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Capital Adequacy Ratio - A comparative analysis

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Introduction

CAPITAL ADEQUACY RATIO (CAR)

CAR is a measure of the bank's capital expressed as a percentage of its risk weighted credit exposures. A minimum CAR ensures that the bank can absorb certain amount of losses before becoming insolvent. Thus minimum CAR ensures the stability and efficiency of the financial system. Minimum CAR also gives some protection to the depositors. In the event of a winding-up, depositors' funds rank in priority before capital, so depositors would only lose money if the bank makes a loss which exceeds the amount of capital it has. The higher the CAR, the higher is the level of protection available to depositors.

One of the most important principles of BIS formulated "Core principles of Effective Banking Supervision" is that the banks should never be allowed to fail and for that it is essential that corrective action should be taken while the bank still has a manageable cushion of capital. This can be effectively tracked through the CAR requirements for the banks. The timely corrective actions can be taken when a bank fails to achieve a min. CAR. In case of foreign countries the supervision framework focuses only on one ratio i.e. CAR whereas in India, along with CAR, Net NPA and ROA are also taken a trigger points. If a bank fails to meet CAR, corrective actions like recapitalization, limits on deposit raising, prohibitions on extension of new credit, acquisitions of new securities are taken according to the level of seriousness. The current norm set by RBI in India for CAR is %. Once BIS II gets implemented, this will be raised to 10%.

Three-tiered capital

The Basle Capital Accord I, 188 specifies three levels of capital to be taken for CAR calculation

1.Tier 1 This capital is permanently and freely available to absorb losses without the bank being obliged to cease trading. Tier-1 capital safeguards both the survival of the bank as well as the stability of the financial system.

.Tier This capital absorbs losses only in the event of a winding-up and so is a lower level of protection. Tier- capital absorbs losses only after Tier-1 capital has been exhausted. Upper Tier- capital has no fixed maturity, while lower tier- has a fixed maturity. Thus upper tier- capital is more effective in absorbing losses.

.Tier It consists of short term subordinated debt. It can be used as a buffer against market risks (losses on forex and interest rate contracts) if the upper tiers are not sufficient to do so. It is not mandatory to hold tier- capital.

Credit Exposures

Credit risk arises out of two factors, the counterparty risk and the market risk. Counterparty risk depends on the financial strength of the debtor while the market risk is the systematic factor in asset pricing.

While calculating credit exposure, it is kept in mind that more capital would be held against riskier assets. The degree of riskiness is defined by the central bank for each broad category of assets. However, Basle II emphasizes on asset risk evaluation on case by case basis. Though costlier and more tedious, this approach would make banks more financially viable.

Off balance sheet exposures are first converted to their "credit equivalent amounts" which are then assessed for their riskiness. CEA is obtained by evaluating the contingency and estimating the outcome.

Under CAD (International banking norms), banking operations are categorized as either trading book (broadly, marked-to-market activities) or banking book (all other activities) and risk-weighted assets are determined accordingly.

Banking book risk-weighted assets are measured by means of a hierarchy of risk weightings classified according to the nature of each asset and counter party, taking into account any eligible collateral or guarantees. Banking book off-balance sheet items giving rise to credit, foreign exchange or interest rate risk are assigned weights appropriate to the category of the counter party, taking into account any eligible collateral or guarantees.

Trading book risk-weighted assets are determined by taking into account market-related risks, such as foreign exchange, interest rate and equity position risks, as well as counter party risk.

This method seems to be a better method as it takes the various market risks into account. However, in India the banking book method is followed.

Limitations of CAR

Some of the limitations of CAR are

1.It does not consider operational risk at all.

.If provisions are inadequate, CAR overstates the bank's viability.

Thus for a reliable study of a bank's financial study, CAR should be used in conjunction with other indicators of the bank's financial health such as Net NPA and ROA.

The Key Financials

HSBC

18100000100

Dividend per share (US $)0.080.40.450.480.5

Dividend payout ratio (%)5751.554.476.6.7

Retained Earnings per Share (US $)0.0.0.60.150.

US$0.50 ordinary shares in issue (Mn)806784586855481

Retained Earnings (Mn $)1874.7708.07.41140.51184.44

Capital Ratios

Tier 1 capital .70%8.50%.00%.00%.00%

Tier capital.0%4.70%4.0%4.00%4.0%

Total Capital1.60%1.0%1.0%1.00%1.0%

Average CAR1.8%

(US $ Mn)

Share capital44404,644,6784,741

Shareholders' funds 7,404,4046,46,885,406

Undated subordinated loan capital ,47,5,546,47,540

Dated subordinated loan capital7,571,1881,6761,00114,81

% Equity4.10%1.5%.%.1%0.51%

% Borrowed Liabilities75.0%78.48%77.78%76.7%7.4%

Tier 1

(US $ Mn)00100(% Change)

Shareholders Funds 45754061.8%

Minority Interests51506-5.5%

Innovative tier 1 securities4676475.1%

Less Property revaluation reserves-71-154-1.6%

Goodwill capitalized and intangible assets-148-178551.1%

Owner Shares Held-68-601-4.0%

Total Qualifying Tier 1 Capital5078411.05%

Tier

(US $ Mn)00100(% Change)

Property Revaluation Reserves71154-1.6%

General provision01481.%

Perpetual Subordinated debt8546.11%

Term Subordianted Debt11875.8%

Minority and other interests677511.8%

Total Qualifying Tier Capital180514417.4%

Subordinated debt raised as Tier cap7.8%76.8%5.5%

Unconsolidated Investments-1781-15.7%

Investments in other banks-67-681.75%

Other deductions-116-1444.14%

Total Capital5085457401.%

Sources of capital00100(% Change)

Internal Funds (%)78.1%76.66%-.85%

External Funds (%)1.0%.4%10.66%

Assets

(US $ Mn)001%00%% Change

Loans and Advances to customers086444.0%54447.10%14.16%

Loans and Advances to banks10464115.0%5461.70%-8.74%

Debt Securities16057.40%17570.40%.44%

Treasury Bills and other eligible bills1771.60%18141.40%0.5%

Equity Shares80571.0%811.10%1.4%

Intangible Fixed Assets14564.10%1716.0%17.85%

Others714710.60%871411.00%1.08%

687608100.00%74801100.00%.04%

HK SAR Govt certificates of indebtedness867 445 .6%

Total Assets6645 7546 .05%

Total RWA147856.%4055156.71%.8%

RWA of Contingent liabilities and commitments

Contingent Liabilities7501 0785 11.4%

Commitments1758 100 1.8%

Total4506.47%517886.8%15.01%

00100(% Change)

Gross NPAs as a % of total loans.0%.00%-1.0%

Loan Loss Provision as a % of total loan.80%.70%-.57%

Loan restructured as a % of total loans0.70%1.10%57.14%

HSBC

The amount of qualifying tier capital cannot exceed that of tier 1 capital.

Term subordinated loan capital may not exceed 50 per cent of tier 1 capital.

1.HSBC has been trying to increase the DPS at a constant rate. However, EPS has been fluctuating. Due to EPS decline, Dividend payout ratio took a massive jump in 001 (40% Increase). As a result of this, retained earnings went down drastically, indicating that the bank's dependence on external sources of fund had increased. However, the situation improved in 00 with an increase in EPS, resulting in a relative decline in Dividend payout ratio, even though DPS increased.

.This is inline with the observation that the bank has improved its total retained earnings by 56% over the past year. Hence, the bank has strengthened its internal sources over the past year.

.Total asset base has risen by % as compared to FY 001. However, the RWA as a percentage of total assets have remained almost same. This has negated the increase in Tier 1 and Tier capital, and hence the CAR has increased only marginally in 00.

4. The average CAR is 1.8%. This shows a highly conservative nature of the bank. This also indicates that there is sufficient opportunity to expand the asset base for HSBC.

5.The bank seems to raise money through subordinated debt regularly. As seen from the financials, the subordinated debt as a % of Tier II capital is substantial (7%) and increasing further (76%). Moreover, the proportion of subordinated debt as a source of external funds compared to equity capital is high (about 80% as compared to 0%).

6.On the asset side there is an increase in advances (14%) and largest fall is in money at call and short notices (-8.74%) implying that the average maturity of the assets has improved.

7.The Tier 1 as well as Tier capital of HSBC has increased substantially because of a large increase in shareholder funds and subordinate debt respectively. This has led to an increase in total capital.

