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stock of $425,000, resumed; 3, with a capital stock of $510,000, were placed in charge of examiners pending resumption; and 7 failed. The suspensions in Montana numbered 10, and their capital stock amounted to $1,875,000. Of these, 2, with a capital stock of $300,000, resumed, and 7, with a capital stock of $1,075,000, were placed in charge of receivers. Six suspensions occurred in Oregon, and the same number in California, the aggregate capital stock represented being $800,000 and $1,200,000, respectively. There was but one failure in each State, the capital stock in the case of the Oregon bank being $100,000 and that of the California bank being $250,000. There were 3 suspensions in Utah, 3 in North Dakota, and 3 in South Dakota. The 3 banks in Utah, with a capital stock aggregating $250,000, resumed business, while the 3 in North Dakota, with a total capital stock of $400,000, failed. Two of the banks in South Dakota, with a total capital stock of $100,000, were placed in the hands of receivers, and 1, with a capital stock of $125,000, resumed. Two suspensions occurred in Wyoming, and the same number in New Mexico. One bank in Wyoming, with a capital stock of $200,000, resumed, and 1, the capital stock of which was $50,000, failed. Of the banks in New Mexico, 1, with a capital stock of $175,000, failed, and the other, with a capital stock of $50,000, was placed in the hands of an examiner pending resumption on the appointment of a receiver. The only other suspension in this geographical division occurred in Oklahoma, being that of a bank with a capital stock of $50,000, which, being solvent, resumed.

A. CLEARING HOUSE LOAN CERTIFICATES IN 1893."

The unprecedented condition of the money market from June to September called for extraordinary remedies, not only to avert general disaster to the banks, but to prevent commercial ruin. This remedy was the issuing of clearing house loan certificates, which were brought into use, as in 1873, 1884, 1890 to 1891, by the associated banks of New York, Boston, Philadelphia, Baltimore, and other cities where needed. The service rendered by them was invaluable, and to their timely issuance by the associated banks of the cities named is due the fact that the year's records of suspensions and failures is not greatly augmented.

The form of these certificates, with the conditions under which they were issued in 1890-91 (the form and conditions being the same during the late issuance of them as then), is described at length in the Comptroller's Annual Report for 1891. The subject is alluded to again only because it constitutes a very important part of the year's banking history, and for the additional reason that here and there are to be found those who entertain an entirely erroneous idea of the purpose for which these certificates were issued and what was accomplished by their issuance. Briefly stated, they were temporary loans made by the banks associated together as clearing-house associations, to the members of such association, and were available to

a Report of the Comptroller of the Currency, 1893, pp. 15-16.
See Appendix, Note E, p. 388.

such banks only for the purpose of settling balances due from and to each other, these balances under normal conditions of business being always settled in coin or currency. Each clearing-house association selected a com mittee charged with the issuing of the certificates to each bank desiring the same, such bank being required before receiving them to deposit with the committee its bills receivable, or other securities, as collateral for the loan. The amount of certificates issued to each bank was limited to 75 per cent of the value of the securities deposited. They bore interest at rates varying from 6 to 7.3 per cent. Immediately upon their surrender to the committee they were canceled and the securities held as collateral were returned to the bank depositing the same.

At a time when vast sums of coin and currency were being withdrawn from the banks to be hoarded these loan certificates, by performing the functions of the currency or coin customarily required for settling daily balances at the clearing house, released so much currency or coin to legitimate and current demands of business and unquestionably placed it within the power of the banks in the cities named to extend to outside banks the aid needed on the one hand and liberally granted on the other. In no instance were these certificates designed to, nor did they, circulate as money. They were due bills, and their sole function consisted in discharging the single obligation at the clearing house. An attempt on the part of a bank in any of the associations issuing these certificates to use them otherwise would have incurred a fine and other penalties provided in the rules governing such associations. Their issuance at so early a date in the

financial derangement of the country was most opportune in not only preventing an acute panic but intending to restore public confidence, such action demonstrating that by mutual agreement of all, the weak banks of the association would be, so far as depositors and other creditors were concerned, as strong as the strongest.

In inaugurating the issuing of certificates so promptly and issuing them to so large an amount the clearinghouse association of New York in particular rendered the country great service, and the associated banks of that city are entitled to the credit which the public generally accords them.

The following figures, showing the movement and amount of the issue of loan certificates in 1893 in the cities named, will indicate the measure of relief afforded by them:

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B.-REPORT OF THE NEW YORK CLEARING-HOUSE LOAN

COMMITTEE.

NEW YORK, October 31, 1893.

To the New York Clearing House Association:

The loan committee of 1893 respectfully present the following report:

Early in June of this year, at an informál meeting of several banking officers, the subject of the financial outlook was discussed, and those present thought the situation was sufficiently grave to call for some action by the Clearing House Association.

On the 14th of June a meeting of the clearing-house committee was called, at which all the members were present. After a protracted discussion it was moved that the following be adopted as the opinion of the committee:

The clearing-house committee think it advisable to call a meeting of the Clearing House Association for Thursday, the 15th instant, at 12 o'clock. The committee will recommend at that meeting an issue of loan certificates.

This was unanimously adopted, and in accordance with this action a meeting of the Clearing House Association was held Thursday, June 15, at 12 o'clock, 58 banks being being represented thereat.

The President, Mr. Williams, stated that the meeting had been called in order that the recommendation of the clearing-house committee having reference to the disturbed financial condition of the country might be presented for action by the association.

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