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Dana Company, in the office of the Librarian of Congress,
Entered according to Act of Congress In the year 1908 by William B. C.
Washington, D.

Vol. 87.


newspaper of 80 to 96 pages, published in time for the earliest
mall every Saturday morning, with the latest news by telegraph and cable from its own correspondents relating to the
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A complete index to the advertisements appearing
in the present issue of the Bankers' Convention
Section will be found on pages 89 and 90.

That the question of reform in our bank note
currency should have received less general discussion at the Denver bankers' convention than it
received at the convention in Atlantic City a year
ago, is perhaps to be accounted for, first, by the
fact that the turbulent conditions of a National
election, with other issues to the front, do not
favor proper discussion of a subject of this sort, and
second, by the existence of a currency commission
appointed by Congress for the ostensible purpose

No. 2,259.

of framing and submitting a comprehensive plan
of reform. The situation in both these regards was
such as to make it just a little embarrassing to
take up with the usual vigor and energy that
particular question. In addition, it may be said that
the wish of a year ago, to insure immediate action,
was sharpened by the feeling among all observant
bankers that the financial situation was approaching a crisis in which a proper bank currency system
would be of urgent importance. That this last
conclusion was well founded at the time, no one
familiar with the actual course of events during- the
two months after the Atlantic City gathering is
likely now to question.
But interest in the question of a reformed currency is far from dead among the bankers of this
country, a fact of which the Denver Convention was
itself a sufficient indication. They keynote of the
proceedings was sounded by President Powers,
whose annual address at the opening of the Convention devoted itself frankly to the question of
currency reform. He plainly laid before the Convention his belief that the panic was the strongest
of arguments in behalf of a scientific bank currency,
and that the construction of such a system must be
trusted to men familiar with practical banking
rather than to mere theorists. With perhaps a side
glance at the peculiar proceedings of the last
session of Congress in its debates, its legislative
measures, and the composition of its currency
commission, he added, "they should be men who
understand the necessity for and importance of
ridding the government of the dangerous legal
tender greenbacks by their final redemption and
retirement, by a sane and safe means of gradual
change from our bond-secured currency to a system
which has proved sound by the experience of other
More in detail, the same subject was taken up
by Mr. B. E. Walker, President of the Canadian
Bank of Commerce, who spoke on the question with



the authority of a practical expert familiar both tion through period
of expansion to the next period
with the American and Canadian systems. Mr. of contraction, and
from one year to another, and
Walker first pointed out the difficulty which every- from one
part of a year to another, and from day
one recognizes to exist in'dealing with the question: to day, there should
be in addition to .the constantly
"The profound line of cleavage which made it so varying total of checks,
drafts, and such credit indifficult to create the first bank of the United States, strument
s, with which most of our trade is done, a
and which destroyed it and its successor, still exists. species of credit-note issuable
by banks which can
It lies between those who favor a system of banking be varied
in total quantity in proportion as the total
good for the nation as a whole, as opposed to a quantity of trade done with
such instruments of
system of banking which may be right or wrong credit varies. And there is the
additional reason for
for the great number of units engaged in the busi- such a credit-note that whenever
, because of panic
ness of banking, but which is clearly not right for or any form of distrust, the
ordinary currency is
the nation as a whole."
hoarded or additional cash is being held by banks as
What, then, of the actual situation? Mr. Walker reserves, some legal credit currency
becomes more
analyzed the government's statement of the amount than ever necessary."
and kinds of money circulating in this country in
This argument seems to us irrefutable, and it is
the middle of the year, on which he commented
not less impressive because it comes from a pra'ctithus:
cal foreigner who can judge from personal observa"From this it is apparent that in the United
tion the working of two radically different systems
States there is no currency of the kind usually
in two countries as closely• akin, in their industrial
known as bank-note issues, the notes issued by
system, their habits of every-day business, and their
national banks and guaranteed by the Governm
ent geographical character, as Canada and the United
being a species of money based on the debt of a
States. It is, moreover, absolutely in line with the
Government. There were bank-note issues before
opinion of practical European experts who have
the war, and, as we know, they were retired for
studied our currency system and its workings in
arbitrary reasons connected with the finances of the
the light of their own experience. On the part of
Government, and not for the purpose of improving these people judgmen
t is unanimous that our presthe system of banking. We also know that while
ent bond-secured bank-note issues, rigid and inelastic
the national bank-notes which took their place
as they necessarily are, have three very positive repossess good qualities not possessed by the old sults on our finances
—all of them evil. Creating as
State-bank issues, they also carry with them the they do a wholly
artificial motive and basis for ingrave defect of rigidity which accompanies nearly crease in such currency
, they expand unreasonall Government note issues."
ably at ordinary times, thus offering a direct induceThe Aldrich-Vreeland bill, it is true, provides for ment use of bank resources
, at a time of inactive
an "emergency currency" which might be used to trade,
in speculation. Prevented as this currency
meet an occasion of real need. But the restrictions is by law from a quick response
to slackening trade
of this law "practically amount to an admissio
n requirements, they leave the circulating medium, at
that the issuing of credit notes is too dangerous
a a time of industrial reaction, in as great a supply as
franchise to be granted to a bank under ordinary at the climax of an industrial boom,
and thereby
circumstances," and, "the whole machinery
for stimulate export of the gold which lies at the basis
these emergency issues is so difficult that the act of all our currency. Finally, such is
the delay in
may quite fail in its purpose." Of the truth of taking out new bank-note currency under
the presthis latter statement, we imagine bankers who have ent system, and such the obstacles
thrown in the
studied the provisions of this patch-work of legisla- way of it by requirement of governm
ent bond coltion have already a pretty well defined suspicion. lateral when such bonds are hard
to get, that the
It only remains, then, to determine whether a bank normal remedy of such a "currenc
y famine" as ocnote currency not .thus restricted, and suitably curred in last October's panic is
impossible to
adapted to the real needs of commerce, is or is not apply.
an actual necessity in the United States. There
These are three very grave defects. Taken toare public men who have declared it is not; on the
gether, especially in the light of the peculiar needs
floor of Congress, last spring, it was asserted that
of a country with the industrial, geographical and
the present system, if extended on the basis of
political character of the United States, they are
pledge of other than Government securities, is all
enough to condemn the present law and system.
that the country needs. Mr. Walker thinks otherHad the distinctive phenomena of our panic of
wise; he has this to say on the matter:
1907 occurred in any other country, our own finan"There are countries in the Old World where
the cial experts would have been quick to declare that
fluctuations in the volume of trade and in the price
the currency system of that country had simply
of commodities and securities from one year to anbroken down under the test, and that no time ought
other, and from one part of the year to another,
to be lost in contriving another system. That the
are not so violent as to require much elasticity in
the practical bankers of the United States fully recogcurrency. But in the United States, where the nize
the nature of last autumn's experiences, and
volume of trade and the price of commodities and
that they are not likely to allow the governing ausecurities vary largely from one period of contracthorities to forget it when the turmoil of a politi-

cal campaign has passed over, are reassuring facts
which confirm Col. Powers' view that the ,
good results of such a shock as that of 1907 may be
great enough to offset the immediate financial


of the prepared addresses, that of Festus J. Wade,
of the Mercantile Trust Company, of St. Louis,
was entirely devoted to the subject, and a very convincing and conclusive address it was. The report of the Federal Legislative Commission is given
up very largely, almost exclusively, to annihilating
the scheme, and this body demonstrates •that the
plan, so far from preventing panics, is more likely
to prove the mother of panics. On the floor of the
Convention the subject elicited most earnest discussion, and the gathering finally put itself on record
as opposed to the idea by an overwhelming vote.
Mr. Gilbert in his trenchant remarks dealt a blow
at once to the Utopian scheme of Mr. Bryan and
the fantastic and equally futile scheme of Congressman Fowler which Mr. Taft appears to favor.
What for instance could be more conclusive or
more to the point than the following:

The proposition to guarantee bank deposits was
the question of transcending interest. One of the
gratifying features of the work of the Convention
was the consensus of opinion condemning the
scheme. The matter was taken up for consideration on the morning of the very first day, namely
Monday, September 28, at the meeting of the Savings Bank Section, and this section condemned both
the idea of postal savings banks and the bank deNow just a word or two about guarantee of deposits.
posit guaranty scheme—two equally paternalistic The impression prevails quite widely that the injection of
proposals. In the afternoon of the same day the this principle into our banking practice would- be a sure
Clearing House Section had its meeting and took preventive of panics. This indicates mental confusion.
not develop from the fear of depositors that
similar action. The resolution with reference to Panics do ultimately get their money from embarrassed
they will not
the matter presented at the Savings Bank meeting banks, but from the fear that they will not be able to get
attracts attention by reason of its broad and com- it when they want it; they cannot afford to have it locked
prehensive character, showing that the measure is up, and any insurance law which provides that the losses
objectionable on many different grounds. The reso- of failed institutions shall be paid by the solvent institucountry after the loss shall have been ascerlution was offered by ex-Governor Myron T. Her- tions of the
tained by liquidation will be powerless to prevent runs on
rick, of Ohio, and after pointing out that the loss distrusted institutions. Throughout my long experience I
to depositors of savings banks has been so small as have noticed that depositors seldom make a mistake in the
to be a negligible quantity, declares that any plan selection of the institution to run upon. They very seldom
a conservatively managed
to make each of those banks responsible by taxation in the first instance trouble
institution. They know intuitively where to strike the first
or assessment for the acts of one another, or to con- blow, and the second, and the third, and so on until annect them with the National banking system, is imated by fright and panic they attack every institution
"unsound in principle, confiscatory in form, that is distrusted or talked about. This is the course which
law which does
and inimical to the best interest of depositors, every panic follows; and no insurance on demand of the
be no not provide for the compulsory payment
stockholders and borrowers." There could
deposits of embarrassed institutions will arrest or change
more sweeping condemnation than this, and yet this course. The enactment of such a law would be an
the statements in it are entirely accurate. It is also act of injustice—contrary to the spirit of our institutions—
correct to say that the guaranty scheme is a contrary to that sentiment of right and of fair play which
breast, and it would be
"specious form of paternalism and socialism" and is implanted in every human danger in time of panic.
fraught with the gravest possible
that it would "tend to encourage speculation and
You cannot estimate this danger by studying the operaundue expansion of credit." The resolution re- tion of such a law in the State of Oklahoma or any of the
cords "the most solemn protest against the en- smaller States where banking capital and deposit liabilities.
action into law, either by 'States or the Nation, of are small comparatively, but apply it to one of our larger
the State of New York, for instance, many of
any principles so subversive to sound economics and States, institutions have deposit liabilities of fifty millions
so revolutionary in character."
and upwards, and quite a few exceeding one hundred
On the second day the Trust Company Section millions and up to two hundred millions, what would haphad its meeting, and also took up the subject. As pen if one or more of those large institutions should bein time of panic, and the
at the meetings of the other sections, debates oc- come temporarily embarrassed called upon to pay its desolvent institutions should be
curred on the point whether the section had the positors on demand? They could not comply; it would
constitutional right to consider any proposition not aggravate the panic and prolong indefinitely the possibility
of exclusive interest to trust companies. In the of recovery. Compulsory legislation, whether it shall reend, the resolutions under consideration, offered by • quire the payment of deposits on demand or the balance
is wrong in principle, illogical, unF. H. Fries,.whose paper on "Radicalism vs. Con- due after liquidation, old time institutions of the country,
just. Why should the
servatism" attracted a great deal of attention, were with a long and enviable record of wise and conservative
adopted by a vote of 74 to 5. At the regular ses- management and success, be held responsible for losses
sions of the Convention, which did not begin until growing out of the speculative transactions of speculative
are springing up all over the
Wednesday, Col. James D. Powers in his open- institutions, many of which
country in this age of excessive speculative tendencies?
ing address was unsparing in his criticism of the
Colonel F. H. Fries, in his address on "Radicalidea.
President Alexander Gilbert in his address on ism vs. Conservatism," before the Trust Company
"Vital Issues" dealt incidentally but very effectively Section, likewise delivered some effective
with the subject as tioted below. Furthermore, one against both the postal savings bank



and the guaranty scheme, and also declared against of the bank guaranty deposit idea,
because under it
giving National banks trust company privileges. all deposits would be theoretic
ally "guaranteed."
With regard to the deposit guaranty scheme he Knowledge of past
history and experience would
argued that the influence of such a measure would be entirely unnecess
ary. Any set of men, irrebe detrimental to the banks, the bankers and the spective of characte
r, ability or financial experience,
people. Under such a law the bank itself would could form
a banking institution in one form or
have no special inducement to accumulate a large another; put a
sign on the door, as they do in
capital and surplus, or build up a name for con- Oklahoma—"Al
l deposits guaranteed by the
servative management. On the contrary, the in- State"—sell their
certificates paying five and six
terest of the stockholders would be best served by per cent. and compete with
their neighbor who had
the prompt distribution of its earnings and a re- weathered financial storms,
and who would, by
duction of its capital to the least amount that it the operation of this
chimerical scheme, be recould successfully operate with, while profits, and quired to pay the
depositors of dishonest, inexperinot safety and reputation, would be its main con- enced, ignorant or
disreputable bankers. Furthercern. The consciousness of having deposits more, under the operatio
n of the law, the solvency
guaranteed would give to the speculatively in- of every bank subject
to that law, in times of disclined banker just the assurance that would lead tress, would be
questioned. Why? Because it
him to take undue risks for the sake of extra profit would not only be called
upon to show the solvency
and to the lazy and slothful it would give confi- of its own institution, but to
guarantee the deposits
dence that would cause him to become less vigilant of every other instituti
on in the State; accordingly
and careful, while to the people it would give a the contingent liability
of each bank would be
narcotic that would render them less watchful and greater a thousandfold
than its total assets.
more indifferent to true merit and trustworthiness—
The Legislative Commission of the association
all of which is undeniably true.
declares that the deposit guarantee proposition
Mr. Festus J. Wade contended that a deposit
would compel all banks, by force of law, to pay
guaranty is unconstitutional. Speaking of the unknow
n sums to unknown persons, for eventual
Oklahoma law he says the word "assessment" is losses
for an unknown period of time, and subject
undoubtedly used to disguise the fact that it is to unknow
n risks, over which the parties compelled
really a tax. The power to take is subject to the to pay
have no control whatever. It would seem to
limitation that a tax must be levied for public pur- be taking
property without due compensation, and
poses only, and an imposition in the form of a tax therefore ultra
vires. They ask if the inevitable
for purpose of private interest is void and uncon- effect must
not be to impair the present and deter
stitutional. It takes the private property of •the future investme
nt in bank stocks.
stockholders of solvent banks to pay the deposit
With capital sufficient to margin its dealings with
creditors of insolvent banks. This is not taking
the public, a bank next selects men of probity and
private property for public use. It is the taking of establis
hed character for its management; with the
the private property of one class of citizens for the
lapse of time the management establishes its efprivate benefit of another class of citizens, and hence
ficiency as well as its honesty, and a discriminating
is indefensible upon any theory of taxation or upon public entrusts
the bank with its business. The
any theory of just governmental principles.
growing volume of deposits and of business estabBut supposing the guaranty proposition consti- lishes
a good-will, which is one of the principal eletutional, Mr. Wade shows it must fail. It is atments of the value which bank stock possesses, and
tempted to make a horizontal rate of taxation on therefor
e a great inducement to bank stock investall banks—good and bad. How long, he asks, ments.
The guarantee plan, however, would seriwould a life, fire, casualty or fidelity insur- ously
impair the value, if not destroy the good-will
ance company remain solvent if the life insurance of a bank,
by placing all banks exactly on a par with
company made the same rate on the life of each respect
to financial responsibility. For it is to be
individual, irrespective of age or state of health; remembe
red that while each bank guarantees the
the fire insurance company the same rate on build- deposits
of all, each bank assumes the risks and
ings whether frame, brick, fire-proof, in towns and losses
of all.
cities with and without protection against fire; the
Altogether the deposit guaranty proposal furcasualty company the same rate on a man walking nished
the liveliest as well as the livest topic under
on the street as on a man working in a powder
discussion and consideration, and with so many and
factory; or the fidelity insurance company the same
such convincing arguments against the guaranty
rate for a bond of the dishonest or inexperienced
fallacy, it is not surprising that the association colman as it would charge for the honest, experienced
lectively, and all its subdivisions separately, should
and capable man?
almost unanimously have condemned the same. It
Conservatism, experience, judgment, education will be admitted
, we think, that the action of the
in the various financial problems, would count for bankers on the
subject is of no little significance
naught. A man, or set of men, invading the bank- and importan
ce, as indicating the opinion of those
ing field to-morrow, would be placed upon the best qualified, by
training and experience, to pass
same plane as the sages in the financial world. judgment on
the scheme. Necessarily, their conIrresponsibility would be promoted by the adoption demnation of
it must carry great weight.

Naturally the Savings Bank Section took a decided stand against postal savings banks—a proposal
of a piece with the scheme for guaranteeing bank
deposits. The Bankers' Association as a whole was
not so directly concerned in the matter, but
it also declared emphatically against the scheme.
The trustees and managers of the savings institutions, charged with such a weighty responsibility
in looking after the interests of the poorer classes
of the population, for whom savings banks chiefly
exist, would have been derelict in their duty if they
had failed to go on record in opposition to this delusive and deluding scheme. No one informed as
to the proceedings of previous annual meetings of
the Savings Bank Section could have been in doubt
as to what decision this body would reach when the
matter was presented for official action. This was
not the first occasion when the subject had been
considered. There has been discussion of it in the
past, before it became associated with politics, and
these discussions had made it plain that sentiment
upon the part of savings bank officials was radically
and unmistakably hostile to the idea.
There is reason for congratulation in the fact that
the Savings Bank Section in registering its protest
based its action on such broad and impregnable
ground. A special committee, the Committee on
Postal Savings Banks, had been considering the matter and in its report laid down the rule that, unless
imperatively demanded by public needs, the function
of the United States Government should not be extended to the spheres more properly occupied by
State governments or by corporate or individual effort. They thought it preferable to educate the
newly arrived foreigner to American methods rather
than to accommodate our methods to his inexperience.
They "point with pride"—and well they may—to
the record of the savings institutions of the United
States. The figures for 1907 are not yet available,
but during the year 1906 the aggregate net loss to
depositors, they say, was the trivial sum of $120,000,
being three ten-thousandths of 1 per cent. on a total
of $3,500,000,000 in savings deposits, whereas the
proposed Government rate of 2% would have deprived the depositors of at least $50,000,000 interest
in the same year. No one will dispute the statement
that the savings institutions have performed a great
service throughout the United States in developing
the country. A large proportion of the deposits of
those institutions is invested in first mortgages to
build homes and in municipal bonds, all of which
investments have greatly assisted in the upbuilding
of the various communities. Nor can the further
statement be denied that "the history of the financial
institutions of the United States demonstrates that
in safety and in adaptability these institutions are
developing as the country develops, through a process of evolution, and that the record of the past
is a sufficient guarantee for the future that our present banking facilities will steadily grow to meet all
the requirements of the country." The meeting of


the Savings Bank Section endorsed these views and
declared against postal banks by a decisive vote.
All the speakers dealt with questions of decided
interest and of large public importance, and while
their themes differed widely, they all necessarily referred, directly or indirectly, to one or more of the
topics of the day. We risk nothing when we say
that the general average of the papers and addresses
was higher than at any previous Convention.
The remarks of President Woodrow Wilson, of
Princeton, on the subject of "The Banker and the
Nation," were those of the scholar and teacher animated by a desire to promote the welfare and continued progress of the whole population. He observed that we had witnessed in recent years an
extraordinary awakening of the public conscience
with regard to the methods of modern business, and
now that the moral and political aspects of the matter are laid bare, we have run out of quiet waters
into a very cyclone of reform. No man is so poor
as not to have his policies for everything. The
whole structure of society is being critically looked
over, and changes of the most radical character are
being soberly discussed, which it would take generations to perfect, but which we are hopefully thinking of putting out to contract to be finished by a
specified date well within the limits of our own time.
Every new policy proposed, he points out, has as
its immediate or ultimate object the restraint of the
power of accumulated capital, for the protection and
benefit of those who cannot command its use. We
have forgotten what the power of government means
and have found out what the power of capital
means; and so we do not fear government and are
not jealous of political power. We fear capital
and are jealous of its domination. He utters a
word of caution and says there will be need of
many cool heads and much excellent judgment
among us to curb this new power without throwing
ourselves back into the gulf of the old, from which
we were the first of the nations of the world to
find a practicable way of escape.
In the popular view the banks are the special
and exclusive instrumentalities of capital used on a
large scale, and therefore they are deeply concerned
in seeing that public opinion and public action shall
be guided aright. While it was not the purpose of
Dr. Wilson to advocate the establishment of branch
banks, he yet ventured the opinion—with great confidence, he asserted—that if a system of branch
banks, very simply and inexpensively managed and
not necessarily open every day in the week, could
be organized, which would put the resources of
the rich banks of the country at the disposal of
whole countrysides, to whose merchants and farmers only a restricted and local credit is now open,
the attitude of plain men everywhere towards the
banks and banking would be changed utterly within less than a generation, he thought. The average
voter would then learn that the money of the country was not being hoarded; that it was at the dis-



posal of any honest man who could use it; and that City banking reserve occurred in
less than ten days
to strike at the banks was to strike at the general after the suspension of the Knickerb
ocker Trust
convenience and the general prosperity. In his view, Company and was caused
by the shipment to interior
the problem how capital is to draw near to the peo- institutions of the larger portion
of that amount in
ple and serve them at once obviously and safely is that short time. Continui
ng, he said: "We kept
the question, the great and now pressing question, the door of our treasure
house wide open until for
which it is the particular duty of the banker to the good of the whole country
it became necessary
to partially close it. It never was fully closed. CurCol. J. D. Powers, in his annual address as rency shipments
continued in a restricted way
President of the Association, was very emphatic in throughout the panic
and a large number of our
condemning the general craze of the day, which banks kept up their counter
payments as usual. It
seeks to regulate everything by legislation. His is true that large sums were
loaned in Wall Street
attitude can be judged from the following excerpt: during the panic, but it was
not for gain or to
"Take the platforms of the two great political promote stock speculation, but to protect weak spots
parties and compare them and you will find so that had been discovered and to arrest and prevent
slight a difference except on vote-catching planks, the further spread of the panic in
New York. Wherwhich are so rotten that they are not expected to
last beyond the election, that the whole question ever a weak spot was discovered, whether in Stock
for business men and true patriots North, South, Exchange circles or in mercantile or industrial
East and West should be: Where will I find the circles, if it was safe and proper to protect it, money
greatest safety for my property rights, the material was freely loaned for that purpose."
welfare of the Nation, the advancement of trade
Before the Trust Company Section, Mr. Breckinand commerce, the preservation of liberty and
ridge Jones, of the Mississippi Valley Trust Co., deequality before the law, and the greatest hope of
general prosperity, and there abide until you can livered a notable address, entitled, "The Trust Comdo better. Leave the 'buncombe' to the demagogic pany—A Necessity." Not only did he succeed in
politicians who,are responsible for its existence."
establishing his thesis, but he also undertook to
show that the national banks, when they assume to
The speech of Alexander Gilbert, President of
the Market & Fulton National Bank of this city, on engage in trust or other outside functions, are ex"Vital Issues," was that of the practical banker and ceeding their authority. He fortified his point, too,
man of affairs, and his utterances were the out- with strong argument. Here is itis summary on
growth of a wide and varied experience. What such that matter:
"It is submitted that, under the principles and
a man has to say with reference to the panic and
the causes responsible for it, and the way it was provisons as set out above, the national bank has
handled, naturally carries much weight, for he no power to have a separate safe-deposit department, and run it as a business; has no power to
speaks from personal knowledge. As President of act as transfer agent or
registrar of stocks; no
the New York Clearing House Association, he was power to own stocks of any kind unless taken for
one of the group of banking men upon whom fell debt; no power to act as trustee under a corthe responsibility for dealing effectively with the porate mortgage; no power to buy or sell other
critical situation which arose in October and No- than Government bonds generally or on commission; and that if a loss should occur by reason
vember of last year, and preventing the panic from
of its doing either of these unauthorized things
spreading and resulting in widespread ruin. We and the bank should be sued by one who
has incommented on Mr. Gilbert's address in an editorial curred loss thereby, the bank could successfully
plead ultra vires."
article in the CHRONICLE of last Saturday.
In his view when the truth is known as generally
Mr. Jones's address deserves careful reading.
in the West as in the East, it will be recognized that Concerning the way the trust companie
s passed
the checking and subsequent control of the panic of through the panic of last fall, Mr. Jones
asserts that
1907 was not due alone to the prompt action of throughout the United States during
the last year
the New York Clearing House, but to the fact that though twenty-seven trust companies
suspended paythe Clearing House banks of New York constitute ment more than twenty of these have
resumed. Outthe most powerful and conservative banking in- side of the losses incident to the failure of
two trust
fluence in the country. They were prepared for the companies—one the California Safe
Deposit and
panic of 1907, he declares—they saw it coming. Trust Company of San Francisco
and the other
New York bankers, he observed, had been severely the New England Trust Company of
criticised because they did not more fully respond R. I., both of which were looted by officers
who are
to the demands of country correspondents by ship- now in prison—it is estimated, he
says, that the
ping ctirrency against balances. To have fully losses to depositors of failed trust companie
s in the
honored, however, the demands that were pouring last panic will not aggregate $200,000.
"Such is the
in from all sections of the country would have dis- record of over 2,200 companies having
sipated our banking reserve in a fortnight. He resources of over four and one-half
billions of
points out that the $53,000,000 deficit in New York dollars."

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Thirty-Fourth Annual Convention, Held at Denver, Sept. 28, 29, 30, and Oct. 1, 1S08
Vital Issues, by Alexander Gilbert
Banker and the Nation, Woodrow Wilson
American Banking, by B. E. Walker Conservation of Natural Resources,Ransdell
Guaranty of Deposits, by F. J. Wade
Annual Report of the Secretary
Annual Report of the Treasurer
Report of Protective Committee
Report of Currency Commission
Report of Federal Legislative Committee
Report of Committee on Credit Information


91 to 94
94 to 96
97 to 103
103 to 106
106 to 108
109 to 110
110 to 111
112 to 113
113 to 114

Report of Standing Law Committee
Report of Executive Council Page
Report of Committee on Uniform Laws
Report of Institute of Banking
Committee on Uniform Stationery
Report of Committee on Voucher Check Page
Report of Bill of Lading Committee
- Pages
Addresses of Welcome Page
President J. D. Power's Address Report of Committee on Express Companies Page
- Pages
Detailed Report of Proceedings

114 to 116
117 to 118
118 to 119
120 to 121
121 to 124
120 to 136

Vital Issues.
Fulton National Bank,
BY ALEXANDER GILBERT, President New York Clearing House, and President Market &
New York City.
Mr. President and Members of the American Bankers' Association:
This is my first Denver, and the first time I ever
attended a convention of the American Bankers' Association held outside of the city of New York. Now that I
have had a taste of the pleasure, and a suggestion of the
profit which one receives from attending these conventions,
I regret very much that I have been so indifferent to past
opportunities. You will pardon me, I am sure, if I take
advantage of my presence here on this occasion to refer to
a matter which has been brought home to me by numerous
invitations received during the past six months to attend
bankers' conventions held in the West for the purpose of
correcting a wrong impression that seems to have taken
root in the minds of Western bankers, that we Eastern
bankers, more especially the bankers of New York during
the panic, suspended cash payments, and refused accommodation to our out-of-town correspondents in order that
we could loan our money in Wall Street at prevailing high
rates of interest. It is difficult for me to believe that this
impression prevails to any serious extent. I am prepared
to believe that there are •bankers scattered throughout the
country who really believe it. There were quite a number of untrue, unwise, intemperate speeches made during
the last session of Congress by members of both houses,
charging the same offense against the New York banks.
These speeches were printed in the Congressional Record
and through the press disseminated throughout the country, and it would be strange if these misstatements had
not found lodgment in many minds. I am not here to
apologize for anything the New York bankers did during
the panic, for when the truth is known as generally in the
West as in the East, it will be recognized that the checking and subsequent control of the panic of 1907 was due
not alone to the prompt action of the New York Clearing
House, but to the fact that the Clearing House banks of
New York constitute the most powerful and conservative

banking influence in the country. They were prepared
for the panic of 1907—they saw it coming. The furious
stock speculation of 1906 and 1907, with its tremendous
pressure for money and abnormal interest rates, developed
all the apprehension necessary to suggest caution and
preparation. They realized also that a dangerous situation
had been created by the large amount of funds sent to
New York by interior banks to be loaned in Wall Street
at prevailing high rates, knowing full well that the first
indication of trouble would result in a recall of those
funds. They were also aware that an extraordinary
amount having been borrowed abroad on finance bills to
bolster up the speculation in stocks, that the world-wide
pressure for money would make it difficult, if not impossible, to renew those loans at maturity, and that the burden of providing for them would probably fall on New
York. Another threatening danger was the large volume
of trust company deposits, almost as great as the bank
deposits, against which a very small percentage of cash
reserve was being carried. In addition it was feared by
the Clearing House Committee that several important banking institutions, controlled and managed by men of well
known speculative tendencies, had been seriously weakened
by unwise investments. The occurrence of a panic under
these conditions would subject not only the banking reserve, but the wisdom of New York bankers, to a terrible
Well, the panic occurred. The institutions that had been
weakened by unwise investments went down. New York
was the storm center. The paramount question was, could
the storm be stayed before its work of devastation and
ruin should spread over the entire country. This was the
problem confronting the Clearing House Committee. The
committee knew that the issuance of Clearing House certificates would immediately bring about a restriction of
cash payments throughout the country, causing widespread
business inconvenience and embarrassment, and they also



knew by experience that the dissipation of the New York
banking reserve upon which practically the credit volume of
the nation rests, would alarm the nation, intensify the
panic and greatly prolong the period of recuperation. Hoping that the panicky condition might subside, the committee postponed from day to day the issuance of Clearing
House Certificates, honoring the drafts that were being
made against our rapidly falling reserve until it showed
a ,deficit of $53,000,000, and then concluded that it would
be folly to hesitate longer, and Clearing House certificates
were issued.
New York bankers have been severely criticised because
they did not more fully respond to the demands of country
correspondents by shipping currency against balances. To
have fully honored the demands that were pouring in from
all sections of the country would have dissipated our banking reserve in a fortnight. How could it be replenished?
Were the interior bankers sending currency to New York?
What would have been the effect upon the country if the
New York banking reserve had been entirely depleted? It
would have so intensified the panicky feeling that widespread commercial disaster would have resulted. It was of
the highest importance that New York in its cash resources
should keep reasonably strong. To sustain public confidence—to provide the pay-rolls for its own industrial organizations and those numerous large corporations scattered
throughout the country whose headquarters are in New
York—to provide the cash for payments to the government
for duties and internal revenue requirements and for the
needs of the city and its many important interests. The
$53,000,000 deficit in our banking reserve occurred in less
than ten days after the failure of the Knickerbocker Trust
Company, and was caused by the shipment to interior institutions of the larger portion of that amount in that
short time. We kept the door of our treasure house wide
open until for the good of the whole country it became
necessary to partially close it. It never was fully closed.
Currency shipments continued in a restricted way throughout the panic, and a large number of our banks kept up
their counter payments as usual.
Another adverse criticism is that our bankers during
the panic loaned large sums of money in Wall Street to
promote stock speculation and take advantage of high interest rates. In one sense I cannot say that this is not
true. Wall Street required a large amount of credit to
meet maturing obligations; the failure of a prominent
Stock Exchange house would in its effect upon the general
situation have been more disastrous than the failure of a
large mercantile house or industrial corporation. The New
York Stock Exchange represents in the volume and money
value of its transactions the largest business interest in
, the country. Among its members are many large and
important banking houses whose business is strictly legitimate and non-speculative. During a panic these interest
must be protected. The Stock Exchange has its own Clearing House. During a panic it is of the highest importance
that its daily clearances should be effected without difficulty. During the panic the New York Clearing House
Committee was on duty day and night, watching for danger spots in the situation—prepared to protect every weak
spot discovered that was entitled to assistance. During
the discussion of the currency question last winter at
Washington, I appeared before the Banking and Currency Committee. A member of the committee asked me
if it was true that the New York banks loaned money in
Wall Street during the panic. I replied: I am glad you
asked me that question. I should not have known how to
introduce the subject, and I only wish that my voice was
strong enough to reach the ears of every member of Congress and make them clearly understand the relation of the
New York banks to the New York Stock Exchange. It is
true that large sums were loaned in Wall Street during the
panic, but it was not for gain or to promote stock speculation, but to protect weak spots that had been discovered
and to arrest and prevent the further spread of the panic
in New York. Wherever a weak spot was discovered,

whether in stock exchange circles, or in mercantile or industrial circles, if it was safe and proper to protect it,
money was freely loaned for that purpose. And I want to
say with a good deal of emphasis, that nowhere in the
world can be found a more conservative and patriotic body
of men than the bankers of the New York Clearing House
Association, and not for one single moment during the
panic was the Clearing House Committee, in directing that
great banking power, influenced by thought of gain or
other selfish considerations.
New York had resting upon it a great responsibility—
a great task to perform—viz., to hold in poise and steadiness the general busixess interests of the whole country,
and to prevent if possible its credit system and its credit
superstructure being thrown into violent confusion. Inasmuch as the credit superstructure of the country practically
rests upon the banking reserve of New York, the depletion
of this reserve •could only be permitted to reach a certain
If you could have stood 'where I stood and been conscious of the gravity of the situation and the danger which
threatened to involve the business interests of the country
in confusion and disaster through the inability of many
Stock Exchange houses to borrow money to meet maturing
obligations and to effect the daily clearances at the Stock
Exchange Clearing House, you would have thought the
bankers. of New York recreant to their trust had they
failed to prevent, if possible, such an occurrence. The
failure of a number of prominent banking houses at that
moment would have so intensified the panicky feeling and
fear which had taken possession of the people, that the
credit system of the country would have been shaken from
top to bottom. The money which New York banks poured
into Wall Street during that exciting time was not to promote stock speculation or to take advantage ol high interest rates, but to protect the business interests of the
country against threatening and alarming dangers.
The Clearing House bankers of New York deprecate as
strongly as the most conservative member of this association the great speculative movements which occur from
time to time in stocks and commodities, and would prevent
them if possible, but they realize, what every thoughtful
man must •realize, that dealing in stocks and bonds is just
as legitimate a business calling as dealing in any of the
commodities of life, and that among the things which are
bought and sold in business, corporate securities have just
as proper a place as the staple commodities or the luxuries
of life. The formation of pools or combinations, however,
for the purpose of prompting or carrying on these great
speculative movements, bulling or bearing markets, advancing or depressing prices, is a form of gambling compared with which, in its effects upon society, all other
forms pale into insignificance.
Notwithstanding this, the New York Stock Exchange
is an essential part of the business machinery of the country, and any movement to restrict its operations should be
wisely and seriously considered. The marvelous growth
and expansion of the country have been largely stimulated
by its speculative operations through which large corporate
enterprises have been able to market their securities and
obtain the funds to finance their various projects. A market for securities is just as essential as a market for commodities—a place where a holder can quickly convert into
cash at a fair market value his stocks and bonds. To be
without such facilities would almost paralyze the growth
and expansion of business. We all know that speculation
is not confined to Wall Street; that it is carried on to a
greater, or less degree in almost every market of staple
commodities, and we may be willing to concede that within
reasonable limits it is helpful to business. We are also
willing to concede that the men who administer the affairs
of the Stock Exchange honestly try, through proper regulation, to restrain speculation within reasonable limits, and
to prevent improper practices on the part of its members.
Having admitted all this, it must be said that too frequently speculation on the Stock Exchange becomes not



only dangerously excessive, but a disturbing factor of large
proportions, and it would be a great gain to the country
if some way should be discovered by the bankers of the
country or by the members of the exchange, or both combined, to modify, if not prevent, the outbreak of these
periodic disturbances. The rapid advance of prices through
speculation that grows out of legitimate trading operations
it may be impossible to prevent, and it may be unreasonable to criticise, but the bolstering up of prices by processes
purely manipulative is too costly and too dangerous a
pastime to pass by without notice.
The most disturbing factors of the business situation
during the two years preceding the panic were the advancing prices of 1906. and the declining prices of 1907, both
of which filled the public mind with apprehension. The
public was not in the market to any serious extent; money
was stringent, interest rates were constantly advancing,
and yet all through the year 1906 prices of securities were
forced higher and higher until they reached a point which
betokened inevitable collapse. Any business man who did
any thinking at all knew the collapse could not be
avoided—it was only a question of time. This persistent
marking up of prices, and the persistent and continuous
decline of prices, more than any other influence, kept the
whole business world in a state of uncertainty and alarm.
I have said that interest rates were constantly advancing.
You know how high they went-50, 75, 100 per cent.—
and yet these rates only obtained for Stock Exchange
loans. Commercial rates were about normal; and had it
not been for Stock Exchange demands previous to and
during the panic, I doubt if money rates in this country
would have at any time been much above normal. The
high rate which the Stock Exchange was compelled to pay
for money showed clearly where the trouble was. It
,showed that there had been overtrading and excessive
speculation, with resultant inability to finance maturing
Now, just a word or two about guarantee of deposits.
The impression prevails quite widely that the injection of
this principle into our banking practice would be a sure
preventive of panics. This indicates mental confusion.
Panics do not develop from the fear of depositors that they
will not ultimately get their money from embarrassed
banks, but from the fear that they will not be able to get
it when they want it; they cannot afford to have it
locked up, and any insurance law which provides that the
losses of failed institutions shall be paid by the solvent
institutions of the country after the loss shall have been
ascertained by liquidation, will be powerless to prevent
runs on distrusted institutions. Throughout my long experience I have noticed that depositors seldom make a mistake in the selection of the institution to run upon. They
very seldom in the first instance trouble a conservatively
managed institution. They know intuitively where to
strike the first blow, and the second, and the third, and so
on until animated by fright and panic they attack every
institution that is distrusted or talked about. This is the
course which every panic follows; and no insurance law
which does not provide for the compulsory payment on demand of the deposits of embarrassed institutions will arrest or change this course. The enactment of such a law
would be an act of injustice—contrary to the spirit of our
institutions—contrary to that sentiment of right and fair
play which is implanted in every, human breast, and it
would be fraught with the gravest possible danger in time
of panic. You cannot estimate this danger by studying
the operation of such a law in the State of Oklahoma or
any of the smaller States where banking capital and deposit liabilities are small comparatively, but apply it to
one of our larger States, the State of New York, for instance, many of whose institutions have deposit liabilities
of fifty millions and upwards, and quite a few exceeding
one hundred millions and up to two hundred millions, what
would happen if one or more of those large institutions
should become temporarily embarrassed in time of panic,
and the solvent institutions should be called upon to pay


its depositors on demand? They could not comply; it
would aggravate the panic and prolong indefinitely the
possibility of recovery. Compulsory legislation, whether it
shall require the payment of deposits on demand or the
balance due after liquidation, is wrong in principle, illogical, unjust. Why should the old-time institutions of
the country, with a long and enviable record of wise and
conservative management and success, be held responsible
for losses growing out of the speculative transactions of
speculative institutions, many of which are springing up
all over the country in this age of excessive speculative
The taxation of the ably and conservatively managed
savings banks of New York and of some of our Eastern
States whose investments are restricted by law, to protect
depositors of so-called savings banks, many of which can
be found throughout the country doing the freest kind of
banking business without any restrictions whatever, would
be a travesty upon justice. But the principle of justice
seems to have been overlooked in working up this new
theory for preventing panics. Governor Hughes very wisely
suggests, why not apply this same principle to life insurance, the safety of which concerns nearly every home
in the country I Why not apply it to our great railway
corporations and industrial corporations whose stocks and
bonds are scattered broadcast throughout the land, and
which through possible mismanagement or overcapitalization might entail heavier losses upon investors than can
possible arise through failed banking institutions?
If more legislation is needed to protect bank depositors,
let .it be such as will differentiate the various classes of
institutions which are doing a general banking business—
the bank which deals in corporate securities—the commercial bank, trust companies and savings banks. Confiro
each to its legitimate function, provide proper limitations
and restrictions with regard to investments; also adequate and thorough supervision.
The guarantee principle is all wrong. If it does not put
a premium on bad banking, it surely lessens the incentive
to wise and conservative banking, and it lessens the caution of depositors in the selection of their banks. It
enables the banker who desires to build up a large deposit
line for speculative purposes to accomplish his purpose
through the assurance that he can give his depositors
that they are guaranteed against loss, and inasmuch as
his only purpose is speculation, he can induce deposits by
payment of high interest rates, all of which will work injury to the maintenance and development of sound banking. Practically there can be no such thing as voluntary
or optional guarantee of deposits. Oklahoma makes it
compulsory on State banks and optional with National
banks, to comply with the law, knowing full well that,
with few exception, in order to save their business, the
National banks will be compelled to comply. The Williams
bill, introduced at the last session of Congress, which is
said to have the approval of Mr. Bryan, makes it optional
for any banking association or trust company to embrace
its deposit guarantee principle and as an inducement
provides for the investment of one-half of the banking
reserve of the country in bonds to be used as security
for emergency circulation, thus destroying at one blow
one-half of the foundation upon which the commercial.
credit of the country rests. Mr. Fowler in his bill provides
for credit currency issues—puts them on the same footing
• with deposits, and provides a guarantee fund to protect
both depositors and note holders. His proposition is part
of a general scheme for scientifically reforming the currency. In theory his bill is very attractive—a well-thought
out measure—but it can never be reduced to practice. It
aims to accomplish too much. This country is so strongly
intrenched in its present currency system that it will be
impossible to tear it up root and branch. Congress will
not be in any mood to hearken to any new propositions
until the Currency Commission reports and finishes its
labors. Whatever changes are made in the meantime must
be in the nature of amendment to our banking law. Our



present system has been in operation for forty-five years—
and it is not as bad as represented. It has its defects, but
we know what they are and can apply the proper remedies
with less difficulty and greater confidence than we can
introduce a new system. It is only within the past few
years which have been marked by great business expansion and speculation that any great amount of adverse
criticism has been urged against the system. The notes
have had the confidence of the people and have been issued
in sufficient volume to suit the demands of business, with
very few exceptions. In analyzing this statement,
it is
necessary to differentiate banking credit and currency
When a great strain upon the banking credit of the
country exists, an increased issue of bank notes will not
relieve the strain unless the notes are a legal tender and can
be made the basis for an expansion of bank credit.
time of panic, when hoarding is taking place and everybody is clamoring for currency, no properly regulated currency system can meet the demand. The amendmdnts
the National Banking Law, suggested by the experience of
recent years, in my judgment should be:
First—The repeal of the tax upon circulation to make
the note issue a little more profitable.
Second—More adequate redemption facilities to compel
the retirement of notes when not needed, and to
expansion possible when required.
Third—Provision for an increased issue when emergencies require it.
For this purpose the American Bankers' Bill with
or two trifling amendments would have worked admirabl
but instead we have the Vreeland-Aldrich bill. It is not
what we should have, but it will probably be our only
refuge for some time. So for the present let us reconcile
ourselves to it graciously, and try to secure an amendme
reducing the tax upon emergency issues, so as to make it
workable and serviceable if perchance we should have need
for it before something better takes its place.
Let us also keep in view the fact that what we require
to round out our system is a central bank with branches
authorized to issue an asset currency in time of need to
be issued to banks as loans on acceptable security at a rate

of interest fixed by law, not less than 5 per cent. per annum. Such a bank would deal only with banks and the
Government and be so safeguarded by law as to neutralize
all the criticism that is urged against a central bank.
Its note issues would be secured by a guarantee fund—a
25 per cent. gold reserve—adequate redemption facilities
provision for prompt retirement and cancellation when
presented for payment.
It is unnecessary to go into details—sufficient to say
that the experience of European nations teaches that the
movement for currency reform in this country must eventuate either in a central bank or asset currency. I
am a
believer in the safety and feasibility of asset currency
when confined to a few large banks similar to the
operated in Canada, Scotland, Germany or France,
but in
this country, with seven thousand National banks,
of them very small banks, privileged to issue asset
currency, which privilege would serve to increase the numberrapidly, I very much fear that it would prove impossib
through what we term adequate redemption facilities,
properly regulate the issues and prevent inflation.
On the other hand, a central bank would centralize the
note issues and the banking reserve, and would carry the
Government deposits, and would at all times be a source
of supply from which other banks could obtain help fn
the hour of need. It could negotiate foreign loans in time
of panic. It could regulate the interest rate better than
any other agency, and would probably work just as well
here as in any of the Continental nations. If we could
reconcile ourselves to the idea that a great central bank—
either a bank of banks, or a Government bank—could
as safely and successfully operated in this country
as any..
where in the world, and at the same time would
set ourselves to work to develop a plan, I feel quite
confident that
practical results would be reached in a short
time. Whatever is done must be done gradually. Our
system would
not be the worst in the world if its lack
of elasticity could
be remedied. A central bank such
as I have suggested
would accomplish this effectively,
and possibly after a
few years of successful trial would
pave the way to the
abandonment of our bond-secured theories.

