Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1910-02-22
And Credit Instruments
Taking Place Of Cash.
Facts Discussed by Nation.
al Monetary Commission.
Monograph Prepared by Or. David
kinley Of University Of illinois.

" ttIl, -Dl 81 Ht ire
merdous checks and other credit in
s,ruinents' take the place of cash in
the ordinary business of this country
and the financial Questions and prob
lens growing out of this phenomenon
are discussed IN interesting and timely
fashion in the latest of the monographs
OF the National Monetary Commission.
to be issued in a day or two This
mOno2ra ph was prepared for the com
mission ~ DR.. David kinley, of the
University OF Illinois, and appears un-
der the title. THE use of credit instru-
ments in payments in the United
States" This work by Doctor Kinley
supplements and enlarges previous in
quiries which he has made under au-
ti.oritv of the Comptroller of the Cur
rnncv in 1894 and 1886.
''Ihe fact that the use of checks
against deposits renders unneces-
sary ii large amount of money, or
currency" says the author at the out
set, 'attracteG attention early in the
history of deposit banking, and efforts
have been made from time to time to
determine the proportion of money, or
currency. replaced with checks and
credit documents of similar character
He describes the purpose of his inquiry
as having been two-fold: First. Ito
find a basis for estimating the proper
ton Of business done by means of cred
it paper, or The volume of exchanges
settled without the direct use of money
or cur1 encysfn other words, tl@ vol
ume OF money which credit instruments
enable the country to dispense with,
and. therefore, indirectly, the volume
of money which the country needs"
and. second, 'to shed light on the ef-
feet of credit exchanges on the value
of money, or the price level
There have been several previous
inquiries in Great Britain and the
United States in regard to the use of
checks in wholesale transactions, but
it was only with the inquiry of 1894
that direct investigation was at
tempted as to the use of checks in re-
tail trade. The earlier inquiries estab-
lshed the fact that approximately 80
per cent. of the receipts of banks in the
large cities from ali sources are in the
form of exchange for the clearing house
or checks, drafts. and similar instru-
ments of credit which are not in the
form of metallic money or paper cur
rency.
The inquiry of 1894 was made by
means of blank prepared by Doctor
kinley and sent cut by the Comptroller
of the Currency. asking national banks
to give the deposits in different forms
of money and instruments of credit on
May Is, 1894, by retail grocers. butchers,
clotaiers, furniture dealers, and fuel
dealers. The result of that inquiry was
that 5S.9 per cent. of such deposits as
were reported We're in checks and store
orders and ALI uer cent. in various
kinds of currency. The inquiry of 1896,
following similar lines but extending to
the question of pay rolls, showed de-
posts in credit paper by retail dealers
amounting to GA per cent.
Doctor Kinley was not entirely sat
isficd with the completeness of these
results and laid out under the authority
Of the con- ptrOller and the National
Monetary Commission q much more
complete system of reports FOR the i'll
uuiry of 1909. In sending out a series
of intcrrogatories, he extended the list
of banks to which they were addressed
to state banks. loan and trust compa
MES. private banks, and savings banks.
The date on which these banks We're
requested to renoit their retail de-
rosits was March &c. 1909. Replies We're
received from 12,l66 institutions, Of
which 5.55l wcrc national banks, 1850
state banks, 139 private banks. Az loan
and trust companies. and 1914 savings
banks.
'rhe aggregate retail deposits report
cd for all the institutions where the
blanks were made ont properly were
SEQ, 4;G.772. OF this amount st4.2i9.292.
or 1872 per cent. Mere in credit docu-
ments. as against GA per cent. III 1896;
s13.3l4.G50. or % per cent. in currency;
and $2e52.1S0. or As per cent. We're in
specie, pretty evenly divided between
gold and silver. The largest volume or
deposits was in the returns CT
the national banks, where the per-
centage OF checks was IA. the
highest shown by any class OF
banks. The loan and trust companies
,ome next, with 1871 per cent. but their
iptal deposits were only about cne-
ighth of those OF the national banks
he third in order of percentage is the
safe banks. and the percentage OF
6 credit paper in their deposits is 20
lii aggregate deposits of fifteen and
ole-half millions, or about 40 per cent.
Of the deposits of the national banks.
Tie private banks. with aggregate re-
lt.l deposits of $780,, 900. show 6S.4 per
cent. of checks. while the stock savings
bsn<.. with deposits of $377.49o. show
GAL ,er cent of checks. The mutual
savings banks show 1913 per cent. in
checks in deposit of Sl2,49l.
From the national banks replies
which were available We're received
from 1852 The aggregate amount de-
posted by retail dealers in these banks
on the day in question was s3S623. 1863
OF this total. S2s.S46. 102. or ~ per cent
was in checks: SS.066,66S. or 900 per
/ cent i'll coin. The State in whose de-
post, the largest per cent. Of checks
appears is New York, with S6.6 per
cent The state showing the smallest
per cent. was Rhode Island. with $50
per cent. Thirty states show a per-
cen.ase of credit instruments in retail
deposits of 20 or more. Sixteen show i
percentage higher than so and less than
20, The District of Columbia shows 81
per cent
The retail deposits of the state banks