Chicago Daily Tribune Newspaper, December 3, 1872, Page 3

THE CHICAGO DAILY TRIBUKE: TUESDAY, DECEMBER 3, 187 3 debts, are not more than a fair remuneration upon capitel. The dividends declared do mot Drobably exceed in the sggregate the dividends under the old State eystems, and are far lcss than the sverage annual dividends of the Eng- lish banke, viz, : 153 per cent per annam. . Itis geneally supposed that the circulation issued o the Nitional Danksis a source of great Profit; but, if the premium upon bonds is con- gidered as an ultimate loss, the profit upon cir- . culation does not exceed 3 per cont per annum. ' The chief source of profit in banking under . this, as under all other systems, is from depos- its, and upon this branch of business an annual tox is already fixed by law. If tho system has the advantage of circulation, it is 2lso subject to many restrictions which are considered bur- densome, but which give steadiness and Strength to the money transactions of the coun- try. While the banks should contribute their proportion to tlie revenues of the country, they Ehould not, under an imputation of extravagant . Drofits, or an unfounded prejudice, b texed to | = greater degree than other corporations which arg even less important to its prospericy. The consolidation of the banlk capital of the , <ountry in 2 sound gnd conservetive system, with proper safeguards and restrictions, is of mauch greater importance than a penny-wise and ‘pound-fooiish imposition of excessive taxation, 'which will have a tendency to drive those banks that are not over consciontious ont of the Eys- . tem, with the purpose of evading =l taxation “whatever. RESELVE. A good denl of discuesion has arisen during , the recent stringency in the money market, in the city of New York, in reference to the pro- visions of the National Currency act, requiring & reserve upon the liabilities of National Banks, The act requires that the country banks shall hold an amount of reservo equal fo 15 per cent of-the entiro amount of their deposits and eir- culation, three-fifths of which reserve may be on @eposit with National Banks which are their agents in redemption cities. The National Banks in the redemption cities must hold & re- per cent, one-half of which may be on deposit with Nationzl Banks in New York City. The rescives of the ninetcen hundred N 4ional Banks located elsewhere than in the City of New York are beld to a great_extent in that city. For most of the time during the past Fear, an amount equal to more than one-fifth of 1he capital of all thess National Banks has been held on deposit by the National Banks of the City of New York to the credit of their cor- respondents. In many cases these credits anount to twice the capital of the bank with which they are deposited; in other cses the smount of deposits is three, fur, and even five times the cepital, Fhich emount has been attracted thither largely Iy the payment of interest on aeposits. Tho failure of one of these New York City banks in + time of monetary stringency would embarrass, Z pot ruin, many banks in the redemption Gries, and, in turn, the country correspondents of these banks would euffer from the impru- dence of the New York banlk, which would bo re- onsible for widespread disaster. It is clear at & bank having such excessive liabilities has 20 right, even if there were no law, to increase itslouns to such an unreasonable extent agto 1:2d to embarrassment if unexpectealy called Tpon for the reserves of its correspondents. A Provision of law prohibiting banks from extend- Ing their loans beyond three times their capital would seem to be not unrensonsble, but such s provision would be much more restrictive than the present requirements of the law in reference to reserve. < The State Jaws of Massachusetts and Louisi- acg, which were in most respeets models of & aoand system of bank legislation, required an smple reserve to be kept. on hand. "me laws of the State of New York had 10 such restriction. The country banks of that S:ste were, however, required fo redeem their rotes in the City of New York, in A:Eem‘e, and an pxamination of their returns will show that, whilo the country banks usually held but s very small proportion (sbout 23 per cent) of circala~ tion and deposits in their vaults, they were Saced to keep on deposit with their city corre- giondents nearly es large a proportion of re- £irve os under the National system, An exami- 1ation of the weekly returns made to the Clear- iig House in New York City will show that the Rate banks of established reputationin times of ronetary tringency hold & sufficient reserve “ithout such provision of law; while tho Jarger proportion of banks, not included in the Nation- ! system, are continually below s judicious lmit. The truth is that the strong and well- rmnsged banks do not need any law in referenca ‘arcserve, and do not, therefore, ask for a change 0! legiclation in this respect. The weak banks, a1d those already too largelyextended, wish to bo fiee from restrictions. It is tle constant tendency of guch banks 41 increase their liebilities. In times of ‘eicessivo stringency Ioans are ot made by such asociations to business men upon commercial Prmer, but to dealers in speculative securities jon ehort time at_high rates of interest; and arincrease of call loans beyond the proper 2Jinit is more likely to afford facilitics for un- Taranteble stock speculations than relief to ledtimate business transactions. The law is in- Zexled as a wholesome restriction npon National Peiks, organized in almost every city and vil- Ing in the Union. Next to the avsolute securi- tvirovided for the crumpled bits of psperin thipockets of every citizen, no provision of the acthss done 50 _much to give character and stading to the National banking system as the asarsnce to the thousands of depositors thnoghout the country (who, after gll, are the chi€ Gource of profit to every bank) that s re- sere, equivalent to such & proportion of the lia- Dilitds of every bank as the experience of years andhe fiuctuations of business have shown to ‘e ncessary, will always be kept on hand to an- swerthe extraordinary and unexpected calls of crediore. Sy B | Thi variations in the liabilities requirin ‘servtin the banks of the City of New Yorl jvery weat. The banks outside of New Yorl, Qurizy the dall season, send their surplus means o tha city for deposit upon interest, to await ¢ reival of business. The banksin the City f Nev York, at such periods of the yeer, have o legiimate outlet for these funds, aud are efoe threatened with loss. The Stock -d thes advantage of this condition of af- Feirs, spculntion is stimulated by the cheapness *5f morg, and o market is found for the idle funds upn doubtful collaterals, and the result ' is seen iithe increased transactions st the Clear- ing-Houe, which, during the past year, exceeded 2,000,09,0000, or sn average of more then $100,000.00 daily—not one-half of which was 0 resul of legitimate business; the total ount d transactions being greater than that of the bmkers’ Clearing-House of the City of London. The evil arises largely from the pay- ment, byihe banks, of interest on deposits—an old-estabiched custom which cannot easily be chiged by legislation. A coneiderable_por- tionof tlese deposits would remain at home if tiny ould be used st a low rate of_interest, snd tado available at lng time upon the return ©f th's2as0n of active business, No sure in- vestrent of this kind is, however, open to_the conn: - banks; 2nd the universal custom is to sendforward the useless dollars from vaults compatively insecure to their correspondents in theity, wgem they are supposed to be safer, and ¢ -the same time esrning dividends for gharéolders. A Government issue bearing & low rze of interest to be counted 18 & certain propaiion of the reserve, and an increase of the gmour which the conntry baris are required to Eeep o hand, is the proper Temedy for such a etste £ things, Such an issue need not result in infision, for the currency invested would be ’ in thepossession of the Government. If the { gurreny is held, the objection is the loss of interel to the Government; but the loss would | be o jore than & just rebste upon the six mill- Jons oidollars of taxstion annually paid by the panksy the Government, at 