The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-01-13
COMMISSION REPORT

| Hopkins University, IS given out by the
National Monetary Commission. This
report makes comparison between Ma
tional banks on the one hand and State
banks and State incorporated trust com.
panics on the other. It notes especially
the growth of trust companies and the
drifting Of those companies into bank
ing business. The trust companies have
usually escaped number Of the strin-
gent requirements that are imposed
upon banks Their reserves have not
been required to be rs high, nor to be
| as Immediately available as the require
nent is as to banks This is cond.
lion, however, that is gradually being
improved, and the trust companies that
do a banking business arc now more aud
more being required 10 conform tu bank
ing restrictions
AS 10 State banks, their growth has
been phenomenal, according TO the sta.
tistics which have been gathered for
this report. They are now twice as
numerous as the National. hanks. but
their aggregate capital is only half as
much. They have enjoyed pronounced
prosperity because State banks have
fewer restrictions than National banks
in making loans, and because the CAPT
tsl and reserve requirements for. State
banks arc less stringent, while the profit
ON circulation of National bank notes
has not been great.
Professor Barnett says that he has
been unable TO find that the rate of
failure is any higher among state banks
than that among National banks II
Will he remembered. however. by those
who recall the days when State banks
lssued currency, that the almost univer.
sal, immediate cause Of the fallure of
such State banks as failed (and they
were numcrous) was on account Of their
inability to redeem their circulation.
That was the sore spot with the old
State banks And their bank notes we're
subject 10 depression and discount as
soon as they were taken beyond the
boundaries OF the State in which they
were chartered. Undoubtedly. however.
If the privilege of lssuing State bank
noTes were restored, that is, if the pro.
hlbitory tax on such issues were taken
of, the state banks would ssue as much
currency as the National banks, perhaps
more
The State banks not only have grown
very largely at the expense of the Ma
tional banks. but they have. also, sup
planted private banks, the reasons given
being that since the development of
State supervision the credit Of State
banks approXimatcs that OF National
banks. except for interstate business;
the profit on the issue OF National bank
notes has been small, State banks have
more freedom in making loans, and may
lend on rcaf estate And the reserve
requirements for. state banks are less
stringent than for National banks. This
last reason, as given in the report, uu-
doubtedly is. because of the bank note
issues of the National banks. which
are forbidden TO State banks. A bank
that does not issue curreQcN does not
need the amount of reserve that bank
does which issues notes:
The lack of inducement for the cx-
pansion of National bank notes is made
clear in this report. The
higher reserve requirements. the more
rigid inspection, the tax ON circulation,
and the regulations formulated by the
department, arc all 81 many items of
cost and of trouble TO the banks. The
aggregate of these seems to be prohibi
tive on the expansion of the National
banks in number and Importance.
The tenor of this report seems to
raise the question whether it is not bet
ter 10 let the National banks die out
and let the State banks resume their
former functions of issuing currency,
under restrictions that might perhaps
be partly National in view of the in
terstatc circulation of the State bank
which would issue Evidently.
however. the National bank system. as a
means of furnishing currency to the
Nation and of placing Government
bonds, has in. expert opinion outlived
ITS chef usefulness, and the theoretic
fnanciers are looking forward TO sys.
tenn that will tend to its termination
and the building up of currency sys-
tem that will be as broad as the Union,
and at the same time as local as the
postofhcc. The National banks have
served the purpose of placing Govern
ment loans and of issuing currency
about 10 the limit of their usefulness,
il is argued. And this report is evi.
IDENTITY predIcated on that basis. But
TO the people the absolute safety of the
bank notes IS the chief consideration
1t will be much discussed. as President
Taft intimatcd that IT should be, and
out of all the discussions and PROPOSE
tions that undoubtedly will cnsue, there
will be evolved currency system for
this country that will be immensely !