8.The asset composition figures show that the majority of the asset creation is on loans and advances and not on investments, and there is an increasing trend in this. In FY001 the bank had 7.% of total assets into investments and 44.% into loans and advances whereas in FY00 it changed to 6.% and 47.1% respectively. This shows that the bank is expanding its customer base.

.From the other indicators like NPA and restructured loans, it seems that bank is increasingly restructuring its bad loans resulting in a fall in Gross NPA as well as the provisions for NPA.

10.The off Balance sheet items (RWA of Contingent liabilities and commitments) for HSBC though increased doesn't show much increase in percentage terms. However, the current levels seem high compared to the industry average.

Citibank

18100000100

Dividend per share (US $)0.80.410.50.60.7

Dividend payout ratio (%)0.7418.1.1.51.41

Retained Earnings per Share (US $)1.071.8.17.1.

Common stockholders equity (Mns) 50.5148.685140.68

Retained Earnings (Mn $) 1088.1175.611177.16

Capital Ratios

Tier 1 capital 8.4%8.47%

Tier capital .50%.78%

Total Capital 10.%11.5%

Average CAR11.0%

(US $ Mn)

Share capital 156116558511746

Shareholders' funds 4876156564461778518

Subordinated Loan Capital 8,64810,88

% Equity 7.8%6.8%

% Borrowed Liabilities 7.11%7.11%

Tier 1

(US $ Mn)00100(% Change)

Shareholders Funds7785187.0%

Qualifying perpetual preferred stock140014000.00%

Qualifying mandatorily redeemable securities of subsidiary trusts675615-8.5%

Minority interest80165.%

Less Net unrealized gains on securities available for sale-85-1571.6%

Accumulated net gains on cash flow hedges, net of tax-168-146.%

Intangible Assets

Goodwill-861-661

Other Intangible Assets-444-4

50% investment in certain subsidiaries-7-7

Other-05-575

Total Qualifying Tier 1 Capital584485010.6%

Tier

(US $ Mn)00100(% Change)

Allowance for credit losses864887.06%

Subordinate Debt8648108818.6%

Unrealized marketable equity securities gains718017.85%

Less 50% investment in certain subsidiaries-7-6-50.00%

Total Qualifying Tier Capital17410511.7%

Subordinated debt raised as Tier cap4.85%5.%6.1%

Total Capital75777817.%

Sources of capital00100(% Change)

Internal Funds (%)88.5%86.86%-1.5%

External Funds (%)11.41%1.14%15.14%

Assets

(US $ Mn)001%00%% Change

Cash and due from banks185151.76%1761.58%-6.4%

Deposits at interest with banks1161.8%1681.4%-14.75%

Federal funds sold and securities borrowed or purchased under agreements to resell14801.8%1461.75%.81%

Brokerage receivables5155.4%558.1%-7.87%

Trading account assets144041.78%1550814.15%7.11%

Investments1617615.5%165115.45%5.04%

Total Loans81066.6%4604.77%14.4%

Goodwill861.7%661.46%1.%

Intangible Assets000.86%8500.78%-5.4%

Reinsurance recoverables171.18%4560.40%-64.7%

Separate and variable accounts556.4%118.0%-1.50%

Other Assets8568.1%7506.85%-11.0%

Total Assets1051450100.00%10710100.00%4.5%

Total RWA640566.01%666.47%0.%

RWA of Contingent liabilities and commitments10180.6%116681.06%15.0%

00100(% Change)

Gross NPAs as a % of total loans1.80%.10%16.67%

Loan Loss Provision as a % of total loan.60%.60%0.00%

Loan restructured as a % of total loans0.10%0.00%-100.00%

Citibank

1.Dividend payout ratio has increased slightly over the past two years. However, an increase in EPS has allowed the bank to show an increase in its retained earnings as well as DPS. The bank is showing a stable growth which augers well for the bank.

.Total asset base has risen by 4.5% as compared to FY 001. The RWA as a percentage of total assets have declined marginally resulting in a slight increase in the CAR.

.The banks risk bearing capacity as indicated by its CAR at 11.5% as of end of FY00, shows that there is scope for the bank to expand its asset base further.

4.From the sources of capital it is seen that the banks dependence on internal sources has come down from 8% to 87% whereas the external sources has increased from 11% to 1%. This highlights the need for the bank to go in for more external debt.

5.The bank seems to be raising less money through subordinated debt. The proportion of subordinated debt as a source of external funds compared to equity capital is low (about 7% as compared to 6%). However, the bank seems to have realized this and is improving its levels of subordinate debt. As seen from the financials, the subordinated debt as a % of Tier II capital has increased substantially in 00 with a growth rate of 1% over the past year.

6.On the asset side there is an increase in advances (14%) and fall in money at call and short notices (-10% app.) implying that the average maturity of the assets has improved.

7.Tier capital of Citibank has increased substantially because of a large increase in subordinate debt. This has led to an increase in total capital.

8.The asset composition figures show that the majority of the asset creation is on loans and advances and not on investments, and there is an increasing trend in this. In FY001 the bank had 15.5% of total assets into investments and 6.6% into loans and advances whereas in FY00 it changed to 15.45% and .77% respectively. This shows that the bank is expanding its customer base.

.From the other indicators like NPA and restructured loans, it seems that bank is not able to restructure its bad loans resulting in a increase in Gross NPA.

10.The off Balance sheet items (RWA of Contingent liabilities and commitments) for Citibank though increased doesn't show much increase in percentage terms. Moreover, the current levels seem fairly decent compared to the industry average.

Comparison of HSBC and Citibank

001 00

CitibankHSBCCitibankHSBC

CAR10.%1.00%11.5%1.0%

RWA as a % of total assets66.01%56.%6.47%56.71%

Tier1 Capital8.4%.00%8.47%.00%

Tier Capital.50%4.00%.78%4.0%

Dividend payout ratio (%)1.51%76.0%.41%6.70%

Internal Funds as % Total capital88.5%78.1%86.86%76.66%

External Funds as % Total capital11.41%1.0%1.14%.4%

Sub Debt as % of Tier capital4.85%7.8%5.%76.8%

Investments as % of Asset 15.5%7.0%15.45%6.0%

Advances as % of Asset6.6%44.0%.77%47.10%

Gross NPAs as a % of total loans1.80%.0%.10%.00%

•On the Capital Adequacy front, it seems that HSBC is more conservative as compared to Citibank as its CAR is higher. However, it also indicates that the depositors of HSBC are more protected and secured as compared to those of Citibank.

•It is also seen that HSBC has more proportion of Tier I capital i.e. permanent source of capital in total capital base as compared to Citibank's figures.

•Dividend Payout ratio is much higher for HSBC as compared to Citibank. This shows that HSBC relies less on internal capital as compared to Citibank.

•This is inline with HSBC's external funds and subordinate debt being substantially higher compared to Citibank.

•Both the banks have a larger loans and advances portfolio compared to investments. However, HSBC has got a larger share of assets in investments and advances as compared to Citibank. Citibank on the other hand has a higher percentage in Repo transactions and trading account, and hence is more liquid.

•HSBC is also successful at reducing its NPAs whereas Citibank is not.

•Overall it can be said that HSBC marginally scores over Citibank in capital adequacy ratio management though both the MNCs have their pros and cons.

Regulations for Indian Banks

1.Subordinate debt is limited to 50% of tier 1 capital.

.Revaluation reserves limit is 45% while calculating tier capital.

.Actual GPLR or 1.5 % of RWA is taken, whichever is lower.

