill., 463; 1 N. B. C, 356.
60. But the suit may bo in equity. Kennedy v. Gibson, 8 Wall., 498.
61. It is no objection to a bill against stockholders within the jurisdiction of the
court that other stockholders, not within such jurisdiction, are not codefendants. lb.; Case v. Bank, 100 U. 8,, 446.
62. But a pledgee of shares of stock in a national bank who in good faith and
with no fraudulent intent takes the security for his benefit in the name of
an irresponsible trustee for the avowed purpose of avoiding individual
liability as a shareholder, and who exercises none of the powers or rights
of a stockholder, incurs no liability as such to creditors of the bank in
case of its failure. Anderson, Receiver, v. Warehouse Company, 111 U. S., 479.
63. The individual liability of the shareholders of an insolvent association may
be enforced for the purpose of paying all of its liabilities, and not merely
for the purpose of paying its '"'debts/'7 technically so called. Stanton v.
Wilkeson, 8 Ben., 357.
64. The individual liability of the stockholders must be restricted in its meaning
to such contracts, debts, and engagements of the association as have been
duly contracted in the ordinary course of its business. And, therefore,
creditors of an association who make settlements after the association is put
into liquidation and receive from the president payment of their claims in
paper of the association, or of the individual notes of the president himself, indorsed or guaranteed in the name of the association, are not to be
considered as creditors of the association entitled to subject the stockholders to individual liability; for these arc new contracts. Richmond v.
Irons, 121 U. S., 27.
65. The individual liability of the stockholders is enforceable only in behalf of
all the creditors, and any security given by a stockholder for his liability
in this respect should likewise be for the benefit of all the creditors.
Accordingly, a mortgage of all the individual property of a stockholder,
made after the bank has closed its doors, for the purpose of securing a
single depositor, is void as against a judgment obtained against such stockholder in an action by the receiver to recover the amount of his individual
liability. Gatch v. Fitch, 34 Fed. Bep., 566.
66. Bill filed by receiver against transferrer and transferee to enforce such liability will lie whero it is for discovery as well as relief, as the transfer
would be good between the parties. Bowden v. Johnston, 107 U. S., 251.
67. A shareholder in a national bank, who is liable for its debts, is liable for
interest thereon to the extent of the bank's liability, and not in excess of
the maximum liability fixed by statute. Richmond v. Irons, 121 U. S., 27.
68. The creditors of an insolvent association must seek their remedy through the
Comptroller, in the mode prescribed by the statute; they can not proceed
directly in their own names against stockholders or the debtors of the
bank. Kennedy v. Gibson, 8 Wall., 498.
69. Each shareholder of a national-banking association is individually liable
for its debts to the extent of the amount of his stock at its par value, in
addition to the amount invested in the shares held by him, and a receiver
appointed to wind up the affairs of such an association that has become
insolvent is authorized, under the direction of the Comptroller of the
Currency, to enforce the liability of its stockholders, and to collect from
236
REPORT OF THE COMPTROLLER OF THE CURRENCY.
ASSESSMENT: See Insolvent banks; Receiver; Shareholders, etc.—Continued.
each of them the necessary amount, up to the extent of his liability, for
the payment of the creditors. King et al. v. Armstrong, Receiver; 34 N. E.,
163; 50 Ohio Si., 222.
70. Code N. C. sec. 1826, provides that no woman during coverture shall be capable of making any contract to effect her real and personal estate without
the written consent of her husband: Held, That a purchase of stock by
a married woman is not a "contract" within the terms of the statute, and
that the wife is liable upon an assessment, although the stock was purchased without the written consent of her husband. Robinson v. Turrentine et al., 59 Fed. Rep., 554.
71. One in whose name stock of an insolvent national bank stood, paid an
assessment thereon under a threat by the receiver to sue therefor, though
he claimed that he had sold the stock. More funds were collected than
were required to pay the creditors of the bank: Held, That such payment
could not be recovered as having been made under a mistaken belief by
the payor that the whole amount would be required to pay the creditors
of the'bank. Holt v. Thomas (Cal.), 38, P., 891.
