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• L• NELSON ALDRICH SSW EA' r ajzi CLQ,AkA,k, Ckikk frit f"4 4.44AktiAAGLAAt I 4 1 671 7 , 0 )A14-4:11At.1 41114e- Bedding :at ional ic ank, Bedding, Call4eirwila: 7 Mill2a411 " 161111.441 .11"1211111"Wern' 1 Believe that the percentare should be different for different localities to take care of the business of the rrrticl:lrr secti on in which the bank is located. osed find re list of que tions 4 BC40 swe me ked rekOrl ' ; -trri witl.:' a'.ro nf. // I have had conEiderbble experience ns first Lerinten dent of Brliks under the recently enacted Californin Bank Act which permi ts departmental banking, I would say that the plan in practical and actua l operation, is to my m'nd entirely successful ad I can, without resril vation, recommend It for the national system. In fact, I hope that it will be rut into effect. If thore is any on o urs - srecia -t I comman q y 1 4 lowentrvr... d .... 1:6 0,„ A1001r1IT77.7777 * 4.....41.046.orairara00 1 00001 4 " 164 f 1r2 " *- " "‘ 610100.P.0.610.....44,,4 0 1 1141 " " 1 hefty .•' 16717 e Bank of California r. A., San Francisco, Caltgerrls. ,/ 2.4 We would favor an amendment to the national Laws, making it possible , for banks ul- der national surervision to do all kinds of legitimate banking business (commercial, trust and savings) to the end that there might be but one uniform system of banking and that under nntionsl laws. The savings and trust departments could n:ke the real estate loans - the commercial departments should be kept liquid. We get "lock-uTs" without hunting fcr them. ,##*#******************** Strte banks and State Ervings banks and Trust Companies are now competing with national banks for commercial business. National banks now have ;650,000,000 savings deposits. National banks now doing trust and savings business through State institutions - next door or darfii- stairs, by stock ownership tied up in such a way as to make the two banks virtually one - except that only one is under national sup(!rvision i- nntional bank ) laws not fitted to banks outside bf cities of say 50,000 - ideal bank in smalier cities and country one that can do commf.rcial, savings, trust and safe ieposit business, in fnct banks in larger cities'find it necessary to do all these classes of business. We lose our commercial customers when we have to send them to our rivals, ial business tl One. because we cannot do the particular rm&i dim- z customer, when he We lose the nirny years spent\in b st Compa who from that time on die's, as his Will is}found lo at a has his heirs as clients. Departments should be kept separate 7 cash separate r statements should be published showing condition cf all departments and combined totals. The national system would double in a few years if this were done, it should be done, the business is legitimate and we shruld be able to give our clients financial aids of all kinds and chrracter - in t7ne instituti-n under one set of laws instend of having to beat the devil around the sturT and form several \ \, institutions under several laws. -,, t I. B. Anderson,, 14sident) 16717 19 rSitir First National Bank ofAtuburn:: r: East Luburn, Cstmnts.:1 jefr- Ceptmr--1-&rTTrr7 ling to the apclosed circulnr, n t quie f shciithe/reil 90+4 fdrethins t/ 4 on f,tg 0 weiod6lirt su ur, rea od l , / L f il expi4tiorf may Ve of 8(rv1ce. n r / , .hen the iFirst National opened for business we had a savings department, but there was very small demand for commercial loans and a large demand for real estate loans. The savings accounts grew faster than the commercial, two to one. They grew so fast that on account of the big demand for real estate lonns we were forcod to put in an entirely separate bank to handle that branch as nationals were forbidden to loan on real estate. At the pre- sent writing after three ,,ears of business in a clItry bank, our commercial deposits are ,e5,o,-)o and the deposits of the savings bank are .n 163,000. The commercial loans are ,;40,000 as against / 0.60,000/ in the savings bank, all of which are real estate loans, made in accordnnce with the present strict law of tl-As state. Had the liati(-nal law permitted the lorininr of savings deposits on real estate, It would have been unnecessary to have orranized the savings bank and we could have helped our community more. Yoi.1a.' G. W. Brundage, Opshier. cAk\,•\\ 1 671 7 20 • [First National Benk- - 13oulder, Cologria4o3 , 2 ke I 4.... This would allow national banks tc accommodate first a borrower who is their ustoner or otherwise upon a basis of 33 or 5 of a conservative valuation, secondly accommodate your customers or otherwise who seeks an investment by selling the same to him. In troublous times they would be better, in my opinion, than bonds, for the reason that a timid customer would more likely accept a good real estate loan on local property for his derosits than he would a bond. Real-estate molt, ages are in demand her':, while bonds are hard to sell, becEuse of low rate of interest, and running for n long time. The investor can immediately acquaint himself with the security behind a loan, while it is hard to satisfy him on the bond. 170 5, I would keep the savings deposits separate and in other . books, and not be restricted in investments, as are the mutual savings banks of certain states. Y.ake these loans of the greatest use ',o the community where located, and sub:ect only to conditions local/ I think if we keep our money close at home, we do the country more Food than to put it elsewhere, and when conditions are disturbed tc further aggravate the situation by withdrawing the funds, where they have been counted upon for use, and probabl:" where they are most needed. Ches. H. Cheney, Cashier. - .----- i 1 671 7 1 901d ( ',Alit Torrington :Tational Beeick Torrington, Conne444•4-eet_ 3 t ("bobUaa.alaet911. I herewi ml tt :d pleasure in enclosing savings department. sub- 's department was established soon after the orcrnization of the bank over Cla)yeers ago and has proved very satisfactory. It has helped the town in encouraging people to open savings accounts end has made a bank, which otherwise might have had hard work to earn dividends, pay good returns to its stockholders. ;;hkle we have a provision in the deposit book tt the directors mf.y demandZidays notice upon the withdrawal of any sum less than .500./ , and 9 da.:- s notice on any s,m exceeding 500..e0, it has never been _lecessar; to ehforce this conaition, all deposits having been paid upon demand and check or deposit signed by the depositor or payee of depositor's ordr with deposit book attached. 7ith nearly half of the national banks of the country already having established savings departments without any legal objection having been discovered against it, it would seem peculiar to me, at this late dnte, to enact a law authorizing such departments. As it seeraR to me, a national bank with a savings department, required as it is to carry 15 /or more reserve agrinst these savings 4 deposits which can be, in case of panic, put upon time, is much safer than a bank whose entire deposits are subject to check. Lf....1-awit-06e---fri.-ettty -6-0-rmrtc,--47rErrx2 •* Lai:F.4zQ1a -torat an-la-gragard...t o 0ur, aau Lags- dopiertrrnt, r en all—bb' very 41rm4. 4 1 1 me to formar ike,vry get a list of the banks which have snvilgs •epartA,T4 1 'In Mid& and if'ii ask :it 4111,con °tie I-hr lc st me and any e penses attending i I wi be p eased to pay. Hoser Cashii)r, 16717 Doubic Lead ( (Jo 22 dP North Georgia Natio . Bank, Blue Ridge, G;;;;082 : 21 Jilasal.44,...1.913........m.... , Ula /I( t i i Referring to enclosed inquiry and answer thereto beg to say we would favor a law authorizing national banks to loan a certain per centage - say fif / 605 to twAdd of their deposits on real estate security. They should however be restricted to short time loans, making regular commercial loans you might say with real estate liens as ultimate security. If national banks should maintain savings departments they should be separate and should provide for notice of withdrawal and such notice should be enforced. Then they might be allowed to loan the bigger per centage of such deposits on real estate security, but such national banks should not be allowed to loan any part of their regular commercial deposits on real estate security. National banks in our opinioni should be allowed to make a conservative amount / of real estate loans on short time, but they should not enter too much into the savingsi-bank field with the attendant long time real estate loans. Natic,ncl banks should be comrercial banks pure and simple, but should be allowed a little latitude on real estate loans to enable them to take care of the legitimate business of the community that can hardly be handled outside of real estate security. 4,110 k j ta.rirswPaigall.146 / / F. E. Corilez-, --.. C Vice liresident, 1 6717 23 qtad Ayers Nationaltank of .'acsonville, Illinale. il 2 It is of vital i=ortance that xationel banks situated in arricultural districts be rornitted to mrke real estate loans, otherwise thAv tre unable to comrloto with tate /7 3anks and 7' ivatq/Banks in the commurlity. For illustration we will srT trt a customer of a. national bank calls for r loan. 7e is a f-rner 160 acres of f700(' land. , ,:roininc him on one side is an 80-acre farm for srle which he wishes to bur. In order to do so he will hve to borrow the money and srys that it will take about three years f- r him to ray it back. He offers real estate as security, rutting in tile mertcra-() tho 160 acres which he already owns aTy7 acres 1-lo 7:1shes to thoreby securinr the loan by 'AO acres rrfectly satisfactory. it The loan is refused on the rround that it is n yrial 7pnk rnd not permitteC by the r-o7, )rnme:It to mre real estate loans. . The customer is F-.1rrrised, indiunant. o 7oes to a rtrte or Private !ink and is immeC.irtely accomodated, te national bank losinr a very desiraj19 customer. 1 671 /, (First :ationnl '-'nak of -amil on, Hamilton, Il1ineks.:1 224 k 7'ov- of October 9th, stating Eerewith I am pleased to return your circu .1owing inL nal banks to invest a part 1 our opinion of the proposition of : In my opinion federal superin farm mortga7e securities. their funds vision of national bz.nk investments should eal primril:- with ..tate---things: First - and always, the safety of the certainty of its final payment. Second - 444)111 m_afp-V"itt: which e i vostnent, and by that I mean rraperly ivided into tno heads: 4721ke ) of •aturity. ) Convert •ility. '1,/ It can safely be taken for granted that no reasonable person will quesA tion the final security of a farm -ortFage conservatively taken, and no other one thing would add more to the conv(Irtibility of this particular security than their cddssion to the ote file of nationtl banks. For may years it hrs been the established policy of the government to encourage and support anricu:ture 7 the farmer 7 and to my way of thinking, nothing would do the debt burdened farmer more rood than a federal law, or a rulilg of ;:our department, tiLEt would give the dignity and prestige to his frm mort ages that the real intrinsic value of his farm mortgage merits, and no other one thing would more strengthen the position of the rurrl national banks. v2.EZ-Ixu.1401 I . ZIrs 4.4 R. R. Wallace t,i .(:( (- &shier, 1 6 71 7 1.4a13'4 \e !First :at Ban 2,5 of Kankakee, Kankakee, .P 'In rich agricultural localities like our own, real estate mortgages are - the safest security available. State banks make such loans, result, loan up close at all times on gilt-edge home paper, at good interest rate, while national banks when money is plentiful, must hunt for commercial taper from all / 1 part:i of the country, at low rate of interest or funds ram-in idle. If any question exists in your mind on this point, note incraase in new , state banks in Illinois as compared to national banks. , A cnreful invectiu- tion throughout :111nolF, by your office will sub.ttntir,te el.nry work of thiL letter. ywirs jmery—trirratet_ _ ,..,-...,..... ,,.........„ • ,, C. 7,. Taller, 1 ()!6ash1er ) 7ALIIIA> ZeA4..ott.,,,..„.t.2) 167 7 Bank, Des roines, Iowa ., 1:41r.arall.Qx, 3r tter of November 3rd receive• which is the first letter of Y. r the nd th,t hns tome to my notice, rf. I am pleased indeed t• nswer. To you question 7o. 1 -- Does y r bank receive savings er.sits A ., hay hrd to nswer no, ns we do not „ve any ti 7111, or savings eposits I have c nnged .he wo d following' th nature i our nationnl bnnk a partment" to "brnr, and hay /lowered tbii lance of t questiin 'alo "d our nn nal se lines, as we hr e a savi • s bank in the arn room wi ondence iff'the neighborho sar k and yo will fin corr of two lines, inAcct, e advised t dvise• you along 6 th • as • whe her would be ble to do / Our no 1,1 onal bank us and rofit )0,000, and SU cr-Itni!'of over ,000. Thi is lied Arlie Iowa ational B 3, , savin We hpve 7avint. 