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Balance of Trade, etc.,
America and England.
Bank Acceptances.
Banking in Italy.
Banking System of Japan.
Banking System of Mexico.
Bank of France in its Relations to Credit.
Bank of Italy.
Canadian Banking System.
Clearing House Methods and
Credit of Nations.
Development of German Banking System.
Development of Independent
Treasury System.
Digest of State Banking Laws.
Discount System in Europe.
English Banking Organizations.
English Banking System.
Evolution of Credit and
Banks in France.
First Bank of the United
Fiscal Systems of England,
France, etc.
Foreign Balance of the United
French Banking System,
French Savings, etc.
German Bank Inquiry, 1908.

German Imperial Banking Laws.
Great German Banks.
Hearings of December 2 and
31 1908.
History and Methods of the
Paris Bourse.
‘. History of Banking In Canada.
History of Banking in England.
History of Crises under
National Banking System.
History of National Bank
History of State Banks before Civil War.
Interviews on Banking and
Currency Systems.
List of Publications.
London Bankers' Clearing House.
Miscellaneous Articles on
German Banking.
'Abney Banking and Loan Laws
of United States.
National Bank of Belgium.
Origin of the National
Banking System.
Portfolio of Diagrams.
Renewal of Reichsbank Charter.
Replies to Circular of September 26, 1908.
Safety-fund Banking System,
New York State.
Seasonal Variations in Demands
for Currency and Capital.


Second Bank of the United
Selected Documents on Bourse
Senator Aldrich's Economic
Club Address.
Special Report from Banks,
United States, 1909.
Statistics fDr Prance.
Statistics for Germany.
Statistics for Great Britain.
Statistics for the United States.
Swedish Banking System.
The Reichsbank, 1876-1900.
The Swiss Banking Law.
Use of Credit Instruments in
United States.

Balance of Trade, etc.,
America and England.
Bank Accpptances.
Banking in Italy.
Banking System of Japan.
Banking System of Mexico.
Bank of Prance in its Relations to Credit.
Bank of Italy.
Canadian Banking System.
Clearing House Methods and
Credit of Nations.
Development of German Banking Sysem.
Development of Independent
Treasury System.
Digest of State Banking Laws.
Discount System in Europe.
English Banking Organizations._
English Banking System.
Evolution of Credit and
Banks in Prance.
First Bank of the United
Piscal Systems of England,
Prance, etc.
Porcign Balance of the United
Pronch Banking System,
Trench Savings, etc.
German Bank Inquiry, 1908.

German Imperial Banking Laws.
Great German Banks._ _
Hearings of December 2 and
3, 1908,
History and MeLhods of the
Pa -is Bourse.
Hi,Itory of Banking In Canada.
History of Banking in England.
History of Cfises under
National Banking System.
History of National Bank
History of State Banks before Civil War.
Interviews on Banking and
Cu, ncy Systems,
List of Publications.
London Bankers' Clca ing House.
Miscellaneous Articles on
Geman Banking.
Money BanIcing and Loan Lasis
of United States.
National Bank of Belgium.
Origin of the Nzeional
Banking System.
Portfolio of Diagrams.
Renewal of Reichsbank Charter.
Replies to Circular of September 26, 1908.
Safety-fund Banking System,
New York State,
Seasonal Nariations in Demands
for Currency and Capital.


Second Bank of the Unied
Selected Documents on Bourse
SenAor Aldrich's Economic
Club Address.
Special Report from Banks,
United States, 1909.
Statistics for France.
Statistics for Germany.
Statistics for Great Britain.
Statistics for the United States.
Svdish Banking System.
The Reichebank, 1876-1900.
The Swiss Banking Law.
Use of Credit Instruments in
United States.






64-4.6-1J/4 414414,,



Pusuo Dammam'

- U. S/S.












r.n -




,Lupetit, Albert, c/o La Banque de Prance, Paris, France.
ipeaulieu, M. Paul Leroy, Editor, "Economist Francais", Paris, Prance.
ano4, Comm. Tito, Banca d'Italia, Rome, Italy.
onrad, Prof. Xohannes, University of Halle, Halle, Ge:bmany.
.0'erraris, Carlo F., Camera del Deputati, Rome, Italy.
laux, A. W

Gwydyr House

Whitehall, London, England.



oxwell, H. S.,

r-Miliamb:gidge l England.

ram, Robert, c/o "Der Deutsche Oekonomist, Burgstrasse, 3, Berlin,/
en, Moreton, Brede Place, Sussex, Ery;land.
orges-Levy, M. Raphael, 3 Rue de Uoisel XVI e l Paris, France.
overnor , The, Bank of Belgium, Brussels, Belgium.

1 Edward C. Esq., if X. P. Morgan & Co., 22 Old -Boimire St.,
London, England.

ginson & Co., 1 Bank Buildings, Price's Street, London, E.C. Englanik

. tst, Francis W.,13 Arundel St., Strand, London, England.
pATolland, Robert M.I Post Office Court, Lombard Street, London, En7land.
orgoration der Kaufmannschaft von Brzlin (Bibliothek der) Berlin,
C 2, Mrs°, St. Wolf -,

Vevandmann, Dr. Julius, Swiss National Bank, Berne, Swierland.
pfevre, M., Credit Lyonnais, Boulevard des Italiens, Paris,France.
4449xis, Prof. W., University of Goettingen, Goettingen, Germany.
0 el,
t/fsif; M. Andre, 18 Rue Denfert-Rochereau, Paris, France.
j° 104( k, Alfred, 33 Rue St. Augustin, Paris, France.
ish, George, Editor, "The Statist", Cannon St., London, England.
algrave,Sir. R.H., F.R.S., Henstead Hall, Wrentham,Suffolk, England.
Plain, M. Georges, 0' La Banque de France, Paris, Prance.
ffalovioh, A., Ministere des Finances/is Russie, Paris, Prance.
Aiesser, Dr. 3., Lichtenstein-Allee,3, Berlin, German


Sytrch, H. 'v'. .1 Bank- -of---343. 111-114
peVi0.1, E.,

14.andsamr __En..7Artard'.

3 Place de la Bourse, Paris, France.

en B0,11m Bawerck, Prof. E., Uni7e -sity of Vienna, Vienna, Austria.



Karl, Director of the Reichsbank, Berlin, Grinany.

ley, R. W., Esq., Gen'l Mangr. Parr's Bank, Ltd., London l Erwland.
/ 1.0111,rs, Hartley, 6 Linden Gardens, London, Enraand.
Alt, r, Max, Dorotheenstrasse, 3, Briin, Ge:!..nany.
ecteur l'Universite, Moscow, Russia.
cheuhaetser, Dr. X., Speycrer Strasne 14, Berli9e, 1e=any.


e'lik#431nstein, E., 3, Akademies Strasse, Munich, Gefriany.
oblooh, Miss Bertha

Mittledeutsche Privatbank, Ham-ourr,Gormany.


A "' ,•4e




_ ..

f/ObBt, D. Georg, Westfalische Str. 61, Berlin, Gelnany.

A A,(71,y) ($4,y1AcvitfutA>v‘_,


6 , , ;,.
• • •

AupulAt, Albert, c/o La 7.3nque de 'ranee, Pa. is, Prance.
Beaulieu, M. Paul Leroy, Editor, "Economist Fl.ancais", Paris,
Cnovi, Comm. Tito, Banca d'Italia, Rome, Ital
Ccnrad, Prof. Tohannes, University of Halle, Halle,
Ferraris, Carlo F., Camera del Deputati, Rome, Italy.
Flux, A. W., Gwydyr House, Whitehall, London, England.
Fomvell, H. -7., 1 Harvey Road, Cambridge, England.
Franz, RobeI:t, c/o "Der Deutsche Oekononist, Burgstrasse,
3, Berlin,
Frewen, Moreton, Brede Plce, Sussex, England.
Georges-Levy, M. Raphael, 3 Rue de nisei XVI e l Paris,
Governor, The, Bank of Belgium, Br'Aseels, Belgium.
Grenfell, Edward C. Esq.,
J. P. Morgan
London, England.

Co., 22 Old Bride St.,

Co., 1 Bank Buildings, Price's Street, London, E.C. Engl

Hirst, Francis W., 4 Arundel St., Strand, London,
Holland, Robert If., Post Offi3e Court, Lombard Street, Lond
on, England.
Korporatinn der Kaufmannschaft von Berlin (Bibliothek
der) Berlin,
C 2, Beirse, t. Wolf -anstr.


Julius, Swiss Yational Bank, Berne, Switxerland.

Lefevre, M., Crdit Lzonnais, Boulevard des Italiens, Pari
Lexis, Prof. Y., Univ-ersit: of floettinr;en, Goettingen,
Liesse, M. Andre, 18 Rue Denfert-Rochereau, Paris,

33 Rue St. Augustin, Paris, Prance.

Paish, George, Editor, "The statist", Cannon St., Lond
on, England.
Palgrave,Sir. R.H., Pi

Henstead Har., Wrentham,Suffolk, Enp:land.

Pallain, M. Georges, le' La Banque dr: France, Pari
s, France.
Raffalovich, A., Uinistere des Finances, De Russie,
Paris, France.
Riesser, Dr. J., Lichtenatein-Al1ee 1 3, 71er1in,

C9arch, H. W.,

Bank of England, London, Enc71and.

