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F.D. 12A.3

6

067.0

No

Federal Reserve Bank

71oiva

District No. 2
Correspondence Files Division

PA Pefa S

SUBJECT
N.




STATE"

Corr. ryisS to

lau

ro
1913

EU I S
I

19ILI

'BAK)44. I N3




6{:Z",6-C-0/-Ci.

eh'
4-2,7>cf

-A..

ADDRESS ALL OFFICIAL COMMUNICATIONS TO THE SUPERINTENDENT.

r/o,*0./._APeuiP4-ik
BRANCH OFFICE OF

Iud

CG7e, ceA~,
Supepiramdent

MAR 7-

52 BROADWAY

191146"6-4(
March 6, 1911.

Mr. Benjamin Strong, Jr.,
47 Wall Street,
New York City.
Dear Sir:-

I attended a hearing on Senator Grady's

bill providing for the deduction from aggregate deposits,
before calculating the amount of reserve, such deposits as
are secured by bonds of the City of New York.

As a result

of the hearing the Committee declined to report the bill.

It it my purpose to endeavor to watch a
number of bills which have been suggested, and which in my
opinion are inimical to the maintenance of sound banking.

Any suggestions which you may be able to
furnish me will be very keenly appreciated.
Faithfully yours,

Sup

OHC/LFC.




intendent.01000*




IT

Earoh 1, 1911.

Hon. John A. Dili, Governor,

St7n of Ne York,

Albany, New York.

joarSir:

,

I am taking the liberty of 4. ingwith this copy of letter
which I have written today to Er.
-../no* Superinteldent of Banks, which
I think fully explains atself.
._....

,

That portion of the proposeeI
lationwhich really should be
considered as a whale, whioh refers'
ically to the soaarinc of
deposits of funds of the 03. 4.1;:. New., rk,will doubtless be considered

:' ,othe proposed amendments to the Banking
los, in relation to investpent,of' tal and the lmatal money reserve'
affect institutions throm?teut: ; state. You will doubtless recall
that the cmistinc lawto rosary-es was enacted after most careful
carefully by Enyor Gaynor.

consideration by a comm ttpe of
who cave t-et matter fn11. study-

their report, a conservative,

nkers, appointed by Governor HuChes,

consideration, and as a result of

satisfactory amendment to the Banking
Law was scoured. Aside from the umwisdom of frequent chaness in the
Banking low, the preposed legislation has many serious objections whioh
0

I would be very clad indeed to elaborate further if you would be interested in having me do so. I have no hesitation, howeverp in stating that
I believe many conservative bankers in this City, who are thorouchly

familiar -with the qtrstions which are considered by the bills referred
to, would be apnosed to the enactment of such laws, and would believe it
to be a. serious step backwards.
I am,

Trusting that this matter will have your earnest consideration,
Respectfully yours,

Eno-







STATEOFNEM/YORK

EXECUTIVE CHAMBER
ALBANY

March 2, 1911.

Mr. Benjamin Stung, Jr.,
Bankers Trust Company,
7 Wall et.,
New York City.
Dear Sir:

Governor Dix directs me to acknowledge
the receipt of your letter of the 1st instant and

to say that should the bills which you mention
come before him, oareful consideration will be
given to the statements you make.
Very truly yours,

Secretary to the Governor




f',41.;;"f

'
/

7-25-13-5000 (9-7689)

411"..J

ADDRESS ALL COMMUNICATIONS TO THE COMMISSION TO REVISE THE BANKING LAW

COMMISSIONERS:

tt3E11V,E,

A. BARTON HEPBURN
CHARLES L. BERNHEIMER
LOUIS GOLDSTEIN

JOHN H. GREGORY
FRANK E. HOWE
JOSEPH FRENCH JOHNSON
HERBERT H. LEHMAN
RANDALL J. LE BOEUF
ELLIOTT C. McDOUGAL
E. P. MAYNARD
CHARLES A. MILLER
HENRY MORGENTHAU
FRANK M. PATTERSON
JOHN HARSEN RHOADES
LEOPOLD STERN
COUNSEL TO THE COMMISSION:
GEORGE W. MORGAN
JOHN DE WITT WARNER

AUG 2 2 1913
REFERRED i.e

OFFICE

STATE OF NEW YORK

COMMISSION TO REVISE THE BANKING LAW
ALBANY

DEAR SIR:

The Commission recently appointed by Hon. Geo. C. Van Tuyl, Jr., Superintendent
of Banks of the State of New York, to revise the Banking Law of the State of New York
is desirous of receiving suggestions both from students of banking questions and from those
who are practically interested in the operation of the Banking Law with reference to various
phases of its work, and for the purpose of obtaining such suggestions a number of blank
pages and addressed envelope are herewith inclosed.

The Commission will be pleased to have you call its attention to any ambiguities,
defects or errors in the present Banking Law. It will also be pleased to receive suggestions
with reference to changes in existing provisions relating to such important matters as the
amount and character of the reserve to be carried against deposits; limitations upon loans

and investments, with special reference to loans to executive officers and to directors;
dummy loans; second mortgage loans; loans secured by real estate generally; and the liquida-

tion of failed institutions. In various investigations it has been demonstrated that the
failures were the result of loans to officers and directors, or to corporations controlled by
them, and the successful liquidation of failed institutions has in some cases been rendered
almost impossible on account of the large proportion of real estate owned, or of loans
secured by real estate, consisting in some cases of second or third mortgages.

The question of the desirability of attempting to separate interest bearing deposits
in institutions other than savings banks, and compelling the investment of such deposits
in savings bank securities, will also receive the consideration of the Commission.
Some very important bills affecting savings banks were introduced at the last session of
the Legislature, and the Commission will be very glad to receive your views with reference
to the merger of savings banks, the establishment of branches and the necessity of creating

a contingent or guarantee fund in order to insure depositors against loss; also provision
for cash reserve to be carried in vaults, or compulsory reserve on deposit in banks.

It is generally conceded that restrictive legislation interferes with the legitimate
business of well conducted institutions without effecting its object in the case of institutions
whose officers are unscrupulous and desperate. Such men only stand in fear of the provisions of the Penal Law. The Commission will therefore welcome any recommendations
for the proper amendment of that statute.




N

Q

Two articles of the Banking Law, one relating to Credit Unions and another relating
to Personal Loan Associations, are intended to ameliorate the condition of the indigent
but worthy poor, and protect them from the exactions of the loan sharks, and it is possible
that further legislation along the same lines may be practicable.

The adaptation of our own co-operative savings and loan system or of European
loaning systems to the needs of our rural communities will also receive the attention of
the Commission.

In order to further protect small depositors, suggestions have been made for legislation to bring certain classes of Private Bankers under adequate supervision, and to prevent
so-called real estate companies of a certain class, and other questionable investment companies, from exploiting the investors of the State.

The Commission doubtless will also consider the advisability of recommending provisions to facilitate the issuance of State bank note currency so as to be ready in the event
that Congress in future shall modify the present prohibitory pp per cent tax on State bank
notes.

