The independent. [volume] (Lincoln, Neb.) 1902-1907, 1904-05-12

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treasury department at Washington.
This influence today is such that the
secretary of that department has
ceased to be an officer OF the govern
ment, except in name, and has become
the instrument and agent of Wall
street and does its bidding. Notwith-
standing the dangerously low reserve
permitted by law many OF the ma
tional banks have been allowed for
years to reduce their cash reserve
much below the legal requirement. The
purpose of the New York banks in the
enactment of this provision of the
law was to enable them to appeal to
the selfishness and avarice of the
banks all over the country and keep /
stream of money flowing to New
York city. The law prevents the re-
serve city and the country banks
from loaning this amount to their GUS
toners but the opportunity is given
them to send it to New York and loan
it to the banks there for small per
cent. 1t was an ingenious device, and
deceptive, by which 1t was made to
appear that the banks were required
to hold larger reserve than in Tact
the law does require. Every banker
who knows any thing about the his
tory of banking knows that such a
reserve is an element OF constant dam
ger to the business of the country and
that disaster would iong ago have re-
suited il it had not been that large
number Of our bankers have been both
to ohonest and too WISE to reduce, by
loans. their cash reserves to the low
limit permitted by the law, much
less tciow that limit. In the face OF
this overshadowing danger, however,
| In selfshness or ignorance, or both,
there are banks that do reduce their
cash reserves much below the legal
requirement. Almost half of the re-
serve cities show in the aggregate OF
each a shortage. This low reserve is
covered uD in the comDtroller'ss last
report by the statement that The
/ average rate of reserve maintained by
| banks in other cities exceeds the re-
uuirements on each date except No
vember 25th, 1902" In this way the
| comptroller covers the shortage IN
| from ten to sixteen cities by the ex-
cess held in other cities. In order to
/ make even this deceptive showing It
was necessary during the year for Mr..
Shaw to relieve the banks from the
necessity Of including in the computa-
ton by which always before the re-
auired reserve has been determined
4 the amount of United States deposits
in the banks. There is no pretenst
that this is not violation of the plair
provisions of the law. In sixteen Out
4 of thirty-eight reserve cities this las
Il report shows the aggregate reserve II
! each to be less than required; and thl'
Il number would have been .conslderabi!
. increased ii the United States deposits
i had been included in the calculation
d The four banks in Albany, N. I.
are striking illustration OF the SIT
: uation, These banks have only abou
. 9 per cent reserve under the presen
II calculation when they ought TO hay
T 1919 per cent. If the United State
Il deposits they hold had been counte'
. the reserves would have been snow
Q | to be still lower. Tney noius in IL
$ aggregate 1898 .227.47 of government
: money not included in the compute
] ton. If this was drawn out they iwoul
0 have left in cash less than Sl,4o0,0o
4 and would be short in their cash re
k serve over 1898 900. A number OF sue
g instances are covered by the CONF
{ troller's average.
i 1t Is made the duty of the conn
! troller. by and with the consent
0 the secretary of the treasury to prs
II coed against such banks. The depar
! ment is no doubt deferred from takin
2. such steps by the fear of crisis. Thel
o II little doubt that there Is grouns
! for the fear that business would
" disturbed. This Is the condition
q which we find ourselves after mar
y wears of the New York financial ma
l. lpulation. Is II possible that the q
u partment dare not enforce the pla
! provisions of the law rs II possih
that these eastern banking syndicat
have MT last got us In such situate
10 that they must not only be permitt'
70 10 60 on with the saturnalia OF gam