F., 3 Place de la 2ourse, Paris, Prance.
von Bohm Eawerck, Prof. E., Uni've-sity of Vienna, Vienna, Austria.
von Luram, Dr. Karl, Director of the Reichsbank, Berlin, G:nnan7.
Whalley, R. W., Esq., Gen'l 7i1n7r. "Parris Bank, Ltd., Lonion,Tnrrland.
,ithers, Hartley, 6 Linden Garriens, London, England.
Wit',,ner, Max, Dorothere.nstrasse, 3, Berlin, Germany.
Au Recteur

Moscow, Russia.

cheuhaeaser, -Dr. T., Speyerer Strasse 14, Berlin,
qerT: 17.
Rheinsein, E., 3, Akademies 3trasse, Munich, Germany,
Knobloch, Miss Bertha, Or Mittledeutsche Privatbank,
Newborg, M. 60 Broadway, New York, N. Y.

Westfalische Str. 61, Berlin, Germany.







(1-1 TI-1.1•• NATIONAL - `.01TETAIN COM-

59 co.i

of all fylblicatins.

coldfovie: 10 copies of f'lenate docu,
lent 70. 399 (Use of
Credit instruments in U. 2., by Yinle).

Ptc_.linr, of Illinois: 20 colAes of f7enate docu-ent
o. 399 (Usr‘ of Crcuit instr% lents,


.radley, of 'Sew York: 3 copies of all of the publications of the Colis:..ion (for persons in
his 'istrict who supplied the Co-lmission
' sta:,ir:tics for the !I)ecial 1:0 (Lots
from larks).


Mlson, of Wisconsin: 100 copic of flenate docit-lont
225 (Ppecial .e.oftf; fo
anks, 11 ;0(.).
Lawrence, of

Etssachusetts: lb cories of The Direst of
State Bankinc Taws; 1'0 co ics of The 7istery
of Bankinc in Canaca, by 7reckenridr-e; and
16 copies of "The Use of Credit instru-7nnts,
by Yinle:,

Cole, of nhio: 4 of 5 copies of The 'driest of l'tate





The following questions and suczestions are asked and made
with the knowledge that they are in the line of technical detail,
but if they are of any importance at all they are very important,
and should be clearly set forth by the wording of the law itself
and not left subject to different interpretations by succeeding


If the Secretary of the Treasury is expected to approve
all acts of the Comptrollers and the Treasurer, as provided at the
end of Section 1, it would be well to express this in specific
terms at the end in a section by itself and state that it applies to
the entire bill.
Page 2, Line 2
ffonds are to be deposited with Treasurer or any AsoiL
Therefore should not the Treasurer issue the receipt
as at present, viz, in duplicate, and deliver original and duplicate
to Comptroller; latter to retain original ,nd send duplicate to
the bank?

Pap 2, Line 19
Can a "bank issue Circulation ajainst United States Bonds
in excess of amount of capital stock only (as at present), 4id
if so, would th3 excess (against U.S.Bonds) be taxable at 1/247/ per
annum or 1/2% per month?
Page 3 Line 12
Should not the words "of any State" follow the words "City
or County", so as t.) read "by a.ny City, or County of any State in
the United States?"
Page 4, Line 6
Tan the Treasurer require additional or oter securities
That would be very
deposited, without approval of Secretary?
arbitrary power to place in the hands or any one official.
Treat, the present Treasurer, arees with this.

Are Coupon Bonds acceptable as security for Additional
Many of the hich%)st grade State and Municipal
not exceedinf:
Bonds are issued in coupon form (in denominations
icn, and are not
$1,000 each), contain no provision for registrat
Any writing upon such bonds
exchangeable for Reistered Bonds.
very great prewould injure their future saleability; therefore
be provided in the
caution and very explicit instructions should
to establish rules
law; or else, provision made for the Secretary
goverriing such. matters.
If Coupon Bonds are to be accepted it would be
coupon or
for the bill to contain the specific words "either
registered bonds."
Does the word "transferred" on page q, lire 11,
of a St,Ate
the books
a transfer by delivery, or a transfer upon
new certificates? If the
Municipality or Railroad Company, into
contemplate the
latter is intended, then of course the bill must
a mistake.
use of registered bonds only, which would be
If Coupon Bonds can be used, would not one cltaced
of certifiinstrument of assit_fnment and transfer (of title--not
cates) to the Treasurer of the U. S. in trust for a bank, suffice
for each lot of bonds of the saie kind, mentioninrc so many bonds of
:ieinc tile numbers
$1,000 (or whatever the denominations may be) and ,
ually made?
of the bonds, the same as such assicnments are

Coupon Bonds are to be accepted and a memorandum or instrument of
assignment must be attached to each bond, as the bill now provides,
it would be necessary to execute at least one thousand separate
assignments for one million dollars of bonds, even though the bonds
might all be of one issue, which would involve a trememdous amount
of unnecessary detail and labor.

1?,g,e 7, Line 10
Inasmuch as the proposed amendment of Section 9, Act of
July 12th, 1882 (as amended by Act approved March 4th, 1907) does
away with any and all limitation upon the amount of circulation
that may be retired at any time, why is the provision in relation
to bonds called for redemption, any longer necessary?
In re $5.00 notes
Experience has demonstrated that the limitation of $5.00
bank notes to one-third of a bank's total Circulation, although
well-intended, was a mistake; and the proposed bill should afford such remedial legislation as may be requisite for the convenience of the people; therefore all legal restrictions as to
denominations of national bank notes should be removed and the
matter left to the discretion and judgment of the banks, who
can best tell what may be needed by the people from time to time.
The bug-bear about the non-circulation of silver certificates
disappeared long ago.
All national bank notes which the people are required to
accept and use as money (with no means of knowing anything about
the banks issuing the same) should be by law made a first lien
upon the assets of the bank (if perchance that remote possibility
should become a necessity), as such notes are in no sense comparable
to deposits made by a bank's own customers who do know the bank
and who make their deposits voluntarily and at their own option

er of
Are the banks to keep on deposit with the Treasur CircuAdditional
Fund for
the U. S. a Five Per Cent, Redemption
lation, the same as at present?

nal Circulation
All notes delivered to banks for additio ting notes, except
present circula
should be in form exactly like the
on their face that they are
that they would probably have to state Treasurer of the J. S. wid in
secured by "bonds" deposited with the
change the form of present
that event it vould probably be wise to
444AA), so that all the notes
Circulation (omitting the words "U.S:1;4
of the public
That would preclude the possibility
will read alike.
been paying 6% for money by
knowing that any particular bank had
When adbearing a (3% tax.
taking out additional Circulation
depositing lawful money or other
di'ional Circulation is retired by
additional Circulation may continue to
bank notes in tie Treasury, the
after a panic or emergency has
be in circulation for a ion:, time
upon such notes to indicate that
passed, and if there were anything
Circulation, %ht fact might
they were in the nature of emergency
bank's reputation.
operate to the prejudice of the issuing
Pase,..5 1.. Line 20
inserted after the word
he words"United Sta es" should be
Associations having on deposit
"deposit" so as to read "and such
higher rate than two percentum
U. S. Bonds bearing interest at a
f percentum each half year, etc."
per annum, shall pay a tax of one-hal


There are nany misconceptions conccrnin
Aldrich bill.


be t_ substitute f,2 . an

It is nzt t

manent -lan of Lonetar



It iE not intendec7 to in-

terfere with anyone of the proposed plans which h,ve been
adv3cz;..ted b;, our bankers and ctudents of political economy.
Considerable criticior, h&E- been offered to the ef.ret, diffifect thbt the Tre&eury Den..rtrient would 'ilave 6
culty in determinino.

intrincic value of the .

clacseL: of bon ec which :_re to be offered r.:1 security for
emergency circu:btion.

In rerl

to tilt criticism, we

aJC that the :-overnment haE, todE.,; ever:, bral]ch necesuary to
collect this infurration,



Whehinwton the Der6rtrent of Commerce an

cctablished in
I?bor, one brEnch

of v.hich consists of the aulreau of Statistics; anotner the
Bure&u of Cori Lir.tions arel still another t.e Census Cffice.

buree.ue ere thoroutLthl;

fariAliar v.ith

equirred viith high grace nen

.hiE line of work.

On the other htlid, we

have the Inter-2thte Commerce Commission 1.1 ich can supply
ell the informatiJn needed pertaining to our great trunk
The Xe.tional Banking Systen
tion for pore thi.;r1 fort: ::ear.

haz' now been in opera-

The objc tion to the

Aldrich Bill by the American Banlcrs AssocivtIon that it is
impracticable, unwise and finenciallL unsound, iF etivany
aprlicable to the Yational Banling %

1711en the plan

of bond circulation was &dorted in 1663, the question of
inflation of government bonds was raised and the same objections which were applied to the Fational Banhing setem
at that time are noT raised concerning the Aldrich Bill.
This bill does not intend to overthrow the safe system of
note issue6 nor crippl, the lending rower of our national
banks, nor will it create a fictitious bond market; neither
vilt: the taxation rrovieions result in preventlng this cxtra currenc;; from being retired from circulation.




firmly believe that our barers Ere so patriotic and broadgauged that the unrrofitableness of the emergency currency
when needeC_ will not be conps_idered.

If ]t 2houlC prove

to the contrarL the rate of taxation could be uuCified.
During the national banking Act there hac been no
inflation of our rublic debt and CongreE has not ma0e
any effort to tale advantage of this system.

AE a result,

our covernEent bondE have commanded a rermiub, in the open
merlets of thie countr: end have been referre
"Ruropean bankers in a most laudable fashion.
not true of wan

to by
That this is

ropean securities reflectc great credit

ui- on our nE.tiont-1 g. vt- rni.elit.