The Banker and the Nation.
By Dr. Woodrow Wilson, President Princeton Universi
We have witnessed in recent years an extraordinary
awakening of the public conscience with regard to the methods of modern business—and of the private conscience
for scores of business men have become conscious, as they
never were before, that the eager push and ambition and
competition of modern business had hurried them, oftentimes unconsciously, into practices which they had not
stopped, in the heat of the struggle, to question, but which
they now see to have been immoral and against the public
interest. Sometimes the process of their demoralization
was very subtle, very gradual, very obscure, and therefore
hidden from their consciences. Sometimes it was crude
and obvious enough, but they did not stop to be careful,
• thinking of their rivals and not of their morals. But now
the moral and political aspects of the whole matter are laid
bare to their own view as well as to the view of the world,
and we have run out of quiet waters into a very cyclone
of reform. No man is so poor as not to have his policies
for everything. The whole structure of society is being
critically looked over, and changes of the most radical character are being soberly discussed, which it would take generations to perfect but which we are hopefully thinking of
putting out to contract to be finished by a specified date well
within the limits of our own time.
It is not my purpose on the present occasion to discuss
particular policies and proposals. I wish, rather, to call
your attention to some of the large aspects of the matter,

which we should carefully consider before we make
up our
minds which way we should go and with what
we should act.
What strikes one most forcibly in the recent agitatio
of public opinion is the anatomy of our present
structure which they seem to disclose. Sharp class contract
and divisions have been laid bare—not class distincti
ons in
the Old-World or the old-time sense, but sharp distincti
of power and opportunity quite as significant.
For the first
time in the history of America there is a general feeling
that issue is now joined, or about to be joined, between the.
power of accumulated capital and the privileges and opportunities of the masses of the people. The power of accumulated capital is now, as at all other times and in all
other circumstances, in the hands of a comparatively small
number of persons, but there is a very widespread impression that those persons have been able in recent years as.
never before to control the national development in their
own interest. The contest is sometimes said to be between.
capital and labor, but that is too narrow and too specific a
'conception of it. It is, rather, between capital in all its
larger accumulations and all other less concentrated, more
dispersed, smaller, and more individual economic forces; and
every new policy proposed has as its immediate or ultimate
object the restraint of the power of accumulated capital, for
the protection and benefit of those who cannot command!
its use.

This anatomizing of our social structure, this pulling it
to pieces and scrutinizing each part of it separately as if it
had an independent existence and interest and could live not
only separately but in contrast and contest with its other
parts, as if it had no organic union with them or dependence
upon them, is a very dangerous and unwholesome thing at
best; but there are periods of excitement and inquiry when
it is inevitable, and we should make the best of it, if only
to hasten the process of reintegration. This process of
segregation and contrast is always a symptom of deep discontent. It is not set afoot accidentally. It generally comes
about, as it has come about now, because the several parts
of society have forgotten their organic connections, their
vital interdependence, and have become individually selfish
or hostile—because the attention of a physician is in fact
necessary. It has given occasion to that extensive and
radical programme of reform which we call Socialism and
with which so many hopeful minds are now in love. We
shall be able to understand our present confused affairs thoroughly and handle them wisely only when we have made
clear to ourselves how this situation arose, how this programme was provoked, and what we individually and collectively have to do with it.
The abstract principles of Socialism it is not difficult to
admire. They are, indeed, hardly distinguishable from the
abstract principles of Democracy. The object of the
thoughtful Socialist is to effect such an organization of
society as will give the individual his best protection and
his best opportunity, and yet serve the interest of all
rather than the interest of any one in particular: an organization of mutual benefit, based upon the principle of the
solidarity of all interests. But the programme of Socialism
is another matter. It is not unfair to say that the programmes of Socialism so far put forth are either utterly
vague or entirely impracticable. That they are now being
taken very seriously and espoused very ardently is evidence, not of their excellence or practicability, but only of
the fact to which no observant man can any longer shut
his eyes, that the contesting forces in our modern society
have broken its unity and destroyed its organic harmony—
not because that was inevitable, but because men have used
their power thoughtlessly and selfishly, and legitimate undertakings have been pushed to illegitimate lengths. There
has been an actual process of selfish segregation, and society
has so reacted from it that almost any thorough-going programme of reintegration looks hopeful and attractive. Such
programmes cannot be thrust aside or defeated by mere
opposition and denial; they can be overcome only by wiser
and better programmes, and these it is our duty as patriotic
citizens to find.
The most striking fact about the actual organization of
modern society is that the most conspicuous, the most
readily wielded, and the most formidable power is not the
power of government, but the power of capital. Men of
our day in England and America have almost forgotten
what it is to fear the government, but have found out
what it is to fear the power of capital, to watch it with
jealousy and suspicion, and trace to it the source of every
open or hidden wrong. Our memories are not of history
but of what our own lives and experiences and the lives
and experiences of the men about us have disclosed. We
have had no experience in our day or in the days of which
our fathers have told us of the tyranny of governments,
of their minute control and arrogant interference and arbitrary regulation of our business and of our daily life,
though it may be that we shall know something of it in
the near future. We have forgotten what the power of
government means and have found out what the power of
capital means; and so we do not fear government and are
not jealous of political power. We fear capital and are
jealous of its domination. There will be need of many cool
heads and much excellent judgment amongst us to curb
this new power without throwing ourselves back into the
gulf of the old, from which we were the first of the nations
of the world to find a practicable way of escape.
The only forces that can save us from the one extreme


or the other are those forces of social reunion and social
reintegration which every man of station and character
and influence in the country can in some degree and within
the scope of his own life set afoot. We must open our
minds wide to the new circumstances of our time, must
bring about a new common understanding and effect a new
co-ordination in the affairs which most concern us. Capital
must give over its too great preoccupation with the business of making those who control it individually rich and
must study to serve the interests of the people as a whole.
It must draw near to the people and serve them in some
intimate way of which they will be conscious. Voluntary
co-operation must forestall the involuntary co-operation
which legislators will otherwise seek to bring about by the
coercion of law. Capital now looks to the people like a
force and interest apart, with which they must deal as
with a master and not as with a friend. Those who handle
capital in the great industrial enterprises of the country
know how mistaken this attitude is. They see how intimately the general welfare and the common interests are
connected with every really sound process of business and
how all antagonisms and misunderstanding hamper and
disorganize industry. But no one can mistake the fact
and no one knows better than the manipulators of capital
how many circumstances there are to justify the impression. We can never excuse ourselves from the necessity
of dealing with facts.
I am sure that many bankers must have become acutely
and sensitively aware of the fact that the most isolated
and the most criticised interest of all is banking. The
banks are, in the general view and estimation, the special
and exclusive instrumentalities of capital used on a large
scale. They stand remote from the laborer and the body
of the people, and put whatever comes into their coffers at
the disposal of the big captains of industry, the great
masters of finance, the corporations which are in the way
to crush all competitors.
I shall now stop stop to ask how far this view of the
banks is true. I need not tell you that in large part it is
false. I know that the close connection of the banks with
the larger operations of commerce and finance is natural
and not illicit, and that the banks turn very cheerfully
and very cordially to the smaller pieces of business. Time
was when the banks never advertised, never condescended
to solicit business; now they eagerly seek it in small pieces
as well as big. The banks are in fact and in spirit at the
service of every man to the limit of his known trustworthiness and credit, and they know very well that there
is profit in multiplying small accounts and small loans.
But, on the other hand, they are in fact singularly remote
from the laborer and the body of the people. They are
particularly remote from the farmer and the small trader
of our extensive countrysides.
Let me illustrate what I mean. Roughly speaking, every
town of any size and importance in the United States has
its bank. But the large niajority of our people live remote
from banks, are unknown to the officers who manage them
and dispense their credit. Moreover, our system of banking is such that local banks must for the most part be
organized and maintained by local capital and have at their
disposal only local resources. It is difficult for those of
you who do not travel leisurely in the vast rural districts
of this country to realize how few and far between the
banks are, or how local and petty and without extensive
power to help the community most of them are when you
find them. A friend of mine rode through seven counties
of one of the oldest of our States before finding any place
where he could change a twenty-dollar bill; and I myself
was obliged one summer, in a thriving agricultural district,
to get change for bills of any considerable denomination
sent to me by express from banks fifty miles distant. The
business of the country was done largely by barter. I do •
not wonder that the men there about thought that the
money of the country was being hoarded somewhere, presumably in Wall Street. None of it was accessible to them,



though they by no means lacked in this world's goods.
They believed in the free coinage of silver, not realizing
that the silver, too, would have to be handled by the banks
and would be equally inaccessible. It would not have been
shipped like ordinary merchandise.
"Where and whose is the money of the country?" is the
question which the average voter wants his political representative to answer for him. Bankers can answer the question, but I have met very few of them who could answer it
in a way the ordinary man could understand. Bankers, as
. a body of experts in a particular very responsible business, hold, and hold very clearly, certain economic facts
and industrial circumstances in mind, and possess a large
and unusually interesting mass of specialized knowledge
of which they are masters in an extraordinary degree. But
I trust you will not think me impertinent if I say that they
excuse themselves from knowing a great many things
which it would manifestly be to their interest to know,
and that they are oftentimes singularly ignorant, or at
any rate singularly indifferent, about what I may call the
social functions and the political functions of banking,
particularly in a country governed by opinion. I am not
here to advocate the establishment of branch banks or
argue in favor of anything which you understand better
than I do. But I have this to say, and to say with great
confidence: that if a system of branch banks, very simply
and inexpensively managed and not necessarily open every
day in the week, could be organized, which would put the
resources of the rich banks of the country at the disposal
of whole countrysides to whose merchants and farmers
only a restricted and local credit is now open, the attitude
of plain men everywhere towards the banks and banking
would be changed utterly within less than a generation.
You know that you are looking out for investments; that
even the colossal enterprises of our time do not supply
you with safe investments enough for the money that comes
in to you; and that banks here, there, and everywhere are
tempted, as a consequence, to place money in speculative
enterprises, and even themselves to promote questionable
ventures in finance at a fearful and wholly unjustifiable
risk in order to get the usury they wish from their resources. You sit only where these things are spoken of
and big returns coveted. There would be plenty of investments if you carried your money to the people of the
country at large and had agents in hundreds of villages who
knew the men in their neighborhoods who could be trusted
with loans and who would make profitable use of them.
Your money, moreover, would quicken and fertilize the
country, and that other result would follow which I think
you will agree with me is not least important in my argument: The average voter would learn that the money of
the country was not being hoarded; that it was at the disposal of any honest man who could use it; and that to
strike at the banks was to strike at the general convenience
and the general prosperity. I do not know what the arguments against branch banks are; but these I know from
observation to be the arguments for them; and very
weighty arguments they seem to me to be.
That, however, need not concern me. I am not so much
Interested in argument as in illustration. My theme is
this: bankers, like men of every other interest, have

their lot and part in the nation, their social function and
their political duty. We have come upon a time of crisis
when it is made to appear, in part true, that interest
is arrayed against interest; and it is our duty to turn the
war into peace. It is the duty of the banker, as it is the
duty of men of every other class, to see to it that there
be in his calling no class spirit, no feeling of antagonism
to the people, to plain men whom the bankers to their
great loss and detriment do not know. It is their duty
to be intelligent, thoughtful, patriotic intermediaries
between capital and the people at large; to understand and
serve the geenral interest; to be public men serving the
country as well as private men serving their depositors
and the enterprises whose securities and notes they hold.
How, capital is to draw near to the people and serve them
at once obviously and safely, is the question, the great
and now pressing question, which it is the particular duty
of the banker to answer. No one else can answer it so
intelligently; and if he does not answer it, others will, it
may be to his detriment and to the general embarrassment
of the country. The occasion and the responsibility are
We live in a very interesting time of awakening, in a
period of reconstruction and readjustment, when everything is being questioned and even old foundations are
threatened with change. But it is not a time of danger if
we do not lose our heads and ignore our consciences. It is,
on the contrary, a time of extraordinary privilege and opportunity when men of every class have begun to think
upon the themes of the public welfare as they never
thought before. I feel that I have only to speak of your
social duty and political function to meet with a very instant and effectual response out of your own thoughts and
purposes. I think that you will agree with me that our
responsibility in a democratic country is not only for what
we do and for the way and spirit in which we do it, but
also for the impression we make. We are bound to make
the right impression and to contribute by our action not
only to the general prosperity and well-being of the country, but also to its general instruction, so that men of
different classes can understand each other, can serve each
other with intelligence and energy. There is a sense in
which a democratic country statesmanship is forced upon
every man of initiative, every man capable of leading anybody; and this I believe to be the particular period when
statesmanship is forced upon bankers and upon all those
who have to do with the application and use of the vast
accumulated wealth of this country. We should, for example, not only seek the best solution for our currency
difficulties, not only the safest and most scientific system
of elastic currency to meet the convenience of a country
in which the amount of cash needed at different times fluctuates enormously and violently, but we should also seek
to give the discussions of such matters such publicity and
such general currency and such simplicity as will enable
men of every kind and calling to understand what we are
talking about and take an intelligent part in the discussion.
We cannot shut ourselves in as experts to our own business. We must open our thoughts to the country at large
and serve the general intelligence as well as the general



Abnormal _Features of American Banking-.
BY B. D. WALKER, President of the Canadian Bank of Commerce.
Somebody once said to a celebrated English statesman,
renowned for his clear conceptions of all economic subjects,
"I suppose you understand all about the currency"—to
which the reply was, "No, indeed I do not, but I believe
there are people who do." Most of us are willing to admit
that the currency is a complicated mystery. We may feel
sure that we can trace the effect on the general financial
situation of this or that particular factor, but we have to confess that cannot balance the effect of all of the factors and
state clearly, even after a panic, what has caused the disturbance and what we must guard against in future. But
when we consider the currency and banking system of the
United States, and remember what we have experienced
in the panics of 1873, 1890, 1893 and 1907, we need not
hesitate to admit that something is radically wrong, whether
we can agree either as to the disease or as to the remedy.
I have ventured by my title to suggest that there are
abnormal features in United States banking, and this presumes that banking can be reduced to norms, and that aberrations therefrom can be demonstrated as such. I am not
sure, however, that many clear principles in banking can
be set out which are applicable everywhere. As a rule the
banking and currency of a country have been intercepted
in their natural development by the effect of war or by
unwise creation of public debt, and, unfortunately, sometimes by the mere ignorance of legislators. When the natural trend of the banking of any country has been thus
thwarted, time usually brings about, either by direct reform
or by artifical compromises, such adjustments as are necessary to make the banking system reasonably useful to the
.country which it is supposed to serve.
In naming the prominent causes of deflection I placed
ignorance last, but perhaps it should be placed first. As
the great English statesman hinted, few understand the
•currency, and the country which in its constructive period
possessed among its citizens a genius who among his other
great deeds as soldier and statesman was determined to
restore the disordered finances of his country and to set In
the right path for. the future the great industrial agency of
banking, was unusually fortunate. Such a country was
the United States at the close of the eighteenth century,
and such a citizen was Alexander Hamilton. He doubtless
knew little about currency and banking when he began, and
we can almost see his mind turning, in the weltering confusion of the time, from one expedient to another in order
to find a course which was sound financially and at the
same time suited to the poverty of a country possessing a depreciated currency and no capital with which to create banks.
He had about him the two usual types of advisers— those ,
who were willing to try any course of reckless folly in
order to escape from the present evils; and those who,
while bewailing the evils, were unwilling to depart from the
narrowest course of safety. This second class we have
always with us—meii only too ready to criticize, to point
out dangers they are too timid to face, but never ready
themselves to suggest a remedy for the evils to be dealt
with. There were happily in those early days a few men
of courage, sanity and intelligence in finance besides Hamilton, such as Morris, Gallatin and others, but the man of
distinctly constructive ability was Hamilton. It does not
seem to be material that some of his views regarding finance
have been Shown by time to be unsound, or that he was trying not so much to discover the abstract principles of
banking as to mend the broken fortunes of both state and
individual by trying to establish banking and public and

private credit on a sounder basis. Unfortunately—very
unfortunately in my opinion—there was a line of political
cleavage of vast importance, which influenced profoundly
the discussion of banking then, and which still remains the
fundamental difficulty in the path of reform. Hamilton
strove with all his might for everything which would make
a strong central power, he being unable to conceive how
a great nation could otherwise be created. The extent to
which the thirteen units of government then • joining the
United States should retain or give up their powers of
government was a matter of compromise, but, I fancy,
Hamilton would have approved of the plan we adopted in
Canada in 1867—that is, to give the Provinces certain powers and reserve to all other phases of sovereignty for the
Federal Government. Among the powers possessea only by
the Federal Government in Cantu* is that relating to banking; but in the nascent United states the thirteen States
already possessed many small banks and besides this the
fear of the concentration of power of any kind was widespread. Apart from these obstructions to a sound course,
the country did not possess the capital with which to create
a great industrial bank. The fear of partial ownership,
including the control of the stock, by .the State, existed
among many, very rightly I think; and the fear that a
great bank of which the control was owned privately might
fall under the power of foreigners, perhaps of England, was
certainly natural enough at that time. In the midst of
such difficulties the first Bank of the United States was
founded, but in a few years, and while, as we can now
plainly see, it was doing its allotted work very well indeed,
it was strangled by those who favored the small banks.
Almost immediately the second Bank of the United States
followed, only to meet a similar fate at the hands of Jackson. Thus for the second time a system of banking which
might have made the country strong to meet financial emergencies, which tended already to make the various scattered parts of the country cohere in commercial matters,
which was rapidly creating credit in Europe, and which
with all the inevitable faults of youth was performing the
functions claimed for it remarkably well, was destroyed in
favor of an incoherent system of individual State banks.
I am a foreigner, but as five of the establishments included in the bank of which I am President are situated
in cities of the United States, I hope you will not regard
me as a foreigner for the moment. There are very few
banks in the whole country who have a larger interest in the
soundness of your banking and in your freedom from panics
than my own bank. Remembering my peculiar position, I
am particularly desirous not to wound the susceptibilities
of any of my bearers, but I hope it is safe to say that Alexander Hamilton was clearly the leading intellect in that
wonderful group of men who framed the Constitution. At
a time when few men could withstand the onrush of new
ideas, largely visionary and false, which accompanied the
French Revolution, Hamilton was unshaken in his clear
vision as to the future of his country, and few will deny
that where you followed his advice you did well, and where
you opposed it you did not always act wisely. It may be
argued that neither of the two Banks of the United States
was so admirable in its career that we need sigh over its
removal, but we can only judge them by comparison with the
smaller banks of the same period. In your colonial and
revolutionary times you had a curiously full and varied experience in banking and currency. Fiat money, depreciated coinage, currency based on land, clamor by debtors



for cheaper money with which to pay debts, were all amply
experienced. In the following period, contemporaneously
with the first and second Banks of the United States, you
passed through a time largely of mania in banking; a time
when history was recording for this country such fundamental facts as that banks cannot establish a capital fund
merely upon the promissory notes of shareholders; 'cannot
put bank notes into circulation even by the expedient of.
sending them far from home before issuing them, without
considering how they are to be redeemed; • cannot lend
money on land, or lock it up in other ways, and also have
it again when the bank's debts, exigible on demand, fall
to be paid. Indeed, it was a time when every vagary in
unsound banking was being tried. But Hamilton, from
some of these . experiences and from European history,
planned for you a banking system which contained much
of what is good in the successful systems of the world. You
would not, however, have his system, but preferred to repeat in each new district, from east to sOuth and west,
wherever debt and ignorance combined to create banking
and currency, the same errors which make such startling
history in the early part of the, nineteenth century. Is it
not time for us to put aside that silly vanity to which
democracies are inclined—that it is better to 'try our own
experiments and to ignore history? Unfortunately the apparently brand-new experiments we are willing to try have
usually occurred to others in the past, if we had but
patience to discover the fact.
I may as well at this point admit that I have nothing
new to say. I am merely trying to put facts and arguments
made many . years . ago into a .new form.. . We are dealing
with a case. where .the patient has ,immediately after each
serious illness exclaimed: "What shall I do to be saved?"
has repeatedly been given good advice by the experts of
his oNVn country,, and has ,never yet in any 'particular acted
in accordance with such advice. , What seems to be necessary is not so much to suggest means of reform, as to induce the patient to believe firmly, once and for all, that if
he Persistently neglects all remedial measures the next attack May leave him in a state past all aid. Any purpose
I have in 'reading this paper will be amply served if I can
for one brief moment lay emphasis upon the disagreeable
fact that while reform, in the banking and currency systems of the United States is absolutely necessary, there is
'no probability whatever that any substantial reform will
take place at the moment.
The profound line of cleavage whi made, it so difficult to
create. the first Bank of the United States, and which destroyed it and ,its successor, still exists. It lies between
those who favor a system of banking good for the ,nation,
as u whole, as opposed to a system of banking which may
be right or wrong for the .great number of units engaged
in the business of banking, but which is clearly not right
,for the nation as a .whole.
It is not, possible .in the short time tit my disposal to
review all of the features in the banking of the .United
States in which the obstacle to reform lies mainly or altogether in the existence of numerous small banks, but with
your permission I shall take up a few of the leading features.

Most prominently I would place the so-called fixed reserves—the attempt by law tofu the minimum perecentage
of cash to be held by each bank against its liabilities.
The real reserve requirements of any particular bank differ from those of other banks in accordance with the nature
of its obligations as compared with theirs. It is conceivable
that the ideal point at which cash reserves should be kept
would be different in the case of any ten or twenty banks
which you might select for comparison, even in the same
city or community. The bank which acts mainly as a
banker for other banks needs very large reserves indeed.
A bank in the same city doing mainly the business of manu-

facturers, merchants, exporters, etc., will need altogether
smaller reserves, and a bank gathering the savings of a
quiet country community neAds much less again. The law
attempts to recognize these facts, but is evidently unable
to do so except in a most imperfect manner. Clearly each
bank, if it could be trusted to have sufficient intelligence,
should be the judge of the reserves it should keep, and it
seems safe to say that if you had continued to create large
banks with branches, instead of thousands of small banks,
the attempt to. provide wisdom by law would never have
been made. You would doubtless have done as all other
nations have done, and not have been an exeception to so
general a rule.
If the wrong done only resulted in causing small banks
to keep more reserves than they actually required, little
would need be said; but, as has been shown, the law can
be so worked as to provide reserves quite too small, and
experience shows that banks as a rule choose to keep reserves larger than the law requires. The defect in the law,
however, is that by arbitrarily fixing the minimum reserves
which must be always in hand, it practically forbids the
use of the, reserves for the very purpose for which they have
been 'created. The law undertakes to supply that wisdom
which. it presumes the thousands of bankers do not all
possess, and to lay by for them against the rainy day the
provision which. it presumes they would ,not be prudent
enough to make. But who is to supply ,the wisdom demanded by such authorities as Walter 13agehot, who says
that in a panic the sound banker should ,lend to the bottom
of his box? In times of peace the wise prepare for war,
but when war comes the army is flung into the field, not
still held in reserve. The law, however, having forced the
sequestration of so much cash and cash resources against
the day of trouble, provides no means by, which, either
under its own wise and paternal,direction or at the dis,
cretion of the bankers. unaided by the .wisdem of .the .law,
the cash thus provided may be used to avert disaster.
I do not wish to be understood as claiming that the
present law should be repealed and the thousands of individual banks be left to do as they like. I presume. it is
true that they cannot be trusted, and that because of the
folly which ,destroyed a more natural system of banking
you have condemned yourselves to submit to a paternalism
which fixes your cash reserves for you. But I urge as one
of the great evidences of the unnaturalness of your system
of individual banks the fact that they cannot be trusted to
take care of their,own reserves,, and that no law has been
devised which will act the part of Providence for them. I
do not maintain that where the banks are larger relatively
to the country, as in Canada, they are always wise enough
to keep sufficient reserves. It is, as we know, a subject
much discussed in many countries, and it would be well, indeed, if banks could in some way be forced to keep larger
reserves, provided there be no interference with the use of
these reserves when the hour of danger arrives.
Everybody admits the mischief created in, the United
States from the inability to use legally the reserves for
the very purpose for which they are held, and I do not remember that anyone has suggested a better yemedy than
that which takes place in every panic, viz., the breaking of
the law by simply not maintaining the reserves. But
through the press the public is kept keenly aware as to the
exact point in the New Yorks reserves 'below which the use
of them will be illegal, and thus the .panic is increased by
the very attempt to get at the cash necessary to allay it,
while under any ordinary system the panic could probably
be averted altogether by a wise use of the cash In hand,
instead of being allowed to reach a stage where it can only
be stopped by almost superhuman efforts after it has run
part of its course of ruin and disaster.
I think the following statement will show that almost
every panic since the war could have been prevented or
arrested early in its course by the natural use of only a
reasonable part of the actual cash in hand:



1. Cash reserves at beginning of panic
$99,773,100 $110,410,900
2. Surplus over legal requirement
,, 3,642,475
3. Reserves at lowest point as compared with legal requirement
4. Deficiency in reserves at this point
5. Date of first issue of Clearing House Certificates
,, Sept. 22
May 15
Nov. 12
June 21
Oct. 26
6. Date of maximum issue of Clearing House Certificates
Nov. 20
June 6
Dec. 22
Sept. 6
Jan. 30, 1908
7. Date when last Clearing House Certificate was retired
Jan. 14, 1874 Sept. 23, 1886 Feb. 7, 1891 Nov. 1,
Mar. 28, 1908
8. Maximum amount issued
' 1890 the reserve fluctuated considerably from the first of July to
the end of the year, and was below the
legal requirement
frequently before the issue of Loan Certificates. On Sept. 13th the deficit
was $3,306,925, and two weeks later the excess was



In order to avert panics, and also in order to avert the
failure of an individual bank with sound assets, something
more may be necessary than the unrestrained use of the
cash and quick assets in hand. The ability to re-discount
should exist somewhere within reach. The great banks of a
country should manage so as not to require such aid, but
small banks in most countries require it from time to time,
and not merely at the moment of a panic. Under ordinary
conditions a bank in. the United States requiring to rediscount some of its paper can do so, but if there is any
financial strain all bankers, big and little, begin to button
up their pockets and re-discounts soon become nearly impossible. Indeed, instead of the banks in the great financial
centers, where alone the power to aid could be expected to
exist, being able to help their country friends, some of them
are soon unable to get along without aid from other members of their own city clearing house. But there are almost
no banks of such national importance that they feel the
necessity of aiding directly their weaker brethren, whether
it is convenient to do so or not, and thus the clearing house
certificate came into Use. It is not only a splendid tribute
to the genius of the American people for organization, but
so long as its use is between banks alone it is a perfectly
natural and a most effective plan for allaying a panic that
has once been created. It could also be made an instrument
in connection with a proper use of reserves, to largely avert
panics, if °illy some wise autocrat could be entrusted to
decide when clearing house certificates should be issued,
but' as to the moment of necessity there is never likely to
be unanimity of opinion so long as the decision depends on
the judgment of several bankers. And therefore the illegal
use' of the cash reserves and the' issue of clearing house
certificates must alwdys.come too late to prevent the panic.
They may alleviate and cure, but they are not available to
prevent. Still, they are such a natural and efficient means
of making the banks who have abundant reserves help those
was have not, that we may expect to see clearing house
certificates or something closely akin to them in other
countries where there is no great state bank to whom
smaller banks may go with some show of right.
Until the latest panic these loan certificates were only
issued in the largest money centers, but on this occasion
they Were issued by fifty-one clearing houses, and doubtless in the course of future panics they will become practically available to every bank. The wide extension of their
use, however, raises a new question. Used in the real money
centers and issued only in large blocks between banks they
remain what they were intended to be, mere loan obligations assisting banks to build up their reserves, and also
enabling them to make additional loans to customers who
but for such aid might fail. But the extension of their use
to numerous cities and towns where actual cash supplies are
nearly exhausted, and the issue of these loan certificates in
small denominations to the general public as currency, in
open defiance of law, while creditable to the ingenuity and
audicity of the American people, are new features of an
alarming character. There are dangerous expedients we
praise ourselves for resorting to when heroic action is necessary for the general safety, but which are little better
than crimes if they are repeated. An able banker* has referred to clearing house certificates as an "emergency circulation," and as an "asset currency" that even he would
approve of. I think much mischief will arise if these loan
•Willlain A. Nash: "Clearing House Certificates and the Need for a
Central Bank."—Annals Am. Acad.- and Soc. Science, March, 1908.

certificates are ever generally regarded as anything other
than what they were originally—a species of re-discounts
between banks. Currency, to be such, should be available
between the banks and the people, and should surely be
legal whether it is wisely issued or not.
But before leaving the subject of clearing house certificates let us consider how their use, and volume, and abuse,
are affected by the existence of thousands of individual
banks instead of a comparatively few large banks with
branches. Whether we have one system or the other the actual cash will accumulate largely in the few great monetary
centers. In the case of individual country 'banks the cash
not needed at home goes to their reserve agents, while in
the branch system the series of branches of any one bank
are practically one clearing house with a settled tendency
to accumulate actual cash beyond the mere necessities of
the till, in the money centers. While retained in these centers, the cash, except to the extent of the reserves, will be
employed in some manner so as to earn interest. Now, the
extent of the reserves necessary on the one hand and the
extent to which the surplus funds may be lent on the other
is a matter of experience in both systems, but the experience
is very 'different, indeed. If we take as examples a bank in
a reserve city with one hundred banks as correspondents,
and a single bank in another country with one hundred
branches, we can readily see the difference. In times of
strain the one hundred branch managers do not ask for
cash from the head office unless it is actually needed;
the contrary, the moment contraction of loan begins
are a source of strength to the head office. The Credit
affected and the thing to be managed is one organism.
this organism fear of each other by its component parts
will not enter, and whatever courage its executive possesses
will actuate every part of the organism. But in the other
case there are a hundred organisms and cohesion, except
that, the skies being bright, all will cohere somewhat, not
with each other, but with the one bank in the reserve city.
And if the skies are overcast we have a hundred utterly
selfish organisms all concluding that their balance with the
bank in the reserve city would, be better in their own
vaults; in any event they would sleep better if it were there.
And so we have the extraordinary spectacle which accompanies every panic in the United States of each particular
one of the thousands of banks trying to stand alone, except to the extent that the clearing house certificates have
made them cohere. Almost every bank wishes to withdraw
its balance with other banks, and as this is Lin absolute impossibility, the panic reaches its crisis, currency payments
are suspended, all currency is hoarded and Passes to a really
large premium, and the ingenious expedients to which we
have referred, whether legal or not, are made use of with
that general concurrence by the people and the banks which
only exists in the face of a great national danger. The
great national danger is that the panic may cause national
ruin. But what is a panic? A widespread fear without
cause. In most countries financial panic is caused by fear
on the part of those who are not a part of the national
finance—who are not bankers and such. But in the United
States, whoever may start a panic, those who accentuate
it most are the thousands of individual banks by their distrust of each other. We speak indignantly about the private individual who draws his deposit in currency and hoards it. But
in time of panic the most active agency in drawing out currency and hoarding it, is the country bank. And it is not the
fear of the failure of banks, but the fear of the disappearance
of currency, which aggravates 'panics, and brings about dis-



aster and terrible reductions in values. To sum it up, it .
would ,appear that the same elements which in the United
States cause panics of the most ruinous character would
not be apt to cause panic at all in better regulated countries. In such other countries, firstly, the reserved cash
would be instantly available; secondly, the banks would not
be likely to fear one another, but would cohere in meeting
any panicky feeling on the part of the public; thirdly, the
power of re-discounting or of issuing clearing house' certificates would need to be used to but small degree if only the
demands of the public had to be met and not the demands
of thousands of individual banks; fourthly, with these
things assured and a reasonable flexible currency, no stoppage of currency payments would be likely to arise.

. Flexibility in the use of cash reserves, in obtaining rediscounts, in distributing Treasury balances, and in the
issue of bank currency, still seem the main, features to be
discussed. I have little to add to what was said years ago
regarding the Treasury. Then it needed some courage to
say it, but now even a Comptroller of the Treasury, writing
early in 1908, does not hesitate to sum up the whole evil
in the following frank statement.* "But look at the situation. The United States Government has collected from its
people . $245,000,000 surplus, .above its necessary expenditures, and in order to restore this money to circulation and
repair the damage done to business by its withdrawal, has
had to deposit $222,000,000 with the ,national banks; and
when the supply of Government Bonds -gave out, has had
to accept various other bonds as .security." And in the
same connection he says of Secretaries Gage, Shaw and
Cortelyou, that "they are all entitled to the. highest praise
and commendation for what they have done to make the
best of bad situations, with antiquated, complicated and
cumbersome facilities, often little better than mere makeshifts." But why not face the fact that the present Treasury system was created because of the destruction of the
system of large banks in -favor of the system of small banks,
and: would never have existed otherwise? • Under the present system there is no one bank and no one series of banks
to whom the United States people, as they are represented
by the Federal Government, can entrust their balances without very complicated arrangements, including the deposit of
security. Whatever may be the remedy, in the meantime
we must add the Treasury system to that list of abnormal
features which this country has to bear because of its thousands of individual banks.

• The fourth main element in banking in which flexibility
is necessary is bank-note issues. This has become a hackneyed subject during the last fifteen • years or more, but
indeed it has never been long out of the arena of discussion
regarding banking in this country since early colonial days.
The currency, as we have said, is a complicated mystery,
and for that reason it has a strong hold upon the imagination of the average man. But in addressing an audience of
bankers it might be well to avoid the broader definition of
money, and to try and separate the credit instruments
usually issued by banks and passing as money, from metallic
money, paper money representing metallic money, and paper money based on the debt of a government. The species
and quantities of money current in the United States on
August 1 were approximately as follows:
Gold Coin and Bullion
Silver Dollars
Subsidiary Silver
Gold Certificates
Silver Certificates
United States Notes
Treasury Notes of 1890
National Bank Notes


equivalent amount of gold
The figures given above do not include an
dollars held in the U. S. Treasury as a
coin and bullion, and silver
-certificates outstanding.
redemption fund for the gold and silver
Financial Chronicle, New York.)
(Taken from The Commercial and
Currency as a Preventa'Wm. Barrett Ridgley: "An Elastic Credit
Pol. and Soc. Science, March, 1908.
tive of Panics."—Annals Am. Acad.

