Omaha daily bee., 1901-02-18
BANNING FACILITIES ~ THE WEST

BANNING FACILITIES Nv THE WEST.
Whether the reduction In the mini
mum capital for national banks has
proved successful in extending banking
facilities in the west is the subject of
an inquiry, the results of which are set
forth In an article in the current Quar-
terly Journal of Economics. The author
Thorton Cooke, tries to trace the effect
of the new currency law on banking in
group of five neighboring states EN-
bracng the two Dakotas, Nebraska
Kansas, Iowa and Missouri, and under
takes TO show that In this territory the
opinion of Secretary Gage that the re-
duction of the capital limit To $4,000
has enabled many of the remoter sec
tons and smaller communities to secure
necessary banking facilities" is not
justified by the facts. BY ranging the
statistics in tabular form and taking
into account the conversions of old
banks Mr.. Cooke draws these cOnclu-
sions:
The actual gains under the new law are
scarcely noteworthy. The gains range only
from S35, 900 in South Dakota to $3.50, 900 in
Kansas-from per cent of capital already
existing in South Dakota down TO fifteen
hundredths of per cent in Missouri. For
the group the increase of capital is $473 900,
a growth that is insignificant in states
where the banking capital already aggre-
gated s75,0O0,O00. 1t is not likely that the
increase in banking capital due to the new
law is even so much as these figures show
because besides its capital almost every
converting bank had available towards
making up the capital OF the national bank
that replaced it considerable undivided
profits and surplus.
More to the point is the gain in the num-
ber of banks. Here, too, the advocates OF
small national banks must be disappointe ed
by the anayzed facts. The new law has
not given North Dakota an additional bank.
South Dakota and Missouri have each one
additional Lank and Nebraska and Kansas
have each two. BY the act OF March IA
these five states have together gained six
banks. Except that II occurred under a
new law this slight increase in banking
facilities would excite no comment. six
more banks count for little in a region that
has 900 already.
If these states are typical for the
west, the small communities that can
support only sHldll DdnkS Win sIlall
capital must be supplied by institutions
organized under state laws rather than
as part of the national banking system.
That this Is the case is indicated by
figures produced by the same author
that show that in every state of this
Missouri river group except South Da-
kota the increase of bank capital due to
state banks only is greater than that
due to national banks. Against six ad-
ditional banks there traccable to the
new currency law, there are eighty-five
new state banks and ten not unimpor-
tant private banks. The need in the
west of banking facilities that national
banks cannot supply he insists has been
demonstrated by the existence Of nu-
merous little banks in small villages
and by the fact that the organization of
little banks still goes on.
Mr.. Cooke advocates the adoption of
some scheme for branch banks to meet
the requirements, but advances no argu-
ments in support, Plainly the problem
| demands more careful and close study
to reach the right solution.