3 time when al- most eery kind of internal faxation has been disconnued.. Such s reduction of tasation © “yomldiot be grudgingly made, if the result i ghall béa give' elasticity to’ the currency, to n and steady the money market, to re- seriously crippled that they would be unable to resume busnggss, and it was_proposed bta‘ 0[11:;1 their doors with ' the offer of payment by fm&t‘fi,- ments to their creditors, Tho contents of their vaults were, however, rescued in good COn ufion, and finally wiee and prudent counsels prevailed, 1g lurgely to ‘he presence and_edvice of my pr Tight days cfer tho contlagration tho banks obtained new offices in dwelling- Louses distant from their former locations, and opened for tho transection of business, Instead of balances being largely drawn upon, deposits flowed in freely from deslers and correspond- Gents, and at the close of the first day’s business the receipts were_found to be considerably larger than the disbursements. It was_ soon ascertained than the immense losses anticipated Bpon bills reccivable would mot be expe- rienced, snd confidenco was restored. The total loss arising from the fire on discounted paper is estimated at about gix hundred thousand dollars, and the loss from the destraction of bauk buildings, furniture, and fixtures, at_about one hundred and seventy-six thousand dollars, The bauks, at the time of fhis disaster, hsd sccomulated o surplus fund esceeding one-fourth of their aggregate capital, and had at their command a reserve equal to more than 30 per centof their liabilities, and consequently were able to resume business with- out embarrassment. The wisdom of the scc- tions of the law requiring an sccumulation of surplus and the holding of reserve could not be better illustrated. By reference to the abstract of the condition of tho National Banks of the City of Chicago, evidence will be found of the steady increase of business in these banks during the past year.t 5 TSUET. Charges have been made against several Na- tional Banks during the past year for receiving usurious rates of interest. These complaints have been made not only against banks in the Sonth and West, where high rates of interest prevail, but also against banks organized in other States, where the usurious rate charged was but slightly 1n escess of the rate of 6 per cent, allowed Dy law. Section 30 of the act pro- vides that when the amount of interest charged is greater than the amount suthorized by Stzto Iaw, twice tho interest paid msy be recovered by the person paying the same; while Section 53 provides that the franchises of an association may be forfeited if the Directors of a bank Inowingly violate the provisions of the mct. The original National Cor- rency act of Feb. 11, 1863, provided as & penalty for usury the forfeiture of the debt, and Section 50 of the sama act also subjected the rights, privileges, and franchises of an association to forfeiture for wilful violations of the act. It may be doubted, thereforo, whether Congress intended to impose a specific penalty involving the loss of the wholo debt, and then, in addi- tion, subject the same bsnk to a forfeituro of charter in a subsequent section, which is_appli- cablo to other violations of law. I am informed Dy gentlemen who participsted in the framing of the present National Currency act, that the forfeiture of twice the smount of interest was regarded as a sufficient penalty for such viola- tions of law, and, at the ssme time, 2 gufficient protection to borzowers. These statements are confirmed by the act of April 22, 1870, “* An act t0 amend the Usury laws of the District of Calumbis,” which provides “that if any person or corporation in this Die- trict shall contract to receive o greater rato of interest than 10 per cent upon any contract in writing, or 6 per cont npon any verbal contract, such person or corporation shall forfeit the whole of said interest so contracted to be re- ceived, and shall be entitled only to recover the principal sum due to such person or corpora- tion.” It will be observed that the forfeiture of the interest is the only penalty grescnhafi by Congress nearly six years after the passage of the National Carrendy act for corporations and individuals in the District of Columbia, The rates of interest fixed by Stato laws are not governed by any sound economical or busi- ness principles. In three of the New England States nsuary laws aro abolished, while in the remainder the rate has remained for half a cen- tury at s uniform standard, which is less then the prosent rate of the Bank of Englend. In Minnesota and Virginia the rate is limited to 12 per cent ; in Illinois, Wisconsin, and Missouri, 0 10 per cent ; in Alabama and 'Olio, to 8 per cent, while in Pennsylvania, Mervland, and Kenhmki, the rate ia fised 2t 6 per cent. In New York, the taking of an_excess beyond the limit of 7 per cent forfeits the whole debt, and subjects the creditor to fine and imprisonment. It would be difficult to give sny good reason why the rate of interes should be limited to 10 per cent in the City of Washing- ton, to 6 per cent in the neighboring citios of Fhiiadelgnia, Baltimore, Wilnington and Ta- leigh, and t0'12 per cent across the Potomac, in Alexandria, and in the capital of Virginia. Many of the States have prastically repesled their usary laws, while other neighboring States ro- tain npon their statute books laws which are so continually evaded that they have become obso- lete. Bavings banks chartered by Congress, Bavings banks, trust companies, and 8zfe-deposit companies authorized by the Legislatures of al- most every State of the Union, as well 88 pri- vate bankers, offer for interest on deposits rates nearly oqusl, and sometimes exceeding, the rul- ing rates allowed by law; and, under such cir- camstances, it is difficult to control, by legisla- tion, the rates of the National Banke, Self-protection stimulates even the most con- servative banks to control their own business and retain the accounts of dealers of long stand- ing. The rates of interest charged must corre- spond in some degree to the supply of money and to the demand. If high rates are peidfor deposits, it is with the expectation that the bor- rower will pay & rete correspondingly high. Hence loans are made to those dealers who will leave the largest proportion of the amount bor- rowed with the bankforthe longest period in the guise of deposits. Banks in New York charge 7 per cent, in Philadelphia and Baltimore, 6 per cent; but their loans are made chiefly to dealers whose average accounts show balances continually on hand equal to one-eighth or one- fourth of the amount borrowed; whils the banis in tho Sonth and West not unfregquently charge the ruling rate without regard to the ac- count of the customer. The expedients for vio- lating the usury laws are so numerous that it may well bo_doubted whether it would not be better for_all_parties to allow the rate charged to be regulated by the state of the moncy mar- ket. Under existing laws, in an easy money market,tho rate not unfrequently falls below that préscribed by law. If money is scarco, the rate is nominally within the limit, but really regulated in accordancs with & previous under- Bianding between borrower and lender. There are 00 usury laws in Great PBritain, or inthe other commercial European States; and the Commonvwealth of Massachusetts, one of the most prosperous and enlightened Btatesof the Union, has recently abolished such laws; and it will be found, by reference to the tablo else- where, that the esrnings of the bauks in that Btate for the four years since the passage of the act, have been even less than in many of the Eastern, Middle, and Southern States, where the Tate is fied at 6 per cent. Alr. McCulloch, late Secretary of the Treasury, in his first report, as Comptroller of the Curren- ¢y, recommended a uniform rate of interest, and expressed the opinion that Congress possessed the power to enactsuch & law, under the consti- tutionsl provision of regulating commerce among the seyeral Btates. Gongress alone Las tho power to coln money and regulate the valno thereof ; and if italone has autbority toissue and authenticato the paper currency of the couniry, there would seom t0 be 0o good Teason why i ehonld not also provide for its free