This in large measure has

been brought about by reason of our National Banling 2-LcteL.

So far as criticior pertininL; to the Aldrich Bill

being in the intere:t of certain Bond Syndicates, I might
further ad

.ears the Secretaries of the
thet for rgny :

Treasury have seen fit to eccert certain classes of Stte
and Railwaz bonds ad security for government derosits.


.u.!s been no inflation of these
far as I can learn there 1
lcsuet_ by reason of
securit]es been materIll

fact, nor have the price of these

by reason of this pro-

I c. n not see %-h L' these bonds havin

proven en-

tirely sEtisfEctory as security for governrent deroLits
should not rrovE eually as safe for emergency circulation.
If our n:tiorel Immking circulation is safe, t' en this
emergency circulation vhich ha E for its basis semi-public
bonds, shou3d also be safe.

If such securities should de-

preciate the banks which have depoeitef them can at any
the be called upon to put up additional security, and
failing to dc so the bonds can be sold by the Comptroller
of the Currency and the proceeds applied to the liciridation



of thiLs emergene: cdrcul&tion.
atntion 1,a. recently called to
another ap—
p&rent defect in the A15rich Bill
wherein it ft_ile to make
proper provision for the countr:
The criticism
came from one of your leafing
PhilaCelrhia financiers..
Fe felt that certain clec: ,f
street railzaz and electric
ljchting bond, ran L of vhich ere held
b; our co-cntry
bankers :houle be rice' or such rurro
see. 7hether or not
this aclditional rrovieion v,ould be
a viee one is a very
debatable question. T believe tht any
of our country
banks today can compl;y with. -r_e requi
rements of the Al6rich
Bill for better than is general% suppo
Our prr:ent lonlinr; system in the opini
on of most
banlert-J az- stu.
dent._ of roliticL1 economy is totally wron
Our n,tio1 brikin,t: currency, a._ you know, is based
sovernent bon, which sycten in itself Was an
pin p-roviin!: out of tie financing of the T7er of the Rebel
The plan was devise f to attract state and rrivt_te banks to
becoe nbtionel inctitutibns.

The owernment offered the

note circtlation t: L.n inCxcerient for financit:1 institutions
to becote ational Banls.
7hile it


true that

nor to the war certain cities

and ctateL repuOdate0 their debt, it i
have E.tterTted to avoid
late :Ears.

orbtful if bny

the payment of their just debts in

Is it not a fact that such cecurities as &re

authorized by the Aldrich Bill have already been accepted
by Courts and Saving

Tian7- i' in several of our Etetes as

absolutely F.A.fe investments?

Why did our biers hoE:rtily

endorse the plan of Secretaries Chaw and CortelL'ou and
others of receiving such bonds as securities for ,
funds, Yflile they openly criticise the provisions of the
Aldrich Bill which provides for a similar clace of bonds for


this emergenc


While our national banking system has been the subject of severe criticism from its inception, still it has
provided us with an absolutely safe currency.

The one

great weakness which it has developed has been its inlasticity.

This defect, hovever could be corrected to a

certain extent if certain chnses and rlodificLtions of the
National Banking: Act were adorted.
What is especially needed and what has proven to be
absolutely syfe in recent years is the legalizing of our
Clearing Fouses, so that theyr functions and operations
me: be approved by the Courts of our lend.

They and our

Sub-Treb.suries should be so emlated that out Cle,E.ring
Fouee AzsociEltions would become a -part of our Yetional
Banking System.

The country could be so districted that

our principal cities would conform with our present system
of sub-treasuries.

If this were so, all of the uncertainty

of the intrinsic valur of the rroposed bonds to be issued
as securities for this emergenc: circulation would cease.
The burden of determining: their value could be placed upon
these Associations .

In case of depreciation or default,

the loss would be made good by the Associations and they in
turn collect from the defaulting banhe.

Of course, under

such a provision every national bank in the land would be
a member of one of these organizations.
country banker would 1)e protected.

In this way every

The municipal and

county bonds of each district would be thoroughly investigated and the country banker would find thtt it would be
to Xis own advantage to hold a certain amount of these se-

curities as a basis of an emergency circulation.

This in

itself would provide a better market for this class of
securities than has been found in the past.

The prideend rivalry of each association vould make



them most :ealous of each other's standin, and good name.
It is certain that _f some such rlEn sere c:rviLed the
Lo!r.ent any on

efsaia banks was in trouble, or the bonds

of t..1:1:; one of said runicipalities were unsafe, the ratter
would be immediLtcly reported to that rarticular district
clerinLj house assciL-tion.

If deservinj, the institution

would receive immediate help;
to licr- idate.

not, the bank vdould, have

This unity of interest

)uld be


of strength in the hour of trol.ble and a most wise prov. ion in times of inflation.
The T.LtiJnLa Banking System has its faults, but it
has reverthelecc served its purpoye well by giving to us
at a time v!hen sorely needed, a k;ood, cafe an.

stale cur-

I believe it has come to stE.y in a modified form.

Perhaps it 1.a


rrsteriell-L- chanL;ed in years to come, but

the funaaLenta1 rrinciplee on 14hich it is base(' vil1 be re-

Th: Rani- of Pncl!,...n, the Rtn1 of France, and the
Imperial Ban1- of orerNany b

reason of enjoying ,.overnr.ent

deposits do much and offrr considerable aid to their governments in time

of need rithout compensation.

So shou. d

our nation1 ban3-s, organized into some ,tich -lan as outled assist our E-overnment in times of monet&r:k stringency,
because the: too enjoL certain benefits, such as bank circulation and the receit of -,overnment funds.
Kinley in
says :

e vor

on the Independent Treasury

't It is betIrr to keep a system v:hoce evils 17e know,

than to adort en entirely nev one, built on an ideal plan,
whose defects ye cen only guess. "
result of compromises.

All leE;ish.tion is the

Senator Sherman informed r.e that

the 7,hernav Act as his on]

in nex:e.

Our Federal Con- tte'result of e.coLi romise.

Our ear4 bunking


116 II

system waL; to E certain e: tent

L;stern of patch-v:ork

(ul. rational Banking System was colie:1 largeafter a stem in force in rew York State, lAhich had
irrv.1:61.;" 1.:.ner. one Lany material changes.
The Inoerendent Treasu_r:: Syctem was a welcome relief afte!) the financial :2torm arising out of the failure
of 'Lie rcnewal of the Charter of the Secon0 Beni. of the
Unite: State:::.

That it 1s failed in some particulars to

meet Frecent needs has been clearly rroven. Among its
benefits we .e the safety of our public funds and a currency
redeerE.ble in rart

?:01d. and silver.

It faileC, however,

to rrIvide an elastic currencz., which was possible under
the charter: of the First ana Second Baliks of the United

AE a rElsult, we have adopted carious rlans of re-

lief, such aL the derosit of the lgovernLent funds in
natior.La banks.

flven this has been inadecitu,te to r:cet the

strain of business conditions at various

tiLes throuhout the ;:ear.


Now, after both ConL:ress and

banker L have faileC. tp agrec upon a permanent

plan of currency reform, this 1.1drion Bill is offered ,not
as a substitute, hut simr1:' as a emerLency plan.

The Bill

has certein weak point[., but ac a 'hole the rrinciral
object to be obtained will bring that relief and corfidence
which is abcolutel: essential in tilec of financial distress.

Thether the L.overnment should restrict The amount

of the emergency currency to be issued and whether the
governmPt should guarantee the raz,ment of thdE currr'noy
without com:eneation, when it has declined to co either
under the National Banlinir Act, is not so vital to the
business coymunity a


the queztion concernin=- the de-

derpption of this currenk% in leoful more;' on derE-md.
tlis et..renc: curcemc: viii meet Vide requirement is



absolutely certain.

For it will be equal, i

not suicrior,

to green banks for the rez_con that you will ha7c first,
.overnment's rromise
the banks promise to pay, second, the r
to ray, third, the securities themselves, and fourth, the
agreement to redeem the same at the United States Treasury
in lawful money.
It is not a theory bu' a condition which confronts444,
When an emergency arises heroic measures must oftenthes
be adopted to safe life or property.

Commereikl, Financial, an

So, in the economic

trade relations in recent

years have produced a condition in the boCz politic which
must be i-et in a manly fashions otherwise, the ft,..dlure to
act may again result in untold financial ruin.

7htt we

need to adopt for the future is scientific banking.


many 1-lns have been advanced that an bgreement does not
seem near at hand.

Tie hope lies in socie action on the part

of Congress looking towards this end.

It is to be hoped

that a Lionetarz commission ;il: be appointed during this
sessioc. of Congress with full to investigate and re co,
..i.end to our ntional legislators a system of banking
w'rich will not only be superior to any other in the world
but vill also be readily adaptable to our financial needs
an0 institutions. 'ith the adoption of such a plan, let
it be made absulutely essential to the furthering of our
commercial life.

Then and only then can we rightly take

our place among the monetary power of the world and begin
to gain that mastery over foreign commerce which is justly
our own.







