The Kimball graphic. (Kimball, Brule County, Dakota [S.D.]) 1883-1905, 1897-01-09
Great Cash Reserve. in Banks.

Kansas City Stai.
There has never been a time in recent
history when the accumulations Of cash
in the banks OF the world have been
anywhere ear as great as at the pres
ent time. Prior to 1880 bankers consid-
cred themselves perfectly safe IL they
had so to 30 per cen of their deposits in
cash. Since that time the tendency has
been to hold upwards of so per cent.
This is true in England as well as in the
United States. The great Bank of Eng
land went along for years prior to 1890
with a reserve ranging between IS and
40 per cent, and no one thought for a
moment that the supply of cash was too
small for safety. The money market
vas easy" and the movement of a few
millions of gold from England to other
countries had very little effect toward
advancing interest rates. The Bank OF
England reserve now is So per cent, yet
there is a tight" money market in
England.
Kansas City bankers, during the ex-
citing times of the boom, did not think
cent, and for some years after the SUBJ
sidence Of the excitement and specula-
ton of that period no effort was made
to maintain greater reserves, and there
was no suggestion of distrust among
depositors. At the present time. how
ever. the reserves of the Kansas City
banks range from 40 to IS per cent, and
the average is over so per cent.
In New York the cash reserves are no
larger than in former times. That, per-
haps, Is due to the fact that interior
banks place a smaller proportion Of
their reserves on deposit in New York
than in former years. Everywhere else
in the country the cash holdings of the
banks are phenomenally large.
There are several reasons for this.
The most important is that the oppor-
tunities for quick and profitable turns
on borrowed money are limited. Bank
loans must necessarily be made to peo-
pie who can get a quick profit out of the
use of money. Any man who has a
scheme which will enable him to use
money for a few months probably can
get all the money he wants at the banks
today. The fact that not many such
chances for quick money making are to
be found at the present time Is the chief
eason why there Is a glut Of cash in
the banks. The second reason is that
large are doing business on
their own capital to 3 greater extent
than formerly and are not such big bor-
overs at the banks as they used to be.
A third reason is the greater feeling of
conservatism which prevails among the
best bankers. There have been 80 many
losses In recent years from mercantile
failures. and such a sensitive feeling
among depositors, that bankers are dis
posed to keep their well In
hand so as to meet whatever pressure
may come upon them.
This conservative spirit is plainly
shown in the action Of the Chicago
clearing house relative to the Illinois
National bank. Until recent years the
suspension Of a bank at a time when its
cash holdings amounted to 40 per CEN of
It's deposits would have seemed impos-
sible.
These great cash holdings of the
banks furnish the very best evidence
that the Industrial distemper of the
times is not due to a scarcity Of money,
but rather to the excessive competition
which has brought profits down to 4
minimum.