From this is apparent that in the United States there is
no currency of the kind usually known as bank-note issues,
the notes issued by national banks and guaranteed by the
Government being a species of money based on the debt of
• a Government. There were bank-note issues before the war,
and as we know, they were retired for arbitrary reasons
connected with the finances of the Government, and not for
the purpose of improving the system of banking. We also
know that while the national bank notes which took their
place possess good qualities not possessed by the old State
bank issues, they also carry with them the grave defect of
•rigidity which accompanies nearly all Government note
issues. Under the new "Currency Association Law," per4nittbag an emergency circulation, bank issues are to be
permitted, but under restrictions which practically amount
to an admission that the issuing of credit notes is too dangerous a franchise to be granted to a bank under ordinary
gircumstances. Indeed, the whole machinery for these
emergency issues is so difficult that the Act may quite fail
in its purpose. In Canada at about the same time we also
passed an 'Act permitting an emergency circulation. Our
Act contains 967 words, while that part of your Act which
deals with emergency circulation contains 3,730 words.
This is not a very reliable manner in which to compare the
respective value of two Acts of legislation. But in this
case, it may be said that the difference in words fairly represents the difference in ease with which the additional franchise of an emergency circulation may be given to a few
large banks with branches as compared with thousands of
individual banks.
Returning to the ordinary currency, we find that with the
exception of the gold coin and paper money directly based
on gold coin, all of the vast remainder is currency created
for some reason not concerned with the benefit of the business of banking, or, what should be the same thing, of
trade generally. We see fiat money rendered necessary by
the war but not since funded or redeemed; depreciated silver, or its paper representative, kept at gold equivalent by
the good credit of the United States, a sort of half metallic
—half fiat money; and bank issues, so-called, which are
merely indirect evidences of Government debt. Now, if
these species of currency provide all that is necessary
in the interest of trade, no one, in the interest of
the banks alone, has the right to complain. But it
is possible that under modern credit conditions the peculiar functions which in most countries are performed by
the credit notes of a bank should be performed by a mass
of currency which if not constant in volume is so nearly so,
that its non-use at once represents to any holder except the
Treasury the loss of so much interest? Let us consider,
once more, the functions of the credit notes of a bank.
There are still people who imagine that a natural and quite
desirable condition would be one where whenever money is
given as the purchase price of a commodity that money
should either be gold, or a silver equivalent, or that if
paper is used the paper should be actually represented by
an equivalent amount of gold or silver practically earmarked for the purpose. As we know, there is not sufficient coin in the world to make this even remotely possible.
As we also know, the trade of this country is rendered possible only by cheques, drafts, clearing houses, paper money
of the various kinds we have referred to, and various other
substitutes for money which in .the main merely shift the
credits and debits between different individuals and institutions. We shall never return to the simpler conditions of
the use of money which closely followed barter, and I presume we do not wish to. But if we do not this nation
must manage somehow to achieve its large volume of trading, done so largely by credit instruments, in such manner
as to avoid panics and such violent changes in prices as
cause widespread ruin. Let us be frank with one another
and admit that you have been quite unable to do this. You
have achieved the huge volume of trade; you have achieved
the necessary transportation—most difficult of problems
usually; but you apparently cannot manage the shifting of

credits without panic. You constantly fall short of currency,.and the fear of this accentuates the difficulty so much
that sometimes those who have the power to do so lock all
the currency up and leave the country without the necessary financial machinery with •which to carry on business. •
There are countries in the Old World where the fluctuations, in the volume of trade and in the price of commoditiesand securities.from one year to another, and from one part
of the year to another, are not so violent as to require much
elasticity in the currency. But in the United States, where
the volume of trade and the price of commodities and securities vary largely from one period of contraction through
a period of expansion to the next period of contraction, and
from. one year to another, and from one part of a year to
another, and from day to day, these should be in addition
to the constantly varying total .of cheques, drafts and such
credit, instruments, with which most of our trade is done,
a species • of credit note issuable by banks :which can be
varied in total quantity in proportion as the total quantity
of trade done with such instruments of credit varies. And
there, is the additional reason for such a credit note that
whenever, because of panic or any form of distrust, the ordinary currency is hoarded, or additional cash is being held
by banks as reserves, some legal credit. currency becomes
more than ever necessary., No .one at this late day will
advocate. the ,issue of such credit currency unless it is perfectly safe. . I know the history of paper money in the
United States frona,colonial times down to date well enough
to know that in suggesting credit paper money the long and
dismal history of disastrous experiment in this country
comes up as a sort of bogey. I was engaged in business
early. enough to remember the last of the State bank issues
which in the case of solvent banks passed at a discount
If geographically distant, and at a larger discount if the
bank laws of the particular State in which the note was
issued were supposed to favor loose habits or undue risk in
banking. But it is to the last degree unfair to judge any
of the recent suggestions for an asset currency by antebellum experiences: A currency issued to the extent of the
paid-up capital or less, as you have generally proposed;
secured as your National bank notes now are, by a first
lien on the assets
the bank; including the double liability
but nOt by anything specially deposited or ear-marked; further secured by an insurance fund; .and bearing a fair rate
of interest if not paid by the liquidator immediately after
suspension, is perfectly safe in any country where daily redemption can and will surely be effected. The whole difficulty in carrying out such a plan in this country lies in
the fact that you have become used to a system which requires practically no redemption, and with so many thousands of banks you do not quite know how, or you are not
quite willing to take the trouble to establish the complicated
machinery necessary to effect such daily redemption.
That the issues proposed are credit notes, while National
bank notes are not, and that they must be subjected to
actual daily redemption, while National bank notes need
not, should never be lost- sight of for a moment. One of the
greatest elements of safety in . such issues lies in the fact.
that having performed the credit service required they will
immediately come back for redemption. But some of you
will ask how with thousands of banks can you prevent a
bank in Kansas arranging with a hank in Oregon to circulate each other's notes, so that the volume kept out would
be increased by the geographical'distance on the one hand,
while the difficulty and expense of returning for redemption
would be made unbearable on the other? Clearly by organization you could prevent this, but it is rendered so
troublesome, by the many thousands of banks that you
doubtless will not do. so. But again it seems that the obstacle to flexibility in your currency also lies in your thousands of individual banks.
CENTRAL BANK. There are practically only two directions in which those
who desire reform are looking for aid. 'these may be summarized as follows:



(a) Plans differing in detail, but looking to the creation'
of a credit-note system of bank currency based upon the
assets, somewhat similar to that in use in Canada, although
much more restricted in the extent of the powers or franchise to be granted.
(b) Plans differing in detail, but looking to the creation
of one central bank, which alone is to have the franchise
of issuing credit notes.
In the most comprehensive form which I have seen, the
proposal to form a central bank sets out the following features:*
1. A capital of say $100,000,000 to be invested in Government Bonds.
2. The shareholders to be National banks, and possibly,
also, State banks.
• 3. To issue its notes, say for $300,000,000, in exchange
for gold provided by the banks who become shareholders.
• 4. To be authorized to issue additional notes up to say
$600,000,000, provided a gold 'reserve of at least 33 1-3 per
cent. of the whole issue is maintained.
5. The central bank to use its powers of lending merely
by re-discounting for or lending to the other banks of the
6. The shareholders to be represented by a board of directors elected by territorial districts.
7. The Government also to be represented in the directorate by officers of the Treasury Department.
• Among the merits claimed for such a. central bank are
the following:
(a)' It would remove the nuisance of the Treasury, and
cause the balances Of the Federal Government to be available as lending capital when necessary. •
(b) It would not, like the two banks of the United
States, be a Hirai to other banks, because the latter would
be shareholders. This, however, would require that every
bank created hereafter should have the same right to proportiOnate shares as those taking shares at the inception.
(c) It would probably prevent such a lack of currency'
at any one time as to cause panic.
(d) It would to some extent create that necessary cohesion among banks in time of trouble which is now almost
(e) It would steady credit so much as to set the pace
of confidence among the smaller banks.
(f) It is alleged that because of the territorial directorate, and notwithstanding the presence of Government
officials on the board, there would be no reason to fear that
politics might control the working of the bank.
Among the defects of such a system which have been or
might be urged are the following:
(a) The possible customers of the central bank would
consist of eight or ten thousand banks, who would also be
the shareholders. It would be necessary to satisfy these
customers that the favors of the central bank were distributed fairly, and especially fairly as to geographical sections of the country. This would make it necessary for
the .central bank to know the credit status of each bank
and of each customer of each bank, or at least of those customers whose paper might be offered for re-discount or who
might require a loan. It is quite true that the number of
banks out of the eight or ten thousand requiring rediscounts or loans might be very small relatively, but that
does not alter the quantity of knowledge necessary, as it
would be impossible to tell in advance who might at any
moment apply for such accommodation. And if for the
soundest reason a re-discount or loan were refused, discontent would be apt to result. No central bank elsewhere
in the world is called upon to perform such a task, and I
fear it is impossible of satisfactory performance.
(b) It would also be absolutely necessary to keep the
customers permanently convinced that no political influence
could be used to favor one customer as compared ,with
another, or one district as compared with another. Now, it
!Mon. George E. Roberts: "The Need of a Central Bank."
Am: Aend. Poi, and Soc. Science, March, 1905.



might be quite possible to keep political influence out of
the management of the bank, although surely no one can .
feel certain as to this, but can we believe that in a country
where party strife is so keen, the customers of the bank
and the people will remain continuously convinced of this
(c) An argument against such a central bank, which
perhaps will appeal more strongly to a Canadian than to
an American banker, is that as the central bank may not
have any. customers except banks, it can do nothing to
change the state of affairs now existing because of which
a large borrower may have either to keep a discount account with a great number of banks, or to sell his paper
to sometimes as many as fifty or sixty banks, or even more,
through the medium of a note broker. This clumsy manner of borrowing not only prevents that .close intimacy between a sound borrower and his banker which, lasting over
a series of years, tends so much to create firmly cemented
credit relations, but it undeniably has often caused perfectly
solvent American merchants or manufacturers to fail—a
thing which in other countries would be regarded as reflecting on the banks of such countries.
(d) Another argument which would appeal to Canadian banks and to all other" bankers engaged in financing
the export and import business of the United States, is that
the central bank, having no customers except the banks of
the United States, could do little to build up the foreign
exchange business, which is still done mainly by bankers
other than the National and State banks. Now that you
own the Philippines and the Hawaiian Islands, now that
your foreign trade is increasing so rapidly and, should your
tariff be *lowered, will increase much more on the import
side, Surely the need of great banks in the United States
capable of establishing large banking connections with other
countries, and capable of doing a large international business themselves, is obvious.
(o) When all this is said, however, there is little doubt
but that a central bank, if wisely administered, would be
an imprOvement upon the present conditions, but if the
temper of your people will permit such a departure from
your present system, there are surely better plans for the
permanent reform of your banking. A recent writer, who
is strongly opposed to centralization of power as opposed
to "States rights," puts his main objection to a central bank
in the following significant words:* "In my judgment our
.currency, like our other evils, is to be remedied by greater
freedom and greater distribution of choice and discretion,
-rather than by a greater centralization or unequal distribution of power. It is a fair question to ask, therefore.
whether conceding,'as I do, that there is not sufficient elasticity of the currency, I can suggest no remedy, but would
prefer present evils to those resulting from the creation of
too centralized a power; and the answer, to my mind, is
obvious. The true remedy must be found, not in placing
our independence upon the discretion of any one, 'but of
every one—that is, again, upon* liberty, rather than upon
power and restraint." Without regard to whether this is
in the abstraCt' a wise view, or rot, I think we must admit that it is distinc6 the' American view, and those who
have carefully *read the history of early American banking
will recognize that each attempt to depart from it has
aroused most passionate opposition.
So far as my 4:Tn opinion is concerned, I do not find that
it has ,Changed materially sincI,had the honor of addressing the New York *State Bankers' Association in 1895. I
felt doubtful then as to the Probability of the necessary
reform 'being acceptable to the existing bankers, and I am
not much more hopeful, noW. But if the people are willing
to create a central bank, with the monopoly of banking
which would be involved, they should be much more willing
to create a series of large banks which could perform every
good feature of centralized banking, and still preserve that
chief safeguard of the people in industrial matters, viz.,
competition. And even if the people and the bankers are
'George II. Earle, Jr.: "A Central Bank as a Ilienace to Ltherty."—
Annals A in. Acad. Pol. and Soc. Science, March, 1908.

not willing, I need not I suppose, on that account hesitate
to state what I happen to regard as a more reasonable solution than can be found in any other direction.
In order that reform may be permanent and effective the
new species of bank should be able to create:
(1) A sound credit currency with effective daily redemption.
(2) A distribution of capital available for lending, so
that it shall not be idle and congested in one locality and
scarce or non-existent and proportionately dear in another.
(3) A condition where the gold and other cash reserves
of the country may be made more effective and doubtless be
minimized in quantity.
(4) Where in time of trouble the capital of the country
may be mobile and capable .of being centralized when
(5) Where there may be banks capable of doing the entire lending business of your merchants and manufacturers,
except where these are unusually large, when they could
be divided by arrangement between two or three banks.
(6) Where a great international banking business may
be created and you may do justice to your over-sea possessions, to the great ports of export and import, to your mercantile marine, and to your position among the great nations of the earth.
This state of things can, I think, only be brought about
by your permitting the creation of banks in the United
States similar to the banks of other countries. As I have
tried to show, the mere creation of one central bank will
not change the defective character of the eight or ten thousand other banks. The suggestion I ventured to make in
1895*. and which I give below unaltered, was based upon
the National Banking System and the ten per cent. tax
on State bank issues being allowed to remain as they are, and
the new powers to be added to those enjoyed by a National
bank or to be enjoyed by banks under State or Federal
charters as indicated below:
"Any banks with a paid-up capital of $1,000,000 or
over, to be allowed to issue notes, say to the extent of 75
per cent. of the paid-up capital, secured only by being a
prior lien on the assets of the bank, including the double
liability of stockholders, and by an insurance fund of say
five per cent., and to be free from the ten per cent. tax.
Such banks to be allowed to establish branches within the
State in which the head office is situated. If the franchise.
is granted by a State the Federal Government to approve
of the regulations securing the note issues, and to hold the
insurance fund. I do not enter upon the question of what
the minimum paid-up capital should be in the case of banks
desiring to avail bank issues but not to open branches. I
hope, however, it might be practicable to make it as high
as $500,000.
"Any bank with a capital of say $5,000,000 or over, to
have the same privileges as to note issues and to be allowed
to establish branches throughout the United States, limited,
if though necessary, to cities of national and local importance. Such a franchise would, I suppose, be granted
by the Federal Government. In view of all that has happened since the war, I presume it would not be too great
a stretch of Federal power to grant such a franchise."
In the light of later experience I should think that banks
having power to establish branches throughout the whole of
the United States and its over-sea possessions should have
a larger minimum capital than $5,000,000., This, of course,
proposes asset currency, and I am aware of the arguments
which have been made against it. But no effective argument
has been made other than the difficulty of applying it to
thousands of relatively small banks, and effecting that daily
redemption which is indispensable. That it can safely be
applied to all individual banks with a capital of $500,000
and over, and to all banks with branches with a capital of
$1,000,000 and over, I have no doubt whatever. That it is
extremely desirable in this country if it can be made safe,
I am quite certain.
•B. E. Walker. A.1 tress New York State Bankers' Association, 1895.


But quite as important as the asset currency, to my mind,
is the branch system. If you make your laws so that it is
merely permissive, surely the branch system will not come
Into being in an important degree unless it is right in
principle. If it is right in principle, should the particular
interests of ten thousand or more individual banks stand in
the way of a great public good?
How ever frank I may have been I have not dared to


strike Such a high note of criticism as many of your own
bankers, remembering that I am a foreigner, but if what
I have said offends I beg you to forgive, and to believe that
I have no ends to serve, and have spoken out of a full heart
that which to me seems to be the thing I hope we are all
seeking—the truth.
I thank you most heartily for your patience in listening
to my rather lengthy paper.

Conservation of Natural Resources.
BY HON. JOSEPH E. RANSDELL, Member of Congress from Louisiana, Member of the National Conservation Commission, and President of the National Rivers and Harbors Congress.
It seems most appropriate that this convention of the
men who hold the purse strings of the nation should be interested in a discussion of the conservation of our natural
resources, for all wealth is derived from resources given to
man by the God of nature. Almost any other gathering of
business men would be considering some one of Nature's
gifts—as, for instance, forestry, mining, agriculture, reclamation by irrigation, drainage, or levees, transportation by highway, rail, or water—but bankers are interested both directly
and indirectly in every resource which contributes to the
national wealth.
During the past twelve months the subject of conservation
has been given tremendous impetus by a number of conventions of earnest business men assembled to discuss some
particular form or branch of the subject, and more especially
by the great conference of governors of all the States of the
Union at the White House on May 13-15 of the present year,
which was participated in by the most eminent statesmen,
jurists, scientists, and leaders in our country. This was the
first convention of governors ever held in the White House,
with the President as presiding officer, and because of that
fact, of the high character of its delegates, of the importance
of the subjects discussed, which strike at the very foundations Of our prosperity, and the lofty statesmanship of its
declaration of principles, it marked a notable era .in our
This conference,• which was called and presided over by
Mr. Roosevelt, one of the most progressive and enlightened
men who ever occupied the chair at Washington, considered
in a very intelligent and interesting manner many problems
of deepest import to our country, and the resolutions adopted
by it embodied principles of the wisest and most advanced
statesmanship. They declared, in part, their "firm conviction
that the conservation of our natural resources is a subject of
transcendent importance, which should engage unremittingly
the attention of the nation, the States, and the people in
earnest co-operation. These natural resources include the
land on which we live and which yields our food; the living
waters which fertilize the soil, supply power, and form great
avenues of, commerce; the forests which yield the materials
for our homes, prevent erosion of the soil, and conserve the
navigation and other uses of the streams; and the minerals
which form the basis of our industrial life, and supply us
with heat, light, and power." Each State was urged to
appoint a commission on the conservation of natural resources to co-operate with each,other and with any similar
commission of the Federal Government and conviction was
declared "that in the use of the national resources our independent States are interdependent and bound together by
ties of mutual benefits, responsibilities, and duties."
Shortly, after' the close of this convention the President
appointed a National Conservation Commission, of which Mr.
Gifford Pinchot, Chief Forester, and leading spirit in the
White House conference, is president; and a number of governors have appointed State conservation commissions.
In the brief space of a single address it is impossible to
give more than a faint idea of this great subject, and I can
only make a few suggestions which I hope will call to your

attention the vast importance of the topic and induce you
to make a close study of it.
We usually speak of the soil as "Mother Earth," and Indeed it is our beneficent mother, by whom nearly all of
our wants and necessities are provided, and from whom
flows by odds the greatest percentage of our wealth. We
can consume and destroy all the minerals which underlie
earth's surface—and no human power can replace them—
for when coal, iron, silver, gas, oil, or any other mineral is
once exhausted, it is gone forever, at least, so far as our
world is concerned; when the forests are cut down or swept
away by fires or the hurricane's fierce blast, it takes many
long years to replace them; but the living waters are ever
with us, and the earth never grows old, never becomes exhausted if properly treated, ever growing younger as age
upon age rolls on and the nations of to-day are swept into
the forgotten past.
Why has there been such agitation on this *subject of conservation, and what objects are to be effected thereby? I
shall endeavor to answer this question somewhat in detail.
A careful study of agriculture in the advanced countries of
the Old World, such as Great Britain, Belgium, Holland,
Germany, France, and Japan, shows that. the soil produces
in those countries fully twice as much to the acre in many
instances as it does in the United States, and that while
the lands in these old countries seem constantly growing
better, our lands, which were so productive a few years ago,
are becoming less so all the while. Mr. James j. Hill at the
White House conference gave some startling facts about our
agriculture. Quoting Professor Carver of Harvard, he says
that "Agriculture as an independent industry, able in itself
to support a community, does not exist in the hilly parts of
New England." He further adds that land values in Ohio
shrank $60,000,000 between 1880 and 1900, and .the same
relative shrinkage exists in New York and other parts of
the Union; that single cropping, failure to fertilize, and a
general lack of intelligence in farming have reduced agriculture in our country to a very low ebb—lower in fact than
any other important country with the exception of Russia;
that our system "reduces agriculture to the condition of a
bank whose depositors are steadily drawing out more than
they put in"; that the average yield of wheat for the whole
United States, for the decade beginning in 1896, was only
13.5 bushels per acre; while during the same period Austria
and Hungary each produced over 17 bushels, France 19.8,
Germany 27.6, and the United Kingdom '32.2 bushels per
acre; and that Belgium, the Netherlands, and Denmark have
each had an average yield of more than 30 bushels per acre
for the past five years. What is true as to wheat is relatively true as to all farm products.
Now, it seems to me that we surely should get as large returns from our virgin soil as do our foreign brethren from
their lands which have been cultivated for over a thousand
years. Even under our present bad methods the farm products of the United States in 1907 had a value of $7,412,000,000. If we pursued the advanced agriculture of Europe,
and thereby made our lands produce twice as much as at
present, they would pay us $15,000,000,000 a year, which



portance and stand fourth in the list of great industries in
wonld give the truly enormous addition of $7,500,000,000 to
•the United States: Food and kindred products coming first,
our national wealth every year.
Moreover, I understand that of the 45,000,000 people of
with an annual value of $2,845,234,900; textiles, second,
Japan 30,000,000 are farmers, and the whole population is
with an annual value $2,147,441,418; iron and steel and
supported by a cultivated area of about 19,000 square miles, their products, third, with an annual value of $2,176,739,726; and lumber, fourth, with an annual value of $1,223,aided by food products from the sea. Every foot of soil is
utilized and every farmer is a specialist. If the same in730,396. Surely any industry which exceeds one and onetensive method of farming practiced in Japan were applied to
quarter billion dollars a year is well worthy of being permy own State, Louisiana, whose 49,000 square miles of area
petuated forever, and yet our timber supply is more than
half exhausted, and at the present it will all be gone at
are all arable lands of the greatest fertility, it could be made
the end of forty years. I know of no subject more worthy
to support all the people that now inhabit the whole United
States, provided they lived on the simple but wholesome diet
of careful study and intelligent legislation than that of
of the Japanese, and in addition the 30,000,000 farmers of, forestry. I consider forest preservation absolutely essential
to national prosperity; indeed, I believe our very existence
Japan mentioned above.
as a nation depends upon the intelligent preservation of
We ,are citizens of the iron age, the most glorious and proour forests. France and Germany have for some years been
gressive age of all the world's history, and our great republic
practicing intelligent forestry, and we cannot do better than
is now making nearly one-half of the iron product of the
to emulate their wise example. The Japanese, who are perwhole world. We boast vaingloriously of this fact; we build
haps the shreivdest people on the globe, in spite of the very
a high wall of protection around us which practically forlimited area of their country, reserve 59 per cent. of the
bids our people access to the ore supplies and manufactured
land in forests, the greater portion of which is under govPrOducts of other countries; we do everything in our power
ernment control.
td increase our exports; and yet geologists tell us that the
In my judgment, the Federal Government should extend
wonderful iroit ore beds of the Lake Superior region will be
and increase its forest reserves wherever practicable, esexhausted within forty years, and the national supply be
pecially where the States and localities directly affected are
almost gone bY the close of this century. What is true of
anxious to cooperate, as in the proposed White Mountain
iron applies also to its kindred mineral—coal. Both of
and Appalachian reserves; and each State should pass laws
diem are essential to our daily existence and comfort.
to perpetuate and preserve its forests. Statutes can be
We are consuming coal with great rapidity and wasteframed which will have the desired effect and promote the
fdlness. Only about five per cent, of its potential energy is
public welfare without unduly interfering with the rights to
utilized in •most of our furnaces, the other ninety-five per
private property.
cent. going up in smoke, etc: And in the process of its
On March 10, 1908, the Supreme Court of Maine renmining we lose nearly fifty per cent.
dered an opinion on the right of its Legislature to restrict
The coal supply is eseimated to last about two hundred
the cutting of trees on private lands for the prevention of
years, and what our descendants will use for its substitute
none of us can say. Perhaps they can harness the waves, droughts and floods, the preservation of the natural water
supply, the prevention of the erosion of such lands with
or the tides, or the winds, and thereby generate electricity.
their consequent filling up of rivers, ponds and lakes. And
We know they can create enormous electric power by proper
it assigned two reasons why the right of the public to concontrol of the-various rivers and streams which permeate
trol and limit the use of private property is peculiarly apevery part of our continent. Perhaps some method may be
plicable to property in land: "First, such property is not
devised to concentrate and utilize the inexhaustible heat of
the result of productive labor, but is derived solely from
the sun—a method possibly on the principle of the Portuthe State itself, the original owner; second, the amount of
guese priest's heliophore exhibited at the World's Fair, St.
land being incapable of increase, if the owners of large
touis, which generated 6,000 degrees Fahrenheit, in which
tracts can waste them at will without State restriction, the
any metal would evaporate instantly. Undoubtedly some
State and its people may be helplessly impoverished and one
substitute for iron and coal will be found when in the
We do not
course of time they have disappeared from our continent, great purpose of government defeated
think the proposed legislation would operate to 'take' private
and yet as prudent men and father of succeeding generations
property within the inhibition of the Constitution. While
we have no right to destroy heedlessly these article so essenit might restrict the owner of wild and uncultivated lands
tial to our comfort, and it is our duty to conserve them in
in his use of them, might delay his taking some of the prodevery way.
uct, might delay his anticipated profits and even thereby
Next in importance to agriculture in connection with the
might cause him some loss of profit, it would nevertheless
soil resources is forestry, and some authorities go so far as
leave him his lands, their product and increase, untouched,
to say that it is even more important then agriculture, for
and without diminution of title, estate, or quantity. He
they claim that without forests to regulate rainfall and
would still have large measure of control and large oppor-•
water supply the soil will lose its fertility and become an
arid waste. One writer cites the cases of Mesopotamia,
tunity to realize values. He might suffer delay but not
Assyria and Palestine, where once magnificent forests
The proposed legislation . . . .
would be within the legislative power and would not operate
abounded, in which Solomon's 80,000 workmen spent twenty
years cutting and fashioning the cedars of Lebanon to
as taking of private property for which compensation must
make the wonderful temple of Jerusalem, and which are now
be made."
almost treeless; and he says that the land which flowed with
And the principles involved in this opinion were practimilk and honey is now barren and poor; and that the site
cally affirmed by the Supreme Court of the United States
of famed Babylon, with its hanging gardens and everything
on April 6, 1908, in a case that went from up New Jersey,
beautiful in nature and arti, is almost a desert. Whether
Mr. Justice Holmes being the organ of the Court.
this idea be exactly correct or not, there is undoubtedly a
The United States is one of the best watered countries
most intimate connection between forests and agriculture, in the world, and if properly utilized for reclamation, power
and forests are the parents, so to speak, of rivers. Withand navigation our waters would prove a source of nearly
out forests, ivith their leafy covering to shield the earth
as much wealth as our lands. The Federal Government is
from the sun's scorching rays and their humid mold to
beginning to reclaim by irrigation the arid regions of the
soften the ground and permit the falling rains to percolate
West on what I believe to be a wise, comprehensive plan
freely through it, there cannot be a continuous, steady supwhich is sure to produce magnificent results and redeem
ply of water for rivers, which without forests will be either large domain from the desert. Moreover, private and corporate
effort is also accomplishing great things in this line. I
raging torrents Or dry beds.
heartily commend these efforts—national and local—in beAs an independent source of wealth disconnected from
half of irrigation, and earnestly hope they may be emulated
their influence on soil fertility and water supply for agriin other branches of the conservation movement.
culture and for rivers, forests are of incalculable im-



• Close akin to reclamation by irrigation is drainage. One
ment to improve its navigable waters, as the sovereignty over
reclaims land by putting water on it, the other by taking it
them for all purposes of navigation rests in it rather than
in the States, and it alone has power and control over them.
off; and just as there are vast areas of arid lands in need
of Water, so there are large tracts of swamp land with too
Waterways from the ealiest days were the best means of
much 'water. As much of the arid land belongs to the
transportation till the advent and development of railroads
'Federal Government, a workable plan was adopted by which
about eighty years ago, and they are still the 'cheapest of all
the nation is spending large sums in irrigation, but as the
known methods. Nearly 60,000,000 tons of freight were
swamps are nearly all the property of States or individuals, carried through the locks on the St. Marys River, connectno general system for their reclamation has yet been devised. ing Lakes Huron and Superior, last year at a freight charge
It is worthy of the best effort of our State and national
of about .84 of 1 mill per ton per mile, which is about onelawmakers.
ninth of the average railroad rate for the entire Union of
The possibilities of our streams for power purposes are
7.48 mills per ton per mile, and water rates on the Ohio and
enormous. No accurate statistics are available, but it is
lower Mississippi are about the same as on the Great Lakes.
estimated that the water-power in the United States exHad the total commerce of the Lakes last year, amounting
ceeds thirty million horse-power, and if this amount of
to about 80,000,000 tons, been carried by rail at the average
power were generated in the average steam engine plant, it
railroad, rate the charges thereon would have exceeded
would consume 650,000,000 tons of coal, worth about two
by over $300,000,000 the amounts actually paid for freight.
billion dollars, or fifty per cent. in excess of the total proHence, the improvements on the Lakes, which cost about
duction of coal in 1906. Only about three million horse$70,000,000, saved last year to the American people more
power, one-tenth of the latent force, is now being developed
than four times as much as their total cost, and they will
by water, but the rapid growth of electricity in recent years
continue to save as much and more annually for all time
increases the demand very greatly for water-power, and
to come.
unless care and wise foresight be exercised this most valWhile actual statistics are not obtainable for all our
uable national asset—worth at least a billion dollars a
waterways, I am convinced that water transportation costs
only about one-sixth as much as the average cost by rail.
year—now lying dormant in our flowing streams, will be
And in many cases, delivery by water is much quicker for
seized upon by corporate interests, will yield little or no
heavy, 'bulky, low-class commodities. Railroad freight cars
revenue to the States or the nation, and the power will be
moved in 1906 an average of only 25 miles in twenty-four
sold to the people at monopolistic prices. Some immensely
hours, and I believe an elaborate study would show that
valuable franchises for water-power have been granted by
boats moved at least 100 miles in the same time.
Congress free of charge under the erroneous impression that
they were without commercial value; but I hope and believe
Railroads are very limited in capacity, and there was
that a different policy will prevail hereafter.
fierce congestion on them not many months ago. On wellThe most valuable use of water after it becomes a river, improved waters, such as Long Island Sound, the Great
lake or ocean is for transportation. Cheap transportation
Lakes and the Hudson, and lower Mississippi, there is practically no limit to the volume of business that may be caris the most important economic question in the business
world, and that nation which solves it best and quickest is
ried thereon and no danger of congestion.
Railroads are monopolistic corporations, owned, operated
sure to win in the race for commercial supremacy. The
United States easily leads the earth in railroads, but in deand controlled for private gain. Competition over any given
velopment of natural and artificial watercourses which furline is impossible, because the roadbed belongs to the cornish the cheapest of all known methods of transportation,
poration. Waterways are free roadbeds, for the use and
we are far behind Holland, Belgium, Germany and France. enjoyment of all the people. Conditions for competitions
These four countries of the Old World are thoroughly alive
are perfect on them, and they can never be monopolized.
in the value of their waters as freight carriers. They have
No rate commission is needed to fix freight rates on improved watercourses.
canalized all their rivers and connected them by transverse
canals at enormous expense, so that freight can be moved
Most of the great annual expenditures of our government
from one part to every other part of the country in boat or
are like rain falling on the parched sands of the desert, only
to disappear and leave no trace behind. But waterway imbarge without breaking bulk. Paris, the metropolis of
France, is connected with Antwerp, the great seaport of
provements are investments which will last forever.
Belgium, by seven waterway routes; and Berlin, an interior
The eight millions expended in giving a 35
-foot channel
city, is joined to every part of Germany by a perfect netto Boston Harbor cheapens ocean rates fully 50 per cent.
work of canals and rivers. It must be remembered also that
to the grain grower of the West and the cotton producer of
the railroads are owned by the State in Germany and Belthe South. The annual saving in freight rates largely exgium, and thoroughly regulated in France, so that no unfair
ceeds the cost of the project, and it will remain a lasting
rail competition with waterways is allowed—a statement
benefit to hundreds of generations of Americans for thouwhich cannot be truthfully made about our railroads.
sands of years after the "Dreadnaughts" of to-day have deWhile this condition exists abroad our policy of water
cayed into their original elements and been forgotten.
improvement has been unbusinesslike in the extreme. InNo country on earth is better supplied by nature with
sufficient sums have been appropriated to complete projects;
waterways than ours, and though they have been sadly negand great works, such • as those on the Harlem and Ohio
lected. in the past, I pray, in the words of Washington,
Rivers, are apparently as far from completion as when the
uttered with prophetic wisdom one hundred and twenty years
work began on them over thirty years ago. No definite
ago, "Would to God we may have the wisdom to improve
plan for the improvement of all the nation's waterways has
ever been adopted, but work has begun and progressed in a
A complete change in our present methods of appropriamost unsatisfactory way on certain rivers and harbors, tions and expenditures is necessary. We must adopt a
without any attempt at a complete system of standard depths
broad, liberal, comprehensive waterway policy, which will
and connecting channels for all, as is so well carried out
give sufficient sums to properly improve within the next ten
by our commercial rivals in Europe. Moreover, appropria- . years every watercourse in the nation, together with contions have 'been entirely inadequate, and very large sums are
necting channels between them, which is justified by presneeded at once for pressing projects. The expense of our
ent or prospective needs of commerce, and must make such
, navy for the past five years was something over five hunchanges of administration in the method of expending these
sums as will bring about speedier and better results.
dred millions, and for waterways during our nation's life
In conclusion, my banker friends, permit me to advise each
, about five hundred and fifty millions—nearly as much in
• five years for warships to protect our commerce as we have
and every one of you to study conservation—in its broad
spent in a hundred and eighteen years to furnish that com- sense the most important subject before the American people, and worthy the highest consideration of our brightest
merce cheap transportation to the sea.
Moreover, it is the bounden duty of the national governminds. If too busy to investigate the whole field—minerals,



forests, lands and waters—take up one of them and acquaint
yourselves with it thoroughly. Its connection with the
others will apear, and you will find the study of deep interest. When you go home preach the gospel of conservation, and make your friends and neighbors understand its
importance and practice its teachings. Become active leaders in creating a wise, general sentiment in favor of preserving and using in a sane way the great natural resources
which a kind Providence has bestowed so plentifully upon

our favored country. You can exercise much weight in.
molding this sentiment, for, the banker is a man of power
whose position throws him in contact with all kinds and
classes of men and gives him great influence. I charge you.
with the responsibility in this matter entailed by your honorable calling. I give into your keeping the care of these
precious resources, and shall expect the same faithful.
stewardship, which as good bankers, you bestow upon your
own investments.

The Guaranty of Bank Depsits.
BY FESTUS j. WADE, President Mercantile Trust Co. of St. Louis.

In the discussion of any economic subject, the important
thing to be borne in mind. is, "What are we trying to
In any legislation affecting the interests of our citizens
it is important that the aim of legislation be borne in mind
all of the time.
What is the object of legislation? Is it to safeguard
the interests of any one class of citizens as opposed to the
interests of any other class? The object of banking legislation is to make banking safe; to safeguard the interests
of depositor and stockholder. These interests are not opposed to each other, they are identical. Any measure which
attacks the interest of the stockholder impairs the security
of the depositor.
Any measure which makes banking safer, any measure
which makes bank failures less frequent and less disastrous,
any measure which compels the banker to conduct his
institution along "safe and sane" lines, conforms to the
object of legislation and safeguards the interests of stockholder and depositor.
It i§ deplorable that a financial theory which affects the
interests and calling of every member of this organization,
and those we. represent, should be made an issue between
the political parties in this campaign.
'Whatever we, as individuals, think about the guaranty
of bank deposits, we must feel that it is unfortunate to
have the question dragged into politics.
One State, the newest in the Republic, is experimenting
with taxation or assessment to guarantee bank deposits.
The question of the legality or constitutionality of this
principle is now in the courts. On the banks in existence
prior to the enactment of that legislative act Oklahoma
levies an assessment of 1 per cent on banks' daily average
deposits (less deposit of State funds properly secured) for
the preceding year, for the purpose of creating a depositors'
guaranty fund. (The State makes no guaranty.) It provides that newly incorporated banks shall pay into the
depositors' guaranty fund 3 per cent of the capital stock
when such new banks open for business. It further provides, whenever any bank becomes insolvent, that the Bank
Commissioner shall take charge of its affairs, and that depositors of :such banks shall be paid in full, and when
the available ,money of the bank, or the money that can be
made availatble, is insufficient to discharge the obligation
to depositors in full, the depositors' guaranty fund is to be
drawn upon to discharge the obligations to the depositors.
If the guaranty fund is redueed, by drafts upon it, to less
than 1 per cent of the total deposits of all the banks of the
State, then a levy of a special assessment is made to cover
the deficiency. This assessment is levied upon the capital
stock of the banks, according to the amount of their respective deposits, and such assessment is due and payable
immediately when made. You will note that this levy or
tax is called an assessment. In my judgment, it is clearly
unconstitutional and, in terming it an assessment, it is
attempted to. do indirectly that which cannot be done
• directly under the Constitution of Oklahoma, or under the
Constitution of the United States.