HDFC

10000010000Change

Dividend per share1.1.6.50.00%

Dividend payout ratio4.71%.6%5.55%.68%4.7%4.%

Retained Earnings 16601167818.17%

Tier 1

0000Change

Share Capital8178050.4%

P/L balance10856187.06%

Statutory Reserves8044.48%

General Reserve5857566.15%

Amalgamation reserve1451450.00%

(Deferred Tax Assets)-07-174-5.76%

Total1646185017.%

Tier

0000Change

IFR400840080.00%

Debenture Redemption reserve740-100.00%

General loan loss reserves117411470-.5%

Subordinated debt000000000.00%

Total Capital487164147-.1%

Assets0000Change

Cash and balances with RBI11117081671.0%

Balances with banks and money at call and short notice47010876-51.61%

Investments100401880811.5%

Advances681711754867.5%

Fixed Assets711058584.44%

Other Assets1140515848.85%

Total assets7878044087.0%

RWA15651701771.64%

10000010000Change

Tier 1 cap ratio8.4%.56%8.6%10.81%.4%-1.1%

Tier cap ratio.5%.6%.40%.1%1.6%-47.76%Average CAR

Total cap ratio11.86%1.1%11.0%1.%11.1%-0.17%1.04%

Subordinated debt raised as Tier cap 5.6%6.05%.%

Sources of capital

Internal Funds (%) 5.0%48.0%6.45%

External Funds (%) 64.80%51.7%-1.80%

% Equity 70.57%71.0%0.74%

% Borrowed Liabilities .4%8.1%-1.77%

0000Change

Gross NPAs (Cr).8665.451.11%

NPA provisions (Cr)188.5.518.05%

Restructured Loans (Cr)010.81

Off Balance Sheet Items 4155850007500-51.0%

HDFC

1.Dividend payout ratio is decreasing over the years, so the bank is focusing on internal sources of capital.

.Total asset base has increased by 7.0%, while RWA increased by .64%. This implies that the bank has made riskier investments in recent future.

.The average CAR for last five years is 1.04%. This is well above the % CAR limit by RBI. This shows the conservative nature of the bank. However, over last two years, the bank has reduced its CAR marginally.

4.The bank has issued 6.7 lakh shares as ESOPs to source more capital.

5.Further, HDFC issued ADS in July 001. These two points show that the bank is channelising its efforts to improve Tier1 CAR. Thus the sources of capital have become more permanent in nature.

6.The general provisions policy of the bank is as follows

a.1-% for Retail and Middle market programs

b.0.4% for Corporate Standard Assets

This shows that bank is conservative in its operations.

7.Subordinated debt has not increased from last year. This shows the tendency of the bank to cap its exposure in this segment at the current level.

8.On the capital side (reserves), the largest increase happened in general reserve while the largest fall was in general loan loss reserves. This means that loan restructuring has paid off.

.On the assets side, the largest increase was in advances, while the largest fall was in money at call and short notice. This implies that the average maturity of the assets has improved.

UTI

10000010000Change

Dividend per share0.010.010.0180.0150.0.%

Dividend payout ratio10%1%15%0%%10.00%

Retained Earnings 107810014447004.00%

Tier 1

0000Change

Share Capital1181010.01%

P/L balance786414655.7%

Statutory Reserves7145444.4%

General Reserve0140

Amalgamation reserve00

(Deferred Tax Assets)00

Tier

0000Change

IFR70811817.44%

Debenture Redemption reserve1400-100.00%

General loan loss reserves00

Subordinated debt5504886065.5%

Total Capital487164147-.1%

Assets0000Change

Cash and balances with RBI11160004.44%

Balances with banks and money at call and short notice15800016684.66%

Investments56784784108.0%

Advances5507174.15%

Fixed Assets6047055117.%

Other Assets866717085.46%

0000Change

Tier 1 cap ratio6.4%6.44%0.1%

Tier cap ratio4.%4.46%5.44%Average CAR

Total cap ratio10.65%10.0%.5%10.78%

Sub. debt as %Tier cap77.64%7.1%.%

Sources of capital

Internal Funds (%)8.86%44.4%14.%

External Funds (%)61.14%55.57%-.10%

% Equity.6%.0%-18.64%

% Borrowed Liabilities60.64%67.8%1.10%

0000Change

Gross NPAs (Cr)8.168.-18.87%

NPA provisions (Cr)14.1610.46-46.71%

Restructured Loans (Cr).1475.68-.66%

Off Balance Sheet Items 8700141570061.75%

UTI

1.Dividend payout ratio is increasing over the years, so the bank is decreasing its dependence on internal sources of capital.

.CAR last year was 10.%. This is well above the % CAR limit by RBI. This shows the conservative nature of the bank. CAR had increased from the previous level of 10.65%.

.UTI issued additional PUC of Rs 86 lakhs in March 00. This shows that the bank is channelising its efforts to improve Tier1 CAR. Thus the sources of capital have become more permanent in nature.

4.Subordinated debt has increased by 65.5% from 00 value of Rs 550 lakhs to Rs 48860 lakhs in 00. This shows that probably bank was in need of funds to maintain internal prudent limits of CAR in 00.

5.On the capital side (reserves), the largest increase happened in Investment Fluctuation Reserve. Probably, the bank had seen adverse movements in its investments in recent history.

Comparison of HDFC and UTI bank

0000

HDFC UTIHDFC UTI

CAR1.%10.65%11.1%10.0%

Tier1 Capital10.81%6.4%.4%6.44%

Tier Capital.1%4.%1.6%4.46%

Dividend payout ratio (%).68%0.00%4.7%.00%

Internal Funds as % Total capital5.0%8.86%48.0%44.4%

External Funds as % Total capital64.80%61.14%51.7%55.57%

Sub Debt as % of Tier capital5.6%77.64%6.05%7.1%

Investments as % of Asset 50.46%.48%44.00%.8%

Advances as % of Asset8.64%7.%8.64%6.61%

Gross NPA (cr).868.1665.458.

•On the Capital Adequacy front, it seems that HDFC is more conservative as compared to UTI bank. However, HDFC is taking an aggressive approach by bringing the CAR down by almost % in one year's time.

•It is seen that HDFC has more proportion of Tier I capital i.e. permanent source of capital in total capital base as compared to UTI bank's figures. This means less risk for the stockholders of HDFC.

•Dividend Payout ratio is comparable for both the banks. However, DPS is much higher for HDFC shareholders. Moreover, HDFC has been decreasing this ratio over the years while UTI has been increasing it. This shows that HDFC is trying to use more of internal capital.

•This is inline with HDFC's internal funds growing at a fast rate. However, an anomaly is seen as UTI's internal funds are also showing an increase. On close examination it is found that even though Tier 1 and Tier capital have gone down and subordinate debt has gone up, the reason for the divergence is the low value of RWA of UTI bank. UTI bank has been able to manage it's RWA well and has been successful in bringing them down substantially.

•HDFC had a higher percentage of assets in investments vis-à-vis advances in 00. However, the percentages came closer to each other in 00. For UTI the percentages were evenly balanced (between 5-40% for both) and stayed similar in 00. With the reshuffling of portfolio by HDFC, the figures look similar for both the banks in 00 reflecting HDFC's efforts towards having a balanced portfolio.

•UTI is successful at reducing NPAs whereas HDFC is not. This could be a temporary phenomenon as HDFC is increasing its loan portfolio and hence the additional NPA's.

•Overall it can be said that HDFC scores over UTI bank in capital adequacy ratio management and is the more efficient bank. Moreover, it is moving aggressively towards improving current performance.

SBI

0000Change

Figures In Thousands

Dividend per share0.60.8541.67%

Dividend payout ratio1.00%14.40%10.77%

Retained Earnings1158806004.0%

Tier 1

0000Change

Share Capital5685680.00%

P/L balance6570.1%

Statutory Reserves681511067440610.1%

Capital/General Reserve11007115460.5%

Revenue and other reserve74561006-85.78%

Share Premium51057510570.00%

Tier

0000Change

IFR671158711588.40%

General loan loss reserves00

Subordinated debt45766146550.1%

Total Capital4884875876487.4%

Assets0000Change

Cash and balances with RBI1875471784684-41.76%

Balances with banks and money at call and short notice4057616445561-4.65%

Investments1451401717470718.74%

Advances108064651775845814.0%

Fixed Assets415788548-1.10%

Other Assets144577180056011.87%

0000Change

Tier 1 cap ratio.%8.81%-4.45%

Tier cap ratio4.1%4.6%1.56%Average CAR

Total cap ratio1.5%1.50%1.1%1.4%

Subordinated debt raised as Tier cap8.74%60.%-7.8%

Sources of capital

Internal Funds (%)75.11%6.76%-7.1%

External Funds (%)4.8%0.4%1.50%

% Equity1.1%1.1%-0.1%

% Borrowed Liabilities86.7%86.81%0.0%

0000Change

Gross NPAs (Cr)15485.851506.07-1.78%

NPA provisions (Cr)7118.74608.46-14.46%

Restructured Loans (Cr)117.107.085.0%

Off Balance Sheet Items 1185871167718061.15%

SBI

1.Dividend payout ratio has increased over the years for SBI indicating that the bank's dependence on external sources of fund has relatively increased.

