five regular reports in each year, for any days, and in any form that may be prescribed by the Comptroller. These reports are always called for by him as at the close of business on some past day, and thas any preparation for them is rendered impossible; especially as the periods are always varied. For the past three years the dates have been :

1879 Jan. 1
1880 Feb. 21
1881 Mar. 11

April 4
April 23
May 6

June 14 Oct. 2
June 11
Oct.
1
June 30 Oct. 1

Dec. 12.
Dec. 31.

Of late years, with a view to the annual reports made to Congress on 1st December, the October bank report has always been made on the first working day of that month, but the other days are impossible to be foreseen. The accounts of every bank are also periodically examined by "bank examiners," appointed by the Comptroller, and invested with ample powers to examine into every detail of the affairs. The Comptroller also has power to call for special reports from, or order special examination of, any association at any time that he may deem it necessary to do so. It is worthy of note, at the present time, that all the reports and declarations required by these Acts are to be attested by oath; and, in order to afford an opportunity for the contradiction of any false statement, it is made a special point that these reports shall be published in a local newspaper. From all these sources the Comptroller has ample opportunity not only to ascertain the condition of every bank organised under the Acts, but also to tabulate the returns so as to be most useful for comparison. As a result, his annual reports contain most minute details of the working of the Acts, and are accompanied by numerous tables, in which the accounts of the banks are presented in a variety of ways, and their progress contrasted with that of former years, or the experience of banks in one part of the Union with those in other parts. It would be an easy matter to give you these tables, but I think that most of them would be found to have chiefly a local value. I have therefore selected figures illustrating the position and progress of the system generally, and have recast them into a few new tables.*

The reports, too, contain the balance-sheets of all the National Banks in existence. The efforts that have been made in this country to secure the publication of uniform returns will cause some interest to be attached to their arrangements, and I give below the balancesheet that has been adopted :

I may be permitted here to express my obligations to the present Comptroller of the Currency, the Hon. John Jay Knox, for his kind and valuable assistance in explaining to me many points of the system under his control.

The principle of Government audit is one that does not find much favour here, and the fact that the officials of two National Banks, which failed during 1881, had contrived to evade the vigilance of the examiners has been commented on. It must be admitted that in one case the defaulter used an artifice of extraordinary boldness to prevent discovery, and was remarkably favoured by chance. Still, this is what always occurs in one shape or another, and the great defect of government audit is that it leads people to rely upon it, instead of using their own judgment as to the conduct of an institution, This has been experienced in the case of the National Banks, and the Comptroller has frequently to reply to such complaints. We must remember, however, that in the United States they have had to deal with a population that we might almost term migratory, and, therefore, it is most probable that if the audit had depended on the vigilance of the shareholders it would have been altogether insufficient. No doubt can be entertained that the very stringent regulations of the Acts have prevented very many irregularities.

Very heavy penalties are incurred by any infringement or neglect of the law. For the banks in their corporate capacity, the most important is the power vested in the Comptroller to appoint a receiver, and close the business. This may be done, when any bank

(R.S. 5191.) (R.S. 5201.) (R S. 5205.) (R.S. 5208.) (R.S. 5234.) (R.S. 5239.)

(R S. 6136.)

fails to make up its lawful money reserve after notice to do so; or neglects to sell within six months any of its own stock acquired in satisfaction of debts; or fails to make good any deficiency in its paid-up capital; or unlawfully certifies any cheque; or fails to pay on demand any of its own notes. Also, if the directors of any bank knowingly violate, or permit any of their officers to violate, any of the provisions of the law. In these last-named cases the association can only be dissolved after the fact of the violation of the law has been proved before a court, in a suit brought for that purpose by the Comptroller; and in such cases every director who assented to the act complained of is personally liable to make good any damages the stockholders may sustain.

Penalties of one hundred dollars per day are incurred by neglect to make any of the reports required by the law.

Severe penalties, both by fine and imprisonment, are inflicted on
the persons guilty of crimes or misdemeanors under these Acts.
The powers acquired by organisation under the National Bank
Acts are as follows:-

To adopt and use a corporate seal.

To have succession for a period of 20 years.

To make contracts.

To sue, and be sued, as fully as natural persons.

To elect and appoint directors and other officers.

To prescribe bye-laws for the regulation of the business.

To exercise all such incidental powers as are necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion; by loaning money on personal security; and by obtaining issuing, and circulating notes according to the provisions of the Act.

This last paragraph is of considerable importance as it has been judicially held to comprise all the business the banks can legally do; any other transactions being ultra vires.

The steps necessary to be taken to obtain these powers are exactly prescribed, and are comprised in the making of an Organisation Certificate (answering to our Articles of Association) which is registered by the Comptroller of the Currency who, after satisfying himself that the law has been complied with, issues an authority for the association to commence business.

