CHAPTER 8

BANKING IN THE UNITED STATES BEFORE 1914

REFERENCES.

_Hollander, J. H._, Security holdings of national banks. A. E. Rev., 3: 793-814. 1913.

_Kemmerer, E. W._, Banking reform in the United States. A. E. Rev., 3 (no. 1, supp.): 52-63. 1913. Round table discussion of above, 64-88.

_Kemmerer, E. W._, Seasonal variations in the New York money market. A. E. Rev., 1: 33-49. 1911.

_National Monetary Commission_, Report. 1912. In Sen. Doc. 243, 62d Cong., 2d Sess.

_Phillips_, ch. XXX.

*_Source Book_, 324-336 (extract from National Monetary Commission Report), 314-323 (extract from 1910 report of the Comptroller of the Currency).

_Sprague, O. M. W._, Proposals for strengthening the national banking system. Q. J. E., 24: 201-242, 634-659; 25: 67-95. 1909-1911.

_United States Comptroller of the Currency_, Annual reports.

*_White_, bk. III, chs. IV, XV, XVII, XX, XXI, and appendices A and B.

_Willis, H. P._, The banking question in Congress. J. P. E., 20: 869-885. 1912.

QUESTIONS.

1. Explain the method followed by national banks in issuing bank notes. Why did the banks often find it more profitable to use their money in other ways than by issuing bank notes? Ref.: Discussion in various reports of Comptroller of the Currency.

2. Section 28 of the National Bank Act of June 3, 1864, after providing that a national banking association may hold real estate "necessary for its immediate accommodation in the transaction of its business" and such other real estate and mortgages thereupon as it may have taken to secure debts previously contracted, provides that "Such associations (national banks) shall not purchase or hold real estate in any other case or for any other purpose...."

(a) What is the reason for the above provision?

(b) Would it be wise to make a similar prohibition on savings banks?

3. Describe the clearing house and define its economic advantages.

4. If there are twenty banks in a town and no clearing house, how many collections would have to be made by all the banks daily assuming that each day depositors of each bank receive checks on the other nineteen banks?

5. Does a clearing house enable the banks that belong to it to get along with a smaller cash reserve?