While only two amendments to the national banking 1aws were enacted during Mr. Dawes' administration as Comptroller, one of these had a very important bearing upon the growth of the national banking system.
The Act of March 14, 1900, authorized the formation of banks with a minimum capital of twenty-five thousand dollars, in places the population of which did not exceed three thousand inhabitants. Since this enactment on June 30, 1922, 4,323 banks, with a capital each of less than fifty thousand dollars, have been added to the system.
The same Act also increased the maximum circulation that banks might issue to an amount equal to the par value of the bonds deposited as security therefor, and increased the amount of bonds that could be received for circulation to an amount equal to the paid-in capital stock of the bank.
Before the adoption of this amendment to the law, circulation was limited to ninety per cent. of the current market value of the bonds deposited, not exceeding par, and the total issue of circulation to any bank was restricted to ninety per centum of the paid-in capital of the association.
The issue of circulating notes of the denomination of five dollars was restricted by this Act to an amount not exceeding one-third of the outstanding circulation of each bank, and so much of the Act approved July 12, 1882, as prohibited any national bank from increasing its circulation within six months after the circulation had been reduced, was repealed, thus adding an element of flexibility to the currency issues.
This Act also authorized the Secretary of the Treasury to receive United States notes on deposit, without interest, from any national banking association, in sums of not less than ten thousand dollars and to issue certificates therefor in denominations of not less than five thousand dollars. Such certificates were authorized to be counted as lawful money reserve and to be accepted for Clearing House balances at the places where the deposits therefor were made.
In anticipation of the passage of this Act, and while it was still pending before Congress, approximately one thousand applications for authority to organize national banks with a capital of less than fifty thousand dollars were filed with the Comptroller of the Currency, showing the popularity of this measure, as affording national banking facilities to small communities, and between the date of the passage of the Act and October 31, 1900, the close of the last report year of Mr. Dawes' administration, three hundred and eighty-two banks of this class were chartered.
WILLIAM B. RIDGELY Comptroller of the Currency, 1901-1908.