RATIO OF LOANS TO DEPOSITS 1908, COMPARED WITH 1917.

On February 14, 1908, total deposits of national banks were reported at 5,924 million dollars; loans and discounts at 4,422 million dollars; proportion of loans and discounts to deposits, 74.65 per cent.

On November 20, 1917, loans and discounts amounted to 9,535 million dollars; total deposits to 14,798 million dollars; and the proportion of loans and discounts to total deposits was only 64.43 per cent.

NEW CHARTERS AND LIQUIDATIONS.

During the 12 months ending October 31, 1917, 326 applications were received for charters for new national banks, with a proposed capital of $20,715,000, as compared with 223 applications received during the 12 months ending October 31, 1916, with capital of $11,285,000.

From October 31, 1916, to October 31, 1917, 176 charters were granted, with capital aggregating $11,590,000. This compares with 122 charters granted in the previous year, with capital of $6,630,000. During the past year 30 applications for charters were refused. Sixteen charters were refused in the year previous.

During the year ending October 31, 1917, 80 national banks went into voluntary liquidation (exclusive of those consolidating with other national banks), against 95 banks in the previous year.

EARNINGS OF NATIONAL BANKS, GROSS AND NET, EXCEED ALL PRE

VIOUS YEARS.

National banks are required now to submit to this office statements showing in detail their earnings and expenses semiannually, as of December 31 and June 30.

The earnings of the national banks of the country for the 12 months ending June 30, 1917, both gross and net, far exceeded the best earnings ever previously reported. Their gross earnings amounted to $667,406,000, an increase of $76,764,000, or 13 per cent, over the previous year; while net earnings for the same period aggregated $191,321,000, an increase over the preceding year of $36,778,000, or 23 per cent.

During this past fiscal year the national banks earned 17.96 per cent on their capital stock-the highest percentage ever reported. 13034° -FI 1917- - 35

This compares with 14.76 per cent the year before. The amount distributed in dividends to stockholders was $125,538,000, an increase of $10,813,000, or an average of 11.61 per cent on capital stock.

LARGE INCREASE IN NUMBER OF NATIONAL-BANK DEPOSITORS.

On March 5, 1917, the number of national-bank depositors was reported at 15,738,000, an increase, as compared with May 1, 1916, of 1,450,000, and an increase, as compared with June 30, 1910, of 8,048,000 deposit accounts.

NATIONAL BANK FAILURES.

During the 12 months ending October 31, 1917, 7 national banks, with capital of $1,230,000, failed and were placed in charge of receivers. In the year preceding there were 13 national-bank failures with aggregate capital of $805,000.

HEAVY SHRINKAGE IN PROPORTION OF LOSSES TO DEPOSITORS.

Attention is invited to tabulated statements on pages 70 to 76, giving details concerning all national banks which failed during the past 36 years, or since the year 1881. These tables show that the proportion of losses to the deposits of failed banks for the past three years has averaged about three one-thousandths of one per cent of total deposits, while similar losses for the 33 years prior to 1914 averaged annually twenty-eight one-thousandths of one per cent of the total deposits in all national banks.

This great reduction in the percentage of losses of depositors is the result, in a large measure, of the greater thoroughness in examinations, and the more rigid enforcement of the provisions of the nationalbank act, intended for the protection alike of the depositors and shareholders, and of the public.

These figures show that if in the future bank failures and losses to depositors can be kept down to the basis of the past three years an assessment of only $35 per million of deposits would be sufficient to insure the payment in full of all depositors of all national banks against losses from bank failures. The total losses to national-bank depositors from bank failures during the past 36 years amount, approximately, to $36,600,000, an average loss in this 36-year period of slightly more than $1,000,000 per annum.

During these 36 years there were three States in which there was not a single national-bank failure. These States are Maine, Delaware, and Utah.

