Most of the recommendations for amendments to the banking laws urged by Mr. Lacey upon Congress were in relation to the note-issuing function of the banks. Some of these proposed amendments have been since enacted into law. One recommendation, however, which seemed to have considerable merit, did not receive favorable action by Congress until the passage of the Federal Reserve Act in 1913, although Senator John Sherman, on July 15, 1890, reported a bill favorably from the Finance Committee designed to carry it into effect. This proposition was to reduce the minimum amount of bonds which the banks were required to deposit as security for circulation and as a condition precedent to obtaining a charter, to one thousand dollars, regardless of the amount of the bank's capital, instead of a deposit of bonds equal to one-fourth of the capital stock by banks with a capital of less than $150,000, and a deposit of fifty thousand dollars by banks with a capital in excess of $150,000, as required by then existing law.

This legislation was recommended by Mr. Lacey in order to relieve the banks from the enforced necessity of issuing unre-munerative circulation when there was no need or demand for an increase.

The Federal Reserve Act dispensed with the requirement for the deposit of any charter bonds.

In his report for 1889, Mr. Lacey called attention to a perplexing question which was frequently raised while he was Comptroller, in connection with the existence of banks with a small capital in places contiguous to large cities. Where the growth of large cities brought these smaller banks within the corporate limits the anomaly was frequently presented of a bank with a capital stock of fifty thousand dollars or less doing business in a city the population of which would not permit of the organization of a bank with a capital of less than two hundred thousand dollars, the smaller banks carrying a reserve of fifteen per cent. and the larger ones twenty-five per cent. Two banks of exactly the same title were also in some instances brought together in the same city, causing confusion and friction.

In order to make clear the rights and duties of banks thus located, Mr. Lacey suggested legislation on the subject, although he did not indicate its character, but nothing was done. This question of organizing small banks in the suburbs of large cities continued to perplex the Comptroller's office until June 6, 1913, when the Attorney General of the United States rendered an opinion taking the position that no national bank could legally be chartered in any place within the corporate limits of any city, with an authorized capital of less than the minimum amount required by law for a bank in the city proper. Since this decision no national banks have been authorized with a small capital in suburbs within the corporate limits of large cities.

Considerable friction having arisen between officers of national banks and State taxing officers as to what constitutes "moneyed capital" within the meaning of the Bank Act subject to taxation under State authority, to meet this difficulty Mr. Lacey suggested an amendment to the law defining in clear and unmistakable terms the intent of the language employed in the statute "other moneyed capital in the hands of individual citizens," as, he stated, it was difficult in some cases, in view of the fine distinction, to determine when moneyed capital may be said to have been merged into personal property or exempted by the statutes of some States from taxation.

Mr. Lacey also pointed out a number of other ambiguous terms and phrases in the statutes, difficult of interpretation, and suggested legislation to make their meaning clear and definite.

In connection with the liabilities of the active officers of the banks Mr. Lacey recommended that they be excluded from incurring liabilities to the association with which they are connected for any amount, and that the directors of the bank be limited in their direct and indirect liabilities to an amount not exceeding twenty per cent. of the paid-in capital of the association. He was of the opinion that the publication of the liabilities of officers and directors in the aggregate would afford a valuable safeguard against the excessive use of the funds of the association by those who were entrusted with them.

There was only one amendment to the banking laws passed during Mr. Lacey's term of office, and that was the Act of July 14, 1890, requiring all deposits of lawful money made by the banks with the Treasurer of the United States for the redemption and retirement of their circulation to be covered into the Treasury as a miscellaneous receipt, instead of being segregated as was required before the passage of this Act. This provision of law, however, does not apply to deposits received by the Treasurer for the five per cent. redemption fund.

A. BARTON HEPBURN Comptroller of the Currency, 1892 1893

A. BARTON HEPBURN Comptroller of the Currency, 1892-1893.