The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1911-01-14
STATE BANKS
HAVE MERITS
National Monetary Commits
sion Has Issued Book on
Relation to Banking

Washington, Jan. 14.-In an ex-
haustive review Of the growth Of state
banks and trust companies since ma.
tional banks entered the field III 1854,
Prof. George T. Barnett Of John Hop
kins university, in volume just pub
lished by the national monetary COM
mission, declares that he has been
unable to find that the rate of failure
among state banks is any higher than
that among national banks.
Professor Barnett bases his asser-
ton on an examination Of the statis-
tics of 1892 to 1909. He believes, how
ever, that the national banks pay q
higher percentage Of claims. Statis-
tics of failures of trust companies
are not complete, but the writer is
of opinion that their percentage Of
failure is higher than that of either
state or national banks.
Growth of state banks has been
phenomenal, according to the sta
tistics which have been collected for
the volume. They are now twice as
numerous as the national banks, al
though their combined capital is only
half as much. Their growth has been
especially rapid since 1886, and the
greatest increase has occurred since
1889. Their growth has been great
est In the far west and least In the
New England states. Trust compan-
les have been on the increase since
1889. There are now approximately
$4,000 state banks, private banks, and
trust companies.
State banks have enjoyed pronounc-
cd prosperity, Professor Barnett says,
because they have fewer restrictions
than national banks in making loans
and because the capital and reserve
requirements for state banks are less
stringent, while the profit on circula-
ton Of national-bank notes has not
been great. They have been growing
at the expense Of private banks, and
in many cases have supplanted ma
tional banks of. small capitalization.
The recent growth Of trust compan-
les, Professor Barnett says, has been
due to their more liberal reserve re-
quirements, their more liberal provi-
sions regarding investments, and
their wider range of powers in gem
eral.
The capital required to trust COM
panies varies from $1,000 in North
Carolina to $1,000,000 IN the District
VI SOAu&uVA0y kAO USUAL 404ulI 0lllouL
being 100000. "The first general laws
for the Incorporation Of trust COM
panies In the United States required
such companies to have q much larg-
er capital than that required for
banks, but the later legislation shows
a distinct tendency In the direction
Of lowering the requirements in re-
gard to capital" Most companies are
not usually required to accumulate a
surplus.
New Features.
The requirement of a specified re-
serve against demand liabilities is Of
comparatively recent date in most
states. I'm most of the antebellum
state banking laws reserves were re-
quired only against note issue. TN
til 1887 reserve was required for
state banks in only three states, and
In these the required reserves were
small" At present reserve Of from
ten to twenty-five per cent Of deposits
(either demand or total) is' required
in all except ten states. This reserve
need not be entirely cash In bank,
but may be part hank balance or, in
some cases. specified securities. "In
Connecticut, Florida and Pennsylvan-
Ia the reserve may consist partly, and
In Georgia wholly, Of securities"