The word "assessment" is undoubtedly used to disguisethe fact that it is really a tax. The power to tax is subject
to the limitation that a tax must be levied for public purposes only, and an imposition in the form of a tax for
private interest is void and unconstitutional.
The property of banking institutions belongs primarily
to their stockholders, subject, however, to the payment
of their debts.
Every assessment or tax levied upon and required to be.
paid by banking institutions, to pay the deposits of a defunct institution, is, therefore, an appropriation of a part
of the property of the stockholders of solvent banks for
private purposes. In the case of the Oklahoma Banking
Act, however, the assessment required to be levied upon thebanking institutions for the creation of a depositors' guaranty fund is not levied for any public purpose, but is levied
for the purpose of securing to private individuals who are.
so unfortunate as to have their money deposited in insolvent banks a payment of the debt of the bank to them.
The assessment, therefore, takes the money of the stockholders of the solvent banking institutions to pay the.
debts of insolvent corporations to their depositors. It is
unjust in that it attempts to favor the creditors of banking institutions by special legislative protection over the
creditors of other sorts of business corporations.
It is unjust in that it takes the private property of the
stockholders of solvent banks to pay the deposit creditorsof insolvent banks. This is not taking private property for
public use. It is the taking of the private property of one
class of citizens for the private benefit of another class of
citizens, and is therefore indefensible upon any theory of
just governmental principles.
The fifth amendment to the Constitution of the United
States provides that private property shall not be taken
for public Use without just compensation, and it has been
held by all the courts, both Federal and State, that there is
an implied limitation upon the power of the State in relation to the appropriation of private property and an absolute prohibition of the taking of private property for
private use.
Bid leaving to the courts and the lawyers the question
of legality, you and I can consider the economic phases of
the subject, confident that we know what we are talking
• Is it practicable?
• Would it be equitable?'
How would it affect our Stockholders?
How would it in fact protect depositors?
Would it prevent panics?
It is attempted to make a horizontal rate of taxation
on all banks—good, bad, indifferent. How long do you
suppose a life, fire, casualty or fidelity insurance company
would remain solvent if the life insurance company made
the same rate on the life of each individual, irrespective
of age or state of health; the fire insurance company the
same rate on buildings whether frame, brick or fire-proof
in towns and cities with and without protection against
fire; the casualty company the same rate on a man walking

on the street as on a Man working in a powder factory;
or the fidelity insurance company the same rate for a bond
of the dishonest or inexperienced man as it would charge
for the honest, experienced and capable man?
Conservatism, experience, judgment, education in the
various financial problems, would count for naught. A man,
or set of men, invading the banking field to-morrow would
be placed upon the same plane as the sages in the financial
Every successful financial institution receives its stimulus, its deposits, its profits, from the wise and careful
management of its officers and directors. The capital invested in the institutions and the judgment of its officers
and directors are the surest safeguards to protect its depositors. There are over 16,000 banking institutions in
this country. No other line of trade or commerce shows
such a small ratio of loss as the banking fraternity.
It is suggested that the fear of insolvent institutions will
be eliminated by the inauguration of this latest financial
heresy. Let us examine this in a homely way. Suppose a
bank in a remote part of Oklahoma carried its reserve in a
bank in Guthrie, and Dame Rumor suggests to the officers
of the bank in the remote town that the bank in Guthrie,
where the reserve is carried, is tottering and will likely
close within a week. What will the banker with his reserve
deposited in the Guthrie institution do? Will he wait
until the doors are closed and then wait until he receives
his reserve from the guaranty fund? Will he not immediately proceed to remove his -funds from the institution of
which he is suspicious and place them where he is confident of security?
Suppose you had on deposit $1,000, being all the wealth
you possessed, and fear entered your heart as to the solvency of that institution; would you wait for the guaranty
fund, or would you withdraw your deposit?
The guaranty of deposits, as exacted by the United States
government in the deposit of its funds, is held up as an
example why all deposits should be guaranteed. I maintain now, and have always maintained, that the government
should depOsit its funds the same as a citizen, and should
not exact security' from banks over which it has direct supervision and control. It should not take securities purchased with its assets and turn same over to the treasury
to protect the depositors of the government, and thus diminish the security of the other depositors.
Every depositor has the same right as the government
to ask security. The banker can decline or accept the
deposit, as it may suit him.
However you may legislate, the secret has never yet been
discovered whereby you can create personal honor or ability
by legislation; and the theory that the guaranty of bank
deposits will avoid disaster, dishonesty or breach of confidence, is a fallacy.
Irresponsibility would be promoted by the adoption of
the bank guaranty deposit idea, because under this latest
heresy all deposits would be theoretically "guaranteed."
According to this fallacy, knowledge of past history and
experience would be entirely unnecessary. Any set of men,
irrespective of charicter, ability or financial experience,
could form a banking institution in one form or another;
put a sign on the door, as they do in Oklahoma—"All deposits guaranteed by the State"—sell their certificates paying five and six per cent., and compete with their neighbor
who had weathered financial storms, and who would, by
the operation of this chimerical scheme, be required to
pay the depositors of dishonest, inexperienced, ignorant or
disreputable bankers.
No legislation can absolutely stop speculation or avert
recurring periods of depression. The law of average, as the
law of nature, is immutable. Times of inflation will occur;
depression necessarily follows.
The money, real cash, of the country should always be
deposited in the banks. Deposits are created in a large
measure by the thrift of the people and the commerce of
the country. Without depositors, banks would be useless;
likewise without borrowers, bankers could not'exist. The


bank guaranty idea compels each bank to become indorser
for every other bank, but fails to ask each borrower to indorse the paper of every other borrower. Would it not be
foolish to ask every borrower to guarantee all of your bills
receivable? Is it not equally foolish to ask the banks to
guarantee or indorse the debts or deposits of every other
What has been the action of the national banker of
Oklahoma on the guaranty proposition? Ten months have
elapsed since the law went into effect, and although the
National banks were given the alternative of losing the
State deposits or continuing with the national system, be
it said to their credit, business judgment and sound principles, only six out of a total of 307 National banks have
become State banks. State banks were obliged to enter
into the guaranty scheme or retire from business because
of the passage of the law by the Legislature; hence they
were "forced" to join the faith-cure theory of banking.
How does the State fare under the new scheme? It
places the funds of the State directly in politics. On the
theory that each bank is as good as its neighbor in the
State banking system, the party in power will distribute
its favors where it sees fit, and you may depend upon it,
the banker who is not "affiliated," no matter how wise or
solid his bank may be, will receive very little of the deposit.
Deposits in Oklahoma banks, by the latest report of the
Comptroller of the Currency, were $58,037,515. Of this
amount $36,820,989 was in National banks, which as National banks are prohibited from jeopardizing their assets
by becoming guarantors of the other banking institutions;
leaving $21,216,526 in State banks, subject to the operation
of the assessment.
The capital, surplus and undivided profits of the State
banks of Oklahoma amount to $5,536,967.
There are four banks in Oklahoma whose deposits aggregate more than $5,000,000. Consider for a moment the ruin
that would have been created in Oklahoma, if all banks
were guarantors for each other, should these four banks
have closed their doors during the panic of 1907:
Being the largest banks, suppose they were the depositaries of this guaranty fund. Their doors were closed; their
money invested in loans and securities. The ,remaining
banks of the State would be called upon to pay $5,000,000
cash to reimburse the depositors of these institutions.
Where would they have gotten the money (not credits, but
cash) in November and December, 1907? Take it out of
their vaults? If so, what would become of the cash reserve
of the institutions assessed to pay the depositors during that
critical period? $5,000,000 cash would be nearly 9 per cent.
of the total deposits of all the banking institutions in
Oklahoma during those months. If they had been *suddenly
called upon (as the law of Oklahoma is supposed to require
them to do) to pay $5,000,000 in cash into the institutions
assumed to be failed, it would have taken practically every
the State
dollar in cash out of every banking institution in ,
of Oklahoma in November and December last year. What
would become of the other banks with their $53,000,000
deposits? Who would pay those, deposits? What good
would their guaranty be if their reserves were all gone?
For an answer, the advocate of the policy will tell you the
money withdrawn from these banks 'would be deposited
with some other institution. Is this true? Is that the
history of banking in a great crisis such as we have gone
through? Did not a great many bankers in Oklahoma
decline to pay depositors in cash during the panic of 1907?
If the $5,000,000 had been paid out in cash during November
and December, 1907, would not the greatest portion of it
have, gone into safe deposit boxes and stockings, owing to
the panicky feeling of the public, particularly so when
nearly all the banks of the State'had ceased cash payments?
Quixotic is the idea that the mere advertisement of the
State or governmental guaranty or deposits theory will
make philanthropists of misers or public-spirited citizens
out of those who in times of success as well as in times of
distress hoard and hide their money. The man who has acquired the habit of hiding the proceeds of his labor will

-never care about the theoretical guaranty by any Govern• The present guaranty of that vast amount of deposit is
ment or State, but will continue to hoard his cash in the ' as follows: Capital, surplus and undivided profits of—
future as he has in the past.
State Banks
"Recklessly encouraged," Should be the title of the bank
Trust Companies
guaranty idea, because it encourages those who have no
National Banks
experience, judgment, wisdom or financial education, to enter the banking field, and they will do in many instances
plus the double liability of all stockholders of all National
what is now being done in Oklahoma—offer 5 per cent or
banks. Thus it will be seen that depositors' money in Na6 per cent. for deposits on time certificates, with the bait
that their 'bank is guaranteed by the State.
tional and State banks and trust companies, aggregating a
What financial confidence would you have in a wholesale
total of $13,300,000,000, is guaranteed by a capital, surplus
dry goods firm's paper if you knew that firm stood as inand undivided profits of these institutions aggregating
dorser or guarantor for every retail dry goods man in the
$3,500,000,000 plus every dollar of the depositors' money
loaned out by careful, experienced, honest bankers.
There are States and cities where depositors have not
If this guaranty of bank deposits became general, why
lost a dollar in five, ten, twenty years, in the past quarter
do we want $3,500,000,000 as capital, surplus and undivided
of a century. The national banks of the United States
profits? Under the proposed theory, a bank with a capital
handled thousands of billions of dollars in the last quarter
of $50,000 would be as good as one with $1,000,000 capital,
of a century with a loss of less than one-quarter of 1 per $2,000,000 surplus and $500,000 undivided profits. Why
cent. for the entire period. Why discredit the enviable
have any surplus to weather the storm? We all guarantee
reputation of the financial institutions of this country?
one another. Why. pay small dividends to our stockholders
What other nation with any financial power ever attempted
and build up large surplus and undivided profits?
such a foolhardy proposition?
How utterly absurd, how silly, this attempt to foist on
Under the operation of the law, the solvency of every
this nation such a weak, unsound, socialistic doctrine!
State bank subject to that law, in time of distress, would
The most ardent advocate of the bank guaranty heresy
be questioned. Why? Because it would not only be called
admits that the loss to depositors in over forty years the
national banking system has been in existence is less than
upon to show the solvency of its own institution, but to
guarantee the deposits of every other institution in the
two-twenty-fifths of 1 per cent. on total deposits. What
State, hence the contingent liability of each bank would be
other line of trade or commerce can make such a showing
greater a thousandfold than its total assets.
of safety? What can be more socialistic in its tendency,
You may be under the delusion that Oklahoma, as a
more paternal in its purposes, than this wild and illogical
scheme of bank deposit guaranty?
State, proposes guaranteed deposits. The State of Okla'Statistics show there are over 8,500,000 depositors in savhoma guarantees no depositor a dollar. It proposes to colings banks of the United States. Of this number, there are
lect a tax from the careful, thoughtful, experienced banker
more than 5,000,000 in the New England and Eastern States
to pay the debts of the careless,ignorant, dishonest banker
and Pennsylvania. Have these 5,000,000 people arisen in
in case the bank fails. It does not guarantee that the tax
their supremacy and demanded the bank guaranty?
fund may not be deposited in an institution that will close
What organization or set of men comprising economic
its doors.
, Everyone knows that there is now, and always has been, societies, labor unions, agricultural associations, manufacturing or commercial organizations, have demanded, suga guaranty for all bank a practical, business-like
gested or approved of this latest financial fallacy? Is it
not a fact that not one organization of the character above
The total deposits of the banking institutions of the
outlined has ever put its official stamp of approval on this
United States aggregate more than $13,300,000,000, divided
bank guaranty deposit idea? Should we as bankers' in conas follows:
vention assembled sit idly by, or should we condemn this
State Banks
measure? I say it is our duty to our depositors, our stock2,100,000,000
Trust Companies
holders, our country, as citizens, to condemn it in the
Savings Banks
strongest terms.
National Banks














Committee Reports—Banking Section,
Annual Report of the Secretary, Fred E. Farnsworth.
Nnw YORK, September 1, 1908.
To The American Bankers' Association:
It is not without considerable satisfaction that I submit
herewith my first annual report. Notwithstanding the strenuous times which overtook the banking interests of the country
last October, the Association has had an unusually prosperous
year. We have retained our membership and show a healthy
I will not attempt to enlarge on the work of the Sections and
the Committees, nor occupy your time in going into details, for
you will have full reports from these adjuncts of our Association, suffice it to say that this has been for them an unusually
active year. The Trust Company, Savings Bank, and Clearing
House Sections have accomplished a great deal along their various lines.
The report of Chairman Pierson covers, very fully, much of
the work accomplished by this office under direction and with the
approval of the Executive Council.
You will have a report from the Currency Commission of
our Association, of which I am secretary. I firmly believe
that the Currency Commission and its two committees was
a most important factor, through its educational work, in preventing the passage of the vicious Aldrich and Fowler bills as
originally introduced; in fact, I think it is apparent that,
had it not been for the work of the Currency Commission, one
of these bills would have been passed by Congress.
There is probably no other one department of the Association work which appeals to our membership to such an extent as the protective feature.
Of the 151 criminals arrested as appear in the report of the
Protective Committee, 74 have been convicted and sentenced to
specific terms amounting to 231 years and 7 months; 24 have
been sentenced to indeterminate terms.
The Protective Committee has expended $38,522.54 for the
protection of 9,803 members, which amount is $1,675.14 in
excess of the expense of the Protective Committee of last year.
Consideration should be taken, in connection with this increase
of expense, of the fact that there has been an increase of 552
in membership, which, based on the retaining fee we pay
the Pinkertons, will about offset this amount. The Committee
has gone a little further this year in their efforts to prosecute criminals by making special investigations and endeavoring to apprehend and cause the arrest of amateurs whose records may classify them as dangerous criminals, as result of
which additional expense has been incurred.
A large number of our State Associations have the protective
feature and cooperate with the American Bankers' Association
in their endeavor to apprehend criminals, and at times eases are
pro-rated between us. The Committee desire to express to
the State Associations their appreciation of the cooperation
thus extended, and stand ready to be of service to the various
States when it is possible so to do.
Full report of the Protective Committee will be made in regular order to the convention, but I think it is due our Protective
Committee to say that they have been earnest in their work,
and have given such attention to details as has been required
of them.
All of our Committees, and there are now eleven of them,
have held frequent sessions, have been working harmoniously
in the interests of the Association, and the results are very apparent.
It has seemed to me that it was within the province of your
Secretary, and extremely desirable, for him to attend as many
conventions, as possible of the State associations. I attended
several of them, but not as many as I should like to have,
owing to my duties in the office, which have been perhaps a
little more strenuous this year than may be in the future. As
a representative of the American Bankers' Association I have
been very warmly received by the State bodies and I am sure
that these visits have resulted in good both to the Association
as well as the State organizations.
The Institute is one of our most valuable adjuncts—now with
some 9,000 members and 45 chapters, and its work carried
along as originally laid out by the Educational Committee of
this Association. The Institute is composed of a body of live,
energetic, progressive young men, who are a credit to this As-

sociation, and are bound to become the bankers of the future,
and the Institute fitting them for such a career. I was
present at their convention at Providence, which was most suc-.
cessful in every particular.
The Organization of Secretaries of State Bankers' Associations was organized in 1902. While it is not a part of the
American Bankers' Association, its work is closely allied to us ;
and its success and the success of the State Associations, and
increase in membership go hand in hand with the growth of
the American Bankers' Association. When the secretaries organized there were not to exceed six or eight progressive Associations in the country. There are now twenty-five or thirty
associations which can be considered first-class and up to date
In methods, work and membership. I have been Secretary of
tids body since its inception, and believe that these two Associations cannot be too closely identified for the good of both.
For the thorough handling and expediting the business of this
office, with our large memberships, committee work and correspondence—early in my administration I began systematically to install modern business devices, with the result that
we now have an addressograph with 25,000 names of member
and non-member banks; a multigraph on which we have pro,
duced 100,000 letters; modern filing devices for our correspondence, vouchers and files, code receipts, and membership blanks.
I have also introduced a system of office vouchers, and in every
way possible have endeavored to bring the office up to the
standard of a first-class business concern. For the convenience and comfort of visiting bankers the offices have
been rearranged and refurnished, giving us a library and reading room, wherein can be found all of the financial papers
and journals of the country. The working offices have been di,
vided up for the convenience of the working force, as well as the
secretary and assistant secretary. That this innovation was
desirable is attested by the fact that a large number of visiting
bankers have called and made use of the offices and reading
The Cipher Code authorized by the Advisory Committee and
approved by the Council; after correspondence and consultation
with many of our members was prepared by the Business Code
Company (who are experienced in this line) and was sent
out September 1. It is very comprehensive and much more
complete than the former code, and has been received with
much satisfaction by our members.
During the fiscal year just ended about 600,000 special letters, circular letters, pamphlets, and codes have been issued
from the secretary's office.
[To August 31, 1908, Inclusive.]
123 New Jersey
10 New Mexico
41 New York
121 North Carolina
353 North Dakota
134 Ohio
141 Oklahoma
28 Oregon
District of Columbia
29 Pennsylvania
100 Rhode Island
253 South Carolina
76 South Dakota
654 Tennessee
315 Texas
344 Utah
322 Vermont
135 West Virginia
75 Washington
147 Wisconsin
234 Wyoming
337 Canada
321 Cubit
126 Hawaiian Islands
, 341 Mexico
110 Porto Rico
250 West Indies
New Hampshire
9 803
Six hundred and ninety-one (691) members were erased
from the roll through failure, liquidation, consolidation, and
withdrawal. This brought the membership September 1, 1907,
to eighty-five hundred and sixty (8,560).
Twelve hundred and forty-three (1,243) members have joined



the Association since that date. Notwithstanding the fact that
a large proportion of the dues payable for the fiscal year ending
August 31, 1908, were collected during the panic period, we
now have a total paid membership of ninety-eight hundred and
three (9,803), being a net gain over last year of five hundred
and fifty-two (552). The gross gain is within fifty-nine (59)
of last year's. The aggregate capital, surplus and deposits of
our membership amounts to $13,582,982,192.
The membership and resources of the Association have increased as follows:
Sept. 1, 1875
Sept. 1, 1885
Sept. 1, 1895
Aug. 31, 1905
Aug. 31, 1906
Aug. 31, 1907
Aug. 31, 1908
Interest on bonds
Interest on bank balances

Paid mem'bership.

$ 11,606.00

Making the total income

Sept. 1st, 1908, By Balance cash, $1,923.20.


In closing this my first annual report to you as your Secretary, it is my desire to express my sincere thanks to the officers,
committees and members of the Association for their uniform
courtesy and loyal support, and particularly to Chairman Pierson who is resourceful, energetic and progressive, with the
Interests of the Association at heart, and who has always responded to my calls for consultation and advice.
I want to particularly emphasize the work of the Executive
Council, the Vice-Presidents of the various States and Secretaries of the State Associations. We have called on these officers frequently during the year to aid us in our work, and especially in our efforts to increase our membership. In this respect we have received loyal support, as is evidenced by the
material increase in membership which is shown •by the figures just reported to you.
The large amount of extra work during the past year along
certain lines, in extending our usefulness to our members and
in educational work, has required an additional clerical force.
It is due to Assistant Secretary Fitzwilson and my force to
say that they have willingly contributed to the success of
the administration in faithful services, and to tliem I desire
to express my thanks.

I predict for the future of the Association increased membership, unqualified success, and with it hearty support from
the new administration, the enlarged Council, State Vice-Presidents, State organizations and committees.
All of which is respectfully submitted.
Fred. E. Farnsworth,

Report of the Treasurer, A. A. Crane, New York, N. Y.
Financial Statement for Fiscal Year Ending Aug. 31st, 1908,
To Cash—
Sept. 1.—
Standing Protective Committee
Advisory Committee
American Institute of Banking
Committee on Bills of Lading
Committee on Credit Information
Companies and Money Orders
Committee on Express
Committee on Uniform Laws
Clearing House Section
Currency Commission
Standing Law Committee
Savings Bank Section
Trust Company Section
Cipher Code
Account Executive Council meeting of 1907
Executive Council meeting of 1908
Proceedings of 1907, and distribution
$30,000 New York City Registered Corporate Stock, 32
of 1940
Metal signs
Dues returned to two members
Refund account of excess dues by members
Petty cash
Sundry Expenses
Telephone and Telegraph
Convention of 1907
Traveling expenses of officers on official business
Printing and Stationery
Stick pins for Convention of 1907
Furniture and Fixtures
Premium 'on officers bonds
Special office help
of Executive Council
14 K. gold buttons for members
Balance, August 31, 1908

Sept. 1st, 1908,'by balance cash, $1,923.20.
By Cash—
Sept. 1.—
By cash balance
" interest on bank balances
interest on bonds
sale inserts and signs
dues from 234 old members to 1909
dues from 325 new members to 1909
sale of proceedings
sale of 2 trust company forms
Company Section Proceedings
sale of 3 copies Trust
refund account badges for Savings Bank Section
refund account Standing Protective Committee from
various cases
sale of stamped envelopes to Trust Company Section
refund account sundry items by J. R. Branch
sale of old office appliances and furniture
from telephone messages
proceeds from delinquent registrations at convention
of 1907
dues from 8,024 old members to 1908
922 members to 1908
dues from


In addition to the above balance, the Secretary sent to the
Treasurer for collection, Sept. 1, 1908, 9,119 drafts account
of membership dues, unpaid for fiscal year ending August 31,
1909, amounting to $151,040.
Also, the Treasurer holds for investment the following:
$10,000 Government 4 per cent. bonds of 1925.
$30,000 Atchison 4 per cent. bonds of 1995.
$50,000 C. B. & Q., Ill. Division, 4 per cent. bonds.
$30,000 New York City Registered Corporate stock 3% per
cent, due 1940.
An inventory of the furniture and fixtures of the Association
shows about $5,000 in value. This is not carried as an asset,
but was charged off when purchased.
A. A. Crane,

Report of Standing Protective Committee.
New York, September 1, 1908.
To the Executive Council of the American Bankers' Association,
Gentlemen: the detailed financial report of the Standing Protective Committee for the fiscal year ending August 31, 1908,
is as follows:
Sept. 1, 1907, By Balance
Sept. 27, 1907, By Appropriation of Executive Council
By Appropriation of Executive Council
May 5, 1908,
Aug. 31, 1908, By Refunds Account of Special Cases to date
Pinkerton's National Detective Agency Services
per contract for one half fee due Nov. 1,
1907-8,376 members at $1.50
Services one-half fee due May 1, 1908-9,297
members at $1.50
Account Special Cases

One-half expenses incurred by Texas Bankers'
Association re Samuel Robinson case
August 31, 1908—Credlt Balance

234.13 $30.025.10

The following data will show you the result of the Committee's work during the year just ended:

Burglars—Special: Cases not disposed of, arrested prior to
September 1st, 2; arrested since September 1st, 13; convicted
and sentenced, 7; Specific terms, 4; indeterminate terms, 3;
total years 45-3; released, 3; died, 3; awaiting trial, 2.
Burglars—General: Cases not disposed of, arrested prior,to
September 1st, 1 ; arrested since September 1st, 21 ; convicted
and sentenced, 7 ; specific terms, 7; total years, 62-4; released,
3; escaped, 4; died, 3; awaiting trial, 5.
Forgers—Special: Cases not disposed of, arrested prior to
September 1st, 9; arrested since September 1st, 39 ; convicted
and sentenced, 29; specific terms, 22;, indeterminate terms,
total years, 82; released, 7; escaped, 2; died, 1;
trial, 9.
Forgers—General: Cases not disposed of, arrested prior
September 1st, 6; arrested since September 1st, 47; convicted
terms, 14 ;
and sentenced, 30; specific terms, 16; indeterminate
total years, 37; released, 3; awaiting trial, 20.
Hold-ups—Special: Arrested since September 1st, 4; awaiting trial, 4.
Hold-ups—General: Arrested since September 1st, ; con;
victed and sentenced, 1 ; specific terms, 1 ; total years, 5
released, 1 ; awaiting trial, 5.
Sneak thieves—General: Arrested since September 1st, 2;
awaiting trial, 2.

Total cases not disposed of, arrested prior to Sept. 1st
Total arrested since September. 1st
Convicted and sentenced
Released, escaped and died



Financial Statements of Various Committees.
New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.


Awaiting trial
The total period of imprisonment for the criminals that
lave been convicted amounts to 231 years and 7 months. This
-does not include 24 indeterminate terms.
The membership of the Association has increffsed 552 since
our last report, and we are pleased to state that there have
been fewer crimes in proportion perpetrated against members
than for any year since the inauguration of the Protective
We refer you to report of the Pinkerton Detective Agency
for additional details.
Notwithstanding the fact that your Committee has had a
larger membership to deal with than in any previous year
have only expended $1,675.14 more than the expense involved
in carrying on the work last year. By the increased membership the retaining fee of the Pinkertons is an extra expense,
and, moreover, the Protective Committee,' while endeavoring to
confine its operations against professional criminals, do, if in
their judgment a case would warrant it, endeavor to apprehend and cause the arrest of an amateur whose record may
classify him as a dangerous criminals, and therefore, part of the
Increased expense is due to this new feature of their work.
Heretofore the work of previous committees has been confined
entirely to professional criminals.
It sometimes happens that members are dissatisfied because
the Detective Agents are not authorized to do special work
on cases which do not come within the rules of your Committee. The Committee regrets this very much, but believe you
will appreciate the fact that they are compelled to have rules
to govern their work. They give careful consideration to every
case submitted and decide each case on its merits.
We respectfully call your attention to the rules under which
the Protective Committee works as follows:
1. "Upon receipt of notification by the Protective Committee, Hanover Bank Building, New York, N. Y., of an attempted
or successful perpetration of fraud upon a member of the
association, either by forgery, check-raising, robbery or safebreaking, which appears to be the work of professional criminals, accompanied by a full account of the offense, and, if
possible, a description of the operators, the Committee will, if
the case comes within the category of those of which the
Association can take cognizance, at once undertake the apprehension of the criminals by means of detectives and such other
meana as they may consider warranted. A case once committed to the Association, which results in the apprehension of
the criminals, cannot be taken out of its hands, nor the offense
,condoned or compromised."
2. "The Association cannot take cognizance of petty larcenies or thefts by employees.
"The Protective Committee can spend no money, undertake
no detective work, employ no lawyers and pay no fees of any
kind in cases of local swindles, or frauds or confidence tricks.
The vigilance, alertness and energy of the officers of the banks
must be relied upon in such cases."
• 3. "The Association cannot be held responsible for any expense incurred for protective work which has not been previously authorized by the Protective Committee."
The Committee calls your attention to the law:
"BURGLARY WITH EXPLOSIVES—A person who, with intent to
commit burglary, breaks and enters, in the night time, a
building, and commits a burglary by the use of nitro-glycerine,
dynamite, gun-powder, or any other high explosive, is guilty
of burglary with explosives."
with eiplosives is punishable by Imprisonment in State Prison
for not less than 25 years and not more than 40 years."
This law' has been enacted, with some modifications, by Colorado, Kansas, Maryland, Michigan, Missouri and Nebraska.
We recommend that the convention of this Association adopt
resolutions urging the passage of this lato by other States, and
the appointment of a committee to give the matter their

During the past year there has not been a bank burglary committed in Maryland or Nebraska, and we are of the opinion that
this law will do much towards decreasing bank burglaries.
During the last year there were 72 attacks against nonmembers on account of successful and unsuccessful burglaries,
as against 17 members. Loss from non-members was $127,045.23, against $1,959.26 by members, making a difference of
The Hold-up Robberies upon non-members were 9, with a
loss of $22,739.99, against an attack upon one member, with
a loss of $2,287.46, a difference of $20,452.53.
During the year there were no robberies on members by
professional sneak thieves.
Your Committee have examined, reported and acted on over
16,000 letters and reports in connection with their work.
Respectfully submitted,
Standing Protective Committee.


Sept. 1, 1907, By Credit Balance
Sept. 27, 1907, By Appropriation by Executive

$ 5,567.60

Printing, postage and stationery
$ 7,150.07
Expenses of Detroit Convention
Meeting of Board of Trustees at Atlantic City
Preliminary expenses for convention of Associated
Chapters at Providence
Aug. 31, 1908, By Credit Balance


New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.

Sept. 1, 1907, By Credit Balance
Sept. 27, 1907, By Appropriation by Executive Council

$ 2,797.76

Printing and stationery
$ 2,370.46
Sundry Expenses, stenographic services, reports,
Traveling Expenses
Telegraph and Telephone


Aug. 31, 1908, By Credit Balance

New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.

Sept. 1, 1907, By Credit Balance
Sept. 27, 1907, By Appropriation by Executive Council
May 5, 1908, By Appropriation by Executive Council
Aug. 31, 1908, By Receipts
Clerical force, Chairman Executive Committee
Printing and Stationery
Petty Cash
Sundry Expenses
Furniture and Fixtures
Expenses of Convention


$ 2,487.64


Aug. 31, By Credit Balance

New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.

Sept. 1, 1907, By Credit Balance
Sept. 27, 1907, By Appropriation by Executive Council
May 5, 1908, By Appropriation by Executive Council
Aug. 31, 1908, By Refund Account of Badges

$ 852.30

Traveling Expenses
Printing and Stationery
Sundry Expenses
Furniture and Fixtures
Attorneys' Fees
Expenses of Convention
Committee on Auditing
Expenses Executive Committee
wood, N. J., May 4, 1908


, 37.00

Meeting, Lake


Aug. 31, 1908, By Credit Balance

New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.
Sept. 1, 1907, By Credit Balance
Sept. 27, 1907, By Appropriation by Executive Council....


Printing and Stationery
Traveling Expenses
Aug. 31, 1908, By Credit Balance






New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.


Sept. 1, 1907, By Credit Balance

Printing and Stationery
Attorneys' Fees
Traveling Expenses
Sundry Expenses, stenographic services, etc




Aug. 31, 1908, By Credit Balance
New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.

$ 4,972.82
Sept. 1, 1907, By Balance
Sept. 27, 1907, By Appropriation by Executive Council....
by Executive Council
May 8, 1908, By Appropriation

$ 1,000.00

of Mr. J. S. Miller
Printing and Stationery
Traveling Expenses
Sundry Expenses


Aug. 31, 1908, By Credit Balance
New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.

Sept. 1, 1907, By Balance
Sept. 27, 1907, By Appropriation by Executive Council....

$ 637.28



Attorneys' Fees
Printing and Stationery
Traveling Expenses
Salaries (stenographer)



Aug. 31, 1908, Credit Balance

New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.


Sept. 1, 1907, By Credit Balance
May 5, 1908, By Appropriation by Executive Council


Revision of text of the Negotiable Instrument
Printing and Stationery
Traveling Expenses



Aug. 31, 1908, By Credit Balance
New York, September 1, 1908.
From September 1, 1907, to August 31, 1908.
Traveling Expenses
New York, September 1, 1908.
From September 1, 1007, to August 31, 1908.
Traveling Expenses
Sundry Expenses


Report of Currency Commission.
To the American. Bankers' Association:
Gentlemen: The undersigned Currency Commission, which
was, by a vote of the last annual convention, extended for another year, and .directed to maintain its contest for currency
reform, beg leave to report:
Your commission appeared before the Committee on Banking
and Currency of the House of Representatives early in its
session, in advocacy of the plan already approved by the convention, and in opposition to other schemes of legislation
deemed unwise and inimical to the best interests of the country.
We applied .for a hearing before the Finance Committee of the
Senate, but it was suggested that such hearing better be deferred until after the House had taken action. The crisis of
last year was at its height at the period when Congress assembled, and resulting therefrom there were ninety-six different
bills introduced in Congress amending the national banking

The commission was confronted with great labor, and bent
its energies to fully digest the various pending measures so
that it might point out the impracticable as well as the good
features of each. The wisdom of sending to the banking fraternity the various documents distributed was amply evidenced
by the popular demand for more. The officers and members of
the Executive Council of your association have given to the
commission cordial and effective support.
Credit currency, commended in your commission's first report,
and approved by this association at its last convention, had
further pr000f of its soundness in principle and efficiency in
operation in these countries having such a currency, during the
world-wide crisis of last fall. While maintaining open minds
as to the wisest method of its incorporation into our own banking system, it is our belief that a currency based on this principle, so safe and efficient in the experience of other nations,
will be found essential in our own system.
In the Aldrich-Vreeland measure, however open to severe
criticism, Congress, by law, has recognized the normal and
legitimate assets of a bank as the natural and proper basis of
credit extended to the bank in the form of circulating notes.
The principle for which we have so long contended has thus
received legislative sanction. To this extent the labors of the
American Bankers' Association have been crowned with success..
It was the conviction of the commission, based upon experience and the study of the history of periods following
previous panics, that no financial panic could immediately follow the crisis of last fall, and that it was the part of wisdom
to enact no makeshift legislation lest such an enactment for
the purpose of supposed temporary relief should prove a serious
stumbling block in the way of legislation for the comprehensive
and fundamental correction of the grave defects of our banking
and currency system.
Your commission strongly urged this view upon Congress, at
the full hearing courteously granted by the Banking and Currency Committee. It was sought to impress upon Congress
that, if not feasible to enact immediately such laws as would
give us a thoroughly scientific banking and currency system, it
would be wisest to defer all legislation upon the subject except
for the appointment of an able committee, instructed to make
thorough investigation and submit its recommendations to a
subsequent Congress. Although this view was not adopted in
full, the commission feels that its efforts were not in vain,
inasmuch as the committee desired was appointed by Congress.
The high standing and recognized ability of the members of this
Congressional Committee, and the vigorous way in which it has
entered upon this important work warrant the confident expectation that Its report and recommendations will form the basis
for such legislation as will give us a banking and currency
system such as our vast commercial interests so urgently need,
and such as will make this country the greatest financial power
in the world. Your commission begs to urge that hearty cooperation be extended to this Congressional Committee, and
that the American Bankers' Association earnestly continue to
final success its efforts for currency and banking reform.
Respectfully submitted,
W. V. COX,
Report of Federal Legislative Committee.
To the American Bankers' Association:
Gentlemen: Your Federal Legislative Committee beg leave to
Owing to the culmination in the unsettled financial condition
of the country last fall, resulting in a crisis of great magnitude,
bringing out many new questions for consideration, the work
of your committee during the past year required much careful
thought and study, indeed, more than during any preceding
year. This is demonstrated particularly by the fact that in our
National Congress more than one hundred bills affecting the
banking interests were introduced, each member apparently
vieing with the other to produce some remedy to cure our
financial ills.
Your committee made it their special duty to carefully examine each bill introduced and digest the subject matter; also
to keep in close touch with the various committees to which they
were referred, with the view of determining the action to be
We kept ourselves in readiness at all times to promptly notify
the membership of the association, should any measure seem to
require special attention, by keeping on hand two sets of
envelopes addressed to the members of the association, which
could be promptly sent out.
• We were in a position to assist other committees in any emergency, and endeavor to keep ourselves fully advised of their
Your committee since its appointment has followed with

much interest the movement which has been on for the establishment of postal savings banks, and has opposed the enactment of such legislation. No bill has been presented which
would really prove beneficial to the country. On the contrary
all have been burdened with measures sure to prove detrimental,
not only to the banks, but the individual depositors, •as well, by
impairing the ability of the banks to adequately provide and
care for, the very desirable feature and advantage of active
banking accounts, curtailing the use of individual credit, and
giving the dishonest a cloak by making such funds immune
from all process of law, and particularly inviting the several
withdrawals of large sums from commercial channels by making
such deposits not subject to taxation, and such banks are proving a serious menace to the financial credit of the countries in
which they are in use.
Your committee is opposed to the guaranteeing of deposits by
either State or Federal governments, or the assuming of a
trusteeship by either, of a guarantee fund, believing that it
would be a function wholly outside of any purpose for which
State or Federal governments were organized, and for the further fact that the assuming of a trusteeship would be misleading to the general public, as it is not a guarantee by either
State or Federal government; and that such a law would work
to the detriment, not only of the banks, but to the depositing
public as well.
Such a law would tend to minimize the amount of the capital
of the banks, rather than encourage the building up of a capital
and surplus in keeping with the business demands of communities. It would give to the reckless banker the means of securing a larger amount of business than depositors would under
ordinary conditions entrust to him, with a failure that must
inevitably incur a greater amount of loss to the associated banks
and indirectly to the public, than is now possible, and might
lead to an organization of banks which would become a monopoly. in banking.
Losses attend upon banking, ever have and ever will as long
as human nature is selfish and human judgment fallible. Wise
supervision and constant publicity have reduced such losses to
a minimum. The loss to depositors of failed national banks,
annually, during the forty-three years of their existence, equals
only 1-20 of 1 per cent, of their aggregate deposits. Statistics
from various States show that other classes of banks have
maintained an equally strong position. Surely these facts present no crying need for mutual guarantee.
The contractual relation between a depositor and his bank
is like any other business relation depending upon mutual agreement, involves the same ethics, and should be governed by the
same laws. As to the individual depositors these contracts are
essentially local.; the character and moral responsibility of the
official management are determined by a depositor from the
same data and in the same manner that such depositor would
determine the moral hazard in selling goods or otherwise
extending credit. Is there any principle that differentiates a
depositor from any other individual who has voluntarily entered
into a creditor relation with a bank, and which entitles him
alone to protection? If one class of bank creditors is to be
Insured against the usual mischance of business, why not all
classes; and where is the justice of levying a depositors loss,
for which he is not responsible, upon other banks, who also
are not responsible for his loss and who have no voice whatever in the selection of where he shall keep his account?
Depositors of a bank are guaranteed primarily by the character of the assets in which the depositors' money is invested,
margined and fortified by the bank's capital and surplus. If a
bank's assets, that is to say its investments, are good, if its
credits have been wisely and conservatively extended, depositors
are amply protected and need no other guarantee. Why should
not the bank's assets be guaranteed; why not guarantee payment to the banks of the receivables of their various clientele?
This would guarantee desposits. Both propositions are alike
logical and alike absurd.
Deposits in a bank are safe in just the proportion that its
assets are good. We should discourage unwise extension of
credit, rather than open the way for reckless banking, which
would seem to be the inevitable result of the proposed schemes.
A guarantee is a contract, whereby a person. voluntarily pays
to other persons or a corporation, a fixed amount to secure
indemnity against loss on account of the possible happening of
specified events, within a fixed period of time; the amount paid
Is proportionate to the risk involved and is paid by the beneficiary under the contract of guarantee. The deposit guarantee
propositions now before the public would compel all banks, by
force of law, to pay unknown sums to unknown persons, for
eventual losses for an unknown period of time, and subject to
unknown risks, over which the parties compelled to pay have
no control whatever. It would seem to be taking property without due compensation. The proposition is socialistic in the
extreme and is paternalism run riot.
If bank depositors are to be protected, why should not all
classes receive the same consideration? When this point is
reached and this goal attained, how much does it lack of achieving the ideal of socialism? The shades of the great statesman,
• who declared "That country is governed best that is governed
least" must be sadly perturbed by paternalistic tendencies.
With capital sufficient to margin its dealings with the public,


a bank should next select men of probity and established character for its management; with the lapse of time, the manage-.
ment establishes its efficiency as well as its honesty, and a
discriminating public entrusts the bank with its business. Thegrowing volume of deposits and of business establishes a goodwill, which is one of the principal elements of the value which.
bank stock possesses. The proposed guarantee plans would
seriously impair the value, if not destroy the good-will of the
bank, by placing all banks exactly on a par with respect to
financial responsibility. That is what the various plans seek to
accomplish. Remember that while each bank guarantees the
deposits of all, each bank assumes the risks and losses of all.
We are told that these plans will do away with panics. Are.
they not more likely to prove the mother of panics? A panic
is business paralysis, born of unreasoning fear on the part of
the public. In such conditions, will depositors refrain from
withdrawing their funds? Will they not, rather, withdraw them
at once because of the unknown danger resulting from each
bank being compelled to guarantee the losses in 20,000 other
banks? To those who have had the gruelling experience of
several panics, there is but one answer to this question, and no
law could be spread upon the statute books more fraught with
mischief than a law for enforced guarantee of bank deposits.
Let Congress provide a means whereby perfectly solvent banks
with good liquid assets can obtain currency with the same
facility as banks in other great commercial nations, and they
will have gone far toward the prevention of panics.
We do not believe it is possible to eliminate that heretofore
essential judgment, which a discriminating public has been wont
to use in the choice of a bank with which to do business, without taking from the business one of the most important features
for its proper handling and regulation. It seems impossible for
the time to come when honesty, integrity, ability, and the general moral and business reputation of the banker in this country
will not be considered; yet we believe the guarantee of deposits
makes these features absolutely unnecessary, and places. the
level of banking on a lower plane than heretofore.
A mutual guarantee does not make all banks individually
strong. The most and the best that can be claimed for it is
that it will bring the weak ones up, so far as safety of depositors
is concerned, while at the same time bringing the strong ones
down. Average mediocrity would be the result; but would the
impairment of our system stop with mediocrity? It takes conservatism in the interest of profligacy; it compels legitimate
business to bear the risks of speculation; it takes away the
high ideal involved in establishing character •and building up
good will; it compels the conservative banker to place his character, standing in the community and financial strength at the
command of incompetent, venturesome or dishonest rivals, and
thus enable them to buy away his deposits and his business. It
is a premium upon bad banking and unsafe business, and portends disaster to all commercial interests and threatens the
welfare of the entire nation.
In view of the prominence given to this question at the present time, we deem it important that the American Banekrs'
Association place itself on record. We, therefore, recommend
the adoption of the following resolution:
Resolved, That the American Bankers' Association is unalterably
opposed to any arbitrary plan looking to the mutual guaranty of deposits either by a State or the nation for the following reasons:
1. It is a function outside of State or national government.
2. It is unsound in principle.
3. It is impractical and misleading.
4. It is revolutionary in character.
5. It is subversive to sound economics.
6. It will lower the standard of our present banking system.
7. Productive of and encourages bad banking.
8. It is a delusion that a tax upon the strong will prevent failure
by the weak.
9. It discredits honesty, ability and conservatism.
10. A loss suffered by one bank jeopardizes all banks.
11. The public must eventually pay the tax.
12. It will cause and not avert panics.
Respectfully submitted,
W. V. COX,

Report of Committee on Credit Information.
On behalf of the Committee on Credit Information I would
respectfully report: At the time of its appointment your committee was instructed to consider the practicability of establishing a credit bureau to be conducted by the association for the
purpose of collecting and distributing information to members
concerning the credit standing and financial responsibility of all
concerns whose paper was sold through note brokers. After
several conferences and mature consideration your committee
concluded unanimously that the establishment of such a bureau
would certainly be a costly experiment and possibly a serious
mistake. However, your committee believed that the effective
machinery and vast influence of the association could be utilized
to secure practical benefits along these lines within certain
Your committee so reported in detail to the Executive Council



at its Lakewood, N. J., meeting, May 5, 1908, a copy of which
report is hereto appended and made a part of this report, recommending a plan for filing reports of certified public accountants
and registering notes under the supervision of the several Clearing House committees in New York, Chicago, St. Louis, Philadelphia and Boston. Under this plan banks buying commercial
paper through note brokers would have prompt and ready access
to an independent appraisal of the assets of each borrowing
concern, certified by an approved public accountant, and could
also promptly ascertain at any time the amount of paper outstanding. The plan appeared to be simple and practical, but
we regret to report that up to the present time it has not been
found possible to obtain favorable action on the part of the
various Clearing Houses toward its adoption. They all prefer
to limit their operations strictly to the functions which they
have heretofore exercised.
Your committee have a constantly increasing sense of the
importance of this or some similar plan. No stronger evidence
to this effect is needed than that afforded by the recent failure
•of several large and well known firms and corporations selling
.commercial paper widely through note brokers to members of
this association. In each of these cases it is highly probable
that dangerous extension would have been curbed and possibly
'no loss would have been sustained had the recommendations of
your committee been in force as suggested for a sufficient period
.of time. Your committee has in the meantime endeavored by
.personal work, by addresses at bankers' conventions and by
articles in the press, to arouse interest in this subject, to point
.out existing abuses, and to create a sentiment favorable toward
•the adoption of the proposed plan.
There has been a gratifying response to this appeal, and
your committee is assured that by the daily, active co-operation
-of the members of this association the suggested reforms can be
.accomplished. They respectfully urge that every member exert
his influence to have all paper purchased from note brokers
presented with accompanying statements audited by certified
public accountants, and note broker's certificate of paper out-standing at the time of purchase. We trust that this course
•of education and agitation will eventually crystalize a sentiment strong enough to cause definite authoritative Clearing
House action substantially along the lines laid down in your
•committee's report. Clearing House registration of commercial
paper sold by note brokers is the logical and final result desired. While this step can not be taken at the present, it must
be kept clearly in view and actively sought for. To that end
we would ask that the association by the adoption of this report
recommend that its members in purchasing commercial paper
from note brokers give preference to such names as furnish
accompanying statements audited by certified public accountants
. and certificates signed by the note brokers of the amount of
paper outstanding at the time of purchase.
We also recommend that the association refer to the Standing Law Committee the matter of securing the enactment of a
statute providing for the severe punishment of any officer of
.a corporation convicted of obtaining money for said corporation
by means of'a false statement signed by him.