7rnk, an• • have a cqp tn1 of ba' which is calle• he De 0,000, w th near .10'3,00• • rplus and ofits nt bank. These • n the same' 0Om, o b are locat on one side; f the , . hope and o.e on Le other s* e o the room, kept entirely; eparate with sentra o7155, and ar accou 'ng to you rtment for the Tows -ad to the St e author • es her ti:onal Bank kur Savings an . I hav always give our ban exIfilners the vil 'd requested ti to nrIke ons they wised of the savi the time they /ere lookank Any exand throu ur nationa1trban, and they w,:15 felt free to ake any , uirie or any person4 investirrtion ..es amd they ht e tried at all t Aes t• get the State Oepnrtment to w k here at the)pame time% th them, an $ ccee od so o of the time in raking arrangement ofhis kind I have eon in the banking bus ess in Iowa for th ,ty year have paesed rough two nica, have had Brie d experience with ti , 1 depot&ts, losing a ry small am 1 of time deposi under panic conditions. .‘ Ey experience wi .,mor gages as been fine a ays, and especially dur:ng AR two panics, fi people who nted to inv at those times in first mort-4.es on farms, nl ci • rscroult"Intr"TrIT • • 1 Yr. . 1drich in his latest addition, in the way of suggestions to the.ii one. tary lPommittee, under date of October 14, 1911, has advised that national -banks be allowed. a savings department, in which they shall keep a reserve of 4d:)of that required of demand deposits in the same locality, and that they shall be allowed to loan 400off,heir savings deposits upon productive real estate, the loans not to exceed 50C;Of the actual value of the property. I thin:: these are two excellent suggestions and will aid the business interests of the United States materially, and is n very safe feature, but my experience would warrant me in increasing the per cent. of savings deposits allowed to be loaned on real estate to GO or 71„:4 because First, the savinr-s deposits are very seldom and almost never called upon, the averr.ge deposits for the year running along in the usual way: Cecond, 300of cash and short time notes would be ample to cover any shrinl are which it seems to me could possibaz occur: Third, if my experience of411112rt/ years is of value, farm loan paper in , times of trouble one is able to realize on better even than short time demand paper held by the commercial department .of our banks. I very much hope the suggestions of Lr. Aldrich on real estate loans, the savings department in national banks, the reserve requirement, and the thirty days notice privilege on time and savi s deTosita Ng' be adopted s the' woull I be of *trent help. 4 vieB4 1C) C" First :Tationnl Dank, 16717 aterloo, Iowr eijeC13 1 4144 47.4144 " " " " "......° 1 have ours of the . an8we,113 ,..rr.QP r turnin - in Ttintr-ciretettnror I did. •not- me questions and 9th inst. for e reason that I did .te no £'rot st. -1. e "...Nee. •- - s governing rrvings It would not be rn:7 iden to ser-ref-rte more then Pkftr percent of the deposits rnd invest t' em in real estate mortgages. In other - 7ords I would t ink that'4t per cent should be a suf. 1 If ficient amount to invest in this way, rind - lie balance invested \in short time commercial paper. .1,.411. 16Ct0 •Eighrney2._ ) . .r or; IftelrOwetr r 1 671 7 . .0-j ). 0 . First National Bank, Dy reville, Iowc.aett ( Answering question 2 more fully, will say: Dye; more d o.its than -IKny -,thto town of / as they arN repysent fAlmers' money 1 and this b i strictly follows that the mar Its 9-has p BiZ 0 9" Yowpr. at leasy4/5 of a commliArk- of lermaae farmer t,pgics The and know' that the posits e deposits, it naturally s no bettor se curity than a first tgage farm loan. Up 1 two years ag :ers0 ville had no t›Olde nal ban o when this ba started, the k was and got gene5p2 that we could not and an on r al estate (no 4 furthered from our coup eg tors), had t , ans outside commercial paper, which er ubt orizinating. vest and t on as in the Airigs of 01W far( 1...012r de os htve t.11,415.been and are now handicapped in not being able to loan on first farm mortgages, and feel and know that we always will be and will not be able to get and command our share of deposits and insure and bring confidence to i)ur people unless we are allowed to loan at least a certain percentage of our deposits on real estate. While we are surely anxious to have the nntional banking law amended as to the above, we know it is \\ important tht this is done and earnestly hone that goo', results are forthcoming and will thank y, u for your efforts in this wry. ) H. B. ';;illenborg, "-- ushier k ) 4 6717 First 7ntional Bank 29 eld on, Io.7rE /OA).C4)1l- ')/Litrrh7 I think it is a great injustice to' national banks in farming communities that they sre una,le to talK3I mtgs; on farm lEnds at least. ) The buil,ness of the Io-a banks is almost eritirely with farmers and there is no better parer offered any place than the Ior , farmers notes. I know several State and private banks in this locality that carry a lot of real estate mortgages and when close times come, they have placed new loans with the insurance companies, and paid the bank up. These banks have had paper that was more avvilable than a let of the comercirl loans that were floated during 1907. ---- There are a good many country bank s that have hard time getting all the good loans they need, and they would be glad to take a certain amount of real estEte paper on their customers. Many times they have to sell off the 7o. 1 real estate secured paper and then look for paper away from home which they don't like nearly as well, and which they have to take on recommend of some other bank. I think in sore instances the assets of the banks would be better. A farmer may owe the 'tink a good sized note that the bank er wolild really prefer to get secu red on the ferm but it seems to be contrary to law, so he keeps the note without the security or takes mortgage and fails to show it to the examiner. The country bank ought to have privilege of taki ng the loans without regard to savi ngs doposits as say:nes acPounts are small in rural communities. 1)o\l'ole Lead AWFirst National Bank 1 6717 30 Marengo, Icalerp-a4T-4-6Yrn , We enclose herein information requested in your favor of 9th instant; nd ..• for further explanat n, we advise that ie have The Iowa County Loan c Sayings I;ank, in conne ion with o national bank and the same being con..cted in the national banki room. savings bnnk is a corporation with capital of ,15,000 and thr stock is held ntirely inderenden t of that of o national bank, however it is conducted by e same office force, but under different directory. Our say gs bank carries deposi sented by me certificates issued f gating ne ly :300.00 and we have a sA0,000 savings accounts. This counts. The combined deposits of r the e deposits of our savings ba •ans being secured by first mo of ner,rly .,340,000, same being reprethree months or ion r periods, aggrecial savings depar ent with nenrly gs department presents nearly 350 acb..ks will run om 525,000 to E.00,000. are i ested gage on nds stly in farm mortgages, thin our awn state. ;t is our Opinion that if there could be some amendment to the rational lank.law permitting national banks to loan a portion of their deposits on real estate that it wolAld broaden the field of the nationel banks and thereby discourage the operating or organization of savin gs banks in connection with national banks. From our own experience we find that the natio nal bank business is stimulated and made more profitable where it is in a position to handle farm loans conveniently and with the law as it is, our national banks in this section of the country are more or less handicapped unless they possess the facility of a savings bank, such as we have in our building. rEttrra-4nil , 'NG= Frank Cook,) '‘ ?resident.% 1L)u.e Le.0 3' Second National 73tink, DubuqueF, I -Da4-0 1 -4 -19 te7— It i my recollection that rocommendrtion wns made to Congress, by you or ::our p edecosepr, regardin e investment in frrrl or real estate loans, of a portio4 of the Oavinee deposit national banks. \,gy interest in the propositionlpro impts exprtss ws .nd I trust you will pardon the libert:T I take i1 presenting them t&--59-0u. Whatever may have been the objection to real estate loans , as a means of investment of the fulds of national banks, in the minds of the original framers of the ;rational 4a "ct, it is certain that conditions have changed so radically in the pastenty ,yetrs, as to wvrrant a reconsideration of the subject. There has been a large-investment of funds in :estern lands , creatin# in some localities a basis of credit rest.ing upon real estate security only. National banks operating in such localities must either evade or viola te the law prohibiting real estate loans, or else must loan upon open credit, witho ut security. In either oae the credit is based upon the ownership of real prope rty, but in one case security is absolute by transfer of title, and in the other case the payment of the debt is subject to interventions and hazards over which the bank has no control. An: these conditions do not 7-revail in strictly agricultural communities alone, but effect banking operations in the small cities to which such communities are tributary. To meet the situation, national banks which desire to conform strictly to the law tnd ;et supply the requirements of those to whom they look for business support, have found it necessary to organize institutio ns under state lvws, such as Savings n'r,-s nnd o rustotompani.)s, to operate in connection w,th the national bank under the same management and control, thereby Provi ding a channel for the investment in farm loans of funds which would otherwise be force;1 into more hazardous lines. It seems clear that the efficiency of the national bank suffers by this division of its deposits in separtte organizations, and thit the business could be handled more safely, more profitably, and more adv.n tageously in the one institution. Under the provision of the' tional" n14rAct permitting , savings lerartments in national banks, a way is opened for uniting in one institution the privileges granted both tn a national and a State charter, which would largely increase the value and efficiency of the national banking, syste ' m. It would seem to a reason able and safe proposition that a national banks shoul d be permitted to loan upon real estate security (uT,on the usual basis of one-h alf of the appraised value) one-half of its savings deposits, and that the remai ning (outside of the required cash reserve, might be invested in listed bonds or securities approved by the Comptroller of the ,Currency or other officers of the Tress Department. Should a law be enacted embodying these provisions, it would result in the coalition of banks now Practically operating under two charters, would materially increase the deposits under national bank control, would enlar ge the scope Pnd efficiency of the national banking system, would provide more substentirl security for bank assets, and would furnish a more liquid form of inves tment for savings deposits. Furthermore, it would do sway with a restriction which is openly violated or evaded by many national banks at the expense of their more conscientious competitors. te ust,ti*t. o iou,*tp ba va the UriS ,tetit 440,13/FAtpA , se : t and approuil -a largt WeittY/bi w11 .1 11 attfit'44,` ;stli144- Double Lead 1 671 7 --- Union Stock Yards National Bank, Wichita, YanEht. 32 4 ,a Ref rring to tached. I beg_ tr ise thtt tlw answers are the . perscm opinion f th writer th6 ltt hits novEio4 d scussed with i the ot or offi ,rs an' directors, ; / // / e / e I i ,e hav receive prsct ally e irigiry fro ther sources and it s(ems ere is ntte ,t beir made he'r statlftics of this kind e an derstEnd t t ere is plan dn ot to have the National Bankin t amended so o perm;t nritini_ anks to make real estate loans. This is a proposition to which I cm emphatictlly opposed as I believe that national banks should be commercial banks in the stricted sense of the word. Their loans should be commercial loans in the real meaning of the term and all forms of capital investment, underilritinr, bonds, stocks, and such investments, as representing fixed, as opposed to Uoid, should be prohibited. In other words, we have prorerly three fiylds Dr banking institutions. First; State and savings tanks; second, Trust Cormanies and third, national banks. Each has it's se, trrte and distinct field of usefulness rnd should be organized and equipped to handle it's own particular line of business and should not be permitted to encroach upon the functions of either of the others. national banks should be prohibited from rayinr int(Jrest on any form cf deposits whatsoever, especially on the balances of other bans. While we are offenders in this sense, as we accept time certificates of deposits, savings accounts, and pay interest on bank balances, it is because of conTetition and not through any desire on our part. . T. Ransom, 24;) : /resident • 4'\ cad. 12)0u"'" 'Citizens 16717 33 National Bk of Monticello, 1on4m0y. -- /2 .R1(20)per cent. I think this safe and conservative. In country banks we lose, not on:: desirable and advrntageious loans beczuse not allowed to loan on mortgages on real estate, but as a conse quence of this inability, lose also some good deposits. Depositors go where they can get loans when needed. 