SIGNIFICANCE OF BANKING SITUATION IN COLORADO 57 



the purpose. These articles show if they show anything that there is a 

 most fierce competition in the matter of bank fixtures and furnishings. 

 It is true the public is frequently foolish enough to allow its patronage of 

 a financial institution to be in some considerable measure determined 

 by the elegance of the interior of the banking-house. It would seem, 

 however, that with the revelations the past two years have made in the 

 management of great financial institutions, the public will in the future 

 be more attracted by the character of the banker than by the elegance of 

 marble fixtures and sumptuous furniture. If this is true such extrava- 

 gant banking houses will be less necessary in the banking business of the 

 future. 



Competition has developed another practice among the banks that 

 is generally regarded as unfavorable to sound banking. This is the prac- 

 tice of paying interest on deposit balances. Superintendent Kilbum 

 of New York says that the banks in his state are paying too high rates 

 of interest on these balances. The banks do this in order to get money, 

 and are thus tempted to loan on poorer security as it will pay a higher 

 rate of interest. He thinks this is a matter that the banks and trust 

 companies should settle among themselves. The banks in Albany made 

 an agreement in 1905 not to pay interest on balances under $10,000. 

 The agreement was a success. Very little money it is said was with- 

 drawn from the city in consequence.^ 



These general considerations on the effect of competition in the bank- 

 ing business apply with much force to Colorado. Our bankers are 

 exposed to the same temptations that confront those in other states. 

 They must regulate the amount of credit to be given and they must also 

 prevent the growth of abnormal credit. This is not easy. It has been 

 shown that our population is composed of aggressive and adventurous 

 pioneers and their descendants as well as a large element of enterprising 

 immigrants from other states. Come to seek their fortune in the West, 

 they bring little capital and they want credit. Our own citizens are 

 optimistic; they have faith in speculative enterprises. The fever of 

 speculation brought on by the development of mining in this state has 

 not yet entirely run off. Fortune- seeking immigrant and optimistic 



'"Report of Supt. of Banks, N. Y.," Bankers' Magazine, Vol. LXXII, p. no, 1906. 