If you have suggestions to offer upon any of these subjects, or any others pertinent to its
work, the Commission will welcome them. In order that all suggestions relating to the

same subject may be easily assembled for the consideration of the Commission, please
fill in the blank heading at the top of the pages used by you, keeping all suggestions with
reference to a particular subject matter separate, and numbering the pages relating to the
same subject matter consecutively. Additional blank pages will be sent you if desired.
An early reply is solicited.




Yours respectfully,

Ca /

/IN 'Cksr

Acting Secretary to the Commission.

STATE OF NEW YORK

COMMISSION TO REVISE THE BANKING LAW
Chamber of Commerce, 65 Liberty Street
Commissioners

NEW YORK, N. Y.

A. BARTON HEPBURN
CHARLES L. BERNHEIMER

Secretary

LOUIS GOLDSTEIN

JOHN H. GREGORY
FRANK E. HOWE
JOSEPH FRENCH JOHNSON
HERBERT H. LEHMAN
RANDALL J. LE BOEUF
ELLIOTT C. McDOUGAL
E. P. MAYNARD
CHARLES A. MILLER
FRANK M. PATTERSON
JOHN HARSEN RHOADES
LEOPOLD STERN

Chairman
A. BARTON HEPBURN

January 14, 1914.

de
-'Si-v

.1)Eluo,

-

EDWIN F. ROREBECK

Counsel
GEORGE W. MORGAN
JOHN DE WITT WARNER
GEORGE I. SKINNER

°.11'4141
103
jpvt

Mr. Benjamin Strong, Jr.,
President, Bankers Trust Co.,
New York, N. Y.
Dear Sir:

At the request of Hon. A. Barton Hepburn, Chairman of the
Commission to Revise the State Banking Law, I am sending you under
separate cover a copy of proposed ch$knges in the law providing for

State Bank Circulation, which have been tentatively approved and. are
under consideration by the sub-Committee on Banks of the Commission.




Respectfully,

Secretary.

me'

gemOrandvra and ,lnalzpl.IL Ofavgratim,to OM

v

vie ona Bei;ardinfl Ty:c3A

The mole important amendments and

relating to trust c mpanies are the following:
Form:

In the prevent law msny proVisione relating

to tryst companiee aro to be fOund, not in the article dealing with trust companies, but in the article containing general provisions relattve to the Banking Department; and the

converae is also true. The now law reaodies this defect,
while at the enme time oubdividthg and reciasei*Ing many of
the leer sections so an to.z;AMe the tez.t a much more workable
daawnent.

Poyetru These have been enlartIod bjexcressly
includin namj pnwern herotofor oxereteod as beinc implied1;;
granted.

rank 1?ra14149,01 Several of the provisions applic-

able under the present law to Braila; or avins Bank, it not
to Trust Companies, hrm6 been made by the new law applicable

also to Trust Companies;

such Cor instance ao those governing

the time within which real estate mast be sold, the right to

pav out a joint deposit to either or the survivor, the right
to interplead other claimants not parties to ma action to
recover a deposit, the Interest and usury rentrictione,
the annual report of unclaimed dividends and ottlyymits*




1.04415: The new law alters the 1,3'ov1s1one of the




present law restricting individual loans, by lielting atd darning the class to which tho maximum loan nag ho made without security, and by other minor Obtlirerie

The strictness of the preeent law provisiona

agelnet loans to enable a person to pay fOr or hold otack of
the trust company, in somewhat temered by the nom law.

On

the other hand, In addition to the presett law izelvisions prohibitinr and penalising a, director, officer, employee, eLci,
from borrowing without the censent of a majority of the dime-

tors, tha new law directe a similar prohibition and penalty aealtst the trust =many making eunh loon without ouch contrast, arid an absolute prObibitien aoinet maletag' Say loan (In

cities of the lot eines) to any °Moore
Ziagieeeaorj The new law materially
changes, and apparently relaxes, the requirements of the lyre-

sett law as to the maintenance of renervna againet deposits,

It also apparently requires a trust company to ancept as do.
positary An" its reeervea a bank or truot company desienated
by the Superintendent upon application.
ApeOuntiert

The nom Inv provides oomowhat

in detail ,ror caloelation. and entrien of asset values, moon
eartinme, net earnings, and surplue Pend mad dividends,.
retrerts.a.ed Remordat

The new lav requiree in

addition to the quarterly muerte to th '3uportatendent required by the present law, special reporte as attwhen requieted by the auperintendente The direetore, report of lie-

bilitlee must inelvde liabilities to the trust company of
every corporation in whichnny director owns es much as

.13C Of




the outstanding stooks thus materially changing the preeent

law, which specifies any corporation in which any director "in

benefloially interested as a etookholder, creditor or otherwise".

By

the new Iwi records must be preserved until six

years from the d;':te.of the last entry.
(0)Aallestatetm By the AGN 10.71 the Superintemde
ant is required to eeeess any treat oompany for encroeche
ments on reserveo amounting to 1% or more of the aggregate
demand deposits.

(9) Zanii.tvialoyao The provisicns of the
present lare are modified so as to prevent national bnks, as
well as foreign trust oompanies, from exorcising trust oaepanv powers within the state, except that national banKe may

act as fiecal or transfer Agents of the United tats.
(10)ilsknaljLetelatis By the new law trust ease

panies are allowed to hold stook in, ale maintain reserves

with, federal reserve banks to the extant reouirede
In addition to those above specified, the new
lag contains other legs important amendments and innovations,

and numerous awes in wording, form and arrangement.

A'

last mentioned changes, as well as sone provisions relating to

purely procedural matters, regerding notice, publieetion, file
lag, etc., are not referred to, either in this memorandum

or in the attached analysis.
The attached analysis, hewever, indictee the
important changes. Under each paragraph amended is given, at

the left, the section reference to the prevent law, and at the




4.

riOlt tho section rtWeevinoe to the now les* New provisiors

are indie.ted as sash, with election referenees to the now law.
Per convenience there Is also Atvohed a comparative table of
seotien nwnbere ef the present and new laws, so far as conp.

Ouse the article on treat (yeimp=lee.

117 MigalpN (re D.11V1* io2".

tnoorpttration,
(A) Torn of Tlxistc9nce...

Limited try present ler to 51 years;

allowed by now ima. to bo porIetual,
Directors 7 or nom.
(180
100).

(D) 2.101au:A.Ap.&,.. Cortifio4to mar provide manner in
which stock to be transferred and
number of directors nocessary to
constitute a quorum,
(Non - 100).

17/17Ppril.

al To discount and negotiate- vro-

racoon' noten, drafts, 5tUi of

oxahalge and other evidences of
debt; "a147 Qui cell oxchance, coin
bullion; ;lad
rlou--105!
(2! To act ao receiver or committee

of ostato of insolvent or tvIkru,pt;
and

(new - 10).
(3) To aceept drafts; for future pw-

sent, to lexiue letters of credit

authorizing drawing of drafts on it
Lt sidht 3r on tLmo, not =used
one year; mod

NW- 105).