.This is also in line with a simultaneous increase in subordinate debt. During last years, the Bank is issuing by way of private placement, unsecured, subordinated bonds to augment its Tier II capital.

.There is an increase of % in retained earnings indicating that the bank has strengthened its internal sources.

4.Total asset base has also risen by 8% as compared to FY 00. But this has also been accompanied by a large increase of about 5% in the investment fluctuation reserve. Due to this the CAR is maintained almost at the same level.

5. The average CAR is 1.4%. This is much above the % CAR limit set by RBI. This shows a highly conservative nature of the bank. This also indicates that there is sufficient opportunity to expand the asset base for SBI.

6.The bank seems to raise money through subordinated debt regularly. As seen from the financials, though the subordinated debt as a % of Tier II capital has decreased, the proportion of subordinated debt as compared to equity capital as a source of external funds is high (about 87% as compared to 1%).

7.On the asset side there is an increase in advances and largest fall is in money at call and short notices implying that the average maturity of the assets has improved.

8.The Tier 1 capital of SBI has fallen substantially (by 4.45%) because of a large fall in revenue and other reserves but this is offset by an increase in Tier capital (by 1.56%) mainly because of large increase in investment fluctuation reserve.

.From the sources of capital it is seen that the banks dependence on internal sources has come down from 75% to 6% whereas the external sources has increased from 5% to 1%.

10.The asset composition figures show that the majority of the asset creation is on investments and not on loans and advances and there is an increasing trend in this. In FY00 the bank had 41.68% of total assets into investments and 4.% into loans and advances whereas in FY00 it increased to 45.85% and 6.65% respectively. This is the current trend in banking industry.

11.From the other indicators like NPA and restructured loans, it seems that bank is increasingly restructuring its bad loans resulting in a fall in Gross NPA as well as the provisions for NPA. But still the level of NPA is very high at 1506 cr.

1.The off Balance sheet items for SBI though increased don't show much increase in percentage terms.

BoB

0000Change

Figures In Thousands

Dividend per share0.40.650.00%

Dividend payout ratio1.70%4.4%14.%

Retained Earnings4756551844.%

Tier 1

0000Change

Share Capital44440.00%

P/L balance1466111164.%

Statutory Reserves80746717464.0%

Capital/General Reserve4757047-0.8%

Revenue and Other reserve510575771.47%

Share Premium77487740.00%

(Deferred Tax Assets)-606000-078004.80%

Tier

0000Change

IFR5684456754410.7%

General loan loss reserves

Subordinated debt10418001006400-.66%

Total Capital7.1E+087.6E+087.77%

Assets0000Change

Cash and balances with RBI581067646584.8%

Balances with banks and money at call and short notice6664451767-47.6%

Investments814017816.6%

Advances6686754808165.01%

Fixed Assets6867180.71%

Other Assets77415775607-10.55%

0000Change

Tier 1 cap ratio7.56%8.10%7.14%

Tier cap ratio.76%4.55%1.01%Average CAR

Total cap ratio11.%1.65%11.75%11.%

Subordinated debt raised as Tier cap80.%6.88%-0.7%

Sources of capital

Internal Funds (%)66.87%64.80%-.10%

External Funds (%).1%5.0%6.6%

% Equity.0%.68%.4%

% Borrowed Liabilities77.7%77.%-0.8%

0000Change

Gross NPAs (Cr)4185.7448.7.5%

NPA provisions (Cr)05.81004.8-.4%

Restructured Loans (Cr)68.1150.41-77.8%

Off Balance Sheet Items 0.060.045564.60%

BoB

1.Dividend payout ratio has increased over the years for BoB indicating that the bank's dependence on external sources of fund has relatively increased.

.The banks risk bearing capacity as indicated by its CAR at 1.65% as of end of FY00, shows that there is enough space for the bank to expand its asset base.

.The bank is keeping the capital adequacy requirements much above the stipulated requirements showing the conservative nature of the bank. In fact the CAR has increased from 11.% to 1.65%. This is largely on account of a decrease in risk weighted assets.

4.Total asset base has also risen by 7.7% as compared to FY 00. But this has also been accompanied by a large increase of about 11% in the investment fluctuation reserve.

5.There is a jump of 40% in retained earnings indicating that the bank has strengthened its internal sources.

6.On capital side it is also seen that the tier I capital has increased but there is a small fall in the subordinated debt raised as a part of tier II capital.

7. On the asset side there is an increase in advances and largest fall is in money at call and short notices implying that the average maturity of the assets has improved.

8.There is a growth in Tier I as well as Tier II capital of the bank in FY 00 as compared to last year.

.From the sources of capital it is seen that the banks dependence on internal sources has come down from 66.8% to 64.8% whereas the external sources has increased from .% to 5.%.

10.The asset composition figures show that the majority of the asset creation by BoB is on loans and advances than investments. In FY00 the bank had 47.47% of total assets into loans and advances and .61% into investments whereas in FY00 it increased to 46.6% and .4% respectively.

11.From the other indicators like NPA and restructured loans, it seems that there is a fall in restructuring of bad loans and this is also accompanied by a 7% increase in Gross NPA as well as the provisions for NPA which is not a favorable indicator.

1.The off balance sheet items for BoB has increased substantially by 4%.

Comparison SBI and BoB

0000

SBI BoBSBI BoB

CAR1.5%11.%1.50%1.65%

Tier1 Capital.%7.56%8.81%8.10%

Tier Capital4.1%.76%4.6%4.55%

Dividend payout ratio (%)1.00%1.70%14.40%4.4%

Internal Funds as % Total capital75.11%66.87%6.76%64.80%

External Funds as % Total capital4.8%.1%0.4%5.0%

Sub Debt as % of Tier capital8.74%80.%60.%6.88%

Investments as % of Asset 41.68%.61%45.85%.4%

Advances as % of Asset4.6%47.47%6.65%46.6%

Gross NPA (cr)15485.854185.71506.07448.

Off Balance Sheet Items1,1,85,871,5,71,16,771,80686,468,445

•On the Capital Adequacy front, it seems that SBI is much more conservative as compared to Bank of Baroda as its CAR is much above the requirement of %. But that also indicates that the depositors of SBI are more protected and secured as compared to those of BoB.

•It is also seen that SBI has more proportion of Tier I capital i.e. permanent source of capital in total capital base as compared to BoB's figures.

•From the point of view of different sources of capital, SBI is more dependent upon the internal sources of fund as compared to Bank of Baroda.

•Both the banks are depending almost equally on the issuance of Subordinated debt as a source of Tier capital

•SBI is more into the investments than loans and advances for asset creation whereas Bank of Baroda has more loans and advances as compared to investments.

•SBI is also successful at reducing its NPAs whereas BoB is not.

•There is a large change in percentage terms of off balance sheet items for BoB as compared to SBI.

•Overall it can be said that SBI scores over BoB in capital adequacy ratio management though both the public sector banks are very conservative in the management of CAR.

Conclusion

•CAR figures are in the same range of 10-1% for all the six banks.

•8- % appears to be the average norm for tier 1 capital.

•-4 % appears to be the general average for tier capital.

•0-0% appears to be the general norm for Dividend payout ratio. However, HSBC is an exception. Hence, we can say that DPS determines dividend payout ratio and not the other way round.

•Internal funds represent the strength of the banks. HSBC, Citibank, SBI, and BoB have high internal fund ratio. However, private Indian banks, namely HDFC and UTI are clearly taking more risks to fuel growth.

•Subordinate debt as a percentage of tier capital is high for all banks except HDFC and Citibank, which shows that they should go for more leverage.

•Gross NPA's are high for Indian Public sector banks as compared to the other four, which reflects that these banks have still got a long way to go.

References

•Annual Reports of

oHSBC, Citibank

oSBI, BoB

oUTI, HDFC

•Prowess Database

•http//finance.yahoo.com

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The Battles of Verdun and somme

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The Battles of Verdun and Somme

In World Was I there were many battles but two stand out as more important than the others. The two biggest and most horrifying battles of the World War I were the Battles of Verdun and Somme. The battle of Somme was much more significant compared to the Battle of Verdun in WWI. Both battles were appalling and very tragic but the battle of Somme helped turn the war around for the French. The first major German offensive occurred at Verdun, in 116 against the French, and not long after, in June of the same year the French were on the brink of defeat. Just as this became apparent the British launched an offensive of their own, along the River Somme, this resulted in the Germans focusing more attention there rather then the battle of Verdun.

