Book contents
- Frontmatter
- Contents
- Acknowledgments
- Introduction
- 1 Vehicles for accumulating capital
- 2 Insider lending and Jacksonian hostility toward banks
- 3 Engines of economic development
- 4 The decline of insider lending and the problem of determining creditworthiness
- 5 Professionalization and specialization
- 6 The merger movement in banking
- Conclusion
- Index
- Plate section
6 - The merger movement in banking
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Acknowledgments
- Introduction
- 1 Vehicles for accumulating capital
- 2 Insider lending and Jacksonian hostility toward banks
- 3 Engines of economic development
- 4 The decline of insider lending and the problem of determining creditworthiness
- 5 Professionalization and specialization
- 6 The merger movement in banking
- Conclusion
- Index
- Plate section
Summary
The most striking characteristic of American banking at the present moment is the universal tendency to smaller profits. Not only is money getting cheaper, but competition is so keen that the temptation to gain business by doing it for nothing is proving too strong for many bankers. This tendency will help to hasten the day of the trained professional banker in preference to the amateur who spent the best part of his life at something else.
David R. ForganDespite all the efforts bankers made during the last three decades of the nineteenth century to improve their collection of credit information and promote sound lending practices, earnings in the banking sector continued to fall. After a brief recovery during the late 1880s, the profit rate for national banks in New England resumed its downward trend, with the result that earnings for the period 1896–1900 were nearly 50 percent below their level for 1871–75 (see Table 4.1). Many people felt there were simply too many banks in the region and “that too many of them have too much capital and too large expense accounts for the amount of business they do.” But despite dwindling returns, there were no significant efforts to restructure the banking sector before the late 1890s. Indeed, as Table 6.1 indicates, the number of banks in the region continued to grow, from 505 in 1860 to 724 in 1895 (including both national and state institutions).
- Type
- Chapter
- Information
- Insider LendingBanks, Personal Connections, and Economic Development in Industrial New England, pp. 133 - 156Publisher: Cambridge University PressPrint publication year: 1994