1 If question 4 means that loans on real estate mortrages are to be restricted to the savings department, and that such loans cannot be made with other deposits, I say, no; but if it means thzt such leans by the savings department aro to be limitod in am-,unt, as is the case with other deposits, say:yes. I think it will be very helpful to country national banks to be allowed \ ,to lend on real estate mortgages, say to 20 per cent. of their deposits. J. F. Cashirr Lea,O, 1 671 7 34 ••••••.- National Sho4- & Leather Bank o 2h (411 Not exceeding 1 Auburn, Migait. 1/. • Experience has shown that banks should have the privilege of accepting a mortgage on real estate. 44) If restricted to deposits in savings departments, national banks not operating savinrs departments are at disadvantage. 5. By so doing it will seriously interfere with the abillty of a na- k U'r au) tional bnnk to accommodate its customers as ow doing. A savings department would lose much of its value and to make it rrofitable would necessitate a larger investmeAt in bonds with less resources with which to care for commercial customers. No. 5 is favored by bond lealers. a more liquid asset than bonds. Why loc Commercial paper is p assets in nontliquid securities. C. L. Smith, Cashier: Doab' e 1,4J5,d 1 671 7 City Nrtic)nal I4a)of Belfast, m „..„; ..1? !. (1 7 CtObegroafirssaPeallior I wil • 1 • . In Onnectton with your,%_:cular in n tovkaderin ivlation to q e • 3c of 4 ewith attached, There should be no segregation of savings deposits from commercial deposits other than a separate system of bookkeeping which is already universally practiced. There certainly should be no distinction made in the loaning or investing. The savings dollar is no more sacred than the commercial dollar; both Are sacred, equally so, and should stand on the same footing. The present national banking laws ns applied to the handling of deposi ts of the national banks, in our opinion, cannot be irproved upon. The moment you begin to hedge about the investing possibilities of banks with abstract, unnatural and inflexible laws, that mo ent you begin to weaken the banking situation. The safety of every bpnk depends principally on the judgment, ability and integrity of the management thereof. To our minds, the weakest points of our strictly savings institutions today, rre the laws by which they are supposed to be safeguarded; their s:feguards re their weaknesses. The/ de an si*Ors 9,her finiAesim.0.4ercoAage/ 4 fa • es of n snl banks and losses to e fa. re and in's ate,le'stitftions,verifies the abo e statement. rlofr/ascooloat34/*itt AA_Auswist."4-4B-10~-4.5r, we believe that national banks should be permitted to loan a pro-oer percenta of their capital and surplus on real estate security. We further believe that the reserve required on derosits can be safely reduced to the extent of one-half of the preent reserve on the amount of savings accounts, that the require reserve should be so reduce d. -14271-1171777'''' C. W. Westcott, • b. •••• .1 I . C ash'or l ( 11AL 24141. , I :.:erchants 16717 Baltimore, Mpariond. dIMITIffirmr7T7Trr"""mftw Ackn44(led , the receirt of your circular letter of October 9th, which we/re rptirriingv , 441X -,n tilg thereon -A -al ect replmto its several/inci4rVes, I eg to siler. 6st Lew of th IppOitr,nce of the . subjefewhich It 1s xvr5rence and nattre..4.4' the questions, it is g hardtrpossible in 7,- , eqt to give such direct u ort answer and 03 u.s.Ficlna...L.L.Ita.„,pix.6044i—it.ci—iffirie.4fr.-+wissirciAir-.-t4/e , The answer "no" to your first question relieves us of the necessity of making comment upon Its sulivisions. To yottsecond question my answer would be "yes", but here it is necessary to make qualifications. In pnctice and notwithstanding the law to the contrary, many natienr1 links, particularly those located away from the cell , have in the:r assets a very mvteripl yass of loans, !wily times with mortgages attached but possibly more commonly holding C) only a prIncipal note, the mortgage security being held in escrow and out of the bank. In other words the country bank is almost obliged to loan some of money on the security afforded in the ownership c' the land. its In their situation there is no good reason why they should be denied the privilege of protecting themselves in such transactions by accepting security of record if for no other reason than to permit them to the limit of prudence to 0 compete with State chartered institutions. I, therefore, feel that the banks in communities numbering less tt say a population of 1- 0,000 people should , by law be permitted to invest 25' of their assets in mcrtgsge loans on , pro) perty within a radius of an agreed number of miles of such town and further provided. that the aiggrecmte amount of such mortgage loan should in no case exceed the sum of the capital stock and surplus of the bank in question. In cities having a population of 100,000 or more, by which I particul arly mean the reserve cities of both classes, I think it would be most unwise to permit national banks to accept or hold mortcr:.e loans excert as now provided by law. While conditions in the country banks are apt to be more or less fixed in their nature, the prime duty of a reserve city bank should be to have as great a proportion of its assets in liquid form as is possible and we cll know that even without the presence of mortage loans it is extremely difficul t to avoid the accumulation of paper secured or otherwise perfectly good at bottom but upon which it will be next 4 o imossible to realize promptly enough to serve any practical purpose. While arproving of an amendment to the law specifically authorizing national banks to establish savings departments, I feel that in their regulation the same general Principles should apply as those above suggested. In a city large enough to awn 100,000 inhabitiJits or more there can always be found savings banks, building associations, etc., which can comfortably care for all mortfr,pe loans offered. A national bank in such a city in its savings department should if carefully managed prefer to have its savings assets invested in "quick" directions, although I recognize the fact that many very handsomely engraved bonds are more unsaleable and less secure than wry mortgages on land payable five years after any given date. 6717 37 -2- cA ().‘° Answering question 5, T possibly am disposed tr' trice whnt may be the unpopular view and suggest that it would be unwise to attempt segregation .of savings deposits. Mile I think the law should require thrt all national banks in investilp their funds whether current or from their savings derartmeat should be made to closely adhere to the rules . t 1 ,id down in the law of certain Stftes governing the conduct of mutual savings banks, it might be unwise to attempt to differentiate too widely between the two classes of institutions both under the same roof and management. The opportunity and temptation to juggle bookkeeping would be great. There is no reason in my mind why a savings depositor in a particular bank should have afforded him better security than a current depositor in the same institution but they both alike should on equal terms be given the security afforded by the bank's capital, surplus and the personnel of its management. Then all is said sucli a savings department is merelytintemied to be a feeder for the main body of the bank's business, and while T think the law should recognize the propriety of owning such a feeder it should not make it easy for the management of any bank at 'their pleasure to discriminate between them as far as security is concerned. -CrereiTre7:. 1 671 7 Idet 4 Do‘ ). (First :Tational Bank of ret skey, Peto skey, =Ch1 mp/M:3 Reiorring lo the information asked f r 1 in yoor .ircular r / / '' / "Efavini714posilp" cal eltr.rti loans ton1 bfinks'', would say that 1,, .,,, , L wp vre very much into e 0:1 in this. We strongly feel that national banl(s, particularly outside of the large cities, must be allowed to take real estate loss: safely gi;rrded as to values and total amounts, if they are to compete with the :7tate banks. ,, hips Iithink it is regarded that w9 haye good.c:tate-ttnr-TVW gild ,..-I d no tinatic,)ael batk, *ere tbe---cretition m is strong, can coptrete %-....--- . . / to i::,( Thol ur volume of business aga.).nst he -tat e 7 ;tnk, with iti equir/ meit to do business. 1' Some way and some h the national security that can bind, whi bank mutt be allowed to/tal“) the best Aa reel estat mortgape. Law pa 1;Krticularly urge 1 partment to assist NN. ur e)56minors mukt 2eN4(nly . • ver the colittrl-, ber)ring ub ec The ierorts from v y su " Chalmers Curtis, Vice f'resident, , ,.... they can alonr- this cond,11401,-; nil 16717 39 vo‘ , First National Yeeriend3,-c 0 e-------\ In reply to your question 2 1M-would call your attention to the fact , 1 1 amk, Hancock, that the country banks at present are as a rule unable to loan their money in their awn locality but must buy railroad bonds and commercial paper, the value of which they have no definite knowledge and from which the community from which the money is drawn derives no direct benefit, the banks receiv ing in most ccses a low rate of interest. e city than a m. if nka are per gage ey so, desire nd r '_ted to 0 these bon sa which are n cCOWb load the c try banks wi ks a ing m • are und. ;irable sec itie Should the country banks be allowed to loan on mortgage they could invest their monez at home where it would be helpful to them and the community, they would be entirelyndependent of any city bank, which is clearl y the intent of theational"anking aws and in time of panic or depression would have something which they could readily dispoii of in their own locality, . when the best foreign security they might have must be sold at a sacrifice. 44errePettettrf'" ( R. J. McCandlish,-; c leas hier 1 • ,•! ,.• ortititi ...1.1ri:,;!!1.17." , . .i.t ,41,:iivemilfr.“,gt eyOfl el •*'• , A44400 ' • • ,• All Iracticl olitical economists being agreed on an asset bank note currency, the question for us to consider is the instru mentality for carrying it into effect. by ONE PANK 07 ISUE Or That ma7 be done in two ways: by MANY 7ANK5 OP ISSUE. Under the MANY bank plan we wo.11d mave the old statT, 7pankinv system under Federal supervision, and conseent17 no system. The ONE BANK OF ISSUE ylan is ONE BANK OF ISPUE-A the only one which will SYSTEM, MANY 3ANKS ing businery.1 and effect its thorough reforL . This OP P3sUE- NO SYSTEM. ONE BANK OF ISS1P J.‘re system to our bank- an -1- ).ay be ,,ccomIdished in two .. ways, ONE bank fo- the whole country, or SEVERAL DISTRI f CT BANKS for the different sections. ONE flAYK OF ISSUE ;or a country doing 25/J ( ' the world wold be too large. of the Therefore e con - ti tt the only lo:lcal solution would be SEVERAL DISTRICT PANKS OF ISS13. in GrRnting the correct:less of this - osition the only l remain - questions are, the CAPITAL required and MAY= of their COVTRO L, but on these t:o .tions there is plenty of food for economic thought. No people shou), have had less trouble on finances than we 1 (but few have had less), for the froxlers of our Constitution made it oo lain that the blind could see. Those delegates knew that one of the predisposing causes of the Revolu tionary war was t':e insistence by the Colonies for the riat to issue exerciled by the British Government 11 aper money,- a ric:ht never to that time. So when they PINANCIAL POLICY WHICH assembled in Philadelhia in 1788 to bei7ill their THE FRAMERS 0.TP OUR CON- great work there was well nich a unanimous :Jenti- STITUTION CONTEMPLAT7.D. 1:.ent for the distrlActio.: of the colonial financi: - al policy of paternalism and fiat 11- oney an I mother country, for the people were rAdoI,tion of that of the ck ,An'.1 tired of what they had, eleato'l from :faryland being detained at three weeks on account of the :inancial conditions then exilti in tt Colony. the To accomplish that they empowered Congre onl-, "To COIN money, regulate the value t foreigi. COIN". rcof, and of They did not 3to-o Tith fsuch ltiitation on the power of Con7reos, but added this !irohibition aainot the Sttes: "No State shall COIN money, init bills of credit, (or) make anything but COIN a 1()7a1 tender in the payment of debts". The committee on detail added a provision empo-rering Congress "to :It bills on the credit of the United States". A lotion to strike out th_clt rrovision carried by the votes of nine states m.gainst Ne7 Jersey and Maryland. James Wilson, the great lawyer of the Convent- ion, speaking on that motion said: "If you clothe Congress with t1- t power it will i be exercied during the first great war in which we engage, and the government's resources for borrowing money will be destroyed". f Exactly That hap- ,ened in 3262 when we