The battle of Verdun, was fought at high cost to the French Army, it is often compared to a "sausage machine"(Cavendish 156), because 15,000 Frenchman were killed at Verdun. Human kind had never seen such battles throughout history, there were so many losses, and it was quite shocking to the soldiers who fought in WWI. Verdun was a traumatic experience that affected the lives of many soldiers even after the war. The German siege of Verdun and its ring of forts was the longest battle of the First World War. Verdun maintained a great mental hold in the minds of the French people. The plan was to subject Verdun to intense bombardment, thus drawing in and diverting French troops from all over the Western Front to the eight-mile wide front around Verdun. Meanwhile the casualties were mounting rapidly on both sides. The French were certainly losing huge numbers of men, as were their German opposition. By the time the battle ended almost one million casualties had been incurred in roughly equal numbers on each side. On April th the third major German offensive launched its offensive attack. Encouraged by the success in capturing "Fort Vaux, German troops almost succeeded in breaking through the French lines"(Cavendish 46). It was at this stage that the Germans used the latest form of chemical warfare, which was mustard gas. German resources were moved as a result of a Russian offensive on the Eastern Front, which meant that fifteen German divisions had to be withdrawn from Verdun to aid in the defence on the east. There were shortages in practically everything, and rising prices that hurt the economy. The French casualties during the battle were estimated at "550,000 with German losses set at 44,000, half of the total being fatalities"(Stokesbury 14). Further attacks continued throughout the summer and early autumn on Verdun by German forces. The Germans army pushed back the French to there third line by the end of the summer, however, the scale of the German attacks was reduced because of the need to transfer troops to defend their front-line at Somme. With the German troops being diverted it gave the French troops time to counter-attacked against the German troops in Verdun.

The first Battle of the Somme in 116, between July and November, can be considered extremely important, it had effects upon the German soldiers that contributed to the final outcome of World War I. Even though the battle did have substantial impacts upon the German army at the time, at the same time, however, the battle gave a reminder to the Germans that not everything would go their way, and as a result can be considered as a partially important aspect to the outcome of the war. The Battle of the Somme resulted in huge casualties for both the Allies and Germany. The number of deaths on the first day of the Battle of the Somme were horrendous and absolutely astonishing, almost "sixty thousand"(Ousby ), yet the generals did not stop there, they carried on until they had accumulated "a loss of 40,000 British, 00,000 French and 650,000 Germans"(Ousby 4). These are the worst losses in British history for one single day of battle in history. The German commanders decided to retreat, and many historians believe that this to be an "acknowledgement of defeat on behalf of the Germans"(Stokesbury116), however the Germans made a calculated retreat and practiced what they believed would result in less casualties, by forfeiting small land gains to the Allies. This was insignificant in the process to gain land but can be considered to be a wise compromise however, because by falling back to the Hindenburg line, the Germans could reinforce and strengthen their positions to better defend against the advancing Allies and be able to wait for the troops coming from Verdun.

Buy The Battles of Verdun and somme term paper

The Battle of the Somme eased the pressure on Verdun by redirecting German troops to Somme. This is why I think that the battle of Somme was much more important to the French to help defeat the Germans in Verdun. To this extent the battle can be seen as a success even though it has been seen as a total disaster. Some may accept the position that the battle reduced German numbers, it is easy to see with observation that this had an effect on the outcome of the war, because of the number of Allied casualties. The battle had a damaging impact on the morale of the German army, but at the same time it must be remembered that in early 118 the Germans started an offensive. As a result, it can be seem that the Somme offensive did have an impact upon the German morale. To some the extent the Battle of the Somme can be described as "important to the outcome of the war's final outcome"(Stokesbury 4). In any country where 40,000 men are killed or wounded, the mental condition of those who are fighting for the same country will be affected. The Battle of the Somme was had of a great importance to the outcome of the WWI. Comprising the main Allied attack on the Western Front during 116, the Battle of the Somme is famous chiefly on account of the loss of 58,000 British troops on the first day of the battle, on July 1, 116. Which to this day remains a one-day record. The attack was launched upon a 15-mile front, from north of the Somme River between Arras and Albert, and ran from July 1 until November 18, at which point it was called off. The offensive was planned late in 115 and was intended as a joint French and British attack. "The point of the battle was to drain the German forces of reserves, to get German troops transferred from Verdun and the secondary aim was to gain territory"(Ousby 8).

The German Verdun offensive transformed the intent of the Somme attack, the French demanded that the planned date of the attack, August 1, 116, be brought forward to July 1. The point of this was to mainly divert German resources from Verdun in the defence of the Somme. The attack was preceded by an eight-day preliminary bombardment of the German lines, beginning on June 4. The probability was that the cruelty of the bombardment would entirely destroy all forward German defences, enabling the attacking British troops to practically walk across No Man's Land and take possession of the German front lines from the tattered and dazed German troops. Over fifteen thousand British guns, together with a similar number of French guns, were employed in the bombardment. Following the artillery bombardment, it was determined that a creeping barrage would precede the advancing infantry to the German front line, and onwards to the second and third trench lines. The Royal Artillery had prepared an underground network of telephone cables so as to allow forward observation officers to monitor and correct the bombardment as the battle progressed. However, the advance artillery bombardment failed to destroy either the German front line barbed wire or the heavily built concrete bunkers the Germans had carefully and robustly constructed. Much of the military capability used by the British proved to be 'duds' badly constructed and ineffective. Many charges did not even go off, even today "farmers of the Western Front come across many tons of unexploded 'iron harvest' each year"(Cavendish 151). During the bombardment the German troops sought effective shelter in such bunkers, emerging only with the ceasing of the British artillery bombardment, when the German machine guns were manned to great effect, many troops were killed or wounded the moment they stepped out of the front lines into "No Mans Land"(Cavendish 15). Many men walked slowly towards the German lines, loaded down with supplies, expecting little or no opposition. The French soldiers made for extremely easy targets for the German machine-gunners. German soldiers seemed to be at the point of exhaustion and that a breakthrough was imminent sooner or later. Thus the offensive was maintained throughout the summer and into November. By this time the French forces in Verdun were on the offensive and were gaining ground and the German forces were weak because of Somme. The French tried to concentrate on keeping up the pressure on the Germans so they could prevent a diversion of German manpower back to Verdun to assist with the German defence there. This is where the battle of Somme was important to the French. Despite the slow but progressive British advance, the poor weather put a halt to the Somme offensive on November 18th. During the attack the "British and French had gained 5 miles of ground, taking of which resulted in 40,000 estimated British casualties, plus a further 00,000 French casualties. German casualties were estimated to run at around 500,000"(Stokesbury 60).

The war that was supposed to be over by Christmas seemed endless, however, in 118, Germany gave up, and became a liberal Republic. It happened at 1100 am, on November 11, after 4 years and over 8 million military deaths on both sides. Germany agreed to President Wilsons 14 points, issued in January 118 where Germany agreed "not to have secret treaties with other countries, most importantly to end submarine warfare and to free the seas, to give up their colonial claims"(Cavendish 160, notes).

The battle of Somme was used as a way to get the Germans to slowly give up Verdun, which is what the French wanted. Somme was a significant battle because it helped the French take over Verdun. The French used Somme as a way to slowly drain the German army by sending troops from Verdun to Somme to strength that front but would eventually weaken Verdun. I think that that the Somme offensive was necessary in order to relieve the French at Verdun. The Somme battle was a complete disaster in the mind of a military person but in fact it served as a relief to the pressure that the Germans were putting on the French in Verdun. It also wore down the German soldiers, both mentally and physically helping a great deal in the Germans defeat. This was a major step in winning the war, and for this reason, makes the Somme a success and mush more significant than Verdun. It is therefore very difficult to classify the Somme as either a total disaster, or a total success. It is in many ways both of these, a success due to the positive things that came out of it, and a crushing disaster due to the losses that were generated by it.