Report of Standing Law Committee, by Thomas B. Paton,
General Counsel.
To the American Bankers' Association:
On May 5, 1908, our Committee made a preliminary report
to the Executive Council at the meeting held at Lakewood,
New Jersey, in which we said:
Early in the year our Committee, with the assistance of counsel,
prepared drafts of various proposed laws recommended for enactment
in the States whose Legislatures held sessions in 1908. These laws
covered the following subjects:
Punishment of persons making false statements affecting banks.
Two measures, one for State enactment and one for enactment by
Congress, affecting National Banks.
Fixing the liability of banks to depositors for -. payment of forged
or raised checks.
Punishing the giving of checks or drafts On banks without sufficient funds or credit for the payment of same.
Defining and punishing the crime of burglary with explosives.
Providing for the payment of deposits made in the name of two
Providing for the payment of deposits in trust.
Providing a law uniform with the laws of other States relative
- to the transfer of stock of corporations.
Providing for the competency of notaries, who are stockholders
or officers in banks, to make protest and take acknowledgments In
certain .cases.
Relating to the calculation of interest.
Amending the maturity section of the Negotiable Instruments

Amending the Negotiable Instruments law relative to instruments
payable at bank.
Thee drafts of proposed laws, with explanatory statements, were
published in a pamphlet issued by the Committee in which the Committee also advocated the enactment of the uniform law of negotiable
instruments, warehouse receipts and sales in all the States where such
laws were not in force. Pamphlet containing such drafts was forwarded to every member of the American Bankers' Association, to
secretaries and legislative committeemen of State associations, and to
• other interested persons. An extensive correspondence has been carred on relative to the enactment of these laws in various States.
As a result of suggestions and criticisms, this Committee prepared
.two substitute measures for the punishment of persons making derog-

atory statements affecting banks. The measure for national enactment was introduced in Congress by Honorable John Dalzell, of Pennsylvania, and the measure for State enactment was sent to secretaries
and legislative 'committeemen of State associations for action. A
circular letter, enclosing copies of these substitute laws and requesting
members to write senators and representatives from their respective
districts in favor of national measure and report replies received,
was fowardeci every member of the American Bankers' Association,
and an active campaign for the enactment of this law by Congress
was inaugurated.
On March 19 our counsel had a personal interview with Congressman Dalzell at Washington with reference to the favorable report of
this measure by the Committee on Judiciary. Mr. Dalzell promised
to take it up with Congressman Fowler and do all he could to further it.
Our counsel also prepared an argument in behalf of this measure,
which was printed and forwarded to members of Congress
and interested parties.
Our Committee, through the counsel and secretary, has carried
on a very extensive correspondence with bankers and
legislators in
every State in behalf of the bank-slander measure, and has made
every endeavor to have it favorably reported out of the House Judiciary Committee, to whom it was referred. A large number of representatives and senators have written letters to the effect that they
will vote for this measure, and a large number of others have stated
that they will give it due consideration. These letters are on file
with our Committee. At present date it is uncertain whether this
measure will be reported favorably by Congress at this session. Some
members of Congress have written to the effect that favorable report
will be made; others that nothing will be done this session. There is
reasonable prospect of the enactment of this law either at the present
or the next session of Congress.
It is too early to make full report concerning the progress of
State legislation. Such report will be made on the occasion of the
next annual convention.
Continuing our report we would say:
During the year 1908 down to the present time, only thirteen
States and one territory have held legislative sessions, namely,
OKLAHOMA (Began Dec. 2, 1907)
Our efforts, therefore, for the promotion of uniform and
needed legislation have been more particularly confined this
year to these States and in Congress, where we have advocated
the measure for the punishment of persons making derogatory
statements affecting national banks.
Our preliminary report details the efforts before Congress in
behalf of that measure. We can only add that it was not reported out of committee at the last session and that we intend
to actively urge a favorable report at the incoming session of
In the matter of uniform State legislation advocated by our
Committee we are pleased to report the following results:
1. The Uniform Warehouse Receipt act has been passed
by the Legislatures of four States this year, namely, Louisiana,
Ohio, Rhode Island and Virginia. This makes ten States in
all, the act having been previously passed in Connecticut, Illinois, Iowa, Massachusetts, New Jersey and New York.
2. The Uniform Sales Act has been passed this year by the
Legislatures of Massachusetts, Ohio and Rhode Island. This
makes six States or jurisdictions in all, having been previously
enacted in Arizona, Connecticut and New Jersey.
3. The law for the punishment of persons who make derogatory statements affecting banks has been enacted by the Louisiana Legislature in the amended form provided by our Committee and by the Rhode Island Legislature (as part of a general banking law) in the form as originally provided and as
heretofore enacted in the State of New Jersey.
4. The law advocated by this Committee fixing a short time
of liability by a bank which pays a forged or raised check to its
depositor has been enacted in New Jersey.
5. The laws advocated by this Committee (1) relative to
the payment of deposits in trust, permitting payment to the
beneficiary in the event Of death of the trustee and (2) authorizing the bank to pay a deposit made in two names to either,
whether the other be living or not, have been enacted by the
Legislature of Rhode Island as part of a general banking law.
Also in Louisiana the Legislature has enacted the law relative
to the payment of deposits in two names and has extended It
to include access to deposits in safety deposit vaults.
6. The law advocated by this Committee punishing the
giver of a check where there are not sufficient funds or credit
for the payment of the same, has been enacted in Rhode Island
as part of a general banking law.
The following is a summary of state legislation enacted this
year affecting banking interests, together with a statement
of certain legislation introduced, but not passed.
No legislation affecting banks in Georgia was enacted the
present year. Senate Bill No. 186, for the guarantee of deposits
in State banks, was defeated in the Senate Committee on Banks
and Banking, to whom it was referred. This defeat was due to
the efforts of the Legislative Committee of the Georgia Bankers'
Association, of which Mr. Joseph A. McCord, of Atlanta, is chair-


man. • Mr. McCord submitted a printed argument 'in opposition te
the measure.
Senate Bill No. 185, which sought the amendment of the law
passed last year creating a bureau of banking in the office of the
State Treasurer and seeking to enlarge the power of the State
Treasurer as State Banking Examiner, was referred to the Senate
Committee on Banks and Banking. After a careful hearing, the
bill having the support of the Legislative Committee of the Georgia
Bankers' Association, was amended by the Senate Committee and
reported by substitute, the substitute being fully agreed to by the
Legislative Committee of the Georgia Bankers' Association. The
bill was passed by the Senate unanimously on Friday, July 31, and
Immediately transtnitted to the House. It was there referred to
the Committee on Banks and Banking, and after several hearings
given by the Committee was referred to a special committee of
three, and there the bill lay. The Chairman of the House Committee was opposed to it and it was not rePorted out of Committee
until Tuesday, August 11, at 6 o'clock p. in., the last day on which
a committee could report a bill. The Committee consisted of eighteen
members, eleven of whom were in favor and some of the others
filed a minority report. It was called up for special action near
the hour of adjournment, but as there was a division of the report
of the Committee the bill was left over for a new session. The
new session will be composed of representatives elected this fall.
The Legislative Committee of the Georgia Bankers' Association hopes
to be able to get the bill passed at the first session of the next
general assembly.

The only legislation enacted by the Kentucky Legislature this
year of interest to or affecting banks was an act making tobacco
warehouse receipts "negotiable and transferable by indorsement in
blank or by special indorsement and with like liability as bills of
exchange now are and with like remedy thereon." The act permits
warehousemen to commingle tobacco of like grades, requires receipts
to be consecutively numbered, provides for statement on such receipts
of the character and amount of loans or mortgages, if any, upon
the tobacco; requires duplicate issues for lost receipts to be so
marked, and contain other provisions desirable in the interest of
full negotiability.

Louisiana is the first State to enact the act specially prepared
by the counsel for the punishment of malicious slanderers and libelers
of banks. The law as passed provides:
"That any person who shall wilfully and maliciously make,
circulate, or transmit to another or others any statement, rumor,
or suggestion, written, printed, or by word of mouth, which is
directly or , by inference derogatory to the financial condition,
or affects the solvency or financial standing of any bank organized under the laws of the State of Louisiana, or who
shall counsel, aid, procure, or induce another to state, transmit,
or circulate any such statement or rumor, snail be guilty of a
misdemeanor, and, upon conviction thereof, shall be punished by
a 'fine of not more than five thousand dollars and by imprisonment at hard labor for a term of not more than five years."
The above act was passed through the efforts of the Legislative
Committee of the Louisiana Bankers' Association, of which Mr.
Other laws
Edwin T. Merrick, of New Orleans, is Chairman.
.passed through the efforts of the same Committee are as follows:
relief from taxation pending apAn act to afford temporary
.plication for a general exemption of mortgage notes, which had to
be embodied in a constitutional amendment. The constitutional
amendment also passed the House and Senate and will be voted
on in November.
A further act was passed to repeal a statute which' allowed
the public administrator to get hold of money uncalled for after
seven years and to administer the same, which law has given rise
to some hardships.
A further act amended Section 132 of the Negotiable Instruments Law of 1904 so as to read as follows:
"The acceptance of a bill is the signification by the drawee
of his assent to the order of the drawer. The acceptance must
be in writing and signed by the drawee. It must not express
that the drawee will perform his promise by any other means
than the payment of Money."
The section, as originally enacted, provided that "the acceptsnce may be in, writing," etc., and the amendment consists in the
substitution 'of the word "must" for "may."
An act, in the form recommended by the Standing Law Committee, authorizing a bank, savings bank or trust company to pay
a deposit in the name of two or more persons to either, whether
the other or others be living or not. To this act is appended a
further enactment as follows:
"That when a safety deposit vault shall have been hired,
or shall hereafter be hired from any bank, savings bank or
trust company transacting business in this State, under the
names of two or more persons, with the right of access being
given to either, or with access to either of the survivor or
survivors of said persons, such survivor or survivors, whether
the other or others be living or not, shall have the right of
access to such deposit vaults, and may remove therefrom the
contents of said box; provided, that in all cases where such
removal shall have been made the said bank, savings bank
or trust company shall be exempt from any liability for permitting the survivor or survivors access thereto."
The Louisiana Legislature also enacted the Uniform Warehouse
'Receipts act as already stated.

The Maryland Bankers' Association prepared a comprehensive
bill affecting and revising all laws relating to banks, savings banks,
trust companies and all banking institutions of the State. The
bill failed to pass.

There has been a great deal of legislation enacted this year
In Massachusetts of interest to banks, trust companies and savings
A comprehensive act was passed to codify, revise and
amend the laws relative to savings banks and institutions for say-

ings. This is Chapter 590 of the acts of 1908. The provisions of
this are too comprehensive to quote or refer to in detail. Massachusetts enacted the Uniform Sales act at this session.

The Mississippi Legislature passed an act (approved March 19,
1908) to compel the payment of capital stock of banks and trust
companies in actual cash before beginning business, and that no
bank can begin business without a paid-up capital to the amount
of at least $10,000 in towns of five hundred inhabitants or less,
and at least $15,000 in towns and cities of over five hundred
inhabitants, and to make it obligatory upon the directors of the
bank or branch banks and trust companies to make quarterly examinations of the books, accounts and securities and certify the
same to the Auditor.
Also an act (approved March 5, 1908) to amend Section 256
of Chapter 14, of the Code of 1906, requiring every bank and
branch bank and every person, corporation or association of persons
receiving money on deposit or issuing or buying or selling exchange,
or otherwise doing a banking business, to make a balanced statement to the Auditor of Public Accounts at least four times in
each year of the condition of the bank or banking business and each
branch bank thereof.
Also an act to authorize banks and banking institutions to
establish clearing house associations, for improvement and economy of business methods, and in service to the public.

The New Jersey Bankers' Association, through Mr. Field, Chairman of our Committee, introduced various bills advocated by this
Committee, but the only one to pass was the one regarding the time
of liability on forged checks. It provides that "no bank shall be
liable to a depositor for the payment by it of a forged or raised
check, unless within one year after the return to the depositor of
the voucher of such payment such depositor shall notify the bank
that the check so paid was forged or raised."
Most of the time was spent in endeavoring to secure the
passage of a tax bill and it was difficult to keep in touch with
all the other measures. The tax bill was passed by both Houses
but was vetoed by the Governor. Since then, however, the Court
of Errors of New Jersey has rendered a decision which gives the
banks the desired relief.

The New York Legislature passed certain laws relating to savings banks, trust companies, banks of discount and safe deposit companies, in amendment to existing provisions of law. These amendments have been issued in pamphlet form by the Superintendent of
Banks and will not be detailed in this report.

The Ohio Legislature passed both the Uniform Warehouse Receipt and the Uniform Sales acts. The only other important legislation was the Thomas bill. This is a comprehensive act relating
to the organization of banks and the inspection thereof. It provides
that "any number of persons, not less than five, a majority of whom
are citizens of this State, may associate and become incorporated
to establish a commercial bank, a savings bank, a safe deposit company, a trust company, or to establish a company having departments for two or more, or all of said classes of business, upon the
terms and conditions, and subject to the limitations prescribed in
this act." The enactment of this law is the culmination of more
than eight years of untiring work on the part of the Ohio Bankers'
Association. The measure is expected to do much for the financial
interests of the State.

The first State Legistlature of Oklahoma passed a bill, which
was approved by the Governor, December 17, 190; creating a
State Banking Board and also a Depositors' Guaranty Fund. The
law provided for an assessment, within sixty days after its approval.
of one per cent, of each bank's daily average deposits, less the
deposits of State funds properly secured for the preceding year;
annually thereafter each bank must report the amount 'of its
average daily deposits for the preceding year, and must pay into
the fund one per cent, of any excess shown; and whenever the
fund is depleted, provision is made for special assessments to cover
the deficiency, so as to keep the fund to one per cent. of the total
deposits of all the banks. Whenever the Bank Commissioner takes
possession of any bank the law provides that the "depositors of
said bank shall be paid in full," and when the cash immediately
available is insufficient, the Banking Board "shall draw from the
Depositors' Guaranty Fund and from additional assessments, if
required," 'the amount necessary to make up the deficiency. The
State is given a first lien upon the assets of the bank for the benefit
of the fund and upon all liabilities of stockholders, officers, director'
and other persons, which may be enforced by the State for the
beuefit of the fund.
The Supreme Court of Oklahoma, early in September, handed
down a decision upholding the constitutionality of this law and
the case will be carried to the Supreme Court of the United States
for review.

No legislation was enacted by the Legislature of Porto Rico
during its 1908 session especially affecting the banking interests.

Rhode Island enacted both the Uniform Warehouse Receipt Act
and the Uniform Sales Act at this session.
Also a general banking law to provide for the incorporation
and regulation of banks, savings banks and trust companies. In
this law have been incorporated certain provisions, advocated
our Committee, covering payment of deposits in trust and in
names, punishing the maker of a check delivered without
or malicious
funds or credit to meet it and punishing the wilful
slanderer of a bank. The law also contains a provision for
punishment of any person who knowingly makes a false stateof obtaining a loan.
ment to banking institutions for the purpose



This law contains 00 sections and its provisions are too detailed
for even a summary in this report.

chasers of unsecured notes in the open market, more certain
data on the names offered by brokers.
7th. The appointment of a committee to devise and recomSOUTH CAROLINA.
South Carolina passed a law this year for the appointment
mend a form of voucher check which, when used by our cusby the Governor of a Bank. Examiner and defining his powers and
tomers, would be surely negotiable and free from the many
irregularities on such checks in present use.
Also a law making it a felony to enter a bank with intent
8th. The appointment of a committee to submit to the Counto steal. This law provides that "whoever shall break, enter, or
cil for consideration certain amendments to the Constitution.
enter without breaking, any building or pat of a building occupied
A number of other important matters were discussed and
as a bank, with intent to steal any money or securities for money
referred to the Council.
or other things of value, either by force, intimidation, threats,
stealth or otherwise, shall be deemed guilty of a felony, and upon
The spring meeting of the Council was held at the Laurelconviction thereof shall be punished by imprisonment in the peniin-the-Pines, Lakewood, N. J., May 5th and 6th, two sessions
tentiary at hard labor for not less than ten years."
being held each day.
On the preceding day, May 4th, the Executive Committees
of the Sections, and also the Standing Committees of the AssoThe Uniform Warehouse Act passed the Legislature of Virginia on the last day of the session and has been approved by the
ciation, held meetings preparatory to the meetings of the '
Council; and during the sessions of the Council each made
The Legislature also passed the following acts: Making the
written reports of their individual lines of work, which reports
sending of notice of protest or dishonor by mail to any person
were subsequently mailed to each member of the Association.
residing in a city or town equivalent to personal service.
Recommendations of the Advisory Committee were acted upon
Providing that protest in all cases, whether made in the State
as follows:
or not, shall be prima facie evidence of what is stated therein, or
at the foot or on the back thereof, in relation to presentment,
1st: The president, treasurer and chairman of the Execudemand, dishonor and notice thereof.
tive Council were instructed to enter into a contract with the
Amending the act, originally enacted in 1906, concerning the
Bankers' frust Company of New York, charging that company,
effect of death of the drawer of a check. The act provides that
with the responsibility of safe-keeping the Association's securithe death shall not, as to checks presented for payment within two
ties, and its officers' fidelity bonds, including renewals of same,
weeks from date of death, operate as a revocation of authority of
as well as collection of interest on the securities.
the bank to pay and requires the bank to retain the deposit for
two weeks after notice of a depositor's death, and after paying
2nd : Instructing the secretary to publish a monthly bulletin
thereout any checks presented within
said two weeks the bank,
and distribute the same to the members of the Association.
upon demand, must pay the residue to the persons entitled thereto
free of subscription cost, and without advertisements, and conIn the manner prescribed by law.
taining only Association matter; in order to bring the memberEarly in September our Committee issued a call for a meetship into closer relation to the work of the Association.
ing of the Legislative Committeemen of all the State Bankers'
3rd: Instructing the president, vice-president, chairman of
Associations, to be held on September 28, at Denver, under the
the Executive Council, secretary and chairman of each Exauspices of the Standing Law Committee. The objects of this
ecutive Committee of the several Sections to act as a
meeting are: (1) To receive suggestions from the various
committee with power to consolidate with the main office of thecommitteemen as to legislation on matters of banking concern
Association the offices maintained by the several Sections and
needed in their respective States; (2) to establish an effective
Institute of Banking—excepting only for the time being the
the auspices of the Standing Law
working organization under
office of the Savings Bank Section.
Committee by which necessary legislation in the various States
4th: Upon the recommendation of the Savings Bank Secmay be furthered, and (3) for the consideration of legislative
tion, the Standing, Law and other committees, as well as the'
work already accomplished and in progress along the line of
Advisory Committee, the creation of the office of counsel
improvement and uniformity in the laws affecting the bankgeneral and the appointment to that office of Thomas B. Paton,.
ing business.
at a salary of $5,000 per annum, Mr. Paton having ably adRespectfully submitted,
vised several committees, the Savings Bank Section and the
Institute of Banking for some years previous, at a cost nearly
approximating the salary, but who now is giving his entire
W'M. J. FIELD, Chairman,
Treas. Commercial Vice-Pres. Fourth Nat. Bank, time to the work of the Association.
Trust Co. of New Jersey, Atlanta, Ga.
In addition to acting upon these recommendations of the'
Jersey City.
Advisory Committee, the Council also appointed a Finance ComHENRY DIM SE,
Vice-Pres. cf Cashier First
mittee of ten, of which the president of the Association is.
Vice-Pres. Century Bank, New Nat. Bank, Baltimore, Md.
chairman, and on which is no member who is a member of any,
York City.
committee of the Association or any Section's Executive ComCounsel & Secretary, 11 Pine
mittee. To this committee hereafter are to be submitted
Vice-Pres. Fidelity St., New York City.
all requests for appropriations for the work of the several
Trust Co., Tacoma, Wash.
Sections and committees, so that an annual budget can be madeSeptember 15, 1908.
up for action of the Executive Council.
Upon the adoption of the resolution for the appointment of'
Report of the Executive Council, by the Chairman, Lewis E. this committee, the Advisory Committee for this year was discontinued.
The report of the Committee on Commercial Credits revealed
Immediately following the last Convention the Council orso strongly to the Council the necessity of devising a practical'
ganized and elected Lewis E. Pierson of New, York as chairmethod for ascertaining the exact condition of makers of com—
man, A. A. Crane of Minneapolis as treasurer, Fred. E. Farnsmercial paper offered by brokers that the committee was conworth of Detroit as secretary, and William G. Fitzwilson as
tinued, with three additional members.
assistant secretary.
In accordance with resolution at the last Convention reUnder a By-Law of infrequent use the Council also elected
ferring to the matter to the Executive Council, a committee
an Advisory Committee of seven, which held a two days' session
was appointed to devise a method by which uniform stationery'
in New York in February, and in addition to framing up sevmay be recommended to the members and also to consider
eral important matters for the attention of the Council at
the desirability of endeavoring to secure different tints in the.
its next meeting, took action:
Printing of the several denominations of our currency.
1st. For the immediate revision and publication of a new
In order that the various sections of our present Constitution
cipher code—the previous edition of code having been exhausted.
and By-Laws might be made more clear and brought into.
2nd. Instructing the officers to wait upon the Comptroller of
harmony, the Committee on Changes in the Constitution was.
the Currency and urge the republication of Vol. 2, omitted from
increased to six and instructed to present recommendations for
the Annual Report of his office the last few ,years, and which
such a revision at the next meeting of the Council.
contained a copy of one published statement of each national
After unanimously accepting the cordial invitation of our'
bank for that year.
Denver hosts to hold this Convention in their city, an invitation
3rd. Instructing the secretary to prepare a distinctive badge
from the bankers of the City of Chicago for the 1909 Convenfor each member of the Council.
tion was presented to the Council.
4th. Instructing the secretary to inventory and carry on the
The Association is to be congratulated upon the excellent
books of the Association at $1.00 all the furniture and fixtures
work of its several committees during the past year—their'
belonging to the Association, payment for which had preefforts have been continuous and in a number of cases entirely
viously been made from expense account; and also arrange for
successful—as will be revealed in their brief reports to the.
the proper insurance to cover same.
Convention, which you will find most interesting.
5th. Instructing the secretary to gather a financial library,
The consolidation of the offices of the several Sections and
composed of books and pamphlets on financial questions of fact,
Institute of Banking with the main office of the Association is
useful to members of the Association in following lines of finandeveloping a live business organization for the Association, and'
cial research, and also, as soon as introduced, obtain and keep
keeping its members in closer touch with the work of the
on file all Congressional bills affecting members of our AssoInstitute of Banking.
The other officers cannot speak too highly of the efficient
6th. The appointment of a committee with instructions to
work of your secretary and his subordinates during the past
report to the Executive Council on the desirability of endeavoryear. Their efforts have been intelligent, diligent and effective,,
ing to secure for members of the Association, who are purand have met with the full approval of the Council.


Report of the Committee on Uniform Negotiable Instruments Law.
Sept. 25, 1908.
To the President and Members of the American Bankers'
Since the report made by this Committee at the last meeting
•of the Association, held in Atlantic City last September, we
*have had the pleasure of adding Nevada, New Mexico, Wyoming
and Hawaii to our list of States that have adopted the Uniform Negotiable Instruments law. The States still remaining outside are Maine, Vermont, New Hampshire, Delaware,
'Indiana, Oklahoma, Texas, Arkansas, Mississippi, Georgia, South
,Carolina, South Dakota, Minnesota and California.
In the States just mentioned, there are certain conditions
• -existing which make it almost impossible to get good banking
'legislation through.
Tne bankers of Maine, Vermont and New Hampshire, where
the Committee has been working for some time, do not seem to
-co-operate as they should to secure the passage of the law.
We have been unable to get the law through in Oklahoma,
'Texas, Arkansas, Mississippi, Georgia and South Carolina on
..account of the political and other conditions existing against
railroads and other corporations.
We are very much encouraged with our work in South
Dakota and Minnesota, where we believe the measure will be
- passed at the next session of the legislatures in these States.
Considerable work has been done in Indiana, and the bankers
.of that State give us very much encouragement, as they say
they will be able to get the act through at the next meeting of
the legislature.
There are conditions existing in California which Make it
difficult to get the law through, but our friends there tell us
-they hope to secure the passage of the measure in that State
' before long.
We are working in Delaware, and hope, with the aid of our
friends there, to get the law passed.
We urge the active support and work of the bankers in the
States that have not adopted the Uniform Negotiable Instruments law to secure the passage of said law at the next meeting of the Legislatures in their respective States.
The States and jurisdictions which have adopted the Law
are as follows:—
Rhode Island
New Mexico
,New York
New Jersey
North Dakota
• •Utah
North Carolina
West Virginia
Dist. of Columbia Idaho
Our committee desires, at this time, to express our appreciation for the united hearty support of the American Bar Asoelation and the different State Bar Associations in their efforts
to pass the Uniform Negotiable Instruments Law..
EDWARD D. KEYS, Chairman,,


on the part of the Institute than the maintenance of a recognized educational standard and the stimulation of educational
interest and ambition.
When the Institute was founded eight years ago, there were
only two prominent schools of finance in the country. Now
finance is taught in every leading university and, through the
influence of the Institute, instruction in financial subjects is of
more practical character than it would otherwise probably
be. The Institute does not claim all the credit for this revolution in education, but in promoting the study of banking
principles and practices, which are now the paramount questions of the times, it has rendered valuable service not only
to American bankers but to the American people.
Experience has demonstrated the fact that Chapters as
conducted in large cities are not expedient in small places unless convenient to some school of finance or law from which
professional instructors may be obtained. The spirit of fraternity so well developed in city chapters, however, is being
extended throughout the country by means of the Correspondence Chapter, which is doing satisfactory work in alliance with
the International Correspondence Schools of Scranton and
through study courses conducted by the Chapter itself. Too
strong emphasis cannot be placed on the value of the Correspondence Chapter of the Institute. It is no longer necessary
for a young man to live in a large city to obtain the educational
advantages offered by the Institute, for the bank man in a town
of two hundred inhabitants has, through the agency of the
Correspondence Chapter, all the Institute can offer but the
fraternal privileges. We especially urge the members of the
American Bankers' Association in the smaller cities and towns
of our country to bring this Correspondence Chapter of the
Institute to the earnest attention of their employees. The Correspondence Chapter now has 1,122 members, a majority of
whom are active students of various courses of study.
September 1st there were 45 Chapters of the Institute with
a total membership of 8,835 and three or four additional
Chapters were in process of organization. A partial list of
these Chapters is as follows:
Des Moines.

Los Angeles.
New Orleans.
New York.

San Francisco.
St. Louis.
St. Paul.

Some Chapters require encouragement and inspiration, but
Most of them are permanently established and have not only
increased the efficiency and elevated the character of their own
members, but have also exerted a beneficial influence upon the
banking business in- their respective localities.
'Following is a statement of Institute receipts and expenditures for the year ending September 1, 1908:
Balances September 1st, 1907
Subscriptions to the Bulletin
Textbooks and Examinations
Fellowship Dues
American Bankers' Association



Report of the American Institute of Banking, by the Chairman, Joseph Chapman, Jr.
As foreshadowed last year in the annual report of the Ameri-can Institute of Banking to the American Bankers' Association,
the management of the Institute has been transferred by the
Board of Trustees from themselves to the Chapters, with only
.such financial supervision as the Institute Committee of the
Association may deem proper to exercise. The Institute is now
.conducted under a new constitution approved by the Executive
Council of the American Bankers' Association and adopted by
its Convention at Providence in July.
It is too early to determine the results of Institute selfgovernment, but judging from the conservatism and sense of
-responsibility thus far manifested and the educational plans so
far formulated, there is every reason to expect improvement,
not only in the development of executive ability and personality
among the, members, but also in the systematic study of Practical Banking and the kindred subjects of Commercial Law
,and Political Economy.
The spirit of fraternity is the strongest motive power in the
promotion of such education as the Institute provides, and now
that a suitable organization has been built up, there is a commendable disposition to pursue the study courses and examinalions which at first proved to'be somewhat in advance of prevailing conditions. It has been found expedient to localize such
work through alliances between the Institute and available
.schools of finance and law, thus utilizing the best educational
facilities in the United States. In this way the individual
advantages of leading universities and the personality of experienced professors are obtained with no further responsibility

Bulletin and Stationery
Rent and Telephone
Textbooks and Examinations
Postage, Telegrams. Express and Exchange
Office Exbenses
Secretary's Traveling Expenses
Trustees' and Committee Expenses
Editorial and Legal Services
Chapter Convention
Balance on hand September 1st, 1908


The foregoing figures show that the income of the Institute is
less than its outgo. The reason for this is that the Bulletin and
other education matter is furnished at less than cost. While
the annual appropriation of $10,000.00 made by the American
Bankers' Association has never been wholly expended, your
Committee recommends that the same amount be again appropriated for the ensuing year. Your Committee believes that the
money devoted to the Institute furthers a work which adds to
the usefulness and dignity of the Association and tends to increase the strength and character of its membership. It is,
therefore, the best possible investment. Your Committee particularly urges that the Institute in the administration of their
own affairs should be treated as liberally in the matter of
financial support as the Board of Trustees have been treated
In the past.
The Convention of the Institute in Providence petitioned that
proper steps be taken at this Convention to make the Institute



of Banking a Section of the American Bankers' Association, and
we believe that these two great bodies should work together in
the very closest harmony. This Committee, therefore, recommends that the Institute be made a Section of the American
Bankers' Association.
We believe that through the instrumentality of the Institute
of Banking the day will be hastened when the crude, heterogeneous methods now in practice will be crystallized into improved,
uniform methods which will enable us to make of banking a
profession. We are training the best of the younger men in the
knowledge of economics and practical banking, and with the
knowledge thus derived, they will be able to act more unitedly
and with a clearer understanding of fundamental principles
than are the bankers of to-day.
Long live the Institute, the greatest educational trade organization in the world, and may it always have and deserve
the confidence of the American Bankers' Association, representing the greatest aggregation of wealth since time began.

Report of Committee on Voucher Check, by the Chairman,
Clay H. Hollister.
Gentlemen of the American Bankers' Association:
Your Committee appointed some months ago, for the purpose
of formulating recommendations bearing upon the question of
voucher checks, has had several meetings, has conducted various
correspondence, and is endeavoring to suggest typical forms
suitable for voucher checks to the banks, members of the American Bankers' Association.
In making investigation we have found that the best results
could be obtained by the co-operation with large corporations
and railroads, in order that the result of our labors might be
efficient in extending the use of recommended forms to all lines
of business.
In a general way, the Committee is seeking to provide:
First, a negotiable instrument.
Second, an instrument which shall be as easily handled by
the banks as possible.
Third, which shall in every way meet the needs of users of
voucher checks, in permitting them to use such matter upon
these checks as shall not interfere with their negotiability and
easy handling by the banks.
We have examined numerous forms of checks and have been
In correspondence with the American Association of Public Accountants, also with the members of the Association of American Railway Accounting Officers and of the Society of Railway
Financial Officers.
We have decided that before making final recommendations
upon the subject, it will be desirable to meet with representatives of these other bodies, in order that such action as we take
may meet with their approval and enlist the approval of large
users of voucher checks.
We, therefore, are not prepared to-day to recommend specific
forms for the use of members, but we ask for further time in
which to prepare such specific forms, and will undertake to
prepare them at the earliest possible moment, as soon as we
have been able to get the co-operation of these other associations.
We do not expect that this will be an expensive or laborious
task, but hope to be able within a few months to suggest forms
which shall be of real value to the association members.
We, therefore, ask for a continuance of our committee for a
reasonable period in order that we may have time to complete
the work which we have undertaken.
Respectfully submitted,
F. 0. WATTS,
Committee on Voucher Checks.

Report of Committee on Uniform Stationery and Tints.
Your committee to which were referred the resolutions as to
having the various denominations of bank notes printed in different color tints, and as to uniformity in bank stationery, beg
leave to report::
That we conferred with the Treasury Department, and were
informed that it is opposed to a change in the color of bank
notes, for the reasons,
1st. If tellers would rely upon colors, it would lessen the
safeguard against counterfeiting, for these can easily be altered,
and changed from a smaller denomination to a larger.
2nd. The cost of printing would be twenty-five per cent.
3rd. The colors would cover the distinctive fiber of the
. In view of these circumstances we deem it best to abandon
for the present the plan suggested.
As to uniformity in bank stationery, we believe that its
adoption would do much to lessen labor in handling, sorting
and filing, with resulting saving of time; it would gradually
lead to standard forms and material and thus reduce expense.
To carry out such plan we recommend:
1. That for business purposes the following bank paper be
of the uniform size of 3% x 8 inches, and in color as follows:

Checks in white, bills receivable in green tint, certificates of
deposit in pink tint, drafts in yellow tint, receipts in slate tint.
2. That letter heads be 8% x 11 inches and note heads 6 x 10.
Inches, of such color as each bank may choose.
All of which is respectfully submitted.
Dated September, 1908.
W. V. COX,

Report of Bill of Lading Committee, by Lewis E. Pierson.
Since our last report your committee has achieved the purposes for which it was originally appointed, through an order
of the Interstate Commerce Commission, under date of June
27, 1908, recommending two (2) forms of bills of lading for
uniform adoption by all carriers throughout the United States.
The order of the commission includes the recommendations
of our committee, which in brief were as follows :
1. Two separate forms of'bills of lading on different colored
paper, one for straight and one for order shipments.
2. The prominently printing of the words "order of" before
name of the consignee of order bills.
3. The omission of the words "not negotiable" from order
bills and the printing of such words on straight bills.
4. The amendment of the alteration clause so that a fraudulently altered bill shall be good for its original tnor and not
be destroyed completely.
5. The addition, at the end of section 3, of the conditions
(which provide that the carrier, liable for loss, shall have the
benefit of any insurance) of the words, "so far as this shall not
avoid the policies or contracts of insurance."
The commission, however, states that it has no authority to
enforce these recommendations upon all carriers in order to
make uniform all bills of lading issued throughout the country,
but the recommendations have been agreed to by the railroads
in the Official Classification Territory, or, those railroads east
of the Mississippi and north of the Ohio Rivers, and it is
hoped that the other carriers will also adopt the forms.
Preceding the recommendations of the Interstate Commerce
Commission, which followed three years of study and negotiation by a joint committee of carriers and shippers appointed at
the suggestion of. the commission, a hearing was held before
that body in Washington, October last. This hearing lasted for
two days and was attended by a large number of representatives
of shipping, carrying and banking interests. Our own committee appeared with counsel and submitted briefs, which are
shown in Appendix No. 1.
Following the hearing, the Interstate Commerce Commission
gave much thought to the subject and held a number of informal conferences with the interests affected, prior to the
issuing of its final recommendations. The work of the commission in this important matter has been most thorough and
eminently fair to all interests, and the thanks of the entire
business community are due Chairman Knapp and his associates
for the painstaking and satisfactory manner in which they have
lent their aid for the solution of this portion of the bill of
lading problem.
Under the resolution of your St. Louis convention our committee was also charged with the additional problem of securing.legislation which would give to bills of lading, the element
of negotiability or assignability they now lack, and to make
certain the rights and obligations, not alone of carriers and
shippers, but of bankers and merchants who advance value on
the security represented by the bill of lading.
In addition, therefore, to the proceeding before the Interstate Commerce Commission, we have been acting in unison with
many commercial organizations for the purpose of securing such
State and Congressional legislation, which now bids fair to be
A number of the commercial organizations and bankers' bill
of lading committees held a conference at Atlantic City, N. J.,
September 23, 1907, the attendance and proceedings of which
are shown in Appendix No. 3.
After continued study and consultation on the subject a bill
was introduced into Congress by Representative Maynard of
Virginia, as H. R. No. 14934, and by Senator McLaurin of
Mississippi as S. No. 4914, at the request of a committee of
commercial organizations appointed at the Atlantic City conference.
This bill was giveti much attention by the House Committee
on Interstate and Foreign Commerce. Four hearings upon the
same were held, and a sub-committee, consisting of Congressmen Frederick C. Stevens, of St. Paul, Minnesota; William C.
Lovering, of Taunton, Massachusetts, and Gordon Russell, of
Tyler, Texas, was appointed to continue study of the matter,
with instructions to report at the next session of Congress.
It is interesting to note that at one of the hearings before
the house committee, Chairman Knapp, of the Interstate Commerce Commission, in answer to a request of Chairman Hepburn,
of the house committee, said: "I am much impressed with the
desirability of giving to these important agencies of commerce
the degree of negotiability provided for in this bill."
One consideration only appeared to deter the Committee on
Interstate and Foreign Commerce from making a favorable report and that was doubt whether Congress, under the Commerce


Clause of the Constitution, had the power to enact legislation of
the character requested.
Our committee, its attorneys and the attorneys of the commercial organization have no doubt of the existence of such
power (which has previously been exercised by Congress), in
the enactment of the Harter Act, passed in 1893, covering ocean
bills of lading, and more recently through the enactment of the
Rate Bill of 1906, which contained a clause holding initial
carriers liable for loss through damage; which clause has just
been declared constitutional by Circuit Court of the United
States, Western District, Arkansas, Fort Smith Division, in
Smeltzer va. St. Louis & San Francisco Railway, 158 Federal
Reports, page 649.
The Maynard bill, the statement covering the same by
Thomas B. Paton, and brief on the constitutional points involved, submitted by Henry W. Taft, of Strong & Cadwalader,
are Appendix No. 4.
In continuance of the policy of keeping in touch with the
work of the commissioners on uniform State laws, our counsel,
Mr. Thomas B. Paton, this year again attended the session of
the commissioners, with the expectation that they would agree
upon their final recommendations covering bill of lading legislation for the several States.
The meeting was held at Seattle, Washington, and was also
attended by Mr. P. C. Kauffman, chairman of the Committee
on Bills of Lading, Washington Bankers' Association, but, in
view of the fact that the new uniform bills of lading have so
recently been recommended by the Interstate Commerce Commission and in view of the objections made by certain interests
to some of the provisions of the draft of their bill, the conference decided that consideration be postponed for another
In connection with our committee's work, and for the purposes of assisting in securing national legislation, and at the
same time be prepared to take up for State legislation such
recommendations as may be submitted by the commissioners on
uniform State Laws, there have been bill of lading committees
appointed by State banking associations in twenty-five States, a
full list of these committees being shown in Appendix No. 6.
The committee recommend the adoption of the following:
Whereas, The Bill of Lading Committee of the association has
since its appointment been engaged in endeavoring to secure the
acceptance by all parties at interest of a uniform form of order bill
of lading; and
Whereas, It is manifestly most difficult to secure the approval of
shippers, carriers and bankers to a form which would be ideal from
the point of view of any single interest; and,
Whereas, The Interstate Commerce Commission on June 27, 1908,
approved and recommended the adoption and use by all carriers subject to the act to regulate commerce, from and after the first day

of September, 1908, of two uniform bills of lading, one an "order
bill" to be printed on yellow paper and the other a straight bill to
be printed on white paoer, the order bill and straight bill differing
only on the front page thereof, the conditions on the back being the
same in both cases; and,
Whereas, These bills have only been recommended after years of
study and negotiation between a committee of carriers and a committee of shippers appointed at the instance of the Interstate Commerce Commission, and working in conference with that body, and
in the conferences and negotiations leading up to the final agreement upon such bills, the representatives of the bankers have taken
considerable part and such bills embody the amendments suggested,
by the Bill of Lading Committee of this association. And,
Whereas, The Uniform Bill of Lading Committee of the carriers
in official classification territory have instructed that carriers in
such territory "should arrange to employ the new forms exclusively
on and after November 1, 1908," and have also transmitted these
forms to all other carriers subject to the act to regulate commerce
outside of official classification territory with the suggestion that
these forms shall be adopted "in order that the greatest degree
of uniformity in the usage of bills of lading shall be obtained."
Therefore be it
Resolved, That the American Bankers' Association desires to express its hearty rppreciation of the action taken by the Interstate
Commerce Commission, and, further, that it recommends to its
members that after January 1, 1909, they only handle for value either
order bills of lading issued by carriers in the United States on forms
recommended by the Interstate Commerce Commission as order billsof lading and as described in the above preamble; or the so-called,
"clean" order bill of lading, without conditions, being the form
recommended by the National Industrial Traffic League to the Interstate Commerce Commission on October 15, 1907.

