Evening bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1895-1912, 1910-08-01
Our New Phone Number VIII BE
1 z 8 I
City Transfer Co. (Jas. H. Love-
Defects in
OUR SYSTEM

WASHINGTON. d. c., July s.
The most complete summary OF bank
ing history OF the crises Of 1873,
1884, 1898 and 1907 yet prepared is
embodied in n monograph by Pro
lessor Sprague OF Harvard, made pub
lie by the national monetary commits
sion.
y In the account OF the crisis Of 1907
Professor Sprague discusses defects
In the existing monetary system. He
declares that all the banks, judged
by average OF the preceding half
dozen years, were In normal condi-
ton and strength, and that those
outside New York and st. Louis were
in slightly stronger condition in
1907 than In 1906.
The upward tendency of loans was
not so marked in New York as in
case OF the banks in general. The
s40S, 900, 900 Of New York bank loans
in 1897 was nearly 20 per cent, OF
all loans OF national banks, while
the s712.O00, 900 in 1907 was just
above Is per cent. OF the total.
The increase In deposits OF state
banks and trust companies, however,
acid by national banks OF New York
was striking and might well have
been considered alarming. In ten
years. from 1897 to 1907, net de-
posits due national banks by those
OF New York increased from s155,.
100000 to s213,s00. 900 while net
deposits due to state banks, trust
companies, etc. increased from $780,
100000 to s1s3,30o,O0O.
From a little more than one-third
the aggregate OF bankers deposits In
1897, the deposits due to state insti'
tutions had become in 1907 almost
equal to those due to the national
banks. The ease with which growth
OF trust companies made possible the
shifting OF tens OF millions Of loans
and deposit liabilities seems to have
obscured the essential nature OF the
situation.
II. for any reason. 1t should be
come necessary Tor trust companies
to contract their banking operations
II would obviously be necessary fol-
the national banks to shoulder the
burden In order to save the local sit
uation. There was also the elemenI
of outside loans. estimated in 1906
at least s30O,0OO,O00. The outside
banks, II is declared, feel no respon
sibility for the course OF the market
They will naturally withdraw from
II when affairs at home require NOR,
of their funds or when they come e
distrust the future. II therefore be
comes necessary for the local bank
In the money center TO be able at al
times to shoulder at least a part o
the loans which may be liquidated b!
outside banks and also to supply thu
cash thus drawn away.
In New York the seven LEADING
banks controlled in 1873 only abou
80 per cent. OF resources OF all thu
New York national banks. In 190'
the six principal banks-City, Com
merce, First, Park, Chase and Han
over 60 per cent. o
the total. Their cash reserve had In
creased from less than two-fifths Il
about two-thirds Of that held by al
the banks. The net obligation o
these six banks to other bankers OF
August 22, 1907, was 1904, zoe. DOT
out OF q net obligation for the thirty
eight national banks OF the city o
S410,200,000. The only certain re
source for banks holding large bank
ers deposits Is a large cash reserve
and that was as conspicuously lack
ing In 1907 as II had been In 1873
In both years net bankers deposit
were more than twice the cash re
serves of these banks, and their pro
portion OF cash to net deposits wa
but slightly above the 26 per cent
required by law. -