ATTACHMENT:
A. Solvent banks—
1. The stock of a shareholder indebted to it may be attached by the association
and sold on execution. Hagar v. Union National Bank, 63 Me., 509.
2. No State court can issue an attachment against the funds of a national bank.
Although the provision forbidding attachments was evidently made to
secure equality among the general creditors in the division of the proceeds of the property of an insolvant bank, its operation is by no means
confined to cases of actual or contemplated insolvency; but the remedy is
taken away altogether and can not be used under any circumstances. The
effect of the provision in sec. 5242, Rev. St., is to write into all State
attachment laws an exception in favor of national banks, and all such
laws must be read as if they contained an exception in favor of national
banks. Pacific National Bank v. Mixter, 124 U. S., 721.
3. No attachment can issue from United States circuit court in an action against
a national bank before final judgment in the cause, and a bond given on
such attachment is illegal, Ib.
4. An attachment can issue against a national bank from a State court. Robinson v. National Bank of Newbern, 58 How. Pr., 306; 2 N. B. C., 309.
5. The provision of the national banking act that attachments, injunctions, etc.,
shall not bo issued by State courts against national banks before final
judgment, relates only to actions against banks where the action is
brought, and not to cases where the action is against a nonresident corporation. Southwick v. The First National Bank of Memphis, 7 Hun., 96; 1
N. B. C., 789.
6. An attachment will not lie before final judgment against the property in this
State of a national bank situated and doing business in another State.
Rhonery. National Bank of Alhntown, Pa.; Palmer v. Same, 14 Hun., 126;
2 N. B. C, 331.
7. An attachment can not be issued from a State court against a national
bank before final judgment, whether such bank be located in this State
or not. Central National Bank v. Richland National Bank, 52 Howard, 136;
1N.B. C, 801.
8. The provision of the national banking act prohibiting attachments in such
cases is not repealed by the act of Congress of July 12, 1883, providing
that the jurisdiction for suits thereafter brought against national banks
shall be the same as for suits against State banks, and repealing laws
inconsistent therewith. Ray nor v. Pacific National Bank, 93 N. Y.. 371;
3 N. B. C, 624. .
9. An unrecorded transfer of national-bank stock will take precedence of a subsequent attachment in behalf of a creditor without notice. Continental
National Bank v. Eliot National Bank et al., 7 Fed. Rep., 369.
10. The loss of interest occasioned by an attachment wrongfully laid is clearly
an injury for which damages are recoverable against the wrongdoer.
Jacobus v. Monongahela National Bank of Brownsville, 35 Fed. Rep., 395.
11. Where shares of corporation stock are attached, the subsequently declared
dividends are as much bound by the attachment as the corpus of the stock
itself is. Ib.
12. Counsel fees and other expenses (not taxable as costs) paid or incurred in
defending against an attachment wrongfully laid are not recoverable as
damages in an action upon a statutory recognizance given when the attachment was issued, conditioned for the payment to the party aggrieved of
''such damages as the court may adjudge." Ib.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
237
ATTACHMENT—Continued.
B. Insolvent banks—
13. When a creditor attaches the property of an insolvent bank he can not hold
such prox>erty against the claim of a receiver appointed after the attachment suit was commenced. Such creditor must share pro rata with all
others. First National Bank of Selma v. Colby, 21 Wall., 609; Harvey v.
Allen, 16 match., 29.
14. Sureties on attachment bond against national bank who have received assets
of the bank to secure them from loss thereon, the obligation being illegal,
will be discharged in equity and be compelled to transfer their collateral
to the receiver of the bank. Pacific National Bank v. Mixter, 124 U. S.f 721.
15. An attachment from a State court may not issue against an insolvent national
bank of that State. National Shoe and Leather Bank of the City of New York
v. Mechanics' National Bank of Newark, N. J.; Corn Exchange Bank v. Same;
West Side Bank v. Same; 89 N. Y., 467; 3 N. B. C, 601.