Appendix No. 1. Briefs submitted to Interstate Commerce
Commission, by attorneys, Professor Samuel Williston, R. E. L.
Marshall and Thomas B. Paton, together with list of representatives of trade organizations who attended hearings.
Appendix No. 2. Order of Interstate Commerce Commission,
June 27, 1908, with provisions of that body's recommended uniform bills of lading—one for order -shipments and one for
straight shipments.
Appendix No. 3. Report of proceedings, bill of lading conference, trade and financial organizations, Atlantic City, N. J.,
September 23, 1907.
Appendix No. 4. Draft of Maynard Bill, No. H. R. 14934,
with statement covering same by Thomas B. Paton, and briefs in
connection with the same by Henry W. Taft, of Strong &
Cadwalader, New York city.
Appendix No. 5. Report of the American Bankers' Association Bill of Lading Committee to the Executive Council, May 4,
Appendix No. 6. Membership State Bankers' Association Bill
of lading Committees.


No. 54 Wall Street

Capital, $1,000,000

Undivided Profits, $15,172,646.78

J. N. WALLACE, President.
E. F. HYDE, Vice-President.
B. G. MITCHELL, Vice-President.
D. OLCOTT, Vice-President.


GEO. BERTINE,• Secretary.
F. B. SMIDT, Asst. Secretary.
M. FERGUSON, Asst. Secretary.

Board of Trustees.
F. P. OLCOTT, Chairman of the Board.
John S. Kennedy,
Dudley Olcott,
, Cornelius N. Bliss,
Chas. Lanier,
Samuel Thorne,
Jas. N.
Adrian Iselin, Jr.,
D. Juilliard,
William PrIVed,
E. F. Hyde,
James Speyer,
George Bertine,
Henry Evans,
Henry D. Babcock,
James N. Wallace.
Geo. Macculloch Miller,

Detailed Report of Proceedings,
Wednesday, September 30th, 1908.
The convention was called to order by the president, Colonel
J. D. Powers, of Louisville, Ky.
President Powers: Gentlemen, the American Bankers' Association will come to order, and you will take your seats under
the flags of your respective States. Members of the Executive
Council, ex-presidents of the association and vice-presidents
representing the various States are requested to take seats upon
the stage.
The convention will rise and stand during the invocation. by
Right Reverend Charles S. Olmsted, Episcopal Bishop of Colorado.

By Right Rev. Charles S. Olmsted, Episcopal Bishop of
Let us pray. Our Father who are in heaven, hallowed be Thy
name, Thy kingdom come, Thy will be done on earth as it is in
'heaven. Give us this day our daily bread and forgive us our trespasses as we forgive those who trespass against us, and lead us not
Into temptation, but deliver us from evil, for Thine is the kingdom,
and the power, and the glory, forever and ever. Amen.
Almighty God, Father of the worlds and Lord of all mankind, Who
art ready to bless all the works and institutions which seek to
promote the welfare of communities and nations, behold with Thy
gracious favor and bless this association of men who desire the weal
of these United States of America and an honorable place for them
among the great nations of the world. Give them wisdom and
strength. May they continue to teach us lessons of uprightness and
fair dealing, promptitude, sagacity, honesty, respect for law and all
other things which help our business integrity and cause righteousness to dwell in our habitations. Show them this day how much
depends upon their sense of right and of honor. Make them more
and more the guardians of good faith and honorable dealing and
through them, as well as through all other efficient agencies, build
Thou up the walls and strengthen the gates of our beloved country.
May peace and happiness, truth and justice, religion and piety be
established among us for all generations. Give peace in our time.
0 Lord, and unite Thy people and all their enterprises in the blessed
bonds of mutual fidelity and honor. And to Thee shall be all the
glory and praise both now and forever, through Jesus Christ, our
Lord and God. Amen.
President Powers: Gentlemen of the convention, I now
have the pleasure of introducing to you the Chief Executive of
the State of Colorado,'Governor Buchtel.

Address of Welcome by Governor Henry A. Buchtel.
I count it a very great honor to have opportunity to voice the
welcome of the State of Colorado to the American Bankers' As-sociation. While you are here in Colorado you .will be enlarged
by the sight of our mountains, refreshed with our stimulating
climate, amazed at the variety of our products of mine and
factory and field, and charmed with our cosmopolitan people.
Before you left your homes you had learned that we in Colorado passed through the financial depression of last fall with
less embarrassment than any other State in the union. Now
that you are here you can learn all about this Interesting fact
from conversations with our Colorado bankers. The reason for
this freedom from serious embarrassment is found in the fact
that we lead all the States in the union in the production of
gold which is coined at our Denver mint and put into circulation
within three days from the time it is taken from the mine.
-This indifference to the financial depression of 1907 is in marked
contrast with what happened here during the financial depression
of 1893 when a New York draft had no value at all in this
'State. We had seventeen banks in this city when that storm of
1893 broke over our heads. All but five of those banks were
wiped out by the fury of that wild tornado. The names of the
live banks which could not be disturbed, when associated together, constitute an announcement of which we are all justly
proud. Those five names are DENVER COLORADO FIRST
I am an optimist by nature and by grace. One could not live
long in this State, described by President Roosevelt as the playground of the nation, without being an optimist. You know it
is the privilege of an optimist to believe that the level of life
in this nation, on the moral side, is rising higher and higher
every year. And you gentlemen of the American Bankers' Association have had quite something to do and you ought to have
still, more to do with raising the level of our national life in
morals and in commercial integrity. Do you think you appre•clate adequately your responsibility to the life of the nation?
Your moral quality and your integrity constitute the measure of
the moral integrity of the nation's commercial life. So you
have in your hands the fixing of the moral quality of practically
.all the business communities in the nation.

Your duty to the nation is very great at all times, but it is
particularly great at a time like this when we are trying to find
some way to eliminate from our life the periodical business depression. Do you think such periodical financial depressions are
necessary? I do not ask whether such depressions are probable.
I am asking whether they are really necessary. With the business of the nation conducted in absolute integrity and honor,
might not the commercial life of the nation go on always like
the life of a man in vigorous health who finds in each succeeding day a constant and a growing joy? If we shall ever
come to the place where financial depressions are practically
unknown, it will be because the bankers of America shall determine to exercise their vast power in eliminating from our
commercial life all unsound speculative features. Sound business methods never include any roseate dreams of getting something for nothing.
We are indeed glad to welcome you to this land of sunshine
and hope because all the discussions in all the sections of this
great convention will make clearer and clearer the fact that
financial depressions may be practically eliminated from our
life. The people of the nation are expecting you to formulate
the programs which must be carried out to keep the commercial
life of the nation always in sound health. The confidence of
the people in the bankers of America is shown in the fact that
the deposits in your care aggregate approximately fourteen
billions of dollars, while the total amount of money of all
sorts in the nation is approximately only three billions of dollars.
In working out your plans for securing and maintaining sound
health in the commercial life of the nation you will naturally
consider the question of making all banks safe for all depositors.
While you are making your vaults safe from assaults from the
outside, you must also make them equally safe from assaults
from the inside.
The Comptroller of the Currency is reported to have said in
an address to Eastern bank examiners a week ago:
"I say to you emphatically that your work mustS be improved. Embezzlements have failed of discovery, defalcations
and dishonesty have been concealed from you, and in many
cases you have failed to correctly or even approximately estimate the value of the paper and securities held by the bank."
It is for you gentlemen of the American Bankers' Association
to find a substitute for the inefficient and semi-political examination of banks which is now maintained. It is only by the
expert and searching scrutiny of bankers themselves, with their
staffs of men of experience and inside knowledge, that you can
secure an adequate inspection of the condition of any bank. Is
it possible for an inspector to know the value of paper which is
signed by names which mean nothing to him? You must find
the method of making banks strong and safe so that guarantees
of deposits would be as unnecessary as guarantees of government bonds.
Another question which must have an adequate answer by
you is the question of on elastic currency. The program which
the nation will adopt will be that program which shall be approved by the American Bankers' Association. You must take
time for it. You must study all the financial methods of the
other great nations and you must come together youeselves in
finding the way to give to this nation an elastic currency. Has
the average politician any adequate equipment for the solution of this complex and great problem? You do not need the
advice of a peripatetic and perennial catndidate for office who
shouts himself red in the face in explaining to you his method
of providing a banking and currency system which shall serve
the needs of the people in every emergency. You rather need
the temper of the patient and honest student who, with all
knowledge of history and of the present banking methods of
the world, shall find for us what we need to handle the swiftly
growing business of this richest nation in history. It is very
evident that we can learn something from other nations when
you recall what happened last fall. It required two months to
bring one hundred millions of dollars in gold to this country
from Europe, while the Imperial Bank of Germany increased
its note circulation by the same amount in one week. Consider
what an immense amount of harm would.have been prevented
if we,'with our gigantic resources of real' wealth, could have
increased our available cash by one hundred millions in one
week. Last November the Bank of England had only $165,000,000 in gold reserves while the United States Treasury had
$900,000,000 in gold reserves. Yet we suspended cash payments
while London was shipping gold to New York.
The clearing house methods which you have developed, without authority of law, have been an unmixed blessing for the
commercial life of the nation. That clearing house certificate is
an interesting document. It is a notice to the excited depositor

which reads in effect as follows: "Your money is here. It is all
here. We are taking care of it for you. Go home and put an
ice bag on your pulse. Walk out into the open and note the
fact that :we are living in a very, very beatuiful world."
Could you not find another method of preventing the periodical
financial depression by maintaining a definite propaganda for
the education of the public mind? The American Medical Association sends a lecture into every part of the country to awaken
Interest in the prevention of disease. It might be supposed that
physicians would be interested in having business good, but it
Is the American Medical Association which does more than all
other organizations together to arouse interest in the question
of keeping all the people well. The American Bankers' Association ought not to be behind the American Medical Association
in interest in the public welfare. You ought to have in the
service of the American Bankers' Association a few gifted men
who would go into every part of the country and make clear the
facts about banking and currency in lectures before commercial
bodies, trades unions, schools, colleges, universities and people
of all sorts and conditions. All the people need to be made to
understand that you can not in one day or in one month pay
fourteen billions of deposits with a sum total of three billions
of cash.
We all believe that this republic will life forever. We all
believe that we shall make here a ,nation that will become increasingly free, civilized, educated 'and religious. Your part is
conspicuous in this glorious program of making a nation which
shall be as great in moral integrity as it is great in material
wealth. We all believe that the members of the American Bankers' Association will meet their obligations to the nation with
large intelligence and with absolute sincerity.
President Powers: Ordinarily it is sufficient that the greater
.embraces the less, but Denver always speaks for itself, and,
while the Governor has extended a welcome to you, Denver purposes on her own hook to extend a special welcome, and Mayor
Speer I have now the pleasure of introducing to you for that
purpose. (Applause.)

Address of Welcome by Hon. Robert W. Speer, Mayor of
the City of Denver, Col.
Mr. President, Ladies and Gentlemen: Money is sought after
more universally than anything in life, and it is but natural that
the men who handle, and to a large extent control, the currency
of the country should be looked up to by all classes of people.
Denver as one of the newest cities of the country is especially
glad to greet and welcome your association. You have heard of
Western hospitality—it is only nature freed from restraints
and formalities—an honest impulse coming directly from the
Our city is young in years, but great in expectations. Her
credit is good, because she has large assets and promptly meets
her obligations. She has never overdrawn her account, and for
size and age has a smaller debt than any other city. Her
people intend that she shall be known everywhere for her
health, her beauty and her hospitality.
In our journey through life we devote our energies, time and
best thought along special lines; become experts in certain
directions. Your views are sought after on financial questions,
because that has been your special study. Some of us become
so intent at our own work that we fail to fully appreciate and
understand the work of others, and I think this applies to
bankers as well as to other classes of citizens.
There are two kinds of currencies: One, issued by the government and sought after for what it gets; the other, issued
from the heart and valuable for what it gives—hand money and
heart money—they are both issued in all denominations so as
to meet our every want. We are rated by the amount we gather
in of the one, and give away of the other; in one case we are
rich by getting, and in the other we are rich by giving.
There are debts and obligations which can and must be paid
in cash, while there are others which can only be paid in deeds,
kind words and good thoughts. These currencies are not interchangeable, and many mistakes have been made by trying to
pay the debts of one with the money of the other. Injustice has
ever been done by judging men by their heads and cash, rather
than by their hearts and deeds.
I have known persons rich in one currency to be paupers in
the other. Health, friends, honor and happiness have often been
sacrificed for gold and silver, which only accompanies us to
the grave; while heart money scatters sunshine and roses in
this life, and passes death as an individual credit in the life to
come. We judge men too much by their accumulations; the time
will come when they will be judged more by their disbursements.
It requires a greater man to rightly give away money, than to
make it. It will not hurt the bankers of this country to occasionally stop counting gold and figure up their assets in heart
It is the earnest wish of our citizens that your stay on earth
may be as pleasing as they want :'our sojourn to be in Denver;
and that your journey after death may have as grand scenery
and pleasant surprises as you will find on your trip through
Colorado, the Switzerland of America.
President Powers: Governor Buchtel and Mayor Speer, I
think I need hardly, on behalf of this magnificent assemblage,
say that they thank you. They have shown by their attention
and by their applause that they deeply appreciate the kindly


words of welcome that have been so delightfully expressed..
Indeed, they feel more—they feel in their heart of hearts that
you mean what you say, which is not always true of addresses
of welcome. (Applause.)

Annual Address of the President, J. D. Powers.
According to custom, and that I may make report of my
stewardship as President of your Association, I feel that it is
but due that I should congratulate you upon your increased
numbers as well as upon the enhanced importance and benefits
of your membership in this Association; the purpose of which
Is to strengthen the hands of its individual members by mutual
effort, and to afford such protection as is the outgrowth of
Our increased membership betokens the esteem
in which your efforts in the past have been appreciated by'
your fellow-bankers throughout the country. Of necessity the
bankers occupy a semi-official position in communities where
located. We at once became the custodians of the funds of
the community, and the general disbursing agency through
which the commercial and manufacturing world, as well as the
individual, meets current obligations.
Your importance is
measured by your activity, energy and integrity. It is highly
important that these qualities be exerted for good. By reason
of our position in the financial world, we owe it to ourselves
no less than to the community in which we reside to give our
best endeavors to the up-building of civic righteousness, inculcation of civic pride, and above all, we should aid in promoting those virtues which tend to ennoble the individual, and
without which commercial integrity is impossible. We should.
bear our due proportion to the burdens of citizenship and aid in
so shaping the policies of governmental regulation that the
greatest good may be vouchsafed to the greatest number.
Within a few short weeks after the close of his labors as.
your president, Mr. G. S. Whitson, who served this Association
with such fidelity and zeal, giving it that unstinted service
which ever characterized him in whatever station he occupied
in this life, died on November 24, 1907.
The knowledge of his death brought sadness to the hearts of
most of the bankers of this 'country; and especially grieved at
his loss were those who had been intimately associated with
him in the work of the Association. He was indeed a man of
high character and of unimpeachable honor and integrity. To
represent you at his funeral. I appointed the following committee: A. B. Hepburn, J. M. Donald, Jas. R. Branch, Clark
Williams, L. E. Pierson and F. E. Farnsworth, all of New York._
And the following Ex-Presidents as an Honorary Committee:
Jno. L. Hamilton, Logan C. Murray, M. M. White, Robert J.
Lowrey, Geo. H. Russell, Walker Hill, Myron T. Herrick, Caldwell Hardy and E. F. Swinney.
Few men have been charged with greater responsibility than
fell to the lot of Mr. Whitson. From his earliest years of manhood, when he began his work as clerk in a dry goods house;
and soon thereafter beginning his career as a banker with the
Bank of New York; later in 1868 taking a permanent place
with the great bank of which he was Vice-President at his
death; he was continuously for more than forty years In active
and responsible positions; in all of which he acquitted himself
with entire satisfaction to those with whom he was engaged,
and with great credit to himself. He deserved and had the
loving respect of all who knew him. Suitable resolutions have
been adopted by the Executive Council, to commemorate his
memory, in the records of the Association.
About ten years ago this Association authorized the organization of an educational branch of the Association, which
resulted in the American Institute of Bank Clerks. The work
was so intelligently prosecuted that its new members not only,
took a lively, but beneficial interest in its growth, and organized Chapters throughout the country, made up of the bright,
intelligent and thoughtful young men who were in the employ
of members of this Association. They have recently taken on a
new name differing slightly from their original patronymic, and
are now called the American Institute of Banking.
To this Institute and its magnificent work we may confidently look for the improved, educated and broad-minded
banker of the immediate future. Its work has been along the
best possible lines of education and it has reached such magnitude in importance and numbers as to request to be admitted
as a Section of this Association, and to receive in the future
that which has been accorded to it in the past, the protection,
encouragement and help of the Association. It is the outgrowth of your fostering care, and as our oldest and most
cherished offspring, is in my judgment, entitled to full participation and representation in the Association, and should have
special representation on the Executive Council. We have
given of our bounty to the education, encouragement and upbuilding of its membership, and now that it is so abundantly
able to stand alone and assert itself for good, I feel that it
should be taken into full fellowship. Its members are young
men of courage, pluck and ability. They have won their
spurs in the battle of endeavor; they possess the requisite qualities of courage, education, industry and ability to create a
demand for their services, and they are destined to march forward to that goal of success which will make us proud of their



achievements. They will go onward and upward, knowing that
and revolutionary in its provisions that the Banking and
there is always room at the top for good and true men. I
Currency Committee of the House refused its approval, and
hope to see them installed as an integral part and special sec- .then began a scramble to enact a bill purely for political contion of this great organization.
sumption, and one that differed so widely from the original
bill which was offered, that it showed little kinship with the
Within the past year the bankers of this country were confronted with conditions that were fraught with so much of
parent effort, and became a mere political measure for use in
the pending Presidential campaign.
danger and uncertainty, that when we take a retrospective
For the protection of
the interests over which we are custodians, it is one of the
view of the incidents and dangers of the panic of last fall, we
duties imposed upon us, which should by no means be negare gratified at the courage, tact and ability of those who
lected, to defend ourselves and our business from those who
kept cool heads and clear judgment, which enabled them to
pander to the multitudes for selfish ends, and who seek to sway
weather the storm of disaster which was widespread over the
the people by vainglorious oratory in their appeals to the
country; originating at the center of finance, where the greatprejudices of the people, whose suffrage, rather than whose
est havoc was wrought, then moving westward from the Atlanwelfare, they earnestly seek. The Banking as well as the
tic with electric speed, caused the whole country to appreciate
that the deluge was upon them, without warning from the
Commercial interests of the country have met and overcome
signal service and without preparation. The sequel, however,
many of the vagaries put forth for political effect; but one of
proved that the tornado had been gathering for many months
the most serious and altogether misleading, if not, dangerous
-prior to •the great catastrophe, which was precipitated the
propositions with which we have been confronted, is that of
last days of October, when none were so ignorant of condi- 'Government Guarantee of Bank Deposits. By the chief extions as not to be quickly anxious to put their houses in order,
ponent of this latest political fad we are told that all that
to protect themselves from dread calamity that looked for a
is necessary in order to inaugurate the Financial Milennium is
while as though it would engulf all before it. But, be it said
to pass a statute guaranteeing Bank Deposits, and then proto the everlasting credit of the great majority of bankers,
ceeds with this preamable: "What the people need is a system
they displayed a heroic courage and maintained a self poise
whereby both State and National Banks will be compelled to
under great pressure which enabled them to pass through the
guarantee depositors," and that as the "United States Governweeks and months of disaster, and finally to emerge from the
ment, the State, the County and the City require security when
wreck and ruin that had been wrought in a manner creditable
they entrust money to the bank on deposit, and even the banks
to their ability, integrity, courage and sound conservative
require surety from the officials who handle money," then
"why should the depositor be left to take his chances?"
Few financial storms occur without attending benefits freAll money of the Government, State, City and County, is
quently greater than the disaster wrought. The financial atprimarily under the control and in the custody of officials who
mosphere was cleared. The unhealthy conditions that surare required to give bond for its safe keeping, and when, for
rounded many banking institutions in New York required just
any reason, these bonded officials are required to turn over this •
such heroic treatment to allay the money-mad fever which had
money to Depositories, either for the interest that may be
possessed them, and the surgery employed by the clearing house,
earned, or for the convenience of disbursement, they are rewhile a drastic remedy, prevented the spread of the contagion
quired to take bond from this new custodian or disbursing offiand reduced the frenzied financiers to a condition of sanity,
cer, so that the Government, States, Cities and Counties do
and in many cases to poverty as well. As a rule, those who
not become depositors in the ordinary sense. The banks re-were forced to the wall were the architects of their own
ceive from them moneys to be repaid according to contract,
ruin. It destroyed the fallacious view entertained by many,
and furnish surety when demanded either by a deposit of colthat wealth could be created by the automatic inflation of
lateral, a guaranty bond or personal security. The depositor
prices without reference to either supply or demand.
must look about him and measure the security afforded by the
To relieve a congested market, by increasing the price of the
bank, its capital stock, double liability of stockholders and
product beyond the ability of the consumer to pay, was so
surplus, and estimate the character and ability of its officers,
completely in contravention of the law of supply and demand
and must judge for himself where he can best intrust his
that it quickly brought to grief those who attempted it. This
money. This is a Government of free and independent States,
was thoroughly illustrated in the case of the manufacturers
inhabited by free and independent people. The Declaration of
of copper for industrial purposes: The banks suffered by alIndependence and the Constitution of the United States never
lowing the borrower rather than the lender to fix the price
were made nor framed to create a paternal government, but to
-of collaterals pledged for loans. These great lessons of panics
protect the citizen in his inalienable rights as a free man,
seem to be necessary to the proper education of business men
and we do not believe in dwarfing the manhood of the American
periodically, and it is to be hoped that the lessons learned in
citizen by Governmental regulation of his private, fiscal or do-'
• 1907 will not be forgotten for a long time to come. Now,
The stockholder and the depositor are atmestic affairs.
that the panic is behind us, let us look to the needs of the
tempted to be arrayed against each other, -when in good truth
present.;, Let us do this by a cairn and dispassionate examinathere is no conflict between the two. The stockholder, by the
tion into our general banking and financial policy, and espeemployment of his capital, and his credit to the extent: of
-cially as to our currency system. I do not believe that this
his stock, and the surplus created by his investment, creates
•can be successfully accomplished through the ordinary chanthe bank where the depositor, not only without cost to himnels of mere legislation. It must be the work of experts qualself, but too often by receiving excessive compensation therefor,
ified thereunto by experience, and not by mere theoretical finanmay place his funds for his own accommodation and benefit,
-eters who chance to be such by reason of their official or politand for the convenience of himself and those with whom he has
ical positions. They should be men who understand the necestransactions, yet we are told that "the stockholder is not
sity for and importance of ridding the government and the
compelled to buy stock, while the depositor is compelled to use
-country of the dangerous legal tender greenbacks, by their final
the banks, both for his own sake and for the sake of the comredemption and retirement; by a sane and safe means of
munity, for only by using the banks can he keep his money
gradual change from our bond-secured currency to a system
a part of the circulating medium."
that has been proved sound by. the experience of other counA more sophistical and fallacious argument could not be
tries. Our greenbacks were the outgrowth of conditions made
advanced with reference to a serious proposition. If the denecessary by the Civil War, which required an emergency curpositor is to have a place where he can, both for his own
rency; to the ,same source we owe our bond-secured currency,
sake and the sake of the community, use the banks, then somewhich has served its purpose fairly well, but the necessities of
body must create the banks that he may be enabled to get the
•the country. and the necessary flexibility of our currency
use thereof. The stockholder invests his money in the stock
require a different and more scientific basis.
of the bank, primarily for gain, and secondarily for the use
The banks • of the country have for years borne the burden
and convenience of those who use the bank. The depositor
-of the bonded indebtedness of the, Government. We have made
places his money in the bank for its greater security, for the
a market for two per cent, bonds in this country as a basis
interest he may get on it, and for the greater convenience of
for circulation. •These bonds, without the support of the
trade and commerce. The one being absolutely essential to the
banks, would to-day sell in the market at least; 20 points below
other, therefore there is no conflict between the two. Let us see
par. And yet the banks have,created a market at four points
what the stockholder does for the protection of the depositor.
above par for these,bonds. In all periods of the history of this
Before the depositor can suffer any loss whatever, upon his
country, the banks have come to, the rescue of the government
claim against the bank, the stockholder must lose not only his
and sustained its credit. Yet the blatant political demagogue
original investment in the stock and the accumulations in the
is ever ready to insist that the government sustains the banks.
way of surplus upon that stock, but must suffer liability equal
No war has ever been fought by or in this country the sinews
to the full value of the stock. We are likewise told by the
-of which have not been furnished by the banks, and upon a
advocates of the guarantee proposition, that "there are only
debit and credit account, for services rendered between the
20,000 banks, while there are 15,000,000 depositors," and that
banks and the government, it would be demonstrated that the
they "do not hesitate to declare that in a conflict between the
government is largely the debtor of the banks.
two, the depositors have a prior claim to consideration." And
The business as well as .the interests of bankers has been
they say further, "with the owners of these 20,000 banks as
menaced for years by ill-advised, unfair and unjust legislation.
stockholders, there are probably 1,500,000 or only one-tenth
This was made most manifest in the efforts to pass an emergas many as there are depositors." Therefore "the guarantee
ency currency bill a few months ago in Congress, when after
law brings the greatest good to the greatest number." Upon
weeks of effort to construct a measure of general and practical
the same principle, the socialist who advocates "taking from
relief, based on the views of experienced legislators, the Senhim who bath and giving to him who hath not," would take
ate sent to Congress for its concurrence a bill so impracticable
by statute from ten selected men $100,000,000 and divide it out

among 100,000 men who had nothing at all, giving them from
this confiscated money $1,000 each, and justify it by saying that
this process brings "the greatest good to the greatest number."
Such doctrine, carried to a legitimate conclusion, would mean
the disruption of this government and the turning back of
the wheels of progress to a point, equaled only by that period•
.when the doctrine was that "might made right."
What an opportunity was lost to the inventive genius of
the wily politician when the great exposure of the rottenness
.and corruption in Life Insurance was unearthed in 1905, be-cause it occurred immediately after instead of immediately before a presidential election. What wonders in political jugglery
.could have been wrought out of that situation. He would
have said: "An Insurance Company seeks to insure your life
•on the theory that upon your death the amount of insurance
will be promptly paid to your beneficiary named in the policy, and the laws ought to make the facts conform to the
theory." Then with what an agonizing demagogic spasm he
would have proclaimed: "The Insured, the Country and the
'Company itself would be benefited by legislation which would
give to each polloyholder that which is promised by the
Company will be available to meet the requirements of the
-widow, the orphan or other beneficiaries. There are only 159
Life Insurance Companies, while there are twenty-five millions
•of policies in the hands of the insured, and he would not have
hesitated to declare "that in a conflict between the two, the
policyholder has a prior claim to consideration," and that, "the
.Guaranty Law therefore brings the greatest good to the 'greatest
number, as well as to them who have the greater equity upon
their side."
I am well aware that very many good men, at this time,
without reference to political affiliation or party ties, are inclined to the opinion that the Guarantee of Bank Deposits is
not only proper, just and right, but for the general good of the
country, and such was the conclusion of.very many men in the
early stages of the free silver heresy. But there was soon a
great awakening when the fallacy of "16 to 1" became thoroughly exposed, and so it will be with the Guarantee of Bank
Deposits. It is true that for considerable time, it was a question which great political party would first adopt the free
-silver craze as a part of its platform, but the education of the
people was certainly rapid, and caused the party now in power
to get from under the load and leave it to its rival to exploit
the free silver movement, which it did to its serious loss, but
to the ultimate gain of the country.
As early as 1893, and in the midst of the panic of that
year, the great apostle of free silver turned prophet, and
in the, Congress of the Bankers of the World at Chicago in
June of that year solemnly prophesied: "If we decide to tie
ourselves to a single Gold standard, there is not a man here
young. enough to live to see better times." A false prophet
then, and not to be trusted as a prophet now.
Except for the recent panic, we would have heard nothing
whatever of the Guarantee of Bank Deposits in this presidential
year. But in all likelihood, those who are now preaching the
doctrine of Guarantee Deposits would have been the earnest
advocates of government ownership of railroads. It is most
unfortunate that the business of the country is to be made
the plaything of office seekers, politicians and demagogues, who
seek to ride into power and acquire place even at the jeopardy
of the best interests of the whole country. •
With the Guarantee Deposits, what incentive would there
be for banks to pile up a large surplus? They ,certainly would
divide out the surplus, which amounts in the National Banks
alone to more than $750,000,000, among the stockholders. Why
should any bank seek to accumulate surplus if the credit and
standing of all banks is to be measured by statute, without
reference' to the amount of its capital, surplus and undivided
profits. Certainly under such conditions stockholders would
not permit 'their surplus to remain undistributed, to be the
subject 'of attack and to make good the losses of recklessly
managed banks. You are urged, by these advocates of Guaranteed Deposits to look at what wonders it has worked in
Oklahoma. It is impossible to estimate • the conditions that
would be so radically changed by the opportunities afforded for
reckless banking and wild speculation, that any percentage,
figured on past experience of bank failures and losses to depositors; would be so wide of the mark as not to afford even
a good basis for a' guess. How utterly absurd to call attention
to the experiment Of Oklahoma in -'enaranteeing Bank Deposits
with its little more than six months' experience, and that immediately following the lessons of the panic. It is about
In keeping with the advice of the man who sent his neighbors
to the roof garden to see how the drought affected vegetation.
If you would look for experience in Guaranty of Bank Deposits
In this country, see what happened in New York under such a
law' in 1840-1842, then multiply it by the difference between
New York banks then and now; find the pro rata of the balance
of the country and add that to the sum of New York, and you
may have 'an approximate idea of the immense harm, not to
say ruin, that would most likely be wrought by this inequitable,
absurd and foolish movement, once it is fixed by statute.
The Legislature of New York in 1829 passed an act permitting the incorporation of safety fund banks, and assessing
one-half of one per cent. per annum on their capital stock.


This law was intended merely for the protection of note holders, but the law read "notes and other debts," and after a
while the courts decided this to mean all liabilities of the
banks, including their deposits, and then it was known that
the deposits were guaranteed by the State.
Mr. John J. Knox, in his history of banking, says, "When it
was found that all of the debts of every description were to
be paid from it (the fund), a fictitious credit seems to have
been given to the chartered institution, which was used by some
of them in recklessly contracting debts for the emolument of
their managers." For some time after the enactment of this
law, it seemed, like the Oklahoma experiment, to have worked
admirably as well as rapidly, and history tells UP that immediately, "the stocks of the new banks were sought for with much
eagerness, both by investors at home and from other States.
The contest for the control of the institutions had the effect
of increasing the number of subscriptions, and the bank commissioners speak of the number of applications for new acts
of incorporation as far exceeding any prudent calculations of
profitable investment." This condition continued until 1840,
at which time the capital subject to the law in New York was
nearly $33,000,000, and "the fund" was $861,000. The whole
number of banks was 90. From 1840 to 1842, eleven banks
failed and the claims were so large that they could not be
satisfied from this fund. It is stated that the first three
banks, in the order of their failure, exhausted the entire
amount collected, and the State was obliged to issue nearly a
million dollars of its six per cent, bonds, with which the
debts of the insolvent banks, in excess of. the fund, were paid,
and the banks were obliged to continue the annual payment
of one-half of one per cent, on their capital for about twenty
years, in order to repay the State for the sum advanced. This
Guaranty Fund in New York proved not only a dismal failure,
but the operations under it showed the reckless banking and
speculation which ensued by reason of it.
It worked a most serious injury to the whole business community, by encouraging fictitious credits and creating an overweening desire in speculative and adventurous men to control the then large deposits which were the outgrowth of the
Now for a brief contrast between the politically made law of
New York and the plan devised and carried out by the bankers
of New England contemporaneously with it. The New England
bankers provided a plan to protect and keep at par the banknote
issues of New England. They provided that the Suffolk Bank .
in Boston be made a redemption agency for the notes of a
chain of banks throughout New England. In 1858 the circulation of New England banks did not exceed forty millions of
dollars, and the redemption for that year amounted to four
hundred millions, thus making the average redemption of all
notes ten times per year. This system was not regulated by
law, but was inaugurated and carried through by bankers, who
preserved the circulation at par with gold and prevented losses
by only a small fraction of one-half per cent. of the total
amount of circulation. This is illustrative of the question
of bank deposits, for the reason that at that time notes did
much of the work that deposits do to-day. In good truth, it
is immaterial under such a currency regulation, whether the
deposit is represented by credit on the books of the bank or in
the acceptance by the depositor of a note, which is a mere
promise to pay, as is the deposit account. In that day the test
of the bank's solvency was the frequent redemption of its notes,
and to-day it is the daily redemption of deposits, checks,
drafts, etc., through the Clearing House, that establishes the
soundness of a banking institution; "any law, such as that
guaranteeing bank deposits, which gives to the holder of a
check, or draft, assurance that it does not jeopardize his interest by retaining these evidences of indebtedness in his possession, instead of putting them through for redemption, would
interfere with this constant teat of solvency, and would permit many unsound and improperly managed institutions to continue in business long after they should have closed their
Take this simple sum, and argue from it if you can that
there is inequity, discrimination or unfairness to the Depositors; given 20,000 banks with capital and surplus of four billions of dollars, owned by 1,500,000 'stockholders and 15,000,000
depositors with an aggregate deposit of thirteen billions of
dollars, and you will find that the average stockholder must
lose more than $2,500 before the average depositor loses a
single cent. Figure this out and then apply the broad principles of equity and say, if you are going into the protecting
business, which has the greater claim for guarantee, the stockholder or the depositor? But the ever ready sophist will tell
you that the stockholder went in for gain and should take his
chances like other people who venture, but the poor deluded
depositor must be protected by Government regulation. We
all remember the protection afforded the poor negro in. the
Freedman's Bank, and if you will put the banking business
under the patronizing wing of the politicians, as was done in
the case of the Freedman's Bank, you will fare little better
than your colored brother, who was regarded as smart enough
to enjoy the franchise, but who was thought, in financial matters, to need a guardian; he got the guardian, hnd the guardian
got his money and kept it. To protect the depositor, the stock-




holder makes his claim subordinate to the claim of the depositor. Then it is a fact well-known to the bankers that a
large proportion of these very deposits are from loans made by
the bank to its customers. Is it equity •to give a guaranty to
the depositor and not to guarantee the debt due to the bank
for this money furnished to the depositor? It is proposed by
these financial tinkerers to compel an unwilling partnership
for loss or gain. But solely on losses I must stand a part
of the loss, but no part of the gain, and I must have no control
over the conditions that produce the loss. This great leveling
process simply means that the good bank shall be no better than
the bad, and that bad banks shall be as secure and as good
as the best. How absurd! How unjust! How un-American!
Take the platforms of the two great political parties and
compare them and you will find so slight a difference, except on
vote-catching planks, which are so rotten that they are not
expected to last beyond the election, that the whole question
for business men and true patriots North, South, East and
West should be: Where will I find the greatest safety for my
property rights, the material welfare of the Nation, the advancement of trade and commerce, the preservation of liberty
and equality before the law, and the greatest hope of general
prosperity, and there abide until you can do better. Leave
the "buncombe" to the demagogic politicians who arg responsible for its existence.
We should make ourselves felt as well as seen. Let us begin
a. vigorous campaign of education among our stockholders and
among our self-respecting depositors and among the millions
of depositors in savinfrs banks which have no capital stock, but
wherein each depositor is a shareholder in the profits of his
society or association for savings in proportion to the amount
of his deposit and from whom the guaranty of deposits law,
if passed, would take millions of dollars, without any resulting
benefit whatever. On their deposits of thousands of millions
of dollars they would be forced to pay this tribute to sustain
badly managed speculative banks which fail because of reeklesness and mismanagement. Awaken their manhood by showing them the attempt by sophism to depreciate their intelligence and dwarf their manhood, no less than beguile thorn into
an un-American, unrighteous and undemocratic political trap,
set solely for political game, and bated with false hopes, false
doctrine and false pretenses. If there he those among us who
believe that safety and security is to be found in this apostles'
creed of wrongdoing, let them stand undisturbed as monuments of safety, in which error of opinion may be tolerated.
The will of the majority should certainly prevail, but that
will, to be rightful, must be reasonable.
In conclusion, I appropriate the words of my political patron
Saint, in concluding his first inaugural address:
"And may that Infinite Power which rules the destinies of
the Universe lead our Councils to what is best, and give them
a favorable issue for your peace and prosperity."
Mr. E. D. Durham, of Onarga, Ill.: Mr. President, I bold in
my hand a telegram just received which, with your permission,
I would like to read.
President Powers: Read it.
Mr. Durham: It is dated at Louisville, September 30, 1008,
and addressed to Col. J. D. Powers, President of the American Bankers' Association, Denver, Col., and reads as follows:
"The National Association of Credit Men sends greetings to the
American Bankers' Association and stands shoulder to shoulder with
them in the effort to improve business morals and strengthen the
entire commercial fabric of the nation."
This is signed "Frank • M. Getty, President." (Applause.)
Mr. John L. Hamilton, of Hoopeston, Ill.: I move that the
secretary be instructed to acknowledge the telegram and in
return convey to the National Association of Credit men the
greetings of this convention.
. Mr. Lewis E. Pierson, of New York: That is an association
which has done valuable work and I take pleasure in seconding
the motion made by Mr. Hamilton.
President Powers: Gentlemen in favor of the motion will so
express themselves by rising.
. Carried.
President Powers: Mr. Secretary, what is the next business
before us?
Mr. Joseph Chapman, Jr., of Minneapolis, Minn.: In order
that the convention may proceed in proper order, Mr. President,
I move that the printed copy of the program which is in every
seat in this hall be made the order of proceedings of the convention.
Mr. J. T. Trenery, of St. Joseph, Mo.: I second the motion.
President Powers: Those in favor of the motion will signify
It by saying Aye; those opposed to it, No.
President Powers: The annual report of the secretary is the
next order of business.

