The Growth Of The National Banking System

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This section is from the book "Banking Principles And Practice", by Ray B. Westerfield. Also available from Amazon: Banking principles and practice.

The Growth Of The National Banking System

The nationalization of those state banks which desired to continue to issue bank notes was rapidly consummated during the years 1865 and 1866. Since that time the number of banks has increased eightfold, with periods of growth between 1871 and 1875, 1880 and 1892, and 1900 and 1919, and periods of contraction between 1867 and 1869, 1876 and 1879, 1894 and 1898, and in 1916. The most rapid expansion occurred after 1900, at which date the minimum required capitalization, as well as the tax on circulation, was reduced.

The volume of national bank notes is not an adequate index to the growth of the banks. The rapid growth between the dates 1877 and 1882 was due to the expansion of the country; their growth between 1895 and 1914 was also due to the expansion of the country, but more particularly, after 1900, to the lower capital requirements for national banks. The two periods of their decline were between the years 1883 and 1891, when the government debt was being paid off, and between 1915 and 1917 when the Aldrich-Vreeland currency was being contracted.

The two best indexes of banking activity are the deposits and aggregate resources. Except during the panic periods of 1873-1878, 1883-1887, and 1903, our banks have grown in number and in the extent of their operations, and the panic of 1907 and the depression of 1913-1914 retarded but did not reverse this tendency.

The above facts are presented more plainly in the table on page 234.

The comparative growth of national banks and the state banks and trust companies is tabulated on page 433. Such comparisons are somewhat unfair to the national banks, since their minimum capitalization is higher than that of state banks and the increase in the number of small banks does not affect the national bank columns. Possibly a fairer comparison of the growth of the two classes of institutions would be as between state and national banks having capitalization above the former minimum of $50,000.

Growth Of The National Banking System

Number of Banks		Total Resources			Bank Notes		Deposits
Increase	Decrease	Increase (In millions)	Decrease (In millions)	Date	Increase (In millions)	Decrease (In millions)	Increase (In millions)	Decrease (In millions)
.........	...........	...............	...............	...........	..............	.............	.............	................
134	............	............	.............	1863	...........	.............	..............	............
450	............	.............	..........	1864	............	.............	............	............
1,007	.........	..............	...........	1865	............	............	............	............
56	............	............	............	1866	............	............	............	............
............	9	............	............	1867	............	............	............	............
............	9	............	............	1868	............	............	............	............
............	9	............	............	1869	............	............	............	............
7	............	............	............	1870	............	............	............	............
158	............	............	............	1871	............	............	............	............
158	............	............	............	1872	............	............	............	............
36	............	............	............	1873	............	............	............	............
48	............	............	............	1874	............	............	............	............
64	............	............	............	1875	............	$5.0	............	............
............	5	............	$88	1876	............	20.6	............	$44
............	7	............	51	1877	$3.6	............	............	5
............	27	............	24	1878	3.6			0
............	3	$269		1879	20.1	............	$254	............
45	............	16	............	1880	1.4	............	............	57
60	............	323	............	1881	18.6	............	239	............
146	............	41	............	1882	0.7	............	51	............
220	............	............	27	1883	............	12.2	............	71
150	............	............	93	1884	............	22.2	............	74
56	............	153	............	1885	............	8.5	127	............
141	............	81	............	1886	............	23.8	73	............
192	............	107	............	1887	............	26.8	85	............
90	............	195	............	1888	............	36.5	232	............
168	............	183	............	1889	............	34.5	115	............
248	............	143	............	1890	............	18.8	73	............
127	............	72	............	1891	............	2.3	14	............
93	............	297	............	1892	1.2	............	171	............
8	............	............	401	1893	34.4	............	............	314
............	50	364	............	1894	............	2.1	277	............
............	42	............	50	1895	8.2	............	............	27
............	36	............	160	1896	21.8	............	............	102
............	65	............	558	1897	............	7.6	256	............
............	19	298	............	1898	I7.5	............	237	............
2	............	647	............	1899	3.9	............	423	............
334	............	398	............	1900	85.1	............	73	............
344	............	647	............	1901	107.1	............	442	............
397	............	418	............	1902	20.7	............	289	............
469	............	197	............	1903	39.7	............	............	28
346	............	665	............	1904	37.6	............	263	............
363	............	497	............	1905	68.0	............	314	............
Increase	Decrease	Increase (In millions)	Decrease (In millions)	Increase (In millions)	Decrease (In millions)	Increase (In millions)	Decrease (In millions)
366	............	$544	............	1906	$59.0	............	$425	............
425	............	374	............	1907	28.3	............	173	............
222	............	637	............	1908	61.2	............	194	............
151	............	546	............	1909	34.0	............	384	............
192	............	253	............	1910	24.0	............	137	............
113	............	557	............	1911	14.6	............	331	............
97	............	478	............	1912	11.1	............	358	............
86	............	175	............	1913	10.7	............	137	............
61	............	446	............	1914	367.5	............	247	............
48	............	313	............	1915	............	S3I5.3	343	............
............	26	2,131	............	1916	............	48.4	1,537	............
62	............	2,374	............	1917	............	14.5	1,595	............
94	............	1,549	............	1918	7.4	............	1,476	............
135	............	2,960	............	1919	4.9	............	1,720	............

Increase in Numbers of Banks Having Capital of $50,000 and Over

	From 1877 to 1888	From 1888 to 1899	From 1899 to 1909
State banks..........................	409	535	1,032
National banks.........	1,064	435	1,194

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The Growth Of The National Banking System

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The Growth Of The National Banking System

Growth Of The National Banking System

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