JOURNAL OF BANKING, CURRENCY AND FINANCE. CONDITION OF THE BANK OF FRANCE.* WE continue, from our "Journal of Banking, Currency and Finance," in the Merchants' Magazine for July, a statement of the Condition of the Bank of France at different periods since the Revolution of February, 1848; selecting the weeks ending on the 25th of May, and the 8th and 15th of June, 1848. These statements are derived from official accounts made by the Bank at the close of each week. *For previous Statistics of this Bank, see Merchants' Magazine, VOL. XVIII., pages 557,555, and 329. Also, VOL. XIX., page 105. BANKING SYSTEM OF NEW YORK. ACTS OF ASSEMBLY RELATING TO BANKS, 1848. } By the first section of the act hereto annexed, the incorporated banks of this State are entitled to issue the following amount of circulating notes, to wit: Those having capitals to the amount of $100,000, a circulation of $150,000 120,000 150,000 200,000 And all those having a capital of more than $200,000, are allowed to issue to the amount of their capital. This it will be perceived allows no increase to any bank having a capital of $200,000, or less, beyond what was allowed by the act of May 16, 1837; but all banks having a capital of more than $200,000, may have an increased circulation beyond that allowed by the act of 1837, on giving the security required by this act. AMOUNT OF NEW ISSUES. The amount of new issues authorized by this act, is the difference between that authorized by the act of 1837, and the capital of each bank. In order to determine this, it is necessary to know the amount authorized by the act of 1837, and deduct that from the capital of the bank, and the remainder shows the amount of new issues to which the bank is entitled. By act of 1837, banks having a capital of $250,000, could issue $225,000 300,000 66 250,000 From the foregoing statement, each bank will readily determine for itself, the amount of new issues to which it is entitled. SECURITY FOR NEW ISSUES. The 4th section of the act, directs the comptroller to require ample security for the redemption of these new issues, in specie, in accordance with the 8th article, 6th section of the constitution. This is very indefinite, and on referring to the section of the constitution indicated, I find that equally so. It is in these words: "the legislature shall provide by law, for the registry of all bills or notes issued or put in circulation as money, and shall require ample security for the redemption of the same in specie." Of what this "ample security" shall consist, is no where expressed, and the whole seems to be left to the discretion of the comptroller. Under these circumstances, I feel bound to inquire what the legislature has in other cases deemed ample security, for issuing notes to circulate as money. Taking their last acts as my surest guide, I find they require an equal amount of stocks of this state, either a 6 per cent, or made equal to a six per cent stock, or at least one-half of such stock, and the remainder in bonds and mortgages, bearing an interest of seven per cent on improved and unencumbered real estate, and that the mortgage shall not be for more than two-fifths of value of the land mortgaged, exclusive of buildings thereon, and no one mortgage for a larger amount than five thousand dollars. I therefore adopt this as the security which I will take under the annexed act, and the stock, or bonds and mortgage, may be assigned to the comptroller, in trust for the payment of such issues, in the same manner they are now assigned under the general banking law. One objection to this security deserves consideration, and it presents a question which each bank will decide for itself. Most, if not all the charters of the safety fund banks, contain a section substantially as follows:- "The said corporation shall not directly or indirectly, deal or trade in buying or selling any goods, wares, merchandise, or commodities whatsoever, or in buying or selling any stock created under any act of the United States, or any particular State, unless in selling the same when truly pledged by way of security, for debts due to the said corporation." Does this clause prevent the bank from buying the stocks of this State in good faith, with a view to deposite them as security for the payment of notes to be issued under the act of 1848 ? I think not. The object of the statute doubtless was to prevent banks from hazarding their capital by engaging in trade of any kind, and especially in stock jobbing, to which they are often strongly tempted, and from which disastrous consequences often follow. But it certainly could not have been intended to prevent them from a purchase of stocks, with the sole view of giving greater security to their issues; and even if it did, the act of 1848, which requires it, must be deemed to have so far modified their original charters, as to justify it. But it may be said, that this power to purchase for one object, may be abused by purchasing for another. Should it be, then there would be no doubt of the liability of the bank for a violation of its charter. The view with which the purchase was made, would always determine whether it was legal or illegal, and this would be determined by a jury from all the attendant circumstances. MODE OF ISSUES. The act authorizes a new issue beyond the amount before allowed, and requires security for the redemption of the same in specie. In case of a failure, it will be impossible to apply the avails of the security to the redemption of the new issues, unless such issue be distinguished by some mark from the ordinary issues of the bank. It therefore seems to me proper to have them thus distinguished. This may be done in one of two ways: First, by having a die prepared, similar to that now used in the free bank department, with appropriate devices, which should be impressed upon such plates of the bank, as the bank should desire to employ in taking impressions for these extra notes, or Secondly, by having a single plate prepared by the comptroller, with appropriate devices, and then have the bills