K) To purchase and hold stoak of
f0345)ra1 reserve bad: sufficient to
qualify for romberehip in aaah bank.
:

(N1rm - 1051

(5) /lover of exanininc and innerAx7; titloo to realty in confirmed

to thane now paamosinc it, tat
other trurt companier ar forbiddmo
horeaftor to have or exercise meth
r4y4or

tIt.714maiarj 4moint-




=out.

(106,7,0 - 105,6).

nrs be appointed by soy state or

fs4ere1 court of jurisdirion as

oommittec or traatee or reoeiver in
inaolvoncy or b(nkraptcy or other
promodincs.
(Vow - 100,4).

In ease of dissolution the present

to

law provides taut debts due Zrom
trust company in fiduciary capacity,
"Shall have the preference." The
new len Omer ouch debts "priority

of payment from the assets..
on an equality 'with any other
priority eiven by this chapter."
(290 - 130,0).

V

revisions are taken over fram the
article on banks {3ection 663 and
the article on mavings bank (0oc-

to

tion 140) to the offeot that all

real estate, purchased shall be con-

veyed to company directly by name
and invludiately recorded; and must

be sold ;:ithin rive years unless
its own °fries promisor or unless

time extended by Superintendent of
Banks,

(New - 10)1.

VI. Restrictions,




Individanl
LOMB.

The prevent Ima prohibits generally
a loan to any person, firm, cornor cori,loration, of rem than
p

(1) ;resent

of the trust ocrIcxq's cc:4ta-1
and surplun. It thou divides, cities
into lnrip cities of 1,00'),000 Lnd
over and small cities of logs Mon
100,100o, and provider for the
ollowinc two exceptions to the
:pc: limit:
10;,

(1) Amount mo loaned outright

msw. reedit 25;, In 'urge cities,
and 411 112 snail °Moo, iS sooured 0.1.1 to the whole, or ar to

the moose over the 10, limit,
by securities worth at least

or

15;:: more them the amount secured.
PI Amount so loaned by way of

discount of papar ray roach 25%

in largo cities mad 40;: in smal

cities. 7ilo total liability of

any person, rim, company or cor-

.Potation to a trust company In limited
to 25% of the latter's capital and ourplus, but there In excepted from thin
limitatien the U. 3., the mtate, and
any country or incorporated otty of the

state.

(Section 27),

(2)




New Law.

The new law makee the follow!Ing ohanges

in the above restriction:
the dividing line between
large and small cities is rained
to 2,000,000 population;

the exception In favor of the
U. S. state, counties and inoorporated ()nine of the state is
broadened to include any city,
town or village" of the state;
other possible creditors are
divided into
foreign state and nations,
municipal and railroad corpor-

ations subject to the state

public service commiseion, and

individuals, partnerships
and associations; and corpor-

ation' and bodies politic other than thonn In class (a).
The total liability of any one of class
(a) is allowed to reaoh 251 and 40;
respectively, without any requirement

as to security. The total liability
Of any one in class (b), honever, is
allowed to reach 25% and 40;
only If either secured as in
raneetively,

exception 'noil under the present law,
or based upon commercial paper of the
kind speoified in exception No.I1 of
the present law.
In computinE such total liability, the
new law provides that there shall be
Inoluded. all loans =de for the bene-

fit of the debtor, and in case the
debtor be an individual, all liabilities of, and loan l made for the benefit of, any partnership or asemiation

of which the individual is a member.
"This subdivision shall not be construed to render unlawful the oontinsiel
holding of any securities heretofore
lawfully acquired".
(New - 190,1).

(B) LOans to ?ax
pwn =3to0X.

(1) &Lunt Law.

The present law provides that a trust
company shall not lend any money or
property to uny person to enable him

to pay or to hold shares of its stook

either subeoribed for or purchased by

(2) 1!v Taw.

The new law inserts the modifying
word "knowingly" before the word
"lond", and adds the qualification
"unless the loan is made upon security
having an ascertained or market value

of at least 15% more than the aunt
of the loan".
(New - 190,6).

(C) Loans to 0ffit7
122.2-0-:AaSOTtIn
?resent Law,

The present law oontains a provision
prohibiting with penalty any offioer,
director, clerk or employee from borrowing from the trust oompany or for a
corporation controlled by him, except
with the consent of a majority of the

board of directors.
(27).

The TIOW law includes the above pro-

vision and adds a new nrovisien prohibiting with penalty the trust oom,-,

5yanv from makInf!, any such loan, ex-

Cent upon such oonditi en; or from
lending under any circumstances to
any officer, where the trust company

iv in a oity of the int class.

24nulty applicable only to a person
"knowingly" violating the provieicm,
(Now - 222., 190,6).

VII.

ACmount 111P;;f




Assets not to be entered in ny

name other than that of trust company,
or under any designation not truly
descriptive.
(Nmm

194).

5ecurities to be entered at actual
oost, and, for calculation of profits
for dividends, at not exoeeding present cost as determined by amortize,

tion.

(New - 194).

(7) Real estate used for business not

-

L-

to br.:1 entored or parried. ozooeQue
coat, Olusept with approval of Superintendent o BanIza.

(tow-194)

VIII.oacria_..

2000sitoi

(A) gramtla112.




not

ere

requirorsante of the present lnw
165 in a boraagh of 1.000,000
or overt

113',Z in a horouch of less than

1,00C ,0001
let,Z

Such roservos meat confliot of U. S.

money, goll or eilvyr certificates,
or banXinc aflfloclation notoo or

bills, to tho following extents
all, In a boraw,h of
1,800,000 or over;

2/3, in a borrow:12 of 1 lani than
1,8°0,0001

504 in a. city of lit or 2nd
class 1

30;40 in A city of 3rd class
or In a. villw7e.
Whore loco than all of each reserves
are re qui rvd to 1)0 so c °set] tutod,

t 0 balnee muot OrinIti3t 017 rione,715

On deposit stbject to cell.
2,98)

The requirenento of Um new law aro
as followes
ip% In a borough of tst
or csvor of *blob lo% must be on
hands

13% In a bormt of OD0 million
Or avor but loss than two nillionas

of whioh S% met be on hands
10% oinewhore; of wbich 4% nuot

bo 03 bnre In cities of lot and ;Ind
ciace, and 3% malt be on hand in

cittoc e 3rd class an villa7oc.
colt of pold, gold bullion, cold
of snob reserves on hand, Da% nmot

coin, U. 3. gold cortifloateo, or U.

notoo, and the remaindcr. nay novoist

of any form of U. si curroncy, other
than redoral resorve notee.
Trust companion bocoming members of

?edema roscrve bk cny maintain
r000rvo on1:4-.,:od vtith styli rocorve

iitzth, portion of total rosortreo

'4,74n1z,

requirod*

(Wm - 197).

17ho nee 14,a7 tak

cvor frirtTh cal,-

tole on loyIncoBms tc14',ct part
of Sect!. on 144 i lowine pagmont of
a joint dopoet to either or lso
vivor.

(Now - 190

The nom Niv tacos over frota the ortiol-o on Savineo itznIto, Soction 145
providinc that in an at
to room,-

or a dopocit, othl claimants may bo
brought into the mtion.
VW.. 199).
XI. 2rna2.

