CONCENTRATION OF BANKING INTERESTS 421 



gations can be held together; but for the present at any rate, 

 a signal victory has been gained for the principle of community 

 of interest. 



The relations between the magnates who control the two 

 great alliances have not always been harmonious, as was seen 

 in the Northern Pacific corner of 1901 ; and at times there have 

 been lively exchanges of blows and epithets. Considerable 

 divergence of interest is likely to continue both within and 

 without the purlieus of Wall Street; but it is interesting to ob- 

 serve that certain affiliations exist between the two groups 

 of capitalists. One of the directors of the National City bank 

 is a partner in the banking house of J. P. Morgan & Company, 

 while another is a director of the First National. An exami- 

 nation of the directorates of banks and trust companies dis- 

 closes a few other cases in which similar connections have been 

 established; but there is no indication that closer union is de- 

 sired. 



In explanation of the present tendency toward the con- 

 solidation of banking power, emphasis is usually laid upon the 

 undoubted fact that the growth of the gigantic industrial cor- 

 porations has created a demand for accommodations which 

 smaller banks would be unable to supply. Only a large in- 

 stitution, or a group of powerful banks and trust companies, 

 can effect a $5,000,000 loan at an hour's notice, or undertake 

 the vast enterprises that are characteristic of the times. Fre- 

 quently such movements must be conducted with secrecy, at 

 least in their early stages; and this condition is difficult to se- 

 cure when the cooperation of a large number of bankers must 

 be invited. Then, too, the national banking laws limit the 

 size of a loan negotiated by a single borrower to one tenth of 

 the capital of the bank. This restriction is so poorly enforced 

 that its importance is rather sentimental than practical, but 

 it has been one of the reasons for increasing the capital of some 

 institutions. 



Again, it seems certain that concentration results in con- 

 siderable economies in operation, since the outlay for clerical 

 assistance and for some other purposes does not increase as 

 rapidly as does the volume of business transacted. A recent 



