3 .jii y .i-j ?
. . . . . . y . . -
_ _ ,
Conservative.
There is 111 Lou-
A USEFUL AVOKK. , . ,
don a society
which has for its purpose the "convert
ing" of Jews. In its last fiscal year ,
this society expended in the line of its
work something over $190,000. Its
gross returns in the same period were
twenty-eight Jews , or about $6,800 per
Jew.
"By Allah , O Jew , if thou become a
Mohammedan , thy becoming so will not
profit the Mohammedans , nor will it
injure the Jews ; and if then remain in
thine infidelity , thine infidelity will not
injure the Mohammedans , nor will it
profit the Jews. "
HOW TJUE I'KESENT HANKING SYSTEM
FAVOKS "TItUSTS. "
It is erroneous to assume that the
protective tariff is the only political
cause for the existence of "trusts , " and
that tariff reduction is the only practical
remedy. A most favorable condition to
their growth , and of corporations as well ,
is to be found in the present banking
laws ; while monetary reform would
furnish a most efficient remedy.
That this' "favorable condition" actu
ally exists is constantly growing , and is
in contravention of sound principles , is
fairly proven by the character of laws
made by the national banks. The pri
mary or chief function of banks is to
make loans of money upon "commercial
paper" or personal security ; loaun upon
"transferable securities" or upon stocks ,
bonds , mortgages or other property , are
at most an incidental function , the
policy of making which in large volume
is of questionable soundness ; and when
such loans increase to such an extent as
to constitute nearly half the loans of
the banks , and that within a very few
years , it is certainly a matter requiring
the most thoughtful consideration.
Owing to the manner in which
statistics have been gatheped it seems
that complete information upon the
matter of such loans can only be had
for the past eight or nine years. Prior
thereto the comptroller of the currency
made separate report only upon that
portion of these loans as were payable
on demand , the portion payable on
time being included in another and more
general class. Taking the portion pay
able on demand , however , we find that
these increased from 199 millions of
dollars in 1880 , to 552 millions in 1899 ;
or nearly 280 per cent in thirteen years.
It is notable , too , that these loans have
grown up mainly in the great cities ; for
the period stated the increase in New
York City was from 91 to 228 millions ;
outside of the reserve cities the amounts
and increase were from 41 to 91 millions.
From 1892 to the present the loans of
the national banks have been so
gathered , classified and reported by the
comptroller as to show the advancements
on "commercial paper" and "trans
ferable securities" separately. From
his reports , Vol. 1 , pp. CG2 and 8 for
1890 ; Vol. lpp. 412 and 18 for 1898 ,
and proof sheets for 1899 , the following
table has been compiled.
I-oaiiH Made Ity the National Hauler.
In the Reserve Cities.
The figures contained in the above
table are perhaps the best evidence of
present tendencies that can be had ;
because of all banks and loan companies
the national banks should have the
greatest proportion of loans on com
mercial paper , and the least on stocks ,
bonds and other long-time securities.
Yet the table shows for the eight years
covered , that loans of the former class
have actually decreased , while those of
the latter class have increased enor
mously. In the reserve cities the order
of business has met with actual change ;
the incidental function of the banks has
become more important than their pri
mary function , and their stock loans
now exceed their commercial loans by
over 140 millions of dollars.
Taking all the national banks it
appears that their security loans con
stituted 80 per cent of their entire busi
ness in 1892 ; that is certainly serious
enough , but in the present year we find
this incidental branch to have grown to
42 per cent of the entire business. The
loans on commercial paper have fallen
from 70 per cent in 1892 , to 58 per cent
in 1899 ; and at this ratio of change the
passing of the present century may prove
the Rubicon , crossing which our bank
ing system may be torn from the
moorings of ancient usage and sound
financial principles.
It is interesting to study the statistics
referred to and compare the stock or
security loans of the banks in some of
the cities where the "trust" movement
has been most active. Comparing such
loans in the year 1896 with those in the
present year , we find that they increased
as follows : In Cleveland , Ohio , from
eight to sixteen millions of dollars ; in
Pittsburg , Pa , from fifteen to thirty-
four millions ; in Cincinnati , Ohio , from
seven to eleven millions ; in Baltimore ,
Md. , from eleven to twenty millions ; in
Philadelphia , Pa. , from thirty-nine to
seventy-three millions , and in Boston ,
Moss. , from forty-one to eighty-one
millions.
The immediate cause of these condi
tions is to bo found in the location of
bank deposits ; the only credit resource
loft to the national banks by the law , in
their formation. In his report for 1898 ,
Vol. 1 , pp. 474 to 479 inclusive , the
comptroller of the currency gives a table
showing the number of national banks
located in towns and cities of less than
10,000 inhabitants , with the amounts of
their deposits and loans ; also the same
data as to banks located in cities that
size and larger. Although there is in
cluded in the former class 67 per cent of
our entire population , and nearly two-
thirds of all the national banks , it ap
pears from the table that these banks
only possess about one-fifth of the total
deposits of national banks , and are
making but one-fifth of the total loans.
This table shows that over half the city
population of the United States is con
tained in the five states of Massachusetts ,
New York , Pennsylvania , Ohio and
Illinois , the states in which "trusts" are
most active , and that the Southern
states contain about 80 per cent of our
entire population ; yet the banks in the
five states mentioned possess over 62
per cent of national bank deposits and
make over 68 per cent of the national
bank loans , while the national banks in
the Southern states possess but a little
over 7 per cent of such deposits and
make less than 8 per cent of such loans.
The deposits and loans of the banks in
Massachusetts , alone , exceed those of
the banks in the South by over one-
half ; and as compared with the deposits
and loans of the banks in all the Western
and Pacific states combined , they ex
ceed the latter in still greater pro
portion.
With such localization of bank de
posits , the utilization of which consti
tutes the main source of profit to the
banks , it is not wonderful that loans on
commercial paper are decreasing , and
loans on securities so rapidly increasing.
The former is a personal security and
depends on the knowledge of the banker
as to the character , honesty and respon
sibility of the borrower ; generally that
can only be when the banker and the
borrower live in the same locality. It
is impossible for the banker in New
York , Chicago or Cleveland to know the
character and responsibility of thousands
of farmers , planters , stockmen , miners
and manufacturers , a thousand or two
thousand miles away , and these scattered
over millions of square miles.
It is far different with transferable
securities , which in most every instance
represent , and are a general or specific
lien upon tangible , permanent property.
The "trust" combines together all the
real estate , plants , warehouses , fixtures ,
appliances , trucks , wagons and outfits of
similar businesses all over the country ,