Variations in Clearings at New York
| Year. |
Average Daily Clearings. |
Per cent Balances to Clearings. | Remarks. |
| 1870 | $90,274,479 | 3.72 | |
| 1873 | 115,885,794 | 4.15 | Great business activity. |
| 1874 | 74,692,574 | 5.62 | Industrial depression. |
| 1881 | 159,232,191 | 3.66 | Renewal of railway building. |
| 1885 | 82,789,480 | 5.12 | Results of bank panic. |
| 1890 | 123,074,139 | 4.65 | Business expansion. |
| 1894 | 79,704,426 | 6.54 | Depression following panic. |
| 1896 | 96,232,442 | 6.28 | Free silver panic. |
| 1899 | 189,961,029 | 5.37 | Renewed confidence and activity. |
| 1901 | 254,193,639 | 4.56 | Culmination of industrial flotations. |
| 1904 | 195,648,514 | 5.20 | Diminished stock-exchange and business activity. |
| 1906 | 342,422,773 | 3.69 | Stock-market activity. |
The Clearing-House Committee of the New York Clearing-House exercises a powerful influence over the banking situation through its ability to refuse aid in emergencies to a bank which is unwisely conducted. This power was used in the panic of 1907 to eliminate several important, but speculative, financial interests from control of national banks. Only national and state banks and the sub-Treasury were members of the Clearing-House at this time. Their weekly reports of condition were awaited every Saturday as an index of the state of the money-market and the exchanges; but this index was incomplete and sometimes misleading, because regular weekly reports were not made by trust companies. It was announced early in 1908 by the state superintendent of banking that he would exercise a power vested in him by law to require weekly reports in future from trust companies, so that the two classes of reports would present a substantially complete mirror of banking conditions in New York.
Authorities.—William M. Gouge, A History of Paper Money and Banking in the United States (Philadelphia, 1833); Condy Raguet, A Treatise on Currency and Banking (Philadelphia, 1840); J. S. Gibbons, The Banks of New York, their Dealers, the Clearing-House and the Panic of 1857 (New York, 1858); Albert S. Bolles. Financial History of the United States (3 vols., New York, 1884-1886); Charles F. Dunbar, Chapters on the Theory and History of Banking (New York and London, 1891); Horace White, Money and Banking (Boston, 1902); Charles A. Conant, A History of Modern Banks of Issue (New York, 1896); Alexander D. Noyes, Thirty Years of American Finance (New York, 1898); Davis Rich Dewey, Financial History of the United States (New York and London, 1903); John C. Schwab, The Confederate States of America, 1861-1865 (New York, 1901); David Kinley, The Independent Treasury of the United States (New York, 1893); Report of the Monetary Commission of the Indianapolis Convention (Chicago, 1898); Charles A. Conant, The Principles of Money and Banking (2 vols., New York, 1905); William G. Sumner, A History of American Currency (New York, 1884); Amos Kidder Fiske, The Modern Bank (New York, 1904); William G. Sumner, A History of Banking in the United States (New York, 1896), being vol. i. in A History of Banking in All the Leading Nations; John Jay Knox, History of Banking in the United States (rev. ed., New York, 1900); and R. C. H. Catterall, The Second Bank of the United States (Chicago, 1903).
Much statistical information is contained in the annual reports of the comptroller of the currency of the United States, published annually at Washington.
(C. A. C.)
English Law affecting Banks and their Customers
Issue of Notes.—The legislation which culminated in the Bank Charter Acts of 1844 and 1845 secured to the Bank of England the absolute monopoly of the note issue within the city of London and a 3-m. radius. Outside that radius, and within 65 m. of the city, there is a concurrent right in banks, consisting of six or less than six persons, established before 1844, and issuing notes at that date; beyond the 65-m. radius the privilege may be exercised by all banks established before 1844, and then issuing notes, who have not since lost their right to do so by bankruptcy, abandonment of business, or temporary suspension of issue. According to some authorities, the effect of 20 and 21 Vict. cap. 49, sec. 12 [re-enacted Companies Consolidation Act 1908, sec. 286 (d)] was to sanction the increase in the constitution of any bank issuing notes outside the 3-m. and within the 65-m. radius from six to ten persons without affecting the power to issue notes. The rule as formulated above is, however, that enunciated by Bowen J. in Capital and Counties Bank v. Bank of England, 1889; 61 L.T. 516. The increase in the number of joint-stock banks and the gradual absorption of the smaller and older concerns have had the effect of minimizing the output of notes other than those issued by the Bank of England, and, as exemplified by the case of The Attorney-General v. Birkbeck, 12 Q.B.D. 57, it would seem impossible to devise any scheme by which the note-issuing power of an absorbed bank could be continued to the new or amalgamated body. But a bank having the right would not necessarily lose it by absorbing other banks (Capital and Counties Bank v. Bank of England). Foreign banks may establish branches in Great Britain on complying with the regulations imposed on them by the Companies Consolidation Act 1908, but cannot apparently issue notes, even though payable abroad.
Deposit Business.—The term "bank of deposit" gives a mistaken Relation between banker and customer. idea of the real relation between banker and customer. So long ago as 1848 it was decided by the House of Lords in Foley v. Hill, 2 H. of L. 28, that the real relation between banker and customer was that of debtor and creditor, not in any sense that of trustee and cestui que trust, or depositee and depositor, as had been formerly supposed and contended. The ordinary process by which a man pays money in to his account at his banker's is in law simply lending the money to the banker; it fixes the banker with no fiduciary relation, and he is in no way responsible to the customer for the use he may make of the money so paid in. And as being a mere debt, a customer's right to recover money paid in is barred on the expiration of six years by the Statute of Limitations, if there has been no payment meantime on account of principal or interest, and no acknowledgment sufficient to bar the statute (Pott v. Clegg, 16 M. & W. 321). Such a state of affairs, however, is hardly likely to arise, inasmuch as, in the absence of specific appropriation, earlier drawings out are attributed to the earlier payments in, as in the ordinary case of current accounts, and so the items on the credit and debit side cancel each other. An apparent exception to this system of appropriation exists in cases where a man wrongfully pays into his own account moneys held by him in a fiduciary capacity. In such circumstances he is presumed to have drawn out his own moneys rather than those affected by the trust, and so long as the account is in credit, any balance will be attributed to the trust money. As between contending claims to the money, based on different breaches of trust, the ordinary rule of appropriation will apply.