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Now that we are on the subject of loans to deposits, I could not resist sharing this historic data from the gold standard era. For all those of you that know what happened in 1920, maybe some Ben Graham fan out there, check the high 1919 levels. The panic of 1907 was another famous episode. As I said, a high loans to deposits ratio is a good prognosticator of an overextended banking system. In the era when the banking system was just banks this was even more true (click to enlarge).

Figure 1. Graphic Chart Showing Ratio of Loans to Deposits of New York Clearing House Banks

Figure 1. Graphic Chart Showing Ratio of Loans to Deposits of New York Clearing House Banks

Source: Banking Principles And Practice, Ray Westerfield

Source: Charting Banking XVII: Loans to Deposits History