Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1900-11-26

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at this time, in view Of the
financial experiences thru which this
country has passed during the past few
years.
"In times OF financial crisis, such as
1893, when there are widespread with
drawals in currency, not only in reserve
cities, but thruout the country, the re-
serve cities are subjected to a strain
which endangers the stability Of the en-
tire bank system.
THE reserve banks, as a rule, recog-
mixing the instability OF bank balances,
must loan q large proportion of their
money on call. To secure sufficient call I
loans they must go to the speculative
exchanges, and the injurious results Of
that practice are easily understood.
"It is only by loaning money on spec
ulative securities that the banks are en-
abled to pay the high rates of interest
on bank deposit balances which form
the attraction to the country banks for
the deposit of so much larger portion
of their funds in New York than is
eeded for the clearance of exchange.
During the summer of 1899 there oc-
CURED marked demonstration OF the
evil effects OF this practice upon the le-
gitimate business OF the country. AT
that time there was a marked slacken-
ing in the demand for money III the In
terror Of the country, and the banks OF
that section found it difficult to safely
loan their funds. AS result, the inter-
est paid by eastern reserve agents upon
deposit balances attracted an immense
surplus to New York and other eastern
cities.
This redundancy of money in New
York and the east and the ease with
which loans upon speculative collaterals
we're there obtained Immediately created
a speculative movement in stocks, which
was carried on with a constantly rising
range OF prices until the fall OF last.
year. Atsthat time the crop movement
in the west and the rising rate OF inter-
lest there led the banks Of the interior
Ito draw upon their balances In New
\ York and to order the shipment of large
amounts of currency as against these
balances 1t is to be noted that at the
Itlme these demands took place the bust
rtss Of the country was in a prosperous
1 condition, with tendency toward an
increase in general prices and In the
wages Of labor. There was no lack OF
confidence in the country and nothing
4 which indicated panic conditions, ana
iIsyet this demand by the banks OF the
i west for the shipment Of currency on
deposit with reserve agents resulted IN
\ n panic upon the stock exchange of New
/ York, which Instantly became a grave
1 menace to the entire business OF the
country.
4 "Ir the abnormal demand for money
4 created by this panic or the stock eN-
|change the ordinary creditsto the lsgtti-
Innate business and commercial enter
8|prses of the country We're necesSa riiy'
3|curtaiied by the banks. and uuGuestion-
llably great damage would nave peeh
II done 20 such interests had not the sec
! lretary Of the trea sury. sseing the posi-
a bility of evil tot he count at large, IN IN
Z terfsred to prevent a apfdly increas as1ne
stringency in the money market.
!. "Thas scomptroller believes that under
Il the present Law regarding reserve cities
/. TOO great latitude is now given the
banks in connection with the use of the
Il reserve, the primary object of which is
Il the protection of the depositors Of the
banks. and he recommends that amend
Il jlanents to the laws be passed requiring
Il that a larger proportion of the reserve
: should be kept in cash in the vaults 0,
q the bank. Considering the banking sys-
Fl Item @aa al whole, the present ability OF
"A ba rlks Il, us,a credits with reserve hanks
2 as a. basis of loans createto great an eX'
sl tension Of aggregate deposit credits a!
: compared With aggregate cash ressour'
Ices. which. in times of liuqudation ant
g financial panic, increases the necesslt!
-Iupon the banks Of demanding paymen
9 of loans from the community and add
: lto the decentralization of business incl
|.dent to such period BY increasing tn
Il restrictions upon the right of banks 7
d lcount deposits with reserve agents a
e cash. firmer and safer foundation vii
n he built under the deposit credits of tn
d country. and 1t is the belief of the comp
e troller that in times of liquidation tn
8 greater strength of the banks will NOR
lllthan compensate them for the loss of tn
g small amount of interest on portion Q
: their balances which may be due to
= change in the present law
= st sis therefore recommended that sec
-Ition 5192 of the revised statutes of tn
Hunted States be amended so thn
n under its provisions but one-fifth ir
it stead Of three fifths of the reserve OF
y Iper cent required by law to be kept b
,e banks not reserve agents may consls
> of balances due to reserve banks; an
.el that section 5195 of the revised statute
\ Of the United States which authorize
l. banks in smaller reserve cities to kee
y, one-hale Of their lawful money reserN
in balances in central reserve cities, :
,r repealed"
ID The comptroller repeats the recon
le mendation made by his predecessor
ot that the present law should be
h amended as to provide fixed salaries (,
to bank examiners.
- m Immigration omcial. Reversed.
ID Washington, Nov. 26-The treasul
81. department today decided to admit Il
llace workers and their families WI
. were brought to this country by Dowi
o,| the divine healer and founder Of Il
= Zion CITY. Illinois to teach others Il