more obvious. Prominent among these was the insufficiency of the note currency, which continued to be issued solely upon the security of national bonds. In the accompanying table the note issues of the national banks during the years in question may be traced:—
Yearly Increase or Decrease in National Bank Circulation from 1900 to 1920
Issued | Retired | Increase | Decrease | |
1900 | $101,645,393 | $16,537,068 | $85,108,325 | |
1901 | 123,100,200 | 15,951,527 | 107,148,673 | |
1902 | 42,620,682 | 21,868,006 | 20,752,676 | |
1903 | 68,177,467 | 28,474,958 | 39,702,509 | |
1904 | 69,532,176 | 31,930,783 | 37,601,393 | |
1905 | 90,753,284 | 22,732,060 | 68,021,224 | |
1906 | 84,085,200 | 25,055,739 | 59,029,521 | |
1907 | 56,303,658 | 27,980,139 | 28,323,519 | |
1908 | 141,273,164 | 80,025,078 | 61,248,086 | |
1909 | 82,504,444 | 48,433,296 | 34,071,148 | |
1910 | 57,101,345 | 33,011,051 | 24,090,330 | |
1911 | 49,896,951 | 35,284,247 | 14,612,704 | |
1912 | 38,747,149 | 27,586,734 | 11,160,415 | |
1913 | 37,210,597 | 26,441,867 | 10,768,730 | |
1914 | 387,763,860 | 20,246,418 | 367,517,442 | |
1915 | 27,485,675 | 342,807,533 | $315,322,858 | |
1916 | 10,593,700 | 59,026,803 | 48,433,103 | |
1917 | 22,749,150 | 37,211,370 | 14,462,220 | |
1918 | 26,227,740 | 18,781,552 | 8,431,700 | 985,512 |
1919 | 29,660,850 | 24,864,635 | 4,796,215 | |
1920 | 29,000,000 | 20,000,000 | 9,000,000 |
National Bank Notes Outstanding Oct. 31 1920.
Denomination | Amount |
One dollar | $ 341,906 |
Two dollars | 163,288 |
Five dollars | 125,659,460 |
Ten dollars | 305,429,590 |
Twenty dollars | 243,445,080 |
Fifty dollars | 29,862,000 |
One hundred dollars | 30,542,700 |
Five hundred dollars | 87,500 |
One thousand dollars | 21,000 |
Fractional parts | 59,800 |
Total | $735,612,324 |
Less[1] | 3,062,695 |
Total | $732,549,629 |
The figures show a practically stationary condition of the circulation. They cannot, however, throw light upon the increasing volume of demand for currency, which during those years was growing at a rapid rate. Only through an enlarged use of cheques and other credit substitutes or through additions to the basic monetary circulation itself was it possible for the United States to add to its circulating medium. Another factor which had assumed very great importance during the preliminary period referred to, was the growth of trust companies, involving as it did sharp competition with national banks. Subsequently to the year 1890 there had been a rapid development of trust companies in many parts of the United States as well as extension and improvement of legislation affecting them. In some states the trust companies, either through local restriction or as the result of custom, still confined themselves to fiduciary business, but under the laws of most commonwealths they had taken on banking functions, and in some they had developed the latter with so much success as to make their preliminary or nominal purposes largely secondary. Due to the fact that trust company laws were usually much less restrictive than those which controlled the operation either of national banks or of state banks, both of the latter classes of institutions were feeling the competition of the trust companies with considerable severity. The table on the next page shows the relative positions of different classes of banks in 1920 and the increase in the number of trust companies and savings banks during recent years.