16. An attachment issued against an insolvent national bank is invalid (IT. S. R.
S., sec. 5242) and is not made valid by the subsequent acquisition by the
bank of further capital. Iiaynor v. Pacific National Bank, 93 N. Y.,371; 3
N. B. C, 624.
17. Although the bank, after the issuing of the attachment, paid a large amount
of its debts in full, this does not estop it from questioning the validity of
the attachment. Ib.
18. A receiver of a national bank situated in another State, though not a party,
may move to vacate an attachment. People1 s Bank of the City of New York
v. Mechanics' National Bank of Newark, 62 How. Pr.,"422; 3 N. B. C, 670.
19. In an action against a national bank of another State, an attachment issued
againt its property in this State will be vacated upon proof of its insolvency. Ib.
20. The defendant, a national bank at Boston, Mass., on November 18, 1881,
closed its doors and was put in charge of a Government bank examiner,
and thus continued till March 14, 1882, when the Comptroller allowed it
to resume. It transacted business till May 22, 1882, when it was placed
in the hands of a receiver. An attachment was issued in this actiou
November 19, 1881, against defendant's property in this State. At that
time its assets would have paid its debts and liabilities exclusive of its
capital, but it had refused to pay various legal obligations then due:
Held, That defendant had committed acts of insolvency within U. S.
Rev. St., sec. 5242, and the attachment should be vacated. Market
National Bank of New York v. Pacific National Bank of Boston, 30 Hun., 50;
3 N. B. C, 672.
21. Bank property attached by individual creditor after bank is insolvent can
not be sold to pay his demand against the claim of a receiver subsequently
apx>ointed. National Bank v. Colby, 21 Wall., 609.
22. Where service is made on a national bank only by attachment and publication or service out of the State, the attachment, being prohibited by
Rev. St., sec. 5242, should be vacated and the service set aside. Garner v.
Second National Bank (C. C), 66 F., 369.
BONDS OF OFFICERS:
1. It is not necessary that national banking associations shall signify their
approval of the official bonds of their officers by memoranda entered upon
the journals or minutes of the directors. The acceptance is to be presumed from the retention of the bond, and from the fact that the officer
is permitted to enter upon or continue in the discharge of his duties.
Graves v. The Lebanon National Bank, 10 Bush., 23.
2. Where the sureties of an officer can reasonably be prisnmed to have been
deceived by the statement of the condition of the bank published just
prior to the execution of the bond, and to have been led to think that there
was no deficit, whereas there had been a misapplication of a large part of
the funds by the officer whoso bondsmen they became, which fact would
have been ascertained had the directors exercised ordinary diligence, the
sureties are discharged from their liability. Ib.
3. A surety on the bond of a cashier of a national bank is not discharged by the
fa^tthat the cashier had, before the bond was given, committed frauds
upon the bank, if such frauds were unknown to the officers of the bank,
although they were guilty of gross negligence in not discovering them.
Tapley V. Martin, 116 Mass., 275; 1 N. B. C., 611.
4. The engagement of a surety is a direct original agreement with the obligee
that in the event his principal fails he will perform the original obligation, and whether it is entered into jointly with the principal or sepa-
238
REPORT OF THE 'COMPTROLLER OF THE CURRENCY.
BONDS OF OFFICERS—Continued.
5.
6.
7.
8.
i).
10.
11.
12.
ratoly, the extent and character of the obligation are the same as to both,
depending only upon the form in which it is expressed. La Rose et al. v.
The Logansport National Bank et al., 102 Intl., 332.
The contract of obligors, whether entered into separately or jointly with the
principal, if by its terms it appears that the principal is separately bound
by an original, independent contract, to which the contract for security
is collateral, and the obligors agree therein that the principal will pay or
perform according to his original engagement, and that they will answer
for his default in the event of failure^ is a contract of guaranty. Ib.
The contract of the sureties in the bond of a bank cashier, conditioned for
the faithful discharge of his duties by such cashier, is a contract of
guaranty. Ib.
A failure to give notice to guarantors of the default of their principal, except
in cases governed by commercial rules, is a matter of defence, and resulting
damages must concur with such failure in order to work a discharge. Ib.
