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SOURCE ROOM

Annual Report of the Comptroller of the Currency, 1907

Office of the Comptroller of the Currency, U.S. Treasury Department

Claims Supported by This Source

  1. History of Clearing House Loan Certificates: The New York Clearing House issued them in 1860 ($7,375,000, 7%), 1861, 1863, 1864, 1873 ($26,565,000, 7%, September 22–January 14, 1874), 1884 ($24,915,000, 6%, from May 15), 1890 ($16,645,000, November 12–February 7, 1891), and 1893 ($41,490,000, June 21–November 1, max. outstanding $38,280,000) (pp. 63–66, corrected table by the clearing house manager).
  2. The 1873 certificates were for up to 75% of deposited securities (government bonds and gold certificates at par) and were used to settle clearing balances. The wording of the 1884 certificate ("This bank has deposited with the Committee securities... and this Certificate will be received in payment of balances at the Clearing House") is reproduced (pp. 64–65).
  3. Comptroller's findings: Banks outside reserve cities hold only 6% of their deposits in cash, and city banks hold only 1.1% of their reserves in cash. In a system with only $710,625 in cash for $10,000,000 in deposits, the demand of about $200,000,000 to move the crops each autumn causes instability. "The fact that the crisis of October 1907 took on the character of a banking panic and spread throughout the country was a direct result of this" (pp. 72–73).
  4. "What is needed is a system of bank notes based on credit and a proper system of bank reserves, which a central bank of issue and reserve could have supplied." If deposit credit and bank note credit could be freely interchanged, "there would have been no scarcity of currency, no disorganization of domestic exchange, and no panic, either to the banks or to the public" (p. 73).

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