I. BANKS AND BANKING RESOURCES.

The history of nation building contains no parallel to the progress and development of the United States in the past one hundred years, and the most accurate and striking indication of this remarkable growth may be seen in the evolution of our currency and banking systems. As the variations in temperature and the changes in atmospheric pressure are measured by the thermometer and barometer, so are the fluctuations in a country’s wealth gauged by the banks and other financial institutions. Likewise the degree of civilization to which a country has attained is reflected by the perfection of its monetary machinery. After having tried nearly every unwise experiment condemned by the teachings of history, the United States has finally reached a position where its currency meets the two fundamental requirements of sound finance, namely, (1) the standard of value is that in use among the great commercial states of the world; (2) all of the currency is either directly or indirectly convertible into the standard coin.

Despite some minor faults in our financial system which make the maintenance of the parity of the several kinds of currency a cumbersome and expensive operation, and prevent the banks from rendering that full degree of assistance to commerce and industry which they would afford under laws that did not unnecessarily restrict their rightful functions, all our money responds to the two essential tests—safety and convertibility; while the banks have been among the most powerful factors in placing the United States in the front rank of the nations of the earth.

Our finances may be likened to a triangle, of which the base—the gold standard—has been in actual existence since 1879 (much longer than that in law), and the other side—safety—also assured, wanting but another addition—elasticity—to complete the symmetrical and perfect figure. That this last requisite of a sound currency will be supplied by the wisdom and ingenuity of our people, is not to be doubted.

There are two respects in which the financial policy of the United States is unique in comparison with most other great commercial countries; first, its gold reserve is unprotected by the devices in use elsewhere, as it does not charge a premium on gold as the Bank of France does when gold is wanted for export, nor can it protect the gold reserve by raising the rate of discount as the great banks of Europe may do; second, banking is practically free and anti-monopolistic. Under these conditions we have reached a place that may well excite the astonishment of the old-world countries. Our stock of metallic money, as estimated by the Director of the Mint, in 1898, was $925,000,000 in gold and $638,000,000 in silver. No other nation owned so much gold. Only one—China—owned as much silver, but it had no gold, and the per capita of silver in China is only $1.96 against $8.56 in the United States. Our stock of gold is more than double that of Great Britain, greater by a hundred millions than that of France, and also exceeds that of Germany and Russia. Of our silver stock, $561,500,000 is a full legal tender, and $76,700,000 a limited legal tender, the latter sum representing the subsidiary coins.

In our banking power the situation is equally fortunate. Mulhall defines banking power as the paid-up capital of banks, the deposits exclusive of savings banks, and the amount of convertible paper money. He shows the growth of this form of wealth to have been as follows, from 1840 to 1894:—

MILLIONS POUNDS STERLING.

Great Britain.United States.France.Germany.Other States.Total.
1840132   90 16 12 58  308
18949601,0303562317603,337

In the two great essentials of financial strength—the quantity of metallic money and banking power—we have far outstripped every other nation. This is an unfailing sign of our advance toward a position of commercial and industrial supremacy. The sceptre of financial power has crossed the Atlantic from Europe to the New World. We are gradually acquiring command of the world’s markets, and in time we shall see our banks—ever the handmaids of commerce—extending their operations to the most distant quarters of the earth and carrying everywhere the beneficent influences of modern civilization.

New York as a financial centre has been growing with astonishing rapidity in recent years. From 1879 to 1899 the banks belonging to the New York Clearing-House Association increased their deposits from $254,700,000 to $910,500,000, and their specie—chiefly gold—from $54,700,000 to $202,600,000, the latter item having about doubled in the past two years, being $104,700,000 in 1897, and $202,600,000, as above stated, in 1899. The aggregate of banking institutions in the city—national banks, state banks, trust companies, and savings banks, exclusive of private banking firms—had, about January 1, 1899, capital, surplus, and profits amounting to $311,600,000; deposits of $2,047,800,000; and total resources of nearly $2,500,000,000. One bank—the National City—with over $144,000,000 of deposits, is the largest in the United States; while the Bowery Savings Bank, with 121,000 depositors and $67,000,000 of deposits, is the largest of its kind in the country.

The present status of the different classes of banks in the United States is fairly shown by the following table compiled from the Annual Report of the Comptroller of the Currency, for the year 1898:—

PRINCIPAL ITEMS OF RESOURCES AND LIABILITIES OF ALL CLASSES OF BANKS IN THE UNITED STATES, JULY 14, 1898.

National Banks.State Banks.Loan & Trust
Companies.		Savings Banks.Private Banks.Total.
Loans$2,151,757,655$813,749,803$539,162,445$1,070,775,293$57,206,819$4,632,632,015
United States bonds285,356,9004,185,30434,186,440140,029,726927,473464,685,843
Other bonds250,689,375127,500,484159,791,312834,670,4913,599,0921,376,250,754
Cash492,882,724133,877,13322,250,86232,928,3235,857,132687,796,174
Capital622,016,745233,587,353101,228,55518,536,13016,721,750992,090,533
Surplus and profits332,971,643109,554,51997,643,666187,475,9715,092,341732,738,140
Deposits2,076,226,576912,365,406662,138,3972,028,208,40962,085,0845,741,023,872
Total resources3,977,675,4451,356,084,800942,462,1792,241,344,99191,436,3878,609,003,802

There were 3582 national banks that reported, and 5903 other banks, a total of 9485. The total banking funds, that is, capital, surplus and profits, and individual deposits, of all banks reporting, amounted to $7,416,355,568.

We cannot get a correct understanding of these figures without going back to earlier dates and making comparisons. In 1798 there were twenty-five state banks in the country, against 3965 reporting to the Comptroller of the Currency in 1898, which is perhaps about 90 per cent of the total of such institutions now existing.

A hundred years ago the capital of the state banks was less than twenty millions, compared with $233,971,643 now reported. They had, all told, but $14,000,000 of specie—half as much as is now held by one New York city bank alone. Their circulation was only $9,000,000, compared with more than $200,000,000 of national bank circulation now outstanding.

The national banks also show a remarkable growth. In 1869 there were 1620 banks in operation, reporting $420,800,000 capital, $547,900,000 individual deposits, $17,500,000 specie, and $1,517,700,000 total resources. Thirty years later the number of banks had increased to 3590, while the capital was $608,300,000, the individual deposits $2,232,100,000, and specie $371,843,400, while the total resources had increased to $4,403,800,000.

The total wealth of the United States in 1895 was estimated at more than $80,000,000,000,—far exceeding in the aggregate that of any other country in the world. It is expected that the census of 1900 will show our total wealth to be more than $100,000,000,000, or probably double that of Great Britain, the next richest nation.

But while the nation is piling up wealth at an unexampled rate, it cannot be said that this is a land “where wealth accumulates and men decay.” Great in its material resources, the country was never before stronger in those elements which constitute the chief reliance of national power. A united citizenship, possessing an honesty that adversity cannot sully and an intelligence that when once aroused penetrates the most cunningly concealed economic sophistries, working out the problems of the future under laws and conditions assuring to the individual the largest opportunities, points to a development in the twentieth century in no wise inferior to that of the hundred years preceding.