The Battles of Verdun and Somme

Works Cited

Cavendish, Marshall "World War I" Macdonald and Company, Volume 4184

Cavendish, Marshall "World War I" Macdonald and Company, Volume 5184

Stokesbury, James "A Short History of World War I." William Morrow and Company, New York 181

Ousby, Ian "The Road to Verdun." Random House Inc, New York 00

The Battles of Verdun and Somme

Works Cited

Cavendish, Marshall "World War I" Macdonald and Company, Volume 4184

Cavendish, Marshall "World War I" Macdonald and Company, Volume 5184

Stokesbury, James "A Short History of World War I." William Morrow and Company, New York 181

Ousby, Ian "The Road to Verdun." Random House Inc, New York 00

Works Cited

Cavendish, Marshall "World War I" Macdonald and Company, Volume 4184

Cavendish, Marshall "World War I" Macdonald and Company, Volume 5184

Stokesbury, James "A Short History of World War I." William Morrow and Company, New York 181

Ousby, Ian "The Road to Verdun." Random House Inc, New York 00

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Wednesday, August 5, 2020

Silent Spring Outline

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Silent Spring Outline

1. Chapter 1 - A Fable for Tomorrow

Rachel Carson begins her book by telling a story of a town in the heart of America. She describes the town as being very beautiful and full of life. The spring time of this town is the nicest time of the year and many people enjoy experiencing it. She starts off by describing the town as perfect as it can be, and then begins to pick away at its beauty by introducing harmful components that damage the environment. This story never really happened. Instead, it is just describes what has or will happen to the United States and the world to a much smaller scale. This book will try to explain what has silenced the spring of many towns in America.

. Chapter - The Obligation to Endure

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This chapter begins with a very important line that I thought stood out. The history of life on earth has been a history of interaction between living things and their surroundings. I think that this is true because as humans, in order to survive we need to take from all aspects of the environment to provide us with our essentials. Carson brings up an important aspect of our interaction between us and the environment. She states that for the most part, the way we live has been modeled by the environment. Only recently in history have we influenced and modeled the environment. It is primarily the people who have caused this to change. She states that the worst assault that we as humans have done to the environment is the contamination of different aspects of the environment such as the air, soil, and water with chemicals and lethal materials. The worst result of the usage of the chemicals is that once they are released upon the earth, they can not be removed. She states that the chemicals can stay in our soil and effect all different kinds of organism causing a domino effect of death. These chemicals can also pass through are waters and be evaporated into our air. They spread throughout our environment without the average person knowing what is going on. Carson also explains how earth can balance itself with harmful materials, its just the process of life. However, she believes that people have tampered with this process and have given no time for the environment to balance itself. Unlike the natural process of chemicals coming into the world where the earth takes millions of years to adjust to it, there is no such time for the earth to adjust to every synthetic chemical introduced into the world. Carson goes on to talk about new chemicals and what they are used for. She states that there are 500 new chemicals introduced to us each year. These chemicals are used for things in nature that seem to hinder the human race. They can include insect killers and pest killers. They can be found in almost any home, business, and farm. These things should be called biocides instead of insecticides because they kill all living things, not just insects. The use of these chemicals can cause what we now call a Flareback. This is when an animal or insect becomes immune to the power of the chemical causing a more deadly and powerful chemical to be produced. She also brings up a concern with the idea of chemicals and heritage. She believes that when the chemicals enter a human, plant, or animal, it can alter the very genes of the creature to cause change in heritage. She believes that it is are own fault that the insect problem has increased over the years. One major fact that she brings up is the plant product we have imported into our country. It is said that over 00,000 plants have been introduced into the United States that carry all sorts of insects with them. She believes that instead of spraying massive amounts of chemicals around the U.S., we should learn about the insect and their plants and try to promote a healthy balance. This chapter is Carsons way of showing us the concern of the use of chemicals in the United States. She does not truly hate the usage of chemicals, she just believes that they are being used in the wrong way and by the wrong people. This chapter helps us see the history behind the insects and chemicals used against them.

. Chapter - Elixirs of Death

This chapter begins with Carson explaining how chemicals have affected many of us in one way or another. She explains how the demand for these chemicals have been increasing after certain periods for different uses. She states that most insect killing chemicals were evolved from chemical warfare testing. She explains how synthetic pesticides not only attack the surface but enter the body attack different enzymes that protect the body. This is were the idea of how chemicals can cause cancer. One chemical that Carson goes over in this chapter is arsenic. This organic chemical is used in most weed and insect killers. It is a tasteless chemical that has been used to kill humans in the past. It has been used over the past as crop killer for farmers. She states that farmers who have used this chemical have been reported to become sick and some die. Even so, it is still used in many houses around the United States and the world. She says that these organic chemicals are very dangerous, but synthetic chemicals are even more harmful. She then goes on to explain the famous chemical DDT. This chemical is based on the carbon atom (DDT is short for dichloro-diphenyl-trichloror-ethane). It was created in 1874 but was not truly used as a chemical until 1. DDT was used during the war to help kill the lice on soldiers. It was sprayed across there bodies, and killed the lice while not getting the soldiers sick. Many believed that this chemical was not harmful to humans. When the chemical was put on the bodies, the fat cells would store it. When tested on animals, DDT would cause harm to different aspects of the animals. In some cases, a heart enzyme was destroyed along with liver cells. She explains that people have a fare amount of DDT in them through a system in which the can transfer itself. IT can spread through food chains in farms.Another set of chemicals that are explained in this chapter are chlorinated naphthalenes. These chemicals have been found in workers who make their place in electronic and agricultural fields. They are known to cause hepatitis and other forms of liver disease. They have also been know to kill humans and some forms of cattle. The three most poisonous forms of this chemical are dieldrin, aldrin, and endrin. IT was stated that the dieldrin form is almost 40 times as strong as DDT and cause people to go into convulsions. Even with the strength that it has, it is still one of the most wildly used insecticide across the world. Some who have manually used these chemicals have died. The aldrin form has also caused many problems when it has been used. It damages the liver and kidneys and can sometimes cause sterility. Of the the three, endrin is the most toxic of all. It is about five times as strong as dieldrin. Carson explains one case where a young child was severely injured by the spraying of this chemical. Another group of pesticides are organic phosphates. They were first developed in the 10s by the German government for uses of war. These insecticides also attack the enzymes of any organism. One of these chemicals that is widely used is Parathion. It can cause death to a human in a short time but was still used across the United States at that time. In this chapter, Carson gives an explanation of the many used chemicals around the world. In some parts of the chapter, I was lost in the whole scientific explanations of each, but was still getting the point. She wanted people to know the harmful effects of the chemicals that are used every day.

4. Chapter 4 - Surface Water and Underground Seas

This chapter explains the problems with our earths water. Carson goes on to explain that it is our most important resource to us. She explains how our waters are becoming less and less available to us. Even though water covers the majority of our earth, most of it is salt water, and more and more is becoming contaminated and polluted. This pollution comes in many ways. It comes from radioactive wastes, from nuclear explosions, from domestic waste, and from chemical sprays. We know that polluting the waters is bad, but it is more convenient to do so for us. This chapter is Carsons way of telling us how selfish we really are. In many areas, chemicals are being used just like insecticides. They are dumped in water to kill of unwanted fish, plants, and organisms. Others just find there way into the waters though the cycle of life (like though soil and rain). The chemicals that are used inland can seep though the ground and travel by streams and rivers into bigger bodies of water like lakes and oceans. She goes on to explain many areas in which massive amounts of insecticides and other chemicals have been found. She gives many examples of how in some areas there were chemicals meltdowns and areas miles away were affected. This is because of the underground system of water transferring. She also explains the spread of chemicals through different life forms in water. Her one example included Clear Lake where chemicals were used to kill gnats in the area. Soon, people of the area began to notice a certain bird beginning to die out. It was found out later that the birds were dying because they ate the fish that were in the lake. The chemical had spread from life form to life form damaging organisms not intentionally planned. She then goes on about the politics of cleaning agencies and the how they deal with problems like the one at Clear Lake.

