New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-12
Nc more or ess involved in the same practice this dis

p wSsu the late panic commenced the 90 banks com
posing che NewYork Clearing house were indep,eu v
about OoO0O0) of deposits. or TINS aulouht enIao
sututions psying'ntcrest 10 ther country prs az
similar Character owed about siOOoOo that is TO say
IL institutions held ouehaf the aSgregate uepos' anu
the other l their associates, the other half Inc pro
poronate reserve OF notes In tha assocateu
banks also greatly IN iavor OF ne iatter , ,on
money can least bear TO amount OF idle Ihe
active demand rst came as ii usually comes LOT tnaa
nortion of deposits due 10 country DankS VINO, III
addition 10 their annual necessities had been disturbed
by failures Of s SN t S nsrr Sse DEPOSITS
10 great extent loaned upon stocks and bonds IN wall
SH &ere there earning more than the paid for
securing them. and were available as promlsea. Du.i
of deposits from the hanks made the eau from every
direction simultaneous and closed every sOnr6e ' ROM
rowcr upon stocks were deprived both OF their iacles
az borrowing and OF all power TO sell their securities
The necessary result occurred. Banks which found
themselves in this dilemma had no alternative nut
toanagrat,on rapid and violent that every con
alteration fraerna sympathy, selipreseryatOn ana
lion; ana The majority who had for long years
Quoted their bushes. uIon sound principles ana VINO
drawn from them by their associates, by practices
against which they had continually protested instantly
Inand who had done much towards producing
HE calamity. Making common cause. The weak with
the strong. 10 avert n universal catastrophe
An expct'eut found by which tho stronger banks
lied the pesse by gathering In THEN resources and
placing them 40 the disposal OF the weaker woo we've
thus furnished with means 10 meet the demands OF ter
dep0,or and to save themselves from puone eSposuT
and thci- dealers city and country from disaster ana
rulng Meanwhile the public confidence in institutions
had become greatly impaired thl tue ega Siosi
tetnber to $4,000 tho 14th Oc,ober-an amount Oh
ready money never before pad our IN Is h s s:
Interior banks whose ready means IN nu ni ns;aSd
been merely nominal, Dut whoso rSsc .,t nayinS
6e"ES in The pfcipa cos were under the necessity OF
calling back their deposits IN ms'uu,n nGsSl ted
required and to tnese inc Assoclntel bnkS wele
70 respond Is well TO the demands oil tlmLd dealers az
hOnt. tain +ls sim TO congratulate the
associated banks upon the liberal ana excellent spirit IN
which this crisis has been met aud upon the napPs es
the au with them. the country at large IL Is not TOO
in"niHSmsly encountered. the results must have been
more disastrous and widespread than any that nave
occurred dugi9g the present gencrdtlOn
While lhe banks have intelhgeny recognzed the er
OF their associates by whlsn tne la'S Gnu
p.icatiVns aggravated ana tne eolnunity s Il
porled there h.s been no disposition whatever 70 dea
IN harsh rclgoaches On the contrary the mssnltude OF
the deeply fot ana the utnlUst oGu oens pre-
walls an desire and unanimous determination
an 10 rrorgauize the Clearinghouse upon basis OF
mutual support and uniformity OF business
pereBce has again demonstrated the fact that
one npon the other in times Of peril well in the
truss Wi en- the large operutOhs the Clearinghouse
daily impose, and that the entire b0dy Inevitably
Sic ,nen5er No institution, therefore, has
moral Sht to conduct its affairs with the public
to introduce private Of dealing With its customers
which are III conflict with the best interests of ALL Bank
officers have right TO DO sharp personal eompeniors
for public patronage nor merely aoorrrs or dividends
n
Important sense trustees whole community, and
pu1c administrators OF great interests which forbid
tho!east departure rOn principles Whon long experl-
with these general considerations your Committee
Proceed to the practical questions submitted to
Them viz. " What reforms required in the opera
Of San @ each az SeT saS 9 R%pd s t. amd
most prominent, they recommend that the banks en-
posts. whether directly or Indirectly.
THE RESERVE.
The requirement ola illegal reserve" is now engaging
special public attention. and much impotence is
pressed a. the law which cOmpels banks 10 hold def
nitorato Of legal tender notes to Liabilities The prac-
tc, dinicul,y consists in attaching rigid and uAexi
bic rule OF law 20 mobile fund, whicn Is held for the
therefore. IN its very nature variable Quantity II Is
Impossible clearly 10 PreseT,oe 10y sStIte Sne Glrcu
should he increased or diminished. There seems an IN
inast he always Kept which was created on purpose to
be used or that bank Ues who , SSTs SpSS ms re-
false 10 tie oath which he takes 10 obey
Tnander cannot be definitely instructed whom he
may employ his reserve force is not regarded as
should be abandoned, or be reduced IN number or
efficiency SO long as bang de6t are SUBJECT b 10 c3sn
posed assumed. Of Sseping sufficient cash In hand to
"iTsys be remembsred that IN the absence OF any
important central Institution, such exists in other
vuIer,ial nations the Associated Banks are the last
I.sur N tai. country, times Of financial extremity
and upon their staby and sound conduct inc national
prosperity treaty. depends. IN CANNING Tor thsn
.net IL taAns ialtAiu care OF the sGuye CAPITAL
which they intrustcd tuey render
iull ana equitable compensation Tor IT'S proper
Us. Committee point 70 The consequent and para
Ont duty the banks TO hold such proportion Of that
fund in actual pos cash the EXTREMIST needs
may demand. 1t been suggested that the federal
principle which our association has applied TO banklng
through OF loan certificates" IN two important
crises might h. used effectively IN regular business by
keeping two separate accounts viz: Cash and Bank
Credit" each payable In kind 10 avoid run" upon
banks times OF pauic and much speculative study
throughout tbs world given to the question how the
idea OF clearing as used through banks, may be IN.
definitely extended effect the smaller exchanges OF
the community. 50 as to dispense III great measure
with largo reserves OF ready money But IN Tne present
Of economic soence, and especially in TINS Inn
pOrtant exseDey, yonL committee recommend tnat we
accept the teachings OF practicable Xperence ana pursue
che well beaten track which trade and commerce uni
versslly recognize -,
that the volume OF reserve should be in the proper
ton OF onefourth TO onetard the dlrect aOtles OF
bank and whenever II Is there found recedlng from TINS
restrictive measures are taken to tepenish IT,
Our own association IN 1872, estaDiishea a minimum
ratio 81 20 per cent III COM whch was lOr tne ine care
fuy Observed and again. In 1880 increased this midi
OF the currency increases the difficulty Inherent in this
subject The law permits te reserve 70 CONSIST OI com
rational banks, which IN legal payments are
serve" ore troubled by species OF money when is
above, ana by another which Is below the standard
present anomalous condition, that the money OF the
world, which freely coming into the country from
legitimate commerce, eahho 20 aosor1e9 i.'o our NJ
Ing system, but Is necessarily repeIed as cause OF
serious embarrassment Ihe opinion that has largely
prevailed the business Of this country is
conducted upon basis OF rredeemable paper that
therefore there be no suspension of payments has
been Ell ctualy dspeled and the contrary is estab
tied volume is subject 20 sudden ana special dan
exrerIence has shown now rapidly thirty -four millions
may drawn IOm our associated instlutlons and Tor
10 connfry banks reserve liked by law, is is
per cent OF liabilities and threehfths or II may consist
q deposits in banks IN sae lr cues So i n hanks
IN the City Of York, where again t is subject 10