The early history of the American colonies is strewn, like that of most new
countries, with many crude experiments in banking and currency issues. Most
of these colonial enterprises, however, were projects for the issue of
paper money rather than the creation of commercial banks. Speculative
banking was checked to a large extent in the colonies by the Bubble Act (6
Geo. I. c. 18), which was passed in England after the bursting of the South
Sea Bubble. This act, which forbade the formation of banking companies
without a special charter, was in 1740 extended to the colonies.
The serious history of banking in the United States may be said to have
begun with the foundation of the Bank of Pennsylvania. This bank originated
in the project of a number of the citizens of Philadelphia to supply the
continental army with rations. The first bills, issued in 1780, were
nothing more than interest-bearing notes payable at a future time. The
advances in continental money made by the shareholders were secured by
bills of exchange for L150,000, drawn on the American envoys in Europe, but
not intended to be negotiated.
A further outgrowth of the needs of the continental government was the Bank
of North America, which was authorized by congress on May 26, 1781. The act
gave to Robert Morris, the financier, power to create a bank with a capital
of $400,000, to be increased if desirable. Morris arranged with the Bank of
Pennsylvania to take over its holdings of foreign bills and paid in cash
its claims against the Federation. The Bank of North America did not begin
business until the 7th of January 1782, and there was so much doubt of the
power of the continental congress to charter a bank that it was thought
advisable to obtain a charter from the state of Pennsylvania. Under this
charter the bank continued to operate until it was absorbed in the national
banking system in 1863, and it may be considered the oldest organized
banking institution in the United States.
The bank did much, during the first eight years after its organization, to
restore order to the chaos of Federation finances. It loaned to Morris, as
government superintendent of finance, $1,249,975, of which $996,581 was
repaid in cash and the remainder by surrendering the stock in the bank
owned by the government.
_The Bank of the United States._--A national bank of issue was one of the
essential parts of the system built up by Alexander Hamilton in organizing
the finances of the Federal government under the constitution of 1789. The
first "Bank of the United States" was accordingly incorporated in 1791,
with a capital of $10,000,000, divided into 25,000 shares of $400 each.
This bank issued circulating notes, discounted commercial paper and aided
the government in its financial operations. The government subscribed
one-fifth of the capital, but paid for it by a roundabout process which
actually resulted in the loan of the amount by the bank to the treasury.
Other loans were made by the bank to the government, which gradually
carried the obligation by the end of 1795 to $6,200,000. In order to meet
these obligations, the government gradually disposed of its bank stock,
until by 1802 its entire holdings had been disposed of at a profit of
$671,860. The bank did not publish regular reports, but a statement
submitted by Gallatin to congress for January 24, 1811, showed resources of
$24,183,046, of which $14,578,294 was in loans and discounts, $2,750,000 in
United States stock and $5,009,567 in specie.
The expiration of the charter of the bank in 1811 was the occasion of a
party contest, which prevented renewal and added greatly to the financial
difficulties of the government in the war with Great Britain which began in
the next year. Although foreign shareholders were not permitted to vote by
proxy, and the twenty-five directors were required to be citizens of the
United States, the bank was attacked on the ground of foreign ownership as
well as on the constitutional ground that congress had no power to create
such an institution.
The government was compelled in the war of 1812 to rely on the state banks.
Their suspension of specie payments, in 1814, made it very difficult for
the treasury to transfer funds from one part of the Union to the other,
because the notes of one section did not circulate readily in another.
Gallatin left on record the opinion that the suspension of specie payments
"might have been prevented at the time when it took place, had the former
Bank of the United States been still in existence."
