Everywhere in banking there is a movement toward what is called centralization, not in the sense of autocratic control or monopolistic price fixing, but merely in the sense of economy of resources and elimination of risk. The different types of banking systems to which reference has already been made are merely different methods or plans of controlling the legal and economic organization of banks, and experience under them has shaped their development accordingly. The centralizing movement to which reference has just been made is seen in the central banks of England and France, but is also seen in the decreasing number of Canadian banks, and, before the establishment of the Federal Reserve system, was reflected in the increasing amount of interbank control which resulted in giving to large banks in the cities power over many smaller institutions throughout the country. These tendencies were the outgrowth of a desire or necessity for unity of action, of interest rate, and of other policies. In the British banking system centralization was obtained as the result of custom and the placing of funds in the hands of a single institution which was regarded as best able to safeguard them. In the Canadian banking system the unity of action and policy was obtained through the constant narrowing of the number of institutions themselves, the fact that they and their home offices were in constant communication with one another and that an informal organization had been established to include them.

In the United States a similar result was obtained prior to 1902 through the work of our clearing houses, through the development of systems of correspondents ramifying throughout the country, and in various other ways. The question whether a central bank was desirable was thus a mere question of detail of management. In some countries it had been found expedient to create such a central bank and, as in England, such a bank had been successful in controlling the general financial situation upon an equitable basis without the aid of any legislation. In other countries it had been deemed wise not to create a formal organization for the oversight of banking, but to leave matters to develop on a semi-competitive basis in the belief that the community of interest would exert itself so far as was necessary, and that it was not wise to give to this community of interest any definitely organized form. The banking systems of the several countries to which reference has been made, may thus be regarded as belonging to different grades or lines of development rather than to different types of banking. In every country banking method is to-day substantially similar, although details may differ widely, and interbank relationship is, as has already once or twice been stated, largely a matter of organization.