Savings banks' development during this period is shown in the following figures:—
Year | Banks | Depositors | Deposits | ||||
1900 | 1,002 | 6,107,083 | $2,449,547,885 | ||||
1901 | 1,007 | 6,358,723 | 2,597,094,580 | ||||
1902 | 1,036 | 6,666,672 | 2,750,177,290 | ||||
1903 | 1,078 | 7,035,228 | 2,935,204,845 | ||||
1904 | 1,157 | 7,305,443 | 3,060,178,611 | ||||
1905 | 1,237 | 7,696,229 | 3,261,236,119 | ||||
1906 | 1,319 | 8,027,192 | 3,482,137,198 | ||||
1907 | 1,415 | 8,588,811 | 3,690,078,945 | ||||
1908 | 1,453 | 8,705,848 | 3,660,553,945 | ||||
1909 | 1,703 | 8,831,863 | 3,713,405,710 | ||||
1910 | 1,759 | 9,142,908 | 4,070,486,246 | ||||
1911 | 1,884 | 9,794,647 | 4,212,583,598 | ||||
1912 | 1,922 | 10,010,304 | 4,451,818,522 | ||||
1913 | 1,978 | 10,766,936 | 4,727,403,950 | ||||
1914[2] | 2,100 | 11,109,499 | 4,936,591,849 | ||||
1915 | 2,159 | 11,285,755 | 4,997,706,013 | ||||
1916 |
|
8,592,271 | 4,186,976,600 | ||||
2,556,121 | [3]901,610,694 | ||||||
8,935,055 | 4,422,489,384 | ||||||
1917 |
|
2,431,958 | 995,532,890 | ||||
9,011,464 | 4,422,096,393 | ||||||
1918 |
|
2,368,089 | [3]1,049,483,555 | ||||
8,948,808 | [3]4,751,113,000 | ||||||
1919 |
|
2,486,073 | [3]1,151,464,000 | ||||
9,445,327 | [3]5,186,845,000 | ||||||
1920 | 1,087 | 1,982,229 | [3]1,349,625,000 |
The number of trust companies and information with reference to the principal items of assets and liabilities on or about June 30 of each year since 1914 are shown in the following table:—
Number | (In millions of dollars.) | ||||||
Loans[4] | Investments | Capital | Surplus & Profits |
All Deposits |
Aggregate Resources | ||
1914 | 1,564 | 2,905.7 | 1,261.3 | 462.2 | 564.4 | 4,289.1 | 5,489.5 |
1915 | 1,664 | 3,048.6 | 1,349.6 | 476.8 | 577.4 | 4,604.0 | 5,873.1 |
1916 | 1,606 | 3,704.3 | 1,605.4 | 475.8 | 605.5 | 5,732.4 | 7,028.2 |
1917 | 1,608 | 4,311.7 | 1,789.7 | 505.5 | 641.8 | 6,413.1 | 7,899.8 |
1918 | 1,669 | 4,403.8 | 2,115.6 | 525.2 | 646.9 | 6,493.3 | 8,317.4 |
1919 | 1,377 | 4,091.0 | 2,069.9 | 450.4 | 588.6 | 6,157.2 | 7,959.9 |
1920 | 1,408 | 4,601.5 | 1,902.1 | 475.7 | 612.1 | 6,518.0 | 8,320.0 |
While commercial banks, both national and state, had from time to time considered the question of seeking permission to exercise fiduciary functions, the problem had never assumed any considerable importance until the Federal Reserve Act was brought up for consideration. Their policy had been directed towards enforcing a limitation or restriction of the banking functions of trust companies, both in the states where local legislation had not made much direct concession to trust company activity, and in those where a beginning had already been made in extending to them banking powers, rather than to competing with them. One demand which had been made with entire justice by the national banks had been that in so far as they exercised actual banking functions and became liable for demand deposits, the trust companies should be required to keep a proportion of reserve equal to that required of the banks with which they were competing. Something had been done in the direction of applying such a requirement, but state laws were still in an unsatisfactory condition.
The Opening of the World War.—The year 1914 had opened prosperously for the banks of the country, business being practically normal and employment at least up to the average, while agricultural conditions were satisfactory. The sudden advent of war in Europe at the end of July, however, necessarily subjected the banks to a very severe shock. Due to the seasonal character of American exportations of agricultural products
- ↑ Notes redeemed but not assorted by denominations.
- ↑ In the assembling of data in relation to savings banks the classification of banks as made by the State banking departments is closely followed, in consequence of which a number of so-called State savings banks, formerly treated by the Comptroller's office as savings banks, are now regarded as commercial banks, and the returns therefrom are combined with the latter, which accounts for the relatively small amount of deposits reported for stock savings banks since 1915.
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 Dividends unpaid not included.
- ↑ Includes overdrafts.