The financial condition of the government became so bad during the war that
the second Bank of the United States was authorized in April 1816. The
general project was that of Alexander J. Dallas, who in October 1814 had
become secretary of the treasury. The capital of the new bank was
$35,000,000, and the government again appeared as owner of one-fifth of the
stock, which was paid in a stock note. The president of the United States
was authorized to appoint five of the twenty-five directors and public
funds were to be deposited in the bank, "unless the secretary of the
treasury shall at any time otherwise order and direct." The right of
congress to charter the bank came before the Supreme Court in 1819 in the
famous case of _McCulloch_ v. _Maryland_. Chief Justice Marshall rendered
the decision that the right to create the bank was within the implied
powers granted by the Federal constitution, and that it was not competent
for the states to levy taxes upon the circulating notes of the bank or upon
its property except in common with other property.
The second Bank of the United States was not well managed in the early part
of its career, but was upon a firmer foundation under the presidency of
Langdon Cheves in 1819. Its policy greatly benefited commerce, but invited
bitter complaints from the private dealers in exchange, who had been
enabled to make excessive profits while the currency was below par, because
of its different values in different states and the constant fluctuations
in these values. The Bank, in the language of the report of Senator Samuel
Smith of Maryland in 1832, furnished "a currency as safe as silver, more
convenient, and more valuable [v.03 p.0346] than silver, which through the
whole western and southern and interior parts of the Union, is eagerly
sought in exchange for silver; which, in those sections, often bears a
premium paid in silver; which is, throughout the Union, equal to silver, in
payment to the government, and payments to individuals in business."
The bank in 1835 had attained a circulation of $23,075,422; loans of
$59,232,445; and deposits of $5,061,456. The institution was ultimately
destroyed by the open enmity of President Jackson, who in 1833 had
suspended the deposit of public money in its custody. This policy known as
the "removal of the deposits," excited a bitter political controversy in
which Clay and Webster led the opposition, but Jackson was supported by the
public (see JACKSON, ANDREW). The Federal charter of the bank expired in
1836. Under a charter obtained by President Nicholas Biddle from the state
of Pennsylvania, the bank continued its business, but without success, and
in 1841 it went into liquidation.
_The State Banks_.--The Bank of the United States found powerful rivals
during its life and successors after its death in the banks chartered by
the separate states. In the undeveloped state of the country in the early
days there was much unsound and speculative banking. The most successful
systems were those of New York and New England, where the surplus capital
of the country in the early days was chiefly concentrated. The least
successful banking systems were those in the newer and poorer sections of
the country, and they grew progressively worse as poverty and inexperience
added to the difficulty of setting aside capital for investment in the
tools of exchange.
The termination of the first charter of the Bank of the United States was
followed by a banking mania. In Pennsylvania a bill authorizing 41 new
banks was passed over the veto of the governor, and 37 of them were in
operation in 1814. Similar movements in other states increased the number
of banks in four years (1811-1815) from 88 to 208. The amount of specie was
not adequate to support the mass of credit which these banks created, and
what there was in the country drifted to New England, which was upon a
metallic basis. A number of banks collapsed in 1814, and business
prostration was prolonged for several years.
The banking laws of the states varied considerably. Some states authorized
the issue of notes upon state bonds, many of which, especially at the
outbreak of the Civil War, proved valueless. In New England, however, a
system prevailed which required the prompt redemption of the banks' notes
at par. The New England Bank was the pioneer of this movement in 1814. In
1824 what was known as the "Suffolk system" of redemption came into
operation. This system provided for the deposit by a bank in the Suffolk
Bank in Boston of a redemption fund, from which the notes were redeemed and
afterwards sent home by the Suffolk Bank for collection. This system, with
slight modifications, continued in successful operation until 1858. The
circulation of the New England banks in 1858 was less than $40,000,000 and
the redemptions in the course of the year through the Suffolk Bank were
$400,000,000. It was the essential merit claimed for the system that it
tended to keep the volume of the circulation constantly adjusted to the
requirements of business. A branch redemption agency was established at
Providence. Legal sanction was given to the system in Vermont by an act of
1842, which levied a tax of 1% upon bank capital, but remitted this tax to
any bank which should "keep a sufficient deposit of funds in the city of
Boston, and should at that city uniformly cause its bills to be redeemed at
par."