Where by a by-law of a bank its cashier is made responsible for the funds
and valuables of the bank, it can not be implied that his bond would not
become operative until all the other officers and employe's were denied
access to such funds and valuables, nor that he is responsible for losses
which may occur through the delinquencies of others. Ib.
The bond of a bank cashier, executed and approved two weeks after he enters
upon his duties, is upon sufficient consideration, and is operative, at least
from the date of its approval. Ib.
The knowledge by an employer of the misconduct of an employe* whose
conduct and fidelity have been guaranteed by another, which will, if concealed, release the guarantor, must relate to the service in which the
employe is engaged, and must be something more than mere moral delinquency, unconnected with the subject-matter of the guaranty. Ib.
A continuing contract, guaranteeing the fidelity of a bank cashier, may be
revoked by the guarantors without cause, upon proper notice, but the
right must be exercised reasonably. Ib.
A bond of suretyship for an employ^, which is to u embrace and cover only
acts find defaults committed during its currency and within twelvo months
next before the date of discovery of the act or default upon which such
claim is based," covers not only embezzlements made during the year
actually preceding their discovery, but also earlier embezzlements which
would have been discovered within a year but for the fact during the year
preceding the actual discovery the employd had so falsified the books as
to prevent such discovery. Consolidation National Bank v. Fidelity and
Casualty Company of New York (C. C), 67 F., 874.
BOOKS, INSPECTION OF:
1. Code of Alabama, 1886, sec. 1677, which provides that stockholders of all
corporations have the right to have access to and inspection and examination of the books, records, and papers of the corporation at all reasonable
and proper times, applies to national banks located within the State; and
mandamus will lie against the officer having custody of the books to
enforce the right. Winter v. Baldwin, 7 So., 734; 89 Ala., 483.
2. The rights of stockholders are not curtailed nor the statute in conflict with.
U. S. Rev. St., which provide that national banks shall not be subject to
visitorial powers other than those authorized by Congress or vested in the
courts of justice. Ib.
3. The officers of a national bank can not be compelled to exhibit the books of
the bank to State officers for the purpose of furnishing a basis for State
taxation of the deposits as against the depositors. First National Bank of
Youngstoum y, Hughes et al. : Second National Bank v. Do., 2 N. B. C, 176.
BBANCII BANKS:
1. A national bank located in another State can not keep an office for discount
and deposit in New York, and can not maintain an action upon a note discounted at such office. National Bank of Fairliaven v. The Phoenix Warehousing Co., 6 Hun., 71; 1 N. B. C, 784.
2. Under Rev. St., sec. 5190, providing t h a t t e the usual business of each nationalbanking association shall be transacted at an office or banking house located in the place specified in its organization certificate," a national bank
can not make a valid contract for the cashing of checks upon it at a
different place from that of its residence, through the agency of another
bank. Armstrong v. National Bank of Springfield, 38 Fed. Eep.j 883.
REPORT OF THE COMPTROLLER OF THE CURRENCY.
239
BROKER:
A national banking association is not authorized to act as a broker or agent in
the purchase of bonds and stocks. First National Bank of Alleniown v.
Hochy 89 Perm. St., 324; Weckler v. The First National Bank of Hagerstoivn,
42 Md., 581.
CAPITAL STOCK : See Shareholders; Transfer of stock.
A. In general—
1. A national bank can acquire an interest in its own stock only by purchase to
prevent a loss upon a debt previously contracted in good faith; and a provision in certificates of stock in such bank that they shall not be transferred until all the liabilities of the stockholder to the bank are paid is
void and of no effect. Conklin v. The Second National Bank, 45 N. Y.. 655;
IN. B.C., 693.
2. Where a national bank made a loan upon the pledge of its own shares and
afterwards sold the shares to obtain payment of the loan which exceeded
the amount realized from the shares: Held, That the owner of the shares
could not, on the ground that the statute forbids a national bank to take
its own shares as security, recover from the bank the amount realized upon
the sale of the shares. First National Bank of Xenia v. Stewart, 107 U. S.,
676; 3 N B. C, 96.
