Readings in Money and Banking

About this eBook

Author

Phillips, Chester Arthur, 1882-1976

Title

Readings in Money and Banking Selected and Adapted

Credits

E-text prepared by Jonathan Ingram, Josephine Paolucci, and the Online Distributed Proofreading Team ( www.pgdp.net) from page images generously made available by Internet Archive/Canadian Libraries ( www.archive.org/details/toronto)

Language

English

LoC Class

HG: Social sciences: Finance

Subject

Banks and banking -- United States

Category

Text

eBook-No.

35120

Project Gutenberg

https://www.gutenberg.org/ebooks/35120

Release Date

January 30, 2011

Copyright

Public domain in the USA.

Contents

1. 1.E-text prepared by Jonathan Ingram, Josephine Paolucci, and the Online Distributed Proofreading Team ( http://www.pgdp.net ) from page images generously made available by Internet Archive/Canadian Libraries ( http://www.archive.org/details/toronto ) — READINGS IN MONEY AND BANKING
2. 2.CHESTER ARTHUR PHILLIPS
3. 3.PREFACE
4. 4.TABLE OF CONTENTS
5. 5.READINGS IN MONEY AND BANKING
6. 6.CHAPTER I — THE ORIGIN AND FUNCTIONS OF MONEY — FOOTNOTES:
7. 7.CHAPTER II — THE EARLY HISTORY OF MONEY — Currency in the Hunting State — Currency in the Pastoral State — Articles of Ornament as Currency — Currency in the Agricultural State — Manufactured and Miscellaneous Articles as Currency — The Invention of Coining — FOOTNOTES:
8. 8.CHAPTER III — QUALITIES OF THE MATERIAL OF MONEY — 1. Utility and Value — 2. Portability — 3. Indestructibility — 4. Homogeneity — 5. Divisibility — 6. Stability of Value — 7. Cognisability — FOOTNOTES:
9. 9.CHAPTER IV — LEGAL TENDER [5] — FOOTNOTES:
10. 10.CHAPTER V — THE GREENBACKS — The Greenback Issues — The Fluctuating Premium on Gold — The Effects of Greenbacks upon Wages — Rent — URBAN RENTS — FARM RENTS — Interest and Loan Capital — THE PROBLEM OF LENDERS AND BORROWERS OF CAPITAL — PURCHASING POWER OF THE PRINCIPAL OF LOANS — THE RATE OF INTEREST — Profits — PROFITS IN AGRICULTURE — STATISTICAL EVIDENCE REGARDING PROFITS — The Production and Consumption of Wealth — PRODUCTION — CONSUMPTION — The Greenbacks and the Cost of the Civil War — GREENBACKS AND EXPENDITURES — THE GREENBACKS AND RECEIPTS — (In millions of dollars) — Contraction and Inflation of the Legal Tenders [9] — Passage of the Resumption Act [10] — The Struggle for Resumption [11] — Arrangements for Resumption [12] — Should the Greenbacks Be Retired? — WHY RETIREMENT IS NOT IMPORTANT — The Confederate Currency [14] — FOOTNOTES:
11. 11.CHAPTER VI — INTERNATIONAL BIMETALLISM — FOOTNOTES:
12. 12.CHAPTER VII — THE SILVER QUESTION IN THE UNITED STATES — Agitation for Silver and the Passage of the Bland Bill — Provisions of the Act of 1878 — SILVER CERTIFICATES — Causes of the Act — Wherein Peculiar — Limited Circulation of the Silver Dollars — Provisions of the Act of 1890 — AMOUNT OF MONTHLY ISSUES — The Policy of the Banks — The Argument for Silver — THE BIMETALLIST ARGUMENTS — THE EFFECT OF IMPROVEMENTS IN PRODUCTION — THE CASE OF THE FARMER — The Repeal of the Sherman Silver Purchase Act and the Financial and Economic Consequences of Silver Legislation — SALE OF BONDS FOR GOLD — FOOTNOTES:
13. 13.CHAPTER VIII — INDEX NUMBERS — FOOTNOTES:
14. 14.CHAPTER IX — BANKING OPERATIONS AND ACCOUNTS — Statement of A Representative National Bank — The Relation Between Loans and Deposits — Relation Between Reserves and Demand Liabilities Again — THE RÔLE OF A SPECIE RESERVE ILLUSTRATED BY THE INCONVERTIBLE NOTES OF THE BANK OF ENGLAND ISSUED DURING THE OPERATION OF THE RESTRICTION ACT [37] — FOOTNOTES:
15. 15.CHAPTER X — THE USE OF CREDIT INSTRUMENTS IN PAYMENTS IN THE UNITED STATES — FOOTNOTES:
16. 16.CHAPTER XI — A SYMPOSIUM ON THE RELATION BETWEEN MONEY AND GENERAL PRICES — Indirect Influences on Purchasing Power [52] — [ Summary ] — The Testimony of Ricardo — FOOTNOTES:
17. 17.CHAPTER XII — THE GOLD EXCHANGE STANDARD — Objections To The Gold-Exchange Standard For The Straits Settlements Answered — FOOTNOTES:
18. 18.CHAPTER XIII — A PLAN FOR A COMPENSATED DOLLAR — FOOTNOTES:
19. 19.CHAPTER XIV — MONETARY SYSTEMS OF FOREIGN COUNTRIES — England [89] — Canada — British Colonies — Latin Union — France — Belgium — Italy — Switzerland — Greece — Spain — Germany — Austria-Hungary — Portugal — Netherlands — Sweden—Norway—Denmark (Scandinavian Union) — Russia — Japan — China — Philippines — Argentina — Brazil — Chili — FOOTNOTES:
20. 20.CHAPTER XV — THE NATURE AND FUNCTIONS OF TRUST COMPANIES — The Advantages of a Trust Company as Trustee — Banking — Corporate Trusts — Individual Trusts — Other Functions — Care of Securities and Valuables — Insurance — Compensation — Government Regulation — FOOTNOTES:
21. 21.CHAPTER XVI — SAVINGS BANKS — Classification of Savings Banks — Trustee Savings Banks — Stock Savings Banks — Guaranty Savings Banks — Municipal Savings Banks — People's Banks — The Localization of Savings Banks in the United States — Postal Savings Banks — American Postal Savings Banks — ARGUMENTS FOR AND AGAINST THE ESTABLISHMENT OF POSTAL SAVINGS BANKS IN THE UNITED STATES. — THE MAIN FEATURES OF THE SYSTEM — " Postal Savings Behind the Scenes " — FOOTNOTES:
22. 22.CHAPTER XVII — DOMESTIC EXCHANGE — Exchange Relations Between Chicago and New York — Exchange Relations Between St. Louis and New York — Domestic Exchange in San Francisco on New York City — Currency Movements Between New England and the Eastern States — The Domestic Exchanges During the Crisis of 1907 [102] — FOOTNOTES:
23. 23.CHAPTER XVIII — FOREIGN EXCHANGE — The Nature of Foreign Exchange — "Favourable" and "Unfavourable" Exchanges — The Origin and Supply of Foreign Exchange — The Sources of the Demand for Foreign Exchange [106] — Methods of Financing Imports and Exports [107] — Credit Risks of Drafts Drawn on Buyers Abroad — England Draws Few Bills, But Accepts Many—The Reason and the Result — The Recent Rise of the American Acceptance Market — The Economies and Advantages of "Dollar Credits" [113] — The New York Foreign Exchange Market [114] — New York City Practically Absorbs by Purchase All American Foreign Exchange — How Money Is Made in Foreign Exchange—The Operations of the Foreign Department — I. SELLING "DEMAND" AGAINST "DEMAND" — II. SELLING CABLES AGAINST DEMAND EXCHANGE — III. SELLING "DEMAND" BILLS AGAINST REMITTANCES OF LONG BILLS — IV. THE OPERATION OF MAKING FOREIGN LOANS — V. THE DRAWING OF FINANCE-BILLS — VI. ARBITRAGING IN EXCHANGE. — Gold Movements — COMPLICATIONS IN THE DETERMINATION OF GOLD POINTS — THE HANDLING OF GOLD SHIPMENTS — The Silver Exchanges — FOOTNOTES:
