Organized Banking

EUGENE E. AGGER, Ph.D.
Associate Professor of Economics in Columbia University

NEW YORK

HENRY HOLT AND COMPANY

THE QUINN & BODEN CO. PRESS
RAHWAY, N. J.

This book grew out of a part of a course on the subject of money and banking given by the author at Columbia University. It was written under stress of numerous other duties, hence the author himself feels called upon to confess that in several directions the book leaves something to be desired. But it is hoped that it will be helpful to the student and to the general reader in obtaining a little more comprehensive and more closely coördinated knowledge of the broader relations of modern banking. For use in the classroom it is recommended that a good book of readings like W. Hamilton's Readings in Money and Banking, or H. G. Moulton's Principles of Money and Banking be used to supply illustrative, concrete material as a basis for further discussion.

The author has obviously drawn heavily on the productions of others. Professor Dunbar's little book, Chapters on the History and Theory of Banking, supplied most of the basic structure. Suggestions were picked up here and ther in the writings of sundry other authors. Definite acknowledgment is made in a few cases, but most of the principles of modern banking have been so widely discussed that they may be regarded as common property. There is little, therefore, that is really new in this book except in organization and method of approach.

The author takes pleasure, however, in expressing grateful acknowledgment to his chief, Professor E. R. A. Seligman, to Professor E. W. Kemmerer of Princeton, and to Professor B. M. Anderson, Jr., of Harvard for helpful suggestions in drawing up the general plan of the book. He is greatly indebted also to his friend and colleague, Dr. H. Parker Willis, for reading over the proof of the

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chapters dealing with the Federal Reserve System and for
helpful suggestions in connection therewith. The author
himself, however, is entirely responsible for any errors of
fact or of interpretation that may appear. Lastly, grateful
reference must also be made to the fact that the Index
was prepared by the author's friend, Mr. C. F. Kurtz of
the State University of Iowa.

COLUMBIA UNIVERSITY,
January, 1918.

EUGENE E. AGGER.

CONTENTS.

INTRODUCTION

Modern production characterized by division of labor and mu-
tual interdependence-This involves large scale production
and lengthening of the period of production-This in turn
assumes existence of capital-Abstinence is reflected in
money saving-Savings must be invested-Modern organ-
ization assumes considerable saving-Gathering together
and applying these savings is function of banking-The
different types of banking in this connection .

CHAPTER I

THE BANK'S OPERATIONS

Definition of bank-Deposits: nature and use-Methods of ob-

taining deposits-Nature of transactions involved-Effect

of clearing system on bank's resources-Cash reserves—

The issue of bank notes-Methods of obtaining notes-Re-

lation of deposits and notes to bank's profits

CHAPTER II

DEPOSITS VERSUS NOTES

The nature of the deposit and the check as contrasted with

notes-Acceptability of checks and of notes-The impor-

tance of cash reserves in maintaining acceptability-Con-