3. The articles of association and the by-laws of a national bank prohibited the
transfer of stock owned by any stockholder indebted to the bank until
such indebtedness should be satisfied: Held, That the prohibition was
invalid, under section 35 of the National Banking Act, and tha* the bank
could not thus acquire a lien on the shares of the stockholders. Bullard
v. Bank, 18 Wall, 589; 1 N. B. C, 93.
B. Increase—
4. National banks have no authority to increase their capital stock except as
provided by Rev. St., sec. 5142, and act of Congress May 6, 1886; and
where an increase is attempted to be mado without obtaining the consent
of two-thirds of the stock, the payment in full of the amount of such
increase, and the certificate and approval of the Comptroller of the Currency, as required by those statutes, the proceedings are invalid, and preliminary subscriptions to such increase can not be enforced. Winters v.
Armstrong; Armstrong v. Stanage; Same v. Wood, 37 Fed. Rep., 508.
5. Such a subscription is impliedly conditioned on the subscription of the whole
amount of the proposed increase and on the compliance by the corporation with all the requirements of the statute necessary to make the
increase stock valid, and in case of lioncompliance with such requirements
there is a failure of consideration. Ib.
6. In an action by the receiver of a national bank to enforce subscriptions to a
proposed increase of its capital stock, an allegation that the bank, subsequent to defendants' subscriptions, and with their knowledge, represented
to the public by means of circulars, letter heads, etc., that its capital stock
had been so increased and that defendants allowed their names to remain
"upon the list of those subscribing for and entitled to such new or
increase of stock," but without alleging that the public gave credit to the
bank on the faith that the defendants were part owners of such increase
of stock, or that they allowed themselves to be held out as actual stockholders, does not show that they are estopped to j)lead the failure of the
bank to comply with the statutory requirements in perfecting such
increase. Ib.
7. The receiver stands in the shoes of the bank, and can assert no rights against
the subscribers which the bank could not have asserted. Ib.
8. A subscriber who has made payments on his subscription to the proposed
increase, believing that the statutory requirements would be complied
•with, is entitled to have the amount thereof allowed as a claim against the
assets of the bank in the receiver's hands. Ib.
9. Where one subscribes for shares in the increase of the capital of a national
banking association in a certain amount, such subscription being paid in
full and the entry made on the stock book of the bank, he becomes a
shareholder, although no stock certificate is issued. Pacific N. B. v. Eaton,
141 U. S., 227.
10. And the certificate of the Comptroller of
the Currency approving the amount
of increase that has been paid in, wrhich amount includes what was paid
by the dissenting subscriber, will be conclusive upon such subscriber. Ib.
11. But if such subscriber has assented to or ratified the change he will be held
a shareholder. Delano v. Butler, 118 U. S.} 634.
240
REPORT OF THE COMPTROLLER OF THE CURRENCY.
CAPITAL STOCK: See Shareholders; Transfer of stock —Continued.
B. Increase—Continued.
12. When the previous proceedings looking to an increase in the capital stock
of a national hank have been regular and all that are requisite, and a
stockholder subscribes to his proportionate part of the increase and pays
his subscription, the law does not attach to the subscription a condition
that it is to be void if the whole increase authorized be not subscribed,
although there may be cases in which equity would interfere to protect
him in case of a material deficiency. Aspinwall v. Butler, 133 U. S., 595.
13. The Comptroller of the Currency has power by law to assent to an increase
in the capital stock of a national bank less than that originally voted by
the directors, but equal to the amount actually subscribed and paid for
by the shareholders under that vote, Ib.
14. Where one subscribes for shares in an increase of capital stock of a national
bank and pays for the same without waiting to see whether the whole
amount of the increase is taken, he is bound by such subscription and
payment, though the amount of the increase is afterwards reduced by the
bank and the Comptroller of the Currency. Butler v. Eaton, 141 U. S~, 240.