issued the first batch of greenbacks. Our financial advisers having been tau7ht that value crnAld not be created by fiat of law, though at Vie enormous eroonse to the and private credit, many other expedients were resort- ed to, notably our National 3anking system, the principal object of which was to CREATEa :!ARK2T for government securities. THE FINANCIAL ADVICE OF OUR We have paid dearly for the violation of the natFATHERS VERIFIED SOOn AFTER ural law of sound finance, but We are not alone BY COSTLY FOLLIES IN EUROPE in that. In 1797 the 7ritish government 7rW in dire financial distress and forced the Bank of England to loan it 05,000,000 gold. In order to compensate the Bank for that forced loan the Pitt ministry had Parliament make the bank of England's unprotected notes a legal tender in the payment of debts. As a result of that act its notes went below par and rerv.ined below pr during the rapoleonic wars which we ccrilotcld on a raper basis. ternalistic aid was Such pa- tendered the Scotch ]Janks but declined, and their notes remained at par with gold during the whole period. Tois pate- nalistic act of the Pritish Parliament was not repealed until lg25, liring a greater portion of which :eriod the Rank of England's notes were at a Jiscount. That act caused the discGntent which c7ll'inted 1 In the celebrated Bari.: Ac 4 of 1C 14 making that great institntion a mere store house for 7old. Dut such is the penalty imposed for violating a natural lflw. -3- Still another case we might cite is the history of France for the same period. In 1793, all French bank notes were prohibiter'? and the government began issuing the celebrated WIGNAT. -rere enaetad fixing the maximum values for all comodities payable in A.SIGNATS with severe penalties for with1ioldin7 them from the larhet. Frocio exportations were prohibited and it was a crime to diogredit an ASSIGNAT in rrivate conversation. At the end of the third year a t10 ASIGNAT raAJ worth but let in specie. In August 1796 the French government saw the folly of such la7u and repealed them, thus enabling the people to transact business according to the dictates of their individual consciences. France. Immediately gold began to flow into Ranks were organized and their notes began circulatirv throughout the country and the whole of Napoleon's wars 7e-e conducted on a specie basib. This brings us to a consideration of the financial policy of the mother country at the time of the adoption of our Constitution. As we have said before, up to t at time the British govern- ment was content with COINING money, all CUR:iENT CREDITS (currency) being Issued by banks, principally DISTRICT BANKS, especially chartered, for the several sections. MANNER OF CONTROL OF THE BANK OF ENGLAND. The Bank of England was the largest, though Scotland, for• nearly a century before, had had her independent banking system. In the first place the Bank of England is a monopoly, but such monopoly extends only sixty-five .iles from London. It is controll- ed by a governor, deputy Governor and twenty-four Directors, elected annually by the Bank's ELECTOIIS. All are required to be subjects of England and make affidavit they own, in good faith and for their own use and benefit, the Bank's stock in the follo- ing sums, respective, ly: The Governor Each Director f20,000 10,000 The deputy Governor .15,000. Each EL2CTOR 2,! 700. Each ELECTOR is entitled to but ONE vote, whether he owns A2,500 or t25,000,000 of the stock. Foreigners and corporations may own that stock and draw dividends thereon, but they can never ube it to con- trol that rex-at riblic service corroration. BLE RESID7rT flITI77t1 su2 :1-e qqalifie Tbus we 'save a !:*r'e-POITF7I- in two ways, viz: (1) the ownershil) of enough stock to mean a pers onal FINANCIAL 1') to each ELECTOR in case of bad management, ther el7 preventing the DUMUYISM and ITTCAPACITY lo frequent under soci alistic and paternalistic control. (2) By CITT -777SHIP to make each generally inte'Jaest ed in the clean and efficient SERVICE to be renderer]. by the corporation, but of the two his CITI7,EYSHIP interest out ei118 his FINANCIAL Interest. We shall now corrya37e the Rank of :?.nglandl s control 11th one of the modern "TRUSTS". Lets first define a "TRUST". Recent writers on corporation law clai. the word, as now meant, derived its name from the practice of Mr. ROCK Tfeller in proc-ring Ntr1.1st cartificat.71" from the owners of fioc- of corporat .K ions aboorberl by the Stanlard Oil Corpany, thereby enabling him to vote the stock carried by such certificates in the election of the i.ire ctorat ) who control the Standard. We nay derine a "TRUST" to be, DEFINITION OF A "TRUST" A mass of corporate wealth CONTROL= BY 077 MAN (or a very few men) whose interests are OPPOSED to these wl o furnish it PAT-07AG.7. , A "TRUST" may be just as ef:Pctaal by maki ng the VOTING UNITS infinitesinally small as by making them abnor r.ally lar 'e. life insurance oomix1.7 il a case in point. AMn COMPANY ila:4 1,D00 )00 :)olicy The "mutual" The ITLW YORK LIFE IYSUR- scattered all over the world, etch entj.tled to one vote for the iir:?ctorate which controls more than half a billion of wealth. The numerical value of each UNIT is 1/1,000,000 of 1, 6ut when con:11:12:o tl'at few of the.. caro little about their policies each is so Ll tat it lc a waste of postage to attempt to recoalq the Hence t%'e ele(ttion: .so ; b7 (1.efa.ilt, there beinr but 62 votes cant at the election on Airil 12th 100g. But the vim" ii CONTROL make them most valuable trough their well orr-anized and highly y,aiJ ai.ency force. Here is an exafAple of SOCIALISM, pure and simple. 5 011111 We shall no7 a% ly the forefroin definition a NTRUT" to t:le CONTROL of the STANDARD OIL COMPANY and BANK OF LINGLAYD. In "ind thirteen inrlividuals o-ning R .c rrity of the first place -o 4 ,4 the,7tHndPrdis stoLT, their Personal consumption of ref1n:7 cil arruntin .Y to nothin7, thus HIGHEST i1n than al ,,r-ys interested in the r10 for th,.,t Product, '7rhi13 their PATRONS are al rays in, terested in the LOTST. Hence the D011110'11 conflict between the aes-ho contribute anl the ‘')7 ..-Jnt8 of that corporation !tr) the reci;i- 0,000,000 of annual profits. Tn the first '1‘tc.3 th3 VC7ING UNITS are far ,lore nuuerous 'ith the 7ank of Enr;land ti -n -1th th3 tandard Oil Company and comriJe the res- ident :erc'!:nts and b..nkers of England. ,, ho are more interested in r the SERVIC7 of that in:3tittion than the dividends on their individual stock. If the question ;Ihoilld arise as to whethe2 the Pank of En-lanl should ray an <7'; or EV dividend and it Ter° questionable hether the finfIncirll it ions 7ould jutif7 the lar then the smaller amount ,,rould be decDired, for the clifference,21., would rean but $5o to the average EL7CtOR. Rut suppose it -fere a ANTI-TRUST l.tock controllei inctitution and tmro individuals PRINCIPLE owned :i2,000,000 each, then 2;. would mean an in- ILLUSTRATED come of 0500,000 to each. In that case GREED would control instead of RELF-INT7RFST (selfishness) as at present. The 'ir)ctorG of a corporation ry''a, business roliticinns rho nay be relied o to :xecut, the -ill of tho;e electing* them to o -Tice. ) The ANTI-TRUST principle oT the charter of the 7ank of Errland is the death knell to CZARISM of CONTROL of t,lat great public service corporation. temIt to No et of capitalists has ever been so daring tw to atcontrol by fraud, for that would req Jiro the outlay of too lauch capital in the first place and the chance of io:An- it In such a fraudulent scheme has been n bar to any such atte:r)t. Am al:t illugtration of the ANTI-TRUST principle in cororate control is the rACTORY MUTUAL FIRE INSURA/TrIF, COMPANY of 7onton , or-anized by the late Edzard Atkinson, a most - ractical and sound political economist. That company has reduced the cost of fire in- Turaece to its patrons 90c431: Such feat has been accomplishe(1 by virtually eliminating the "fire waste" of property insured by it and reducing the expense of manaelent to a minimum. ited to its own membership. Its risics are Un- No new member is admitted unlcs its i'fictory is equipped according to plans and specfications furnished by the ofAc)rs of the FACTORY MUTUAL; and no old one can obtain insurance unless -precaution is exercised to prevent fir s and its oficers see to it that such precaution is actually exercised, for they believe in the motto that, "An once of p2ovontion is :orth a 7)ound of cures. This is a marvelous record when we consider that the COMMON SENSE SELFISHNESS "fire warlte" in America is (2.80 per capita, as vs. against only 46 ctn for ?3uro6e. Add to our "fire SENTIMENTAL SOCIALISM waste" 1..39 per capita, the expense rate of conducting our fire insurance business and 're have a total waste of Yet but 6O of our "fire waste" is insured. but ours colld stand each a terriTle drain. 3cntrollo No country The FACTORY MUTUAL is by responsible residents INT',RSTED SOLELYin the SERVICE. Instead of wasting its members funds inamad sarat. ble for new business wise exenditures are :ade in preventing fires. A potent factor in that s-:Iccess is that thole in CONTROL enjoy the unbounded confidence of the patrons they serve lo well. In the be- ginning some there were who refused to incur the expense of equip-1ng 1 their plants to meet the views of its lanae*ement, but when the management demonstrated, by actual experience, that such expencUtures were necessary and would mean large savings to them in the couree of time, they, too, came to their terms. Had there been rany such col-J fanies, each fightiw: the other in bitter and unfair competition for business, such refor HEADTEM . A would never have been acmomplished. SYSTEM; MANY HEADS- NO SY 0 N In contrast with the marvelous record of the rACTCRY MUTUAL we h ve narrated we refer to that of a SOCIALIrTIC TRUST. , A-n,in 7e .Ve the N77 YORK LIr7 INSURANCE °UPPITY, the largest of the ii:ratualsu. Durin7 the yoRr 1902 it .1a(i.e the follo71n7 1nr-itnt5: 1.At1-ontic Coast Line Company (HollnY' Cr'.) T/C'05,000,000 L-1/22.Interrtional Navition 7ond Syndic 3,20C,000 TiC Sc Ry (vMonon Rollte") N 3.L 2,535,000 Ccll 4-.No Pac- Gt 7.Th -c , P & Q 12,00,000 Total '27,035,000 All those securities were the orations and 12roperty of the rromot1n7 firi of J. Pierpont Morgan and company, and new flotations when nold to the life company. In those transactions one man, Mr. Perkins, .ian of the finance commitactod as both buyer and seller, being c'nnin. tae c7 the life company and co-partner of the promoting firm, in actin for the former he represented a million persons widely scatter- . ed rho locked to him al0n , 3 to protect their inter ts, whereas the ILLUSTRATION SHO'7ING .170.1ot1ng firm had able financi'irs present to see SOCIALISM PRACTICED to it that their interests mere RESULTS IN GRaFD they rotected, and rere well protected, for the life company , paid right at par for s3curitles which private investors accured at a discount of one-third, a difference amounting to nearly ;',000,000, a profit nearly twice that paid tl.).at year to its policy holders 7ho contributed more than ',16.5,000,000 in premiums. The loss to that one life company's policy holders was not all the barn done by tboF:;e four transactions, for they were the means of enabling the prorlotin7 fir:1 to secure control of several important transportation lines without incurring nny risk themselves, placing that on the life companies and loading down the rnilroads -ith large additional inclebtednesseB. The most pernicious TRUST in the country is the railroad HOLDING COZPANY, controlled by Vc)(3 INTEREST= SOLELY in the HIGH7ST transportation rate commerce 7111 bear, when the PATRONS seek the LOVEST. Hence the conflict, resulting in hostile legisl(frttion which is 7-rmful to every class of business. REF7DY; Rid the life companies of SOCIALISM by providing for their CONTRCL by ItS9ONSIBLE and INTERESTED RESIDENT who furnish them with prel:ams. We shall cite an instance of the evils of PATERNALISM. It has long been the policy of Nr York for the Ler71s1ature to designate the identical securities in all be invested. Then 7 ich the funds of their savings banks E.H.Harriman was a dominant political factor the Chicago & Alton's bonds rere, by such decree, ted. Mr.Roosovelt, sage 46.5,000,0GO, as i-ovarnor, anroving the act. o designa- After its as- and 3-1 2 , flew bonds of that roar3_ 7re i6bued / and sold to the savings banks and life insurance companies right at ppr. Since then they have been quoted at prices which meant a loss to the original investors of more than 20,000,000. In rely to a criticism of his act ap.sroving that bill, Mr. Roosevelt has said he did not know T.D. Harriman '"as interested in that railroae, at the time. ' The public of-, icials on whom such grave rr3u-oonoibi1ity rests are not bond exr,3rts and are forced to seek advice second hand. The ablest export could not 7ive a reliable opinion -rithost bein7 in possession ILLUSTRATION of all the fcts. OF THE EVIL OF future status and value of s bond he must know PATERNALISM the maximum amount of possible future issues, an If tJ- e pr)inion relates to the important fact not considered in that instance. Rut reliable finan- cial advice costs sonifthin, rJO even when it is for sale the state is not always ready to -ay the - rice. Therefore the representatives must resort to guess work and seek advice from rholl they can, frequently from the willing members of the "Third House" in disguise. This principle of ilixin7 busin,Ju'.; and politics is alto7other wron, and if :resisted in will cause universal distrust in representative governLaent. Because of the unbounded public confid'Jnce in the int;)7- rity of the executi7e who approved that act the harm extended only to t,ice (lir.ectly in interest, but the same thin7 is iia- 13 to 'appe', . 