Page:EB1922 - Volume 30.djvu/446

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

$\scriptstyle {\left\{{\begin{matrix}\ \\\\\ \ \end{matrix}}\right.}$	622
	1,242
	622

8,592,271 

4,186,976,600 

2,556,121 

^[3]901,610,694 

8,935,055 

4,422,489,384 

 1917

$\scriptstyle {\left\{{\begin{matrix}\ \\\ \end{matrix}}\right.}$	1,185
	625

2,431,958 

995,532,890 

9,011,464 

4,422,096,393 

 1918

$\scriptstyle {\left\{{\begin{matrix}\ \\\ \end{matrix}}\right.}$	1,194
	622

2,368,089 

 ^[3]1,049,483,555

8,948,808 

 ^[3]4,751,113,000

 1919

$\scriptstyle {\left\{{\begin{matrix}\ \\\ \end{matrix}}\right.}$	1,087
	620

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

1. Notes redeemed but not assorted by denominations.
2. 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. Dividends unpaid not included.
4. Includes overdrafts.