circulation, which i now impeded %y the ever-changing statutes of forty different Legislatures, The penalty for usury should at loast be de- fined, and until this is done the Comptroller will not feel himself called upon to institute pro- geedings for forfeiture of the charter of a bank for usurious transactions, when it is evident that the business of the association is conducted legitimately and safely in other respacts. BAVINGS BANES, The act of June 17, 1870, provides that sxvings sipens any fue N e adgional security to $700,000,000 belonging ¢ Aedoans e aiving 1a the Yaults. of th * Vinke s rge gmount of fuods for legitimate Eiiness arposes, which would otherwise be et uya the Stock Board to unsettle values firoughou the countty, and altemalely in- cease anm deprese the price of every com- ya;yihe iformation of those who do nob be- jeve that th banks usually hold the reguisite mount ofreserve, we have prepared igbles powing ths for the last five years, at from four p fivo nt periods of the year, the _banks nized in every State, and in the principal 522 of the Tnion, bave been found to- bold, in Jm®t everyinstance, & considerable amount jeynd the rqyuirements of law. % ilaw vhick is so univereally observedas to % pavebecyme 4 rule with all the cantiously-man- ¢ N bwks of the country should notbe re- 4 32 wihon; full considerstion. : THEE CHICAGO FIRE. T gret fire in Chicago of Oct. 8 to 11, 1871, shold by mentioned among the noteworthy evecs of tho year. The buildings occupied b; theighte:n National Banks in that city were oty destroyed in the general conflagration, ex.ofi{ ono, snd that one was rendered untensble % for sme weeks. . 2 B amownt of bills receivable held by these ‘pank, at the time wsd moretfl.:m twenty-one g indebtedness to correspondent e %o individual and %o perly nine millions, w .bout seventecn millions. For 8 oo thought they wwere &9 i gme ik banke msy be or ed within the District of Columbia, under the provisions of Sec- tion 4 of ‘the act “‘to provide for the creation of corporations in the District of Columbia by general las ;" and a subsequent act exempts from taxation the deposits of snvings banks in smounts less than £2,000. It is claimed that, uader this legislation, sevings banks, with a capitel paid up in full or in pert, may be established in the District of Columbia, 0 bo conducted for the benefit of the share- holders, The Legislatures of many of the States have guthorized the establishment of similar in- stitutions, which, under tho act of Congress, are exompt from taxation on deposits, ‘while these “Since the above puragraph was written a great con- fsgration has taken place in Boston, resulting in tho Gestruction of from seventy to eighty millions of prop- erty. The facts pertaining to tho Loston banks ‘wers in many reépects similar to thoso of Chicago, Their xggregate capltal was $48,900,000; their surplus, £11,- 440,000 ; their bills receivable, $33,327,000; their de- posits, $40,641,000; and their reserve, according to the Intest ofiicial reports, about 25 per cont of their lisbili- ties. The buildings of seven National Banks)out of forty-nine transacting business in_the city, were do- stroyed by tho fire, but their cash nssets were subso- quently recovered, On the second dby after the com- ‘mencement of the fire all the banls but ona were rep- Tesented at the Clearing House, and on the fourth day all of them had resumed business, Tho aggregata loss pon bills receivable s _estimsted 8¢ from two and & Bwlf to thres millions of dollars, The losses of the aro chargeable to surplus, which was ia excess of the Tequirements of the law, and it is not supposed 1bat tho regular dividends to shareholders will bo ma- forially reduced by the dixauter, identical deposits, if placed to the credit of savings banks in o NationalBank, asis frequent- 1y the case, are subject toa tax of ¢ per cont per annum. It is cvident that Congress intend- ed to discriminate in favor of those institutions which are organized for the purpose of receiv- ing and investing savings for the benefit of de- poritors, and not of shareholders. The ofticial 1'elport of the savings banks in Now England show thie deposits at the close of the year 1871 to have been §313,333,479, or more than threotimos the smount of the hggregate deposits in the National Banks. The deposits in tho savings banks of the State of New York, at the same date, were $207,05,866, & sum also considerably in oxcees of the deposits of the National Banks of that State. A large portion of these arc not properly savings deposits. Savings banks in some portions of New England, Now York, and Pennsylyania, as well 23 other States, have recently become formidable compe- titors of the National Banks by offering much larger rates of interest for deposits than 13 ust in well-managed banks. ) The proper functions of savings banks are to make safe and judicious investments of the funds intrusted to them, and, at specified times, to divide the earnings among the depositors; but, for the purpose of attracting the deposits of ‘business men and others, who Would otherwiso do business with regularly organized banking institutions, the custom prevails, to alarge ex- tent, of offering_ high rates of interost for de- posits beforo dividends have been earned. The result is that saviugs deposits aro, to a consider- able extent, endangercd by investments in strect paver, in loans to the managers of such institu- tions, and in speculative securities, The savings banks are among tho most import- ant business institutions of tho country, and they should bo fostered and_maintained; but a the samo timo they should be restricted to a legitimate savings bank business, and not allow- ed to encourage violations of usury laws, nor to be controlled by the personal interests of share- holders, managers, ortrustees, Frequent publi- cations of reports should bo roquired, and their affairs subjected to rigid scrutiny from timo to timo by competent examiners, Special charters with special privileges for savings banks and trust compaies, should not be granted, but all such institutions should be organized under gen-~ eral laws. The passege of such a law for tho District of Columbis, with judicious provisions, would be productive of beneficial results and would afford sn_example, not only for those States which have no epactments of this kind, but also for the older States, whose present sav- ings bank laws are lisble to great abuses. LOCKING UP GREENDACES, | The act of February 19, 1869, provides ‘‘that 1o uational banking 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 shall agree to withhold tho same from use, or shall offer or receive the custody or promisé of custody of such notes as security, or as collat- eral security, or consideration, for any loan of money.” On the 5th of April last the Comptroller was advised that a bank in the city of New York, with a capital of §1,000,000, and whose average exchanges at the Clearing House did not exceed $300,000, was that morning ereditor at the Clear- ing House for $4,770,000. "As it was evident that this large credit was not the result of legitimate business, the Examiner was directed to make an examination of the bank, which was im- mediately done, in connection’ with & member of the Clearing House Committee. From the examination, which was ‘horoughly and carefully conducted, it appeared that deposits had been mad> in that bank, by one individusl, upon the morning of April 5, to the amonnt of $4,100,000, the wholo of which-was. drawn out upon the same day, upon tho checks of the de- ‘positor, in legal-tender notes. The President of the bank denied that the bank had any interest in these transactions, and there was uo evidence of any Joan, or of advances in any shape, upon these deposits. Theso transactions were the subject, subsequently, of an investigation bythe Bank Committee of the House of Representa- tives, and, although it was clear that the apirit of the law had been violated, no evidence could be obtained to warrant the commoncemont of & suit for the recovery of- the penalty prescribed in the sct referred to. The investigation un- doubtedly had the effect to prevent the repeti- tion of similar transactions ; no offences of this kind, on the part of any National Bank, having sinco been brought to the