Reference has already been made to the establishment, under
state systems, of banks with capitals much below the minimum
allowed by the national banking law. No doubt many of the
banks thus established are below the minimum of safety. With
their trifling resources, it is impossible that they should command
for their service such experience and capacity as their operations,
although on a small scale, really require in the interest of the com-
munity. And yet the increase in the number of such small banks,
hardly to be distinguished from the smaller class of private bankers,
comes from an obvious tendency to carry banking facilities farther
and farther from the g^eat centres and to open the way for their
more general use by the community at large. In short, there is
not only a movement of increase, but a movement of diffusion
going on, which is probably the result, not merely of the general
pressure of debt in certain sections, already spoken of, but of a
healthy desire to use more freely and widely than has hitherto
been possible in sparsely settled communities the modem methods
and agencies of commerce. The state systems afford an opening
for this movement, and have therefore an importance in the busi-
ness organization of the United States at this moment not always
recognized in the more densely populated and wealthier parts of
the country. With the quickened movement of commerce pro-



196 ESSAYS

duced by the railway, the telegraph, and the telephone, an eco-
nomic need for the wider distribution of the machinery of exchange
is developing, which the smaller banks under the state systems
satisfy, — not perhaps in the best manner, but still in an important
degree. When a Western state provides, as Nebraska does by its
act of 1889, that banks with a capital of only ^5000 may be estab-
lished in towns having less than one thousand inhabitants, we must
recognize that for that community, under its conditions, the complete
diffusion of banking is felt to be a necessity. 