BY EUGENE E. AGGER, Ph.D. NEW YORK HENRY HOLT AND COMPANY A3 Econ. Dept. Feon. A. Main Library BY HENRY HOLT AND COMPANY THE QUINN A BODEN CO. PRESS PREFACE 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 416963 chapters dealing with the Federal Reserve System and for COLUMBIA UNIVERSITY, EUGENE E. AGGER. 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 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 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- flict of motives in management of reserves- -Secondary reserves-Order of availability of investments-Discounts and loans-Relation to the question of fixed and circulating capital-Publicity and government supervision as factors in confidence-General acceptability of the bank note-Im- portance of reserves in the field of note issue-Special pro- Are banks producers?-Safeguarding and stimulating savings- Promoting productive investment of savings-Releasing V. |