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?