Tho new law tato); over rrom the Irt.n10 on bmilts, tlection 74 rroscrib*
171,7; rates of interest mu% portation
tor t.mury.
(754,.0.. 743.
The nekt 11,AVI tti:i.,:co over fro/ this

lel° on banks, Jot ion 75 all 3,1747;
'-...lerost to 1;0 chortled on de-

r.4,-Ind loans of not loco Van ;',:e,S,C.:r*.
co no:
ar!rood upon.
(5cKti

- X11

for ony dividend porttrod ttoky includo the tollootac tom:
(1) Actual carnings leas acc mod
and totpaid Into:wool; included in
lost prtrYit)113 calouloti on

A6dit1ons ror amortization to
coot of oat:owl:tics boucht below
pars

(a) Pronto rsmt saes;

:Ann received on items
vionsly obarr7od aft rald artounto
allowed by rouporintondont on aonett) previonoly oharrod offs
Acortod ond unpaid interoot up-

Ott oollaterally coonted debts on

which no default of MIMI+ than

one ycar oxisto, and Upon undofaultod corpottat,o oacuriti on and
int *mot boating obl rpti ono.
(rim - M11)*

nvo,,,z,11.2a,wa;Ljte
(A) ,er_eztorit Larf*



The.prosant Lot provit

-7-

plus profits" out of which dividends
can be made, shall be ascertained by
charging to profit and loss and deducting from actual profits:
All expenses of business;
Interest paid or accrued and uneaid on debts awimee

All losses, including debts on
which no interest paid for more
than one year, or on which judgment
unsatisfied for more than two
eears.
(28.)
(b) 1W2Leat




The new law, in providing for the

calculation of "net earnings" for

dividends, chances the above provision as follows:
Requires the elimination from
(1) of expenses and accrued inter-

est deducted at last calculation;

Requires also the deduction of
amounts deducted for amortization

of securities;

Changes in (3) the time in which
MD interest shall have been paid, to
two years, and the period in which
judgment shall have remained unsatisfied, from "more than two years"
to two years.
(New - 202).

Surplus Pune.

Shall be created, and may be created
or increased by contribution, or

transfers from undivided profits or

net earnings shall be used up to 205,
Of oepital, only for payment of losses in excess of undivided profits.
(New- 203)

Crediting Net
2arninRs.

If surplus fund less than 205 of
capital, 10% of net earnings to be
credited to surp/ue tand, ealanoe,
or otherwise, whole, to profit and

loss. Net deficit, if apy, to prof-

it and loss account available for
dividends. While capital and re-

serves not impaired, dividends may
be declared semi-annually or quar-

terly by the directors.
Stockholders

(Now- 204).

Action to enforce liability must be
brought within six years.
(New - 206).

Term does not apply to person hold-

ing stock in bona fide fiduciary

-6-

e




capaciV, not appearing on books as
owner, unless funds no invested in

violation of trust.

Wow - 206).

No action to be brought by credi-

tors to enforce stockholders liabil-

ity In any ease until Judgment and
unsatisfied execution.
(New -

XVIII. Mr (Wag's..

Vhesesies set filled by the directors may be filled by the stockholders at sa annual meeting.

(lN- 209).

Directors shall meet und sleet officers within fifteen days after the
annuca stockholders meeting.
(New - 213).

If not fixed by the oertificate of

incorporation or by-laws, directors
my fix number nesessary for quorum, which Mall be vet lees than 113

or less than 5.

(New - 214).

Nay examine into affairs of eanpuey

in either Aureh or April and in either 'Aptember or October of each

year; instead of only in April and
October.

(Wm

2115)

Report of exesining directors Is required by present law to include

statement of liabilities to the

trust compaey of every corporatida
Ln Whioh any director is "benefiaLally interested ae a stockholder,
creditor or otherwise". The present law substitutes for the words
'Meted "owns stock to the anount of
25'7, of the total outetanding stook".
(23 - 216).
Beeorte.

4narter1y reports to Superine

tent of Banks must be publiahel

in a newspaper witbta thirty days
after filed with Weerintendent of
Banks.

(New - 219)4,

Special reports most be made to
Superintendent when and as required
by him.
(New -.210).

-9azperintendent may extond tuas
for waking report.
(sow G 218).

Unolained dividonds and depoilts
muet be reported and published annually
on or before the 10th of September:

analty, 400 per day,

(Ilew - 219).

xt

AQSOMV1014.01,

Trust ',;Imapany liable to Ouperintendent
rur assessments rode by MIA on acoaunt
of eNcroaehmants on reserves, etc. Znch

assessment Shall be levied, so lone as

an enoroaehmont on total reserves amounts
to 1;1 or aggregate demand deposits, at

the rate of

0% if oncroachtaxat not over 2% of

au& deposits.

Sri; on artj additional encroaohments

in excese or 2; but not over 3%
or such Csposite.
10% on any additional enoroachrents
in excess of ;',4, but ao' ; over 4 of
such deposit°.
WO

12% on saw additional ancroadhmento

Upon failure to pay such asseemsents,
tuperintendeLt nay apoly on az& payment

the interest on securities deposited with
him.

oreservaIlEasi:
aocerlmo

(New =, 30 and 34).

Mist be prosorved until Iz years fran

date of last entry.

(Eew 221).

XXII.

:::rohibition

in't other
The presont law prohibits .foreiEn ooze____fron doing a trust company bus se
within the ABU, except that foreirn
trust company may at as testamentary

(A)

execrator or trustee upon complying With

certain requiremerits, provided that a

reciprocal law exists In the state of
its 1ncor9oration in favor of trust
Opmpanies of this state.
1.86)

(B)

pew T..mr.




The new law extends such prohibition to

corporatiow st2tAtMEalgpeetic traet

companieot with the

e

:.




to foreign trust
sem ezoeption
+companies, and with a further ez°option to allow fedoral roporve

bankn to act co Mos/ ogante of
the United 3tates.
jIeeorve
2g2,1Mrja,

93t rW7.

(41)

(223),

The prosent law requiree reservos
on deposit to be knpt with a bunk Or
trust company in the state approved
by the Nperintendent Of Banke, and

having a oepital of at least 200$000.
or a cepitcl avA surp/us of at least
C200,000.
(B)

116E-WEA

(190).
The now LW nrovideo that tho Onpor-

intondent shall in his discretion

on nomination dosignato such deposit-

ary which :elan be a bank, trust

comany or national banking aesocie.

at ion located in the state and having a cohbinod oqpital and surplue of
t1,000,000. in a boron.* of tee
million two hundred thousand or overt
$750,000. in a borowt of ono

!sillion or over but less than two

ziU ion to hundred thou .4
(a)

5OO,OOO. olsowfwre in state.

t no such corporation, if in a borough
of two million or over, shall be dosignar
ted depositary for any trunt oOmaird
having a combined capital and surplus
greater than its cm, unless the
oombined capital and eurplue of such
depositary exceeds 04200,00(. Banking
corrorations in GIL/cacao Boston or
Philadelphia evu ale° be designated as

depositarieo, if haring capital and surplus
of 0.2,200,000. or more, and if reporting

to, and al/owing oxaminations by Superintend-

ent of Iknks.

