The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1907-12-16
Central Bark Is the Solution
-Comptroller Ridgely

mand was accompanied by withdrawal
caused by uneastness and distrnst, that
the BANKS were forced IN self-defense,
10 partially suspend payments, adopt
clearing house certificates, and various
otIler ekpedlents 70 furnish currency 10
meet such an emergency
TIE surprising thing is not that there
mas been such a disturbance OF credit
Snd business. but that the situation has
been met as well as it has. It speaks
volumes for the credit of the banks that
they have done as well as they lave,
and shows the confidence of the people
In their ultimate solvency and strength.
II Is the greatest possible evidence OF
the wisdom, patience, forbearance, and
sound, conservative sense OF our bust
ness men.
1T does not. however. speak well for
our political wisdom that this condition
mas been allowed 10 stand unchanged
without any attempt 20 improve our
laws. This situation IS nothing new.
but has been known 10 all students OF
our banking and currency system and
written and talked about for many
years. II has produced disturbance and
stringency every autumn FOR forty
years, and panic after panic.
1T is directly and Immediately due TO
this that the crisis of October, 1907, as
suned the phase Of a bank panic and
spread all over the country, Instead OF
being confined to the comparatively few
people and concerns who were fret in
Volved, and II undoubtedly added to and
spread the business reaction in a; di-
rections.
without Protection.
IF the experience OF the country in
the bank panlcs from 1857 10 1898 needed
any further confirmation, thu panic Of
1907 has demonstrated beyond the pos
sibility or denial that perfectly solvent
banks. Independent. Isolated units.
with no power OF cooperation except
through such voluntary associat. On as
their clearing houses, can not protect
themselves in a panic and save them
selves from failure without such a sus-
pension of payments as TO produce dis
order and Generalization In all the bust
ness OF their customers
well managed, sound, and solvent
banks have been dishonore6 by having
to refuse payment and all our COM
rnercial, industrial and financial affairs
hive been thrown into confusion because
the Government fails 20 prDvide the
necessary financial machinery TO pro-
tect them in times OF excitement and
5eriI. no single bank or groIp OF banks
can do this for themselves They must
depend on the Government Of the
United States. For this reason this
question is submitted Tor yc,r consid-
THE solution OF such a vast problem
as this presents is not 20 be hoped
still too diverse 10 bring about quickly
any such agreement as Is necessary
10 accomplish a definite and final re-
suit
StIingency Foreshowu.
Early in the year conditions IN the
United States and abroad evidenced the
probability OF contraction OF business
in general and tightness OF the money
market, but the extraordinary condi-
lions developing in October wore not
foreshown 10 an appreciate extent in
the banks reports as a whole up to
August p. II Is stated that there was
a steady Increase in the volume Of
loans and discounts from 34.3eSO45.2ss on
November y. 1896. 10 A.67S. 5s3s6S on
August Y, 1907, the total Increase be-
ing XII. 53S, SO. This increase was due
in part 10 the fact that 5i6 hanks, with
authorized capital OF S33 30 600. were
chartered during the year, but mainly 20
the Increase IN business OF the older
ASSOCIATIONS.
'Since the date Of the corresponding
report In 1905 September q the banks
increased their Investments IN United
States bonds on August p. 1907, 10 $780,
z94,440, net increase Of S3l.500 80. Law
fol money held BY the banks on August
p aggregating SC SO, $50, consisting of
1881. lVl' $50 in specae and S170.5i5. 7S2 an
legal tenders. exceeded the amount held
in September. 1905 by S75.6I1.lH In ad-
dition to lawful money. the banks held
on August p. S33. So, 657 In notes Of other
hanks, fractional currency, etc.
The only notable diminution IN as
sets was In exchanges FOR clearing
nnUCn - hafv al
Between November u. 1906. and January
-, 1871, there MAS a reduction in eN-
changes Of S34S. ~, III, a fall from Sg7G.-
$3.50 70 tl2S.24s6ls. n the period be
there vas an increase OF s13& 617.1I7, and
from March 10 May OF S1o.234.833 on
Augusf = the amount had fallen $50
4sS,so6, or 10 $4,000, IC3-
New York Loan Center.
Approximately one-hfth Of the loans.
OF all national banks are made by as
sociations located IN the city OF New
York.
The bank and trust com panv rate
ranged from ~ to per cent. the max
inum being reported in November and
December, 1906, and March and October.
1907.
Approximately 20 per cent of the
$4,000 to 500 900, inclusive the aggreqate
amount being = 80 per cent Of the cap
ital of all associations. Thirty-one per
cent represents the proportion Of banks
with capital Of less than S50Oa0, the
proportion of capital OF these banks
being but 81 per cent Banks with
capital Of $4,000 to 81, 600. 90, number
Ing so represent z IS per cent OF the
aggregate capital, and nearly y nor
cent OF the capital is that OF seventy
associations with irdividual cauital
ranging from Sl,090, 600 to s25.00000O
The outstanding circulation OF ua-
uonal banks reached the lowest point
In the life Of the system, from 1855 10
date, In 1891, amounting at that time
20 Approximately 1851, 10000 ard repre-
senting but 10 per cent Of the stock of
money In the United States There was
a variation Of but or per cent from
that date until 1900, when the proper
-