The Hattiesburg news. (Hattiesburg, Miss.) 1908-1917, 1910-07-08
(By Associated Press.)


1893, and 1907 which has yet been
prepared is embodied in a monograph
by Prof. o. NJ. w. Sprague, of Har
ward University, which has just been
made public by the National Monetary
Commission. Professor Sprague not
only enters into a careful analysis
covering several hundred pages of the
banking and financial history of these
events, but presents also in an appen-
dix several of the most authoritative
articles which have heretofore been
written on these subjects by Secre-
taries of the Treasury and Comptrol-
lers of the Currency and by such spe-
cialists as Mr.. A. D. Moves, of the
New York Evening Post; DR.. A. Piatt
Andrew, now Assistant Secretary of
the Treasury and the chairman of the
New York clearinghouse committee
The account of the crisis of 1907
will naturally attract the greatest in
terest among bankers because of the
recent date of the event and the man.
ner in which Professor Sprague dis
cusses what he describes as defects
in the existing monetary sytem. He
declares that all the banks, judged by
the average of the preceding half
dozen years, were in a normal condi-
| ton of strength, and that those out
side of New York and st, LOUIS were
in slightly stronger condition in
1907 than in 1906. The upward ten
dency of loans was not so marked in
New York as in the case of the banks
in general. The $40S,OO0OOO of New
York bank loans in 1897 was nearly
20 per cent of all the loans of the
national banks, while the $712 1000, 900
iNt907 was just above Is per cent of
II Nptal. The increase in the de-
pos I of state banks and trust COM
panfes, however, held by the national
banks of New York was striking and,
Professor Sprague thinks, might we'll
have been considered alarming. In
ten years, from 1897 to 1907, the net
deposits due national banks by those
of New York increased from s155, 00O,-
900 to $213 100000, while net deposits
due to state banks, trust companies,
etc., increased from $75,900,0O0 to
$196.000,000 From a little more than
one-third the aggregate of bankers
deposits in 1897, the deposits due to
state institutions had become in 1907
almost equal to those due to the ma
tional banks. The ease with which
the growth of the trust companies
made possible the shifting of tens Of
millions of loans and deposit liabili-
ties seems to have obscured the es-
sential nature of the situation.
Professor Sprague points oat that
If, for any reason, it should become
necessary for the trust companies to
contract their banking operations it
would obviously be necessary for the
national banks to shoulder the burden
AZ OAoCi w oofO bnt iOCdl SlLudllOu.
at least $3OO,OO0,OoO. The outside
loans, estimated in 1906 to amount to
at least $300,O0O,0OO. The Outside
banks, 1t is declared, feel no RESPONSE
bility for the course of the market.
They will naturally withdraw from it
when affairs at home require more of
their funds or when they come to dis
trust the future. It therefore be-
comes necessary for the local banks
in the money center. to be able at all
times to shoulder at least part of
the loans which may be liquidated by
outside banks and also to supply the !
cash which is thus drawn away.
Taking up the relation between the
New York banks themselves, Profess
'or Sprague points out that the lead
ng banks controlled in 1873 only
lbout 80 per cent of the resources of
I'll the New York national banks. In
907 the 6 principal banks-the City,
First, Park. Chase and
lanover-controlled over so per cent |
Il the total. Their cash reserve had
Increased from less than two-fifths to
bout two thirds of that held by all
he banks. The net obligation of
hese 6 banks to other bankers on
august %, 1907, was $3O4,2OO,OOO out
net obligation for the So national
anks of the city of $41O,2OO,O0O. The
My certain resource for banks hold
lg large bankers deposits is a large
ash reserve, and that, Professor
prague says, was as conspicuously
cking in 1907 as it had been in
'79. In both years net bankers de.
'sits were more than twice the cash
30 |