CONCENTRATION OF BANKING INTERESTS 423 



illustrates the conditions under which the operations of such 

 institutions must be conducted. The same tendencies exist 

 also in the case of the deposits by country banks. At the ap- 

 proach of anything resembling a panic these are withdrawn 

 with great rapidity; so that they have been justly called the 

 explosive element of our banking system. It is evident, there- 

 fore, that more than ordinary conservatism will be required 

 if the largest banks are to exercise a steadying influence in 

 times of actual or impending danger. 



This point can be made somewhat clearer by a brief refer- 

 ence to the conditions that prevail in other lands. In France 

 or in England for example, the specie reserves of the whole 

 country are concentrated very largely in the vaults of a central 

 bank. The Bank of France and the^Bank of England occupy 

 an independent position, and are dominated by no outside in- 

 terests that can involve them in the fortunes of special enter- 

 prises. Sobered and steadied at all times by an appreciation 

 of the enormous moral responsibility that rests upon them, 

 the managers of these institutions adhere to their ultra conserv- 

 ative policy even when the spirit of speculation is rampant 

 in other financial circles. Against its enormous deposits the 

 Bank of England maintains a cash reserve of over fifty per 

 cent, while the position of the Bank of France is even stronger; 

 when, therefore, other banks experience a demand for ready 

 money, relief can be quickly afforded by these central institu- 

 tions. And it is only through such conservatism as these 

 banks display in periods of prosperity that they can contribute 

 to stability in times of stress and storm. When it is remem- 

 bered that the reserves of the New York banks seldom exceed 

 very greatly the twenty five per cent limit which has been 

 established by law and by custom, the contrast between Amer- 

 ican and French or English conditions becomes at once appar- 

 ent. For an independent bank, which is free to seek its own 

 safety at the approach of danger, a reserve of twenty five per 

 cent should ordinarily prove to be ample; but for institutions 

 that aspire to the rank of central banks such a safeguard must 

 be wholly inadequate. 



This leads us to another weighty consideration. Unlike 

 the central banks of other countries, our largest institutions 