Summstr:: cf Replies frorn Bank Officers reltinc t.
, r.brtc,


, *too






ouble Lead
7.7(fiCts rtrritr"ririTittl


L671 7


independent, .C1
t the same time closely affiliated with the 7ational
titutions and • ld
sult in bringin
of this cltse
r government sup
ision nj control.
se p ers could
grant d w' out nny wenkenInc o - he nation 1 s:7stem r'/with deci ed pro
to the bt
and their patrons,
at the sam time 1the olmortu ty
operate undo the national Inv ad
ive the benef 4- C. ,equent thereto.
Saviapet -T6Tiosits.
mpetition between savings and nationa
ks has resulted in the
ter of so-called
departnents, many of whioh
are flourishing and in
,re ,
-rowing more rapidly than the other
departments of the Instit.6. The ban
ese recounts not only pro-ftable, but they a
so proving most valuable intlftetiAG_in the development of their
and other business.
onl:about 2,900 of the 7,200 nationtl banks hrve ns yet estab1
s',"414,11.7s-terrftrtrisFTFFE'rrdepneitrrpripmtweir-eroTtnts eviemrtrz000.
The savings feature is entirely in keeping with the functions of the bank and
th ,- Etab.lishment of these departments is filling a 1041-felt wrnt, the
apliNtnely being eager to take advantage of the addit*fial protection which
cvornnent supervision gives to their deposits.
In my judgment, however, the law
-hoc,1d clearly define just what deposits are to be classed as saving
s and 60pr/tate reuulations should govern the investment of these funds.
If thelpaximum rtte
of interest to be paid on such deposits we fixed, the character of the invest
ment determined and the deposits made nontaxable und2r certain condit
ions, the
people generally would derive much greater and more permianent benefi
than can
ever be hoped for as the result of the existing fostr 1 t4
zvings ABank /


e is an urgent necessity or the provision of the
act which limits
the amount to
loaned to one firm
corpora ion is apParent, but./khat the law
as Lt exists today is an;-thing bu perfect is equall
y evident.
Its Principal
weakness is its flexibility, an at the same time the
letter o
he law can bo
strictly observed and yet t,Zie cry object of its being
be dt '-ated.
A law which
permits a bank to loan Z70
cent. of Its capital to ten .r even forth nr—I:ited corporations which ,
ated by one indivi
or one idea and which
would likely be affec
disastrousl:, should the aff
s of one become involved,
and yet limits deft
ely the amount
at can be
ned to one concern,regordless alike of it
nherent strength, asell-li
s ability to collateral the
loan with unou
lonable security, is certain
ub,lect to criticism.
Is there
any reason
permitting an institution to
chat an_un7.imited amount of .0v-,
lroad or other bonds flci yet
rifting- the amt that can be loaned and
yet lim' ng the amount that can be lot d on the same
sec ities to responsible
borro rs? It would indeed be disnst us were there no limit,
an. in fact the prese
Unit in most instances ia quilth enough and in some, entire
ly •0 large, but
would mdoubtedly seem most dqirirale that this present
feature of
hould be so changed that tLero should be different liMits for
the various'nss of

1 . 4,11k-.i5Nlichmond,

Double Lead


1671 7

ord r that when t
new currency
tem,pekes into effect the laws
me sui ur
the ernen -'of eke
tion' the
f th"banksj.uil up al , cons rVative line
s. -


The one thing which, above all othe
ems to be responsiU9 for the
rrepo erance of State banks is t''
- .ility of the 7ationjAAWMs to make
real estate loans.
Tt is
easy to see how the;parei of 'Oa° revised lay,
so soon after the cl
d,wastating war amn real estate values were
unsettled nL1 •
err.ined, should have
t necessary to prevent a bank's
tying ur •
,,nus in long-time 195Aise
ich could not be marketed easily in
There is no
'rent reason existing today, howev1‘, why a fixe
oportion of the capitaWlrrlu
its of a "sank 8110u- d-Trot' be Iffrested
It is absolutely essential that a bank in
a farming community should be
e to make advances upon mortgares, and where
ordinary precaution is taken, the risk incurred
is hardly so great as in many
classes of paper which can now be handled lega
lly in large amounts.
Of course
no institution acceptingAlemand de,osits could
survive if al; or an extremel:
large percentage, of it funds were invested in
long-time real estate paper, but
between these two eNtremes there is ample oppo
rtunity afforded for an amendment
to be drafted which will enable the banks to
make this class of loans within reasonable bounds.
)ependent upon the F./1mnd, as I'm are, for the
Pr^duction of our wealth, the
government prohibits us from accepting it as
security for loans and thus deprives
the/ation(4/5inks of what should be one of
their chief functions, viz: the employment of the funds of the depositors in
the up-building of the country, upon
which they thrive and which makes their
deposits possible.
What greater security could ne conservatixe banker desire
than "the earth?"
Even as it stands twlay, the law in inconsis
tent in thtt it permits a bank
to make unlimited investments in bonds, whic
h are primarily secured by real estate
and yet prohibits absolutely well marg
inied loans to customers on real estate
security. We are also permitted to lend
30 per cent,/ of our capital on the single
name paper of an individual and yet cann
ot accept his home or farm as security
for even a small amount, until he has show
n his inability to meet his obligations
and when in all probabilit:: the security is
no longer obtainable.
If the law be amended in this rtrticular
to a reasonable extent, with proper
precautions being taken against real estate
speculation and other abuses, the 7ptional Banks, and especially those in the
country districts, will take a position
in the work of developing the resources of
this country hich they cannot possibly
occupy today.
-Trust ..Powerr. rr
In au
on to 'emitting real este el
ionns, as outlined above, the field
of labor of the
in our nationa .zstem could apparently
be broadened to great
advantage to themsoli
nd with • h bencifit to the public at larg
e by granting
them, along conserv:tive
nd within proper limits, the powers now enjo
by Trust Companies.
f-anized as they are, under the laws of the
various states are n
estrictod to ,
ticular field ef endeavor, but are daily
becoming more act'
competitors for the come
usiness of the banks.
a provision IN
do awn;: to a grert extent with t;ie present
tendency of those interested 1
ati7mal Banks to orranize Trust Companies,
which, while in a meas-oro

1 6717




Americnn 7atiota1 Bank, Lynchburc, 74tagimni-al


'141 144°14€446"44. .."±n&tarri6


to a6 forc-rr
sint on
yours of tZle 6tbL in07•,rettorri.
lellintevtocrtki n b.pank sdnt mit by ou undkr doteiof Octobor 9th, 1911.
.1 We i'pknoiled

Regarding our answers to questions :To. 4 and


beg to 'dvie

that we are not entirely satisfied thrt national bnnks should be permitted
to mrke real estate loans at all.

In the lirrht of the inform-tl -n td.t

rnssess at preset, we fool that our nnswer shold be th. we are not
in favor of such loans.


1 671 7



C -Clte,LIV )

"Igloo Dexter-Horton Tetionnl

-411-L1 .
Seattle, Washinctona at


We do not favor commercial banks doing a savinrs business, but if


:national banks are to be granted that privilege under the supervision
of your department, we blieve that if they are allowed to make loans on
real estate securities the amount so loaned should be within certain
lirits set by your office.

We should sa: 25Dshould be the outside


Your. tru
M. '. Pet rson,

• •••••....


671 7

First altional Ban; Escanaba, Michigan.


, 4:3

-440 Not less than I,nor over ljwith an arbitrary limit


legal limit of loans, forcing as much as possible 7 small
loans well



We, here, especially need home building loans.

4 4111 Not less than

nor over 1:Ountil it was tried out, unless segregatio

and restricted investment prevail, in which case a larger
percentage, say
23 or 26of savings should go on real estate.

Our reason for opposing segregation of savings deposits
and restricted
investment in savings bank securities is that a very large
proportion of our
deposits are savings deposits and it would materially
cripple this community
so far as loans are concerned if we could not loan local
ly and, as I understand it, savings bank securities are confined to bond issues
and fixed investments.
This county is rapidly developing and if our entire savin
gs deposits amounting to over ,1,100,000406 were cut out of the loan loan
field, development would
be very much retarded.

In fact, we believe Vat the rre:ent arrangement
is as

good as can be devised, provided a reasonable percentage of
deposits could be
loaned on first mortgages on real estate.

Leslie French,

1 671 7


Scandinavian.4merican 7etiolf) Bank of Minneapolis, Minn
2. i44 Yes not to exceelL56


4 441

and reserve should be required on sFvings - same percentage as is required on other deposits.

We have in same office 7 a State, Uutual Spvings Bank, entirely
organizations, but practically under the



It would be better, much better, in our opinion for all concerned
if deposits
in savings department might have protection afforded by our capita
l and stockholders liability.



1 671 7


Merchants :7atir_insl Bank,:7icksburg, Miestindopp41

• ,i4t1

Under proper restrictions and safeguards not to exceed frflir per cent of
capital stock.

, 4. .idt) Loan 7‘

properly safeguarded as t

percentage of value of property.

Our savigs bank iE owned by alrost the same stockholders as o
ntional ban;
and has same officers.
We oper te
in same btnki
sevrate clerks, books, etc. and we tr e
the same time by national bank


(1,'e your inquiry, addressed to the cashiers of the national banks, under

I am afraid that I may not have made myself clear in filling out the blanks,
but I want to sa;,-, first, that ' am very glad indeed that this inquiry is being made.


