105 and 1041; fours of 1907, 102§ and 1023; fours of 1925, 131 and 1301; threes of 1908, 103 and 1027. The number of national banks in operation, authorized capital stock, bonds on deposit to secure circulation, circulation secured by bonds and by lawful money, total amount of circulation outstanding, and the average monthly market price of 2 per cent consols from November 1, 1905, to October 31, 1906. are shown in the accompanying table. By reference to the subjoined table it will be noted that 50 per cent of the number of banks in existence, representing one-fourth of the capital stock, are of the class with capital of $50,000 to $100,000. inclusive, and that nearly 28 per cent of the capital, representing 7 per cent in number, is with banks having individual capital of over $250,000 to $1,000,000, inclusive. Nearly 16 per cent of the capital is represented by approximately 12 per cent of banks with capital of $100,000 to $250,000, inclusive. Approximately 1 per cent of the banks with capital in excess of $1,000,000 represent nearly 25 per cent of the aggregate capital. Of the smallest class, those with capital of less than $50,000, there are 1,831 associations, nearly 30 per cent of the number, but with only 5.72 per cent of the capital stock. The table in question is as follows: Amount and kinds of bonds on deposit to secure circulation on March 13, 1900, and on October 31, 1902, to 1906, inclusive, are shown in the following table: Class. Loan 1908, 3's... Mar. 13, 1900. Oct. 31, 1902. Oct. 31, 1903. Oct. 31, 1904. Oct 31, 1905. Oct. 31, 1906. $56, 164, 820 320,738,000 Panama Canal.... The percentage of outstanding circulation to the paid-in capital of national banks, as shown by reports of condition, periodically, from January, 1866, to December, 1885, materially exceeded 50 and ranged from a maximum of 70.3 at the close of 1868 to 50.5 at the close of 1885. From the latter date there was a gradual decrease to 18.4 in July, 1891. From October, 1893, to March, 1895, the average was approximately 25 per cent, and thereafter a steady and slight increase to 33.8 per cent in December, 1899. The act of March 14, 1900, resulted in an increase of the rate to 38.3 per cent on April 26 of that year, and 47.3 at the close of the year. With the exception of July, 1902, when the rate was 44 per cent, the proportion of circulation to capital has exceeded 45 per cent since the date last named, and reached a maximum of 62.03 per cent in September, 1906. Distribution of national-bank circulation, based on reports of condition during the year ended September 4, 1906, is shown in the following table in its relation to the amounts issued by national banks ocated in reserve cities and elsewhere: Amount of each denomination of circulation outstanding on October 31, 1906, the amount previously issued, together with total redemptions, are shown in the following table: During the year ended October 31, 1906, notes to the amount of $278,550,060 were received for redemption at the United States Treasury redemption agency, of which $203,247,874 were delivered to the Comptroller of the Currency for destruction, $177,851,593 of the latter amount being replaced by new notes; $12,912,870 redeemed and destroyed as a result of reduction of circulation, and $12,142,389 redeemed and destroyed on account of insolvent and liquidating banks. In addition to the amount stated, notes aggregating $341,022 were received by the Comptroller direct from national banks for redemption without reissue. Nearly one-third of the notes received for redemption at the agency were in condition to warrant their return to the issuing banks upon redemption, the amount returned being $77,523,750. About 86 per cent of the receipts for redemption came from banks located in the reserve cities and nearly 50 per cent from banks located in the city of New York. The amount and per cent of receipts from the principal reserve cities were as follows: The law limits the retirement of national-bank circulation by the deposit of lawful money to $3,000,000 in any one calendar month. Beginning with January, 1906, applications to retire circulation exceeded the limit each month, but the aggregate amount of circulation retired in this manner from November 1, 1905, to October 31, 1906, was but $20,686,400. Deposits to retire circulation of insolvent and liquidating banks and the coincident withdrawal of bonds to a like amount aggregated $31,980,090. The relative proportion of national-bank circulation to aggregate currency of the country was greatest in 1873, namely, 43.7 per cent, but with the increase in the coinage of gold and silver the ratio steadily declined to 7.3 per cent in 1891. From this low point there was a very gradual rise and in June, 1906, 16.6 per cent was reached and, coincidently, the percentage of circulation to capital reached a higher rate (61.8) than in any year since 1883, when it stood at 63.7. In 1900 circulating notes of the denomination of $5 amounted to approximately one-third of the outstanding issues. As a result of the legislation of March 14 of that year, limiting the amount of fivedollar notes issuable by any one bank, the percentage steadily declined to 13.6 per cent in 1904, but increased to 14.01 per cent in 1905 and to 15.63 per cent on October 31, 1906. As an aid to the issue of the largest amount possible of notes of the lower denominations, and without permitting a deviation from the provisions of the act of March 14, 1900, during the past year the Department authorized the engraving of an additional plate for the printing of four notes of the denomination of $10. Theretofore, under departmental regulations, notes could be printed only from one or more of three sets of plates, namely, four $5's, three $10's and a $20, and a $50 and $100. It should be stated, however, that the use