Annual Report of the Secretary.
. (The report ,of .Secretary 'Farnsworth will be found on page
President Powers: The report will be received and placed on

Annual Report of the Treasurer.
President Powers: Next in order is the report of the treasurer.
Mr. A. A. Crane, of Minneapolis, Minn, treasurer of the Association: Mr. President and Gentlemen, you will find my report
as treasurer of the association printed in full at page 6 of the
little pamphlet entitled "Reports" which has been distributed
throughout the hall. I will not read it, but simply call your
attention to some of the principal facts contained in it.
The cash balance on hand September 1, 1907, was $5,771.54.
The total income of the association for the year was $156,741.73.
During the year the association invested in New York City
registered corporate stock $25,506.67. The expenses of operation of the association were $135,083.40, making a total of
$160,590.07. Leaving a cash balance on hand September 1,
1908, of $1,922.20.
On September 1, 1908, the secretary forwarded to the treasurer for collection 9,119 drafts on account of current membership dues, amounting to $151,040, and of that amount there had
been collected up to the 25th of this month $129,050, and the
cash balance on hand at the present time is approximately
For investment the association holds the following stocks
and bonds, which I deposited with the Bankers' Trust Company of New York City as per authorization of the Executive
Council: $10,000 4 per cent. Government bonds of 1925; $30,000.
Atchison, Topeka & Santa Fe 4 per cent, bonds of 1995; $50,000,
C. B. &Q. 4 per cent. bonds; $30,000 New York City registered
corporate stock due 1940.
An inventory of the furniture and fixtures belonging to the
association shows them to be about $5,000 in value, but they
are not carried as an asset owing to the fact that they were
charged off at the time of their purchase.
(The complete report of the treasurer will be found on page
110 of this publication.)
President Powers: Unless objection is made, the report of
the treasurer will be received and filed. The Chair hearing no
objections, it will take that course.
Next in order is the report of the Auditing Committee.

Report of Auditing Committee.
Mr. F. II. Curtiss, of Boston, Mass.: Mr. President and
Members of the Association. 'Your committee begs leave to report that it has examined the verified statement of the firm of
certified public accountants covering the examination of the.
books, accounts and vouchers of the American Bankers' Association for the fiscal year ending August 31, 1908, and hascompared the accountants' report with the statement of the
treasurer. The committee finds the cash balance and securities
to agree, but there are certain small differences which your
committee has been unable to reconcile owing to the system of
bookkeeping employed in the secretary's office. In reference to.
these differences your committee has made recommendation to
the Finance Committee covering the same.
President Powers: Unless objection is made the report will
be received and placed on file. There being no objection, it is
so ordered.
Next in order is the report of the Executive Council.
Mr. Lewis E. Pierson, of New York, chairman of the Executive

Report of Executive Council.
(The report of the Executive Council is printed on page 110:
of this publication.)
President Powers: The next report to be presented is that
of the Protective Committee. The Protective Committee has no.
chairman, for a very sufficient reason, as you gentlemen all
understand ; but the secretary of the association will make a
brief statement as to where you will find the report.
Report of Protective Committee.
Secretary Farnsworth : I will not burden you with reading
the report of the Protective Committee. It will be found beginning on page 7 of the pamphlet containing "RePorts," copies,
of which have been distributed throughout the convention hail.
This is a brief report of the Standing Protective Committee.
There has also been distributed throughout the hall copies.
of the report made by the Pinkerton Agency, the agents of the
association, which is a very full report and shows the work that
they have done for the Protective Committee during the past
(The report of the Protective Committee is printed on Page.
President Powers: This report Will take the usual course•
and be received and placed on file.

Report of Committee on Uniform Laws.
The next report in order is the report of the Committee on
Uniform Laws, which will be presented by Mr. George F. Orde,
of Minneapolis.
' (The report of the Committee on Uniform Negotiable instru
ment Law will be found on page 117 of this publication.) '
President Powers: Next is the report of the American Institute of.Banking by Joseph Chapman, Jr., of Minneapolis.

Report of the American Institute of Banking.
(We print the report of the American Institute of Banking on
page 117.)
President Powers: This report will be received and placed
•on file in the usual course.
Secretary Farnsworth: The Organization of Secretaries will
meet at four o'clock this afternoon in the Brown Palace Hotel
immediately after the close of the address of President Wilson
of Princeton University.
President Powers: Next in order is the report of the Committee on Bills of Lading, which will be read by the chairman
of the committee, Mr. Pierson, of New York.

Report of the Committee on Bills of Lading.
(The report of the Committee on Bills of Lading will be found
•on page 118.)
Mr. P. C. Kauffman, of Tacoma, Washington: I feel that
the American Bankers' Association owes a debt of gratitude to
every member of the Bill of Lading Committee for the valuable
work that they have done on this most important matter. I am
sure from the results already accomplished that it will be only
a matter of a few years when we may look for the enactment of
State and national legislation that shall render such a bill of
lading absolutely safe as collateral for loans.
Inasmuch as the report just made contains a number of
recommendations and resolutions, I would like to offer the
following resolution:
Resolved, That the report of the Bill of Lading Committee be accepted and the resolutions and recommendations therein be adopted
by this convention.
Mr. J. K. Ottley, of Atlanta, Ga.: I second the adoption of
that resolution.
President Powers: Those in favor of the adoption of the
'resolution offered by the gentleman from Washington will
manifest it by saying Aye; those of a contrary opinion, No.
Mr. John L. Hamilton, of Hoopeston, Ill.: I wish to announce that a meeting Is desired of all gentlemen who have
served upon the Executive Council of the association during the
past year, which meeting is to be held on this platform immediately after the adjournment of the convention this noon for
the purpose of organizing'a social club, of which doubtless you
have heard.
President Powers: Gentlemen interested will take notice of
this announcement. The next order of business is the report of
the Standing Law Committee, of which Mr. William J. Field is

Report of Standing Law Committee.
Mr. Thomas B. Paton, of New York: Mr. President and Gentlemen—In the absence of Mr. Field and in behalf of the committee, I present the report. I will not take up the time by
reading it, as it is printed and has been distributed through the
[For report of Standing Law Committee see page 114.]
President Powers: Next in order is the report of the Committee on Express Companies.
Mr. B. D. Durham, of Onarga, Ill.: I move that the consideration of this report be deferred until the afternoon session.
President Powers: If there is no objection it will be so
The hour of adjournment having arrived, the convention will
take a recess until 2 o'clock.
Adjourned until 2 P. M.

President Powers: The convention will be in order. We will
now receive the report of the Committee on Express Companies,
-of which Mr. Fred. Kent is chairman.

Report of Committee on Express Companies.
Mr. Thornton Cooke, of Kansas City, Mo.: The chairman of
the committee is not present. In your service he has been
abroad, and he returned to this country too late to attend this
convention. Mr. Kent has forwarded an admirable report, rich
in detail, and which will be put in shape in time for publication in the proceedings of the convention. I will simply inform
you of the salient facts that will appear in it. Pursuant to the
directions of the convention two years ago, to prepare a test
-case and submit it to the Interstate Commerce Commission, a
case was prepared and with great thoroughness, and a preliminary hearing was held in New York before one of the members
of the Interstate Commerce Commission last spring. There we
established that there is growing up in this country a great
branch banking system operated by the express companies which
competes unfairly with the banks. Such competition is vicious,
as you all know. The express companies were surprised at the
thoroughness with which we put our case before the commission. They moved to dismiss our case, but the motion was
denied. There is to be a further hearing before the Interstate
'Commerce Commission in Washington on the 15th of October.
Now, our chairman has just returned from abroad where he
has concluded arrangements with the principal countries of


Europe for the issue of an American Bankers' Association's
traveler's check, which we are preparing. We are ourselves
going into competition with the express companies and will
fight them with their own weapons. We are preparing and
getting in shape an American Bankers' Association money order.
In these ways we expect to meet the competition of the express
companies, whether we succeed in our fight against the express
companies or not.
Mr. a D. Durham, of Onarga, Ill.: I want to supplement
what has been said by reading a letter that has been received
by one of our members from the American Express Company.
It is dated September 25, 1908, just at the time of our convention. This is addressed to the Cherokee State Bank, Cherokee, Iowa, and reads as follows:
September 25, 1908.
Cherokee State Bank, Cherokee, Iowa.
Gentlemen: It is at present the custom of your bank to remit check
on yourselves or on your banking correspondents as cover for the
sale of foreign drafts, travelers' checks, letters of credit and whatever other financial paper you have as supplied by the American
Express Company.
It seems to us that you would find it much more convenient and
advantageous to open an account with us, against which all settlements could be debited, thereby avoiding the frequent drawing of
We believe you also act quite often as guarantor upon sales of our
travelers checks and letters of 'credit. It would be to our mutual
convenience, we think, to debit your account rather than to draw
upon you as we have been accustomed to do heretofore.
Cable transfers and postal payments for places abroad made under
your instructions could be readily settled for by a charge against
your account, of which you would be at once advised.
Entries on your books in such an account as we suggest would
keep you informed of the extent of your foreign exchange business.
Should you at any time desire to withdraw any part or the whole
of your balance, drafts against the treasurer, American Expres's
Company, New York, would, of course, be entirely in order.
Again, should you so desire, we could arrange by letter or wire,
at current shipping rates, to make your balance immediately available at any of the principal cities of the United States and Canada.
Should you find it desirable to open a current account with this
company, we would allow 3 per cent. interest on your balances until
further notice when same amounted to $5,000 or more; on balances
under $5,000 you would receive interest at 2% per cent. per annum.
Interest' would be credited monthly.
We might also say that we are prepared to purchase whatever
foreign bills you have and to handle your collections, both foreign
and domestic, to the best advantage.
We trust that we may have the pleasure of a favorable reply, and
Yours very truly,
(Signed by treasurer at 65 Broadway, New York. Cannot make
out signature.)
If that is not an open defi, then I don't know what is. The
express companies ask us to help them in the very competition
which we are complaining of.
President Powers: Next in order will be the report of the
Committee on Federal Legislation.
Mr.• Arthur Reynolds, of Des Moines, Iowa: In view of the
fact that a number of resolutions have been referred to this
committee upon which they have not as yet had time to act,
we ask that our report be deferred until to-morrow, morning.
• President Powers: Without objection it is so ordered.
President Powers: The Committee on Uniform Stationery
and Tints will now report through its chairman.
Mr. John Schuette, of Manitowoc, Wis.: We regret that our
report is not as favorable as we expected it would be. When
I offered the resolution at Atlantic City, providing for different
colors in our bank notes, I anticipated that it was easy of
attainment, but lo! when approaching the cold wall of the
United States Treasury we struck a snag as the officers did not
approve of the plan for which I had expected to receive the
thanks of a whole nation.
I conceived the plan under a peculiar incident. Once upon
a time I had resolved to have a tooth pulled, but I dreaded
the operation. I made several attempts, went around the
dentist's block, up one-half the stairs and down again, when
finally in the room I was glad to find the dentist occupied. My
wife called me a baby or coward. Then I resolved it must come
out; took a good horn of whiskey, rushed upstairs like a wild
Indian, sat down in the slaughter chair, and dared the dentist
to do his best quick. Before I knew•it, it was out. I felt so
happy and proud of myself that I grabbed a bill out of my vest
pocket and gave it to the dentist, who told me to wait for my
change. I said, is it really out? Then keep it. When on my
way to my bank it occurred to me that it might have been a
$100 bill, but was pacified by my son that it could not have
been more than a $20 bill. So this was the inspiration for the
resolution to have different colors which we can distinguish
without glasses.

Report of Committee on Uniform Stationery and Tints.
[The report of this committee appears on page 118.1
President Powers: Next in order is the report of the Com'iliac() on Voucher Check, of which Mr. Hollister is Chairman.

Report of Committee on Voucher Check.
[We print this report on page 118.]
President Powers: The report will be received, without objection, and filed.



We will now receive the report of the Committee on Credit
Mr. William A. Law, of Philadelphia, Pa.: I am sorry that
Mr. Talbert, chairman of the committee, is not here to read
this report in person, because he has taken great interest in the
matter. The report is as follows:

Report of Committee on Credit Information.
[The report of the Committee on Credit Information will be
found on page 113 of this publication.]
President Powers: The report will be received and filed.
Next is the report of the Committee on Constitution.
Mr. F. 0. Watts, of Nashville, Tenn.: Mr. President, I feel
that the courtesy is due our distinguished guests who are to
address us this afternoon and that we should not longer delay
with these reports, and I suggest that the report of our committee be made the special order of business upon convening
to-morrow morning.
President Powers: Unless there is objection, that may be
done. Hearing no objection, it is so ordered.
It is now my pleasure to introduce Mr. B. E. Walker, president of the Canadian Bank of Commerce, of Toronto, Ontario,
who will address us on "Abnormal Features of American

"Abnormal Features of American Banking," by
B. E. Walker.
[Mr. Walker's address in full will be found on pages 97 to
President Powers: Gentlemen, it is my privilege and pleasure
to introduce as the next speaker the president of Princeton
University, Woodrow Wilson, who will address us on "The
Banker and the Nation."
Mr. President and Gentlemen of the American Bankers' Association: I would not properly represent my feelings upon this
occasion if I were not first to express my very deep appreciation of the courtesy and of the honor of the invitation to address
this association; and I take it for granted that there will, in
listening to me, be a certain element of refreshment for you,
for I am not a banker, and I am, in fact, in such an absolute
attitude of impartiality with regard to banks as must belong
to a man living upon a salary.
I am here in the hope that we may by conference together
a little better understand the relationship in which we stand
to the country as a whole.

"The Banker and the Nation," by Woodrow Wilson.
[President Wilson's address in full will be found on pages
94 to 96.]
President Powers: Shall we proceed to the last item on our
program for the day? No questions have been received for discussion.
Mr. Thornton Cooke, of Kansas City: Mr. President, I move
that we adjourn until to-morrow morning.
The motion was seconded and carried.
President Powers: Gentlemen, I want to remind you that
to-morrow we are scheduled to begin at half past nine o'clock,
and I trust every delegate will be prompt in attendance.
Adjourned to Thursday, October 1, 1908, at 9:30 A. M.

Thursday, October 1, 1908.
President Powers: Gentlemen of the convention, we were to
convene at half past nine o'clock. It is now ten o'clock and
while members are slow in coming in, we must get the convention in shape to go .ahead with our business. I will ask the
members of the convention to rise while Rev. Dr. Coyle, of
the Presbyterian Church, delivers the invocation.
By Rev, Robert F. Coyle, D. D., Pastor of the Central Presbyterian
Church of Denver, Col.
Almighty God, our Heavenly Father, we are the creatures of Thy
bcunty. We feed at Thy table. Strong or weak, rich or poor, high
or low, all are dependent on Thee. Whatever we have of blessing,
whatever we have of human happiness, whatever lifts and inspires
us and makes us better and stronger men, we owe to the thoughtful
love of God. The gold and the silver are Thine, and the cattle upon
a thousand hills. Help us to remember Thee, our God, who giveth
us power to attain material wealth and prosperity.
May that blessing rest upon our beloved country, upon those who
represent its policies and principles and who direct its affairs both
In the nation and in the State.
Let Thy blessing rest upon our business and make our trade
profitable, to the end that there may be no complaining in our spirit,
and that there may be a large surplus left over for the promotion
of education and benevolence and religion, and all the higher things
of life.
Look in great mercy upon all classes and conditions of our fellow
Be gracious to the members of this convention gathered here from
every section of the country. Give them broad views of social
obligations and of their Individual responsibility. Keep them in the
hollow of Thy hand while they tarry In our city, and when they go
hence take them to their homes in safety; deliver them from the
perils of travel.

And to Thee we will give all praise forever, for Jesus Christ, ourLord and Redeemer. Amen.
Mr. Wilson, of San Francisco,' California: Mr. President and
Gentlemen, I have a matter that will take just a moment to
present to you. At a meeting of the commercial bodies of San
Francisco on the 25th of September, bodies constituting the
Local Committee of Control for the Trans-Mississippi Commercial Congress, it was unanimously resolved that the commercial organizations of the city extend to the delegates of
the American Bankers' Association in convention at Denver an
invitation to attend the congress which convenes in San Francisco on the 6th of October, and will continue until the 10th.
Arrangements have been made to extend a hospitality which I
am sure will be made very welcome to you, and I hope as many
of you as can do so will visit San Francisco at that time.
President Powers: The first business on the program this
morning transferred from yesterday is the report of the Committee on Amendments to the Constitution, which will be presented by the chairman of the committee, Mr. Watts.
Mr. F. 0. Watts, of Nashville, Tennessee: Mr. President and.
Delegates in our Convention of the American Bankers' Association, the Committee on Revision and Amendment to the Constitution have prepared a report, the substance of which you.
will find in the small pamphlet, a copy of which I hold in my
hand. In order to give the constitutional thirty days' notice, it
was necessary to hurriedly print the report as originally prepared by this committee. After the printing we found it necessary to make some changes in it in substance and in form, and
the committee itself, and later the Executive Council, have
made a few immaterial changes from the copy.
I suggest, unless it meets the opposition of some members,
that in order to save time the report of the committee may be
considered as having been read, allowing me only to call attention to such changes as we have made.
President Powers: If there is no objection that will be the
order. The Chair, hearing no objection, the chairman of the
committee may proceed.
Mr. Watts: At the bottom of page 27 the wording was
changed as follows: "Delegates shall be voted on in person, and
no delegate shall be entitled to more than one vote."
Mr. Sherman, of Wisconsin: Is the chairman referring to
Section 3 at the bottom of page 27?
Mr. Watts: Yes, Section 3 of Article II.
Mr. Sherman: All right.
Mr. Watts: At the top of page 31, in the middle of the second line: "At such meeting the members shall vote in' person
only from a list certified to by the secretary of the association
of the vice-president of that State." This is of members of the
American Bankers' Association, at which you select your member of the Executive,Connell, credentials' of any member at that
meeting shall be a certified list furnished either by the secretary of the American Bankers' Association or the vice-president
of the State holding the meeting.
President Powers: Unless objection is made, gentlemen, it
will be considered that these amendments are satisfactory.
Therefore they will be passed unless objection is made when
they are read by the chairman of the committee.
Mr. Watts: On page 33, Section 7, the words "assistant
secretaries" are inserted for the word "secretary" twice in that
clause, so that in the future if it should be deemed advisable for
the association to have assistant secretaries there will be a
constitutional provision allowing it.
We have added to the same section the following words:
"Provided, however, that vacancies in the membership of the
council shall be filled by the election of a member of the association from the same State or section in which such vacancy
On page 35, Section 1, Article IV, the authority was given
to the chairman of the Executive Council to appoint the Protective Committee. It was decided that it would be better to
have that responsibility placed upon the executive officers, the
president, the vice-president and the chairman of the Executive
Council, and therefore the reading of the section will be:
"The president, vice-president and the chairman of the
Executive Council shall appoint a standing Protective Committee
of three persons whose names shall not be made public.
"The said committee shall control all action looking to the
detection, prosecution and punishment of persons attempting to
cause or causing loss by crime to any member of this association."
Beginning at the bottom of page 37, Article 9, the section
providing for the Trust Company Section is changed to read as
follows: "A Trust Company Section whose scope shall embrace
all matters of interest to trust companies"; the change being
that from the latter part of the sentence is omitted the words
"in so far as such matters are distinct from banking." Section
B, "A Savings Bank Section whose scope shall embrace all matters relating to institutions receiving savings deposits" ; Section
C, "a Clearing House Section whose scope shall embrace all
matters relating to the work which may be of interest and
anvantage to members of this association which properly come
within the scope of clearing houses."
That completes the changes as made in the original report.
You will observe that in the first report the committee in its

original draft made practically no changes from the old constitution. The effort was to make plainer the lines of the
constitution—the change being in form and not in substance.
The only change of substance was the provision wherein it was
provided that the various State associations should send delegates to this body. That was entirely eliminated, the duties
of such delegates and their privileges having been practically
withdrawn by the changes in the constitution, which provided
that the various State associations at their meeting shall select
the members of the Executive Council, and it further being
anticipated that this convention would adopt another report of
this committee, providing that the vice-presidents from the States
and the members of the Nominating Committee shall be similarly selected.
I move this report of the committee be adopted.
Mr. Sherman, of Indiana: I second the motion.
President Powers: All in favor of the motion that has been
made will manifest it in the usual manner; opposed in a similar
Mr. Watts: Now, as to the by-laws. Your committee found
in the old by-laws a matter which it appeared to them should
not be in the by-laws of this association. We found there provisions for the various sections, which, as you have seen, were
transferred to the constitution, where they properly belong, and
the by-laws therefore contain nothing practically about the provision for membership and annual dues. The change made in
the by-laws was the dropping of a part of the first by-law. The
first by-law will therefore read as follows—and this is on page
41—"The annual dues to the association shall become due and
payable in advance September 1 of each year, which date shall
be the commencement of the fiscal year of the association."
The remainder of that clause has been dropped as being superfluous. Otherwise the report is presented as printed.
I move that the by-laws as read be adopted.
A Member: I second the motion.
President Powers: Gentlemen, you have heard the motion.
All in favor of the same will manifest it by saying aye; opposed no.
A delegate from California desires the floor for a moment.
Mr. John M. Elliott, of Los Angeles, California: Mr. President and Gentlemen, I stand commissioned by the Los Angeles
Chamber of Commerce and by the Clearing House of Los Angeles,
consisting of 2,400 active members, to invite this convention to
assemble in our city in 1510. (Applause.)
We stand prepared,to show to the Executive Council that very
much reduced railroad fares will be afforded to the delegates,
that the hotel and ether accommodations wilt be ample—even
palatial. I can assure you that nowhere in the country would
you receive a warmer or more hospitable welcome than if you
should see fit to give Los Angeles the pleasure of your visit
that year.
Some of you gentlemen may remember that in 1904, when the
convention met in San Francisco, you were invited to spend a
day or two in Los Angeles en route. What we did for the
delegates who favored us on that occasion is only an earnest of
what we will do if we have the opportunity in 1910, as our city
has larger facilities and more accommodations for taking care
of a large convention than it did at that time. We have Mount
Lowe and Mount Wilson, two of the grandest mountains, with
one of the finest scenic railways in the world to reach them, on
the one side, and the Pacific Ocean with miles of finest beach
in the world and splendid hotels and cottages along upon it, and
last, but not least, the very best street car transportation service to be found anywhere in the United States. (Applause.)
Mr. G. M. Reynolds, of Chicago, Illinois: I am sure we are
grealy pleased to receive this invitation from California to visit
Los Angeles in 1910, but since this is only 1908 an eternity of
time will intervene between now and 1910, during which it is
the wish of the bankers of Chicago and the Clearing House Association of that city that the convention visit Chicago.
I therefore extend to the association in the name of the citizens of Chicago and the clearing house of Chicago and the associated banks of Chicago an invitation to hold its convention in
1909 in our city. (Applause.)
President Powers: I understand the committee has still some
further reports to make.
Mr. Watts: The committee have two further reports as you
will see from the printed pamphlet. On page 43 an amendment
to the constitution provided for a section to be known as the
American Institute of Banking Section.
I think it is hardly necessary for me to call attention to the
great work that has been done by the American Institute .of
Banking Clerks. I consider it one of the greatest works of this
association. A philosopher has said that the curse of the world
is joyless labor. Gentlemen, the American Institute of Banking
Clerks has been formed to make joyful the labor of banking
clerks in this country.
It gives me great pleasure to move the adoption of this
report providing for this section, and giving the banking clerks
a representation of one member on the Executive Council.
A Delegate: I second the motion.
President Powers: All in favor of the motion and the adoption of the amendment will signify by saying aye; opposed no.

. 127

, Mr. Watts: The final and last report of the committee you
will find on page 44. This amendment changes the constitution
which you adopted this morning, and provides that hereafter
the vice-president for each State and the member of the Nominating Committee from each State shall be selected at the
annual convention of the various State associations by members of the American Bankers' Association attending. I believe
every man within the sound of my voice feels more than satisfied with the work done last year at Atlantic City, when we
amended the constitution and provided that the various States
having more than one hundred members of the American Bankers' Association should select for themselves a member of the
Executive Council to represent them. Now, carrying out that
policy, we are proving that more work shall be put upon them;
that more interest shall be created at such meeting; that in
some States, instead of a necessity arising for a meeting every
three years, as might be the case in one selecting a member of
the Executive Council, we shall now provide that a meeting shall
be held every year for the members of the American Bankers'
Association attending such meeting, and they shall have the
work of selecting a vice-president and a member of the Nominating Committee to come to this convention. I believe this
will result as your action at Atlantic City did in July, in increasing the membership of this association. It is a fact that with
the very active work of the secretary's office the membership
of the organization has remarkably increased, but I think no
little of the increase is due to your action in giving the States
themselves the right to select a member of the Executive Council.
I move the adoption of this amendment to the constitution.
Mr. Bradford Rhodes, of New York: I desire to second the
motion, and in doing so I want to call attention to the fact
that it was the suggestion of the present vice-president from
New York that this should be done. In years gone by State
vice-presidents have been practically of very little account, but
now, under the present rule, State vice-presidents have important work to do.
President Powers: All in favor of the adoption of this
amendment will signify by saying aye; opposed no.
Mr. Watts: I -should call attention to the fact that on the
last page of this pamphlet • there is a proposed amendment to
the constitution by Mr. August Blum, of Chicago. Mr. Blum has
withdrawn it now, not knowing at the time it was prepared and
forwarded to the secretary that the committee had prepared a
similar resolution.
President Powers: No action is therefore necessary on that.
Mr. Sherman, of Wisconsin: Since we have adopted the
amendment on page 43, it seems to me that we should make a
provision to bring it under the amendment which we adopted
on page 38, to provide, after the Clearing House Section, Section of American Institute of Bank Clerks, so that when the
constitution is reprinted it will appear in its proper place.
President Powers: That will be regulated by the proper
officers, sir.
Secretary Farnsworth : I desire to state, Mr. President, that
I hold in my hand invitations to the association to hold.its convention next year in Hot Springs, Arkanses, and in Seattle,
Washington, and also in Put-in-Bay, Lake Erie, Ohio.
President Powers: I suppose those invitations will be more
properly within the province of the Executive Council, and
unless there is objection they will be referred to that body for
its action.
Mr. Parker, of the District of Columbia: I should like to
speak for one moment on a question of privilege, sir.
President Powers: Very well, you may do so.
Mr. Parker: I have been thinking about the words uttered
by the distinguished President of Princeton University. He
said enough to give us all the nightmare, I think. I should
like to have one suggestion printed in the proceedings of this
convention and sent abroad throughout the country, namely,
that the members of the American Bankers' Association are
desirous of recommending that bankers and others throughout
the various States take up the matter of chattel mortgage corporations for the'purpose of loaning money to the small borrowers.
This is no time forme to discuss the subject in detail, as I
fully realize, but I desire to say that the methods in vogue in
France, where the laboring classes all have such accommodations extended to them, is a. great object lesson, and I think
it would be well for us to undertake to institute such a system
in this country. It is certainly within our power to do so.
The chattle mortgage sharks are creating socialists and anarchists among us, and these people, the poor borrowers, the small
borrowers, need our assistance. We should give it to them.
This would not be an act of charity, but would be an act
based upon business principles. (Applause.)
President Powers: The suggestion, of the gentleman will
doubtless receive the attention it merits from the members of
the association, as the Chair thinks it should.
The next regular order of business is the report of the Currency Commission.
Mr. Myron T. Herrick, of Ohio: Mr. President and gentlemen
of the American Bankers' Association, in the absence of the
chairman of the Currency Commission, Mr. A. B. Hepburn, of
New York City, I beg leave to submit the following report:


Report of the Currency Commission.

(The report of the Currency Commission is given on uage 112.)
Gentlemen, it has seemed to me, particularly since President
Woodrow Wilson's address yesterday, which was so eloquent
and understandable, that just ahead of us in the line of his
suggestion was the greatest piece of work for this association
and the various State associations to do. It is not many years
since the organization throughout the country of State bankers'
associations, the object and purpose of which was to make
bankers more thoroughly understand their business. Now, we
desire as bankers to be appreciated by the people of this counWe desire them to know our aims and purposes.
We know they are not sordid.
The majority of bankers
are poor men. They represent others. Bankers have in their
hands a sacred trust, and it is in a primary sense that we are
seeking to understand our business. Had there been an efficient
organization of this body, headed by State organizations in the
days when our banking system was established by that great
statesman, Alexander Hamilton, which has proved successful in
Canada, I doubt whethei to-day it could have been made the
football of politics and the passions of the people roused by this
hobgoblin cry against what they term the money power. We
appreciate that because the people of the United States did not
understand that we were arrested in providing a vehicle which
In the course of its natural growth would have been adequate to
carry the commerce of this country, it was broken down. Now,
earnest men, bankers, are looking beyond their counters and
desiring to understand their business and their neighbors', and
bring out of chaos a vehicle of commerce which will carry the
trade of this country, and without which we can not make
progress. We are in the position that the railroads were thirty
years ago when forty and fifty pound rails were relied upon to
carry the trains. To-day 120 ton locomotives are running over
100 pound rails. The banking system of the country remains
practically where it was years ago. During the stress of war
times, in order that our securities might be marketed, this system was inaugurated. We were so pleased with it that we have
been talking in our self-conceit all over the country, delivering
Fourth of July orations and saying that we have the best currency system in the world, until we have educated the people,
and this has been done largely by the politicians, into the belief
that we have the best that could be obtained, whereas only one
country In the world has had the temerity to try it—Japan—and
Japan gave it up in disgust. It is in this situation that we find
ourselves. I ask you gentlemen to think deeply upon the splendid address of President Wilson yesterday, and that we may
profit from it, because we must advance this association. We
must encourage the people all over the United States to understand our business, and to understand it in a manner that we
may make others know it, as we hope to know something other
than the mere loaning of money and of barter over our counters.
This subject is so important and I was so impressed with
what President Wilson said of the ignorance of the people on
this subject, that I think it is one of the practical things that
we should endeavor to educate the people of this country upon
in the future. There was a man who traveled abroad once whose
home was in a rural community, and upon returning from abroad
he brought with him an ostrich. It was something never seen
in his neighborhood, and he thought he would make a little
money out of it. So he advertised that he would admit a single
person or families for the price of ten cents to see it. One day
a big woman came along with an umbrella and a small man
behind and nine children to see the ostrich on one ten cent
ticket. The show man said "Madam, is this all your family?"
"Yes, sir," she said, "ain't you going to let us in?" "Oh, yes,"
he replied, "it is all right. It is just as important that the
ostrich should see your family as it is that your family should
see the ostrich." (Laughter.)
And I say, Dr. Wilson, that it is just as important that you
understand us as that we should understand you.
Mr. President, inasmuch as the labors of this Currency Commission are not ended, I would move in connection with the
motion to adopt the report that the committee be continued.
Mr. Bransford, of Kentucky: Governor Herrick has referred
to the admirable address delivered by President Wilson yesterday. Now, I want to say that I think if President Wilson were
put on the stand to-day he would say that this scheme of the
bankers of this country to get control of the currency of the
country is the most nefarious ever devised by man. I tell you,
gentlemen, this is a dangerous proposition. It is all right for
bankers to meet and devise schemes for the promotion of banking interests, but when they undertake to control the currency
of the country it is a proposition that I for one can not sit
here silently and endorse. If Congress carries out its announced purpose to give to banks of this country the right to
issue asset currency, I tell you it is only a question of time
when the banks can at will precipitate panics or make flush
times, just as they please. I believe this currency question ought
to be left to the national government. All the people of this
country have a right to say whether we shall have prosperity or
hard times, and no set of men—bankers or anybody else—ought
to be permitted to make flush or bard times at will. Gentlemen, we are now within six weeks of a national presidential
election. This question will be settled by that election and I
hope that every member of this convention who loves his country
will range himself on the side of progress and will help to rescue

this government and give it back to the people from whom it
Mr. E. D. Durham, of Illinois: In view of the excellent work
done by the Currency Commission in the past, and in view of
the work yet to be done along the line of their labors, I second
the motion that the report be adopted and the commission continued.
Mr. Bradford Rhodes, of New York: I also desire to second
that motion.
President Powers: Gentlemen, is there any further discussion? Are you ready for the question?
Mr. John Schuette: Mr. President and Gentlemen, I think
what this Currency Commission calls a step in advance is a
fallacy. Congress has recognized commercial paper as a good
asset for currency. We will have fictitious money based on
commercial paper, as we now have fictitious money secured by
bonds. I think President Wilson was mistaken—
A Member from Florida: I rise to a point of order that the
gentleman from Wisconsin is speaking on the report and not
upon the motion before the house, which is to continue the
members of the Currency Committee.
President Powers: The gentleman from Wisconsin must
address himself to the question before the house. Of course,
incidentally, the Chair is inclined to allow him to go ahead on
the general subject of the report, as the provision made in the
program itself is for a discussion of the report, but the immediate question before the house is the motion to continue the
Currency Commission.
Mr. Schuette: I beg the pardon of the Chair, but a motion
was made to adopt the report.
A Member from Ohio: The motion before this body, Mr.
President, is tile adoption or rejection of this report. Governor
Herrick submitted the report and moved its adoption, and asked
that the committee be continued. Is not that so, sir?
President Powers: Yes, sir.
Member from Ohio: Then I raise the point of order that the
point or order made by the gentleman from Florida is out of
order. The motion before us first is to adopt or reject this report, and then the continuance of the Currency Commission is a
further motion. I ask the Chair for a ruling upon my point of
President Powers: The Chair would rule that the point of
order is not well taken in the manner in which the gentleman
presented it.
Member from Ohio: I will present it in writing then if the
Chair does not understand it as I have stated.
President Powers: Very good. Suit yourself, sir.
Mr. Durham: Mr. President, I rise for a bit of explanation.
A motion was made, as I understand it, to adopt the report and
to continue the commission.
Member from Ohio: I stand corrected if the gentleman says
that is the motion that he made. I didn't so understand it.
Mr. Schuette: I only desire to say further, Mr. President and
gentlemen, that I differ with the assertions made in this report.
What was there gained in Congress when they allowed the issue
of credit currency on the deposit of commercial paper? I claim
that is fictitious money. I expect that everyone here will
acknowledge that gold is the only real money we have, not only
by law, but by usage among all commercial nations. National
bank notes we call circulation. That name alone justifies and
limits the character of the paper money. Paper money, no
matter whether it is legal tender, was the first poison injected in
our currency. Then our bonds secured our national bills for
circulation. When they get back to the banks they ought to
cease to be money; they ought never to form bank reserves. As
soon as that money which is only good for circulation and IS
only justified for circulation comes back to the bank and is held
as a reserve for the debts of the bank and accumulated by the
institution, it becomes fictitious money. Now, gentlemen, our
business is not to deal with fictitious money. Let us have gold
for bank reserves and bank notes only for circulation. Then
you will have something that the people will understand.
Mr. A. J. Frame, of Waukesha, Wisconsin: I have no objection to approving this report that has been submitted, but I do
have an objection to any proposed branch banking system. The
banks of the United States are not ready for it. As far as the
system of Canada is concerned, why, gentlemen, it is no comparison whatever. Let me tell you that Canada has three
million square miles of territory and yet it hasn't a banking
business equal to the State of Massachusetts. The idea of
coming before this convention and trying to force upon this
convention the branch banking system is absurd. I am amazed
that it should be brought up here. I will not take up any more
time. I simply wanted to enter my protest against any such
proposition. As far as the banking business of the United States
is concerned, I want to give one illustration. I live in a small
town. I have been in the banking business for forty-six years.
I started in the business in our town when the deposits were
very, very small indeed. They have been growing steadily until
to-day our deposits are over $3,000,000, and we are loaning
money to our people at five per cent. The stockholders of the
Waukesha National Bank all are people of Waukesha. We pay
$5,000 a year taxation. Now, a branch banking system could
come in there and pay $25 a year for a license, the same as is
done in Canada, and every bit of profit made out of that branch
bank would go to Chicago, New York, Boston or Philadelphia,

and the people of our community would receive no benefit from
it whatever; the money would not be distributed in the community. I hope most emphatically that any attempt to force
upon the bankers of the United States a branch banking system
will fail.
Mr. Herrick: I am rather sorry to be misapprehended in the
few personal remarks that I made in presenting the report. The
American Bankers' Association appointed the commission. It
reported back to you. You approved its plan. It is carrying
that forward solely and entirely along the lines of your instruction. In what I had to say I merely called attention to the
suggestion that in the report we started out on a plan, proceeded on it for a number of years, illustrating what our course
was, and that that plan was laid aside by the American people,
although it had succeeded in Canada. That was stated as a
mere illustration and I think if the gentlemen had kept their ears
open they would have understood plainly that it was merely an
illustration as to the history of banking in this country. This
report is made in accordance with the instructions of the association at your annual meetings and heretofore approved. It is
a report that we have made some progress and that progress has
been along the line of your direction.
President Powers: Is there further discussion on this question? If not, those in favor of the motion to approve the report
of the committee and continue the committee will signify it by
saying aye; those of the contrary opinion, no. The Chair hears
no noes, so the motion is unanimously carried.
President Powers: It seems a little strange because it has
not been the custom, but you all got up so early this morning
that you practically are not only up with the business, but a
little in advance of it. We have about thirty minutes to devote
to the call of States, and the reports of vice-presidents, or we
can begin the subject set for 11 :30 o'clock. I think if it
meets with the approbation of the convention, which, of course,
has absolute control of the matter, we will consider the time
as moved up to 11 :30 o'clock. Therefore, I have the pleasure of
introducing to the convention Mr. Alexander Gilbert, president of
the Market and Fulton National Bank of New York City, and
also greatly distinguished as president of the New York Clearing
House. (Applause.) Mr. Gilbert will address us on the subject
"Vital Issues," as I understand.

"Vital Issues," by Alexander Gilbert, President of the New
York Clearing House,
Mr. President and gentlemen of the American Bankers' Association, I consider ,it a very great honor to stand on this plat.
form in the presence of this large audience of American bankers
representing every section of the country. I am going to speak
to you in a very informal manner. I don't propose to discuss
any very serious problems that are now before the American
people, but I want to say .some things that are on my mind,
which I feel ought to be said, especially to the bankers of the
West and the Northwest and perhaps of the South.
I desire to say in advance that I don't subscribe to the idea
that the American bankers do not get very near to the people. I
believe from my own experience that• no class of business men
get so near to the people in a confidential way as the bankers.
(Applause.) There evidently is a great deal of hostility throughout the country to the bankers ; but it is not hostility on the
part of the business men of the country. It is perhaps hostility
on the part of the men who have no relations whatever to the
banks and they are swayed entirely by outside influences, mainly
of a political nature.
This is my first visit to the city of Denver, and this is the
first time, I am sorry to say, that I have ever attended a convention of. the American Bankers' Association held outside of
the city of New York.
I said to you that I feel I have something to say. I am
justified in saying this because during the past five or six
months I have received several invitations from people in Western States, where conventions were about to be held, asking me
to attend and address them on the subject of the relation of
the New York banks to Wall Street during the panic of 1007.
That is one of the things which I want to talk to you about this
(President Gilbert's address in full will be found on pages
91 to 94 of this publication.)
Secretary Farnsworth : Mr. President, I desire to state that
the following communication has been received from the Gilpin
County Chamber of Commerce, the Rocky Mountain National
Bank and the First National Bank, under date of September 30:
The Rocky Mountain National Bank, the First National Bank and
the Gilpin County Chamber of Commerce respectfully invite the
members of your association to visit the cities of Black Hawk and
Central City, in Gilpin county, Colorado, on Saturday, October 3,
1908. A train will be provided on the Colorado Southern Railroad,
leaving the depot at 8 o'clock in the morning, reaching Black Hawk
at 10:30. Some time will be spent examining the mills at this
point and the gathering of gold will be exemplified. From the
mills tram cars will be furnished by the Gilpin County Tramway,
which will take the guests up on I'ewabic Mountain, where a barbecue lunch will be served, and opportunity given to see the mining
of gold ores.
The train will leave Black Hawk at 4 o'clock P. M. and reach
Denver at 6 o'clock the same day.
All who desire are cordially invited and it is believed that the
trip will be unique, interesting and instructive.


President Powers:,All members who desire to take that trip
will doubtless be well repaid for it.
I now have the pleasure of introducing Hon. Joseph E. Ransdell, Member of Congress from Louisiana, who will speak to us
on the subject of "Conservation of Our Natural Resources."