Zsadotturo

of

(Now - 30).

Ay the new law corporate rights aro
i:orfeited uniese business is commewed within six months after authorized.
(Nea

485).

acTxola maatos.

qc4iPila.c.,tut

..ection Number




180
181

183
164
185
186
187
108

Correspondence Oectian
r_of -eztepait
Ru

Wholly or Partly
New Sections

140.195

180

181
180
183
180

181
182

186,187,188
187,188

183
184
185
186

197

109,187,190
191,194

188

189
190
191

27, 1065193

190

19%

186

193
194
195
196
197
190
199
200

193

202
203
201
205
206
207
200
209
210
211
212
213

139

106

8,45
27

190

192, 144
185

74
75
28

190
199
200
201
202
203
204

31

196, 2, 713 72

206

17

195
195
195
195
195

42
215
216
217
218
219
220
222

194

186

213
214

2.3

23
41

21, 27, 22
30

222
223
485

27

486
467

199
36

219
220

186

406
486

in




466
489
490
492
193
494
495
496

36
37
37
37

37, 39, 40
37
38




January 17th, 1914
Gentlemen :

You are respectfully requested to consider the enclosed tentative

report and submit

in writing to

E. F. Roreback, Secretary of Committee

to Revise Banking Law, Chamber of Commerce Building, New York City, any

comments thereon not later than January 22nd, 1914, in order that such
comments may be considered by the entire commission.
Yours truly,
SUB-COMMITTEE ON TRUST COMPANIES

January 21, 1914.

E. F. Roreback, Esq., Secretary,
Chamber of Commerce Building,
New York City.

My dear Sir:
Replying to your invitatio

f the 17

rt of the SubCommittee on Trust

the following suggestions in regard

Companies:
Pa-e 2

instant, I respectfully offer

[7-----_:::::71
7th Line from bottom

'ovide

orgaaization certificate in the office tf the S
copy in the offices of the Secretary of 5
language is a little

te

for the filing of one copy of
erintendent of Banks
of the County Clerk.

end one
The

ambiguous as to whether all three originals are to be filed
tended that one copy shall be

Possibly it is gimp

in these three offices.

recorded in the office of the Goun

Ole!

and subsequently filed in the office

of the Secretary of State.
Pa o.e 3

5th Line

Page 5

1231,4AM,
L5rd

d

"025,000." Dollar mar

should be omitted.

On voze qheona rdeepened.
oempllodp Edocoolled.

aa.2-zb-,zzgzatj- ?kw have been intovana to implode thn potior
purehneo bonan nnd nther oblicntione of eorporotiano gler invoetrrnt. Pooribly
The uordn *Ulla of mirth...Ivor tore rennv intended to be "bontlr

but If not, the

vxvdn tonde and (AMP oblIcoMIono of oorporationir ebonla be naded a! find.



it, r, Irrobnalt, act., Searetcry

...,

whore in the lie:ort the opociflo povill. t/orterrrod upon truot eftnrtioo to bay
ons
corpora% bonde mid ob31 cpti. !ho

prohibition In tho sow piracer(47h acanot

V ie i Mite of bilk to ho oironlatod no nonoy to so keocil no to post:Ably be con-

otmed ac includine tho note° of the Fedora Res,ne Banl:o.

T.=1.Q. -

3...2.....1Am

"eke, viordo

artenlmnt to the Baitinc Imo
to broherd Gall loan° on 0

9in vritinco should be onittod.

N*IeLbsgity panned, ?JIM Intended to q:11/..y

#00r), -2, , ooMtaral. stach 3.0:-2/0 flre inreely
- i''

node by mrd of tivOli

(jutr,ine written artcractions

tiolophofts, and I doubt the neooesi 'y of ro-

..00 the rate of Inborn% ,r-rtio".11rr1u as

the rat3 froftzvntly chances

aWjilt 4.

I, 'sic

Utzlar

Catratleaabj tolenhon01

184 Pit is pro:2,0°4A that trust co:1)(211os ohz:11

con:allot the bucin000 of indniitsirtitio-TAY.Bol eetato. Thirie I believe, to be
an anrriee tad Unooend provision.

OorloratiOno of that obasnoter tif1,7 n017 be

orcar.ised =dor osnarate Mat

vad not ho crafted on to

priair174 to sanister
kap 12, -

4

and thoco power°, in my opinion,

ltutionr, that aro orcaniood

boBineee

r000yi

pootte.

IWO hoe 1ontioef4tra fooline atone trtryt oorrytny ofAciale

that it mule be vino to onlareeAhe roujr of :,,Lorouatoo md. of tho Evvrorr
°omit (1:2 ouch pm/ern aro molielined ij t11t\pour4) oo tbct trunt compatioc

nicht be mippointod nilninictraipalts of the

401,1atoo

of Intestat.o Tilthout rocnrd

to the richt° of no:It of line eraditorc..4°0 It nooestart17

tho O

e'o1co of Mos at sOrottort by the rurrecnte, bat the ohmmeter csnd recon't of that
Court %mid Potify oonforrine thin p011ir and it vot1ld. probably be nxorciwd

the public Interoct.
I 0n not quite °uric that the provision° 42plicable to tyab.parnGroehe ono,
t770 owl three of 74)01710T1 136o. Md. Arnibriy

oub---xtrocr?4.-he

oevon

oicht arc co dr=o -;o rialto olocr that the tract corpasieo °re not roquirod to



Ito P. Tioroback, Bog., secretary

Ova bonds Mon orpointod by taw court in fiducivry acpacitico. rAlb.prragraph

6, pat,N1 13, rry amly to all previous 3ect1on:1 of the Act, but tioo Intended,

it shelad no state, it seems to no lt les however, intse that the poser should
root with the Court to require the &Arc Cr? bararl wtvn thn MIcoasitu arises

In/mired condttion f the trnst oonxtrg7 actine, as trantee.

throuch

za.212:

1)7,0/10r to describe these inventmonts as

."+:,r,"13

"oath ao the clourte

--noir-742n

e1tie and not by any rule or deoision of
initc alit (lees not describe a speoifie

.osaracrrph those vilioh clre

the ::owts?

The lcrImaos used

class of isigi.4410 'obi& tne.

to the ovelfic steilinte tnn

eOcurrxtely eidnorilled by reference

ehbrae eln 'Nento me authorized.
ttihe word "it" chonld be ,111N,

1a Llatmtal 9
21,11-41zuclin
surplus axt nrofite is too

isrlonfrients referred to by this

1.

st btell12061 130 thinIt Vint 4C5 of capital,

crearCcititc, t) smear ion any claw of iretitn,

time innrat:r twocured

1 mom wonV entitle The Isetors Tract Oocvez-...71,

dollars a por of one concern, ,,lhich in

for instance, to bey ton milli
fertaka17 too Imola.

The wort? "air should follov the wort"

Ras,

22martonnir

vastiaLM

to 'mars of tract eorponioe

The

specified not in section 100, tht:istLzsii, stand

it,

in eections 104 and 100,

althouds the longtime° refer° to mdbodivteion of "thie section".
11°1-io 20,-,921..a21.1=1.1glal*" The

inge ns

741.