It is also gratifying to report that in the same period there were 24 reserve cities in which no national bank failed. These were the cities of Albany, Washington, Richmond, Charleston, Atlanta, Savannah, Birmingham, Galveston, Houston, Waco, Chattanooga, Cleveland, Milwaukee, St. Paul, Cedar Rapids, Des Moines, St. Joseph, Omaha, Muskogee, Oklahoma City, Tulsa, Los Angeles, Salt Lake City, and Ogden.

NATIONAL-BANK NOTES AND FEDERAL RESERVE NOTES.

During the 12 months ending October 31, 1917, there were issued through the office of the Comptroller of the Currency national-bank notes and Federal reserve notes aggregating $1,301,970,430, of which $325,570,430 were national-bank notes and $976,400,000 were Federal reserve notes.

There were redeemed national-bank notes and Federal reserve notes aggregating $464,410,082.50, of which $335,679,477.50 were national-bank notes and $128,730,605 were Federal reserve notes.

During the year the amount of Federal reserve notes outstanding increased $689,746,800. This is due chiefly to the issuance of Federal reserve notes against the deposit of gold certificates or gold with the Federal reserve agents, the amount of gold and gold certificates so held in the Federal reserve banks on October 31, 1917, being approximately $600,000,000.

In the 12 months ending October 31, 1917, the amount of nationalbank notes redeemed or destroyed in excess of the amount issued for the same period was $10,109,047.50.

The Comptroller of the Currency had on hand on October 31 1917, of Federal reserve notes and national-bank notes an aggregate of $996,028,330, of which $341,088,330 were national-bank notes and $654,940,000 were Federal reserve notes.

The amount of national-bank notes and Federal reserve notes outstanding October 31, 1917, was $1,644,520,095, of which $716,276,375 were national-bank notes and $928,243,720 were Federal reserve notes.

GOVERNMENT LOANS AND THE NATIONAL BANKS.

To provide funds for expenditures related to the war, the Congress has, since the declaration of the war with Germany, authorized the Secretary of the Treasury to sell United States Government bonds from time to time as necessity may demand, up to an aggregate of $12,538,945,460.

The national banks of the country have performed invaluable services in connection with the flotation of these "Liberty bonds," and they have given their services not only without commission or other remuneration, but in many cases at a considerable expense to themselves in the shape of advertising, circulars, postage, and the time and effort of officers and other employees.

The first issue of "Liberty bonds" was offered on May 14, 1917, the books closing on June 15, 1917. The amount offered was $2,000,000,000, and the rate of interest 3 per cent. Purchasers, however, were given the right to convert these bonds dollar for dollar into the bonds of future issues, should the latter be issued at a rate of interest exceeding 3 per cent.

This was by far the largest loan ever offered up to that time by this Government. Subscriptions were payable, 2 per cent on application, 18 per cent on June 28, 20 per cent on July 30, 30 per cent on August 15, and 30 per cent on August 30.

At the closing of the books June 15 it was ascertained that subscriptions had aggregated $3,035,000,000, and had come from approximately four million subscribers.

The records show that of the $3,035,000,000 of subscriptions that were sent in, $1,700,000,000, or 56 per cent of the total subscriptions, were made by or through the national banks of the country, and of the $2,000,000,000 of bonds which were alloted to subscribers, $1,088,000,000, or 54 per cent, were allotted to those whose subscriptions were sent in through the national banks.

The 12 Federal reserve banks cooperated closely with the Treasury Department in securing subscriptions and in the collection and delivery to purchasers of the "Liberty bonds." To facilitate these huge transactions temporary deposits of the proceeds of the bonds. as collected were made by the Secretary of the Treasury with subscribing banks, with the understanding that the banks could hold such deposits until they might be needed by the Treasury. These deposits were therefore held only temporarily.

The settlements were completed for the entire two billion dollars of bonds without producing strain or disturbance in the money markets, and by September 1st the proceeds of practically the whole issue had been paid to the Government by the subscribers.