5. Chapter 5 - Realms of the Soil

In this chapter, Carson explains the problems with our soil on earth. She also believes that soil is a very important part for our existence on this planet. Without soil, we would have no plants for us and other animals to eat probably not allowing use to be able to survive. She explains how soil has been created over time through the emission of acids on rocks, nothing to important. She says that the soil is constantly changing because many living things inhabit it. She also says that many new matter is added to the soil while other matter is taken away. She goes on to explain how the smallest things in the soil are the most important like bacteria, fungi, and algae. She says that these three components are very important because they create decay. This is when they break dead things down into their component minerals. Carson then begins to talk about the importance of the earthworm and how it helps keep the soil in rotation to keep it fresh. Carson uses the begging of this chapter to show the importance of all the creatures in the soil of the earth. She then begins to start talking about the dark side of pesticides and chemicals. When these pollutants are dumped into the earth, they hinder the soil to complete certain life cycles. One of these cycles she talks about is nitrification. The insecticides that are put into the soil mess up the very balance of all the living creatures that make life in it. She goes on to say that the chemicals that are put into the soil have been known to stay in the soil for up to twelve years. She uses the example of arsenic on tobacco plants to show the how the chemical stays in the soil. Even if plants that have grown in the contaminated soil are removed, the soil will stay contaminated and continue to set birth to new contaminated plants.

6. Chapter 6 - Earths Green Mantle

This chapter takes a turn and talks about the green portion of the earth. Carson makes a good point by saying that plants connect with all different parts of our earth. They connect with soil, animals, plants themselves, and humans. So using chemicals on weeds and plants would mean that a lot of interactions could be harmed. One example that Carson uses to show the relationship between plants and the surrounding earth is with the sagebrush lands of the west. Cattle owners wanted to destroy all the sage with chemicals to make grassy lands instead. Along with killing the sage, other animals that have adapted the way they lived based on the amounts of sage will not be able make a living anymore and eventually die in the end. The chemicals sprayed on the sage would also kill other surrounding plants leaving more destruction. Many other areas are sprayed in the United States with multiple herbicides that kill targeted plants. Carson goes into detail about roadside destruction of beautiful plants by herbicides. She also talks about how a normal plant has been dubbed the name weed because chemical companies want to sell their product no matter what the plant. These companies use the herbicides ,4D, ,4,and 5-T. These herbicides are considered safe, but they have been known to cause severe neuritis and even paralysis in people using them. They also have been shown to damage chromosomes. When eaten, these contaminated plants have also know to cause metabolic problems in animals and livestock. She also talks about how the chemicals when sprayed on that plants damage the soil when released into the ground by the plant. While seeming like nothing is happening on the outside, herbicides can cause damage to the surrounding earth.

7. Chapter 7 - Needless Havoc

In this chapter, Carson tries to tell the reader that true loses that insecticides bring upon earth and life itself. This chapter helps sort two different stories of the truths of insecticides. Each story is by two different types of groups those who are against the usage of chemicals (biologists and scientists) and those who agent the companies that use the chemicals. The conservationists the chemicals have caused severe damage and things will only get worse if nothing is done. They say that animal and plant life have been been subject to many lethal obstacles. On the other hand, the companies that run the chemicals say that their product only does what it says it does kill the target that it says it will kill. Carson goes on to say what happens when a certain area is hit or sprayed. When this happens, all the life will most likely become infected by the chemical that is sprayed. She uses the example of the Japanese Beetle in Michigan. Almost 0,000 acres were to be sprayed with the chemical Aldrin that I mentioned earlier. Aldrin was used because it was the strongest and cheapest. The plan went on and pellets of the chemical fell on people, animals, houses, and crops. For the most part, life went on with no problems. Then days later, many birds and other animals began to die suddenly while others became suddenly sick. Then people started to become sick and the city just told them that the symptoms were from something else. This covering up of the truth also happened in many other cities including Sheldon, Illinois and other towns of Illinois. This chapter allows Carson to show her readers that insecticide companies should not always be listened to for what they want to do might not be what is expected.

8. Chapter 8 - And No Birds Sing

Hence the name of the chapter, this part of the book deals with the relationship between birds and the chemicals I have been talking about. Carson begins by stating the fact that more and more birds are disappearing throughout the United States. During the time of this book, she talks about how many complaints from different parts of the country were starting to be developed. In such states as Illinois, Mississippi, Louisiana, and Alabama, people were reporting the drop in the number of bird sightings in places where they usually were seen. The disappearance of the birds have been licked back to usage of insecticides again. IN some areas, disease carried by bugs were eating away at different types of trees. In order to stop the spread of the disease, insecticides were sprayed among the infected areas to kill the bugs. The birds would then eat the contaminated bugs and therefore become contaminated themselves and eventually die. Another case included the usage of the chemical DDT, once again. When certain trees were sprayed with this chemical, the leaves of the trees would become contaminated. When they eventually fell in the fall, earthworms would eat them. Then, not only would birds eat the worms, but also small animals such as raccoons and hawks. This creates a problem in the circle of life as Carson explained. Since the chemicals were killing of the birds, the birds could no longer eat away bugs that were harmful to us (not directly to us, but things like eating away are gardens and trees). Since the trees of the community seemed to be the biggest part or contributor to the spraying of insecticides (because they hold the bugs that need to be killed), Carson believed that an easy solution to stop the spreading of bugs was to not plant the same tree in massive amounts. If only a certain bug can eat a certain tree, then only those trees can be affected. If more of a variety of trees were planted then the bugs could not migrate from tree to tree and increase there population. In this chapter, she tries to show the reader, seeming small, the birds can play an important part with the environment and therefore should be protected from insecticides.

. Chapter - Rivers of Death

Carson begins this chapter by explaining the paths that salmon fish take every year to return to their place of birth. She starts by using the example from Miriamichi River were salmon return every year to lay eggs. Carson explains it to be one of the most finest streams for salmon in North America. She states that the new-born salmon eat the insects that inhabit the water of the River. This river was also home to an insect called the bud worm. This worm was becoming increasingly populated during that time and the Canadian Government wanted to get rid of it. To do so, they sprayed DDT on thousands of acres of land to attempt to kill it off. Along with the acres of land being sprayed, so were the rivers. It was severely damaged killing of many insects and many fish. The DDT killed the insects of the river and therefore leaving thousands of fish without food. The whole environment of the river had been altered from plant life to animal life. However, the bud worms population increased making it a total failure. This example shows that dangers of spraying rivers because it can cause a chain reaction of destruction to occur. Other examples were giving in this chapter of similar occurrences. Carson goes on to explain that the chemicals used in these sprayings, scientists dont really know what the future will hold. They may know the initial attack of the chemical, but they cant predict what will happen when these chemicals enter streams and underground water systems and mix with other chemicals. It is just on to much of a large scale. Time is precious, and as long as people know that the chemicals can do what they say, the future goes not really matter at that time.

10. Chapter 10 - Indiscriminately From the Skies

This chapter deals with the usage of insecticides that are sprayed form airplanes. She states that the spraying has increased heavily during her time. She also says that people have seemed to worry less about the increase because they feel as though they have become safe over time. This chapter starts by giving two insects that have called for major spraying in the states. One is the gypsy moth in the northern states and the fire ant in the southern states. The gypsy moth was introduced into the states in the 1860s and began to increase in population. It was contained temporarily by importing certain predators. Then in 156, they decided to wipe out the moth using chemical techniques. It was decided that DDT would be sprayed in all areas including densely populated ones. The spraying included all farm land, people, housing, and cattle. Reports of crop failure was huge and wildlife was also severely hurt. There were also reports that huge amounts of DDT were found in cattle products (such as milk) and in vegetables. Like cases before, many aspects of life were hurt, but the main problem, the gypsy moth, was not hurt at all. It was the same deal for the fire ant. Agencies reported that they were a threat to human productivity and needed to be dealt with. Chemicals stronger than DDT were sprayed in areas causing massive deaths and infertility in cattle. Carsons main point that she tries to get across are the fact that the aerial campaigns against thought-to-be-threats are very expensive, damaging, and ineffective.