attention of the Comptroller. The New York Clearing Houso Association subsequently passed & resofution declaring “that the Clearing Honse Committee bo and_is hereby directed, whenever it appears, in its judgment. that legal tender notes have been withdrawn from use through the agency of any bank, mem- ber of the Association, to make an immediato examination of the bank in question, and should there appear to be complicity on the part of the bank or ite officials, to suspend said bank from the Clearing Houso until action of the Associa- tion ehell be teken thereon.” The withdrawal of currency for illegitimate purposes, has, Lowever, siuce been accom- plished without the assistance of the banks. The rigid enforcement of the resolution of the Clearing Houso will prevent complicity on the part of the banksin such transactions; and if the New York Stock Board and the leading bank- ing houses will unite with_the Clearing House, and refuse to transact business with unscrapu- lous men, who do not hesitate to embarrass le- gitimato business for the purposo of incroasing or diminishing the values of stocks or bonds in which they are temporarily interested, they ean do more to prevent such operations ;than any Congressioual enactmont. INSOLVENT BANES. Twonty-one Notional Banks, organized in eleven different States, with an aggregato capi- tal of 34,236,100, v failed sinco the organiza- tion of the system in 1863. The total circulation of these banks was $2,942,793, of which $2,441,- 430 has been redeemed in full, leaving & balance still outstanding of £501,363, which will also be redeemed, upon presentation to tlie Treasurer of the United States, from the avails of United States bonds held as security for that purpose. Of theso banks, five have been finally closed, two during the past yoar), having peid divi- lends to their creditors, as followa: Amount of Dii- Name and Weationof Capital ~ claims ddspd, an stock, proced. per ct. First, Attic .$ 50,000 $122,059 * 58 First; Meding, 3 * 50,000 833 Tenrieasce, Mémphis, Tean 102,000 1735 Croton, New York City.... 00 831 First, Keokuk, Towa. ... 100,000 683 Six National Banks have failed during the past year, as follows : Amountaf| Dic Name and loca-| Capital , claim s dends| Remarks, tion of bank. #tock. proced. |paid. Ocesn, N. } Per i &t 1,000,000 81,280,328 70 Claimsp'd in 0| 1651f 100t (Cash on bana 250,000/ 873,925 60) lsfi.-ffl;:lh g s i v‘d in ey, N, Y. 106,100 e, 100 gl © Firss, Fori Oash on hand Sutth, Acked a0 neml... | CETS Of those banks, tho Union Squara National Bank, New York; tho Fourth National Bank, ‘Philadelphin, and the Waverly National Bank, New York, havo paid their ereditors in full, & Bcttlement, it is believed, without precedent prior to tho establishment of the notionsl sys- tom, The Eighth National Bank, New York, has paid a dividend of 50 por cent; the Ocean’ Na- tional Bank, New York, s dividend of 70 per cent; and the receivers of the Ocesn National Bankf, and of the First National Bank of Fort Smith, Arkansas, estimate that the creditors of Dboth Of these banks will wltimately receive & dividend of 100 cents on the dollar. The re- maining ten National Banks which have failed are ag follows : Name and location Capital of hank. Venan, H(exchfi e First, Selm: 160, 000 ’n'l Unadilla Bank, Unadilla, N. ¥. 120,000 20,433] 12,3501 ckford, 65875000 | 19,101 01 Nevads, Aui 169,314 53,15 The eggregate smount of claims proved against the seventcen National Banks which have failed (excluding the four beaks which wero Govern- ment depositorics), is $5,205,068; the average dividends, 6945 per cent; the additional divi- dends to be declared are estimated at 14 8-10 per cent ; making, in all, dividends in favor of cred- itors of 84 3-10 per cent, which would lexve an average deficiency of 15 7-10 per cent to be col- lected of shareholders, a8 provided in Section 50 of the act. A final dividend in favor of the Farmers' and Citizens' National Bank, of Brooklyn, will be made during the present yesr, of about 4 per cent, making, in afl, dividends from the assots of 96 per cent. A final dividend of about 40 per cent in favor of the creditors of the National Unadilla Bank is delayed by a claim in litigation for the value of the bonds deposited 8s security for circulation in excess of the amount required to redoem its circulsting Also §50,000 ih140, 550,000 Uited tatos 6 por cent bonds on dopastt notes, which will probably go to the Supreme Court for final adjudication. An as- sessmont has been_made upon the shareholders of the National Bank of Bethel, of 153 per cent, which, if collected, will pay the creditors in full, without interest, up to the dats of the sppointment of the Recoiver. A dividend of more than 80 per cent will also soon be declared in favor of the creditors of the First National Baok of Nevada, The affairsof the Eighth National Bunk of New York, and of tho First National Bunk of Rockford, Tllinois, aro in- volved in hti;:nfion, and thedate of the final closing of tneir affairs is uncertain. The Venango National Bank of Franklin, Pennsylvania; the Merchants’ National Bank of ashington, "District of Columbia; the First National Bank of Selma, Alabama, and the First National Bank of New Orleans, were United States depositories. The finel dividend in favor of the creditors of the Firat National Bank of Vicksburg has been unexpectedly delayed by the recent presentation of = claim of the United Btates for money alleged to bave been ille- gully deposited by the Collector of Internal Rev- enue of that district, in the year 1868. Since that timo no losses have occurred to _the Goy- ernment by deposits ia the National Banks, al- flmufi}x many millions of dollars have been con- tinually on doposit with banks which are desig. mated a8 depositories, The three first-named banks, at the time of their failure, hed & large amount of Government funds on deposit. The fifth section of the act of March 3, 1797, provides “ that when auy revenue officer or other person hercefter becoming indebted to the United States, by bond or otherwise, shall be- come insolvent ; or where the estato of any de- ceased debtor, in the hands of execators or ad- ministrators, shall be insufficient to png all the debts due from the deceased, the debt due to the United States shall be first satisfied ; and the priority lmreay established shall be decmed to extend as well to cases in which & debtor, not having sufficient property to pay all his debts, shall make & voluntary assignment thereof, or in which the estate and offecta of an absconding, concealed, or absent debtor shall be attached by process of law, as to cases in which an act of lo- gal bankruptey shall be committed.” The Treasurer of the United States claims, under this act, that all deposits in these banks at the time of suspension, belonging to tho United States, whether_deposited {o its credit directly, or to the credit of its disbursing offi~ cers, with interest thereon from the date of the failure :f the bauk, are entitled to priority of ayment. b u tho case of the First National Bank of New Orleans, othor questions have arisen. Ab the date of its suspension the bank wasin charge of officers of the Govgrument, who were also engaged in the settlement of tho accounts of o defaulting ex-Assistant Treasurer of tho United States. The nominal balance to tho per- sonal credit of this individual upon the books of the bank was $815,779.10, and a certified check for this amount was taken from bim, and about $04.000 collected upon it. The Government holds this check, and claims that the balance un- collected shall bave priority in payment, the samo as if that smount had been on deposit to the credit of the United States. The creditors of tho bank, on the other hand, claim thab, at the time of the suspension, the bank held legal offsets, and that there was really no balance upon the check held by the Government. The Recetvor concurs in this opinion, and if the claim should bepresented to him in the usual way for settlement, it would be disallowed. Unsuccessful sttempts have been mado to ob- tain a final decision in the Supreme Court of the United States upon these questions, owing, in purt, as is believed, to defects in the present act. A large amount of funds has been ‘on de- posit with the Trensurerfor the last threo years, which will be distributed emong the creditors as Boon a8 & decision of the Court can be obtained upon these points, Section 50 of the Fational Currency act pro~ ‘vides that the Comptroller shall make a ratable dividend upon all claims which may be proved to his satisfaction or adjudicated in a court of com- petent jurisdiction; and this is the only existing grovipion inreference to the method of proce- luro in the proving of claims against an insol- vent bank. The law should be 50 amended a3 to define tho duties of the Comptroller and of tho Receiver in proving claims and in pregcrib- ing the modo and mannier of referring conflict- ing interests to the proper tribunal for final arbitrament. A bill for this purpose was intro- duced into the lnst Congress, reported by the Bank Committee, and referred to the Judiciary Committee of the House of Representatives. The passage of this bill will facilitate the sattle- ment of the affairs of these bauks, and simplify tho mothod of procedure in all cases of insol- vent banks. An amendment is also suggested giving au- thority for the return of the assets of an insol- vent bank to an agent of the shareholders upon their unanimous request, after full payment :hn!