0 to an absolutely honest executive -rho Jor3s not enjoy public confidence to that degree when the trouble will come. If the :lost irmor- ant :lan hsc sense enou7h to make and sn.ve money! 1.. select the bank -1 in which to deposit it, certainly his FINANCIAL REPRESENTATIVTS should be relied on in preference to his LEGISLATIVE REPR:PENTATIVES to perform that duty, for if they err their FINANCIAL REPUTATIINS must suffer. The true secret of the success of the Bank. of Enr- land as well ; as the Bank of France is largely due to these five important facts: THE TRUE SECRET OF TT11 (1) CONTROL by RESPONSILE RESIDENTS . (2) CONFIDENCE in ACCURACY of statements. SUCCESS OF THE WORLD'S (3) PERMANENT del)osit of PUBLIC FUNDS. (4) AMPLE, but not excessive, CA-PITAL. (q) And the fact they are moroP GREATEST BANKS OF ISSUE We have heretofore discussed the MAITNER OF CONTROL of the RANK OF ENGLAND and shall therefore confine our remarks to the other four -orobositions. The BANK OF YGLAND issues a weekly statement w11..;:h is verified by CHART P.ED ACCOUNTANTS of estabiis''e 1. ular employ. Concealment e:catations not in its reg- y them m1,7ht nean their ruin, for they live by the work they receive from the business institlitions of that locality, while publicity of the truth would enhance their revataMETHOD OF THE BANK 07 tions. ENGLAND IN SECURING countants in the regultul employ of such an insti- ACCURATE STATIENTS tion to whose head they are responsible for their In t171e they differ materially 2,rol ac- positions, for no one is free to criticise the acts of a ing him meat and broad. The Scotch banks, by erroloyin an furnisha similar self imposed inspection, have rendered obsolete te ins1;oction :previded by Parliament. 7apoleon looked on this practice of the banks of England anrl Scotland with such favor that be made it a ..)-17t of the or7anic la of the RANK OF PRANCE, its charter providing for the election of three CENSORS by its ELPCTORS. The BANK OP ENGLAND in the sole .31)os1tory for the BritiTh gov- ernment and aient for keeping those funds activa, :.or without it they wollld he irlle at certain seasons. Those ft_Ms rane from - 45,000,000 to $25,000,000, a small amount compared to the deposits 'uelonrin to the state, county and l'7Li1ciral THE BANK OF ENGLAND 'E governments or the United States which are now GOVERNMENT DEPOSITS without fiscal u:ents. The phrase, "capital is timid', is so familiar that we :reard it as axicr=tic, but one notable excel tion is 'oublic funrl.n. -9- T ere Rre twc objects of bank CAPITAL, first to afford security to its creditors pnr.1 oecond to _furnish a reserve. two cl..3b of CAPITAL required by a BANK or Put there are ISSUE, PERMANENT 711(4 4. TEMPORARY, or the CAPITAL rroper and DEPOSITS, til.e object of the latter being to afford E C 0 N 0 M Y. If the PERMANENT CAPITAL be excesive it !leans a 7aste to the bosiness inCAPITAL CLAFFIFIED; terests of the territory for which the particuOBJECT OF FACH CLAF: lar RANK OP ISSUE is created to serve. ITAL of the world' great BANKS OF IS7U7 is flki follo7s: the BANK OF ENGLAND $of''5,0C ,',000, DANK 07 FRANCE of the DANK OF GL:It..ArY until recently only ond UNIT:D STATES BANK had ital is excesive in Vi'37 . 35,C:00,000. The CAP- That of ) 200,000 ,,nd that 37,50C,000. The uec- The BA7K OF ENGLAND'S cpp- of the igstrition;.; inued by the 7tink act of 1g44. To da.Tonstrite our prorosition, THAT BANK NOT2S ';liOULD BE ISSU:ID BY A iAONOOLY, 7e have 'out to refer to the Iracticeu of the Europeon RATKP OF IUE. cn For instance, 7rJlen gold 1 too cheap and ex- rum; a:TAnst London the BANK OF ENGLAND step :3 into the market as 7urcaser, and vice versa when that convodity is too hig, in 7Plich that f1nriciF11 balance wheel keeps fairly stable thAr IrlASURIT OF VALUE- GOLD. 3 If t-er, 7Jre WHY A BANK OF ISSUE many of such banks there, each in bitter cooSHOULD BE A MONOPOLY tition -ith the others for business, then no one of them could afford to buy or sell .Y.old at lose, but enjoy1n7 a MONOPOLY it cq.1-1 afford to lose by such transactions for a jay or so, for such loses -ill be equalized by s all pro2,:1ts extending over mRny months. Unless one bank be :iven a MONOPOLY :or a certain district there can be no SYSTEM to the bank note credits therein, nor syst3 in the bankinp, business there. A7a1n, -*Here there are innumerable BANKS OF ISSUE for the Emma ) territory, good, bad and indiff, rent, tho failure of one distruHt among the note holc7.ors of all. -10- ill brirv7 THE BANK OF FRANCE'S CONTROL is modele0 after that of the RANK OF TTGLA7D, as it was in 1803, when Napoleon drafted the chartor, with this exccrotion, viz: That the Governor is selected by the French govermiont fror French citi7iens owning $20,000 H.UD is vested with a VETC power only; the 1„owor to INITIATI/ or incur a liabLlity 13 vested in the DIRECTORS; an. the 'power to INSPECT is vsted In the CENSORS elected by the ELECTVS. Here we have seprzate powers in control, ear!'n inder,endent of the others, the dutieo of no two conflicting. While the Frinclpal factor: con-titut- ing triis ARRANGEF,NT of power were taken from the charters and praotices of the ENGLISH and SCOTCH banks, yet the credit for thus kliRANGIYG and makinf; them a part and - arcel of the organic law of the corporate body, so as not to be abroi terl or annulled by a by-law, due to the wonderful confltructive ingenuity of Napoleon. is neither SOCIALISM nor PAI9MTALISM in it. There The State is granted the .1rivileze of 3lect1n7 the W, ITO I.ower, not I.:ANNV,R OF THE ;;ONTROL so muoh for lack of con21once in t e capiTHE ./11TK OF FRANCE talists but a51 a matter of RIGHT to f;ive rel)resentation in control to the TEMPOKARY CAPITAL, but to 1,rovr)nt durcrr risra and incapacity so frequertin soclalistic and paternalistic o control the State's selection is lirated to those citizens owning 20,000 stock. As the TEMPORARY CAPITAL is protected by the PERI1AY- ENT CA- ITAL the latter is give:: the sole 2 DOTOT to incur a liability. The MINORITY in interest but not in control of P7RANENT CAPITAL is reprelented by the INSP7OTION- CENSORS. both harmless and so,Illess. A corporation, All harm reF.I'llt,1 fro 1L211 . se, is those in control. The statesmen of Prance *A.th one accord contend that the fact t' -at their BANK OF BANKS has been madea PRIVATE has ben the 'Inavation of the State. And that is the truth, for LI ONOPOLY when the Germans hail posnession of the Caital that great *',11blic service corporation negoti!,ted a :Loa, for '250,000,000 and freed the government of her enerw. -11- THE FRENCH AND AMERICAN FINANCIAL SYST EM COMPARED. FRENCH. A!:FRICAN. ONE B,VTIC OF ISSUE. ON HEAD- A SYSTEM; MANY HT7ADS- NO SYST714. ANY NUIPER OF BAIM OF ISSUE. NY H7ADS- NO SYSTEM. RESERVES. RESERVE reseonsihility placed on CENTRAL 11ANK,and in ens° of financial flurry all banks 00M3 to its rescue -rith de-t)osits. It is merely required to ANNMC -1 the stntus of its reserves, 7ich vary from day to day to meet the v rying , laws of teade,es well a: the fitful demands of caprice. BANK Each bank requireA to maintain its own reserve, and in panics each fights all others. The statute law FIXES reserve AS TEST OF SOLVENCY. Such politieal edict in reducing to an actual science that which is golferned by a law as variable as the wind, is a monstrocity unknown to any country but our own. To n_eet the natural laws the statute laws are vilatol pith impunity, nnd that with the consent of higt officers sworn to enforce them. NOTES :i.aximum amount of notes virtually unlielited,- 41,450,000,000. Each note is secured by BANK'S assets and issued immediately to eleet the demands of trade. MANNER OF Each Anote secured by bond worth but 7op as dividend rayer; linited to each bank's capital and issued without referetle to the demands of trade but only on the assumption that there will be a profit on each bond purchase. PROCURING All charters t7ranted.by 0 N F government under a special act of Parliament, only to persons of F;ood character where a neeessity exis t; for additional banking facilities. If the political power Should err in granting charter to bad cieracters, their power to harm the 12:11b , lb c lely be destroyed by the refu sal of the BANK OF BANKS to Jo iusiness with them. CONTROL The po-er of CONTROL vegeted in three SEPARATE classes; INIATIV7 (Directors); VETO (Governor) and INSPECTION (Censors). Eac.,i class being independent of the others, Titn clearly defined duties to ,-eform which do not conflict with those imposed on the othr t To. CHARTERS. Charters granted under the gener6.1 laws of 50 governments, two in each state. Each class is subject to laws and regulations of different governments. any persons procure charters from both, so they may do business under one 7hich iP prohi,ited by government crating the other class, and vice v r9. OF E A C H . No attem.,t at SYS2FM in CONTROL. Freqnently ONE MAY owns majority of the stock and elects himself an pres ident and director and his friends as co-directors. If the ONE MAN be honest, as is usually the n-se, and he be a safe and experienced, banker all goes well; if not, and scandal ensues, peblin distrust extends to all financial institutions because the public is tau7ht to rely on the law and, :):overn:.^.ent supQrvt,7ion. -12- COMPARISON OF FRENCH AND AMERICAN FINANCIAL SYSTEMS (continued). (FRENCH) H F A D . The HEAD (Governor) is selected from limited number of R?SPONSIBLE , and INT1 RES':7D r(sident owning 7 20,000 of stock by the Minister of Finance, not so selected AS .m311 for distrust in capitalists as a right to c:overnment, the BANKS' largest defr2ositor. The H"ADIS SOLE duty is the PANZ'S affairs. INSPFC (AMERICAN). The HEAD (Secv of Treasury) is required to •eisess neither experience nor capitl in bank- ing or any other businesc. His time is occupied with momentous affairs of State; hedged about with law; respensibilitic:s out of all proportion to the quthority vested in him and is a con ;‘i'Jant target for political attack. 0 R The CENSORS are PUBLIC EXPERT accountants, selected by the BANK'S ELITTORS- Minority in interest out of CONTROL. Changed frequently to prevent poqqtbility of collusion. They accept the position more to aid their profession THEN apllied than the salary it pays, but their re utation3are enhanced most by strict attetion to duty THERE inPosed. Hence the INCENTIVE is not to conceal but give publicity to errors and "businesq politics" 1.ivered by thou. EXAMINERS are not required to possess any knowledge of the science of accounting, and are frequently plilected solely by reason of their "political pulls" Their ABITIOIT is either a continuance in _ublic servile (invariably in a line entirely different from luties THEN engagint them) or graduate into a lucrative bank office, to accomplth either the INC7NTI .7 is to conceal important facts. That fla7rant violations of plain stritlIte lar Is frequently concealed is too well known for comment. THE LESSONS TAUGHT BY EACH SYSTEM. The French system teacnes the - mblic the TRUTH,- that a RANK note 19 a CREDIT to be destroyed when the necessity for its is, -111nice ceascs to exist and not remain in nirculation to play thief in roblAng labor of its reT'ar(1. Tne American system tches the public a FALLACY,- that a BANK NOTE Is MON7 7. Therefore it remains in ciroul-tion until it wears out, thuu inflatim'; o,Tolt and creating panic. CONFIDENCE OF THOSE GOVERNMENTS IN THEIR RESPECTIVE CREATIONS. The French governnent de t oits .111 its runis with its "BANK OF BANKS" on sole security of ita capital Hotting an example to the public of its crrn confidence in its financial creation. Our government sets ensnrin::: trap baited "legal reserve","govern. iont supervision", etc. to entice the public to deposit their funds but exacts alvle collateral security for its own. THE BASIC PRINCIPLE OF EACH SYSTEM. That RESPO7SIPIL7 AND INTERESTED Under our free banir.ing system the residents, operating under a charpolitical power has atte:Tted to ter clenrly safe guarding the riplits appease every class by allowing n11 or the MINORITY IN INT177TT OUT OF to engage in the businesn, but in CONTROL (a class always interested puttinir it in execution distrust is In clean and efficient corporate manifested everywhere, for all are manageilent) may be trusted to .lanhedrAd about -ith law from start ufacture CURRENT 027DITS necessary to finish. to expedite the business of the count-y and portect all inter:1sta,STATE, INDIVIDUAL and CORPORATE. —13— The rt-i- rter of the first UNIT:D STA TES BANK mflected no - it on it ietelli-ent author. It pro vided that the stock should be divided into 25,000 shares of '40 0 each, of wA.cli 18,000 were owned b:r foreigners. Eacll shareholder was entitled to vote for the directors, in person and by pro xy, one vote for the first share, one vote for next two shares, and so on, no one oeilv entitled to more than thirty votes. Poreirmers were entitled to vote on the same basis as residents in person only. No provision yias iade for the inspection by - ublic expert accountan e t: elected by the 21INORITY IN INTERST OUT CP CONTROL, and the secretary of the TiTIASURY was expressly denied the :4i,;ht to inelcct its _,rivate accounts, though the government was the largest sLarelleL-Ter and deposited three-fcurths of its funds with the ban k on the sole security of its calAtal. A more ideal TRUST would be difficult to frame. Not only did the UNITS vary in value, thirty to one,- thus mekiw; it stock controlled instead of employinv the itoc*:r. to cia:ify the SOME OF THE WORST RESPONSIBLE MAN,- but all the UNITS were re FAULTS OF THE FIRST quired to vote for the ame candid ates, instead UNITED STATES aNK of 'ividing e into districte. Fven now the best bankers of one state are not acelealeted with the eame clas in an adjoining state, but wit h these of their own ctate it is otlerred.:3e, for there is a oankors association in ench tate. The nero ownership of bank stock car ries with it no ecqeli_tan,eship of - ersons fit for such a ];oeit ion. Hence the HEAT) 07 7ICEOLIZUL CONTROL of that hank. D1rector..1 'Jere elected in a annner unknown to the "provincials", to the "out of town" directors of the large life insurance companies at present who are given a few crumbs for the use of their nam es. The leading statesmen of the day churn7ed it with practicin r favoritism and its control being dominated be' foreigners. Thi s •7as denied by its defenders l'iointed to the charter permitting then to vote only in person, but every experienced an knows tha t where one ;0e13esees the i.ower to do a thing it is not necessary to actually exorcise the same in to enjoy the fruits of its force. Pas s word down the line that 3qch and sqch must be done and it in usually done. -14- cb rt r 0 the lecond UMPTYD rTATES BAN K was drafted in 1S1G and contained all the imperfections of the first, except that it izohibited foreiillean :rcr. votin and lid not deny she right of the Secretary of the Trrnsux7, t3 inspect its business. It contained no provision for the electic,n of PUBLIn 7X17 RT 3 ACIOUNTANTS, the lack of which nenrly caused it ruin oefoile it ra3. ' en in basiness three , D years, it then being involvont, owing ot it lax retliods and practices of l'avoritis, and wo7ad have :one illto the hands of a receiver had it not 13 - n for the 'T,O0C,000 of i_overmqent delAntits. It also got into politic. All it-1 ctors resided in six states, all bordering the North Atlantic ocean, yet the west and south contributed largely towards its sup!'ort. Busine ss politicians who refa3ed to do business on business principles r:ssorted to 'politicn for cavors they were not entitled to on their m.erit. Ito not cur -FurSOME OF THE -ORST pose to discuss the great political ** BANK war" FAULTS OF SECOND which paralysed business in this countr y for a UNITED STATES BANK decade, its enoll to la- r that the bqnk engaged In the iresidential camvai gn of 1L_3 ith all its wealth and influence and lost out, President Jackson being re-elected b7 a lari 'e I.Ijority. Feeling that the people hal vinclicated his act I v:itoin; the bill :oenewing the ban k's chartr, the President nex t had the government's deposits rerioved -prove the undoing of that financial institution. After such rerfloval the bank continued sev eral years under its Federal cha rter and when it expired it operat ed under a State chrtrter, but the act of c. .oving the'ovF. rnment doi.osits , so destroyed public confidence in it at it never afterJards ropsered and had to liquidate at a great los-1 to its shareholders. Her e wo have two valuable lessons: FIRST, the I7FLUTME OF PUBLIC DEPOSITS; SECOND, Tilat a FEDERAL chart 2, per se, thoucl I! 0 OPOLY Is bettor +1, r 1 -15, STATE charter. ?. a ant; The faults of our 01(.1. sTAT13 SYsT= ar3 too numerous to if that epoch in ArriricP,n fInuicil hiBtory Ilay be referred to S1TTE. as HoTever, 7e shall direut at+.ention to three of the rtrincirrl faults. FIRST: The fault of faults -ras in its lack of H7AD or directinr; force. business, and each bank Every one, so to speak, Tas in the bank— '"as issuing CURREITT CREDITS. If a pJrson of doubtful finnncial ability failed to secure notes from a .A37r)ns1ble and conservatively managed bank, he could secure acomno— dptions frci:. cat" concern. So the failure of the rild cats' to redeem their notes in [.:old brought discredit on the uound institu— F1'ECOND: tions. The next fault ,, ra that most of them had insuffi— cient caritql, and the notes of the weak ones drove froll circulation those of the best banks, thus iliustrRtinr the force of NGresham's laws. THIRD: The next greatest fault was that a large majority of SOME OF THE WORST them issued notes altogethr on corcial and FAULTS OF OUR OLD individual depouits as reservee. STATE PANK SYSTEM are entirely too timid to form the solp basis of a bank note circulation. Such le7)osits The individual deposits his money 7ith a bank confidently believing he can it it any moment on dennnd, and he is not going to wait until ictral darer arises before making demand, for if t'ere be a sl17ht ru,Aor that he may not get it on demand he is go1n;7 tc crUl for it. 7,ut 7ith PUBLIC DEPOSInthi:2 is not the case, for their custon(4 ans will investi7ate rumors, (ild in 1 doing so are not crazy like individup.1 depositors, and finJing the bank to be solvent they are contented. rurthrraore, PUBLIC DEPOSITS such as state, county and :amici-nal taxes, are usually collected for ten to trel7e 1:tonth'3 in advance to run those governments for that reriod, tTlat one rany calculatJ with their stage r:t all seasons. a : de( r; or certainty , The bulk of such taxe to in the farming sections are collected at the season the Ilrinciral croT, is 7ar"pceted, tat season when the bank's rerves should be lp,rest and. its most di21cult to mnintain them. -16 TIe olai rvo.,tes of our present NATICMAL ANiING rYSTEM o no tat it woald 7(,)-orm our currency or ban?- inp: b13iness. only object in a L-ost devasting Their to f'.1rnish a market forovernment bowls durin The bank notes have been :a(1 e les . War. secure by ench amendment to the original act, bo:inning with a 90c/J1iue of 5) bonds it is now a 100:1) issue of 210 bonds, and the only reason the ( latter are at 1:ax is because they may be converted into CURE7 3NT 2 CR7P,IT. Let us enrage in a great wax or ]:eet with a few years ha7:. tims, thus necessitating a billion dollar bond issue and tose bonds would fall to a dividend bearing basis and entail a t:'emendous loss to the .bans and create a lanic wTiichwold r77.1n the country, The 7,cope of this *paper will not permit of a full discussion of the many defects of our present financial system wich 13 almost identical with that of the Colonies 1ften the Constitution was ado:vted. 71e shall confine our criticism to two of the most iml)ortant defects: (1) To the LACK OF ELASTICITY (71.7 On 7ANK NOTTS, and (2) TO t7cle I7P1,7in7ILITY OF OUR 7ArK 7 SRVES. (1) PRINCIPAL FAULTS 07 OUR NATIONAL BANKING SYSTEM This LACK OF ELASTICITY is due to the fact that our bank notes are bond secured, the banks Issuing and 2'etirin::: them being actuated solely by the stage of the band market instead of the rleand for curren t credits. Hence they rerform every office of fiat money by remaining in circulation until they wear out. use as resorv. noney. They inflate credit by their Some of the states have no reserve laws and those that have ma17.e distinction between bank notes and real monpv. iLi. Fowler, former chairman of the House corinAtee oh Banking and 0.1rrency publicly declared, in December 1907, that no less than 200,000,000 of bank notes were then used as reserve money. Its much easier to criticise than sugest a remedy, but we can see but two ways of curing this defect, First, Either by annihilating the state banks and trust companies and :lacing government inspectorfl in each National bank. (An impossible remedy because Congress lacks such power, and if it expensive) ossessed the power the remedy would be too Second, Or by oranizing ONE CENTRAL YANK OF ISSUE or SEVERAL DISTRICT BANKS clotl od with exclusive reserve responsibilities. To demonst:oate the disastorous effect of the INFLEXIBILIT Y OUR BANK RESERVE LA?, we give below the status of the reeerves and :reserve deficit of the Nov. York Houle banks the 1:11:-st nine weeks of the 1007 panic: Week endilv;: Reserve (leficit: October 26 Novenber 2 V 9 it 10 ,17 II .... a 30 Decer.lber 7 n 14 If 21 ,1,233,300 38,838,825 51,924,625 53,666,950 54,103,600 52,989,425 46,210,350 40,101,17r , 31,751,000 24.685 21.30-) 11 20.20if ,? 20.274 19.98 20.116 13 20.70c/0 21.2A/) ( The relort of the Comptroller's report of tho: --3e New York :.)r_taks were only 5 the banks of one city were 2O0 Peqerve per cent. 8i101T:1 that rfelle, the reserves below the legal test, those of above,above, and those of :leveral cities ranged from 30!.; to 100V0 above the test. Yet those New Yo;: banks AN APT ILLUSTRATION OF THE were exerting every effort within their power to DISASTEROUS EFFECT OF on secure cold, succeeding finally in getting - 100, FIXED-INFLEXIBLE RESERVES 000,000 frol.:t the Bank of England. were fri:htened out of their wits. The i:eople So were the :lanks throughout the - country, and as the law inlYoseo_ an individual responsibility on the;', each looked after its individual intomrs.st. It was a "hold tight to every thing you get" policy all the way round to the detriment of each and the public as well. The ‘istakc. was in allowing gole_ ex) - portations during the summer of 1907 amounting to llistake can not be laid to the door of any on any one city. )145,000,000. Such t, bank or the br-u-a:s of It 1:r3.0 the duty of all and, "what's everybody's busi- ness is nobody's". It was unquestionably r;ood ban:f-linr for those bank e to suspend specie pay2ients while the publi c was so fri:V,tenocl, but it was barlyirisr. to co1.1- )01 the3 to do so after 1 the fifth weak, and nothing but our monstrous reserve law forced then to do so. The brea.Kinr; (Towil of our bank reserves disarranged our whole cralit sYotera, paralyzed business in every branch, closed our factories and depressed the Liarkets for our crops to a frightfal extent. No other country has such a le.:•7,1 bu.Taboo to frighten the public into a panic. -18- Lets .noth7:r illu-;tration of that RI_JRVF, LA". the reserves of ten National banks loc ated in the Say that tate oiL Kanss are "1,000,000. If they care for their own reserves then the law wold reqire then to hold in their own vaults lnwful money amo unting to :.1,000,000. But the law 1;rov1 des that they lAay send 3/5 (600,000) to oi.e authorized ban k. in a RESERVE CITY. Suppon e that Lank be lonated in Kansas City. The law _rovides it ilast ainta1.: a :rve of 25,), of wA.ch 1/2 mtvA be in its own vaults and tie ,;:lance it may kee in a CTINTRAL RESERVE CITY. Suplpose it sends all of that (.7.eo7,it -perEitted by lw (525,000) to a bank in New York Cit y. The latte2 would be required to k1.:0- ) in / 1 4 Lmful money 25 of tllat ae10:Tit, or $131,250, in its own vallts. By t'As device the orirlmal 41,000,000 of de- ositf; of the ten p Kansas banks have been exp anded 112io (;600,000 in Kansas City ana 525 ,000 in New York City) rma the 1=fal Is)ney behind them has been rei ced nearly 40c/0 ($400,000 in the Kansas banks; 75,000 in the Kan :las City bank and i:131,250 in the New York City bank). Henry Dunning McLeod, in his HISTOY 07 ECONO:JCS, page 400, says, INFLATION OF CREDIT BY BANK "A surT:len increase of deosit s is, tT'erePore, nothing more than inflation of credit, exDEPOSITS IS FAR DANGER-aotly similar to a sudden increase of bank notes. Deposits are nothing but ban?: notes in ais7ine". 011:- THAN THROUGH BANK NOTES The YE7 YORK EVTNING PVT, in a well considered article on this subject, says: sInfltion throull excessive expansion of do. oA.ts is Zar :ore danLerous in ito Lil :diate results than inflation 1 :rou,e),7h , ecessive expansioL of bank not es; because bank notes will inevitably be widely aiTtributed, so that it will take ti]ao to Etcumulato them for a run by the ubl1c, whereas a run of depositors may begin on an ho- 12 , , notice". As credit 1-, LIfl:Ited by bank deo gits it is centt:y1 by their withdrawal. The ifJ.