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IN SENATE,

January 26, 1833.

REPORT

Of the committee on banks and insurance companies, on the report of the Acting Comptroller, in regard to the Bank Fund.

The committee on banks and insurance companies, to whom was referred the report of the Acting Comptroller, in regard to the Bank Fund,

REPORTED:

That the whole amount of the banking capital, incorporated in this State, now amounts to $25,381,460. Of this amount, the sum of $20,531,600 is now, or soon will be, subject to the safety fund; so that the amount of that fund, even in the event that no more banks should be incorporated, will ultimately be $615,948. Hitherto the contributions to the fund, and its consequent accumulation, have not been as rapid as they will be hereafter. The late period at which some of the banks were incorporated, and the charters of others renewed, has produced this result. Henceforth, however, the payments to the fund will exceed $100,000 per year, until its full amount is attained.

The public and the banks are alike interested in the preservation and productiveness of this large amount. It was the intention of the Legislature, and the expectation of the people, that this fund should be preserved entire, and be impaired only when the Senate, No. 47.]

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IN SENATE,

January 26, 1833.

REPORT

Of the committee on banks and insurance companies, on the report of the Acting Comptroller, in regard to the Bank Fund.

The committee on banks and insurance companies, to whom was referred the report of the Acting Comptroller, in regard to the Bank Fund,

REPORTED:

That the whole amount of the banking capital, incorporated in this State, now amounts to $25,381,460. Of this amount, the sum of $20,531,600 is now, or soon will be, subject to the safety fund; so that the amount of that fund, even in the event that no more banks should be incorporated, will ultimately be $615,948. Hitherto the contributions to the fund, and its consequent accumulation, have not been as rapid as they will be hereafter. The late period at which some of the banks were incorporated, and the charters of others renewed, has produced this result. Henceforth, however, the payments to the fund will exceed $100,000 per year, until its full amount is attained.

The public and the banks are alike interested in the preservation and productiveness of this large amount. It was the intention of the Legislature, and the expectation of the people, that this fund should be preserved entire, and be impaired only when the Senate, No. 47.]

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protection of the community, against the consequences of a bank failure, demanded its expenditure. This is evident from the provisions of the safety fund law, which declares that the annual payments of the banks shall be inviolably appropriated and applied to the payment of such portions of the debts, exclusive of the capital stock of any of said corporations which shall become insolvent, as shall remain unpaid after applying the property and effects of such insolvent corporations.

At the same time it was equally the intention of the Legislature and the promise held out to the banks, that the fund should be productive, and its income be reduced only by the salaries of the commissioners; for the same act provides, "that the income arising from the fund, after deducting thereout the salaries of the bank commissioners shall annually be paid by the Comptroller to the several corporations by which the said fund shall be created, in proportion to the amount contributed by each."

To produce both these results, the law not only declares that the fund shall be the property of the corporations by which the same shall be paid, but that it shall be the duty of the Comptroller to invest the same, and all moneys belonging thereto, in stocks of the United States, or of this State, or of the cities of New-York and Albany.

The committee believe it to be due alike to the banks and to the community, that proper inquiry should be made, whether this intention has been carried into effect, and if not, what are the causes of obstruction.

It appears from the report of the Acting Comptroller that the sum of $26,983.67 was paid to the fund during the year 1880. This sum promptly invested, as the law required, would by this time have produced an income of nearly $2,600. A similar investment of the contributions of 1831, which amounted to $62,626 68, would now have yielded an income of about $3,000; making a total of $5,600, which it was expected would have been produced as income by this time. Yet the report of the Acting Comptroller shows that only $1,707.21 has yet been realized on that account. But this is not all. The whole fund now amounts to about $183,000.

Of this sum, $8,082.40 is invested in canal stock, and $80,000 in State stock, leaving about the sum of 90,000 uninvested and idle in the treasury, which we are told by the Comptroller in his annual report, may remain so deposited for a long time before favorable terms of investment can be obtained."

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Here too there may be a loss of income to the amount of $5,000 per year, and unless the obstacles in the way of a proper investment are removed, the greater part of this fund, which will soon amount to more than $600,000, may long remain unproductive and unsecured.

The banks are mainly, but not solely, interested in providing a remedy for this evil. It is true that the income of the fund belongs to them, but not until the salaries of the Commissioners, amounting to $4,500 per year, are first discharged from it. The sums already paid to the Commissioners for that purpose amount to $10,897.96. Of that amount, $1,707.21 has been paid by the income already mentioned, and the remaining $9,190.75 have been paid from the fund itself, and have caused a diminution of so much of its capital.

It is true that this deficiency is to be made up from the revenue hereafter to be derived. At present, however, the investments do not produce revenue enough to pay the salaries of the Commissioners as they fall due, but there will be an annual deficiency of revenue to meet expenses of $95.88. Thus, unless some remedy is found, the banks will be deprived of the income guaranteed to them by our laws, and the deficiency already created in the capital of the bank fund will be continued and become greater every

year.

This difficulty results, we apprehend, not from the conduct of the officer charged with the care of this trust fund, but from that provision of the statute which confines his investments to stocks of a particular denomination.

During the session of 1831 the attention of the bank committee of the Senate was called to this subject by the Comptroller, and that committee then reported to the Senate that the stocks mentioned in the act were not to be had, except at a premium of two or three years interest on the capital invested, and that the Comptrol

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