The wide variation between the State reserves and the reserves of the National banks is not difficult to explain. There are eighteen states today which have no reserve requirements at all. In the remaining states, the reserve requirements range all the way from 5 per cent to 25 per cent. The reserve laws in some of the states are excellent, just as good as that of the National Bank Act, while in an adjacent state, there may be no provision whatever requiring reserves. The result is that half of the banks of the country which are compelled to carry adequate reserves are carrying the other half, a condition that is unfair, unjust and manifestly unsound. MR. MERCHANT: It is not only manifestly unfair as between the bankers themselves, but such a condition imperils the banking situation as a whole, and more than any other single cause, brings on a general commercial disaster, as things now stand. The banking of the United States and all the productive and transportation interests are, comprehensively speaking, but one single business, so intimately associated and interwoven are their affairs. The banks put up their capital as an insurance fund, to protect their customers, and should handle their resources, and should keep such an amount of reserves on hand or at their command as to guarantee the payment of all depositors upon demand, or in accordance with their contracts. Since the banks, commerce and the people are all bound up together, the contracts of the banks with the people should take one common form, and each bank, from one end of the country to the other, should be compelled to assume its proper share of the burden, both as to paid-up capital and as to reserves. It is interesting to note that the capital of the 7,312 National banks amounting to $1,033,000,000 is just about equal to the capital of the other 17,804 banks, outside the National System reporting, and the estimated capital of $70,000,000 of the non-reporting banks, $1,047,000,000. The surplus of the National banks is 92 per cent of their capital, and strange and fortunate to say, excluding the Mutual Savings bank, the surplus of all other state banks is exactly 92 per cent of their capital. That is, the National banks have $1,983,000,000 capital and surplus to insure $5,825,000,000 individual deposits and $2,178,000,000 due to the other banks, or a capital and surplus to all deposits of nearly 25 per cent, while all the other banks have $2,010,000,000 capital and surplus to insure individual deposits $5,089,000,000 and $454,000,000 due to banks, or a little over 24 per cent. Insurance expressed in capital and surplus, therefore, is about equal, but a great and serious divergence comes, as we have seen, in the average cash reserves of the two classes of banks.