é have been mode to the creditors of the auk, ¥ !i F].un'u dividends are delayed by reason of pro- od litigation, provision should also be mede for'the investment of the Tunds on aeposit with the Treasurer in interest-bearing securities. SURFLUS AND BPECTE. Tho law requires that every National Bank ghall carry onc-tenth part of its profits to sur- s}ud»fum] account before the decleration of o ividend, until the same shall smount to 20 per cent of its capital stock. Thia wise provision has been generally observed, and the returns show that the banks now have 2 s1 us of over one hundred millions of dollars, and_considera- bly more than one-fifth of their capital in sur- plus account. The act also limits the liabilities of any association, porson, company, or corpo- ration, for money borrowed, to one-tenth of the capital stock pid in. The 'Comptroller recom- mends that this limit be'estended to_ono-tenth of the copital and surplus, which will bave & tendency to increase tho surplus fund boyond tho limit raquired by tho law. Banks have hitherto been in the habit of re- porting, s specie, checks payable in coin, The result 38 to give an erToncous aggregate of tho smount of coinheld by the Lanls, tho samo amount being reported by the bank holding the coin and the bank lholding the check., In the presont statement, and iv el future statements, the item of coin Will include only actual coin end United States coin certiflcates which are payable on demand at the Treasury. SRINPLASTERS, The State of Alabama hes issued for some youra past, in the form and similitudo of banl notes, of five different denominations, certif- cates which read as follows: ¢ The State of Alabama : Receivable as five dollars in payment of all dues to the State. Montgomery, May 1, 1867. (Signed) —— ~— Governor. (Signed) —— —— Com. of Public Ac'ts.” On the reverso : ¢ Reccivable in payment of taxes and all dues to the State. Issued under the provisions of the act entitied ¢ An act to provide for thoe issue of certificates or recoipts by tho State,’ approved Feb. 19, 1867. The credit and {aith of the State of Alabams aro pledged for the redemption of this certificato or receipt, a8 provided for in such act.” A circuler was also issued by tho Governor of Alabama, on July 24, 1867, and is still in cirenla- tion, which states that an opinion has been ob- tained from the Attorney Genersl of the United States that such recoipts or certificates are not subject to the tax'of 10 per cent imposed upon the notes of State Banks by the act of March 3, 1865, and_recommending the co-operstion of bonks and benkers in giving clrculation to the issues referred to. The Constitution of the United States provides that no Stato shall emit bills of credit, and it has been held by tho Su- premo Court 'of the United States ina famous Caso,| thet_a note of circulation “issued bya State, involving the faith of o State, and de- signed to circulate as money on the credit of the Btete, in the ordinary course of business,” is & Dill of credit. Other decisions of the Supreme Court hold “‘ that certificates issued by a State in sums not exceeding ten dollars nor less than fifty cents, Teceivabloin payment of taxes, the faith and credit of the State being pledzed for their redemption, are bills of cradit within the prohibition of the Constitution,” y It is clear, therefore, that such certificates are bills of_credit, and_prohibited_by the Constitu- tion. Savings banks, railroad, municipal, and other corporations in the Stutes of Florida, Georgia, and other Southern States have fol- lowed the esample of the State of Alabama, snd have issued, and are still iseuing, & largo amount of similar circulation, some in the form of re- ceipts and certificates, and others in tho form of railrond_tickets, but all issued in the form and similitude of benl notes, and intended to circu- Iate ns monoy. Thereis ©o law in existence to provent the cisculation, and no legislative pro- vision for tho enforcement of the constitutional prohibition of such igsues. The act of July 17, 1862, makes it & penal offence ‘‘ to make, igsue, circulate, or_pay any note, check, memoriudum, token, or other obligation for & less sum than one dollar, intended to circulate as money, or be received or used in lieu of lawful money.” Itis recommended that this act be so amended as to prohibit, absolutely, the issue of such circula- tion, and thus prevent great ultimate loss to the people, among whom such notes are now obtain- ing extensive credit. SEs ape A fow National Banks have gone into liquida- tion and reorganized as State banks, relaining their national title. Stato Savings Banks an private companies have also assumed the title of *National.” These corporations and com- panies erect large pigna over their doors, issuo 1Briscos pe, Bank o Kentueky, 11 Pob,y 207, conspicuons advertisements, and obtain recog- nition in the counterfeit detectors among lists of National Baoks, thus transacting business under falso calors,” which, of itself, should be suflicient to put all business men upon their puard. Such abuses chould, however, be pro- ibited, and the Comptroller rocommends the passage of an act probibiiing the use of the word **National® as a title for banks other than thoso organized under the National Cur- rency act, He also recommends that all’ officera of Na- tional Banks, and all Government depositaries, be required to stamp the word * counterfeit” or “illogal” upon all counterfeit and unsuthoz- ized issues presented at their counters, BANKS OF CIRCULATION. The National Currency act is, to o certain ex- tent, deficient in a provision for the prompt closing up of Nationa! Banks pursuing an Mogits. mate business, These banks ate of &wo classes, One class organize or attempt to organize and payup their capital stock with tho notes of shareholders instead of cash capital, as required by law. A few such cases have beon forced into liquidation by withholding the jssue of circula- tion, and in one instance the Solicitor has been requested to bring a enit for the forfeituro of charter for willfal violation of lnw, as provided in Section 53 of the act. In all similar cases hereafter procecdings will be commonced for o Like purpose. In other cases, banks which have lost a large portion of their capital refuse to go into liquidation, transacting no business, but i other respects conform to tho roquirements of the law, for the purposeof receiving the interest npon their bonds. The stockholdors of thess banks, in some instances, have the mesns to reatore the cupital, but refaso; in others, a po- tion of the shareholders desiro to pursuo a legiti- mute business, but snother portion refass to respond to assessments. The Comptroller re- spectfully rocommends ihat in. theso cases au- thority be given to _withhold the interest upon the bonds, and to commence proceedings for the forfeiture of charter, and that o penalty bo im- posed. These cases aro not numerons, but o remedy is needed to_terminate the exisicnce of such associations, and no penalty is too_sovers for this evasion of theJaw. With