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

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part V. General summary and interpretation

Collection:: Economics Books

356 BANKING STANDARDS market, therefore, which are reflected in the changes in the volume of funds in New York and in changes in money rates in that market, are national in character and have a definite relationship to changes in credit and banking conditions in all parts of the country.”*! That banks in all parts of the country through correspondent and other relations? are linked together? through debtor and creditor relationships,’* and that these relationships are inter- twined with business growth and decline are facts well under- stood. Indeed, the “complicated relationships of creditor and debtor . . . . make the disaster of one enterprise a menace to many. On this financial side of their operations, the banks bear a relation to all other enterprises not unlike that which the rail- ways bear on the industrial side; for most enterprises need bank credit not less than they need freight service. As a serious con- gestion of railway traffic applies the brake to industrial operations, so any hampering of banking operations applies the brake to business dealings.”*? To consider at length the interrelations of banks the country over and their connection with business would be to emphasize the obvious. Our only interest in calling attention to them is to indicate the background of interdependence in which must be 11 Annual Report of the Federal Reserve Board, 1925, p. 15. 12 The duties of correspondent banks “may be of a more or less elaborate char- acter or they may be comparatively few in number. The country correspondent of a city bank usually does nothing for that bank except to collect funds, remit them, and carry a balance in its favor. The city correspondent for a country bank does the same kind of work, but is ordinarily called upon to carry a larger balance and to allow interest upon it. From time to time it may be allowed to invest this balance or a part thereof, passing upon the securities or notes that are taken and thus morally guaranteeing their goodness. Conversely, it may be asked to con- vert such securities or notes into cash through repurchase or rediscount. It may also be asked to open foreign credits on behalf of the country bank and to trans- act various other kinds of business. The city bank usually supplies its correspond- ent information from its credit files, and the latter may be occasionally requested by the city bank to supply information regarding some individual or concern in its own immediate neighborhood as to which the city bank wishes to be informed.” H. Parker Willis and George W. Edwards, Banking and Business (New York, 1922), p. 241. 13 Ag to the manner in which this is effected for member banks in the Boston Federal Reserve district, see Appendix IL 14 «An important class of borrowers from reserve city banks is their correspond- ents. . . . . In general, the lending bank stands ready to supply the reasonable requirements of the correspondent, but only in proportion to the average balance carried and with due regard to the applicant’s assets and borrowings elsewhere and within the limitations set by law.” Ray B. Westerfield, Banking Principles and Practice (New York, 1921), Vol. IV, p. 871. 15\W. C. Mitchell, Business Cycles (New York, 1927), p. 102.

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