4 i 4 CHARLES J. BULLOCK 



State banks appeal to the needs of certain sections of the coun- 

 try; private bankers maintain an important position, especi- 

 ally in financing corporate enterprises; and trust companies 

 have constantly increased the scope of their operations. But 

 with all these developments, our banking system remains 

 decentralized, and better adapted for fair weather than for 

 foul. In times of actual panic the banks in the largest cities 

 have sometimes utilized the clearing houses for the purpose of 

 adopting common measures of defense. By the issue of clear- 

 ing house certificates they are able to tide the weaker insti- 

 tutions over the period of greatest stress; but this is merely 

 a temporary expedient, and does not change the essential fea- 

 ture of the system. Prior to 1898 it would have been difficult 

 to discover any appreciable tendency toward the concentration 

 of the banking interests of the United States. 



In this respect, however, the situation has been radically 

 altered during the last five years. In the first place, the or- 

 ganization of trusts in various branches of manufactures has 

 brought to the great financial centers a large amount of busi- 

 ness which formerly fell to the banks of the localities where the 

 separate factories were situated. Many loans which independ- 

 ent manufacturers would have secured from local bankers 

 are now negotiated in the larger cities where the combinations 

 have established their headquarters. While the aggregate 

 sums borrowed may not have been increased by this process, 

 it is evident that corporation loans have been centralized to 

 a very marked degree; and it is well known that New York 

 has been the principal beneficiary of the change. 



A similar tendency is disclosed by an examination of the 

 movement of bank reserves. The national banking laws per- 

 mit the country banks to deposit a certain proportion of their 

 reserves with institutions located at various cities, and recent 

 vears have witnessed a rapid flow of such moneys toward New 

 York. This is due, in part, to the drift of corporation business 

 to that city; since country bankers have deposited there, at 

 interest, some of the funds formerly loaned to concerns that 

 have been absorbed by the trusts. Then, too, some of the 

 metropolitan banks have been making very vigorous efforts 

 to secure such deposits; so that eight of the principal institu- 