'W0171003 druid bo ,trovision"

111100..auwass I Oa not understaid the tinnninc of the sontmos

to no offset that fUnde row rmin with a trust cazymynpon the no interest
on other aeponits of lihn mount,

Met ctioutt deee it refer to?

The lanuusge

Mem incsnot. POesibln, it °hoed road ,ene ether deponils c,f liko character to



book, "ogee Seeretnry

the orodit of oirtil.n.r notionor

d %giro not to nom prortaion in
rocArd, to the ryarcar of tract am/ponies?

As I recall, the etrttlitOIT prOVioloa

reozereltne the reamer of bortkinc oerporntiono oocuro in mother section of the
Aet.

The motion respecting rierc:ore ohoold be core oarofully vritton thro

pro sent and tibould contain

a oleo" statorrnt in rcrord to the rielt

of onoessolon to oorporate

lisembh

The cremation WA" rcoomtly boon

mintero, yhottlor anost-_,:ed oormlny onceeede

rnlood LIZ) C. recruit oftrust

to oortain claseee of tostrrrntary trues, coil fttethorrloro, atoro try be doe.bt
'Tale of real estate conferred by toe/IL-to:lit-

as to Thother dineretionary 1)==,,,*

Clcove

onoceosor i 1vti truetra (low
not ordinarfly (*lofted to die ttora eontainod in toctprientery truing
ary trusts mad ran to tho

,

trid I have akw.yo been doubtfeii-or-tvo ability of a nerved trer t eorrear to asboon co co/aft:mod upon one of the

erase ouch diecretionory realer

quectiono nnv arise 773,th

1nctitation0 rkelett Itarnoet tha

respect to willso execute:1d p

ITO a

appointing a trent oarnany exrcutor

be rin Ia puobated unbeetroont to a

or trustee or tootricontary

mercer, ana them doubts nicht properly lo elininated by a $laitnble errnerrnt

the cootion in the 19dn
the px.erriaorra of the Stook

p

character of not

ti,in 4rirer of tract eorlorldeee
al/don

1octste.

ocanietiae ma if a ne0P ammo co-ieP:

Rom of

the Batall.ne Lay in marl bo the
civeninconnection rrith norgere tube

the rierjor of tract oontrnloo yore

Prepared, the conflict Of the minting statutes mad bo remelt*, by having the
notioo provielons refer only to tymot ocrpcmy risrcoro end not to other °Woes

of cornorationo

cot

- The offset in the ehonco in the r000rso section is a roderate

rednotion of VOOOM



irerntN roach loco roam" than yoald 7)o involvod by the

eerotnr:

ro Peoraboon,

contabod In the roma ilieorios Mt* 06

atIrtAlas of the Ertl° reserve pm

tOollaild to think that tho notion no dram, moo co der no In

Tlinioe

gitor Aulisr thra veggil, nit Ottriribe
NV
tnotttrtiont) if they doet(loa not to bofxre mix*.
rood i, betmeen Deredtttsc

)

lx.407.49

Itto orivrontooa do

rornfin do dt proem% artd &VOW

otatitto

redora tiodorvo Om, mem
I OM

am %ter

thed5.

efltisiblilliwy ad It tlan to rude
Tikizilotibot on rodorvon of Onto Inotttuto

statorrnt virertgeod

tow rhitad bo trlio %rideable to

time, asolminc thdt tho wino

to brAtto ao them nor 'proposed tor trt1eitevidloo, awl tilris

me

irtodt.111

(

von 4 oopy,

no folloratt 'ffho

...le loot oentmoo

oath

reeervo And ',rig rella ti1 Vidal

Ztasialf4,.. Moans to odg046141116Ino Iwo of notes of tho mamma Timm
Data

rocorveo Itor flitete idestIVtiC

Alm no I ,v1Iew it 1r udo,

von nnalirreblei omesod

:

tinntriarePto rico to diffteratioe.

SP Mao of ftho 1ldra4 Row
bp !waver ringablie Bet,
dip eadrldomble

in

'

103

°ant of ,*0=4 Mad

1O4masronorntO

leo

tuft. Vurthormore, the adore

)vo

Vddorel nesorve notes ac rose

met

non-aiiitor Wan, Mot

tbrouLhout the orttlrr- 01,Sio

111.1.414 btlatiow




fli.oter, of

Onto IntWitittegoc

enidod 17 P0dorn1 Aire,vozy riecludoi.

tirlbor Into miritnirdac *146 &bawl,
maintaincd

perlOan their fonottma dhould

rnillhad tor etaudeetton

vould 041Z0a, lug of no ilontit:b

'omit

orxy verb

t menhor limbo to um
or' ritato 7417 voldit

diffberot eteraotee

rooerroo

csontlenev, if "'ratted to 8orrlp,9
the emelt!?

tbe tncit.1 of

re F.

Seeratar:

aftrObaelte

it IOC been Irineelble vrIth

tirAor of nowt
.-,e1.74141

Iceto to Vie Wm. earxresr wettest of th. riostire lea

I believe,

Ptrotto

Weccasti to the mtlzo4.1 of o

ItothInc no- cv era.° in thie rterer';

ellottIctoil
ip naive el' tho Seporintontlent of

id.to welt ritalelt Prnrrvo

to etionla ettliorbe
ar a (iernitIon

vihleh reeervo onlzytono atle tnee,

email bo otalo4
deftnItIon bo mitt!

eh

the Ala rok.rlaVy enttlefetleno ofirlto elvonetor eanbe

*Dec t tIna t

Dtgrez

91.4111110

24 I malil prefer tbnt
ned

averSztonleatto

tt r$31-12irtit Mak WM:We In streorroatItIre siinboroht-)

tile Miami ,14:tooroo rrzot

It

bet

ttlaD

proviline that etat
of a ototorze
litirotr1colti
Onotloo

arlIono,

s-v7




F;tvroro, ma

tht Iry

WW1

Atto

ate ra

tom*

Suggestions Regarding Tentative Draft of Report of
Sub-Committee on Trust Companies of the Commission
to Revise the Banking Law.

5i of-me-40ff of or''filing
Ciqs)A.1/9

Page 2 - 7th Line from bottom

-

Provides for

tn
,

ling

ganization certificate in the office-of the Secretary of State and-in-the-aftice

of the-County-Clerk. It seems

Clerk should be sufficient witho
language as it now reads ap

pass out

of the hands o

Line

The

the necessity of filing an original.

ently contemplates that all three originals shall

the trust company into the various public offices.
Dollar mark should be omitted.

125,000."

Page 3 - 5th Line
Page 5 - 17th
23rd

the record in the office of the County

to me

-

"

Page 9 - sub-aragraph 9

The word "been" misspelled.
"Complied" misspelled.

- May have been intended

purchase bonds and other obligations of

corporations

to

include the power to

for investment.