printed with the ordinary plate of the bank, and with black ink, and then printed again with this new plate with red ink, which is said to be as indelible as the black. This, it strikes me, after consultation with the engravers, is the most feasible mode; it will save the bank plates now in use, from mutilation, and will upon the whole be least expensive, and effectually secure the desired object. Two plates will be prepared, one indicating that the security bonds, and mortgages; and it will be necessary that the bank should indicate before stocks alone, and the other that it is stocks, the printing is done what the security will be, as it will not be convenient to change it afterwards. For the purpose of preventing the banks from impairing their capital to obtain these extra issues, every bank applying for them, will be required to make satisfactory proof that no part of the capital of such bank has been used or pledged, directly or indirectly, in purchasing or procuring the securities to be deposited with the comptroller for such extra Issues. By the terms of the transfer of such securities to the comptroller, he will be authorized to dispose of them, and apply the proceeds to redeem the notes issued thereon, in the same manner that he would do under the general banking law, in case of a failure by the bank MILLARD FILLMORE, Comptroller. to redeem. AN ACT TO REGULATE THE ISSUES OF THE SAFETY FUND BANKS, AND FOR OTHER PURPOSES. SECTION 1. The several safety fund banks in this state incorporated by special act, having capital up to and including two hundred thousand dollars, shall continue to issue and have in circulation notes or bills duly registered, as required by law, to the amount now allowed by the act of May, 1837, regulating the issues of safety fund banks; and those banks having capitals over two hundred thousand dollars, shall be allowed to issue and have in circulation notes or bills to the amount of their respective capitals, and no other or greater amount. But in all cases where a bank has a branch located at another place, that portion of the whole capital actually employed at each place of business, shall be taken and deemed the capital thereof under the provisions of this section. 2. It shall be the duty of the comptroller at all times to cause to be printed from the plates in his custody, and deliver to each of said banks, such notes, and of denominations allowed by law, as the bank owning such plates may require, not exceeding, together with outstanding old circulation and with the notes previously received, the amount of circulation allowed to such banks by the first section of this act; and said notes before being delivered to said banks, shall be countersigned and registered in the manner specified in the second section of the "act to abolish the office of bank commissioner, and for other purposes," passed April 18, 1843; and the expenses of preparing, countersigning, and registering said notes, shall be paid to the comptroller by the banks receiving the same, in proportion to the number of notes received. § 3. All acts and parts of acts heretofore passed, so far as the same are inconsistent with the provisions of this act, are hereby repealed. § 4. It shall be the duty of the comptroller to require, in addition to the contribution now made to the safety fund of all banks asking for, and receiving any bills or notes under and by the provisions of this act, beyond what they are authorized to issue by the act of eighteen hundred and thirty-seven, ample security for the redemption of the same in specie, in accordance with article eight, section six, of the constitution of this State. § 5. This act shall take effect immediately on its passage. AN ACT AMENDATORY OF THE ACT ENTITLED "AN ACT AUTHORIZING THE BUSINESS OF BANKING," PASSED APRIL 18, 1838, AND THE ACTS AMENDING THE SAME, passed April 12, 1848. SECTION 1. All banking associations, or individual bankers, organized under the provisions of the act passed April 18th, 1838, entitled "An act authorizing the business of banking," and the several acts subsequently passed amendatory thereof, or which shall hereafter be organized, shall be banks of discount and deposit as well as of circulation, and the usual business of banking of said associations, or individual banker, shall be transacted at the place where such banking association, or individual banker shall be located, agreeable to the location specified in the certificate directed to be made by the second clause of the sixteenth section of the act passed April 18th, 1838, herein before mentioned and not elsewhere; and every report directed to be made by any law of this State from such association or individual banker, shall be verified by the oath of the president and cashier of such association, or such individual banker, that the business of said association, or banker, has been transacted at such location. But nothing in this section shall be deemed to repeal or modify the provisions of the act passed May 4th, 1840, entitled "An act for the redemption of bank notes," as the same is applicable to all the banks, banking associations, or individual bankers of the State. § 2. The security which banking associations, or individual bankers, hereafter to be organized under the provisions of the above recited act, passed April 18th, 1838, and the amendments thereto, shall deposit with the comptroller as security for the redemption of circulating notes issued to them by the said comptroller, shall be New York State Stocks, in all cases to be or to be made to be equal to a stock producing six per cent per annum, and it shall not be lawful for the comptroller to take such stocks at a rate above its par value or above its current market value; or the securities shall not be less than one-half in such stock and one-half in bonds and mortgages upon improved, productive, unencumbered lands in this State, exclusive of any buildings thereon, said mortgages bearing an interest of not less than seven per cent per annum, and to an amount not exceeding two-fifths the value of said lands. 