St. Landry democrat., 1891-03-28
How 1t Is Made Up.
MANNER OF PREPARING TEE Bank STATE
MENT

How 1t Is Made Up.
MANNER OF PREPARING TIE BANK STATE
MENT
The weekly statement of the condition
of the banks composing the New York
Clearing House association is justly re-
garded IS one of the most important items
of financial news. IN fact, it bears The
same relation to the American MONEY mar
ket and # as indicative of its tendencies
and as influential in shaping those EN-
denotes as the weekly statement OF the
Bank of England is with respect to the
London money market. This statement,
and il particular the items which repre-,
sent the comparative conoiIiCn OF the re-
serves held bv the great financial instltu-
tions of New York, is one of the factors
which pot. nifty Influence the course of
specu a,ion and govern the rates of in
tsrest in the money market. Its appear
aEce every week is awaited with interest,
not only in Wall street itself, but through
out the country al large. in fact it il
sometimes asserted that the Importance At
tached to the bank statement is. N some
respects, exaggerated 1t has often been
poiuted out in these columns that MS the
figures themselves are the averages for
week of the items of loans, deposits,
specie, legal tenders and circulation, there
is constantly room for deviation from the
exact condition of the banks, and that the
true statistical value of the exhibition Is
to be found i'll the general direction of the
items represented for q series of weeks, or
in mparison with the position of the
banks at former periods. The details of
the statement aud the manner in which it
is prepared are however, not generally
understood Even the W. ali street ublic,
which is famil ar with the report rs fac
tor in the general financial and speculative
situation, is apt to forget some OF the HOS:
important points in connection with it
In the first place the bank statement, as
has often been explained in the columns
of Bradstreet's, is purely voluntary tx
hibition presented by the banks, through
the clearing house, for the information Oh
the public. There is no law, either
national or State, requiring its publication.
The national banks, are of course required
by the laws of the United Ststes to make
reports of their condition when called
upon by the comptroller of the currency.
The State banks likewise furnished SINH
lar exhibitions through the agency of the
superintendent OF banking OF tue State of
New York. The bank statement which
appears every Saturday is provided for
solely by section Of the constitution of
the New York Clearing House association.
This section reads: Every bank, mem Ger
of the Clearing House association, shall
furnish weekly statement of its cond ltioD
to the manager fOI publication, showing
the average amount of-tirst. loans ADD
discounts; second, specie; third legal ten
der notes; fourth, Giro llation; fifth, de-
posts" This section was adopted in the
year 1857. immediately after the great
panic of that year, and WAS the result of
the desire on the part of the banks to give
the public an assurance as to the condition
of the institutions on whose soundness The
prosperity and safety of: the business
world depended. t.@S #AE
At the outset the statement made it's ap-
pearap celin the early part of the week. La er
on the time of its appearance was transfer
red to Saturday, and the figures themselves
close with the transactions of each Friday.
The process of preparing the bank state
ment is simple enough. Each of the sixty
odd banks, members of the clearing house.
prepare in readiness for Saturday morning
q statement of the average for six working
days ending with Friday hight of the it, ms
standing on their books, as called tor by
the clearing house association. For in
stance, the aggregate of the items of loans
ut the close of business tor each day do
ring the week is divided bv the number of
working days, and the result, the average
for the week, furnishes the figures which
on Saturday morning are forwarded to the
manager of the clearing house These
figures from each. bank usually reach the
clearing house aoout. or soon after, 10
o'clock on Saturday morning. They are
Immediately entered, by the expert &C
coun,ants in the service of the clearing
house, upon the sheets containing each
banks title, aod long columns ara added
up for the aggregates. The calculation to
which the most importance is attached is
naturally that referring to the relations OF
the average cash holdings to what are
termed tine reserve requirements. 1t is
obtained by adding together the items OF
specie and legal tenders, the average cash
holdings for the week. Under the national
banking act the natl ,nal banks, as is well
known, are required to retain cash, that is
gold or legal tenders, to the amount of %
per cent OF their aggregate deposits. TWEEN
ty-fve per cent, or one-fourth of the av-
ersge deposits shown by the statement,
therefore, constitute the reserve require
ments, and the extent to which the total
average holdings OF gold and legal tenders
rise above or fall below this required re-
serve constitutes the surplus or deficiency
in reserve upon which Wall street bases so
many of its calculations. 1t is almost
needless to reiterate what has so often be
fore been said, that the surplus require
ment applies only to the national banks,
and not 60 the State banks, which form
such an important element in the clearing
house; their reserve being within the dis
cretion of the state banking department
Ii is often the case that while certain of
the national banks hold an smpunt greatly
in excess of the legal reserve requirement,
some of the State banks, as they are en-
titled to do under the law, will fall more
or less below the 25 par cent limit. This,
however, is one of those Inconsistencies in
the statement which it is impossible to
avoid under present conditions. Ii is Gus
tomary to furnish the detailed statement
showing the averages of each bank by
name, which statement is usually printed
in the papers and receives attention, al
though it does not 20 directly influence
the money or stock markets as the state
ment of aggregates oftall the banks. The
suspension OF the publication of the de,
tailed statement, which has occurred since