In the literature of banking and currency reform in the United States, comparatively little attention was until recently given to the interrelations of the thousands of banks in the national banking system, except in the matter of redeposited reserves. It is true that in the discussions which followed the breakdown of the banking system in i893, banking interrelations were emphasized by the advocates of branch banking; but for the most part this school of reformers looked rather to future relationships than to those already existing. It was little appreciated that the system of interbank borrowing, which had already developed to such an extent that even in i893 more than sixty millions of dollars were so borrowed, contained within itself a principle which might conceivably be extended to secure the very ends which the proponents of branch banking contemplated, namely, such mobility of loanable funds as would approximately equalize rates of interest throughout the country. This possibility was obscured by the trend of thought and of legislation toward greater freedom of note issue. It did not, indeed, escape attention that the variations in the volume of interbank borrowing formed a very satisfactory index of the needed elasticity but it was not until the need of credit elasticity as well as of currency elasticity2 began to be perceived that any considerable importance was attached to the existing relations of banks with one another.