_ We have had, almost since our organization as a national bank, a savings department, which is owned almost exclusively by the stholders of thej.:erchants ptional; 1
the name of this bank is the Peoples f'avings Bank4)Loan Comnany.
This banIrwas or- (
ganized for the purpose of taking care of seal estate loans, whieh in t'As section of
the country is a very valuable part of oUr business.
The bank was remnrktbly successful from the start; we organized with 450,000 capital, and now have ..,50,000 capital,
50,000 surplus, .60,000 undivided profits, and have paid POdividends since the first
year of organization.
Our savings deposits at this time are about equal to the conmercial deposits in the :erchr.nts :Taticnr1 Bank.
For several years we had considerable trouble and criticism from the Comptrollers
Office, as we had the two banks in the same room, and at that time the savings bank
was not being examined with the national. We suggested to a former Comptroller that
he examine both banks at the same time; since that time this has be
done, and we
have had no further trouble.
The only way that the savings bank business is reflected in the Merchants 7ations1
is the amount of cash that they carr on hand. We report this as 'due savings bank'
in our report to the omptroller's ffice.
We allt heartily in favor of allowing national banks to lend a certain percent of
their funds on real estate collateral - of course this to be strictly safeguarded,
both as to the percentage loaned and the margin in the collateral offered.
If you are familiar with this section' of the country, you will realize that this style
of loan is almost necessary, as our country is almost wholly agricultural, and it is
yery hard fcr a comnercial bank to make loans that are nct secured by real estate.
5-14nio.0 the organization of our savings bank, however, we have never taken real es
pans in our national bank.

We are nn e and more convinced, each day, that the Conrtrollor's office is in the
hrnds.--tt a man, who wants to make the national bank system both as strong and as ef—
fieent as possible.
Respae441,14.447. 7. McCoy, 7ashier



1 6717

First National Bank of Alba.

Albany, Miasomada

In my opinion a first mortgage loan on real estate not
exceed f44ity per cent. of the value of the land is the
on the
loan that can be made and cashes as readily as any paper
If a country bank wisher to discount any of their paper
have real estate loans, they are more easily sold than any
paper held by them.
In the case of personal notes a country brink is required
endorse before they can sell them.
Again it puts a national bank at a disadvantaee with
mers to
banks and forces them to give up sore of their best custo
real estate
state banks because they can accommodate them with
Y. P. Whaley)

' 41`



100;1131 11(6546

National Bank of Ashland, Ashland, 7ebruu-lee2



Ccitakker- r07 192.1.
2. .kg)1 would be a liberal amount; lbwould more than meet
our requirements.
That amount of loans secured by good mortgages would enable
us to meet
a reasonable demand and would really strengthen banks as tlioy
take some of these loans instead of investing in commer
cial and other
paper that they don't know so well.

I am

ing the liberty of addiLg a 1

o the answ ,- in ycur circular

have lways bee
little at sea about the so-c
"savings deposits"
• aria_ ot sure just what th
artment meant by the term.
surpcse all deposits
ted by certificates as ;ually issued by country bank"ght be called
savings ci
It is hard
istinguish sometimes w
urpose a deposit is for.
the same kind of ce
icate to a farmer wIsh
to put .3,000 on interes,
six months and a boy o
*r1 for 10.
are only two of us
the hank and it keeps us
etty busy without debnting very
over fine points a
the particular miture
arosits, the main
thing is to go
I ha
eon cashi
• f a national bank fcr some twenty five years
• am strongly
in favor of 1
sting - 1a
• i be properly managed but with as little re
re tc
take time from mo
important '1- ings as possible.


7ery refspertftary •
. E. White. 1
&shier f



(iaremont 17ationa1 Bank, Clar



nt, N'w Iltwreiti•reL

In_acanaztiarett-gromittritatTe-treterb+.ette-wpoeseubmitted to national
1/771arleragrErtMe2,48;)Vg beg tc say that our experience of some te years with a sayngs depirtment has shown that it is a branch of business which can be
handled without interference with the commercial department, enabling us
to serve a considerable element of the population advantageously to
them, and with a fair margin of profit to ourselves.
7:e sincerely trust also that you may see your way to recommending
i. yout report, in connection
th proposed hanges in the l'ational Bankin Laws, the enlargement f th powers of ational banks in other direetic
omietiti n of stat chartered bEnks whr h are
The increasin
handle lines f business rem whi h national banks are • rred plats
a hand
p on the ,Ater which o ht to e, it seems to us, remo d.
have not
with ratificatic, ex essi ns, coming from the 7ecre ry
the Treasu
o the effect thE' b ks operating under a federal c
should be g
n the privilege, wide
roper regulation and control,
per\ f2rming a
'timitite banking funct n.
e our own cc
e for exa
having ri population of 7500 s ved
rational ban
each having
ngs der)artment, and by one t
tered Mutual Savi S rank
re empowered tc do a trust b
s we would be able t get som , custom n the way of hFndling true nu ds,
cting as executor under 'us, tc. and
rform n locn1 service of -rlu
to the community; but the
oun. of such bu mess is not large enoup pro
bable to warrant the organi tipn of a separ e company with adequat capi
tal. (Our present capital, f ilities, organi ation and the rublic onfidence enloyed by olr Institut' , if al/F.11a ble would enable us to ct as
Trustee with the minimum of e#pense and a great() degree of securltl to
patrons than an independent oepnnization with sma er capital coul well fur)


Frank H. Foster,
Cashler 7



;00(Citizens :lational Bank, Tiyn, Noll* Famfierhire.J2:14.0,6
Iron. Comitnitter t5T-Mli1'er.


des're„ o make morelextendej replies
allow/15/ the bloflk sint me, ano T.
11 say thrt

o your interr_
ke the libefty

tories thank the ro m
f writing

a tank has no 'teivings department.

In answer to question 2 it would seem as though 10 or l*of the capital of the
bank perhaps might be loaned on mortgages, but I am not in favor of a very large
per cent. inasmuch as commercial banks should confine themselves in their business
I will amend the answer somedepartment to comercial paper and quick assets.
what, however, by answering question 3, by saying that I would favor an amendment
to the law specifical%.. authorizing establishing or savings departments in national
banks, in which case I would favor restricting real estate loans to, say, 5tof
the deposits in such savings department only, in which case I would favor keeping
of the savings department accounts separately from the commercial accounts, which
could be easily done by savings ledgers.



s banks and national banks to soerate in
this State the aw
so requires that twice a yeac"atVrtmtiona s
I be made
the •ame office, b
ng howevr, that
sin taneously b co ittees from both banks. I htve been exr0
mi t b. QueGted-tlaibt-woultio fortrirtrThIrT;wftiation in the same
milations which obtains
,xa,stri9tions as to
of ice, alt ,•gh pe sona
me to say, however, that
e I c, ot see any danger therein.
expensive hardship to require
aities like our own it would be
11 co_
e ours here to oper--te In serr
f any legislation was recomit would mean4r1ITT e2Pr"*"Tgirgivirega7171/737iTliltriflt
meriaed it might be along the lime of authorizing a- sings department in national
banks, which licul(1 then ,ermIt a national and savings bank to consolidate under a
n-tional ch. rter, and continue the savings department under said charter lawfu:ly.
Unless some such provision as that is made it mi.-ht mean in some instances that
the savings bank might have to either m out of business or content itself with inadequate facilities and srfeguards.
It s ems to me t,ht it might be allawabln
bank ch- ter faelit es to the eXtInt of
trusee, o guarcWirft, or other fi uc
fact thit Plis last ecrndation would i
n see no ossibob
trust c(anies, bu I
tlemeat an pe
money of estates in
equirped, and thereby materin

lso to even further extend national
tinc,..he national b,ank 'to nct_ms

ar, clracity. IlttYpretintle /
ntely'receive orpoi t0kn of
. ,
ction kto,.,a -national bn
sot of work for which it is adm/ i


the imT
re doing business in a
al corrnuu.itr you would - procia
I you
finpecia institutio s bear to th pro e ity c>f he
ceythi h the o
tiekher „:14:tte
ot 40 in a nrger'commun „
a si
stitut' n


I les
am r


dy o expre

self furtl

In the ma


er should you care to corres......
A. Cass, OashifIr /



D ouVie

Feene, 240 IT.ampshir,e.

011 111Keene raticntl B-

u 4

aatat...1.2., •1911.

d out, your circular of the 9th inctive

We return herewith f*
to the savings dope
The write
ence to o

lents of nationl banks.

•ould like to explain the view

ould not in any wiq conic'

pays but 2' per an
ject to with

ve that this dep
;;pent in a national

savings department.

blisiness in different co

avings instit

loaluag_lo.P.- Irter intrirbriertit'

with mutual savi




•anks doing a legitimnte

here, for instance.

In our

on savings d

cwal when the y

the board here, in refer-

This bank

and they are demand obligations, sub-

is presented.

We have in this town, two good

tet-gemITrtetett:i. 111, ,e-ToeT.le are

. With deposits payable on demand, it would he very

risky, in our opinion, for a national bank to allow any portion of these deposits
to be tied up in real estate loans, which are not even a moderftely quick asset.
:11,:uk..../orrfir?Wg gt(ytit 3410r aCCourft6 triftb .
6r:i1WFi rattWAggiit
.,;'160.00 a deposit.