The period from 1836 to 1842 was a trying one for American banking. It was
preceded by another great expansion in financial ventures, made without
sufficient circulating capital or adherence to conservative banking
methods. Foreign capital had come into the country in considerable amounts
after the English crisis of 1825, the entire debt of the general government
was paid off and a tremendous speculation occurred in public lands, which
were expected to advance rapidly in value as the result of immigration and
the growth of the country. The sales of public lands in 1836, on the eve of
the crisis, reached 20,074,870 acres and brought receipts to the treasury
of $25,167,833. How essentially speculative was the mass of these sales is
indicated by the fact that such receipts declined in 1842 to only
$1,417,972. President Jackson pricked the bubble of speculation by the
"Specie circular" of July 11, 1836, requiring payments for public lands to
be made only in specie or notes of specie value. Practically every bank in
the Union stopped payment, and banking capital fell from $358,442,692 in
1840 to $196,894,309 in 1846. As usual in periods of business collapse the
shrinkage of capital did not follow at once the outbreak of the panic, but
was the result of gradual liquidation. Specie payments were resumed in
1838, but there was another crash in 1842, after the United States Bank
finally suspended.
In New York, which was becoming the chief commercial state of the Union,
the banks of New York City were generally sound, but several different
systems were tried of securing the circulating notes. The "safety-fund
system," inaugurated in 1829, provided for a contribution by each bank
towards a fund to meet the deficit of any contributing bank which might
fail with assets insufficient to meet its liabilities. It was the intention
of the act to protect by this fund only the bank-notes, but it was treated
as a fund for the payment of all the liabilities of a failed bank and in
consequence the fund was exhausted by important failures which occurred in
the panics of 1837 and 1857. Before 1843 the issue of notes was not
controlled by the state, so that in several cases there were illegal
over-issues.
What was called the "free-banking system" was inaugurated in New York by
the act of 1838. This system permitted any body of persons, complying with
the requirements of the law, to form a bank and issue circulation secured
by the deposit of various classes of public bonds. This system was in
operation at the outbreak of the Civil War, was imitated in several other
states, and became in a measure the model of the national banking system.
The state banks of Indiana and Ohio were among the most successful of the
state banks, being modelled somewhat on the European plan of a central
bank. They held in their states an exclusive charter for issuing notes and
had branches at important points throughout the state. Under the management
of Hugh McCulloch, afterwards secretary of the treasury, the bank of
Indiana weathered the crisis of 1857 without suspending specie payments,
and retired its circulation when gold went to a premium in 1862.
One of the defects of the state system of note-issues was the inconvenience
which it occasioned. Notes issued outside a state could not safely be
received without careful scrutiny as to the responsibility of their
issuers. The systems prevailing in New England, in Louisiana, in Ohio and
in Indiana were eminently successful, and proved the soundness of the issue
of bank-notes upon the assets of a well-conducted commercial bank. But the
speculation fostered by loose banking laws in some other states, and the
need for uniformity, cast a certain degree of discredit upon the state
banks, and prepared the way for the acceptance of a uniform banking system
in 1864.
The power of note-issue formed a more important part of banking resources
before the Civil War than in later years, because the deposit system had
not attained its full development. Thus in 1835 circulation and capital of
state banks combined were about $335,000,000 and deposits were only
$83,000,000, in 1907 circulation and capital of national banks
$1,430,000,000, while deposits were $4,322,000,000--in the earlier period
deposits forming less than one-third of the other two items and in the
later period three times the other items. The circulation of the state
banks fluctuated widely at different periods. A maximum of $149,185,890 was
attained in 1837, to decline to $106,968,572 three years later and to a
minimum of $58,563,608 in 1843. From this point there was a tendency
upward, with some variations, which put the circulation in 1845 at
$89,608,711; 1848, $128,506,091; 1850, $131,366,526; 1854, $204,689,207;
1856, $195,747,950; 1858, $155,208,344; 1860, $207,102,477; 1863,
$238,677,218.