Possibly

Fr

the words "bills of exchange" were really intended to be bonds, but if not, the
word$"bonds0r-and other obligations of corporations should be added as I find no

where in the Report the specific power conferred upon trust companies to buy
The prohibition in the sane paragraph

corporate bonds and obligations

against

the issue of bills to be circulated as money is so broad as to possibly be con-

strued as

including the notes of the Federal Reserve Banks.

Pase 10 - 11th Line

- 54.-eeems-ttr-m;The words "in writing" shouli be omitted.

This amendment to the Banking Law, when originally passed, was intended to apply
fAt_

Such loans are nade by wqrd

61-ir,5 AO* L---outtoari to requireaf
theze ii ru1l as eeaMon

to brokers' call loans on Stock Exchange collateral.

A

of mouth a__-ei4 over the telephone, and

written instructions toevidence the rate ofinte eat, particularly as the rate

da46

au. 1.7

frequently changesi-eweer4er,-



A

to

4 'cc at

-2-

Page 11 -

Under Section 185, it is

proposed

that trust companies Shall conduct

the business of insuring title to real estate.

This, I believe,

to be an

?MLA' / 71,61.0
Corporations of that character ehea4d be organized
e ,Le
Jite4f,c)
Allot Arnt Et0,0 14, ww
under separate statutory provisions and notygrafted an to the business of
unwise and unsound provision.

A

9-

41

institution&that ills organized primarily to administer trusts and receive deposits.

Page 12

There has long been a feeling among trust company officials that it

wouii be wise to enlarge the powers of Sit.Surrogattfand of the Supreme (Jourt(if

such powers are exercised by that Court)so that trust companies might be ap-

pointed administrators of the estates of intestates without regard to the rights of
next of kin, creditors, etc.

C4mOtt, Aa)

It necessarily implie

tar

cretion by the Surrogate, but the record of the Court would justify conferring this
power and it woull probably be exercised in the public interest.
I am not quite sure that the provisions applicable to sub-paragraphs
one, two and three of Section 186, and similarly to sub-paragraphs six, seven and

eight are so drawn as to make clear that the trust companies are not required to
give bonds when appointed by the Court in fiduciary capacities. cTh
, Sub-paragraph 6 - Page 13

-

May apply to all previovs Sections of the Act, but

so intended, it should so state, it seams to me.

It is, however, wise that the

power Should rest with the Court to require the giving of bonds when the necessity
arises through an impaired condition of the trust company acting as trustee.

Sub-paragraph 7 - Page 14

-

Is it proper to describe these investments as

"such as the Courts recognize" ?

Are not the investments referred to by this

paragraph those which are fixed by statute and not by any rule or decision of
the Courts?




-3-

- The word "it" should be "if".

Sub-:paragraph 9 - Page 14 - Line 3

Sub-paragraph "B" - Page 16 - I um inclined to think that 40% of capital,

surplus and profits is too great a latitude to confer upon any class of
institutions in Trinking unsecured loans. That would entitle the Bamirers Trust

Company, for instance, to buy ten million dollars of paper of one concern,
Which is certainly too much.

Page 20 - Paragraph 15 - Line 2

-

The word "at" Should follow the word "amount".

Page 22 - Section 189 - The reference is to powers of trIptccmpanies specified

not in section 189, but as I understand it, in section$186, although the language

refers to sub-divisions of "this section".
Page 23 - 8th Line from Botton Page 25 ...Riddle of Pape

The word "proviso" should be "provision".

- I do not understand the meaaing of the sentence to

the effect that funds may remain with a trust company upon the same interest as

other deposits of like amount. What amount does it refer to?

The language NFovinto

ter inexact, te-sev-ibtrer1Hmmrtr Possibly, it should read "as other deposits of

like character to the credit of similar actions".
Page 29 - Following Section 195

- Should there hot be some provision in regard

to the merger of trust companies?

As I recall the statutory provision regarding the

merger of banking corporations occurs in another section of the Act.

The section

respecting mergers should be more carefully written than at present and should

contain specifically a clear statement in regard to the right of succession to
corporate and personal trusts.

question has recently_keen raised as a resuit
czatokr 114,0,4.4t

of mergers as to Whether -*like merged company succeeds4d0 testamentary trusts and
ornet,/

f.;,,Tut 10146-1L,

as to the power of sale of real estate

furthermore, Alf-144awaiuesd,iimir=

The siicessor trustee does not ordinarily, as I
recall, succeed to these discretionary ewers contained in testamentary trusts,
and there has always been doubt in my min in the case of the merger of trust
mampanies as to whether such discretionary powers may not lapse. /some of the
running to the merged company.




h4v

-

provisions of the Stock Corporation Law and. the Barking Law in regard to the

character

keitobte

of notice, publication, etc. to be given in connection with mergers

a, ma-

Pottn:snr.,
.ftiam--the

are conflicting and if the-olaase m-.

merger of trust

#N,

companies were

prepared, the

conflict of the existing

statute5would

be remedied, by having the notice provisions refer only to trust company mergers
and not other classes of corporations.
Section 196

-

The effect

reduction of reserve

in

the change in the reserve section is a moderate

requirements,

much less radical than would be involved

by the adoption of the same reserve plan as
Act.

contained

in the Federal Reserve

On the whole, I am inclined to think that the section as drawn, goes as

far asi.s now safe - and farther, that it would not operate to the disadvantage

of New York

institutions

if they decided

compromise, as I read it, between

not

permitting

to become member banks.

This

the statute to remain as at present,

Zwirvo 7i 6-8
and adopting the Federal Reserve plan, ieviiimmeeso, about as satisfactory as it
can be made.

4.

The last sentence on Page 29 should read as follow:
reserve fund may and at least ten fifteenths must"
Section 196

.

- Seems to contemplate thew() of notes of the Federal Reserve 'Dank

as reserves for state instituionn.

program as

"The whole of each

-

I am unalterably opposed to any such

I believe it is unsound and will

ultimately give rise to

difficulties.

Otatine
It has been impossible with the limit of time to consider quite a number
4

of possible additions to the trust company section of the Banking Law, which woul0e4mb
improve the Act .as-a-whole-very materially.

made if time is permitted.

Suggestions of this character can be

For instance - nothing now appears in the Report in

regard to the method of computing net deposits upon which reserve is calculated.




This should either be specifically authorized by ruling of the Superintendent

of Banks or a definition of net deposits upon

which the-reserve

caloulationSier- 4ra,

Itigoinketibt

6/57-nni

made, should be olneladoe,in the Act, and I would prefer that the

Superintendent's

Old aerervivel

definition be authorized as it will permit more Istituto 14-daaling-s444:4sa-ltat.i.ons-whielt-besente
dd,o

members

et the

Federal

Reserve System.

gtfeALA

be enacted without Puvtloptir
Acknlitill) Veirwr)1
institutions Joe bob& gold bullion and foreign
epo
specified by law to-seams-4er reserveYforpasers:

It is unwise that this legislation should
snacIfift authoxi.tiy-for state

gold coin of

This is the

a standard to be
practice

0;4040;;,

in Europe and in time of gold novomont-would /Welty- facilitate

the-hand-14%-cdt_012-140rIation. Srue4.-.4.44valtAG177441,




Benjamin Strong, Jr.