11. Chapter 11 - Beyond the Dreams of the Borgias

Carson takes a step down from the large-scale destruction of aerial spraying and massive chemical attacks, and talks about the individual in this chapter. She states that people are subject to daily chemical poisoning in small dosses (I would like to know how true this still stands today). She goes into the very details of household appliances and necessities. This chapter was, I feel, more intended to put some questions in the brains of the average daily housekeeper, not a biologist. Carson talks about many things that dont seem to be much of a threat to the everyday person. Things such as bug sprays, lotions, paints and varnishes, and even a pocket-sized insecticide dispenser are mentioned to help show the everyday dangers we encounter. The U.S. Department of Agriculture even encourages the use of insecticides in the home, urging people to spray their clothing with oil solutions of DDT, Dieldrin, Chlordane and other moth killers. In the garden, many products that were sold in stores were very lethal to people. Only until some cases of death, was something done to stop it. Carson also explains in one situation were a person applied such chemicals as Chlordane and Dieldrin to the lawn by use of an attachment to the garden hose. This method can hurt the person applying the chemicals and it can also lead to poisoning of the public water supply because of the underground water systems talked about earlier. One physician used this method to apply DDT to his lawn weekly. Suddenly, he became severely debilitated. Tests showed an accumulation of parts per million of DDT in his fatty tissues. She then goes into the camisoles found in our diet. Back during the time of the book, many animals were contaminated with residues of chlorinated hydrocarbons. When the meat was eaten, the chemicals were entered into our body. Carson finally writes a chapter not about water, land, or animals, but about humans, She goes into the details that the reader probably has been wondering about since he bought the book.

1. Chapter 1 - The Human Price

This chapter starts our with Carson explaining the new age of health problems, the old age being health problems such as smallpox, cholera, and plague and the new age being the hazards of chemical poisoning. Things such as the water we drink, the air we breath, and the food we eat, have all come under concern at this point. Carson goes into detail that are still unclear to me. She talks about how the chemicals may not seem to be damaging at one point but over time hurt the body. She goes into details about how the chemicals are stored in the bodys fatty tissue and released with stress related issues. She also talks about the chlorinated hydrocarbon chemicals that effect the liver over time. When these chemicals effect the liver and damage it, the liver can no longer detoxify the body of other chemicals and therefore cannot protect the body. The two major types of insecticides talked about earlier greatly effect the nervous system. Some tests on animals and humans have been done in the past to help prove this theory. Carson then goes into more detail, causing some confusion for me, about how chemicals are harmless when in the body alone, but can evolve into something more serious when mixed with another. THis chapter is more on the side of medical and scientific terminology that was confusing and many points. I think that she is trying to make the reader feel as though we as humans are not subject to immunity from the chemicals that we unless on the rest of the world.

1. Chapter 1 - Through a Narrow Window

For me, this was probably the most challenging chapter. Carson goes into fine detail of the cells of the body because she feels to understand the true effects of the chemicals, we need to go deeper than just the outside. She starts to explain the process of the cell. She states that energy is produced by the cells of an organism from a transformation of matter. Each step that is made to make this energy is controlled by a different enzyme. When this energy is produced, the cells release waist. She then goes into details about how Mitochondria are packs of enzymes that are necessary to this process that I am not to sure what she is talking about. She then starts talking about the development of energy called ATP. Then it loses some phosphate groups to evolve onto ADP (this is were I begin to get confused). I have gotten out of this that is ATP is lossed, then different parts of the body are effected. She then loses me again when she talks about mitosis and cell radiation. All I know is that the usage of chemical poisoning effects all the process talked about in the cell. Overall I am still confused on this chapter and will wait for class discussion for future reference.

14. Chapter 14 - One in Every Four

This chapter deals with the human fight against cancer. Carson begins by sayaing that the battle of cancer had began so long ago thats its origin is lost in time. One thing that I read that I did not know and seemed interesting was that Carson stated people were the first species to creat canser-casuing agents. One thing mentioned was that soot was a carcinigion. Other cancers began to show their faces after the descovery of the cancer from soot in the 1770s. One interesting fact that was brought up was that in 100, only four percent of deaths were by cancer. Then by 15, that number had risen to fifteen percent. It was also stated that cancer was the leading cause of death among school children in the mid-century. After some history in cancer, Carson starts to put cancer and chemcials togther. When the poisonous chemicals were tested on animals, most of them developed some kind of cancer. One of the earliest chemical known to cause cancer in the human body is arsenic. She gives an example from a town were their drinking water was contaminated with arsnic. On to another note, Carson tells the reader about how the FDA tests chemiclas for cancer-causing agents. It is sometimes hard to test for these things becuase certain cancer will not show up in a persons body for up to fifteen years after exposure. One example that Carson gives us is when a woman who hated spiders decided to srpay her house with a form of DDT. Soon after she did that, she began to felt sick. When her symptoms left, she sprayed again. This time her symptoms got worse and needed to go to a hospitle. She was later diagnosed with leukimia, the most common cancer from chemcials. In the past, many who have used some kind of chemical poison or insectisied have always been known to develop leukimia. Carson then goes into cell mutation from radiation or poisons. When it divides irregularly, a malignant cancer could develop. It is also true that the chemcials in the body can damage vital organs and parts that are essentail to fighting against cancers.

15. Chapter 15 - Nature Fights Back

In this chapter, Carson talks about how nature is responding to our attempts to change it. She begins to talk about how insects are adapting to the insecticides that are being used to against them. She goes into the theory of natural selection. This means that they are becoming to survive the chemicals being used on them. Their immune systems are outsmarting the poisons that once almost killed them. The poisons that were used to kill the insects also harmed the predators that are supposed to keep them in check by nature. And also, the insects that they thought had killed, returned after time. Carsons main argument in this chapter is that the poisonous chemicals used have upset the balance of nature itself. Chemical control proponents overlook two key facts of nature. First, nature applies the most effective control of insects. Second, insects have an explosive capacity to reproduce once they have adapted to chemical control methods. Carson goes on and talks about human attempts to break the balance of nature. She gives example of the coyote, the deer predators, and insects. She talks about how at first the idea seemed to work, but in the end there was some kind of backfire that made every effort pointless. Carson then goes to talk about the impact of insects and how scientists say they make up 70 to 80 percent of the earths creatures. She then talks about the importance of insect predators and how that should be the natural way of keeping things balanced. She believes that is people would just sit back and study what happens when nature takes care of itself, many of our problems would be solved.

16. Chapter 16 - The Rumblings of an Avalanche

This chapter starts off by Carson giving insects the credit of survival. She begins by saying that if Darwin were still around today, his theory of survival of the fittest could not fit more perfect. Through the years of chemical spraying against insects, their species have ditched the weak and reproduced the strongest to form a more power arsenal and an even bigger threat. She says that it is known for a fact that insects have become resistant to sprays. At the highest time of spraying, Carson states that new chemicals were needed to be produced every couple of months to help deal with the resistance. Now a days, all the chemicals needed to get rid of the strong breed of disease carrying insects are in some way a danger to human health. One example of the resistance that Carson gives is the attack on houseflies after WWII. During the war, DDT was used to help kill the insects, so it was later used at the house. When the insects were finally able to resist the chemical, another one one was added to the mixture to help make it stronger. Then the insect would become resistant to that chemical and another one would have to be added, making the mixture stronger and stronger. This happened year after year until The flies became abundant as a result.

17. Chapter 17 - The Other Road

As a society, we have two answers to the problem of insect control. The first, chemical poisons, has proven already to be costly, ineffective, and extremely, lastingly dangerous. The second, biological controls, has proven already to be cheap, effective, and safe for humans and non-pest animals and insects. Carson says that biological controls are the best of the two because they do not interrupt the balance and rules of nature. By using natural controls, such as predators, nothing in the environment is damaged or harmed. She says that people look past the importance of insects, and just want to kill them all bemuse they cant see the truth behind what they were put on the earth to do. In this chapter, Carson ends with new ways of biological control instead of chemical control on insects. On method is the sterilization method. The sterilized males would compete with the normal males and after a while, only infertile eggs would be produced and the population would die out. Many tests have been done throughout the world to help make this method a full proof plan. The only problem is that chemicals used in the process of developing this method could be worse than the insecticides themselves. However, if proper care is taken, it should not pose a problem. Chemical sterilants are of two main kinds. One interferes with the metabolism of the cells of insects. The second affects the genes, causing the chromosomes to break up. Some people believe that this use of these chemicals could lead to new carcinogens. New methods of using the insects to our advantage are also in process. Using things such as the insects scents and sounds can be used to our advantage in wiping out large breeds. Another method of destroying populations of insects includes destruction by bacterial infection and by parasites. Talks of introducing insect viruses are also in the works. Introducing more and more predators in a small area will also have a huge impact on insect population. Predators such as spiders, birds, and small animals will kill or eat many insects in their lifetimes. Carson ends the book by saying some words of wisdom. She spent the whole book talking about the negatives of chemical usage. She feels that the human as one species of the world should not try to control nature, but instead just let it take its course like it has since the beginning of time.

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