Other leading items of the accounts of the state banks for representative
years are as follows:--
[v.03 p.0347]
_State Banking Progress_, 1835-1863.
+------+--------+---------------+-------------+-------------+
| | No. of | | Loans and | |
| Year.| Banks. | Capital Stock.| Discounts. | Deposits. |
+------+--------+---------------+-------------+-------------+
| 1835 | 704 | $231,250,337 |$365,163,834 | $83,081,365 |
| 1845 | 707 | 206,045,969 | 288,617,131 | 88,020,646 |
| 1850 | 824 | 217,317,211 | 364,204,078 | 109,586,595 |
| 1855 | 1307 | 332,177,288 | 576,144,758 | 190,400,342 |
| 1860 | 1562 | 421,880,095 | 691,945,580 | 253,802,129 |
| 1863 | 1466 | 405,045,829 | 648,601,863 | 393,686,226 |
+------+--------+---------------+-------------+-------------+
_The National Banking System._--The creation of the national banking system
was mainly the outcome of the financial necessities of the Federal
government in the Civil War. It was found difficult to float government
bonds at profitable rates, and Mr Chase, the secretary of the treasury,
devised the scheme of creating a compulsory market for the bonds by
offering special privileges to banks organized under Federal charters,
which would issue circulating notes only when secured by the deposit of
government bonds. But this plan, authorized by the act of 25th February
1863 (supplemented by the act of 3rd June 1864), was not sufficient to give
predominance to the national banks. The state banking systems in the older
states were so firmly entrenched in the confidence of the commercial
community that it became necessary to provide for imposing a tax of 10%
upon the face-value of the notes of state banks in circulation after the
1st of July 1866. The state banks were thus driven out of the note-issuing
business, some being converted into national banks, while others continued
their commercial business under state laws without the privilege of
note-issue. A remarkable growth in the national banking system took place;
in 1864 there were 453 national banks with an aggregate capital of
$79,366,950, and in 1865 there were 1014 banks with an aggregate capital of
$242,542,982.
The national banking system was specially marked by the issue of
circulating notes upon United States bonds. Any national bank desiring to
issue notes might by law deposit with the United States treasurer bonds of
the United States to an amount not exceeding its capital stock, and upon
such bonds it might receive circulation equal to 90% of their par-value. No
bank could be established which did not invest one-third of its capital in
bonds. This was changed in 1874 so as to reduce the requirement to 25%,
with a maximum mandatory requirement of $50,000. Notes were taxed at the
rate of 1% per annum. The banks obtained from the provision for circulation
the benefit of what was described by critics as "double interest," being
credited with the interest on bonds in the custody of the treasury
department, and being also able to lend their notes to the public. But
several deductions had to be made: notes could not be issued to the full
par-value of the bonds; the tax of 1% upon circulation reduced by that
amount the profit which would otherwise be earned; and the banks had to set
aside in gold or other lawful money what was needed for redemption purposes
and for reserves. As the banks suspended specie payments at the close of
1861 and great masses of government paper-money were issued, gold ceased to
be a medium of exchange except in California, and the new banks redeemed
their notes in government paper. The gold-value of the bank-notes,
therefore, rose and fell with that of government notes until the resumption
of payments in specie by the national treasury on the 1st of January 1879.
The amount of bank-notes in circulation proved in practice to be influenced
largely by the price of bonds. The maximum originally set for bank
circulation was $300,000,000. This was increased in 1870 by $54,000,000,
and in 1875 the limit was removed. The circulation reached $362,651,169 on
the 1st of January 1883, but afterwards declined materially as bonds became
scarce and the price rose. The fact that circulation could be issued to
only 90% of the par-value of the bonds greatly reduced the net profits on
circulation when the price of 4% bonds rose in 1889 above 129 and other
classes of bonds rose in like ratio. The circulation of bank-notes fell as
low as $167,927,574 on the 1st of July 1891, but afterwards increased
somewhat as the supply of bonds was increased to meet the treasury
deficiencies of 1894-1896 and the expenses of the war with Spain.