24. 24.CHAPTER XIX — CLEARING HOUSES — I. In the United States — A CLEARING HOUSE DEFINED — METHODS OF EXCHANGE IN NEW YORK PRIOR TO 1853 — THE ORIGIN OF THE NEW YORK CLEARING HOUSE — MEMBERSHIP AND ADMITTANCE FEES AT NEW YORK — [126] METHODS OF SETTLING BALANCES — [127] RATIO OF BALANCES TO CLEARINGS — [128] THE NATURE OF CLEARING-HOUSE LOAN CERTIFICATES — CLEARING-HOUSE LOAN CERTIFICATES AND THE EQUALIZATION OF RESERVES [129] — CLEARING-HOUSE BANK EXAMINATIONS [133] — II. Clearing Houses in England — THE LONDON BANKERS' CLEARING HOUSE AS THE FOREMOST EXAMPLE — PROVINCIAL CLEARINGS — FOOTNOTES:
25. 25.CHAPTER XX — STATE BANKS AND TRUST COMPANIES SINCE THE PASSAGE OF THE NATIONAL BANK ACT — The Evolution of the Trust Company — Incorporation — Capital and Surplus Requirements — Liability of Stockholders — Restrictions on Loans and Discounts — LOANS TO DIRECTORS AND OFFICERS — REAL ESTATE LOANS — Reserves — Branch Banks — Further Reason for the Lack of Branch Banks in the United States — The New York State Bank Act of 1914 [145] — FOOTNOTES:
26. 26.CHAPTER XXI — THE CANADIAN BANKING SYSTEM — The System Not New — Other Financial Institutions — The Essentials of the System — PROCESS OF INCORPORATION — NOTE ISSUES — SECURITY OF NOTES — IMPORTANCE OF REDEMPTION — THE CIRCULATION REDEMPTION FUND — TWO NEGATIVE QUALITIES — CANADIAN BANKERS' ASSOCIATION — ELASTICITY OF THE CIRCULATION — BANK NOTES HAVE NO COMPETITION — NO LIMIT OF ISSUE REALLY NECESSARY — THE PRACTICAL LIMIT UNDER THE LEGAL — Deposits — SAVINGS DEPOSITS ALWAYS PAID ON DEMAND — SAVINGS DEPOSITORS NOT PROPERLY REWARDED — No Bankers' Bank — Amount of the Reserve Fixed by Each Bank — Competition Is Not Lacking — Banking in Different Provinces — EASTERN PROVINCES HAVE SUFFERED — Large Use of Deposit Currency — Banks Silent Partners in Industry — A Customer's Line of Credit — Loans to Farmers — Call Loans in Canada and Elsewhere — The Banks as Financial Institutions — The Revision of the Bank Act, 1913 [148] — Comparative Figures of Condition of Canadian Banks [149] — ASSETS — LIABILITIES — FOOTNOTES:
27. 27.CHAPTER XXII — THE ENGLISH BANKING SYSTEM — Foundation and Growth of the Bank of England — Peel's Act or the Bank Charter Act of 1844, and its Suspensions — Account of the Liabilities and Assets of the Bank of England — For the Week ending 7th September, 1844 — The Functions of the Bank of England — The Joint-Stock Banks — The Private Banks — The Merchant Bankers and Accepting Houses — The Discount Houses — Interview with the Governor and Directors of the Bank of England — Interview with Sir Felix Schuster, Governor of the Union of London and Smith's Bank Limited — Interview with Mr. Charles Gow, General Manager of the London Joint Stock Bank, Limited — FOOTNOTES:
28. 28.CHAPTER XXIII — THE SCOTCH BANKS — Democracy of Scotch Banking — Use of Notes as "Till Money" in Relation to the Establishment of Branches — Evasion of Peel's Act — Defects — Bank of Scotland — INTERVIEW WITH SIR GEORGE ANDERSON, GENERAL MANAGER [160] — Royal Bank of Scotland — INTERVIEW WITH ADAM TAIT, CASHIER AND GENERAL MANAGER [161] — Commercial Bank of Scotland (Limited) — INTERVIEW WITH ALEXANDER BOGIE, GENERAL MANAGER [162] — Union Bank of Scotland (Limited) — INTERVIEW WITH ROBERT BLYTH, GENERAL MANAGER [164] — FOOTNOTES:
29. 29.CHAPTER XXIV — THE FRENCH BANKING SYSTEM — The Bank of France — CASH HOLDINGS OF THE BANK OF FRANCE — Place of the Bank of France in the Distribution of Credit — LOCAL BANKS AND THE FINANCIAL INSTITUTIONS — IN WHAT MANNER THE BANK OF FRANCE PROMOTES THE FREE DISTRIBUTION OF CREDIT IN FRANCE — IN WHAT MEASURE THE BANK MUST CONTROL CREDIT — Territorial Expansion of the Bank of France — The Bank of France and Agricultural Credit — The Bank of France — INTERVIEW WITH M. PALLAIN, GOVERNOR OF THE BANK OF FRANCE [177] — The Crédit Lyonnais — INTERVIEWS WITH BARON BRINCARD, ADMINISTRATEUR DÉLÉGUÉ, AND OTHER OFFICIALS OF THE CRÉDIT LYONNAIS [178] — Comptoir d'Escompte — INTERVIEW WITH M. ULLMANN, DIRECTOR OF THE COMPTOIR D'ESCOMPTE [179] — Banque de Paris et des Pays-Bas — INTERVIEW WITH M. MORET, MANAGER OF THE BANQUE DE PARIS ET DES PAYS-BAS [180] — Crédit Foncier de France — INTERVIEW WITH M. TOUCHARD, SECRETARY [181] — Caisse des Dépôts et Consignations — INTERVIEW WITH M. DELATOUR, GENERAL DIRECTOR OF THE CAISSE DES DÉPÔTS ET CONSIGNATIONS [182] — Crédit Agricole — INTERVIEW WITH M. DECHARME, CHEF DU SERVICE DU CRÉDIT MUTUEL ET DE LA COOPÉRATION AGRICOLE AT THE MINISTÈRE DE L'AGRICULTURE [183] — FOOTNOTES:
30. 30.CHAPTER XXV — THE GERMAN BANKING SYSTEM — Banking Arrangements in Germany — General Sketch of Bank and Credit Organisation in Germany — BANKS OF ISSUE — COMMERCIAL BANKS AND THEIR RELATION TO INDUSTRY AND COMMERCE — LAND CREDIT INSTITUTIONS — RAIFFEISEN AND SCHULZE-DELITZSCH BANKS — Interview with Herr Kleemann, Director of the Dresdner Bank — The Reichsbank — INTERVIEWS WITH HERR DR. VON GLASENAPP, VICE-PRESIDENT, AND HERR DR. VON LUMM, DIRECTOR, OF THE REICHSBANK [191] — Königliche Seehandlung — ( Royal Sea-Trade Society ) — INTERVIEW WITH HERR GEH. OBERFINANZRAT LOTTNER, DIRECTOR OF THE ROYAL SEEHANDLUNG, PRUSSIAN STATE BANK [192] — Deutsche Bank — INTERVIEWS WITH HERR PAUL MANKIEWITZ, DIRECTOR, AND HERR A. BLINZIG, ALTERNATE, OF THE DEUTSCHE BANK [193] — Dresdner Bank — INTERVIEWS WITH HERR SCHUSTER AND HERR NATHAN, DIRECTORS OF THE DRESDNER BANK [194] — Bank des Berliner Kassen-Vereins — INTERVIEW WITH HERR HOPPENSTEDT [195] — FOOTNOTES:
31. 31.CHAPTER XXVI — BANKING IN SOUTH AMERICA — Our Growing Surplus for Foreign Investment — Greater Lending Power of Banks — European War — English Banks in South America — ENGLISH TRADE AND BANKS DEVELOP TOGETHER — German Banks in South America — OTHER INFLUENCES IN BANK EXPANSION — Other Banking Institutions — AMERICAN BANKS — DOMESTIC BANKS — LAND MORTGAGE BANKS — Conditions of Commercial Banking — LITTLE CONTROL OR CO-OPERATION — NATIONAL COLONIES — PERSONAL CHARACTER OF BUSINESS DEALINGS — UNDEVELOPED ECONOMIC ORGANISATION — INTEREST RATES — COMPENSATION OF DIRECTORATE — CLASSES OF BUSINESS OF FOREIGN BANKS — FOOTNOTES:
32. 32.CHAPTER XXVII — AGRICULTURAL CREDIT IN THE UNITED STATES — Agricultural Credit Conditions in the United States — Value of Farm Implements and Machinery in the U. S. [206] — Farm Credit in a Northwestern State [225] — LONG-TIME LOANS — SHORT-TIME LOANS — Cattle Loan Banks [226] — FOOTNOTES:
33. 33.CHAPTER XXVIII — THE CONCENTRATION OF CONTROL OF MONEY AND CREDIT — Have We a Money Trust? — The Borrower and the Money Trust — BANKING THE MOST LOGICAL OF TRUSTS — NO LACK OF BANKING FACILITIES — WHERE THE MONEY HAS GONE — CONSOLIDATION—A STEADY PROCESS — HOW THE LAW HAS FOSTERED AFFILIATION — THE CORPORATION AND THE BANK — HARMONY THE WATCHWORD — MONEY POWER NOT DISTINCTLY AMERICAN — WHY, THEN, DO WE HEAR FEW COMPLAINTS FROM ABROAD? — WHERE IS THE VITAL DIFFERENCE? — The Banks and Railway Finance — FOOTNOTES:
34. 34.CHAPTER XXIX — CRISES — The Nature of an Economic Crisis — The Crisis of 1907 in the Light of History — Current Theories of Crises — TWO POINTS OF AGREEMENT — BEVERIDGE'S "COMPETITION THEORY" — MAY'S THEORY OF THE DISCREPANCY BETWEEN WAGES AND PRODUCTIVITY — HOBSON'S THEORY OF OVER-SAVING — HULL'S THEORY OF THE CHANGING COSTS OF CONSTRUCTION — SOMBART'S THEORY OF THE UNEVEN EXPANSION IN THE PRODUCTION OF ORGANIC AND INORGANIC GOODS — CARVER'S THEORY OF THE DISSIMILAR PRICE FLUCTUATIONS OF PRODUCERS' AND CONSUMERS' GOODS — FISHER'S THEORY OF THE LAGGING ADJUSTMENT OF INTEREST — Mitchell's Theory of Business Cycles — 1. THE CUMULATION OF PROSPERITY — 2. HOW PROSPERITY BREEDS A CRISIS — 3. CRISES AND PANICS — 4. DEPRESSION — Moore's "Rainfall" Theory — Stringent Money and Financial Panics [247] — How Banks Should Handle Panics — FOOTNOTES:
35. 35.CHAPTER XXX — THE WEAKNESSES OF OUR BANKING SYSTEM PRIOR TO THE ESTABLISHMENT OF THE FEDERAL RESERVE SYSTEM — Conflicting Opinions — Inflexibility of Ledger Balances — RIGID RESERVE REQUIREMENTS — NEED OF BANKERS' BANK — The Parcellation of Reserves — Redeposited or Overlapping Reserves — The Perverse Elasticity of National Bank Notes — National Bank Notes Unsound and Unsafe — Speculation Involved in the Issue of Notes — STATEMENT I — STATEMENT II — The Lack of Adjustment Between Bank Notes and Deposits — The Commercial Paper Situation in the United States — No System of Bank Acceptances and the Absence of an Open Discount Market — THE ESSENTIAL CONDITIONS FOR THE ESTABLISHMENT OF AN INTERNATIONAL DISCOUNT MARKET — Cash Stock Exchange Dealings — No Power to Lend on Real Estate [278] — The Independent Treasury as a Source of Weakness in Our Banking System [280] — DIFFICULTIES ARISING FROM THE TREASURY SYSTEM — CORRESPONDENCE OF TREASURY RECEIPTS AND DISBURSEMENTS — EXAGGERATION OF TREASURY EVILS — Lack of Central Control — Absence of Regulation of Ratio of Deposits to Capital and Surplus — Banking Abuses — USURIOUS INTEREST RATES — BANKERS' VIEW OF USURIOUS INTEREST RATES — FOOTNOTES:
36. 36.CHAPTER XXXI — THE FEDERAL RESERVE SYSTEM — The Federal Reserve Act [287] — THE SPIRIT AND OBJECTS OF THE ACT — ORGANIZATION — CAPITAL, EARNINGS, DEPOSITS OF THE FEDERAL RESERVE BANKS — FEDERAL RESERVE NOTES AND NATIONAL BANK NOTES — LENDING OPERATIONS OF THE FEDERAL RESERVE BANKS — ADDITIONAL POWERS OF NATIONAL BANKS — SUPERVISORY FUNCTIONS OF THE FEDERAL RESERVE BOARD — The Federal Reserve Act—an Experiment — The Federal Reserve Act and Democracy in Banking — The Elasticity of Note Issue Under the New Currency Law [299] — Notes Printed and Issued — Impounding Gold — The Financial Policy of the Federal Reserve Banks [302] — Relations of Federal Reserve Banks with Member Banks [303] — RELATIONS BETWEEN THE FEDERAL RESERVE BANK OF MINNEAPOLIS AND ITS MEMBERS — RELATIONS BETWEEN THE FEDERAL RESERVE BANK OF BOSTON AND ITS MEMBER BANKS — Federal Reserve Banks and the Acceptance Market — Clearings and Collections in Practice — Branches and Agencies — Proposed Amendments to Federal Reserve Act [311] — STATEMENT OF CONDITION OF FEDERAL RESERVE BANKS. [312] — Combined resources and liabilities of all Federal Reserve Banks as at close of business on the last Friday of each month during 1915. — FOOTNOTES:
37. 37.CHAPTER XXXII — THE EARLY EVENTS OF THE EUROPEAN WAR IN RELATION TO MONEY BANKING AND FINANCE — American Finance and the European War — I — II — III — IV — V — VI — National Bank Failures and Suspensions—1914 Compared with 1893 and 1907 [317] — The Effects of the War with Special Reference to the Central Banks of France, Germany, and England — I — II — III — Darlehnskassen and Other Financial Novelties in Germany — The War and the World's Financial Centre — MR. WITHERS A GOOD ENGLISHMAN — America's Chance of Holding World Purse-Strings [323] — FOOTNOTES:
38. 38.APPENDIX A — AN APPROXIMATE FORMULA FOR DETERMINING THE VELOCITY OF THE CIRCULATION OF MONEY — FOOTNOTES:
39. 39.APPENDIX B — SOME REGULATIONS OF THE FEDERAL RESERVE BOARD — ACCEPTANCE OF STATEMENTS IN LIEU OF CERTIFICATES AS TO CHARACTER OF COMMERCIAL PAPER — BANKERS' ACCEPTANCES — I — DEFINITION — II — STATUTORY REQUIREMENTS UNDER SECTIONS 13 AND 14 — III — RULING — IV — ELIGIBILITY — V — POLICY AS TO PURCHASES — ACCEPTANCE BY MEMBER BANKS — CLEARINGS BETWEEN FEDERAL RESERVE BANKS — I — STATUTORY PROVISIONS UNDER SECTION 16 — II — GENERAL PROVISIONS — III — DEPOSITS IN THE GOLD SETTLEMENT FUND — IV — CUSTODY OF FUNDS — V — ACCOUNTS — VI — PROCEDURE — VII — DEFICITS — VIII — EXCESS BALANCES — IX — RESERVE — X — EXPENSES — XI — AUDIT — XII — Membership of State Banks — I — STATUTORY REQUIREMENTS — II — BANKS ELIGIBLE FOR MEMBERSHIP — III — APPLICATION FOR MEMBERSHIP — IV — APPROVAL OF APPLICATION — V — POWERS AND RESTRICTIONS — VI — WITHDRAWALS — VII — EXAMINATIONS — VIII — FUTURE REGULATIONS — FOOTNOTES:

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