proper logisla- tion, and the co-operation of banks doing o legitimato business, an extmplo may bo mado of illegitimate institutions, which will provent the organization of banks withont the full amount of eapital paid up in cash, os required by law. EXAMTRATIONS. It is_the intention of tho Comptroller that every National Bank shall be thoroughly exam- ined once a year by & competont bauk examiner. Every Director and sharoholder is personally in- terested in these esaminations, if properly con- ducted. No woll-managed banlk will object to o confidentinl scrutiny of its affairs, but will wel- como ot oll times, as is generaly tio case, & competent and courfeous agent of the Depart- ment. Many valuable suggestions may bo ob- tained from the experienct of an intelligent ex- aminer, and, in not & few instances, banks heve been saved from ruin by timely interference in tho correction of sbuscs. In somo instances in- formation is received at this office of violationa of law which call for spocial exammations, but ‘which cannot bo made because there is no means of peying the expensc of conducting such ex~ aminations, If the bank is found in foult, it will respond to an assessment; if not, it should not be subjected to an expense not _authorized = by law. The Comptroller, therofore, respectfully osks for an appropriation of 3,000, in ordor that ho may ab all times be freo to pursue such inquiries asho ehall consider expedient for the protection of the creditors of such asaociations. Prompt action in cases of this kind_ i3 very desirable, and the_expenso incurred is trifing when com. ‘pared with the public interests invorvod. t AMUTILATED CURRENCY. Bection 24 of the act provides {hat the worn- out and mutilated circulating notes of the Na- tional Banks “ghall be burned to ashes_ in the presanco of four persons, one to be appointed by the Secretary of the Treasury, one by the Comp- troller of tha Currency, one_ by the Treasurer of tho United States, and one by she association, undor such regulations as the Secretary of the Treasury may prescribe.” From tho organiza- tion of the system in 1853 to Nov. 1, 1673, 386,- 695,305, more_than omo-fourth of the ‘whole amount issued, has_been returned to this ofico for destruction, as follows: Previous to Nov. 1, 1865.., During the year ended Oct, 31, 18¢ During the year ended Oct. 31, 1867 Dauring the year ended Oct. 31, 1868 During the year ended Oct. 31, 1869, During the Fear ended Oct. 31, 1870 ,639 During the year ended O« 1, 1871, 24,344,047 During the year ended Oct. 31, 1872. 80,211,720 It is probablo that the emount of mutilated ourroncy to be returned hereafter for ro-issue will exceed $30,000,000 snnually, and that the whole smount of National Bank sirculation will Do re-isened as often 15 once in fen vears, An additional forca will be required for fhe careful performance of this duty. No effort will be spzred by the Comptroller to heve the provision of tha law in roference to the buming of mutilated notes and tho prompt is- su0 of now notes in their placo strictly execut- ed; and the National Banks of tho country aro urged to send forward such notes 2s frequently 83" possible, in order that the curroncy of tho countrv msy bo kepi in the best possible condi- tion. The officers and depositaries of the Tnited States can render efliciont service in purifying the currency, by sorting out all mutilated notes of the Nacions|” Banks_and presenting tho samo to their agents in New York City and elsowhero, for redemption. 75,400 050,383 - 14,305, THE OFFICE. The foree of this oflice consists of the Deputy Comptroller, fifty-six mala clerks, tud tyenty- eight female clerlis. The work of the ofiice is con- tinually increasing. More than twelve thousand reports of National Banks aro received annually and cerofully scrutinized. More than one hun- dred miliion dollars of United States bonds havo been received, transforred, and deposited with the Treasurer during the past year, and twenty-five millions of dollurs of bonds have been withdrawn and surrendered to the banks. Thirty millions of dollars of mutilated currency have been receivad, counted, and destroyed, aod £52,000,000 of new currencyissued to the banks. Muny thousnnds of communicatious are annu- ally received and promptly answered. If any success ghall attend the administration of the Tesponsiblo duties of tha cffico, the Comptroller will be in a Jarge measure indebted to the industry and eficicncy of tha Dep- uty Comp-trcller, of the _compotens eorps of examiners, and of tho chiefs of tho different divisions, and to the services of expe- rienced clorks, who Lave assisted him in the dis- charge of these dnties. A reorganization of the oftice, with increased pay corresponding to the zesponsibility of the differont positions, would e a proper recognition of services which have too long been well performed without corre- sponding campensation, Btatementexhibiting the numberand amonn of notes issued, redcemed, and outstanding, Nov. 1, 1872: > o o gig2 | a5sz ¢ g S238 B g c5za E g 85z 2 Foefiy B i 538, B Iogga3 i gFEZ ioi8ds R4 iOiEE i T 80U Jfo squny << eeseepautIp, 805 Jo squng * Guzpupysino 0 fo squng '106'68/081'096'¥8F $1920'T09'478 |0ce'020'818 |0z0'8LE'003 ' g unowy 3 g e 8 powonpos Junousy 2 8 8§ H £ ol 2 =55 g2 g5z seeseeee e iy s Egg -puvsyno qunowy S|8 g38 ela 2 glg S8 APPENDIX. Special attention is celled fo the carefally pre- d_tables contained in the appendis, exhibiting the aggregate resources an Lisbilities' of all the National Banks, yeatly, for the last ton years ; to tables showing thoir condition during the present year, for five dif- forent periods, arranged by States and redemp- tion cities, and_scparate statements of every boal: of the Union npon the 3d day of October altimo ; also to tables exhibiting the different and earnings of the National Banks, by States and cities, Semi-anpually, from March 3, 1969, to Aug. 31,1872; together with lists of insolven} banks, and banks which have gone Into volun. tary liquidation, and the emounts and_different kinds of United States bonds deposited with the ‘Ureasurer as security for circulating notes. The appondix aleo contains an exhibit of the capital and dividends, semi-anaually, for two years, of one hundred and sixteen of the ]cnding{mka of Great Britain and Ireland ; and the interest laws of Rhode Island, Massachusetts, and Connecti- cut. Jomx J. K~ox, Comptroller of the Currency. Hon. Jaxes G. BLAISE, Speaker of the House of Representatives. Amount of gold bank notes issued, not included in above, §1,604,100, ‘Statoment shoving the smount and kind of United | States registered bonds Leld by the Treasurer of the Tnited States to securo the redemption of the circte lating notes of National Banks, of the 1st day of No— vember, 1872 = Ratcofint. Amount, Spevcent, § 640,000 Gpercent, 4,009,600 © per cent. Gperceut. 6,680, Loan of 1663 (8L's). . S percent! 32030450 Ten-forties, 1854..... 2.0 7'5 per cent. 104,867,950 Five-twentiea of March 8, 16646 per cent, 2,054, Five-twenties of Juuc, 186. 16,201,150 Five-twenties of 1865 11,743,100 Consols of 1865. 1250 Uuited States honds jesucd to the Pacific Railway Compa- nies ‘Total, POSTAL TELEGRAPHY. 