Barton County democrat. [volume] (Great Bend, Kan.) 1885-1915, 1891-01-22

city of money" while in truth, the
trouble comes entirely from an arbi-
trary and needless restraint upon the
leading function of the banks. The
operation of this reserve law has con-
trlbuted more than all ether causes tO
the panics and the periodic congestiOns
that have made the oscillations of the
New York market byword and mar
vel the world over.
1t is not to be inferred FROM shis that
in any measure underestimate the
necessity of maintaining ample cash
reserves: the only question is whether
they shall be regulated by cast iron
law or by each bank for itself; whether
they shall be used when the emergeEcy
arises for which they are provided. Oh
be kept idle in time OF urgency, to the
injury alike of the banks and the pub
lie. Herein, as conceive, lies one serie
Gus source of the needless aggrava'
tion of crises, which oughb to be rem
edied.
In various other directions, che ma
tiOnal banks are placed under legal
restrictions which impair their ability
to take care Of themselves and their
customers in periods of disturbance.
The banks are allowed to issue circula-
ting notes not only upon deposit of
bonds the market value of which eX-
ceeds by 15 to 80 per cent, the amount
of notes issued. whereas the notes
could be made absolutely secure by
simply making them first lien upon all
assets of the bank, as we'll as upon che
duplicate capital SOr which Che stock
holders are responsible in the event Of
the bank Failure; iB which event, the
bonds now deposited against cirula-
ton could be converted into Iaobile
and always readily available capital.
The form Of guasantee hese suggested
has broabsg precedent ia Soseign
banking systems than any otheg.
Ehe banks are Systematically en-
haYrassed also by the clause YOrbid3ing
their lending a SUM exceeding one
tenth che a0ouat ox their capital to AM
one borroweg. Conservative as shis g@-
straint may seem in theory, ses, in such
large operations as have to he under
saken by the New York banks is is
found 60 be very decidedly otherwise III
practice. 1t frequently prevents bank
from accepting large sOund loans and
compels it to divide UP its advances
among seveSal smaller and WeakeC bog
rowers. in times Of disturbed credit
it ofteal prevents a good customer gEoal
getting all the Accommodations at his
bank that he needs, and sOg the Semain-
der throws him upon the tender Enef-
cies OF others to whom his standing is
unknown. Such restriction is spec
tally hostile to the interests os a city at
which centre the larger transactions of
the nation. More and more every yeas
capital is concentrating into larger
masses; and ite owners require corres-
pondinglv increasing accommodation
fSom the banks. 3es, owing 60 this 30
pes cent. limitation, the lending ability
OF the national banks becomes increas-
ingly inadequate 20 the borrowing see
quirerAenss Of large interests Yhe
readiness of the Associated Banks 80
ISSUE Clearing Mouse ceyti6cates' ip
periods of danges 10 Yeyg largely ek-
planned by the eact that, ;ss each bank
is h5 law largely disqualified gog deaf
ing with important applications foY ad.
vances, they find ia necessary Co cop.
solidate Sheir lending poWees as q
means of resisting the progress Of de
moralization and relieving che argent
wants of borrowers. Sn these ana ia
other respects TIE siaidisy os the nation,
al banking system has becone respon.
sible for seyioas iaade0nacy og ou,
banking arrangements Go satisfy oVs
| financial necessities.
The foregoing s.re @n1s some og the
many possible alterations of che igFeg
ularities in the working of our inancia'
system which are seSiously 9et~rdine
the progress Of the nation Yhey age
however, all to which the necessary
limits OF my space permit reference.