15. The conditions imposed by Rev. St., sec. 5142, as to the validity of increase
of national-bank capital were intended to secure actual cash payment of
subscriptions and to prevent watering stock, not to invalidate bona fide
subscriptions actually made and paid. Aspinwall v. Butler, 133 V. S., 595.
16. Stockholder in national bank who, with knowledge of its insolvent condition
and of ail material facts, subscribes for increased stock to same amount as
his original stock, and amount of proposed increase is afterwards reduced,
can not question validity of proceedings for such increase to annul such
subscription and payment. Delano v. Butler, 118 U. S., 634; Pacific National
Bank v. Eaton, 141 Ib., 227; Thaijer v. Butler, Ib., 234; Butler v. Eaton, Ib.,
240.
17. There can be no increase of tho capital of a national bank until the Comptroller of the Currency approves thereof and issues his certificate, as provided by section 13 of the act of Congress providing for the organization
of national banks. Charleston v. People's National Bank, 5 South Carolina,
103; 1 N.B. C.,898.
C. Reduction—
18. A national bank, reducing its capital, can not retain, as a surplus or for any
other purpose, any portion of the money which it received for retired stock,
and having refused to permit shares thus retired to be transferred on its
books is liable for the value of the shares to the holder. Seeley v. New
York National Exchange Bank, 78 N. Y., 608; 4 Abb. New Cases, 61; 2 N. B.
C.t 340.
19. The capital of a national bank having heroine impaired by the nonpayment
of the interest on some paper among its assets, to the amount of $71,000,
in order to avoid an assessment by the Comptroller, the stockholders
reduced its capital stock, and carried the bills and notes to the account of
suspended or " bad debts/' which were not thereafter included as assets,
although retained in its custody. Some years afterwards the bank realized
$75,000 from collaterals pledged for the security of that paper. In a suit
by a stockholder to recover his share of the amount realized, proportioned
to the amount of stock surrendered: Held, That he could not recover.
McCann v. First National Bank of Jeffersonville, 112 Ind., 354; 3N. B, C, 434.
20. Under Corap. Laws, sees. 3589,4515, relating to the recision of contracts procured through fraud, one induced to purchase bank stock by fraudulent
representations as to its value may rescind the purchase and recover his
notes 1given therefor against a holder of the notes having notice of the
fraud. Taylor v. National Bank ($. D.) 62 N. W., 99.
21. The State legislature may authorize the sale, under execution, of nationalbank stock. In re Braden's estate (1 a, Sup,) 30 A, 746; Appeal of Wood, Id.
CASHIER: See Officers.
CERTIFICATE OF DEPOSIT :
1. National banking associations may issue certificates of deposit. Riddle v.
First National Bank, 27 Fed. Hep., 503.
2. Certificates of deposit in the ordinary form, issued by a national bank to
depositors, and payable to order, are not post-notes, within the prohibition of sec. 5183, Rev. St. Ib.
3. A certificate of deposit, payable to the order of the depositor on the return
of the certificate, is not due or suable until demand made and return of the
certilicate. Ib,
REPORT OF THE COMPTROLLER OF THE CURRENCY.
241
CERTIFICATE OF DEPOSIT—Continued.
4. Certain persons, directors of a savings and of a national bank, procured
money from the former on notes made by a third person to them for the
payment of stock of the national bank, issued in tlie name of such third
person for their benefit. These persons were behind in their accounts
with the national bank, and the savings bank allowed them to overdraw
their accounts with it to a large amount, which was used in settling their
accounts with the national bank. Thereafter the savings bank delivered
the notes and the check to the national bank, which issued to it a certificate of deposit for an amount covering the whole amount represented by
them: Held, That this certificate of deposit was without consideration
and void, and any loss accruing to the savings bank by virtue of the
transactions was due to the fraud or incompetency of its own officers.
Murray v. Pauly, 56 Fed. Rep., 962.
5. A certificate of deposit is evidence of so high and satisfactory a character as
to the sum deposited that to escape its effect the maker must overcome it
by clear and satisfactory evidence. Where the testimony, aside from the
certificate, is balanced as to the amount deposited, the certificate will turn
the scale The First National Bank of Lacon v. Myers, 83 III., 507.