Notwithstanding the large withdrawals of funds from national banks to provide for these payments, the reports to the Comptroller of the Currency show that at the time of the call of September 11, 1917, the deposits of the national banks were actually 154 million dollars greater than on May 1, 1917, before the "Liberty bonds" were offered.

This loan, to that time unprecedented in size in this country, was placed without involving the tying up or congestion of any great amount of the banks' own funds, for the reports submitted to this office by the national banks under date of July 28, one month after the allotment was made, showed that the national banks owned at that time only $88,000,000 of the 3 per cent Liberty bonds. Of this amount $7,000,000 were held by the national banks of the central reserve cities, $17,000,000 by the national banks in other reserve cities, and $64,000,000 by other national banks.

There were 73 national banks, however, which according to their sworn reports to this office, failed to send in any subscriptions for Liberty bonds either for themselves or their customers. A list of these banks is given on page 152; and on the other hand on page 145 will also be found a list, by States, of those national banks which subscribed on their own account for the first Liberty loan an amount not less than 5 per cent of their total resources.

To provide for advances to our allies, as well as to secure funds for our own needs, the Secretary of the Treasury offered to public subscription early in October the "Second Liberty loan" of three billion dollars of 4 per cent 10-25 year bonds, subscriptions for which closed on October 29, 1917.

In announcing the offering, the Secretary of the Treasury stated that if the subscriptions received should exceed three billion dollars he would accept only one-half of the additional amount which might be subscribed for in excess of three billion dollars. Under the terms of subscription 2 per cent was payable October 27; 18 per cent, November 15; 40 per cent, December 15; and 40 per cent, January 15, 1918.

Upon the closing of the books on October 29 it was found that the subscriptions received aggregated the vast sum of $4,617,532,200,

and that the applications had come from more than nine million subscribers. The amount allotted to subscribers on account of this loan was $3,808,766,150.

The records show that although the amount payable under the subscription agreements by December 1, 1917, aggregated but $762,000,000, yet the amount actually paid into the Treasury to that date was $2,813,000,000.

These excellent results were also accomplished through the cooperation of the Treasury Department, the twelve Federal reserve banks, and the other banks of the country, without a jar, or the least disturbance to the money markets.

NATIONAL BANKS AND THE SECOND LIBERTY LOAN.

The compilation of the figures concerning the part taken by the national banks in the negotiation of the second Liberty Loan has not yet been completed, but a preliminary report just prepared gives the following interesting facts:

Of the $4,617,532,200 subscribed to the second Liberty Loan, subscriptions for $2,446,000,000 were made through the national banks of the country, through whom approximately 3,500,000 subscribers made their applications. Of the total $3,808,766,150 allotted in the second Liberty Loan, approximately $2,000,000,000 were allotted to the national banks and their customers on subscriptions received through these banks.

Subscriptions made by the national banks for their own account approximated $430,000,000, on which they were allotted approximately $348,000,000, their allotment amounting to approximately 1 per cent of the total resources of the national banks.

On November 20, 1917, the amount of money which the national banks reported they were loaning on Liberty 3 per cent bonds was only $48,000,000, approximately. The amount of Liberty 4 per cent bonds upon which the banks had agreed to advance funds if desired by their customers was approximately $294,000,000.

These figures therefore show that the amount of Liberty 4 per cent bonds allotted to the national banks for their own account plus the amount of Liberty 4 per cent bonds upon which they had agreed to loan was less than 3 per cent of their total resources.

The total subscriptions to the Liberty 4 per cent bonds sent in through the national banks for themselves and customers amounted to approximately 13.33 per cent of their total resources.

LEGISLATION RECOMMENDED.

The efforts of the Comptroller's Office in the past three years have brought about the reformation and elimination of many dangerous and unlawful practices by national banks which in the past have frequently brought ruin or serious losses; but to cure evils which yet exist and which until they are removed menace alike depositors and shareholders it will be necessary for the Congress to pass certain new laws and to amend some existing.

In my annual report a year ago I very earnestly asked for certain remedial legislation, and again I respectfully repeat those recom