The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1880-12-17
Ghe QmteIliqetrter,


Banks and the Rate Of Interest.
The Controller OF the Currency, in his
very valuable report for the current year,
deyo,es considerable space to the facts al
iecting the rate Of interest in this country.
He calls attention 10 the fact that the large
amount OF coin and currency which was
drained from New York during the au'
tumn Of last year, to meet the unusual re-
quiraments OF the purchase OF the crops,
did not, as had previously been the case,
return to this centre by the opening or be-
fore the middle OF winter. This pheno'
menon was regarded as wholly exception
al, but ithas been to considerable extent
repeated this year. Mr.. Knox explains 1t
by statement that "a large portion OF
the svails OF produce has been retained
either for the liquidation Of debts, for en-
ployment in trade and commerce at home,
or in the many new and extensive enter
prises for which the West is distinguished,
where there would appear to be no limit
Tor the safe and profitable employment Of
capital" IT., ...,,,, ,o,,,
! to indicate new and greater means oil en-
ployiug capital in section OF country
from which capital, in the form OF cur.
rency, has, ordinarily, tended strongly TO
return eastward, there has been no lack oil
available funds in the principal Eastern
markets, or in other parts OF the country.
The rates at which money could be Dor
rowed have been in all sections below the
limit fixed by statute. In New York,
money ut call upon frst.class collaterals
has been for months at from 2 TO 8 per
cent. Commercial paper has been at from
4 per cent to s 8 per cent, and the average
has been nearer the lower than the higher
figures. In Philadelphia, Baltimore
and Boston the rate has been
about the game, and in the first
named city often lower. In ten West.
ern cities mentioned by the Controller,
the rate has been TO marked degree
lower than has been known in q long time.
Thus, II has been ia Chicago from b per
cent to per cent; in Milwaukee, 9 to s.;
in Cleveland, 6 to s; in San Francisco, s,
while Il is not until we reach st. Paul, 60
ing westward, that we find rate exceed.
ing s per cent. In that city the rate has
been from to 10; in Omaha, 10; In Dem
yer, 10 to Is; in California, outside Of San
Francisco from to IL. In the South the
rate has ranged from 4 per cent and per
cent in New Orleans, to per cent IN
Richmond and Charleston, and 10 per
cent In Atlanta. "The borrowing power
Of the Government" adds the Controller,
''has been at 8! per cent, and that OF
many Of the leading States and cities at A
per cent"
Even at these rates the banks have
found difficulty in placing their available
funds, and as matter OF fact have loaned
smaller proportion Of them than has
been usual in the past. From 1870 to
1873, the loans OF the New York city
banks exceeded their net deposits. In
1873, September IL. the loans were $780,
200 COO, the net deposits SIZE, 700, 600
From that time the net deposits have 10.
creased more rapidly than the loans. On
October |, this year, the former were
S26S, 100 900, the latter only 1888 500, 900,
In other reserve cities" the loans have
continued to exceed the deposits, but the
excess has steadily diminished. II to the
deposits we add the capital and surplus Of
the banks throughout the country, we
find that OF this total the banks in 1873
loaned 70 per cent, while in 1879 they
loaned only IS per cent, and on October
|, this year, G9 8 per cent.
In connection with this series OF facts
bearing on the rate at which loans have
been made, and the extent OF loans, the
Controller gives tables showing the in.
crease In the currency OF the country since
the date OF resumption. At that time,
January !, 1879. tina total amount OF cur.
rency, estimating, in part, the gold and sill
YER, was s., 055. 356,6l9. tits now 81 ,30?,.
70S, $50, an inorease-ef % per cent. OF
this increase, that OF bank.notcs has been
800 042, 433; that OF gold has been $780,
sol, 904, and OF silver s5l ,607 ,424. BY a
series OF calculations, which 1t il not nee.
essary to examine here in detail, the Con.
troller shows that of the gross increase In
the currency OF S247, AL 1851 in 90 months,
only So, 1877 AGO remained either in the
Treasury or the banks, while SlO5. ga ,40l
"has been disbursed among the people
since the date OF resumption"
The condition Of the banks during this
period has, in one important regard, de-
CldSuIy lupIUNeus Luci kOiu IeaclNet
which on the lst OF January, 1870. had
reached but s35 ,O39, POI, was on the lst Of
November SlO2 s5l 1882. And the Controll-
or remarks with satisfaction that the
amount OF gold coin now held ia but
twenty-five millions less than the entire
reserve required" In some other regards
their situation is not so satisfactory. The
capital and surplus OF all the banks on
October 9. 1874, was S622, 500. 600; on DC.
tober |, 1880, this sum has fallen TO S57S,.
100 600. Loans, on the other hand, which
were S054 400 900 at the first named date,
and fell to $SS4, 600, 600 in 1878. have sd.
vanced in the last two years to 81 OIL ,000,-
900. The ratio OF cash to net deposits,
which was 20 per cent in 1874, has fallen
to II 0 per cent in 1880. We do not re-
gard these changes az Indicating any seri.
GUS mistakes in the management OF our
banking system, but they unquestionsbly
point 10 the direction In which mistakes
are liable to occur. The Controller him.
relf points this out, with directness TO
which his position oil authority gives spe.
cial emphasis: when the rates Of inter-
est are low there Ia danger that bank man-
ayers, in their desire to use their available
means, may be induced to loan upon secu-
rites which are not OF the best character,
and thus IN the end diminish rather than
increase their earnings"
agnve Your Harp Keen IL Beautiful.