6. A certificate of deposit issued by a national bank, payable to the order of the
depositor, on return of the certificate properly indorsed, and understood
between the bank and the depositor not to be payable until a future day
agreed upon, is not in violation of the national banking act. Bunt,
appellant, 141 Mass., 515; 3 N. B. C, 474.
7. Suit against a bank upon a stolen certificate of deposit given by the defendant to the plaintiff, reciting that he had deposited in said bank a certain
number of dollars, payable to his order in current funds, on the return of
the certificate properly indorsed: Held, That the instrument should be
regarded as the promissory note of the bank, assignable under the statute,
but that it was not negotiable as an inland bill of exchange, being made
payable, not in money, but li in current funds." The National Slate Bank
of Lafayette v. Bingel, 51 hid., 393.
8. Held, therefore, that the payee could recover on said stolen certificate without, giving a bond to indemnify the bank against a subsequent claim
thereunder by another person. 1b.
9. A person depositing money in a bank accepted from the cashier a certificate
of deposit, which made no mention of interest, but with a verbal agreement that interest should be paid. The cashier at the same time indorsed
a memorandum of the rate of interest on the stub from which the certificate was taken. Held, That the stub should be read with the certificate,
as evidence of the entire contract. Thomson v. Beal, 48 Fed. Hep., 614.
CERTIFICATION OF CHECKS: See Collections.
1. A national banking association may "certify" a check.
Merchants' National
Bank v. State National Bank, 10 Wall., 604.
2. The certification of a check by a bank is, in effect, merely an acceptance, and
creates no trust in favor of the holder of the check and gives no lien on any
particular portion of the assets of the bank. People v. St. Nicholas Bank,
%8 N. Y. St., 407; 58 N. F. St., 712.
3. A certified check has a distinctive character as a species of commercial paper,
the certification constituting a new contract between the holder and the
certifying bank. The funds of the drawer are, in legal contemplation,
withdrawn from his credit and appropriated to the payment of the check,
and the bank becomes the debtor of the holder as for money had and
received. National Commercial Bank v. Miller fy Co., 77 Ala., 168.
4. Where the defendant has a right of election, on account of a tort committed,
either to sue for the tort, or, waiving the tort, to sue for money had and
received, the relation of debtor and creditor does not exist until he elects
to sue for the money; and his creditors can not defeat his election by garnishment against the Avrongdoer. But this principle does not apply where
the garnishees, having received a check from the defendant, with authority
to collect for deposit and use, have had the check certified by the bank on
which it is drawn, before the service of the garnishment; being authorized to have it certified, and the relation of the parties being thereby
changed, they are liable to the defendant for the amount of the check, as
for money had and received, and that liability maybe reached by garnishment. Ih.
5. A broker received coupon railroad mortgage bonds to cover future margins
of a customer and pledged them to a bank as collateral security for "any
indebtedness he might owe to it. Afterward the bank advanced money
CUR, PT 1 —16
242
REPORT OF THE COMPTROLLER OF THE CURRENCY.
CERTIFICATION OF CHECKS: Sec Collections—Continued.
and certified checks on the faith of these bonds, when broker did not have
money on deposit equal in amount to the checks: Held, under sec. 5208, that
although the certifications were unlawful the checks certified were good
and valid obligations against the bank. Thompson v. St. Nicholas National
Batik, 146 V. S., 240.
6. In an action by a bona fide holder of a check drawn on defendant, a national
bank, and certified by its cashier: Held, That the defendant was liable,
although the drawer had no funds in the bank when the check was certified. CooTce v. The State National Bank of Boston, 52 N. Y., 96; 1 N.B. C, 69S.
7. Where a postdated check is certified by the cashier of the bank on which it
is drawn to be "good," by indorsement thereon before the day of its date,
the instrument, upon its very face, communicates facts and information to
persons receiving the same that the cashier, in making such certification,
was not acting within the known limits of his power, and that he was
clearly exceeding them. The Clarke National Bank v. The Bank of Albion,
impleaded, etc., 52 Barb., 592.
