The Spokane press. [volume] (Spokane, Wash.) 1902-1939, 1907-12-10
BY gibson GARDNER.

o4Ny DOS. ~. w az
should the national bank law give
special favors to Wall st? That is
a question which congress is now
called on to answer.
The secretary Of the treasury has
put it up to congress in his report
just made public. He does not use
just those words, but that is what
it comes to.
at might be regarded as worth
while to consider" is the way Mr..
Cortelyou opens up the subject. Mr..
Cortelyou is always careful Of
speech, and sometimes his words
mean more than they seem to, at
first glance.
ut might be regarded as worth
while to consider amending the
laws so that the country might be
divided into geographical or COM
mercial sections. with provision for
the retention within each section
of a larger proportion of the bank
reserves required to be held against
deposits in national banks of such
section"
dhc yOul map VI InC ohitCN
States, and with pencil mark with
crosses the cities of New York. Chi
cago and St. Louis. Those cities
are by the present law, central re-
serve Cities
Next pick out 40 Of the next most
important cities, considered COM
mercally, and mark them with
lesser crosses. They are reserve
cities"
Now pick up the report of the
comptroller of the currency and it
will show that the national banks
of the central reserve cities" New
York, Chicago and st. Louis) owe
other national banks $421 900, 900.
These were the figures approx
mately at the close of last month.
But, of this sum, 5000, 100000 is
counted on by the outside banks as
part of their reserve" which the
law requires them to carry. For
every national bank is required to
keep a reserve of % per cent of the
amount of its deposits. But the
present act permits banks in ire
serve CltltS W uSpooil oO PSi SChs
of their reserves in banks in cen
trail reserve cities" namely, ST.
Louis, Chicago and New York. In
other words, the outside banks ere
serves" are not really reserves" at
all, as they are on deposit in ST.
Louis, Chicago or New York, where
they-in time of stress-can't be
had.
The nominal reserves of the ma
tional banks of the United States.
at the present time, are sl,121,-
$685.
That is supposed to b., in round
terms, - per cent of their deposits
They are supposed to keep that
amount back, in available cash,
against times of need.
.ntihis a th-presennrmh NH NH hh
But what is the fact? The
money is not kept back in available
cash. The little bank mot located
in a reserve city, has $35 ,000,0 900
of that supposed reserve on de-
post in st. Louis. Chicago or New
York; and the banks of the 40 ere
serve cities" have $I65,000,000 de-
posted in New York, Chicago or
ST Louis. The enormous total of
$500, 100000 of moneys which in
theory the small outside banks are
keeping ready in their vaults to
make good their loans and de-
posts, are in fact kiting about New
York, Chicago and St, Louis.
II, a1Aifin,, m which 10 tho 70 at
that New York, in order to coax
money from the small rural bank,
actually pays an interest of per
cent on all balances carried by
these outside banks.
What is the result? New York Is
in the chronic condition of owing
the rest of the country close to
$500, 000,0 900, a large share of which
is supposed to be a reserve fund
OF the national banks outside OF
New York.
And what happens when the
stress comes and New York is
called for this reserve? What hap
pened during the closing days OF
last October? The New York banks
met together and-after the man
ner of the most up to date trust
! agreed to act as unit in refusing
to pay. They simply declined TO
return to the other cities the money
held as part of the reserves OF these
other cities.
And that caused all the trouble
Now the secretary of the treas
! thpt tho law ha
amended so that reserves shall be
held as reserves; that the country
be divided into geographical OF
commercial section" and that
| banks in these sections be required