of the four-$10 plate has not been in effect long enough to result in a material increase in the amount of notes issued of that denomination. PROFIT ON CIRCULATION. The profit on, as well as the flexibility of, national-bank circulation depends upon the cost of bonds deposited as security therefor. The average net price, monthly, of 2 per cent consols of 1930 fluctuated during the year from a minimum of 103.075 in February, 1906, to 103.95 in July, 1906. In August the price rose to 104.756, in September to 105.090, but declined in October to 104.221. At the minimum price of bonds during the year, 103.075 in February, the profit on circulation was 1.160 per cent. At the market price of bonds in September, namely, 105.090, the profit is reduced to 0.982 per cent. The average rate of profit, based on the average cost of bonds, monthly, during the year ended October 31, 1906, was 1.09 per cent. In estimating the profit on circulation 6 per cent is taken as the rate for money. From the gross receipts, interest on bonds at 2 per cent and on circulation at 6 per cent, taxes, expenses for redemptions, and sinking fund are deducted to determine the net receipts. The difference between net receipts and interest on cost of bonds at 6 per cent is the measure of profit over the cost price of bonds invested at 6 per cent. Upon circulation secured by $100,000 2 per cent bonds at 104.221, the average market price in October, gross receipts are $8,000, taxes, etc., $646, making net receipts $7,354. Interest on the cost of the bonds at 6 per cent amounts to $6,253.26, resulting in an excess profit on the issue of circulation to the amount stated of $1,100.74 or 1.056 per cent. BANKS WITHOUT CIRCULATION. At the close of the year ended October 31, 1905, there were 8 national banks in operation, with aggregate capital of $2,625,000 and bonds on deposit with the Treasurer of the United States in trust of $181,250, which had no circulating notes outstanding. At the close of the current year the number of nonissuing-note banks was reduced to four, with capital and bonds of $280,000 and $70,000, respectively. EARNINGS AND DIVIDENDS. In the year ended March 1, 1906, shareholders of national banks were paid dividends to the amount of $80,831,561 on $779,544,247 capital, the average rate being 10.4 per cent, the highest since 1870. Based on capital and surplus the ratio was 6.8 per cent. The net earnings were $113,662,529, or 9.5 per cent, of the combined capital and surplus. The average rate of dividends paid by national banks annually from 1870 to 1906, 37 years, was 8.42 per cent. The aggregate net earnings of the banks during the period in question were $2,313,396,556, from which dividends were paid to the amount of $1,780,712,714, which is over three times the average annual capital. As the act providing for the submission to this office of semiannual reports of earnings and dividends was enacted in March, 1869; from that date to the present time the reports have been compiled and published for the six months periods ending March 1 and September 1. By reason of the fact that the dividend periods for the large majority of banks end on June 30 and December 31, in future the returns will be compiled and published for the six months ending on those dates. EXPENSES. The expenses of national banks, in so far as this Department is concerned, during the fiscal year ended June 30, 1906, were as follows: Semiannual duty on circulation, $2,509,977.80; examiners' fees, $396,766.23; cost of redemption of notes by the Treasurer of the United States, $250,924.24; cost of plates for new banks, $54,150; cost of plates for extended banks, $31,450; the aggregate being $3,243,268.27. The cost of redemption of circulating notes per thousand dollars was 84.528 cents. The cost per thousand in 1905 was 80.993 cents. During the existence of the system national banking associations have paid $98,730,906 in tax on circulating notes; from 1874 to 1906, for expenses in connection with redemption of circulating notes, $5,461,959; for examiners' fees, 1883 to 1906, $5,094,273; cost of plates for the printing of circulating notes, $981,530. In addition to these amounts taxes were paid on capital to June 1, 1883, and under the war-revenue act of 1898, amounting to $14,904,301, and on deposits to June 1, 1883, $60,940,067, the total payments for all purposes enumerated being $186,113,036. These payments are stated in the following table: Expenses. Amount. Redemption of circulating notes from 1874 to 1906. Cost of original plates, 1883 to 1906.. Cost of extension plates, 1883 to 1906.. Fees for examination authorized by section 5240, United States Revised Statutes, 1883 to 1906. Total.. Tax paid on capital to June 1, 1883, and under war-revenue act of 1898. Tax paid on deposits to June 1, 1883. Duty paid on circulation to June 30, 1906.. Total. $5,461,959 581.910 399, 620 5,094, 273 11,537,762 14,904,301 60,940, 067 98,730,906 186, 113, 036 GAIN ON NATIONAL-BANK NOTES NOT PRESENTED FOR REDEMPTION. From the date of the first issue of national-bank circulation in 1863 to October 31, 1906, notes to the amount of $3,566,012,225 were issued; $2,982,955,511 redeemed, leaving outstanding on the latter date $583,056,714, of which $46,238,816 is covered by deposits of lawful money with the Treasurer of the United States from which the notes are redeemed as presented. Under the law any gain that may arise from the failure to present notes for redemption inures to the benefit of the United States. An examination of the records discloses the fact that from the beginning of the system up to October 31, 1872, 119 associations were closed, 98 by voluntary liquidation, and 21 by failure; further, that the notes issued by these associations aggregated $13,351,233, and that of these issues there is still outstanding $100,488, |