T etiree4PWItrrnat'5

•. 1.
'"' tvshi erg




1:)04%A>le 14454
First National Bank, Croton-o:
14the-ITudson, 7f* ..farIS






0 mak
tions of

on wtd
not q
9th, answers to
we enclose, and that is

The law in regard to real estate mortgages as security for loans by
national banks should certainly be changed.
It is somewhat immaterial to
the national banks of the country - speaking from my awn observ
ation, whether or not they be allowed to invest in real estate mortgages,
thrt is
whether they be allowed to make permanent loans on the security
of real
estate itself, giving no thought whatever to the person awning
the real estate.
The country banks, howevor, are very much hampered in their busine
by the law forbidding them to take real estate mort-ages as collat
eral security for temporary loans.
oan on his note, and is perfectly wil
o give,
as additional security, a II. tgage on a piece of
e owns himself or
a mort7age which he may have
It may be that his note
is perfectly good, and the bo •
ors or discount committee, of the
bank would unquestion:.
s count the not
t security, but is it not better to take al ,„Ailesecurity which may be offered,
le may arise between
the ti
e making of the note nd the time the note fa




ere is still another ca
n which the law works more hardship, a
is t
g a tempora
and beim: nable o u will
ing o ob
s note,
bein perfect
MOr :ake as ad itional
In t
case t
di ecto
are f ced i
a choi e be
on loaning the
ey on the an'
e or
e loan
erhaps, thus o
P a deposit°
y were allowed'
to ake the security, there woul
e no question a out their making the loan.
We, therefore, very strongly urge that, whatever be done about the law
anowinf! national banks to invest in real estate mortgages, the law should
amended to allow them to take real estate mortgages as collateral
security for
temporary loans.

(Leslie R. Palmer,


National State Bank of Tro


Troy, 74ow York3 Fi904444;


We are strongly against any amendme-A to the law allowing
national banks
to invest any of their deposits in real estate morti.ages as we
do not
consider mortgages a proper investment f r strictly colimercial
nor within the spirit or intent of the 'ations1/1 ank*t
Assets should
be as "liquid" as liabilities.


We are opposed to any amendment specifically authorizing
establishment of
savings departments or allowing any investments in real
estate mortrages
and also to the segregation of such deposits and restri
ction of their investment.

Supplementary to the specific answers to the ouestions in ;$6r
circular of
Cctob r 9, 1911, ,ve have to say: The first questions are ii,leg
ard to "Savings'
doposib . The 7e-: York rtate law at rresent will not all(90 us to
use the word
"Saving '; we never have used :t and do not desire to./ We
hove now, and we
have had •ver since this bank was established in 1852 s a
rtate bank, a "Special
Deposit on nterest" department in which we issue
s books.
These deposits can
only be dra
when the pass book is presented wi
the check or order.
r'ar regulati -ms so not (squire or provide for notice oS, ithdrawals.
We also issue Certiricates of Depo 't bearing interest, payable A surrender
of the certificate when
properly endorsed.
All our deposits
payable stric
on demand, without notice, whether on
certificate or on pass
e do ot pay interest on daily balances except on
local municipal accounts
d a few
her accounts to which special reasons apply.
Cur "Special Deposit" de
nt is used largely by customers who have funds
for which they have no immediF
use and on which we would not pay interest if left
on their business account.
ve depositors in our "Srecial Deposit on Interest"
department who have dealth ith us 'hrough three generations, and
we have always
found these "Special repo its on Int( st" the most stable in every
We are orTosed to ny amendments to t
law specifically authorizing the establishment of Savings
artnents in national
The old State banks had this
"Special Deposit c Interest" department long
fore the national bank act existed
and we have cont
ed it after our conversion to
national bank under the 7ntional
Bank Act.
We woul
ot favor segregation of these deposits no
restriction of their investment.
e find the general public thoroughly posted on
e law governing national
banks, a
that the published reports are understood and crit
'ly scrutinized.
do not believe in guuranteed deposits nor preferred deposits
d do not think
ther should be any radical changes In th present law under which
al tanks are
no universally safe and prosperous.
''here will always be a few minor e options
ui er any law.

Henry Colvin,
'- 64shiery






4911e Bank



New York


Octt_11, 1911.


, --tillitt we are not
1 1r,
In favor of the establishment of savings departments in national banks
for the reason that they are not needed in the cities, nnd in the country
the money might be invested ill advisedly, so that we think it is much
better not to alter the regulations of the 7ationtil Banking Act
Olney, )


/ice fresident

It will be interostinF
follow this idea.


ee if


in the

First NationP1 Bank), New York, New Yerk:I

• your circular letter of the 9th,instnt, th)s ba
,ce w mike o rep
i your v ious
ce ves /0( ngs pd4co its,



ns in rala

on to t



Replyiag to your inquiry :o. 2, we would favor an amendment to the
law allowing national banks to invest in real estate mortgages only as a
means to an end, namely, the adoption of a new comprehensive balking and
currency law, and in that case would limit the investment to 10)of deposits.
Replying to your in Juiries 7os. 3, It and 5, ther3 woul3 seem to us
to be no occasion to amend the law specifically authorizing the establishment of savings deptrtments in national banks.

The establishment of such

dewrtments which has already been made in various places is designed, we
understand, to meet the competition of trust comranies rathg.:r than thtt of
savings banks.

Jleapactfully a
C. D. Backus,




1677 7




_ -)
-National City Bank of New York, 7ew Xerl -7 U


reply seriatim to the


tions aske


tter of the

avingi dep.-its?

ou :vOr an arn4nont to the Lw allowi nationa eet n' to inc tam n percen Fro of their deposits i real estate
hat per cent
s o the iyper6f71
4he NstirInal City Bank, We do not
. a'Possibly for the sake of banks in some of the c'tates,
where the community is almost altogether a farming or agricultural one, it
might be desirable to permit banks to lend their depositors or customers upon
their notes, secured by mortgages on their farms.
We are inclined to believe if this were permitted, the tot.1 amount so
loaned should bear L-ome relation (we are not prepared to state exactly what)
to the amount of the bank's time deposits.
We are unable to bring ourselves
to believe that deposits withdrawable strictly upon demand should be loaned
on the security of real estate mortgages.
Would you favor an amendment to the law specificalloutrhorizinr the
tablishment of sfl,rings departments in nationa
- Ilas?
Under rigis restrictions in regard
the investment of the
funds deposi
in such departments, - yes.

If so


Wouli you favor
strictinr re
state loans to a percentage
. of the deposits in
Answer. Not nocessari
• the deposits of the savings department,
but we are of the opinio
t th
hould bear some proper relEition to the
posits cf the
total of all the time
7f so, what p
re not prepared to say.
Ane*;;er. W
ou favor the segregation of savings deposit
d the restrieti
of their investment as provided by the mutual sai
ban'{ laws
certain Stptes?


Arthr Ksvanaw.h,


Cnemical :Tational,
Oank, New York City ...1


Octo1442-14, 19/1.--'

itagimiturn U;iiitagiiamaimeolomegl trtre'rrtivrbekiertb,. 511, we have
answ red the questions provided for therein, as requested.
rring to
Quest I
s a certain percentage of their deposits in real estate mortj espeasksbeaffeterrr- ,
-wrierrri"trInttlr—Pletree-enwiter flIy, we ber-to soy tbat
we appreciate that national banks located in small towns and villages
and in
rural communities would be benefitted if they were permitted to invest
a certain percentage of their deposits in real estate mortgages, but, as
flexibility and a liquid condition are the strongest features of any bank
deposits from the public, payable on demand, we believe that the genera
l principle that a bank should not loan on real estate mortr-ages is a sound
r_nd correct one, the country over.
We can also appreciate that ban'xs located as above-mentioned
would favor
an amendment to the law authorizing the establishment of savings departments
in national banks, but it would be necessary that the books should be
distinct and separate but if savings departments were established,
it would
be well to restrict the
rcentage of such deposits invested ir real estate
loans to not more than 2
r f the total amount of the savings department's


L6-146144,--apiewered-tfr, -in thr. nerattve on yrur
ba.44we can appreciate that certain benefits would accrue to the banks
and likewise to the community in certain sections of the county, if such
were passed.
On general nrincirles, howevr, we are opposed to the passag
of these amendments.


B. Lartindale,



1 671 7
First raticnal Bank, Eantua, Ohio.



rthor in reply to your inquirie,*(will
moni s are handled


same as


sy that our

other mone.



same clerks and is in same drawer.

I am not so familiar w:th conditions in the cities, but in
country places it is almost absolutely necessary that natio
nal banks
be allowed to loan to sone extent on real estate.

It is the best

security we can get and if we should need tc disrose of
some of our
raper, nothing would be cashed quicker by city banks than
good real
estate paper.

The fact that we could not legally take on real estLte

secured paper has caused us most of our losses.
bunk4.1aoated-rn a farming countr; and is owned

almost entirely by farmers.

There are but to besides myself employed.

Our conditiar.4-e'rer IMT- alfferent than in many otEor

Am not

frana:-.1-Lar-:aitaa.--trite--- fnut--irmi"""1"MM so "rirTrcrt--a-novire,r_...r
-bur directors have talked the matter of real estate loans
over carefully
and are unanimously of the opinion that they should be


sibly they t:hould be restricted to towns of less than
25,000 or some thing
like that.


"Aai tkla _QIULIADt es chtl-ter runs out in a year or two
eking a State
charter on account of the real ostat*..1o442
, .
; ure of the national Bank


The national bank system Weld be made so goo

,mapt the needs

of the people so closel,vtlaat it would be preferred tc
.the State s:yst
of various kinds the we now have.
We aiiriv,itte the efforts that have been made under
your sdminIstration to imeove the bankiLg oonditiors mr the ccuntr7
snd trust that you
cail olirjapoiretrt- the imrrrremerts thnt 71 think amAlg
Ve in cort
Yioup4i-ros+aetf.uplly Ira E. Hine, ashier,



( ;Ore


Medina County Nat7c3 Bank, Medina, Ohio:. "S


In connection with the enclosed statement as to our vi
to sav

deposits and the legal ricrht of national

estate mor

o the other laf

losns made by national bank
places in Chio, are made on
borrowing the money, t.
dems.nd for same'


to take real

es under the law, I feel it nee: ;ary to make one or two

statements in addi

are fulfille

in regard

nation enclosed.