6 per cent, Report of the Postmaster Gen- eral. Argument Against the Present Tele- graphic System, A Governmental System Advocated. Wo havs received a copy of the repors of the Postmaster General; but,in consequence of the crowded state of our,columns to-day, we can present in this issue only that portion of the document which relates to a Postal Telegraph. The other interesting portions of the report will be given to our readers hereafter. On tho subject of Postal Telegraphy, Mr. Cres- well says: POSTAL TELEGEAP. In complience with the provisions of Iaw re- uiring the Postmuster General annually to fis tho rates for official telegraphic despatches, I is- sued an order, dated tho 20th of June, 1873, one section of which rotained the previously-estab- lished rate for ordinary telegrams, viz.: ona cent per word for each distance of two hundred and fifty miles, or fraction thereof, to which rate no formal objection had been made by the tele- gm%h companies, The rates established in 1871 for signal service messages having been objected to 25 too low by tho Western Union Telegraph Company, by whom the greater part of the service was pe! formed, I ugain availed myself of the expo- rienced counsel and assistance of Brigadier Gen- eral Albert J. Myor, Chief Signal Ofticer, and Hon. William Whiting, specially retained as As- sistant Attorney General, with ‘authority to rep- resent the United States in negotiations with the telegraph companies. The Weatern Union Company contended, first, thot tho signal servica messages, which, to by offactive, Tequire simultaneons transmission through special circuits at certain times, were not covered by the second section of the act ap- proved July 21, 1866, entitled “ An act to nid in the constriction of ‘telegraph lines, rnd to se- cure to the Government the use of the same for postal, military, and other purposes,” and could only bo’ sent by special airange- ment; second, that the understanding under which the Company had been transmitting such reports was not intended to bo continuons, bat was terminable at tha pleasure of the Company st the end of a year from the 2ith of ey, 1571, when the Company _gave formal notice that it would discortinue the cervico unless a higher rate should be allowed therefor. On both of these points I took the opposite ground, meintaining the right of the Govern- ment £o requiro tho transmission of the weather reports under the act of 1866, and also asserting the permanent charecter of the nssent of the Company to this construction of the law. In view, however, of the representations of tho Company as to the insufficiency of tho compen- sotion previously sllowed, and acting on the recommendations of General yer and Jr. Whiting, I advanced the rates for signal servica messages from two to three cents per word for each cirenit they might pass, in accordance with the plans of the Chief iticer. _Groye difiiculties havo arisen from time to time between the Government and ccrtain of the telegraph companies, which have declined and still decline to furnish such facilities 23 are essentizl to the perfoct success of the signal service. In my opinion, & Government telegraph affords the only safeguard against the continuance of such evils. While the embarrassment conse- quent on the sttitude of the telegraph compa~ vies toward tho Government demands prompt attention, it is but one of the many considera- tions which point to the ndoption of a postal telegraph 28" o measure of immediate public necessity. When, through the liberality of Cnng'mss. tho first telegraph fine had been constructed, and the ‘partial successof the invention demonstrated, the why the Government should assume control of this new means”of transmitting intelligence wero forcibly set forth in various letters of the inventor, and in a report of the Ways and z\!enns Committes of the House of Representa- ives, _This roport, (No. 187, second session Twenty- eighth Congress,) after enlarging upon the wis- dom of the policy which led the founders of our Government, ‘““devoted 2s they are known to have been to the powerand importance of the States, jealously epprehensive of the undue pre- ponderance of the Federal branch,” to engraft on that branch a power 6o great, 50 growing, so penetrating and perveding as that of the Bost Ofico eystem,” and alluding to tho extension of that power by the adoption of all the more rapid improved methods of transmission which bad boen introduced since the adoption of the Con- stitution, continues: But, though not snticipated or foreseen, theso new and improved modes werc a8 cloarly within the pur- viow of the Constitution ns were tho older aud less perfect ones with which our ancestors _were familiar, *% * Thosame principles which _justified and de- manded the transference of the mail, on many chief Toutes, from horse-drawn coaches on_common high- ways to steam-impelled vehicles on land and water, is cqually potent to warrant tho calling of the electro- magnatic telegraph in aid of the Post Oifice in dis- charge of jts great function of rapidly transmitting correspondence and intelligence, And again : Should thearrangements intoshich be (theinventor) may find it necessary to enter with private individasls or associations stipulato exclusive rights in their favor, it is manifest how greatly Government and peopls ‘Would lig ot their mercy. Huving in their hands the monopoly of suchu medium of intelligence on tho important lines, they could make such use of their ad- antages over the Government and the community as would at length enablo them to exact their own terms 85 tho prico of the surrender of their cxclusive right ; for the truth cannot be too often repeated, or too deeply impressed, in relation to this subject, that the ‘people will never submit long to th mischicfs and dis- Credit of the public post being outstripped by any pi vate monopoly or establishment whatever, ~Tha loss of revenue will co-operato with tho complainia and sufferings of the people to do what were better dono at once, namely, to establish the telegraph in connection with'and a3 & branch of the Post Otlice, The following paragraph of tho report must now be read with peenliar interest: Tho Committeo might exsily ndd to tho views and arquments which they havo now presented others of a highly commanding character, éspecially those which Telute to the extreme value of which the magnetic tele- graph would be in the emerzoncics of war, and its sin- gular adaptedness to render our system of Govern- incut eosily and certainly mointainablo over the immense space from the Atlantic to the Pacific which our ferrilory covers, Doubta have been entectained by many patriotic minds how far the rapid, ful), ana thorougi intercommunication of thought and intelli- gence 60 necessary 10 a people living under o common. Tepresentative republic could be expacted to take place througliout such immenso bounds. That doubt can 1o longer exist. It has been resolved and put an end to forever by tho triumphant snccoss of tha electro- maguetic telegraph of Profcssor Morse, as already tested by the Government. _Owing to tho slowness of the public to xcc_ug}» nize tho advantages of the new invention, and the doubts cast on the feasibility of its, orérs: tion over long distances, the conrse recommerids ed by the Committes was not adopted, eudghe line, built and for some timo maintzined at Gov- ernment expense, wes turned over to tho hold- h from which in this country by far the l:u?;e.r'.j partiof the telographic pattonage is derived, _will certainly be moro reluctant to intrust ita ‘despatches to possible rivals than to odicers of the Government. Wero the latter, however, to dictions have been graduslly approaching re zation, and many evils, unforeseen by the Com- mittee, have grown up under corporate manage- ment of the telegraph system. If the effects of rivalry between the telegraph and the mail upon the revenues of the Post Ofice have not been serious, it is due alone to the lib- eral management of the latter as compared with that of tho companies, & management which, since the invention of the telegraph, has rednced the rates of postage from twenty-five to three cents, and increased ten-fold the correspond- ence of the country. The netural policy. of privato compauies is to estend facilities slowly and only to profitable points, to let their business augment, adually, and to reap ]&r[fn profits from o small number of messages, while 2 Government system, maneged in the interests of the people, ‘pursues cxactly the opposite course. * Had the policy of the Post Offico been adopted by the telegraph companies, or had the Government held 6 tho cld rates of postage, the telegraph, instead of now transmitting ono. fifticth part of the annual correspondsnce of the country (collecting thozefor onc-third of the entire expense of the Post Office establishment), would probably trensmit at least one-tenth, The profits rtequired of privato ontor- prises~ would mnot bavo permitted such o course. Butimprovementsin telegraphy rendor it by no meaus certain that in foture the tele- greph will not to very great extont superseds the mail a3 & means of correspondenco, The in- troduction of the duplex transmitter, doubling the capacity of lines for through business, an of the *fast” or automatic system, by which one wire can bo made to do the work of six; the probable simplification of the fac simile system of Caselli, by