The sun., 1902-10-05
THEDEPLETEDBANK PRESERVES
BtNkS " - RESERVE CITIES
Mellow THE LIMIT.
1his l. VII, secretary shaw Announced
That Banks Need Not Maintain Their
FUN Reserves or 25 per Cent.-Secr-.
TAR, anu the Comptroller In Harmony.


Tuii Reserves Of ?5 per Cent.-Secrr.
TAR, AMI the Comptroller In Harmony.
" AsHINGroS. oct 4,.Thc fact became
.uo'yu to-day that th" recent act ion OF the
Secretary Of the Treasury in announcing
that nl'iurai banks need not maint ain THEM
fnl reserves ot 25 per cent TO secure Gov
eminent deposits was caused not so much
hv the necessity Of relieving the stringcncy
of money as 10 avoid a threatened danger
rothr banking interests of the country which
,xiss just at this time.
The Comptroller of the Currency recently
is.ued a call for a statement of the con-
ulton ot the banks at the close Of business
nu Sept Il. 1hirt y-three of the larger
.itics Of the United States are known az
no Jess than twenty-five of these cities the
average reserve funds held by the national
banks we're below the limit of IS per cent.
which tho law requires shall be maint al ned.
IN these twenty-five cit ies there are 287
Ia ioual banks. In the eight cities whose
banks maint aimed their reserves according
% law arc only sixty-eight banks, these
cities being san Francisco. Portland, ore
Ios Angeles. Kansas City, Kan; Houston,
Ind. Denver and Philadelphia.
This condition became known to Secre-
'sry Shaw several days ago, and it was
Immediately recognized that IL the insttu-
ions whose reserves we're too low should
b. required 10 replenish them. embarrass-
rncnt might be caused the banking interests
u the country. The average reserve
Aeli by all the banks Of the United States
On sept. Il was only 257l The banks
outside oi reserve cities are required 10
maintain reserves equal to only 10 per
cent. Of their deposits, but many Of them
really keep on hand reserves amounting
10 80 g and even 40 per cent. The serious
condition, therefore, Is confined 10 the
,argar cities Of the country, only Phila-
ielphia. among cities Of the first rank.
showing an average reserve for its banks
As large as the minimum allowed 10y law.
With this general condition prevailing,
Secretary Shaw and Comptroller RidK"ley
mad no hesitation in deciding not To force
the statute, which merely says that the
Comptroller may" require tho banks 10
make good their reserves
In view OF the statements that the Secre-
rarv and the Comptroller are not in har-
mony, and for other reasons arising from
addressed the following circular to national
bank depositaries to-day.
A wholly unauthorized and uniouuded re-
nort appears 10 have been -"'t from Wa ~h-
.ugtOn yesterday, calculated 20 ul-lead, with
reference 10 the action taken hy the SECRETARY
NJ th" Treasury relative To tn" n.aint rUanu"
of reserve against Government dr pO-itS So
,ur"d hy Govrrnment bond. That th"r" may
Oe no misunderstanding. either n to III" law
or the action taken by ia" Department, YOU
are advised
Tho Nntionll Bank act a. you ,rc w"ll aware
ay, down m" ril" that all associations ~hU!l
MAINTAIN certain r"~"IN" against llI deposits
failiug % do which the Comptroller of IN"
rressurv may notify any a-~oCintiOn To make
good such reserve. Failing 10 do which
within thirty day. the Comptroller may, with
tho concurrence OF the Secretary ui the Treas
nv, appoint receiver &c
lh- law therefore lay down the rule that
the reserve hall ba nlHln'tin"d but lodge
discretion with the Comptroller ana with
the ~ccr.t try OF the Treasury a. to he enforce
mrut Of IN" rule. You ar" therefore notified
that ~" rule will not hr enforced % far a. II
rlat"- TO Government d-pO-i'~ secured by
Government bonds
r. uu,, he borne in mind IN tu,~ connection
that u l. not the intention oi the Depart Went
oouCuura go inUTens sod credit ON tie contrary.
very great conservation should bc exercised.
Bur n il the desire OF IN" Department TINT 70
worthy hu>lue., interest shall ~ui'"r simply
beCdu-" a bank has Invested it E.on"y IN
Government bonds to ~r,urc = GOvcruM"ut
deposit, and TO that extent has relieved tho
Treasury from SroNlnG .urnlu>, and
Ga> thus restricted IT, capacity 10 extend
sCoommodat on
This is the first official circular hat the
Secretary has issued ON rh" subject of
depleted bank reserves. His announcement
n New York that banks need not maintain
Il reserve against Government deposits
vas never made over the SeCretary's sig
nature. The reports OF "a difference OF
opinion between the Secretary and the
Z comptroller are believed TO have arisen
from the fact that soma lett"rs have been
sent out from the Iomptrollsr'- office no.
fifying certain ba.hs that their reserves
we're too low. Af'rr Secretary Shaw and
{ comptroller Ridgey hnd talked with Prc-i-
dent Roosevelt to-day, the toINpt roller
vas asked Why hc had sent out these no.
rices, in view Of the fact that the Secretary
had said that the Reserves need not be
maint aimed He replied:
! did not know that any notices were
>ent out There might have been two
or three; II SO u Wa a MI axe
The reserve given, 25-i per cent. does
not really represent the true strength of
r he banks, because trey arc unable to
count as part Of their legal reserves large
deposits with approved reserve agents.
nder the Law only ~ per cent. of the re-
serve can he deposited with approved
reserve agents The deposits are now
greatly in excess Of the limit, and the per
certaga OF reserve Of the banks in the
= 'hirtv-three reserve cities, instead of be-
ng 2t90, would be % ai per cent If the
"EcesS could also be counted rs a part Of
Z no reserve.
With the order of III. Secretary exempt
ng from the reserve rulc the sll7 .097, I69
Of Government deposits on sept. 10 0hey
have since been increased 10 sl35. .7O0,9l2l
al Of the reserve cities, with perhaps one
"xception, show minimum beyond the
"gal requirements As 10 tho banks out
slde the reserve cite. the percentage is
even greater II the excess Of deposits with
approved agents i, taken into considnra-
4 ion.