3. No mortgage hereafter to be deposited as security as aforesaid, shall be for a greater amount than five thousand dollars each. 4. The provisions of the first section of this act shall apply to the banking associations, and individual bankers now organized as aforesaid, on and after the first day of June, eighteen hundred and forty-eight. Comptroller's Office, Albany, May 2, 1848. Twenty days having elapsed since the passage of the act hereto annexed, it is now operative as a law, and all banks and individual bankers under the general banking law, are bound to conform to its provisions. It will be seen that the first and fourth sections of the act, will, after the first day of June next, operate upon banks and individual bankers now doing business under the general banking law, and that every such bank is to be, and every such banker is to keep a bank of discount and deposit, as well as of circulation, and its usual business of banking is required to be transacted at the place where such banking association or individual banker shall be located, as specified in the certificate required by the second clause of the 16th section of the act of 1838. That certificate is required only of associations and not of individual bankers; and the second clause of the act declares, that "the place where the operations of discount and deposit of such associations are to be carried on, designating the particular city, town, or village," shall be specified in the certificate. In the case of an individual banker, his place of residence is the place where his bauking business must be done. A practice had grown up under the general banking law, of establishing banks in obscure places, in remote parts of the State where little or no business was done, with a view of obtaining a circulation merely, and doing no other business. This circulation was then redeemed in New York or Albany by the agents of the bank, at one-half of one per cent discount, and again put in circulation without being returned to the bank, thereby enabling the bank to redeem its own paper at a discount, and then again put in circulation in the same place where it was redeemed. The object of the present law appears to be to break up that practice, and to ensure obedience to its requirements, the legislature have enacted that the president and cashier shall in every report made to this office, state that their business has been transacted at the place required by that act, and that such report shall be verified by their oaths. A strict compliance with this rule will hereafter be exacted from every bank and individual banker subject to its provisions. The second section of the act relates only to such bankers as shall commence business, or such associations as shall be formed hereafter. It makes some important changes. These will be better understood by a short review of the several enactments. By the 2d section of the act of 1838, the comptroller was authorized to receive the stocks of this State, or of the United States, or of any other State in the Union; but after several of these States repudiated, and their stock generally fell below par, it was thought prudent to exclude them; and in 1840, an act was passed (ch. 363, § 1,) restricting the comptroller to such public stocks as was issued by this State, which should be equal to a stock of this State producing an annual interest of five per cent. But it was expressly declared by the second section of that act, that it should not be construed to prevent the stocks then held by the comptroller, from being thereafter transferred to and received by him at their market value, in the same manner as though that act had not been passed. Thereby still authorizing the comptroller to receive the stock of any other State or of the United States, in deposit for banking purposes, if such stocks were held by him when that act passed. This might have done to prevent the depreciation of such stocks in the market, which would greatly have impaired the security of many of the banks; but the legislature has now changed that rule, and they are no longer receivable under any circumstances. This, however, will not impair the validity of those now held, but only prevent their being taken hereafter for any new bank. The material changes therefore effected by this act, which apply exclusively to banks hereafter to be formed, are, First. That no other stock than that of the State of New York, can be deposited with the comptroller, as security for bank issues. Second. Heretofore such stock was only required to be equal to a five per cent stock; hereafter it must be made equal to a six per cent stock. If it be not a six per cent stock, its comparative value will be ascertained by the stock tables prepared by Joseph M. Price. Third. No stock can be taken above its par value, nor above its market value. Fourth. Bonds and mortgages may be taken as heretofore, for an amount not exceeding one-half of the deposit, but heretofore the amount secured by the mortgage was not to exceed one-half of the appraised value of the land mortgaged, hereafter it must not exceed two-fifths of that value. Fifth. Heretofore there was no limitation to the amount of each mortgage, and the consequence was that mortgages were sometimes taken of so large an amount that it prevented fair competition in the sale of them. This evil is now remedied by the third section of the act, which limits the amount of each mortgage to a sum not exceeding $5,000. These changes will be strictly adhered to by this department in the formation of all new banks. MILLARD FILLMORE, Comptroller. DAYS OF GRACE ON DRAFTS AND BILLS. A very important case has lately been decided in New Orleans, which appears to have created considerable excitement in that city, and the decision will, if confirmed by the Supreme Court of Louisiana, lead to a revolution in the system of drawing drafts, upon this and other northern cities. It seems that a certain banking firm in New Orleans had drawn several bills, payable at sight, upon their correspondent banking establishment in |