$9,644,317, or 2 65-100 per cent. on the capital invested, represents the profits that the banks would receive over and above what could be obtained from the loan of the same amount of capital at the rate of interest named, provided that the whole amount of circulation received by the banks upon their bonds, less the redemption fund, could be kept loaned out by them continually throughout the year.
“In the above calculation no deduction is made for the costs of the redemption of the bank circulation, which lessens by so much the profits on circulation. Those costs were for the fiscal year ending June 30, 1877, $357,066. Another point that should be considered in the above estimate of their circulation is that the banks held their bonds at a premium, which appeared among their assets for a large amount. It was on December 28, 1877, the date of the last report of their condition, $8,834,639.”
The Comptroller states further that if the bonds of the banks necessary to secure their circulation were converted into 4 per cent. bonds, which will as much as possible be done, their profits on circulation will be 1 91-100 per cent. on the capital employed.
Thus it appears that the national banks are by no means the gold mines they were represented to be, especially considering that of late they have not been able to keep their whole circulation loaned out the year through, and that the losses charged off by all the national banks during the year ending September 1, 1876, were $19,719,026.42; during the following year, 1877, $19,933,587.99, and during the six months ending March 1, 1878, no less than $10,903,145.14, a total in two and a half years of $50,555,759.55. Now, it will appear natural to you that the ratio of earnings of the national banks to capital and surplus for the year 1877 was only 5 62-100 per cent., and this year it will not be greater. I am sure many of your