-tion ber;inLiw; at the beginning of the dull season and at the end thereof when the revers e action takes pllce. Of coarse, this is due to a large extent because the banks of the reserve cities riyfrom 2 to 40 for bank deposi ts. Then how can any well informed person doubt that we NEED B A N K 01/h MOLE THAN CURRENCY REFORM? -19- The SUFFOLK BANKPJP, SYSTEM of No-- Pngland wae the nearost a-i',proach - to a sound '17-1 -t tie, country Tha ever had. The SU77, ?0IJK BANK of Bostom was orcani7ed in 1818 and operated until 1863, when annihilated by our National syste. :rhen it bega n the seven etrong banks of BoGton had 50* of New nland banking capi tal, though but itc; of tie bank note circulation. The reason for such disarity was that notes of the weak country banks had put "Gre samss La7" in o-1)eration Allah drove those of the 3trong ones out, for thoae 'Inr.lound banks - rere discounting commercial paper right in 73oston and other comeretai centers of New England. So it will be seen that the SUTIFOLK reformed the CURRENCY as well as the BANKING BnINEso of New England. Of this Horace White, in his CURRENCY and BANKING, says: NEAREST APPROACH TO "Under such circlInstances the SU7FOLK t7lok upon it - elf the office of a comptroller of the CONSTITUTIONAL SYSTEM currency. It did not adrAt a new bank to the membership of the system merely because it had IN OUR WHOLE HITORY procured Q charter, perhaps by favoritisl:. , perhaps by fraud. It first satisfied itse lf the shareholders were men of good character and that the institution had been started in good fait h. Of course, the SUT7OLK could not prevent the newcomer from issu ing notes, but it could thhold its passport and thus prevent it from gettinz an extensive eircultion. The precautions which it took in admittin g newcomers were taken for the credit and good name of New England bankin,7". The object of the SIPFOLK was to enable the New England banks to redeem their notes in specie. At the start it had lilited cap- ital and it:3 officers and dicto:73 were without financial prestige, and had ti:o oposition of all the Boston bank s who Jater on when they saw it was for their benefit, ofite to its resque with all the caIltal nemossary to nake it the gromt smeorm it was. Here we i,ave another illustration c)- the : DISTRICT gYSTEU directed by ONE HEAD. Had quoh attempt been made ror the whole country it would have failed, just as did the two UNIT ED STATES BANKS, f(D. it would have incurred the ennity of the ubilsine ss would have played on the ::)eiilices of Vle people in the country districts, by telling that the SU770LK wao an attempt of the "blo -ted bond holder of State street" to Ilake them "financi al serfs". such attep.its were tried and it was callry3 the "even tail ed Bashawu etc., but they failed,'s those men were personally acquaint ed throughout New England and known to be real human beiirs. -20- T7) CAYAPTAN ivrnk note OUR:1NCY is sound cur-ency, 'but the instrumentalitieD tx-vi ii.erl, bin;' a 1-T7e thirty-four otron7 conservati7ely inao1. 1:anks, Ftnd no ne7r one can orrtn17e -Tith 131;s than!00,000 cRpital. ) - It Toilld be disastarous to us to ongraft t'neir CURRENCY PRINCIPLE on our weak .)ral. ing system, wher:: the banks K number :ore than 25,000 and new ones organizing daily by r7 0 differ, ent 7ovarnments. While the CANADIAN RAnING SYSTEM is Th tronger th-n ours it is not an ideal one by any means and not at all suitd to the conditions of our country. ciPally in the commercal curiter Their bank capital i3 prin- of CANADA, Enland nil Scotland 9nd a 1ar7e .m.'aority of the businss of those banks is done by bTInch es managed by clerks 7hooe authority is limited in a Aannr simil-r to the local railroad agents in America, arents rho can't put in one hundrfed feet of 6ide track wlthout goin7 through a lot o• rd tape. Urri,r our banking system the capital is o-rned locally and those in control possess absolute authority to THE CANADIAN AND AMERICAN grant creit consultin critside parties. 7ANKING SYSTEM COMPARED This is as it should. be and our 7onde7ful progress is more attributable to that than 2ny other orci fact. No one is in a bettJr position to :7r ant credit to 'mother than the very person ''rho Kno75 all the con1tiorn3 for that credit. nd factors forilim7 the basis Therefo7e ciote hi ith authority to act, and that can best be done by lettirr him bach his judgment "71th his individual capital. Therefore the conscientious practical politionl economist 7111 attempt to REFORM our banking system rather than CANADIAN 7ANKING SYSTEM i ritory. nd T ANNIHILATE N it. TIEN Th.: the Scotch system rlfInted in a 1!-Ir7, ter3 The area of ScotlinJ is less than one-ei:7hth of just one of the American states and their financirs are kno7n personally by a large Taority of the *.-.3ople of that country, -rile-r'eas a :la:i,ority of the peo: Evloinin of a county here do not knor the finnnoi.irs of the county. Therefore to CANADIANI7:our77ANING SYsT:",:. -ill never do. -71- The four i REMEDY for CONGRES t7. 31vie the country into BANKING DISTRICTS, by amenJing the INTER -STATE act of J1y 13, 1806, 10-:J .t,* on all bank rote circulation -J i exce- A those of National Kank! , aai nctes of thole INTER-STATE BANKS. 1i iuc1u uc1i exceltion the Let the aended act efine an INTER-STATE RANK by requiring that the charter of each 311911 grantod by some one of the states comprisinE the DISTRICT in its notes are to circulate free fron such tax and aDvide that such charters clntain these express provisions: (1) That each bank shall .1)030.9S AMPLE CAPITAL. (2) Be Controlled by RESPONSIBLE HESIDENTS. (3) Elect CENSORS by RESPONSIPLE MINORITY. (4) Elect RESPONSIME HEAD with VETO -power. (5) Let states nake thel:1 fiscal aP-ents. REMEDY: INTERSTATE BANKING FIYFITEM. Lots take u (1) those five 1,s7r•equisite, in the order stated above. CAPITAL. Let the CAPITAL Of each be 05,000,000 of which 000,000 should be re- esented by its 8/, preferred stock and , j ft0,000,000 by its 10:: common stock. , 2 . 0110:!9, Let the treferred be paid as r,5,000,000 each and 1!1,000,0U annually CLATAL SHOULD BE AMuntil the whole of the preferred is paid. CTe. PLE,- NOT EXCESSIVE. ate the common out of the profits and issue it vozlen all the preferred is paid. Let the 'ro.j2its after defraying ex- panses, payment of authorized divldenTh and croating co]n:...on ltock the states comprisiw,: each BANKING DIFTRICT in be olvided aon proportion to their e:osits, less any taxes ir&osed on the bank or its circulation. (2) CONTROL BY RESPONRIT 1SID-A7NTS. 4LEXL Provide that the power to INITIATE in the BOARD OP DIRECTOR COLON SENSE METHOD r Lot the charter an obli ):ation) be vested the :members of v.r ich - elected the ELECTORS of their resectivo St tea. of 77n1ands.3 07 CONTROL NECESSARY Define an MECTOR, as does the Ban POP GOOD MANAGEMENT. charter, a resident citi: -Ien owning in good faith 1 2,500 of the bank's stock. -22- Give each DIRECTOR a REPIT,SENTATION -ned in his state and on the Board in izoportion to the STOCK o7. PUBLIC DEPOSITS furnished by his state and its subsidiary ,',overnmentsi thus giving the TEMPORARY CAPITAL REPRES -1 TA TCN with the PERMANFNT CAT'ITAL IF CONTROL. (3) CENSORS. Designate each city of 50,000 in 1it9.nt5.3 in each 7:MIXING DISTRICT as a separate CENSOR'S DISTRICT and provide for the el.-yction of one CENSOR every four 1:.ionth3 by the ballots of TTORS residing in the CENSOR'S DISTRICT in which such electtilo7L, ion is held. Let there be three CENSORS, serving the BANK one year each, eleet'.)(1. four _lonths froart, so there will be two old 01'103 in service when the new one takes office. Define a CEkrOR to be a pu7.- LIC EXPERT ACCOUNTANT residing in the C.T7SORI S DISTRI CT fro'l he is elected. ich Let the charter erloower the CENSORS to a.1.1.orvise, all EXPERT CENSORS SELECTED BY elections, verify the stata:ents, audit the ac- MINORITY BACKERS ARE PAR counts and inspect the transactions and proper- SUPERIOR TO BANK EXAMINERS ties of the BANK. Let no two of them serving the BANK at one time be residents of the 5“.--4,::e state. officer or director .,•::Yo Prohibit any voting for or using his influence for or against the election of a candidate for CENSOR. The science of accounting is a sim13 one, and in our 1 . rge, olties rclay be found ^, .3 CO .1.otent ones as there are in London or Paris. is to All 7‘-e have to do sirniae and 1.:ractical method for their election by the RESPONSI13LE MINORITY OUT 07 CONTROL. Such CENSORS would not be rushed for time as are our 7overn. ent examins, Coming fro.. the cities all over the BAITi:ING DISTRICT they would advance to th7! officers the latest and best methods of checks. They would prevent the forLiation of cliques on the *inside" and destroy ' siness poli,bu ties" in its control. Three would leave the BANK annually going into leparate sections of the 7ANKING DISTRICT acquainting the public as to the actual manner in which the BANK'S affairs 7ere being conducted, and in that .my nain for it the confidonc,Ye of the public. - -23- (4) TIP fEAD SHOULD A VT.TO PO'7,R, the qame ail the Gov- :y.nor of the PANK OF FRANCE. - Req;ire 1:1: to o.:1-1 20,000 stclk, as reclizi.id by the Governors of the banks of France an England. Let hi:. be elected by the RANK COnITIONRS of the states comprising the BANKING DISTRICT, to coesponi with the election of the HEAD RES.PONSIT-3LE HEA D of the .:3ANK OP PRANCE. - There will be little or ELECTED LIKE GOVERNOR no )0l1t.,1 cs in t 13 selection, for the reon OF THE BANK OF FRANCE that there will be, on an average, twelve TANK CO.i :IE; -IIJNERS for e:-Ich BANKING DISTRI7T, thus ne,cessitating . eleven to vote for a cancUdate 1iv1n entirely beyond his cyrn 7one. (5) THAT FITA77S MAY LAKE THEM THEIR ITISCAL AGENTS for our local govermients in 13311111g and 2.ark2t1n[' their bon's, a 130 to become responsible for the ftinds bclonginF to these local gover n THESE INTERSTATE BANKS rents by designatin, the local ltinks to collect - WOULD GIVE SMTE GOVERN- and care for them, the loul bank acting as the MENTS agent of the BANK OF BANKS. FISCAL AGENTS Insteqd of 11aving 29,003 banks now in a political scramble for the sone :-:400,000,0 00 funds belonging to our state and subsidiary itate r;overruf.'Ent s, as at present, those local banks would seek such deposits from the CENTRAL BANK on their ind1vid188.8.131.52 merit. Of course, the CENTRAL PANK wc have no earthly use for them in its w...rn vaults but wc1.11. Ilr.ve them in the local *banks or channels of trade, except when its reserveq nr-sd reidlenishin: it could Lake delan.nd for such an amollnt as the occasion demands. It will be observed, therefore, t,- at each BANK OP ''ANKS will be CONTROL as well as in OPERATION. It would be in- iir•Ictical to expect the best bankers of Texas to vote intelligen tly for residents of Florida, for there is little business intercourse between the bank,.rs of those two states. Therefore, the L.17CTORS of each state should vote only cor the DIRECTOR of that state. As the busints of the states will differ in amount •:J.ve each DIREC TOR -24- e vote on the BOARD in idro l ,ortion to the stock oned in and de-oosite furnished by is state, end as some DIRECTORS will reside further J:rT7 the executive office than oth rs each should be requied to retain his 'esidence in the state from which he is elected. INTERSTATE IN CONTROL S In this way the CORPORATE (oepreme) power will eceli cle WELL AS IN THEIR OPERATION in the several states foredng the BA7KING DIS— WITH EQUAL REPRESNTTATION TRICT, lust reversirv the -i?resent orJer of such corporation control in this country. As the DIRECTORATE of a corpor— ation is its legislative body it could, by by—l aw, cm ate a BOARD OF CONTROL to remain at the executive office and perform euch duties as the by—laws impose. The BOARD OP CONTROL would be the afeents of the DIRECTORS. With four such banks operatin in t le country and an act of Congress providing for the retirereent of our present bond secured bank note currency, it woe.ld be but a short time until that would be replaced by a sound scientific currency which would expand and contract to meet the demands of trad e. Such BANK OP .NKS would reform the banking business of its dThtric,t ',ear Tore effectually than all the laws which Congress and the Legi slatures Ilight enact In e century. Lets see the economy and sirplicity with which this system could be operated. The CENTRAL BANK of each district woald form CLEARING HOUSS in each city with . 