New-York tribune., 1908-02-12
DEFENCE OF BANKS.
4NSWER TO CRITICS.
Points IN Senator DepezC's Reply to
Senator Culberson.

Senator pepew in his reply in the United States
| Senate Monday to the charge made os ssn
ator Cuiberson of Texas, that the Secretary OF me
Treasury In the recent financial stringency favored
| New York City in depositing pubic moneys ~
! tonal banks, and that New YORK Clty oaiihs
| used this help to encourage speculation mace
| statements of small interest to bankefs ana
| financial interests generally He not only repfed
to the Cuiberson charges, but corrected nnsapp'e
tensions which have been spread broadcast con-
| cerning the banks and banking methods OF Ne"
| York City.
Il will say at the outset" began the Senator
that the business and financial conditions Were
saved by the courage wisdom and patriotic actloh
of the Secretary of the Treasury and the phe-
nomena genius of Mr.. J. Pierpont Morgan IN as
sociating with him the strongest nnancfers and
bankers and devisng the methods to save the ST.
uation' He continued:
There are six thousand six hundred national
banks IN the United States and some eleven thou-
sand state banks and trust companies Inc ] ma.
9nal banks in the central reserves ana esos
tiers of 25 per cent. while those in the country
deposit in round numbers four billion three hundred
and twenty-five millions of dollars: Ine stale
deposit about nine billions of dollars. The average
reserve in state banks and trust asanst AIMS
and that not in gold but in bills;
| billions of deposits payable on demand, while the
currency of all kinds in these institutions I conf
will thus be seen that If the millions depositors
who owned these thirteen billions become fright
ened and want their money at once IN cash tne
machinery OF business and commerce stops III IT,
b9 Mo R2 a r cent Of
cia transactions carried on, little cssh com.
year. when nearly three hundred millions of dol,
lars has to be shipped by the central reseIve o ana 10
banking System Is Ss6 So de6sexs SaSb that ia
crisis must from the government and the re-
he A
than its weakest link and the weak Ins IN st5 st5
| their enormous deposits and limited reserves
BANKS HERE COULD GET BONDS.
| Mr. Cortelyou says in his report that of the
reasons for making deposits in such Large amounts n
portant cities in addition TO the effectiveness of
such deposits in financial centres where they would
was wy the ae ae @ as these banks able
more promptly to obtain the bonds required as Sc
The emergency too keen to assign deposits
could not obtain them promptly either by purchase
by from large arg If no, aons
| Or the demand of deposits l., ~,
depositing of government money neglected Texas
so that his great state received only .t per cent
shows that on December the banks of Texas were
The reserve in the Galveston banks was nearly
| double the reserve required by law, The Fort
banks IS a per cent. @ the San Antonio banks $ per
S Of es n 4ras G e MeT 1GS 3 oankS an e in
| shipment Of currency had drawn their reserves
Similar conditions to those in Texas prevailed in
ndianapos MnneapoIs and ST. ST. Paul, Wchta da
oeceived these figures this m9rnng from aIa the Con
ed the whole country by deposits Of government
funds in New York banks at the crisis is illustrated
@ by ngs bank bar civ in TT fs t srs uss
Buring the % MONTHS Of e November and December
s s
% nsope sp 91 Vast sa a d
to the people in the country at the most critical
Would hs Of 5e
so re fha hs seayss o he mass Of m
ures in the report Of # the he Secretary -
from the New YorR Sanks ssat to hs
banks in the interior; Surely the Secretary OF the
rely and who If his reports can be impeached, is.
TO the Senate that between October 10 and De
oTR eale fe ss hanks of ce b the he New
tiqnal banks of the interior slS,e2l 700.
BY w he se6aeoT thus IN renes M
claim of shipments to the interior. represented
companies. The Senator attempts prove the
fair distribution st M Of the Treasury money to ,he
ism to New York City.
PERCENTAGE OF DEPOSITS
Percentages are always illusive, and Yet the Sec
retarys report is directly the reverse of the con-
eusons at which the DISTINGUISHED Senator ar
riVes IN his laborfouS analysis. The Secretary
shows that instead OF calculating upon action in
taking individual states. if you take the New Eng
land, Eastern and Middle West states. including
New York which are directly tributary to New
ury to the capital and surplus of the national
hanks was about 10 per cent; that the banks OF
proportion of nearly IS per cent, while eliminating
New York from the Eastern group the percentage
of the remaining Eastern and Middle Western
states was only about, Il per cent. that in this
states were. Oh the basis of percentages. per
cent better off than New York and its tributary
| ern and Middle Western states, standing by them
selves. This passage from the Secretary's report
IS illuminating In New England, where business
is carried less with borrowed capital than in
some other sections Of the Union, the average per
centage deposited in the national banks of the
entire section was only per cent and in Connect
cut as low as 3 210 per cent.
In other words, the great manufacturing State
Of Cohnecticgt was lover In its averages than the
had only four per the State of Louisiana has
twenty-seven and four-tenths per cent in deposits
il! proportion to its national bank capital and
plus. The finance of the cotton crop not made
Austin or at Houston. at Galveston or Fort
Worth, but at New Orleans. 1t is emphatic
demonstration of the suddenness with which by
this currency crisis acute in centres great
and small all over the country the little remote
villages were not affected.
Many of them had from twenty-eight thirty
six per cent OF reserve money hand for which
they had no use The farmers had sold their crops
at profit, the storekeepers' bills We're promptly
but in week If the panic had continued they
would all have been involved and cut off from the
markets of the world.
STOCK EXCHANGE COMPARISONS
AS the charge that these government deposits
were used to permit gambling in the Stock Ex-
change, these figures Instructive business of
Stock Exchange in 1901 was in bonds s9Sl Isl 900
II ~ ia taf 80