The national banks supported the government cordially in the measures taken
to bring about resumption of gold payments on the 1st of January 1879 under
the law of 1875. The banks held more than $125,000,000 in legal tender
notes, of which sum nearly one-third was held in New York City. A run upon
the treasury for the redemption of these notes would have exhausted the
gold funds laboriously accumulated by secretary Sherman and compelled a new
suspension. But the banks appointed a committee to co-operate with the
treasury, declined to receive gold longer as a special deposit, and
resolved to receive and pay balances without discrimination between gold
and government notes. Thus resumption was accomplished without jar, and as
early as the 17th of December 1878 gold sold at par in paper.
The silver legislation enacted by Congress in 1878 and 1890 caused
uneasiness in banking circles, and the banks discriminated against silver
dollars and silver certificates in their cash. When the treasury began to
lose gold heavily, however, in 1893, a combination of leading bankers in
New York, Boston, Philadelphia, Baltimore and Chicago turned over a large
part of their holdings to replenish the government reserves. About 150
national banks suspended during the panic of 1893, but 84 of these
afterwards resumed business. As in former periods of depression, the system
suffered the greatest decline during the years of liquidation following the
actual panic, the number of banks falling from 3856 on the 1st of June 1893
to 3585 on the 1st of June 1899, and aggregate capital falling during the
same period from $698,454,665 to $610,028,895.
A new extension was given to the national banking system by the provisions
of the gold standard law of 14th March 1900. Banks were authorized to issue
circulation to the full par-value of bonds deposited, and the tax upon
circulation was reduced from 1% to 1/2 of 1% in the case of circulation
which was secured by the 2% refunding bonds, which were authorized by this
law. By issuing 2% bonds in exchange for those paying a higher interest, at
approximately the market-price, it became possible to obtain a given amount
of notes upon a smaller investment in bonds, independent of other
provisions of the law. Under these provisions the volume of notes
outstanding, secured by bonds, which stood on the 31st of October 1899 at
$207,920,774, reached on the same date in 1900, $298,829,064; in 1901,
$328,198,613; in 1902, $335,783,189; in 1903, $380,650,821; in 1904,
$424,530,581; in 1905, $490,037,806; in 1906, $536,933,169; and in 1907
$562,727,614.
The lowest denomination of national bank-notes authorized by law is $5, and
not more than one-third of any bank's issues can be of this denomination.
The government issues notes for $1 and $2, as well as for higher
denominations. The largest amount of bank-notes of one denomination is in
bills for $10, which on the 31st of October 1907 constituted $249,946,530
in total outstanding issues of $609,905,441. Of this total circulation
$562,727,614 was secured by bonds, and the remainder, $47,252,852, was
covered by lawful money in the government treasury, deposited for the
redemption and retirement of the notes as they might be received.
An important extension of the national system resulted from the authority
given by the act of 1900 to incorporate national banks with a capital as
low as $25,000, in places having a population not in excess of 3000. The
previous minimum limit had been $50,000. Under this provision there were
incorporated to the 31st of October 1907 2389 national banks with capitals
of less than $50,000, with aggregate capital of $62,312,500, of which 272
banks were conversions of state and private institutions, 752 were
reorganizations and 1365 were new institutions.
The national banks possess most of the powers of commercial banks, but are
not permitted to hold real estate other than their banking houses, unless
taken for debt. Five reports are required each year to the comptroller of
the currency at dates selected by him without notice, and each bank is
subject to the visitation of bank examiners acting under the comptroller.
