New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-09-11

Clearing House statement and spo-
cial bank reports.--Financiul Edi-
tori
By Edgar D. Thornburgh
kkn ANK statements"-the sta
Is tistical displays Of condi-
'0 tion published each week
by the individual Federal Reserve
banks, those Of TIE Federal Reserve
Board issues showing the condition
of the twelve regional Reserve banks
and the exhibits put out by the
clearing house associations in the
more important reserve and central
reserve cities-too frequently are re-
garded by the general public as
things so highly technical and in
volved as to be past tho understand
ing Of the average newspaper read
err, and hence largely are disregard
ed. AS matter Of fat, they are
nothing Of the kind, and to the man
who will take che small trouble re-
quired to find out just what they
show they will tell an interesting
and an extremely important story.
The statement which the Federal
Reserve Board issues showing in con-
solidated form the resources and liza
bilities of the twelve Federal Reserve
banks, is, probably, the most important
banking statistical display to be pub
lished in any country in the world;
certainly far and away the most i'm
portant which is published in this
country. In scope it Is considerably
greater than the statement issued
weekly by the Bank Of England, for
while the latter institution is the great
"bankers' bank" for the greatest COM
mercial country in the world, the con-
solidated Federal Reserve statement
deals in far greater figures and is an
epitome of the banking situation in an
infinitely greater territory.
1t was not so many years ago tn
examinations Of the national banking
situation were indeed difficult to &C
complish. Prior to the creation Of the
Federal Reserve system in November,
1914, it was necessary, If one were to
attempt to analyze the banking condi-
ton of the United States, to depend
largely upon deductions drawn from
the weekly reports of half dozen Of
the leading clearing house associa-
l. 4
St Louis, the central Reserve cities,
augmented by the statements of perhaps
four or five other clearing houses,
were all that were available for current
week-to-week study. Four, and some
times five, times year the Comp
troler Of the Currency issued his call"
to the seven thousand odd national
banks, but these reports, while COM
prehensive enough, generally were so
belated in making their public appear
ance that n good part of their value
was lost, Similarly, the calls issued by
state superintendents of banks also
that their value was almost nil.
Some years ago, thanks to the eff
| forts Of the association of bank super
intendents, an understanding was ar
rived at with the Federal Comptroller
Of the Currency whereby calls, both
state and national, were synchronized
once every year, usually on June 80, SO
that something approximating a cor
! rect survey Of the national banking
situation was possible But the report
arising from this effort usually was
even longer in coming out than were
the other calls.
With the coming into being. Of the
Federal Reserve system this was
changed. Under the Federal Reserve
act all national banks were required to
join the system and state banks and
trust companies were permitted to do
SO. AS the regional Reserve banks were
made repositories for the legal reserve
/ of the member banks and also reser-
voirs of credit for the members, the
statements Of the regional banks natn-
rally reflected local conditions within
| the territory over which each held
I jurisdiction, and, by the same token,
the consolidated Federal Reserve re-
port m;rrored the national financial
| situation.
IN the beginning, of course, the con-
solidAted statement was decidedly
meagre. But as the system grew the
weekly statements steadily gained in
importance, until now, after nearly
seven years. growth, they are easily the
truest index we have, and, incidentally,
very true one.
To take up this statement in detail,
then, probably the first item that is
scanned is "ratio Of total reserves to
deposit and Federal Reserve note liza
bilities combined" This is purely a
gratuitous figure. 1t is not provided
for in the act, and although in the early
debates there apparently was some in
tention on the part of Congress to give
such a combined reserve item, there
was nothing in the subsequent debate
to show that Congress intended that
any such item should be Incorporated
In the statement. What Is provided
for in the act is that there shall be a
40 per cent gold reserve against Fed
eral Reserve notes and a 35 per cent
gold and legal tender reserve against
net deposit liabilities. But this com
bined reserve figure is matter of con-