The National tribune., 1907-11-28
VICIOUS BANKING.

a feature which has greatly aggra-
waited the spreseat stringency has not
yet received its proper attention. OF
late years nit has been the custom of
the country banks to keep a large por-
tion of their surplus on deposit in the
New York, banks, These have strongly
encouraged this lpractice by paying a
high rate of interest upon such depos-
its. a bank in Kansas or Texas having,
say. s1OO.e0O orff deposit. may prefer,
and frequently csloes to send it to it's
New York Correspondent and receive
from two to three per cent interest, to
lending it out at five or six per cent to
the people who do business with it. 1t
may be that the demand for money is
not active; that there is no business
going on which requires loans, or it may
be that the directors are timid and
easy-going, and prefer to get a smaller
rate of interest without any trouble or
anxiety about securities. They say that
any time, which is better than putting
it out around home upon securities up
on which it would be difficult to quick
ly realize. The evil effects of this are
that the New York banks having to
pay interest will seek to lend it readily
to whoever can offer security. and this
tempts speculation and kite-fying. Dur
ing the past few weeks New York has
been filled with country bankers fran
tic to get their deposits returned to
them to meet runs which they feared.
They found the New York bankers per-
fectly obdurate, and appeals to return
their deposits to them at once were in
effectual. Where bank in Texas would
have, say, 100000 on deposit in New
York it's correspondent could only prom
Use the money back s25,000 to-day, $685.
900 10 days hence, and so on. AS this
sort of piecemeal return would not
meet loan, the bankers were torn
with fears as to their ability to stand
a run, and ruin stared them in the face.
The remedy for this and method
which would seem to do much good in
money matters would be for the States
to take action prohibiting more than
certain amount of the deposits In the
banks being sent out of the State or
invested otherwise than in the State.
This would prevent New York from
being gorged with money. and limit
somewhat the temptation to wild specu-
lation. 1t would also limit the evil in
fiuence of tight money market in New
York.
The Canadians are somewhat exer-
cised over the action of a lady In Seat
tie, who tried to get the Chief of Police
to compel her neighbor to pull down
the British flag which he had flying on
his premises. The Chief replied that
he had no authority. and then she in
sisted upon the Chief making the neigh
Dor hoist the American flag over that
of Great Britain. This the Chief of
Police also declined to do, but upon
representations being made to the own
er of the flag he hauled it down The
Canadians say that this is an exhibition
Of narrowness on the part of the Amer
leans which they should take to heart,
since they, the Canadians, have been
using the United States flag for decora-
tive purposes with great freedom and
considerable affection for the United
States If. however, the Americans will
not reciprocate. they will stop the use
of our flag. They claim that they hoist
our flag as compliment to us and an
exhibition of good feeling, and that we
might do the same.