San Antonio daily light. [volume] (San Antonio, Tex.) 1886-1907, 1897-10-31
LOCAL BANKS.
WHY THEY DO NOT PAY w THE
SOUTH.


Experience Of Southerner Who Wanted
to start . Small Bank-His Conclusions.
Branch Banks Would supply n Long Felt
want-wouId Also Stop the Cheap
Money Cry.
The failure of q state bank in North
Carolina loaded up with real estate,
especially country property on which
realization will be slow" is interesting
for several reasons, says the New York
Journal of Commerce. 1t then proceeds
to point out the great need of better
banking facilities in the south and the
disadvantages of loaning on real estate
the only security many southern farm
ers can give.
The Journal of Commerce then re-
lates the experience of southerner who
made a trip through several northern
states looking for town where he could
establish q small bank with reason
able prospect Of profit. His observations
satisfied him that the small bank would
not pay. When the crops were being
marketed, the farmers around the town
where such bank might be established
would have plenty of money to deposit
and no occasion to borrow. In the
spring of the year the farmers with one
accord would desire to borrow, but
there would be nothing to lend because
they had already drawn out their de-
posits. Deposits would be abundant
when there were no borrowers, and the
demand for loans would be good when
there was nothing but the banks cap
ital to loan.
He concluded that practically there
was no profit to be made except the
profit on the banks capital, and cap
ital of $25, 600 not in demand during
the whole of the year would not afford
enough profit to meet the expenses OF
the business and give the banker q
satisfactory income. The branch of
bank Of issue, however, could make
money under these conditions, and he
was satisfied by his study of the prob.
lem, with every motive for reaching
sound conclusion, that the one solution
for the financial difficulties of the south
was branch banking. The branches
could circulate the notes of the parent
bank, and if the issues could be made
on general assets the capital of the bank
would be loaned to the farmers and
merchants of the locality instead of to
the government, an advantage difficult
to overestimate. The branch would not
be dependent upon the local depositors,
or a capital proportional to its local
business, for the means of making loans.
The parent bank, receiving deposits
through its branches from many local.
tiles, would be able instantly and at al
most no expense to transfer funds from
localities where there were large depos.
its and therefore small demand for
loans to localities where the conditions
were reversed.
Advantageous as the branch bank
system would probably prove to com.
mercial men, it would be vastly more
so to farmers. Merchants are depositing
and borrowing all the time. There are
every day deposits from one dealer
which can be loaned to another, but the
farmers who have a great deal of money
to deposit at one season and occasion to
borrow great deal at another would
be vastly aided by such an equalization
of the demand for loans and the means
Of gratifying them as would be afforded
by central banks with widespread
branches.
The political significance of this is
that the south has no interest in silver
coinage as such, but took up the free
coinage issue under the impression that
it would afford more currency, for
which the section had an undoubted
need; banking system that would
afford more currency, and especially
more and cheaper credit, would fully
satisfy the south, and the cheap money
cry would at once cease to be formula
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