The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-03-13
.nr orfnsuppLr OF BANKS.

hon I transactions. due to dearer rates for
fest'u IN Wednesday. when borrowing be-
W. o,sIer and cheaper. prices advanced, the
'a",. recovered its liveliness, and. aided by
"a,S Sss favorable to certain gas and street rail-
u'mn,r,cs. maintained itself till tho end
mau.u ark A continuance by the banks OF
u " nr,sent llbcrality in lending seems to
,"', 81, that Is needed for n continuance OF tho
w ",sJonre OF operators, while a reversal otthelr
' ',Ioy could lead TO a reversal OF speculative
yy.n,iment. 1t must not be forgotten. that
~, ,hc banks call deposits, upon the volume
+" rhIch ejaculation depends, are principally
,.ics on their books to the credit OF their
tome and that, as they are created by u
.,roEe Of the pen, they can be destroyed with
he same facility.
mia resolution which the Clearing House
..,rs odoptcd last week. to discontinue the
,]r,tuitous collection OF checks and drafts upon
iistont points. which. It is computed, now costs
hom 50 100000 q year, is n virtual confession
,ha, ,hey have been led by competition among
,ham selves for business. into u practice detri-
a,ontsl TO their real interests. The resolution
On MAINLY wise. that il suggests the hope OF
Tho ndoptlon OF another. equally desirable.
nomely, TO discontinue the payment OF interest
an country bank deposits. which are VIGOROUSLY
o,rm,ttcd to remain only when they arc not
necleI. md are drawn out the moment n rise
NJ interest rates would make them a source OF
rrplt, 4 still wiser reform would be for bank
Ulcers to net unitedly in making loans, and
not TO allow borrowers. by dividing their ac-
,ounts, to obtain an aggregate amount OF
accommodation which is in the highest degree
nerllous To safety. aud which, II it were asked
openly. would be refused them. ,
I'pon this latter point. the London Economist.
referring to the ease oil a Scottish whiskey com
many which. when It failed. was found to have
attained from various banks and bankers dis
,ounts and advances amounting to nearly
S2.750,OOO. very pertincntly remarks:
"Thcre is no doubt that the banks, as we'll as
o.hcrs have suffered through the departure from An
old adage. which is. perhaps. so old that they con.
,idcr 1t antiluated, viz, that u banker should either
have the whole of an account or none of it. This is
business. to split which does not divide tho risk; 1t
increases it. 1t is. OF course, possible for the banks,
with the approval of thor customers, to make ar
nngenents as to the conduct of the accounts; but
the policy is a pernicious one, and II two or three
banks are giving IN toto more credit than they would
give Individually. II they had the whole business.
the sooner this ceases the better. And. when it does.
what will almost invariably be found? This; that
one bank has outwitted the Others. one will have
gathered in the lions share of what security was 10
BE- had"
il this is true OF Scotland. where banks are
and are administered with the proverhial
caution OF the Scottish people. 1t is a thousand
fold more true of this country. with its numer-
Gus little banks. oflccred. in the majority Of
cases. by men whose only rule Of conduct is to
lend as much money as they can and at the
highest possible rates of interest. OF national
banks we have 300. and OF State banks as
many more. whereas Scotland has but 10 banks.
and England but 81. Canada, with it's .OO0.-
900 Of population. has but 40 banks. or one to
every 10000 inhabitants. while we. with our
100000 OF population. have one for every
10000. How easily. among this multiplicity
Of such institutions. all eager for custom. a
yenturesome or a dishonest borrower, by keep
secret his operations. can obtain money to
an excessive amount. there are plenty Of in
stances to prove.
Evidently. therefore. the first step to a true
reform OF the banking business among us is to
reduce by consolidation or otherwise the num-.
Der Of banks. and it is not a little remarkable.
the process. which has so extensively been
applied to industrial undertakings. should haye'
as yet affected banking SO little. 1t is true. that
several OF the large downtown banks in his
city have virtually absorbed small ones located
uptown, and the Corn Exchange Bank has
taken steps to consolidate with itself
the Aston Place and the Hudson River. but the
has gonea very little ways. This Is
partly attributable to the unwillinGness of
Presidents and cashiers to lose their places and
their salaries. but more soto q dominant preJu-
in favor of the present system. .
The idea prevails. extensively in this coun-
especially in the agricultural districts, tina
the community is better served and on cheaper
by a multitude Of little banks. than by a
few great ones having as many branches as
there are now separate banks. The so-callcd
currency reformers, almost to n man. with the
Of the Treasury and Mr.. Hugh H..
Hanna at their head. demand legislation which
shall enable banks to be established in small
under the National Bank act. with cap
itals Of S23,O0O each. and the advocates OF IA
repeal OF the 10 per cent. tax upon State bank
place their advocacy of it distinctly
upon the ground that the repeal would slim
llatc the creation of State banks. which. sup
ported by the profits Of a note issue without
other security than their own assets. would be
able to lend money literally to borrowers who
have now to 20 without 1t. To the immense
OF national banks and State banks al
ready in existence, they would add as many
more as occasion requires.
Little argument ia required to show that a
bank with as small a capital as So. 900. located
among people who have no money OF their own.
and who would. therefore. be borrowers only,
and not depositors, could not. from any legiti-
mate banking business. earn it's expenses and
enough more to pay dividends which would
capitalists for establishing IL. In
deed, the advocates OF such banks. demand for
them the privilege of issuing unsecured cur
rency in order that they may be profitable. As
Gage innocently admitted, I'm an adj
dress which he recently made to the virginia
bankers at Richmond. tho credits extended by
a small country bank to its customers must be
put into the shape OF engraved notes. in order
10 make them acceptable ont OF its Immediate
helghborhood. A result that cc-lld not De ac-
compllshed by the ccrtification OF n depositor's
'herR' would. according to him. be rendered
easier by taking advantage OF popular conf
uehce in what bears the customary semblance
OF money!
itls doubtful, however. whether. under pres
eNt conditions. this illegitimate business would
We as profitable as is supposed. In former
years, when railroads connected only the few
ptlhclpal cities with each other, and the cleo.
Nv telegraph was In its infancy. a bank located
:" " 'l'lago remote from the beaten track OF
,'"Nel' could. by means Of its circulating notes.
IN 40 d &c.