The work of the Stock Exchange

Bibliographic data

Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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

APPENDIX 62% In the hearings on the La Follette Resolution, this same question frequently arose. The text of the resolution blithely assumed that agriculture was being deprived of credit by the call loan market. But Professor O. W. M. Sprague in his testimony (p. 32) stated that most banks are local banks, and their local business is most profitable. “The rates on their local business are in general higher than upon brokers’ loans. Banks are not tempted to invest in brokers’ loans primarily by the rate of return, since this rate is regularly lower than the rate on local loans. They invest in brokers’ loans primarily because they do not find in the local situation a volume of satisfactory loans sufficient to absorb all of their funds consistent with safety.” And again (p. 33): “A well-conducted bank holds in part customers’ 'oans. These loans ordinarily cannot be liquidated in any large meas- ure without loss of standing of the bank as a going concern . . . if the bank is to utilize its resources at all times, it must ordinarily invest a part of its resources outside, in an impersonal way . . . holding a quasi-reserve, and that is one of the reasons for the shifting of funds to the large money centers from the small money centers . . Now the query presents itself whether they are draining money which might be properly and desirably utilized in their own locality or whether they are sending money there because they do not ind a reasonably safe and reasonably liquid use for those funds in their own locality. Now, I will say that, by and large, beyond the point of a quasi-reserve, there would be a moderate amount of money transferred to New York, either to be carried as a balance or to be lent on call, the balance, the increasing amount, represents funds which the banks, in their best judgment, do not find it feasible and safe under existing conditions to employ in their own localities.” Again (p. 37), Professor Sprague reiterates: “It is not at all certain that you can employ all the funds of a bank locally; that it may not be to the advantage of the community, and may be unsafe for the bank; and that on the whole, the inducement is very strong on the part of the bank to employ all of its funds locally that it considers to ve safe . . . A great many of our 26,000 banks clearly have em- ployed more funds locally than was in fact safe. They misjudged the situation. Whether there are some bankers who are unduly pessimistic about their localities, lacking in enterprise, and who fail to put an adequate amount or a reasonable amount into the local situation, is probably true, but I think such cases are exceptional.” Governor Roy Young of the Federal Reserve Board, testifying in the same hearings (p. 69) stated: “The second inquiry that I made nf myself was this: is this volume of credit that is going into the

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