2, and I understand some few other

the agreenent with the person

they shell have .7,4- 5tKir to get the money after

been made, providing the obligati

the mortgage

This method does not tie up asets for a ion,

ime any

ordinary notes of a years time would do, and as there Is a

ion for renewal of the notes, paper can be kept clean and fresh and
fre- 1
ue_ntly endorsed notes cleanA. up or renewed.
17 7
I am not in favor of any amendment to the law specifically authori

the establishment of savings departments in national banks,;ualeee-t-een
beeoererrertrlinn—grial7TrrenCiment w
tically written by the
triae-Cuoiseadei Abn41-na4- by po it c lans in Congress.

The nagarlal..bauke -of the- errantrrirPti 'VT dr5 .-Troffri• of obeying the law, and


, to tbat end inefficient and urwise-lmmw4aikehad not be placed on the statIdes and their enforcameynt-thereir madie..a.azazzary.
:ithout the aid , nn: legislation, or any other laws than those of
good business sense, a lrirge number of national banks hive Instituted savings departments in their institutions, prospered and done well.


It not be just as well to give them the legal right to loan on real estate
and then let them alone?

Hendrickson, ashier.,

1671 7


First Natio

/ Bank, Canal Dover, Ohio7_


y you

I cular letter of the 9th inst. rel tive to mortgv e 1oj4






er the con

ol of t

ect t

of vlAal impor ance to every

11 b


In rlmost every instance, our basis of credit on local loans is real estate,

Y and if we had been permitted to secure a preferred lein on this class of property

in the first instance our percentage of loss would have been reduced

In .

addition to this we have lost a very large amount of savings deposits, and other
profitable business, by not being able to assist the young men of our community
to build homes after they had accumulated half the amount needed, in oursavinge

These young men had nothing but mortgage security at the time to

offer, and naturplly their future business would go to the bank thet took their

In many instances they later developed into merchants and manufactur-

ers and prosperous farmers and th.t little mortgage on their first investment
brings to the bank that assumed it their valued business of later successes.
state and group conventi ns I ha
dreds 0 national be

om the smaller cities and

d not welcome a law permitti

this subje0.4,1th hun..
yet to find one
roper restrict-


hope that the movement inOigur-ted by y
frverabl‘/legislation Ovthe sLl

r deparnt wil


cilifte Commercial r:

ional Bank, Youngstown, Oh1.0



I would like to urge as strongly as possibl ) this amendment to the national
bank 11./s, authorizinf us to some extent to loan on mortgage.

In the eiti of

Youngstown it is absolutely necessary for us to make some mortgage loans to hold
our position in securing our share of business, but owing to the fact that it is
generally known that national banks carinot under any circamstances make mortf7.age
lonns a large percentage of our peoples bank accounts, both savings and checking,
go to the $avings

anks and 7
frust Gomranies, where otherwise the national banks

woald receive their fair percentage.

In othor)word4, if:a depoOtor


/his 1s checYinr accrunt and 411i3 savinas aac,
:mit and heAnts Wborrow on-

mort age /and,(we cannnt sccemmodateAim, he will certainly go elsewhere wi441- hi


Double Lad



"11 E471/A/
First Nati

al Bank, Viilliamsburg, Ohio


2,1;.1 Twenty-five per cent.

7:e think this the best thing could be

done for our country banks and would in no way
injure the city
banks for it would force the prIvete and Stat

banks to send to

the city banks the amount we would thus loon
, giving us the advance in rite of interest.


I." sh to thank you for taking uV the Lest


anks, thnt cold be made in, permittin

iement fpi rCionay,
certain per cent.Y

deposits being made oil real estatekhich
make, and as I see it, it will wotk no hard

i the private al!ki State banks will be


the amount we take of their business, thus

for the

rend/to the iity b
us a chanpe to

of -four money nt a better rate and a safer
Auelqiht Nla iNatilk\ yft. f4.421,5st\.sielN
l7- 1 r

ity b

lilt out

1671 7


Double Dad
First 7ati



al Bank, Fostoria, Ohi0 0 4
2 —t

7e have always been in favor of
permitting national banks to make
mortfage loans and it is a handicap to the
country national bank not to
be allowed to do so. Our experience is
panicky times, when banks were going down abort us, even in our own city,
is that the depositors would be
only too glad to accert mortgages In lieu of
their derosits, when they
would refuse tc accept their own city
bonds or other form of security.
Our mortgages have been limited to farm
property and ,
ur only loans on
citzr property are those which have been
taken t
have been very small.

secure previous debts and

671 7
, Securit. NatirnaiirBank of Oklahoma City, Okis9temaa C.2.4LA:45-/4 0
titer-A47 4,1* u)
ita afirAkte..-tqNpst.4-lini;41F4jr_Va--tfU--frAtiAystr


urther -answer- tcfNqtre- 'titlr-2' \
4nt:, lrr-wttI-e-r-±tvlt-l---tltt-rtir•-tere-rerr-_ab,okrl.d_Atary--sorti-i-nr'ttNirks-NaexnalinAn\saidrNalso‘132UP4Avfnx--t*-4cAs,
say that here in Oklahoma well secured short-time real estate mortrages are
fullyas liquid as any other class of assets that we have, with the exception of
grain and cotton loans.
This is
y a cotton country, and 1.4t
rural district's
e Ire ts
ar from err g un 1 fall, onet he lines Wf redi are, in mwfopini n,
til tY.i5t'cott
a eolutel
movere estarts ach fall
I be eve that
•m winte or s. ng unt 1 fall o farmers n mode te amoun s siduld b
ed to be
their arms
well as on such
ttele ns he/ may
believe ths
real est
an will be pti
quick, or qu Jgr, thrn the
can on the chn
n the matter of liquidity of loans, it is my opinion tIlt)t farm loans from
the concerns primrrily in that business, can be obtained as quickly as retlization can be made on any other class of assets outside of the two mentioned above.
The usual farm loan requires from tsp)days to a month to closeA
..14 Copmvord.
The danger in my opinion is overvnluntion of the land by the banker.

juaiectua, 1 671
144 Hi11 sboro :Tatipnal Bank, Hillsborc, Oregetlae



rb1e Lead

-A.,..11 .. 24,-114444- 14, Mr4--44.404/41e+snir'.t*ttti m Yrtrmtilrwillefileilkiel
. .;
1 s
fi r ra
eWitrf4 Ch P nge
of 140-1Wk6440, 0.441ftilkipaikiwwilam6,4411.Lowinpoilatickns1 bPnI:s tc 1ox17m-rmfttAftlretriylr..,
montgLggs,......piaz:1-zafiLla..iamarese- weelf pwre fully than allelee votrtId -s41ow
in llailiarill1"61TVrTTTIrt/Tr77" "t strtweet-414-eux...skiaewit....40...eqwe favor the
loaning of at least sixty per cont of our joint derosits on real estate mortgages ON a land vclutation nc't to exceed forty por cent of the cash value of
said ren1 estate.
L .•
produced gx,,wirr
tiled, tr-acitmeineregr-blrclr-Aeort-e-rercentart of
rtzi,12 ,
1 j:sag„reizefil"...
Ext,_,rt of lionestecd ExemPtion..
"Such homestead shall not exceed 0.,500 in value, .ilgoetxceed one hundred
and sixty acres in extent, if not located in town u terty laid off into blocks
and lot • if located in any such town or cit.y,
it shall not exceed one
block; bu in no instance shall such honest
e reduced to less than twenty
\ acres nor o e lot, regardless of value.
-. 1C93, p. 92, Sec. 3; B. & C. Sec

c-a-ii, flec.


Under the
;gon Exempt'
law, national banks in an agricultural district like ours nr handi
ped in not being allowed to loan on mortgages.
At least fifty nor c
of ollr farms are smell tracts of fifteen to twenty
acre u.nd are beina,, 1 I ed so as to ray the owner a good profit.
You will
note, under tho opif07o
tion, 222, a frmer owning twenty acres of land
which may berth twent
housEind dollars, his personal note would not be
worth t1400151per it is writte an, for the twenty acres is exempt, regardless
of v/1446. The country bank can t loan all it's avt,ilable money on coq.cinl paper in c city of fifteen hu
QtrePe--•titok‘fitsha-lailaabitaato. with two
We are forced to lc:,X to the farmer
for at least
,j per cent of our loans and in an agricultural community like
ours it would e a great benefit to the national banks if they were all,
Ymed to
loan to the small farmer.on mortr.ages, which would be gilt edge loans; it
would also be a profitable line of business to the bank.
tkiczW.LIAILIA...14144mtrmos-immi4a. opened state savings and trustj*.Aks in connection
with their nationa1. PAPQ toc b41Jurs, president of one will be vice-presi4
denC- 71Te 6rh7c., vice-versa, running both national and state savings in
et1 MQ rcow, doinc Pnc8&susa,
"Slitraen 43QUatf.414, ".
-e read the National Bank Law an, understand it to say th(t this is
till it is being done every day.
We do not desire to open a
• Sttte savings in c
n with out national.
We wruld rather carry on our
savings 'epartment as it isIIIII:o"-taf Age, were allowed to loan our joint
on real estate mort, ages.
Being in competition,.
p1 a national bank connected
with a state savings to take care of their mortgages, and the hrndicall
such as
the exemption law referred to, will we be permitted to loan on
mortgages which
would be'tlle safest and best loans perssible in our community.

he c

s 1. reis)
L.L,e;t,Li2„.. _tma .ko- -11221.tior-vid2).--titg. Imre s t*-441-. your
... Yea,Ugar-triaJorgifiti.lioriaiatzalr;kzsp,Aiert.4.



