Banking standards under the federal reserve system

Bibliographic data

Monograph

Identifikator:: 1762969653

URN:: urn:nbn:de:zbw-retromon-142432

Document type:: Monograph

Title:: Banking standards under the federal reserve system

Place of publication:: Chicago

Publisher:: A. W. Shaw Company

Year of publication:: 1928

Scope:: xxxviii, 420 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part V. General summary and interpretation

Collection:: Economics Books

358 BANKING STANDARDS to vary from year to year in the same direction—such proportions reflecting the needs of general business in its year-to-year changes, which, it will be recalled, tend to be relatively the same not only among districts but also among cities within districts. Banks, however, though interrelated with the fortunes of gen- eral business, are distinctive as banks. If they are essentially commercial, their assets must be measurably liquid. Yet, within the realm of administrative discretion, the business needs of the clientéle which they serve, standards of regulation, and matters of solvency, they are free as they see fit to divide their resources as between loans and investments. Moreover, they are free, with essentially the same limitations, to seek increases in either or both their time and demand deposits, attracting them from new or old accounts, from immediately adjacent or distant territory, by the competitive devices freely employed by all, and held to be legiti- mate according to standards of business ethics and likelihood of success. The flow of goods, of gold, and of credit from district to district, and the geographical specialization in industry, in trade and commerce, and in investment opportunity, as well as the geographical distribution and concentration of wealth, place different parts of the country on different levels with respect to the distribution of their earning assets as between loans and investments, and the proportion of their deposits as between time and demand items. Yet, relative to their own levels, changes in the proportions of both tend to occur with regularity and to follow much the same course from year to year. District differentials, however, tend to persist. If, with levels divergent from district to district with respect to ratios of loans and discounts to earning assets or of time de- posits to total deposits, for instance, conditions occur which disturb the “normal” relations, then administrative control— suggestive of the existence in bank management of a conscious standard of “right” relations—, requirements in the loan and in- vestment market, regulation, and competitive pressure apply correctives which tend to re-establish an equilibrium. How much of this process is consciously carried out, and how much is due to the working of competitive forces governing the use and price of credit, it is difficult to say. But that such phenomena occur cannot be disputed. There are regressions to type, not only for the series indicated but for others as

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