which an exact copy of anything that can be drawn or written may be instantan- taneously mads to appear at a distance of hun. dreds of miles from the original ; and the connt- less other applications of electricity to the trans- mission of intelligonce yet to be made,—muat gooner or later interfere'most seriously with the {ransportation of letters Ly tho slover means of the post. Meanwhile, the immediate defects and abuses of the telegraph call loudly for reform. Tho system has grown up with and by the side of railroads, and has naturally directed itself to profiteble and easily accessible districts. It has followed the march of civilization, and not, like the Post Ofice, led the van. It waited for certain remuneration beforo advancing, without attempting to educate the people through its uge to an appreciation of its advantages. On the contrary, its spirit has been too often illib~ eral ond unprogressive. A glance at the tele graph mep of the country sliows large districts totally unprovided with telegraphio facilities, and many important places with Post Offices in their business centres dependent upon the ont- Iying railvoad stationsforthemeans of telagraph~ ing. Tho tariffs aro_exorbitant, unequal, dnd complex, supplemented in somo cases by enor~ 1mous charges for local delivery, and regulated entirely by the pleasure of thecompanies. In this connection I askattention to the table (Telegraphs, 3) appended to this report. It has been carefully compiled from statistics kindly furnished me by the International Bureau ot Telegraphs in Europe, by the Directors of the different National Burezus, by Alr. George Sauer, 2n Americen gentleman residing in Europe, who Lasmade the subject of Government Telegraphs a special study, and by the oficers of several of the American companies, to all of whom I desire to express my acknowledgments. The tsble shows that, with & cost per mile for construction and equipment much lower kere than in Bavaria, France, Ereat Britain, Italy, and the average of Europe, and sbout equal to that in Belgium and North Germany, and with a yearly expense per mile of line which will compars most favorably with that of the countries menrtoned, the tele- graph in this country collects an average of 70 cents on each mesazge, against an average ot 16 cents in Bavaria and Belgium, 28 in_ France, 29 in Great Britain, 82 in Italy, 22 in Germany, and 338 in Europe generally. On the Continent, the minimum tariif is for twenty words, inclad- ing address and signature (which are estimated together to average soven words); in the Uni- ted Kingdom it is for twenty words, cxclusive of eddress and signature; whilein the United States the address and signature are excluded, and ten words only allowed. g “Tha table (Telegraphs, 4) gives & comparison of telegraphic tariffy in Europe with those in the United States a8 regards distance, showing the Iowest averago rate per milo on 32 messages sont from Washington to points cast of the Mississip~ pi River to be higher than the highest average Tate permile abroad (thatin Russia), and the average rate per mile on 96 messages here to be from one and one-half to four times 2s high as those of Earope, notwithstanding the greater distances in this country. The same table also marks most clearly the in~ equality and discriminating character of Ameri- can tariffs, as opposed tothe generally uniform rates of Europe. The uniform system has recently been adopted in Canada, and o tariff of 25 cents established throughont the Dominion, with highly satisfac~ tory results, as will be saen by reference to the statement of the PxTasidanb fi; ;;Jei MO;I;:%&% Telegraph Company (Telegraphs, 5), for whi am igflegted to Lheybgnomble Pogimaster Gen~ eral of Canada. The complex and uncertain character of omn rates, necessitating sometimes & persopal visit to the oftice, and frequently a lengthy computation to ascortain the cost, i3 also one of the greatest obstaclesin the way of the extended use of the telegraph. A uniform or simple and well known rate of charge permits the use of letter-boxes or other places of deposit. "Tho table (Telegraphs, 6) illustrates the extent to which the rates to larga cities in the United States are burdened with delivery charges,which often double the cost of a mossage addressed to oints very far within the free delivery of the gost Oftice. -Tho abolition of this delivery chargo in England by the Government has pro- duced amost salutary effect. But perhaps the greatest oyil of the American, system, in this regard, is the utter lack of re~ straint upon the companias as to their charges. When the exclusive right,” or patent, referred to in the report above quoted, cxpired, it was be- lieved that competition would afford a remedy for the evils which were even then oppressively felt by those who had occasion to use the tele- question arose whether the Government should | graphs. _ Events, however, have shown purchiase the patent or relinquish to privato par- | this belif to have boon unfounded. ties tho lines which it Lad built. The ressons | Atthough new companies have from time to time sprusg up to divids tho profits of - by, they havo generally proved short-live $off theic Todnetions. of Jadf bave basn bub temporary and within narrow limits. The vast extent of the lines of the companies now con- ‘| molidsted under the name of the Western Union kas enabled them to rednce rates between places reachied by the opposition to a point which bare- Iy cnables the Iatter to meet expenses, without serioualy impairing thoir owa rovenues. Incred- ible g8 it may appear, the oficial statements of tho Western Union’ Company show that their averago receipt per messaze hes been increased eloven cents, or nearly 20 per cent, since 1867, notwithstanding the undoubted reductions of tariff between important points. Whether this is_due fo the sugmentation of rates between offices not' reached by competition, or to some other cause, I do not know. Not only has competition thus failed to affect tho great mass of tho telegraphic business, but, in addition, there are evidences of 2 combina~ tion between the competing parties which has recently resulted in anadvance of rates between pointa reached by the wires of both. The table (Telegraphs, 7) gives a few specimens of rates in operation previous to and since the 1st of My, 1872, which were fixed by agreement be- tweon companics formerly rivals. The move- ment is_ perfectly natural, and, from the com- panies’ stend-point, justifiable; for it cannot be expected that a tariff which i3 perhaps _highly peofitable toono compuny will pay, on o dividend N usiness, the more than donbled ezpenses of two, even if the capital invested in the opposi- tion system could afford to wait for its dividends until the lines were 50 extended s to secure s fair share of patronzge. ‘While, as I have stated, I believe that im- proved means of transmission will eventually ra;x:\(}er the telegreph a formidable rival of the m: in tarif, I am convinced by exporience that thesa improvements will be adopted too slowlyto meet the necessities of the people, and that, whai~ ever the rates may be, the wires will be prac- tically controlled Ly one corporation o long as they romain in private hands. The gradual re~ duction in rates, if ever made, will, therefore, bo more than counterbalanced by the growth of , shich it cannot bowithout large reductions the evils ationding tho management of tho tele- graphs by a privato monopoly. Among theso evils may be classed the pos- sible abuise of the wires for perdonal ends by business men controlling them; the enormons and dangerous extent of the free-messzge busi~ ness; of dilferent cuscomers, both 18 to rates and or- der of transmission; and tho vast aad irrespon- sible influence of telegraphic managers over the press of the conntry. discrimination botween the messages Fowover unjust mey bo the suspiclon that thoso controlling the_telegraphs make use of the information passing over their vires, it witl probably contine to impair public confidence in. , this means of correspondence 5o long as it re-~ zins in the 1ads of persous engaged in com- ial pursuits, The business community, kinds of funds held as resorve: the dividends exs of thepatent. Bince that day the above pre- e [Continucd on Scoenth Fageq