The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-07-29
BANKING CONCENTRATION.

The August number of the Atlantic
Monthly contains an article by Prof
Charles j. Bullock on ''The Concentration
of Banking Interests IN the United States
that contains food for thought, in view
OF the growth of the banking interests
of the country coupled with the fear that
the great metropolitan banks are looking
to the establishment of branch banks
throughout the country. and to the con-
trol of the national currency.
Mr.. Bullock begins his article by say
ing that central institution enjoy
ing federal patronage and serving to unity
banking interests, has been political
lmpossibility since Nicholas BIddle rashlN
ventured upon trial of strength With
the masterful statesman from Tennessee .
He shows then that up to recent times
there has been decentralization of bank
ing interests which has {been generally
approved as democratic In its tendencies
and well adapted to tn diverse needs of
our vast territory" blaE such banks have
been unable to opp6se united front to
stuu saocaes Of financial disorder" Trust
companies have of late years multiplied
rapidly, especially in financial centres and
been of great value to the growing large
corporations. Writing of the rise OF trust
companies, Mr.. Bullock says:
items has forced its way into the field of
American banking. Trust companies have
existed in the United States for three
quarters of a century, but up to fifteen or
twenty years ago their number was small
and the scope of their operations was
restricted. Originally they were formed to
act as trustees of estates and to execute
other trusts. while they often conducted
sate-deposIt business. With the growth
of corporations, trust companies began to
act as transfer agents. or as trustees un-
der mortgage deeds executed to secure
corporation bonds. Such functions were
OF great financial Importance, but did
not carry the earlier companies into the
territory occupied by banks of deposit
and discount. Indeed, it not seldom hap
pened that their charters or the general
laws of the State prohibited them from
receiving ordinary deposits or doing a dis
count business. Gradually, however, a
change was effected in the law or in the
practice OF these associations, and trust
companies began to engage in the work
of commercial banks Today. besides re-
ceiving time deposits, they accept deposits
that are subject to instant withdrawal
by check; and they make extensive loans,
IL
their original business, therefore, they
have added the ordinary banking functions
and these are exercised without the re
strictions which the law imposes upon
banking Institutions. The result has been
that trust companies have multiplied rap
idly, especially in the financial centres,
and that their competition has been felt
severely by the banks. In 1902 there were
727 of these institutions in ,he United
States, and their aggregate deposits ex-
oeeded $500. 900 900"
He thinks that, while banking CAPT
tai has increased, the fact that our bank
ing system remained decentrallized, it has
been better adapted for fair weather than
fer foul In times of actual panic the
banks in the largest cities had sometimes
utilized the clearing houses for the pur-
pose of adopting common measures of de-
Tense"
Prior to 1898 there was little appreciable
tendency toward the concentration of
banking interests. but since mat time it
has gone on apace The writer intimates
that with the absorption OF small banks by
large ones and the increase of capital
Capitalization will follow similar lines
by which the manufacturing plants have
been absorbed into modern trusts. He
shows that the bank reserves are concen-
trated more and more in one city-New
York-as in France or England, the re-
serves are stored in a great central bank
Within five years the banking institutions
of New York have enlarged their capital,
surplus and undivided profits from $232,
900 900 to $451 900, 0OO Prior to 1898 the
CAPITAL of New York banks had been OF
moderate size. only two having capital OF
S. 600 900. the average for the clearing
house institutions being less than one mil
lien dollars Today the average capital IS
twice as great while three banks have as