The Cairo bulletin., 1908-01-28
GOTHAM BANKERS
CONGRATULATED
BY DAVID r. FoRGAN OF CHICAGO
IN ABLE ADDRESS LAST
NIGHT.
THE SHIP or FINANCE
Has Ri9hted Hereef end is IN Smoth
Watcr---TWo Great Vessels "in-
dustry' and "commerce
Follow Closely

/ New York, Jan. FL David r. For
4 gan. al Chicago, ono OF the most
prominent bankers cf tho country to-
daH addressed the state Bankers As
soclation hero tonight. After con-
graduating the BANKERS 81 New Ycrk
/ eitE for tho way they handled them
I selves and their truss curing the re-.
tcent financial unpleasantness he con.
itinued speaking part as follows.
1 Coming from tile second city of
tho country 10 the first aud appr@
oiating the financial problems and
iburdens which fail upon the centers
III feel that my first word must bo one
iot SINGER congratalaticns cor
gratulate you that tie "stringency' is
over and that you are again in a
ipcsltion to order a good dinne..
rejoice with YOU that the good shin
finance has rIghted herself and is
low in fairly smooth water, and that
tho Other great vessels Commerce
lnd "Iurustry" are following closely
ID her wake II you will allow me
should also like to commend The abe
saamanship displayed b yyou os New
! YORK during the late stress OF wealth.
| Ter. we in Chicago are rather proud
of the way We weathered the storm.
j think we came through ii bettesi
than most cities But for courage 70,
face the situation, grit to stand pnp
ishment, and willingness to strain
yourselves IN order to help others, !
take my has off to the bankers gf
! tilis .t7its sassis ss.aassag neFs etln.
parisons toHthd Contrary, notwitE
istandin.s
Tho lat unplesaatness was SO
5hcrt aad sharp that its nature should
ba apparent to every oanAei. 1t was
not due to defects in our country, We
were having no more than tho usual
fall scarcity Of currency when theI
storm broke Extreme scarcity OF
currency was the result cf the panic
not its cause. The cause was loss Of
public confidence which had been
gathering force for months, and which
reached the crisis when your troubles
here in New York came to the sur
face. The defect in our banking sys
tenn brought fully to light by this
panic relates to the reserves. The
system which permits banks to count
a credit with thtir city correspond.
snts as part Of their reserves works
M right In ordinary weather, or when
ahc storm is confined to a particular
locality That locality may then draw
uInn its city credit and find it is
available as the reserves in its own
vault. But the storm is big enugh to
scare the country it naturally hap
pens in one of the centers, and a
general withdrawing Of balances sets
lin from the country banks. This may
easily assume proportions quite inc
possible for the centers to meet. AT
he time when the centers most need
their reserves to help them through
some local trouble our system creates
an additional and greater diffieulty
in the sharp Withdrawals by their
country correspondents.
That is what happened lately. II
has happened before, and New York
aas several times been driven to clear
ng house certificates as the only
means OF salvation Chicago never
issued them before. In 1898 we hal
the Worlds fair. which brought n
great deal of currency to the city,
and besides the bank deposits of Chi.
ago in 1898 were only si79 .o00,009
whereas now there are s7e0.000,000.
This time we were driven TO the same
refuge aud after our first experience
We are inclined to think clearing
house certificates a good thing ii they
lid not scare the people 50.
The way the law regarding re
serves works Is best understood by
an illustration: The law requires q
National Bank in Troy. n. Y, to-
carry Is per cent reserves. Only sI
per cent however. necd be in its own
vault Tie ether per cent may be
rith its reserve agent in New York
ity. II the deposits of the Troy bans
ere $L090 COO it keeps sG0,009 at home
nd $50 G09 In New York The s90.05o
New Yor-. however Is not money
t is merely a credit on the books Of
the New YORK banE- against which a
reserve faliowing fer legal dedHc
tiousl Of net more Than $4,000 is kept
by TIE New York bank. When IN
Troy bank becoming alarmed. deems
il prudent TO have a larger proper
tion OF its reserve at home IL teie-
graphs the New York correspondent
70 send it. say. s290og. That does not
seen aH unreasonable request to the
Troy banker 0nly szo.oe9 out of
So o3o- But when the Troy bank
pithdraws s2e 03e Il withdraHs all the
reserve there is in the vorid against
its deposits except what IS in its osTa