Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-04-26
FOUR CENTERS COMPARED
Fluctuations in Real Interest Earned
Greatest in United States.
PROGRESS MADE IN BANKING
National and State Institutions In
the United States-Conditions
in Europe.

tional monetary commission is the varia-
lions In the value Of the government
bonds Of the United States and three
other important commercial powers
Great Britain. France and Germany. The
ascending and descending lines Of the
charts reveal in graphic way the fiuc-
tuations to which these gilt-edged securi-
ties have been subjected through varia-
tions in the demand for capital and dis
turbances in the money market The dia-
gram of average net prices seems to In
dictate that the market for European
government bonds was subject to different
fluctuations in some cases from those felt
in the market in America.
The United States 4 per cents touched
their maximum average price Of about 12s
in 1889 This was also the period of the
maximum annual average Of German i'm
perial As, which were above 1OS British
consols. then paying per cent. were
per cents were then below so and were
only beginning their upward course,
which eliminated in 1897 at 103.
Drop in United States 4s.
The United States Is fell between 1889
and 1893 below los. partly as the result
of approaching maturity and partly be-
cause OF the panic Of that year. The
year 1896 was the year of the elimination
of the prices Of German 3 and 81 per
cents. the former going close to los and
the latter to near par. English consols
also touched their high point, above LIP.
plunge. which. in 1901, left them below
% and carried them in 1907 below IS.
after their reduction in 1903 to a 21x per
cent basis. The pressure upon the money
markets caused by the Boer war and
other influences affected all European is
sues in 1900. They enjoyed a considerable
recovery during the next few years, but
suffered again in the panic Of 1907. The
United States per cent bonds advanced
to nearly 100 in 1902. but then began the
them, with the IS. nearly to par.
The influence Of these changes is
brought out, perhaps, more clearly by a
table in which the issues of the four
countries dealt with are reduced to 3
per cent basis. In this table, in spite of
wide variations due to particular causes,
there is a general movement upward from
1884 to 1889, which persisted in the. case
of European issues until 1897. In the
United States there was a marked de-
cline in values in 1896. which would have
put the per cent bonds below par upon
a 3 per cent basis. Between 1897 and
1900 German and British loans declined
materially, and French rentes declined
Then set in, about 1902. the decline in
all the securities quoted, at the time Of
the large demands for capital arising
from competing issues of railway and in
dustrial securities. eliminating in the
strfngency of 1907.
Real Interest Earned.
chart showing the real interest
earned upon government issues shows
rfoff t.
States than in that of Great Britain,
France or Germany. The net interest
rate upon German imperial securities,
while showing less variation than in the
case OF France or the United States, is
higher than that of either of these coun-
tries. standing for the As in 1907 above
IA per cent. French rentes, which in
1884 earned nearly per cent. declined in
earning power as their price rose, until
their net return was below per cent in
1897. but with the fall in price In 1907
showed an increase In earning power to
about 3.25. English consols, which in
1897, at the period of their highest price.
paid less than 2R per cent, stood in 1907
practically at a per cent basis. The
earning power of American securities in
1908 makes a showing under 2k per cent
for the As of 1925, and about ~ for the
2 per cent bonds
Progress in Banking.
These charts also show the progress
of American and foreign banking during
the past thirty to forty years. The
number of the plates is twenty-four. The
subjects are arranged in a logical order
of evolution. beginning with the progress
in the number of national banks. state
banks and trust companies. They then
deal with changes in relative capital of
each class Of banks and in the circula-
ton Of the national banks: changes In
the circulation of national banks in their
relation to the supply and price of gov
eminent bonds; the relation Of the Treas
ury balance to deposits of public money
in the banks; the movements of the bank
In reserve cities and other
cities: the relative fluctuations in the
price and net return upon the public debt
of the United states and that OF Great
Britain, France and Germany; changes in
discount rates in different markets, and
the comparative stocks of gold in leading
banks
The first chart shows the progress in
the number of national banks from about
$50 in 1867, through the gradual rise
to about 1880 in the summer Of 1893.
Then comes the depression Of the line,
lowing the panic Of that year, until the
number in the summer of 1899 falls be-
low $500 Then comes a sharp up
ward turn, which began in the summer
or 1879, apparently as the result or re-
turning business activity, but was sharp
ly accumulated by the act of March IA.
1900 which first permitted the creation
of national banks with capital between
500 600 and $4,000. This upward move
ment continues practically unbroken I'M
til total Of nearly 800 banks is at
tanned In the summer of 1908, after which
the movement Is slightly relaxed as the
result of the panic Of 1907.
Variations in State Banks.
Even more interesting in some re-.
spects are the variations OF the line in
dicating the number Of state banks.
Starting below 3Ov in 1867. the number
is barely above 600 in 1915, and shows
a decline to 475 in 1873. From that date
to the summer of 1885 there is a gradual
upward movement. until the number of
state banks is only little under LOCO.
Then comes a depression to about $50.
which suddenly turns in the summer or
1886 into rapid upward movement.
which has never been permanently in
terrupted. 1t was in 1898 that the num-
Der of state banks began to overtake
the number of national banks. The
lines OF increase in banks Of both types
had been roughly parallel down to about
the summer of 1883, with the state banks
nearly 1900 less in number than ma
tional banks.
BY the summer Of 1891 the distance be-
tween the two classes Of institutions had
fallen to less than ], 100. by the summer
Of 1892 to less than 600. ana by the sum-
4& 80 49,