1,000,00 0 banking capital and eurrlus eendine: them its CURRENCY to be countersigned by them and circulated as the demands of trade required , just as is being done at present by the fire insurance companie s. Actinga s the agent SIMPLICITY, EC(Y' :CY AND for the CENTRAL BANK the (..LARING HOUSE would SECURITY OF THIS SYSTEM discount paper for the banks of that CLEARING HOUSE DISTRICT. The C7TTRAL TANK would keep accountants at each CLEARING HOUSE to report to it daily as to the status of the business and that Its in'ItrIction s earried out. This would be far less expensive than for the CENTaAL :!ANK to have branches, as that would be a reduplic ation of the work done -ey the local banks by mere clerks and an unne cessary expense in —25— equiplirr and rqintaining bankin.7 houses, and it 7111 be 7:a:r beter for the uhl1c Interest, as the capital of the tanks formi ng the CLEARING HOUSES would be additional security behind its note issues. In other words, the CENTRAL PIJTK would 1)-7 farrinv out to the CLEARING HOUSES its monol)olistic : 1 rivileio to issue currency and r!,ontrol Of public depcit3. hands of specultors If a local bank should fall in the the local CLAIITG HOURE wou10, refuse to do business with it, thus so linitinf: its .i)siness opera tion as to )ake businso umiroJltable. The arq 'jr Qi1 INTMUSTATZ (1) W1y then° CENTRAL 3ArKS 11 - rathor than PI D7! AL 111 be r1,07-.tions: Because the states would not nake them their fisca l unless they possess the sole 1)o:7(n' of tl.rAr supervision, ..nd until WHY AN INTERSTATE avTKING the SYSTEM IS PREFRABLE TO A our state ;rid s-lbsidi'lry state ['overniJents NATIONAL OP STATE SYSTEM controlled by ONE C-1NT:J.AL 'ArK for each district 400,000,000 of 'public funds belorvim- to it is out of the question to thoroughly reform our banking business and take our twent-r-f'ive thousand banks out of politics. (2) Because it i.- o, 2.t of the question to hope to reform our . banking businosl Fv.) Ion, ro legilltive bodies possess concur- ANOTHER REASON rent authority to enact laws on ppocisely the IN TAVOR 07 THIS same subject nattor, in the same territory, and .3,A.N.ING SYSTEM at Vile 'lame time, us i3 the ease at present. As it would bo !.nconstitutional for Congress to anniA.1, 1te the :Ante bankinv system or l':::.cvont those governments creatik, iJanks , the only way out of the dilenim is for Congress to conlitionally surrender to the states the authority which rightfully belonged to them under the Constitution, but usuryed by it to meet the exigencies of a terrible war. -26- (3) the T3ecausc 1. -:1an the public call t) better t!aught TRUTH 2- THATABANK NOTT ISACtiEDIT AYD UOT MON7Y 2- and that it is no the Juty of the government, -Federal or State, to issue or ieco;). ;.erion7lible for CURRENT CREDIT than any other species of credit, 7rhether it be evidenced by a bill of exch ive, a check, or a 1:ronis3ory note. We can also under tills plan better teach the public that inasmuch as a cor oration is the cretture of ANOTHER REASON tl7e state, that its control Inay be just what IN ';'AVOR OF THIS It 'RANKING SYSTEM duties imosed upon their CORPORATE P2PRESENTA- creator3 will, and that sliecial business TIVES may be done in a manner far rnre satisfactory to the public interest than by their GOVERNMENT REPRESENTATIVES whose ';uties are far more ralltifarious and who are frevently elected withcrnt rcrAr d for their 8-; acia1 fitness for such businoss, und that by divorcing . ) the government from this business 1:re ra..ove the temptation of the evil minded to corrupt our bile officials. (4) Becau7,e t_L.s (INTERSTATE) :lan is the Con, :titutional 1..ethod, being in pcfect harmony with our - yste: of ; ov.717nment, which means that the states shall do for thoEselves everythilv within their 1. :ower, with a Federal government holAng them in check. Congress can apjay this corrective indirectly by amending, from time to time, Its definition of an INTSTATE BANK when it becoos convinced that the public interest Teviires it, for unless the carters be amend ed ANOTHER REASON to meet the req,Are:. ents of 10 Coni:xessional IN FAVOR OF THIS definition tie Peeral tax 13D1Ald rlake it iMr4110.u- PANKING SYSTEM tical fox silch banks to operate and employ the amount of ca: !Hital reui-od. The c*.-latT:r is to a coryoration just what the constitittion is to a state, and for such a service corporation orvinp; several 7Aillions of peo-ole widely seatt e,.d, the same care should be exero1e-1 in its drafting is that of a great governont. -27- Pt' (5) Because under the INTERSTATE ayster. we could more eileect— ually eliminate politics from the banking business than under either a r"D7RAL of qr"ATI-J sy3tem. There are but four politicql zones in 1 country,- 7- tional, State, County and Municipal. As we i'ixrD t"re would be about twelve states in each banking rlictrict, thus ivinç 1.7:-1 twelve VOTING UNITS in each for the election of the HEAD. If it -ere a PFIDERAL PANK then tharbe would be a calice for THE PINAL REASON the political tower selecting the HEAD to reward IN FAVOR 07 THIS some politician who ailed him in getting his own AKING SYSTEM - osition. p The same thing would be true if it were a STArIT 7ANK, but bein, an INTERSTATE corm ration el large 7 majority of the BANK COM_ ISSIONIP S would have to vote for resiling entirely be-ond their 1)olitical zones. rsons It in certain that it would not have as much politics in it as exists to .1 ay in -. either our Federal or Stte systen. EITDORSEL71T OF Pr_UDIMS. 1, the undersigned, have read the foregoing prosp ectus for an INTERSTATE BANK OP ISSUE, but have not had the time to , 1.'ve it the careful connideration the subject deserves, yet on the whole it apenrs to be the best solution for our perplexing financial problem to which it attention has been directed. Respectfully signed, !TAME. ADDRESS. 077ICE OR )i CATION. os t41 2 - C ( t - C't 7 / zv; et-4,0„. c< C-7 a, 4, A.7 c r't • ic*oes. (Lt L(' crd 41vA , CP( 4.7 64..0 A•Ae‘.: "" e L. 77 *-.) • •,„„.11 Ahook.. t 11--trtr1 3 4 e k- i c /0 . a-Oen j C 3,9 erire 071-0 f C Ce-410 / 7 1 . /91 1/7p .1 ugh the ,8. ...nsions throw :or the guarangovernment or )ined. It is not .mous advantage tve conferred on one serious obi ended in their in the New York • the distrust of rs in their banks. )een guaranteed the "chain bankhave been in the their personal noney. 1, .ificates, chat ti goan certificates ..g Clearing balances in New _ has now been t. ilL doned. ,..;() risk c Loan certificates have been in actual ser- is the m o . vice on this occasion for fourteen weeks, of the far though it is altogether probable the actual •the leading life of the certificates this season may, number being owing to the insolvency of the four banks ly facilitated. referred to, before taking up such issues, I should like be prolonged beyond the eighteen -week limit, observed during the panic of 1893. however, that it The issues of this and previous years, w ith that such consolid. the duration and maximum amount, have should LI any way been as follows: or monopoly of th, When When Total Maximum issued. cancelled. issue there should be a Issue. 1907.. Oct. 26 'Jan. 28 $100.000,000 $84.000,000 centre in New " 1893.. June 21 Nov. 1 41.490.000 38,280,000 the present r 1890.. Nov. 12 Feb. 7 16.645,000 15,205,000 it is consid( 1884.. May 15 June 6 24.915,000 21,885,000 solidation 1673.. Sept. 22 Jan. 14 26,50:000 22.410.000 1864.. Feb. 29 June 13 17,728.000 16.418,000 the numbel 1863.. Sept. 15 Feb. 1 11.471.000 9.608.000 tutions goir 1861.. Sept. 16 April 28 22.585,000 21,960,000 thought that 1860.. Nov. 23 Mar. 9 7,375,000 6.860,000 ject to be s* 45,520,000 certificates taken out by failed banks ing into do still outstanding. banks and t , 1)91-)kA., 4.40 4 1 671 7 g I6 _ . 1 6ep r-411 First 7ationa1 Bank $f Oxnard, Oxnrrd, Calfforula conditions would warrant the loaning of 2 of deposits on real car estate mortgages would aid very materially in our giving credit. Our savings bnnk ot take care of all good mortr7age offerings and we would be better protected if loans could be made on real estate. of savings de( . # .41 Would prefer that national banks be allowed to invest 8 of commercial deposits, if condiposits In real estate loans and say 2 locally, warranted it. tion, 1 Heyor 0 ur nc tmen Apawers-recarainr onalibqnk wild/ VIE) ‘1_ rr6pkivni. p,mgairdilu*ItAD 9ie f ,'. ;/ !/ : .• 1 10 a , ' , J e nal banks to loan €n aeal distate i6rt AS. 4 king Lew. rerm . W4Q14 say ths we have ,in .ecrffrintfrciirl;rtrilirs —littrik rance9 i N tO earttr 1/,/ ff IA: / ..t11 7 4:9, mo '7E, consider a savings department or the amendment of the Yatirnal Bank lx,ws permitting loans on real estate a very important and necessary matter for country banks, whore the refustl of t! loan on real eatate would drive a good customer for the present as well for the future to another institution. We consider real estate cur best secur- ity and heartily favor tho amendment, loans to be linited of course to 54 or 6 of conservative actual market valutation. rro+rar ivoirrami l " e-eetne•mitriluste, ,4ereityPer."' t e Lead 1 , 71:. /tArm , , et,ic.__,11 16717 Third National Bank, Dothan, Alaboire] • 2. , olepoLi)s, rius sbothe requir tors' (Ps a whel 06 accumulating specially unt of surpl entir i.ed the pre nt lew; the r ote) out di enti se. for suc QD, 1F eccy of receiNt of your favor cf the 9th, and answer herewith be to ackno led /T he enclosed Judging frf as flossible. and 1111 ar y)4r qtie4tios as t, ut we did not half orm-,ani Ai Vet)01-tq 'ty_at,' scine fath 1 .tc f , , and tVeyefore If • a as des ng s in tter re ;1 l oks of the 14th, please to our elatifor ; ulki havq. een fiot' t •4 4ne s thtt we may comT y with your recluest. f •ear us i NJ , t. 3 . ,2. Tlk laws, We are deeply interested in the questions asked, and hope that the the requirements through the influence of the.;omrission, may be amended to meet and varied conditions. r of a cre:t, growinc country,euch as is ours, with wonde -ul "u abo t the advisability of handling real estate promiscu"j vie W are somet a national or commercial bank, except under prorer condilous1:: as,etcuri are best conserved tions;--Taut are equally firm in our belief that local conditions sound end conservaby -local management as nearly 98 possible, when consistent with tive methods. more _e doubt th(a advisabilit, however, of allowinr national banks to loan e in any community, agrIcultural, than lOof their corTercial deposits on real estat . uld not appear PC444c or otherwise. But on savings deposits, the limit of 310wo We favor at the same time allowing a national bank to accumlfte /4 40 sive possibly. enb and if the local board of direca surplus account, over and above the require - meet and agree to allow tors - who ought to be familiz-r . ith local conditions , we believe the law should the finance comm'ttee)loan that fund on realty securities allow it so handled. I'Go financial economy, Poss11:2y these opinions are of no value in the greet field of There is no use calling s but they are based on experience and local conditions. nal banking law at present sptde something else to make it sound good, and the natio se the banks, we believe, as a is not meeting the re:uirements of the times, becau or indirectly, and doing sc whole are nor/ either violating the realty law openly Some sections their territory. because they feel that they must meet conditions in some banks make small loans, and seem to call theirs realty bonds, and buy them; money, are forced to take realty later by reasu of the demands of customers for more "pdditionl security" to reasonable to permit thertleep at nights; others cell it and white, and take their amount of personality; while some put them down in black administer it. At any rate, the ".'ncking up" as often as the department sees fit to the efforts made to enforce it. :70 law law seems to be evEded or violfted in spite of nearly every community, and it seems is a good one that meets with such -ensures in t depositors and the banks (n, to mento us that it would be far better both for the due and reasonable provisicns, and tion the Banking 7)errtment) to amend the law with who go beyond the bounds of conservawith penalties or fines sufficient to check those tism. 8v 1-0.1tLetA.L &rr)tk.) -12 :: 4 .06 ,Pg C.' a A-444.1 9r; -la ria.- 4 et; _t ion Aw 624-4 4 411,,,„ a_ALA eLa4LL.. , Tell City, Alaba mm: c_gA, V.icact - Do kiiY;i4eteteetped.retAate•ofiejfrana.44, 011 : —me prohibition against such loans was written in the act, over a -1 7yL Atf 4 1 / 1 large area of the nation real estate was largely specultAive in value and /therefore loans upon same were either hazardous or noni-liquid in character. Conditions since then larive changed. Real esttAo, except in spots easily avoided, has every element that goes to make up first class security and in many instrAlc(!s loans up n it can be collected with greater ease than mercantile or mtnuf-,cturing parer rnd at the same time the calling of such loans is not marked by the business disturbances incident to the two latter classes of paper, when called. limit to real estate loans with national banks which does not exceed capital or say 20\10f total depmsits would vastly benefit national banks now organized and would ultimately result in the conversion into nationals of the great majority of state institutions save those with trust comr,vny features. :von here m div . sion of the business into two concerns, a national bank with separate trust company, would be freuently witnessed. In my judgment this privilege must be extendec: national banks if order is to be brought out of existing chaos due to the dual system and before the problem of currency reform can be tackled with any sLow of success. m.i!airm444...4*--Arrr-