No reserves against notes are required by existing law except 5%, which is
[v.03 p.0348] kept in Washington for current redemption purposes. The
redemption system is defective in that redemptions are not authorized at
other places, and the notes reach the treasury on an average only about
once in two years. For many years the banks were prohibited from retiring
more than $3,000,000 of notes monthly, but the limit was raised by an act
of 4th March 1907 to $9,000,000 per month.
Reserves are required against deposits to the amount of 25% in so-called
"reserve cities," and 15% in what are called the "country banks" outside of
reserve cities. Not all these amounts, however, are required to be kept in
cash. The three central reserve cities, where cash is required, with only
trifling deductions, are New York, Chicago and St Louis. In other reserve
cities, which in 1908 numbered forty, the banks are permitted to deposit
half their cash in national banks in central reserve cities, while country
banks may deposit three-fifths of their cash in any reserve city. The
shareholders of national banks are subject in case of liquidation to double
liability upon their shares, and this is now the rule in most of the
conservative state banking systems. National bank-notes are not legal
tender, but are receivable by the government for all obligations except
customs dues.
The panic of 1907 imposed a severe strain upon the cash resources of the
banks of New York City, but did not cause any such considerable number of
failures as occurred in 1893.
Payment of cheques in currency was suspended in New York on the 28th of
October 1907, and continued until about the beginning of the year 1908. The
panic was precipitated by over-speculation by a group of national banks,
followed by the suspension of the Knickerbocker Trust Company on the 22nd
of October with deposits of $48,000,000. Then came runs on other companies,
a deficit in the required reserves of New York banks of $38,838,825 in the
week of 2nd November, and arrangements for the importation of foreign gold
to an amount which soon approached $100,000,000. With an increase during
the autumn of about $77,000,000 in national bank circulation, a transfer of
$72,000,000 from the treasury to the banks, and a further decline in
required reserves in New York during the next week, the amount of currency
which was added to the circulation or disappeared during a few weeks of the
panic amounted to more than $275,000,000, or nearly one-tenth of the usual
volume of circulation in the country. The total bank-note circulation on
the 28th of December 1907 had risen to $687,340,835; but this amount was
abnormal and was reduced somewhat during the spring of 1908.
The position of the trust companies, especially those of the city of New
York, was one of the disturbing features of the panic. These companies were
comparatively a small factor in New York finance at the time of the panic
of 1893. The capitalization of all the trust companies in the United
States, even as late as 1897, was only $106,968,253, and individual
deposits were $566,922,205. The capital of these companies had risen in
1907 to $276,146,081 and their deposits to $2,061,623,035. The trust
companies of New York were required by the law of the state to maintain
only 5% of their demand deposits in cash in their vaults. Whilst most of
them had also large amounts on deposit in national banks, these reserves
proved inadequate to sustain the vast mass of credit which was built upon
them. The absolute amount of the reserves, however, was perhaps less
important than the class of business to which some of the less conservative
of these companies had committed themselves. Instead of keeping their
assets liquid by purchases of commercial paper and loans on first-class
negotiable securities, they had in some cases engaged in speculative
underwritings and had locked up their funds in enterprises requiring a long
time for their consummation.
It was these combined influences which led to distrust of the Knickerbocker
Trust Company, and to the runs upon that company and others during the late
days of October and early November. The result was to reduce the total
resources of the forty-eight trust companies of Greater New York from
$1,205,019,700 on the 22nd of August 1907 to $858,674,000 on the 19th of
December 1907. Individual deposits subject to cheque fell from $692,744,900
to $437,733,400. Such a reduction of resources within so short a time, most
of it being accomplished within a few weeks, has hardly ever been recorded
in the history of banking, and the fact that the stronger companies were
able to call in their cash and meet such demands was evidence to a certain
extent that the criticisms upon them were exaggerated. The necessity for
stronger reserves and for greater safeguards against speculative operations
was so strongly impressed upon the public mind, however, that several
restrictive measures were enacted at the session of the New York
legislature in 1908, designed to prevent any abuses of this sort in the
future.