;

STATE OF NEW YORK

COMMISSION TO REVISE THE BANKING LAW
Chamber of Commerce, 65 Liberty Street
Commissioners

Chairman

NEW YORK, N. Y.

A. BARTON HEPBURN
CHARLES L. BERNHEIMER
LOUIS GOLDSTEIN
JOHN H. GREGORY
FRANK E. HOWE
JOSEPH FRENCH JOHNSON
HERBERT H. LEHMAN
RANDALL J. LE BOEUF
ELLIOTT C. McDOUGAL
E. P. MAYNARD
CHARLES A. MILLER
FRANK M. PATTERSON
JOHN HARSEN RHOADES
LEOPOLD STERN
JERIEMIAi T. 7.L'I.HONEY

A. BARTON HEPBURN

Secretary

January

EDWIN F. ROREBECK

21, 1914.

Counsel
GEORGE W. MORGAN
JOHN DE WITT WARNER
GEORGE I. SKINNER

)1,

JOHN J. POLLEYN

c5tvto
Mr. Benjamin Strong, Jr.,

JAN

REFERRED To
OFFI CE

President, Bankers Trust Co.,

New York, N

2 101!

Y.

Dear Sir:
I wish to acknowledge with thanks your letter of the 21st inst.,

making suggestions for dna

es in the draft of Article 5 of the proposed Bahk-

ing Law.

I have handed ypur letter to the Chairman of the Committee on

Trust Companies and have sent* copy to the Counsel who is revising the rough
draft.




- \Very truly your
(9

f\O--tax--,e,Kr
Secretary.




4,"

e

ADDRESS ALL OFFICIAL COMMUNICATIONS TO THE SUPERINTENDENT.

agtei1:tlArdsly441tipeZtVaar

_O

4

OVititt
ruary 28,1914.

Superintendent.

T)
Mr. Benjamin Strong,Jr.,
President, Bankers Trust Coznpany,
#16/Wall Street,
New York,N.Y.

7:2)

Dear...S.1a.;
'

Your lett

of February

27,1914/with reference to the

kinds of currency to be permitted for

Oe

reserves on hand of

!

State Banks and Trust Companies, is at. hand.

As the question of excludirkNational Bank notes from
that portion of the reserves on hazid not required

gold, gold bullion, gold

certifiOates

to

be kept in

or United States notes

was very fully discussed by the/Commission on several different
occasions, I am of the opinion that it would be fruitless

to

again call this matter to its attention, and I do not feel,

under the circumstances, that
to

forme

it

would be proper for me to attempt

amend the Commission's bill in this respect.
There was a very decided inclination

more conservative members of the Commission to

the reserves on hand should
coin,United States gold

consist

certificates

of gold,

on the part of the
provide that all

gold bullion,gold

or United States notes. It

was believed,howwver, if all the reserves on hand of State insti


Mr.Benjamin Strong,Jr.

#2.

tutions were kept in gold, that there would be a considerable
drain upon other institutions. It was also believed that there

would not be a sufficient supply of small bills of this character
to afford coulter ozrrency for banks and trust companies in manu-

facturing cities where there

are large pay rolls, and that in

order to meet the demands of this character, these institutions
would be compelled to carry reserves on hand largely in excess of

those

reqdred of other

institutions not so

located, or not having

the same kind of demands made upon them.

There seems to be some justification at least for the
latter argument.

It was also believed by the members of the Commission
that the ultimate tendency under the Federal Reserve Act would
be to retire the bond secured currency




Yours very r

Superinte

ADDRESS ALL OFFICIAL COMMUNICATIONS TO THE SUPERINTENDENT.

TI-Vantiht

terpartntrat
March 13,1914

,42/1"1/

Superintendent.

Personal.

Mr. Benimin Strong,
Presidentr Bankers Trust Company,.
16 Wall Street,
New York,N.Y.

My dear Mr. Strong:
I

inclosing for your inforzation a copy of

letter which I have sent to the president of the Trust Companies
Association of the State of New York..

Very respec

(1 Inclosure)




Superintendent of B Ac

t014.

F.

dwin

:Arti

esident,

ew York

tAte

rust Comp Any \soocintion,

New York,'

ky de-tr .r.

I Irmo thouGht it proper to inform you. A Li . rouident of
therust CompAny %soociltion of the 3tAte flif New mrk, of A con.

4P ion thathls Arleen with reference to tlio proposed rcvilon of
the blnking Llw.
You Are of course AwAre or the fact thrit the reserves
whiCA Al t1nl iArlks will be compollel to e,irrv undcr the ?edeTra
. tly redeeed oo thAt in the Li L,oC eu York
e.ervketwivre
sith mnre nolrly
1c
rust COmpAnicz1 .,111 b
NetionAl ol;s An
upon tat; ;Viue plAno AO to reserves, while AtionAl :Anko Arc iven
certain spcciAl privilegee under the ',Pederti. ".oserve Ust.
(Niue the
uring t.4.1e se3c1on(4 of the .i;oirglijaion
lAnlarr, 2,3w it was of course ilored thAt the reserves required
U4 t2 reduction
of :trate Ituakc clhould be reduced to carreonend
:his nore nelrly TIproximAtes
in the reserves of VAtional
(),

tho reservcs required of trust coupAnies. L,Awithotliding this
reduction in their o',4n reserves, tle reprecentAttees of the
but I pon the l omlission Araued nAt the trust compAnico ould



Mr,-dwin

Aerrill

in the revision be compelled to crry tie enme reserves ee
and .Ante ,Janks. The fact that the cneh reserves required of
per centum lees

trust companiee in Vew York City were made two

than the reeerve reclure of banks has been e ,ecielly critici
ks A result, it is believed,of th feeling created by contentions
over theee cauparatively trivial mattere,representatives of the
State j:Jankers' Aesociation the other day opposed the immediate
pas3age of the revision, AlthouRh criticieing no feature of it,

notwithstanding their

Attitude

tatives of the 6tate Banks

and

upon the Caramiesion, the repreeen-

of riany of the

been inclined to resent the attitude of

501110

],ational Boinke have

of the menbere

of the State Legislative Committee Rnd are wagin,e

pni6n to procure the immediate passnge

of

AM

actiee cam-

the bill, in order that

l3tate institutions may immediately be authc,rized to join the Vied-

eraleserve system, at tiley gee fit, And may, in Any event,
obtain so far ns reserves are concerned equal

advantagea wit: the

Nntional Banks.

Inasmuch as te attitude of the A.ate

ankers' Amu

1-

cintion, whether aut,,orized or ot, seis to hAve been the result of the contentions to which I have referred, and the Legiulative ComAittee of the Trust Compeny kssociation appeared in
support of the bill,

thoueent it best to call your attention

Lo the situation, in order that there mirJet be organized throte:h-

out the :Ante an eneretic euppot of the position taken

by the

eeislative Comuittee of the 'rust Compeny AasociAtion, if



Mr.

dwin G. Merrill.

#3

deem such support proper and wi3e.
I am sending a copy of this lettr to the menbers of
the Legislatitge Committee of the Trust Company Associltion.




Very respectfully yours,

3uperintendent.




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