The National Bank Act proved inadequate to meet modern needs. There was a lack of elasticity in the currency of the country - that is, the periodical demands for money and currency coming from the great agricultural sections of the West and South could not be adequately met. The method of handling the bank reserves also proved imperfect and insufficient; vast sums of money were accumulated in the three central reserve cities, New York, Chicago and St. Louis. The banks in these cities, especially as they paid interest on bank balances and were therefore forced to earn something with these funds, would lend out this money in the most liquid ways they could. When the banks throughout the country found it necessary to draw on the reserves they had in the large cities, to meet the seasonal demands of business and agriculture, the large city banks were required to call in their loans as rapidly as possible. This would frequently result in high money rates and radical declines in security prices. If business conditions in general were not especially good, a panic, or at least great alarm, would result. Another great defect in our system was the clumsy Independent Treasury System, designed to keep all government funds separate, and often resulting in withdrawing money from circulation at a time when it was sorely needed, and putting it back into circulation when there was plenty, thus increasing the money in circulation at a time when business needs did not require it. There was no good discount market for commercial paper; trade and bankers acceptances were almost unknown; and there was no control over gold movements to or from the country. Our system of check collections was imperfect and the banking system would not permit us to compete on an equal basis with the European banks, as there was no adequate means of extending American banking abroad.