The function of issuing notes, which is exclusively a privilege of national
banks, has diminished in importance in America, as other methods of
transferring credit have attained a wide development. This has not only
been true of the national banks themselves, but has accounted for the
development alongside the national banking system of state banks, private
banks and trust companies, which have not had the privilege of note-issue,
but have obtained other privileges sometimes greater than those of the
national banks.
The aggregate resources of all classes of banks in the United States have
greatly increased in recent years. The following table shows the increase
in the chief items of the accounts of national banks for representative
years from the reports made nearest to the beginning of the year:--
PROGRESS OF NATIONAL BANKS, 1865-1908
+--------+----------+-------------------+-----------------+
| | No of | Loans and | Individual |
| Year. | Banks | Discounts. | Deposits |
+--------+----------+-------------------+-----------------+
| 1865 | 638 | $166,448,718 | $183,479,636 |
| 1870 | 1615 | 688,875,203 | 546,236,881 |
| 1875 | 2027 | 955,862,580 | 682,846,607 |
| 1880 | 2052 | 933,543,661 | 755,459,966 |
| 1885 | 2664 | 1,234,202,226 | 987,649,055 |
| 1890 | 3326 | 1,811,686,891 | 1,436,402,685 |
| 1895 | 3737 | 1,991,913,123 | 1,695,489,346 |
| 1897 | 3661 | 1,901,160,110 | 1,639,688,393 |
| 1899 | 3590 | 2,214,394,838 | 2,225,269,813 |
| 1900 | 3602 | 2,479,819,494 | 2,380,610,361 |
| 1901 | 3942 | 2,706,534,643 | 2,623,997,521 |
| 1902 | 4291 | 3,038,255,447 | 2,964,417,965 |
| 1903 | 4666 | 3,303,148,091 | 3,152,878,796 |
| 1904 | 5180 | 3,469,195,043 | 3,300,619,898 |
| 1905 | 5528 | 3,728,166,086 | 3,612,499,598 |
| 1906 | 5911 | 4,071,041,164 | 4,088,420,135 |
| 1907 | 6288 | 4,463,267,629 | 4,115,650,294 |
| 1908 | 6625 | 4,585,337,094 | 4,176,873,717 |
+--------+----------+-------------------+-----------------+
The combined returns of state and private banks, savings banks and loan and
trust companies in the United States show a growth within a few years which
is indicated by the principal items of their accounts:--
RESOURCES OF STATE BANKS, TRUST COMPANIES, &c.
+-----------------------+------------------+----------------+
| Items. | 1897. | 1907. |
+-----------------------+------------------+----------------+
| Capital stock | $380,090,778 | $807,178,262 |
| Surplus and profits | 382,436,990 | 924,655,010 |
| Loans | 2,231,013,262 | 6,099,897,535 |
| Deposits | 3,324,254,807 | 8,776,755,207 |
| Total Resources | 4,258,677,065 | 11,168,514,516 |
+-----------------------+------------------+----------------+
The aggregate banking power of the United States, as computed by the
comptroller of the currency in his annual report for 1907, increased from
$5,150,000,000 in 1890 to $17,824,800,000 in 1907, and the banking power of
foreign countries from $10,835,000,000 to $27,034,200,000, representing an
increase for all reporting countries from $15,985,000,000 to
$44,859,000,000.
The system of clearing cheques has attained a higher development in the
United States than in any other country, except perhaps, Great Britain.
Clearing-houses exist in about 112 leading cities, and the aggregate
clearings for the year ending 30th September 1907 reached $154,662,515,258.
The New York Clearing-House inevitably does a large proportion of this
business; its clearings constituted in 1906 67.2% of the total clearings in
55 of the larger cities. The volume of clearings fluctuates greatly with
the volume of stock-exchange transactions and with the business prosperity
of the country. An indication of these fluctuations at New York is afforded
by the following table, taken from Conant's _Principles of Money and
Banking_, brought down to 1907.
[v.03 p.0349]