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From: "James Brady" <>
Subject: RE: [APG] accepting money from a foreign country - off topic
Date: Thu, 6 Jul 2006 14:15:20 -0400
In-Reply-To: <b66a4ad50607060841p68119976oc003d6138669f896@mail.gmail.com>


Ken wrote:
>Historically American banks have been small, and ill equipped to handle
>international foreign currency matters. Canada with its major banks
having
>branches across the nation, and in New york, London and Paris was better.
----
There is a line of thought that one of the main reasons that Canada
weathered the Great Depression better than the US did was because of the
differences in banking structure between the two nations.

Over-simplifying here:
Canada had, what, nine or so, nationally chartered banks with branch offices
across the nation and overseas. The US had national charter banks or state
charter banks, not to mention savings & loans, trusts and mutual banks.
Thousands of them and, because many states had unit-banking laws, most only
had one office. The small-ish banks were dependent upon larger correspondent
banks in the money-centers in order to conduct much of their business. They
would have been required to maintain balances at those banks. So you have
the odd result that a small rural bank could solicit deposits in only a very
limited area, but would have to ship some small percent of that to a far
richer correspondent bank thus reducing what it could loan out in its' own
area of operations. That wasn't a problem as long as the local economy
performed well, but if the local economy took a hit, deposits would be drawn
down, which meant fewer funds for loans were available. The local bank could
pull surplus funds from the money-center bank, but it couldn't raise
deposits outside of its' franchise area. It might have to call some loans
due prematurely to pay off depositors. That kind of thing could lead to a
bank panic and a rush to withdraw funds resulting in the collapse of the
local bank and economy.

Canda with fewer banks, but larger branch networks, was able to gather
deposits nationwide and shift them around.

In the US, since the 1994 Reigle-Neal Act, which regulates interstate
banking, the number of FDIC-insured commercial banks fell from 9,972 to
7,527 at the end of 2005, a decline of more than 24 percent. Savings
associations fell from 15,461 to 13,136 during that same period, off about
15 percent. Primarily due to interstae mergers. The total number of banking
offices grew more than 20 percent during that time from 65,711 to 79,243.
Total FDIC-insured depositary institutions grew from 81,172 to 92,379. That
doen't include stand-alone ATMs or telephone or internet banking.

Some think this may be one of the reasons that US recessions are milder now
than they used to be.

So what does this have to do with genealogy? It's worth keeping in mind when
doing genealogy that the US had bank panics of varying degrees in 1819,
1837, 1857, 1860-1, 1873, 1884, 1890, 1893, 1907 and 1930-1-2-3. People lost
farms, businesses, jobs and may have moved on to other locations.

Jim

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