The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-01-28

! ing 10 admit. r or many years
q system of banking was
popular in this State which did
great deal of harm, not only to banking
institutions but TO business generally 1t
was known as the "overdraft" system.
Banks encouraged it because it yielded
higher rate Of interest To the institutions
than customers were willing to pay on
promissorV notes ayable at a fixed date.
But when stringent monetary market
appeared The bankers were at their wits
ends TO regulate their finances accurately
owing TO the peTnici0us habit of the lover
draft system, and during the early eX-
perience of the financial cyclone which
prevailed all over the world the bankers
or California wisely resolved to do away
with it. aud the adoption of a sound bank
ing policy did much 10 avert what might
otherwise have been disaster to insttu-
tons in good standing in the financial
world in this State.
The new order OF things is called by
many a ''einch," because it compels the
borrower to give his promissory note, pay
able on a fixed day, instead Of drawing The
money from the bank as it is required.
In the true sense 1t is not so because
under the old system the rate for over
drafts was higher, and while it may be
incOnvenient to the business man to give
a promissory note when the occasion for
an advance presents itself it is safer for
the bank and the customers; besides, the
rate Of interest TO the borrower is shade
lower.
Aside from this. it PUTS the business Of
banking in much safer condition and en-
ahles the banker to calculate ahead lust
how he stands
1t is also good for the customers of the
bank, because it o6yiates the danger of
over-trading in times of keen competition
IN commercial circles.
No other city in the world withstood the
strlngency in money matters as did San
Francisco.
The banks, while not embarrassing their
customers beyond the doing away with the
over-draft habit which in reality helped
The banks to calculate on the future and
only inconvenience the customers in
slight degree, stood by the business men
and with one exception proved to the world
that California has institutions capable of
meeting all emergencies during season of
financial storm
Inc banks are IN sound condition, and
while they are not extending credit too
freely the channels Of legitimate business
are being supplied at reasonable rates OF
lHtoioot, thds IS, loF gOOu commercial
notes or accommodation paper at from to
per cent per annum interest.
Last year about $500, 900 sterling In Brit
ish gold were imported from Australia AMI
turned into double eagles at the San Fran
cisco Mint. This profitable transaction
was negotiated by an agency of a foreign
bank which, TO say the least, reflects some
what on the financial as,uteness of our
local bankers who have the same opportu-
mites to make profits that agencies for
foreign institutions have.
When exchange is low the Importation
Of British gold from tie Australian Colo
MES is profitable transaction to the San
Francisco banker and a saving to the Aus
tralians, who usually owe large amounts
to Great Britain.
Money is easier and the outlook for
lower rates of In terest is a feature which
should encourage those engaged in CON-
mercial pursuits.