The amount of capital subscribed must be regulated in part by the population of the town in which the business is to be situated :— R.S. 5138.) In any place not exceeding 6,000 inhabitants, the capital must be at least £10,000

5140.)

with from 6,000 to 50,000

£20,000 £40,000

At least one-half of the capital must be paid up before commencing business, and the remainder in monthly instalments of ten per cent.

The capital stock is always to be divided into shares of £20, and (R.S. 5139.) every shareholder is liable to a further like amount on each share. (R.S. 5151.) It is expressly provided that persons holding stock as executors, (R.S. 5152.) administrators, guardians, or trustees are liable only to the extent of the estates or funds in their hands. This is so directly contrary to our own law that we may be curious to see how it will be found to work. At present no difficulties have arisen under the clause; trusts are not numerous among the shareholders, nor, indeed, have failures been numerous among the banks.

The directors must be at least five in number; must all be citizens (R.S. 6145.) of the United States; and at least three-fourths of them resident in (R.S. 5146.) the immediate neighbourhood. Their stock qualification is fixed as

at least ten shares (£200).

Before commencing business each association must transfer and deliver to the Secretary of the Treasury United States bonds to the

extent of one third of its paid-up capital, but in no case less than (R.S. 5159.) £6,000. The interest on these bonds, and also upon such further amounts as are deposited to secure circulation, is receivable by the association under power of attorney granted by the Secretary.

Upon the deposits of bonds being made, the bank is entitled to (R.S. 5171.) receive from the Comptroller circulating notes to the extent of 90 per cent. of the par value of the bonds, if the current market value is not below par, in which case the notes granted are only to 90 per cent. of that value. Circulating notes may also be obtained in the same proportion against further deposits of bonds to the following extent :

To extent of 90 per cent. of capital if not exceeding £100,000.
To extent of 80 per cent.

To extent of 75 per cent.

To extent of 60 per cent.

£200,000. £600,000. if exceeding £600,000.

These restrictions as to the amount of circulation to be issued to the banks were not prompted by any prudential considerations as to their stability, but by the fact that the aggregate amount of national bank circulation was limited, and there was not enough for all. Although, in 1875, the aggregate limit was removed, the banks are still restricted in their circulation according to their capital. The Comptroller has recommended that all banks should be permitted to receive circulation to extent of 90 per cent. of their capital, but it does not seem at present likely that they would take up more if they had the power. Experience has shown that the banks having large capitals even now take less circulation than they are entitled to.

At the commencement of last year the total circulation the banks were entitled to call for was 78 millions sterling. Of this the banks having capitals not exceeding £100,000 had a right to 54 millions, and had taken 48 millions, or 88 per cent.; whilst those whose capitals exceeded £100,000 had taken only 16 millions out of 24 millions, a proportion of 66 per cent.

(R.S. 5172.)

The notes bear the signatures of the Treasurer of the United States, and of the Registrar; and also a promise to pay them on demand, which must be signed by the president and cashier of the association issuing them. They are legal tender in all parts of the (R.S. 5182.) United States in payment of taxes and all other government dues

except duties on imports; and also for all sums owing by the United States except interest on the public debt, and in redemption (R.S. 5196.) of the national currency. They are also legal tender for any debt or liability owing to any national bank. This latter provision applies to national bank notes issued by a bank since failed, which are still legal tender to any national bank in discharge of claims. although they cannot be called upon to pay them. A special clause (R.S. 5206.) forbids national banks to pay out such uncurrent notes, such as hold them must send them up to the Treasury for redemption. But the notes of any solvent national bank coming into the hands of any other national bank may be re-issued by them, or they may send them up to the Redemption Bureau, in sums of $1,000 or any multiple thereof. Here they are credited to account of the bank remitting them, and charged to the several banks by whom they were issued, the Treasury acting in fact as a sort of Clearing House. The national bank notes are of the denominations of—

$10 $20 $50 $100 $500
£4 £10 £20 £100

$1000 £200

$5 Say £1 £2 Formerly notes for $1, $2, and $3 were also issued, and one-sixth part of the circulation taken up by any national bank might be of such notes. But the Act of 1875 decreeing the resumption of specie payments on 1st January, 1879, provided, that after that date no such notes should be issued to national banks. There was, however, no considerable demand for them on their part, probably owing to the labour required to sign and handle them; and out of two hundred and twelve millions sterling of national bank notes issued during the existence of the system, less than eight millions have been in notes below five dollars.

Since the beginning of 1879 the one and two dollar national bank notes have been reduced by £1,173,500, whilst the legal tender notes of the same denominations have increased by £1,580,700.

The following table shows the amounts of national bank notes of each denomination issued from 1863 to 1st November, 1881; and also, by denominations, the amounts of national bank notes, and of legal tender notes,* outstanding on the latter date. In separate columns will be found the ratio of each class of note to the whole issue:

*The legal tenders are notes issued by the Government under the various Acts 1862-1878. In the latter year the maximum issue was fixed at $346,681,016, the amount then outstanding, and which has remained fully in circulation since that date. These notes are legal tender for all debts, public and private, except in payment of interest upon the Government debt, and of duties on imports.