8. It appearing, on the face of such paper, that it was certified by the cashier
before its payment could have been legally demanded, and before it could
be presumed that the drawer had made a deposit for its payment, this is,
in the law, full notice to a purchaser. Ih.
9. To enable a holder of such check to recover of the bank upon it, it must
appear that ho became the owner and holder in good faith for a full and
fair consideration in the usual course of business, and without notice
of the cashiers want of power to make the certification. He must have
parted with something of value upon the strength and in consideration of
the transfer of the paper. Ib.
10. If he parted with nothing before the check was dishonored, he stands in privity with his immediate indorsers, and is affected by all that will affect
them. Ib.
11. Crediting the indorsers with the avails of the check on the books of the holder
is in no sense a paying over. The holder, upon receiving notice of dishonor,
has an undoubted right to erase such credit, and to restore it only at the
special instance of the indorsers from whom he received the check. Ib.
12. The receipt of a certified check is not, of itself, payment. Such a check does
not cease to be commercial paper and become money. Certifying a check
to be "good" is nothing more than a promise by the bank upon which it
is drawn to pay it when presented, as in the case of the acceptance of a
bill of exchange. If an accepted bill bo protested for nonpayment, and
the drawer duly notified thereof, he is bound to pay the bill, with damages
and costs. The same is the law with regard to a certified check. Bickford
v. First National Bank of Chicago, 42 111., 23S.
13. As the acceptance of a bill of exchange does not discharge the drawer, so
neither should the acceptance of a check, manifested by the word "good"
placed upon it by the bank, discharge tho drawer. They rest on the same
principles. In this respect there is no difference between an uncertified and
a certified check j the dishonor of either must make the drawer liable. Ib.
14. There is this difference, however, between a certified and an uncertified
check: In case of the former, the amount of the check is supposed to be
at once charged up against the drawer, and thus placed beyond his control, while the holder of an uncertified check may bo anticipated by
another, who also holds a check on which he may draw tho money. The
certificate is an unconditional promise on the part of tho bank to pay the
check on demand. The object in certifying the check is to give it a currency value and to enable the holder to use it as money. Ib.
15. Although it be the fact that certified checks pass from hand to hand as cash,
still they are not cash or currency, in tho legal sense of those terms, and
they do not lose, on that account, any of their characteristics as bills of
exchange, and therefore, when dishonored, the holder has a right to look
to the drawer for payment. Ib.
16. In this case a check was drawn and certified and deposited in a bank after
10 o'clock a. m. and before 3 o'clock p. m. on a certain day, where it
remained until the next morning, when it was taken, in the usual course
of business, to the bank on which it was drawn. The bank was closed
and continued so. The check was protested for nonpayment and due
notice given. This was sufficient diligence to hold the drawer. Ib.
17. The holder of a certified check has the right to hold the drawee and acceptor,
as well as the drawer. So, where the acceptor has failed and made an assignment, the holder waives none of his rights against the drawer by giving notice to the assignee of the acceptor not to pay over any money to the
drawer out of assets which might come to his hands in that capacity. Ib.
REPORT OF THE COMPTROLLER OF THE CURRENCY. " 243
CERTIFICATION OF CHECKS : See Collections—Continued.
18. A certificate of a bank that a check is good is equivalent to an acceptance;
it implies that a check is drawn upon sufficient funds in the hands of the
drawee; that they have been set apart for its satisfaction, and that they
shall be so applied whenever the check is presented for payment. Merchants' National Bank v. State National Bank, 10 Wall., 604; 1 N. B. C, 47.
19. National banks have the power to certify checks, and this power may be
exercised by the cashier without special authorization. The directors may
limit his exercise of this power as they deem proper, but such limitation
will not affect a person ignorant thereof who deals with the cashier in
relation to matters apparently within the scope of his power. II).
20. A bank, knowing that the county treasurer of the county had not sufficient
county funds in his hands to balance his official accounts, consented to
give him a fictitious credit in order to enable him to impose upon the
county commissioners, who were about ?;to examine
@FedFRASER