Lumbermens 7ati nal Funk, Tortland, Creget:]

:eferring to your circular letter of Oct. 9th asking us for information
.as per
ur sch dule, we beg to reply as fo lows:
1. Does
r bank receive 4avingc dep sits? .
. . . . Yes.
(a) I
is your sa ings depar ment
operat d as a eparc,
divisiori, with sep rate,19trOks, etc..
(b) I your sa ,
Igs dOpartment o
,a.fl th same roo with the c
ercial d
nent? . .
. Yes.
(c) Are your savings
s su ject to
withd awal by cleck? .
(d) Oir only upon
sentti - of pass bocks? . . .
(e) lr only u
surrender of c tificttes
of d posit? . .1
. Yes.
r regulations provide for n
(f) Jo
of 4ithdrawal .
. Yes.
If so, do you enforce such regulatiols?
. .. To.





ou Ivor "ti amot
c (Ort in pe oentnto of
hat ter ent..

eat o tke)law'al ow
Tosite in r al e



We would not favor a law allowing national banks to invest in real estate
mortgages to any extent, as we regard the investment of fuads in reel estate
mortpages a very dangerous matter for commerciil banks, and allowing any percentage of deposits to be so invested ould lead to many abuses by the banks.
It would also be difficult for the banks to discriminate between its customers
on a percentage basis, whereas at the present time we can refuse all real
estate lorns.
If we were tll wed to make reel estate loans on ti percentage
basis we think it would be very diffiqult to draw the line at a safe proportion of our loans.
.3. 7kluld y'opu for Un rilendmvnt tip th lavAsfcifreAly at4hcrilin
eotablisiment of savings departmeate
national batiks
We would favor an amendment authorizi.lg the establishment of savings departments in national banks, and allowin: t e saving
rtment to loan up to
a greater percentage of deposits t an the ationvl tank
t now allows; but we
would not favor a law that would specify a particular kind of security that
should be purchased by the savings department.
Especially in our Western
country it would proscribe the business of the bank to sach an extent, by
li-iting them to the purchase of certain high grade securities, such as you
have in many of the savings laws of the Eastern States, that it would not be
profitable for national banks to engae in savings business.

We would not favor loans upon real estate In the savrngs departmenterN


ilViistm4nt as"rrov.deAby t

avPis b;I:nk laws of cer
A For reasons stated above, we would not favor the restriction of investments
of savings funds the same as the mutual savings banks of certsin,states.

Double Lead

rational yank of rxford, Oxford, I



44144410 7 44r"
411)447. )

Herewith we are returning to you the-list
oc questfc)s with outlrihwersi
rtideived from you, binder date of the 9th
71e answer question

3 "no" because the law as it now stands, or
vs the

pepartment now interprets it, gives us the
privileges of conductinr a savings

If the amendment suggested

vould come up for discussion and be

passed it would, in all probsbility, carry
with it a demand on us to serregate
such deposits and compel


tc conduct this part of the business alon
g the lines

of :'tate abvings _enks, and invest the mone
y only in securities specified for
such. This would compel us to either
discontinue this department of our busi
ness, or invest a good deal of the depo
sit away from this center.
1 1(3 are decidedly of the opinion that we do not went
any legislation thvt will disturb the
present conditions.

Double Lead
V4/14 10104T/O.d4
Nils German 17stional Bxik, Pittsburgh,
..Q.etrter itt
'67i 7


ake,p et
re in ;nclosing he



ansVer toc:70.


th answers to
r clues io
t‘your/aestiona (,‘,12 wi 10n au a

in our cLinion shculd a

o be



The writer has favored such changes as you sugrest for some time,
and feels that under the circumstances, in this city, where national banks
are paying

on savings deposits, the law should be amended to such nn

extent as would perm t carrying a certain pereentzTe of savings deposits
in real estate loans together with chPnees in legrl reserve re .uirements on
such deposits, which in -ur opinion should be 14j with the same provisions
as state institutions.


1 6717


First iTational Bank,
Arlington, Sd at.h Del!o41,1

.1±±2:11=116-3.siiiimrDouble Lead
r '

•ttl \
SW Ur k!3/1"tistQ0
);145\ 9tql

I will Sty


in my opinion it would be to
the advaLtage of national tt
,n1;& 'n
smiler towns in the
agricultural districts to invest a
of their funds in real estate
It is our experience
that in times of depression
or financial stringency, our
mers bre anxious for this kind
of security, and that this is
first clbss of security that
the bank has been able to
realize on
in times cf trouble.

1491 4
1 .48iiipiialtaktipipriregippor

Ai 1

IL. U-T1 L•


1 67



bt4t1Tist :7ation I Bank, Gallatin, Tennhame6
answerQ,S4bW s 4 and

We dld n

ur ciea‘ilar 1,0)r o,flOct.Ar

9t/1 beca so ofithe fact we have had no,exporience on tile subjbet aboat which
ytt makW inquierz.
We 17ie an olilnion on fy.s sukect, baikl on ge
/t 1 on y an. o .14on and can be of no s+loe/to

f \


Wajci at


, .

al busin988 prin
ur darment,of


in comi6:: to a c6nclusion 011 the s



ffect e



As 4 he me.ority of loans made here are based on real estate values, and
as so few borrowers have bonds or stoc, or other kinds of such securit
ies to
offer as collaterR1, banks look to the value of land owned by the
borrower, and
on this basis the loan is made.

But as real estate loans are some times slow

to realize on, we are of the 'pinion that 33 1/

)715)77n t!.1

inAcplmat)c o

f deposits.


letio6 oft4ctobi‘; 91/i914




ce-2-(47Canadian, i'exase:3

First National Bank

1 6717


Double ead
Loans by national banks on real estate might be al: right in certain
sections of the United States and especially in the larger cities, but as
a general rule I do not believe it would be good policy.

Real estate loans

as a rule will have to be made for a longer time than a bank can conservatively loan for.

It takes too long to realize on real estate loans especial-

ly in times of depression.
Shimld 4ational banks betpermitted ,t) loan a certain pereghtape
tliey xfould soon be loaned up to this liA.t and/ten


e sa0e fix they are mow or worse,
In my opinion real estate has no business in the assets of a bank exCepting where it is necessary to take it in order to secure or collect an
existing debt.

The present laws are liberal enough in this respect.

In savings deposits where withdrawal of same can be limited by notice
a certain percentage may be safely loaned on real estate but, where deposits
are subject to check on demand without notice, real estate has no business
in the assets of such banks.





41 i.rwafetrtr*




1 6717

• .
Merchants :;ational Bank of Richmond, rdchmond, 17rnq ),



--- 1 s.:6‘co-ta
the libert
f enclosing a
hlet, pages
12 of which
will give in
general :my dens as
anges su id bs made in the
rational Ban ng Act
I would resre ,ully invi e th
onsider tion of your
• th
omission •
Le advisabiljt
changing th law so that
there will b
ferant lir.its for the Various classes of loans. \




by Thomrs
ch :icAdam;,,,s-C
„. 11a1
der7-rec:1/tef re 71n-- La 7ankers Associat* , Hot Srri_ s
re Association
Lake, June 22, 1911.

dr s
Vi inia,
6, 191 and

the various provisions of the 7ational 73anking Act were lived up to in
the spi
as well as the letter and if this law, which' has remained practically
unchanged s ce
were so amended that it would better conform to the conditions of t
the failure of a I-ational bank would indeed be a rare occuronce.
Fundametclly, he Tntional Bank Act is soUnd and wise anil the best evidence
of its strength is the wonderfully small percentage of losses which have been inc,
;rred by delositors since'
organization of the system.
I am now sponkinr specific lly of tha'7ctional Banking Act, because its most
i rortnnt provisions serve in a arge measure as the basis for the banking laws
of the various States and also be ruserthe future development of the business of
this country demands that the score -eFf,the operations of 7ational Banks should be
so broadened as to mnke it not only'posrle but most advantageous for the various
State inEtitutionc to ultimately enter the national system.
That the s:-stem in its print shape ds not as yet fulfill all the requirements is best indicated by ths fact that there'rro over twice as many State as
National banking institutiont in operation today, ad although a great many new
7rtional Banks are organi;ed every year and a large umber of State banks are being converted into 7ati0nf
n1 institutions, new State b ks are being chrrtered in
such numbers that ther is every rerson to believe 'they ' 1 continue to largely
outnumber 7stiona1 b
,s until the National Bunking Act is o amended that State
institutions can co uct their business profitably under it provisions.
Let us hurriedly consider then a few changes in there is
the adoption of
which at this time would aprtrent1:- prove benefic. al.
So much i being said and
written about the reform of our currency system, the need for which is tniveranlly admitted, that it is quite unnecessary to &sell here upon the dote)
ls of this
most important of all the needed changes in the rstiontl Banking Act.
We should
observe in passing, however, that whether or not the PldrIch plan is ado ed, desirable amendments along other lines should be given careful tonsideratio at

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102