[Volume XXVli
THE CHICAGO BANKER
14
Editorial Comment
too, has been slow, in comparison with the other wide geographical divisions used by the treasury department in presenting its reports —Southern, Middle Western, Western, and Pacific states. Not only has the number of national banks in New England decreased 84, but the paid-in capital has fallen from $142,670,770 to $101,420,425. The increase in total resources has been nominal, whereas in every other division the expansion has been just below or very much above 100 per cent. In dollars the East leads with a gain of $1,941,591,-607, or almost as much as was owned in 1899, and the Middle West’s resources have appreciated in value by $1,391,505,840, or well over 100 per cent. The rate of growth has been by far the most rapid on the Pacific coast; assets of $120,905,295 have in ten years expanded to $553,139,849, or about 360 per cent.
The increase in crop output, in stock raising, in mining, in irrigation products, in railroad growth, and in timber and power developments are all back of the banking growth. Ninety per cent of the Western bankers are farmers or land owners, and the farm loan is the best investment the Western banker knows in the whole list of credits.
Chicago Bankers on MacVeagh’s Bond Plan
A plan on the part of the government to stimulate the sale of its Panama bond issue is seen by some Chicago bankers in the order of Secretary of the Treasury MacVeagh, recently issued, that only government bonds will be accepted as securities for government deposits in the future. Others, however, view the order complacently, while still others welcome it as a move in the right direction and declare it proper for the general good.
For some years the treasury department has not applied the old rule of confining securities for government deposits to its own bonds. This change was first made at a time of stress to meet a peculiar condition, and then became a fixed rule which was attacked in some quarters and seriously questioned. Now, however, the order has gone forth to return to the original requirement. That some other bonds, such as state, municipal, and railroad issues, provide a greater profit than the government and have been accepted in place of the latter, rouses a feeling of resentment among some bankers, because they say they will now be obliged to make a change in their securities.
One who does not look favorably upon the order of Secretary MacVeagh is John J. Mitchell, president of the Illinois Trust and Savings Bank.
“It looks to me at the first glance to be a scheme for forcing the Panama 2 per cent bonds on the banks,” he said. “These bonds have not been doing very well, and the department is taking this move to force them on the market.
“This is the only way the government has of stimulating trade in its bonds. They have never proved very profitable for the national banks and have been valuable only for their circulation. They could be secured, I believe, at 104, when but for their circulation advan-
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LARGER PAID CIRCULATION IN THE MIDDLE WEST THAN ANY THREE OF ITS COMPETITORS COMBINED
84 in the number of banks. The agricultural states used are Missouri, Iowa, Minnesota, Kansas, Nebraska, North Dakota, South Dakota, Oklahoma, and Texas, while the cotton belt, Arkansas, Georgia, Oklahoma, and Texas, the older southern states being omitted, chiefly for the reason that they have not developed so rapidly as the ones here given.
The story of growth by number of banks is borne out by the deposit increase in the same favored districts. Total general deposits have risen from $2,530,743,268 to $5,060,755,866, or nearly 100 per cent, but deposits in the farm states are 191 per cent and in cotton states deposits are 292 per cent larger than in 1899. The ratio of expansion in loans has been similar—from $2,496,751,251 to $5,128,882,351, or 106 per cent, for the United States, against 203 per cent for the West and 312 per cent for the South.• Cash on hand (specie and legal tender notes) ten years ago aggregated $449,786,034 for the whole country; the sum held last September was $854,091,857, a gain of 90 per cent, or only half the percentage gained west and south, the figures for the former being $40,410,804 in 1899 and $111,335,415 in 1909, and for the latter $8,862,880 and $24,654,465, respectively. The total capital stock paid in was $605,772,970 ten years ago, against $944,642,067 last September, an increase of 56 per cent, whereas the agricultural increase equaled 95 per cent and the cotton increase no less than 179 per cent. The surplus fund changes have been very remarkable ; the improvement in the cotton states has been 338 per cent and in the agricultural area 305 per cent, as contrasted with 141 per cent for the United States.
Consulting further the figures furnished by the comptroller we find that the total national banking resources in 1899 reached $4,650,355,-133 for the whole country, and in 1909, $9,573,-954־377־ a gain of $4,923,599,244, or 106 per cent. In the nine agricultural states the growth has been from $522,846,167 to $1,507,-189,772, or 188 per cent. In the four cotton states the increase has been equal to 297 per cent—from $110,197,818 to $438,211,887.
One cannot contemplate the foregoing figures of the phenomenal banking growth of the West without indirectly calling attention to the dwindling of New England’s banking system. The progress in the Eastern states, as a whole,
Banking Growth in the West in the Past Ten Years
Investigations carried on from Washington and by important Eastern interests have developed, apparently, the facts that in banking growth and power the West and the Southwest and the Northwest have far outstripped the East now, or even in its palmiest days. These conditions, in part, are to be ascribed to the wealth of the farmer, who has stepped over from among the goats—the borrowers— to the side of the depositors. This has lessened the withdrawals from Eastern depositaries for crop season purposes and a less proportion of reserves go East than formerly. Chicago and St. Louis have made wonderful strides as reserve centers, and are making greater preparation than ever before to handle this business. Bank capitals are being increased, and in recognition of Chicago claims as the one real municipal bond center of the country new bond houses or branches of going houses are being established here every week. This change has been going on so steadily that perhaps it may have failed of notice by some. Being the logical centers for the great agricultural states, Chicago and St. Louis have benefited, for the banking growth has been greatest in the great agricultural states. The Western banker of to-day has farmer customers, owners of land whose value has doubled or trebled in a few years, and who are accorded credit that would have been denied them ten years ago, and who have learned to use checks and other bank instruments instead of actual currency in the form of bills and silver dollars. Ten years ago country national banks numbering 3,274, kept 31.87 per cent reserves; this fall the percentage for 6,595 banks was only 24.58, showing that bankers had used 7.29 per cent more of their cash resources. In ten years the wealth produced on the farms of this country has exceeded $65,000,000,000, and the capital of the farmer in the form of land, buildings, live stock, etc., is now estimated at approximately $30,000,000,000 (an increase of almost 100 per cent in one decade), that the farm value of farm products in 1908 was $7,-778,000,000, or $3,061,000,000 above the census total of 1899, and that the 1909 yield is computed at the stupendous total of $8,760,000,000, although detailed figures for 1909 are not yet available.
Ten years ago the number of national banks in the whole of the United States was 3,595, the total on September 1, 1909, was 6,977, an increase of 3,382. Of more direct bearing was the increase of country banks, namely, 3,321; there was a decrease of five in central reserve cities and an increase of only 66 in other reserve cities. Compared with this increase 94 per cent for the whole country, the increase in the agricultural territory has been 181 per cent, and in the cotton district 271 per cent. In New England there has been a decrease of