"Conservation of Our Natural Resources," by Congressman
(Congressman Ransdell's address will be found on pages
to 106 of this publication.)
President Powers: I am sure that every member of the association feels well repaid for listening to the addresses delivered
to us in this morning. (Applause.)
Mr. E. D. Durham: Before we adjourn for luncheon I suggest that the especial attention of members should be called to
the address to be delivered by Mr. Wade at half-past three
President Powers: I want to say that when the convention
assembles at two o'clock the first business in order will be the
report of the Committee on Federal Legislation, which was
yesterday fixed for this afternoon session. Immediately after
that we will listen to the addriss of Festus J. Wade, of St. Louis,
We will now take a recess until two o'clock.
Adjourned to 2:00 P. M.

President Powers: The convention will be in order. We will
change the order of the program a little, and will listen now
to the address of Mr. Festus J. Wade, of St. Louis, Mo., whom
I now have the pleasure of introducing to the convention.

"The Guarantee of Bank Deposits," by Mr. Festus J. Wade,
of St. Louis.
Mr. President and Gentlemen of the American Bankers' Association. I told a friend of mine that I would have to apologize
to the convention for reading instead of speaking. He daid if
I did it would be like an old constituent of his who lived in the
State of New York. After he died his friends wanted to perpetuate his memory fittingly and they concluded to have a
picture of him painted. They made a bargain with the artist
that if a majority of the departed's friends didn't like the
picture he wouldn't get any pay for it. Well, the picture was
painted, and, strange as it may appear among a lot of Irishmen, there was a dispute as to whether it was a good likeness
of Murphy, and it was concluded to leave the decision to Gallagher, one of Murphy's closest friends, and who hadn't yet seen
the picture. So they sent for Gallagher and brought him in
and suddenly unveiled the painting and he exclaimed, "My God!
That looks like Murphy," and he was about to touch it when
one of the crowd said, "Hold on, he isn't dry." "Thin," said
Gallagher, "if he isn't dry it isn't Murphy." (Laughter.) So
my friends said if I read my address the audience would say
it wasn't Wade.
(Mr. Wade then proceeded to read his address, which will be
found printed in full on pages 106 to 108.)
President Powers: We will now call upon Mr. Arthur
Reynolds, of Des Moines, Iowa, chairman of the Federal Legislative Committee, to present the report of his committee.

Report of Federal Legislative Committee.
Mr. Arthur Reynolds: Your committee since its appointment
has followed with much interest the movement which has
on for the establishment of postal savings banks, and has opposed the enactment of such legislation. No bill has been
presented which would really prove beneficial to the country.
the contrary all have been burdened with measures sure to
detrimental, not only to the hanks, but the individual depositors,
as well, by impairing the ability of the banks to adequately provide and care for, the very desirable feature and advantage of
active banking accounts, curtailing the use of individual credit,
and giving to the dishonest a cloak by making such funds immune from all process of law, and particularly inviting the
withdrawals of large sums from commercial channels by making such deposits not subject to taxation, and such banks
proving a serious menace to the financial credit of the countries
in which they are in use.
(The report of the Federal Legislative Committee will be
found printed in full on pages 112 to 113.)
Mr. Arthur Reynolds: There was referred to this committee
a resolution introduced by Governor Herrick touching upon this
question, and at this time I move the adoption of that resolution.
The committee recommended the adoption of the following
resolution :
Resolved, That the American Bankers' Association is unalterably
opposed to any arbitrary plan looking to the mutual guaranty of
deposits either by a State or the nation for the following reasons:
1. It is a function outside of State or national government
2. It is unsound in principle.
3. It is impractical and misleading.
4. It Is revolutionary in character.
5. It is subversive to sound economics.



6. It will lower the standard of our present banking system.
7. Productive of and encourages bad banking.
8. It unjustly weakens the strong and unfairly strengthens the
weak bank.
9. It discredits honesty, ability and conservatism.
10. A loss suffered by one bank jeopardizes all banks.
11. The public must eventually pay the tax.
12. It will cause and not avert panics.
Resolved, That the American Bankers' Association is unalterably
opposed to any arbitrary plan looking to the mutual guaranty of deposits either by a State or the nation, believing it to be impractical,
unsound and misleading, revolutionary in character and subversive
to sound economics, placing a tool in the hands of the unscrupulous
and inexperienced for reckless banking, and knowing further that
such a law would weaken our banking system and jeopardize the
interest of the people.
Mr. Chamberlain, of Texas: I second the motion.
Mr. John Schuette, of Manitowoc, Wis.: Is that question
open for discussion, Mr. President?
President Powers: It is.
Mr. Schuette: Then, sir, I desire to say a few mirds upon
it. We can insure ourselves against almost any kind of loss,
except our money. Whether we keep it in our pocket, home or
the bank, the constant fear of its safety hangs like a pall over
nearly every one of us, and when bank failures are frequent,
fear breaks out into a panic which seizes the whole population
and carries ruin in its track. Not only do those worry who
have their money in banks, but also those who don't trust the
banks and hoard it.
Mr. Rufus H. Brown, of Augusta, Ga.: Is the gentleman
speaking to the question before the house? It occurs to me he
is making a political speech.
President Powers: The Chair thinks the gentleman is proceeding and will presently arrive at the question before the
house. (Laughter.) He may proceed.
Mr. Schutte: If I was a college professor and knew nothing
about banking I could take up an hour's time and nobody
think of calling me to order.
President Powers: The gentleman will proceed.
Mr. Schuette: If depositors were insured, the gloom
more harrowhanging over the whole nation would be lifted, no
They would
ing of nerves, no fear of loss, no more bank runs.
safest place to put it,
put in the banks, because it would be the
y the immense
and leave it there if not wanted; consequentl
one billion dollars,
amount now hoarded, estimated at over
beside the government's hoard of over two hundred
they get into
dollars, which is kept in reserve for banks when
trouble, and is loaned to them without interest, would
idle money could be
be put into use. Most of this immense
of trade, and
released, put into circulation and into the marts
is now owing to
would stay there and not be withdrawn as it
the fear of its safety.
in all the banks
Some may imagine that to insure the deposits
undertaking; too large a
of the country would be too bold an
conterritory; too colossal in amounts. But this is just the
trary. The larger the territory, the more numbers, and the
larger the amounts, the better general average is obtained,
which is the main safeguard of all kinds of insurance and also
tends to lessen the expense.
Insurance corporations are now insuring in banks at onefourth per cent. premium, and more are organizing; but such
Insurance would cost the banks at least three times that of the
plan under government control, and would not inspire the confidence so vital.
A single fire insurance company in the United States, with
a capital of only $1,250,000, has insured against fire over $1,500,000,000, and received $12,000,000 premium receipts, pays ovqr
$7,000,000 in losses, which is seven times the loss sustained by
depositors in national banks each year on the average.
Even in the great San Francisco fire year a Milwaukee fire
insurance company with a capital of but $200,000 paid with its
surplus more losses that year than it would have paid had it
paid all losses in failed national banks the same year, and
keeps on doing business at the old stand. This shows that,
Insure deposits in banks is not visionary, but practical and
The Comptroller's reports disclose that in the forty-three
years of our national banks' existence practically ten banks
did not exceed
failed each year, and the losses to depositors
and if the national
one million dollars on the average, annually;
eighty cents on each
banks had paid annually a tax of only
paid in full,
$1,000 deposits all depositors would have been
and no one lost a dollar. At the present day our national banks
have approximately $6,000,000,000 deposits.
Say six billion dollars, of which one per cent. should be deposited with the reserve fund, which would amount to sixty
million dollars, and the annual premium tax of one-tenth of one
per .cent. would amount to $6,000,000; deduct from this the
loss of eighty cents on each $1,000 deposits, being $4,800,000,
of $1,200,000
this would leave a balance in the premium fund
fund, this would
In the first year; with the $60,000,000 reserve
Of course if all
be the strongest insurance company on earth.
banks of deposits had to nationalize or be under government
supervision the above figures would soon be more than double.
to continue on the
Why should we allow our banking methods
same rules, which, time and again, have brought disaster? Why
not adopt a measure so easily attainable, and popular

our people, and to which our bankers should not object to
contribute their mite?
(Cries of Question! Question! Question!)
Mr. J. W. McNeal, of Guthrie, Oklahoma: I would like to
have the 8th proposition, if I remember the number correctly
read again.
Mr. Reynolds: Our eight proposition is as follows: "It unjustly weakens the strong and unfairly strengthens the weak
Mr. McNeal: I know that every advocate of the guarantee
law favors it on the ground that the farmers' money is good
in a weak bank. Now, it seems to me that we fortify that
position by the language used in that eighth proposition. The
effect of the law in Oklahoma has been to induce the chartering
of forty-two small banks with $10,000 capital each and not a
cent surplus—the disposition being evidently to organize with
the least possible capital and put all dependence in the guaranty.
Mr. Heinsheimer, of Iowa: If I understand it right, the
resolution before us is to the effect that we are opposed to
postal savings banks. Now I think we should also declare that
We are opposed to the guarantee of bank deposits.
Mr. L. A. Goddard, of Chicago, Ill.: I rise to the point of
order that the report is not under consideration.
President Powers: We are now considering the resolution.
Mr. George, of Pennsylvania: I think it would be well to
have Mr. Reynolds re-read the resolution. As I understand
it the resolution gives twelve reasons why it should be adopted,
but there is nothing in it about postal savings banks.
(The resolution containing the twelve reasons was read by
the chairman of the committee.)
Mr. C. R. Breckinridge, of Arkansas: I offer the following
as an amendment or substitute, whatever is the term, for the
resolution now before the house:
Resclved, That the American Bankers' Association welcomes all
legislation that adds to the security and advancement of the business
of the people, but deems the proposed plan of guaranteeing bank
deposits and of establishing government savings banks as unwise
and. hurtful.
A Member: I second that amendment.
Mr. Breckinridge : I desire to say that I offer this for the
purpose of coupling the two propositions together and I take
it that this assemblage is almost unanimous in its opposition
to both propositions, and certainly if we take action upon one
of them we should also declare ourselves upon the other.
Mr. M. T. Herrick, of Ohio: I think there is a very good
reason why we should not take the action proposed by the
amendment of Mr. Breckinridge. In the first place, the postal
savings bank plan has been tried in different countries; it has
some place in economics. Now, the other proposition has never
been tried and has no place in economics. The Legislative
Committee in asking for the approval of its report condemns in
polite terms the establishment of postal savings banks, but it
recognizes that inasmuch as the two leading political parties
have declared for it that it is unwise for this convention to
place itself on record in offensive terms against the plan.
Therefore, gentlemen, I suggest that it is better for us to
receive and approve this report as it stands.
Mr. W. W. Bonner, of Greensburg, Indiana: When the
United States Government guarantees post office money orders
it guarantees to pay out of your pocket and out of mine and
to meet any loss that occurs. That is a combination and arrangement that is perfectly unjust.
Mr. Festus J. Wade, of Missouri: Gentlemen. Do not let
us get confused in striking at that which is absolutely unsound
by mixing it up with another question about which perhaps
there is some question.
Mr. Charles H. McNider, of Mason City, Iowa: I should like
to know what is the precise question before the house.
President Powers: The question before the house is:
Resolved, That the American Bankers' Association welcomes all
legislation that adds to the security and advancement of the business of the people, but deems the proposed plan of guaranteeing bank
deposits and of establishing government savings banks as unwise and
Mr. James It. Branch, of New York: I want to raise my
voice in favor of both propositions; this is not a political meeting, gentlemen, but is the discussion of an unwise declaration in
the platform of the Republican party, and an unwise declaration
in the platform of the Democratic party. We are not
is to
to simply talk in polite phrases, and what we ought to do
put the stamp of our disapproval upon schemes that we
we vote
to be injurious to the welfare of the country. Whether
put them
on these two propositions separately or together, let us
both down. (Applause.)
for postal
Mr. A. J. Frame, of Wisconsin: As far as the plan
Europe with
savings banks is concerned I will say this: In
the different
sixteen thousand million dollars deposited in
nations, that money is immediately put into the securities
those nations. If this plan is adopted in the United
moment it is
what will be done with that money? Why, the
it will be
got into the hands of the United States government
bonds. I
a practical impossibility to put it into government
tell you it is entering upon a plan that a free and enlightened
nation ought never to touch. As far as the question of guar-



anteeing bank deposits is concerned, I am a country banker
the last year, with the exception of one small bank that was
and thank God for it, but I have never become inoculated with
looted by its officers.
the virus of socialism. The American people will pay whatever
At our State convention the subject of postal savings banks
tax is necessary for the support of the State and the nation
and the guaranteeing of bank deposits were discussed and they
that the poor and the unfortunate may be cared for and prowere both unanimously sat down upon.
tected in the pursuit of the affairs of life, liberty and happiness,
Business interests in Arkansas are all right. Crops are
but when it comes to levying a tax upon an individual or a
abundant. Cotton and its bi-products will produce a revenue of
corporation to pay the debts of another individual or corporaover $40,000,000 this year. The lumber industry is, thriving.
tion not controlled by the former to reimburse it for its own
The mining industry is thriving. We are mining zinc in a
errors of judgment, then I say that is paternalism gone mad.
small way. We are also mining diamonds. Perhaps many of
I firmly believe that the United States Supreme Court will
you had not beard of that, but it is a fact.
promptly relegate this latest and most dangerous heresy to the
In conclusion, I want to invite lifts convention to come and
scrap heap of political fallacies.
hold one of its meetings in the near future at Hot Springs.
Mr. Wade: I ask that we vote upon the guaranteeing of bank
That is a beautiful town, and it has ample hotel accommodadeposits first as embraced in the original resolution.
Mr. Breckinridge: I will agree to that upon the understandALABAMA.
ing that we shall afterwards take a vote upon the postal savMr. Tilton: Mr. President and Gentlemen. On behalf of the
ings bank proposition.
state of Alabama I can say that we have passed through the
(Cries of Question! Question! Question !)
year 1907 and the first half of the year 1908 without a single
Mr. N. T. Gilbert, of Lawton, Oklahoma: I wish to offer a
bank failure. Our financial institutions are all in good shape
substitute for everything that is now before the house, and my
and business generally is in a prosperous condition.
substitute is that we take'up and vote upon the original proposiAlaska: (No response.)
tion, striking out Section 8, and consider that later.
Arizona: (No response.)
President Powers: That is not in order, sir. The question
Is on the substitute offered by Mr. Breckinridge, as the chair
Mr. Joseph D. Radford, of Los Angeles: I would not underunderstands it, and that declares a declaration upon both
take at this time to make 'a fitting response on this roll call
for the State of California, and I will ask leave to send a writMr. John L. IIamilton, of Illinois: Mr. President, I move
ten report to the secretary to be incorporated in the proceedthat the substitute offered by Mr. Breckinridge be laid on the
I might say in passing that the prospects of business in CaliMr. William Livingstone, of Detroit: I second that motion.
fornia are very good indeed, the natural resources of the State
President Powers: All in favor of the motion to lay this subare being largely developed from day to day, and the banks
stitute on the table will manifest it by saying Aye; opposed,
'generally are in a flourishing condition.
Before I sit down I desire to emphasize the announcement
that I believe has already been made that the city of Los.
Mr. L. A. Goddard, of Illinois: Now I move to amend the
Angeles hopes to entertain this convention in 1910. (Applause.)
eighth reason stated in the original resolution by adding after
Connecticut: (No response.)
the words "weak bank" the words "under incompetent management."
President Powers: Is there a second to that motion?
Mr. Fletcher, of Denver:
Mr. John L. Hamilton: As a member of the committee I
Mr. Chairman and Gentlemen of the Bankers' Convention: Because
Colorado is acknowledged to be the leading State in the Union in
wish to substitute for reason No. 8 the following: "It is a
the yield of the precious metals, it is quite natural for moSt people
delusion that a tax upon the strong will prevent failures of the
to think that we are simply a milling State. My aim will be to
show that this is not the ease. In this brief talk I propose to show
Mr. Goddard: I will second that.
you, represeetatives from the North, East, South and Middle
Mr. Reynolds: On behalf of the committee I will accept that.
that we produce something besides gold, silver, copper, lead, etc., etc.;
President Powers: Very well. Then the question is on the
so I pass over any statement of the production of these metals
original resolution reported by the committee with the amendsimply refer you to the statement of the United States mint
other sources to confirm the fact that in the production of
ment of the eighth reason as stated by Mr. Hamilton and acthese
precious metals we have not gone back, but are showing a steady
cepted by the chairman of the committee. All in favor of its
gain each year.
adoption will say Aye; opposed, No.
Coal.—It is stated as a fact that the area of coal lands in Cola
rado is greater than any State in the Union, not excepting PennsylMr. Livingstone: I now move the adoption of the report of
vania, a small part c,f which, comparatively, has been opened;
the committee as a whole.
'we mined during the year ending June 30, 1908, 10,900,000
tons of
coal, 10 per cent, of which was anthracite, the balance lignite,
A Member: I second that motion.
bituminous and semi-bituminous coals.
President Powers: All in favor of the motion to adopt the
Following coal is the iron industry, and it may surprise many of
report of the committee as an entirety will say Aye; opyou who believe that the iron industry does not extend west of the
posed, No.
Mississippi to learn that one of our concerns, the Colorado Fuel &
Iron Company, located at Pueblo, manufactured and sold during the
Mr. Breckinridge: May I ask if the committee intends to
fiscal year ending June 30, 1908, 2E3.000 tons of steel rails, besides
submit a report on the subject of postal savings banks?
enormous quantities of structural iron, such as banks, braces,
President Powers: It has already submitted its report and .nails, etc.
Our stock interests continue to steaCily increase, and show that
the report has been adopted.

Postal Savings Banks Condemned.
Mr. Breckinridge: I move that it is the sense of this association that we should condemn in unqualified terms the proposition for the establishment of postal savings banks or any
other system by which the government enters directly into
banking relations with the people.
Mr. A. S. Beymer, of Pittsburgh, Pa.: I second the motion.
Mr. McNeal: I rise to the point of order that the motion
cannot be entertained, the substitute offered by Mr. Breckinridge having been put to vote and lost and the report and resolution of the committee having been adopted.
President Powers: The point of order is not well taken.
All in favor of the motion made by Mr. Breckinridge will
manifest it by saying Aye; opposed, No.
On motion of Mr. Durham, of Illinois, the Committee on
Federal Legislation was continued and the thanks of the association extended to it for the work already accomplished.
President Powers: The next order of business is reports
from vice presidents of the various States.

Call of States.
The secretary called the roll of the States with the following
Mr. H. L. Remmel, of Little Rock: Mr. President and Gentlemen--The condition of banking in our State is very good
Indeed. The banks have between forty-five and fifty million
dollars of deposits. There has been no failure in the State in

for the twelve months ending January 1, 1908, the receipts and shipments to and from Deliver alone amounted to 1,500,000 head of cattle,
sheep and hogs.
Ten years ago, when your honorable body met in Denver, there was
not a sugar factory in existence nor a sugar beet raised in the
State. To-day we have eighteen factories, and the production of
sugar for this season, by close estimates, will be 220,000 tons, of
the approximate value of twenty millions of dollars. Only about
10 per cent, of this yield is consumed by our own people, the balance
being sold outside of the State, bringing in eighteen to twenty
millions to our people for the sugar crop alone. Besides, it requires
more than 5,000 men in the production of this sugar, not estimating
the labor necessary to raise the beets.
We are manufacturing Colorado Portland cement of a quality
superior to the government's tests for cement. The amount produced and used in and outside of the State is about a million dollars
a year, about one-half being exported. This industry employs some
500 men.
In the matter of vegetables, there was shipped from the State
last year 10,000 carloads of potatoes, 8,000 carloads of flour and
2,000 carloads of cabbages and onions. All garden vegetables and
small fruits are grown everywhere in the State, including apples,
peaches, plums, pears and grapes. The superior quality of our
apples particularly is acknowledged in all the markets of the country.
We ship fruit and vegetables by the carload as far north as Canada,
east to the Atlantic, south to the Gulf of Mexico and west to the
Pacific. Our melons are noted for their superior quality, and the
cantaloupes of Rocky Ford are famous throughout the United States
and the western slope is coining forward in equally good melons.
It will be understood by many of you that our success in agriculture and horticulture is due largely to the system of irrigation
that exists throughout the entire State, and it is but in its infancy
at this time. Individual enterprise first made known the great value
of irrigation. The storing up of the vast floods of water coming
down from our mountains in reservoirs upon the plains to be used
throughout the summer demonstrated not only to our people, but to



the government, the enormous value of irrigation; and the government has taken up the matter on broad lines and is establishing
national reservoirs throughout our Western States; and I may tell
those of you who do not know that this is not 'done at the expense
of the taxpayers of the nation, but the States and the owners of
the lands on which the reservoirs are established, so that while the
government makes advances in many instances to enable this work
to be done in unusually dry localities, they will eventually receive
-every dollar advanced for this great purpose. In the near future
•irrigation will make of Colorado an agricultural State equalled by
few and surpassed by none.
I would add a word about our climate, but I feel that it would
,be impossible to lay before those of you who have not spent at least
41. year in Colorado what our climate really is. I can only tell you
a tittle story concerning it. Several years ago a New York banker,
broken down in health, came out to Colorado and after spending some
time here he recovered his health completely. Returning to his home
he was asked at a banquet to respond to the toast, "The West," and
be immediately took up the subject of our climate. After expatiating
at some length on its beauty and healthfulness, his audience became
a little weary and showed signs of impatience, and he said: "Now,
you fellows keep still for a little while, for I tell you the fact is
you can't tell the truth about the climate of Colorado without lying."
Delaware: (No response.)
District of Columbia: (No response.)
Florida: (No response.)
(No response.)
Mr. E. E. Crabtree, of Illinois:
Illinois can always be depended upon in any emergency. Like
the balance of the country, we have passed through one of the most
severe panics that this United States has ever seen. Next to New
York, the panic perhaps fell harder on Chicago than any other city.
When New York shut down, the entire United States, west of the
Alleghenies, made demands on Chicago, and how well Chicago performed her duties need not be related here; it is a matter of
history now.
No failures of banks or mercantile houses of any consequence have
been reported. Our deposits are equal to those of last year. Our
banks are in excellent shape, and while legitimate trade has been
taken care of, there is an inclination to refuse credit to projects
+having the slightest suspicion of speculation.
Agricultural districts have been handicapped by most remarkable
weather. In the early part of the season the rainfall was tremendous;
the farmers were able to do but little planting until after the first
of June. During July, August and September a drought prevailed
from one end of the State to the other, and it has been predicted that
crops would be ruined. The oats crop did turn out poorly. wheat
was fair, and prospects for corn seem to be improving daily, until
it seems to be no question of doubt but that we will have approximately a 60 per cent. yield. Good prices prevail. The farmers are
happy and prosperous, and farm values are very high. We have,
therefore, every reason to look forward to a good winter's business
'with plenty of money.
Our State Bankers* Association is in a thriving condition and
'membership of the A. B. A. has been materially increased since
our last meeting. No bank legislation has been enacted, as it is an
off year with the legislature.
Mr. W. W. Bonner: Indiana for the last two decades has been
-the centre of population of • the United States, and possibly because
of that fact we have more diversified interests than any other State
-in the Union. We raise the corn of the West, the wheat and the
oats of the Northwest, we have the forests of the North, we have
-the manufactures of the East, and we have the blue grass of Kentucky, and with it all I believe we have some of the push and enterprise of the West.
Business conditions with us are very good, and the prospects of
the coming fall and winter are very bright indeed.
Mr. Leo. E. Stevens, cashier Ottumwa National Bank, Ottumwa,
One of Iowa's leading life insurance companies headed by a former
governor of the State has adopted as its slogan, "In all that is
good, Iowa affords the best." Each of us in responding for our
'-State will attempt to outboast our predecessor in the virtues of our
respective Commonwealths. But how many of you know or realize
that Iowa, the Flawkeye State, is one of the really great States of
-the Union? Did von know that she leads all other States in number
•of banks, now having 1,574, with an aggregate capital and surplus
'of over $68,000,000 and deposits of over $300.000.000? This means
Iore banks than post offices, and the convenience of banking facilities
at nearly every crossroad, with a per capita deposit of about $150,
leading, I believe, every other Western State in this respect.
She also has the largest State Banking Association with a membership of over 1,200, and is represented at this meeting by the
largest delegation of any State association. But Iowa is justly noted for her farming lands. An old Iowa farmer was on his death bed
-and though he had never taken time to be much of a religious man,
vthe family called in a minister of the gospel to console him in his
'last hours. Seating himself at the head of the bed he asked the
'dying- man, "Are you prepared for the better land, brother?" The
-old man rallied, lifted his head from the pillow and replied, "Look
there. Mr. Preacher, there ain't any better land than Iowa."
The products of Iowa farms in 1907 reached a value of over
4389,000,000 and the farms themselves, including improvements, mavehinery and live stock thereon aggregated a value in the remarkable
*um of over $2,627,000.000.
Iowa ranks first among the States of the Union in number of acres
•'of improved farm lands; first in value of farm products; first in
maumber and value of hogs; first in acreage of cereals; first in acreage and prodection of oats; first in animals sold and slaughtered; first
Pin farm animals owned, and first in production of butter, eggs and
poultry. She ranks second in value of farm properties, second in
trumber and value of horses owned; second in value of cereals grown;
-ascend in acreage, production and value of corn; second in value of

oats grown, and second in acreage and production of hay, being exceeded in each of these products by Illinois only. The closer proximity of Illinois to the markets gives her an advantage over Iowa
in obtaining better prices and consequently higher values. In all
farm products, Iowa is well toward the head of the list, but she
don't stop at this, she also produces men who do things, as for
example Secretary James Wilson of Agriculture, ex-Secretary Leslie
M. Shaw of the Treasury Department, the lamented Senator William
B. Allison, Senator J. P. Dolliver and numerous others prominent in
the public and business life of our country.
Iowa did not suffer materially from the panic last fall; she does
not fear one this fall. Our crop experts estimate we will this year
produce over three hundred million bushels of corn, worth over
$200,000,000; oats worth $70.000,000, wheat worth $5,000,000, barley
worth $6,000,000, hay worth $60,000,000, butter worth $40,000,000,
poultry and eggs worth $35,000,000, potatoes and small fruits worth
$10,000,000, wool worth $2,000,000, a total in marketable products
from the farms of Iowa of over *428,000,000. In addition her farmers
own horses and mules worth $145,000,000, and cattle, hogs and
sheep worth over $186,000,000, part of which will be marketed this
fall. Her coal mines will produce over seven million tons of coal
worth about $12,000,000 and our 5,000 manufacturing establishments
will market products worth $200,000,000.
Iowa banks are loaded to the guards with idle money; when her
crops are marketed this fall she will, as in the past, have money
to loan to the rest of her neighbors who are not so fortunate. One
Iowa farmer meeting a neighbor friend one day said, "John, I had
a strange dream about you last night. I dreamed of dying and
going to heaven, and walking down one of the beautifully paved
streets in company with an angel guide, saw a heavy post evidently
sunken deep in the pavement and a man fastened to It with a large
chain. Calling my guide's attention to it I asked, 'Isn't that my
old neighbor John Jones?' On receiving an affirmative reply, I asked,
'Why do you keep him chained in such a manner?' The guide replied, 'Well, sir, your friend Jones agrees that this is a pretty nice
place, yet it appears that he is not wholly satisfied, and we fear
if we let him loose he will return to Iowa."
Colorado is much nearer heaven, from point of elevation only, than
Iowa, but we Iowa fellows don't care to change our abode just yet.
I thank you.
Mr. Bailey: Gentlemen, if you should ask to-day, "What is the
matter with Kansas?" the reply from all over our State would be,
"She's all right."
And Kansas is all right, gentlemen. She has $150,000,000 on deposit in her banks; she has splendid crops, and she has fine men
and women. What more could a State have? (Applause.)
Mr. Ford: So far as the State of Kentucky is concerned, gentlemen, business conditions are flourishing. We had no bank failures
until the panic was all over, and then only two concerns went under.
Of course, there was a natural shrinkage of deposits, but that condition has been entirely recovered from now. There was not a
single commercial or industrial failure. To-day Kentucky looks to the
future with faith and hope. (Applause.)
Mr. N. E. North: Louisiana in its products and capabilities agriculturally and otherwise is the most diversified State in the Union.
The hour is too late for me to take up your time with enumerating
all that we raise or might raise in the State, anti I will simply content myself with the statement of the general fact.
The bankers of Louisiana are conservative, progressive men, and
the financial institutions under their management are in a flourishing
Maine: (No response.)
Mr. Edmunds: On behalf of Maryland I wish to say that we are
a coeservative people, and naturally we are so in banking. We not
only did not have any failure during the last panic, but we have
not had more than two or three failures in the State in over sixty
You have heard it said that Boston is the hub of the universe. I
want to tell you that Baltimore is the gastronomic hub of the
United States. We invite you all to come to Baltimore so that
we can prove the fact to you. We will feed you on the finest canvas
back duck, the best crabs you ever tasted and the far-famed diamond
back terrapin. (Applause.)
Massachusetts: (No response.)
Michigan: (No response.)
Minnesota: (No response.)
Mr. T. W. McCoy: Mr. President, members of the American
Bankers' Association, Ladles and Gentlemen:
As vice president for the State of Mississippi, I wish to extend to
every member of this association sincere greetings.
In spite of the made-to-order panic through which we have
passed, I am glad to report that our State is fairly prosperous. We
were perhaps hurt as little as any other section of the country, only
two small bank failures being recorded, and those brought on by
mismanagement rather than from general business conditions. We
had a fine crop with good prices and but for money. conditions which
depressed prices somewhat, would have had a record-breaking year.
Our deposits are about up to normal except in the lumber districts,
where they have declined sharply. We have moderate crops in sight
and with good prices should soon be in a position to send more money
to our friends who keep our reserves, "but under the rules of the
clearing house are not shipping currency."
Let us hope that, with the lessons drawn from the late unpleasantness, the members of this association will stand firmly together for sound and conservative business methods, and work continually for such legislation as will bring about the best results.
Mr. J. F. Farrell, of Missouri:
Mr. Chairman, Members of the American Bankers' Association,
Ladies and Gentlemen:

I am especially pleased to have the privilege of presenting to
such a distinguished body of gentlemen the greetings of Missouri and
Missouri bankers. The Missouri Bankers' Association, with a membership of 1,192 (twenty-two of our members being brokers), out of
a total number of 1,165 banks and trust companies, representing as it
does all but one bank in our State, with a percentage of membership
of 99 9-10, and if you please the largest and best association of all
States in the matter of percentage, extends to the members of the
American Bankers' Association here assembled, individually and collectively, its heartiest good wishes and good cheer. And, Mr. Chairman, it gives me additional pleasure to be able to report that, taking
them as a whole, our banks are highly prosperous and in excellent
condition. Our membership in this, the parent association, is approximately 350, a gain of fifty in the past year. This increase is
due principally to the fact that our worthy secretary, Mr. Farnsworth, was a visitor at our last convention. While we have some
apologies to offer for our small membership in this association, you
have our assurance that this will be largely increased in the next
Missouri, notwithstanding the recent financial disturbances, has
been and still is enjoying much prosperity, and reports we have received from various sections of our State indicate a very prosperous
and successful year. The fact is Missouri is so wonderfully resourceful that it takes more than "a money panic" or ever a Presidential election to put us to the bad.
While it is true there was a general decline in all lines of business
the first months of the year, trade reports for the last few months
are quite favorable. Our crop prospects are excellent, the marketing
of which will have a tendency to stimulate trade and increase
activity in all lines of business. Our financial, manufacturing and
commercial concerns have nothing to complain of considering the
severity of conditions last fall.
In Missouri we produce almost every known commodity in excess
of the amount required for home use, and were we so disposed, we
could live absolutely upon home products. I should like, if we had
the time, to tell you in detail of our vast resources and of our
many industries, and present to you facts and figures which would
verify and justify the claims of we Missourians that we have the
best State in the Union. This we sincerely believe, and being from
Missouri, we will have to be "shown" to the contrary.
l'ermit me again to extend to you on behalf of Missouri and her
bankers our very best wishes, together with a cordial invitation to
come to Missouri and be "shown."
Mr. Ramsey: I come from the State of Montana, the third largest
State in the Union, a State in which 3ou may get into your sleeping
car at night and ride all night and tile next day and still be in the
same State when you wake up the next morning—(laughter)-A Member: What's the matter—a breakdown?
Mr. Ramsey: Well, you see, it is a big State. I simply take this
opportunity of saying, although we are modest up there, that we
have everything and enything that you can find in any other State
in this Union. Our mountain ranges, our plains, and our meadows
are giving forth an abundant harvest, feeding our cattle and horses
and supplying the wants of man in agriculture; and our mining
industry, as you all know, is not excelled by that of any State in
the Union.
Mr. Black: Nebraska sends greetings to this convention. It has a
little over 800 banks, of which 745 are members of the State association. The Stale association is divided into six groups, which hold
annual meetings in the spring. These groups are all well attended,
varying from 100 to 170 at every meeting. About 275 members of our
State association belong to this association. We have a good State
banking law, and through the influence of our State Examining
Board and our State organization Nebraska banks have been so
managed that not one single bank failed during the Mat panic and no
depositor lost a cent.
The prospects in the State are good. We have splendid crops. We
have good deposits, notwithstanding the panic.
And in conclusion, gentlemen, although our State is the home of
one of the candidates for President, Nebraska at its meeting of
bankers last week spoke with no uncertain sound upon the question
of the guarantee of bank deposits, voting against it 3 to /. (Applause.)
Nevada: (No response.)
New Hampshire: (No response.)
New Jersey: (No response.)
New Mexico: (No response.)
Mr. Bradford Rhodes: In bringing greetings from New York to tile
thirty-fourth annual convention of the American Bankers' Association,
it is fitting to present, very briefly, some aspects of banking and business conditions in the Empire State.
General Business Conditions.
From i study of trade statistics it is clearly shown that there is a
gradual improvement in the commercial situation, although the
volume of trade has not expanded in proportion to the growth of
confidence. Resumption of work at manufacturing plants is the
best evidence of prosperity, the number of unemployed steadily
though slowly diminishing. Foreign commerce at the port of New
York for the latest week (September 19 figures) showed a gain of
$2,023,245 in exports and a loss of $1,439,380 in imports. That indicates wholesome conditions and portends large trade balances in our
favor in the near future. International balances are now much more
favorable than a year ago.
To illustrate the 'trend of business activities in New York, a large
Broadway establishment only the other day leased for a term of
years two additional stores adjoining their present premises to be
improved and added to the main store. The head of the concern,
Mr. Edward Hatch, speaking of the lease, said in regard to the
business situation:
"The business outlook is most encouraging. The country has been
passing through a recuperative period. It has been taking a rest
justly due it, from the phenomenal activity which reached its
climax a year or so ago. • • • We are on the verge of the
greatest period of prosperity this country has ever experienced.


Money is a drug. The crops are good, with a big market abroad,
and the Presidential. question is practically settled."
This opinion of the business outlook, in my judgment, harmoniseswith the prevailing sentiment among conservative business men in
the City of New York and throughout the State. Far-seeing merchants.
and business men generally do not believe that because business is
not so good as it was a year ago, or even behind what it was, that
prosperity has gone forever. Wholesalers and jobbers say that there
never was a time when the stocks of merchandise were as low as it
present. Houses that should be carrying stocks of $50,000 are reduced to $10,000, and even lower.
Although economies have been
practiced, consumption has gone on. The purchasing power of thepeople was never greater than it is just now and it must be conceded that the time is ripe for a great expansion in general activity.
Banking Conditions:
Appended is a compilation, from official sources, showing the condition of the national banks, State banks, trust companies and sayings banks in New York City, and also in the State of New York.
The figures, if closely read, clearly indicate the general business
situation, and show what a great height has been reached by each
of the four classes of banks, the grand total amounting to 0,443.579,200 as their resources.
These stupendous figures not only reflect the prosperity in the
State of New York, but to a great extent the general prosperity
throughout the United States. For it is well known that New York
City being the chief financial centre of the United States, much of
the large volume of banking business shown in that city is due to.
the prosperity throughout the entire country. In this connection it
is interesting to note that total resources of all the national banks
In the United States (6,824 in number) July 15, 1908, amounted to
Your attention is especially directed to the comparative statements of national banks, State banks and trust companies submitted
herewith. (I will not read the figures in detail, but will ask that
the tables be printed in the proceedings.)
From August 22, 1907, to July 15, 1908, deposits in the New
York national banks increased $309,000,000. Mark the figures! The
great depository banks in New York met the demands made upon
them during the recent world-wide money panic and they fully merit
the unbounded confidence of their correspondents throughout the
length and breadth of the United States.
On the contrary, from June 4, 1907, to June 17, 1908, the deposits
in State banks decreased over $40,000,000. It is thus shown how
the world money panic which ran its course mainly through December and January, affected these institutions. A larger proportion of
their deposits are local and the effect of the stringency was, therefore, more readily felt. To point out how rapidly this class of
banks have gained since that period, it is seen that from Felfruary
8 to September 12, about seven months, their deposits have gained
over $56,000,000.
Even more instructive is the record of the trust companies. With
aggregate deposits, August 22, 1907, of $1,087,000,000, a comparison
with figures of August 31, 1908, shows a decrease in deposits of only
$12,000,000; while from February 8 (nearest date to close of panic>
to September 12, of the present year, a period of about seven months,
their deposits have increased over $294,000,000.
Particularly interesting from an economic standpoint is the fact
that 2,719,598 people have open accounts in our savings banks, the
total of their savings, July 1, 1908, amounting to $1,378,000,000.
These figures point out more eloquently than words the thrift and intelligent economy of the people. Habitual savers are good citizens.
New York savings banks are provident institutions conducted under
wise general laws. All the earnings after paying necessary expenses
belong to the depositors. Working in their separate fields but toward a common end, the church, the public schools, and the savings
banks develop a trinity of power, promoting righteousness and safeguarding the best interests of the State.
In reviewing the situation generally, I can see no reason to fear
any catastrophe ahead of us. The lessons of the past have brought
to the front strong and conservative management and the business
men of the entire country, North, South, East and West, have
reason to congratulate themselves on the fact that our banking business is in conservative hands.
President Powers: I desire to introduce to the convention as a
gentleman who will also respond from New York, Mr. Clark Williams,
State Banking Superintendent.
Mr. Clark Williams, State Superintendent of Banking, New York:
Mr. President and Gentlemen, I stand before you not as a man connected with any financial institution, and I must rely upon your
courtesy to hear me for a moment. As Superintendent of Banks of
the State of New York I represent $3,517,000,000 of banking power,
equal to 20 per cent. of all the institutions doing a banking business
in the United States. During the last year we passed through a
great financial panic, the general causes of which are familiar to all,
and the storm centre of that panic was in New York City. Thirteen
institutions under our supervision closed their doors—institutions
whose aggregate assets amounted to $125,000,000. These institutions,
gentlemen, were solvent, and, with the exception of two which have
liquidated and have paid all claims against them in full, all have
resumed without a dollar's loss to a single depositor. (Applause.)
I ask you, gentlemen, could a guarantee plan have produced any
more* satisfactory result?
I am here, too, indirectly representing a constituency of three
millions of people, customers of the financial institutions under our
supervision, and when I return home I shall hear from that constituency an expression of sincere gratification to the members of
this convention for the action which you have taken to-day.
Gentlemen, I thank you. (Applause.)
North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas,
Utah and Vermont, each responded through delegates from those
States to the effect that they would forward to the secretary of the
convention statements of the conditions in their various States for
publication in the official proceedings of the convention.
Col. James R. Branch: Mr. President and Gentlemen of the Convention, I feel deeply honored at having been selected by the dele-




gates from my old home to respond to the call of Virginia, a State
so rich in memories, traditions and resources that every man or
woman born within her confines is proud of the heritage of being a
I will not enter into any statistics nor will I attempt the impossible task of portraying her many splendors, past and present, in
a five-minute speech.
She sends you greetings and best wishes for a successful, instructive and effective convention.
Virginia's streams teem with fish, her mountains and valleys with
game, her womb is filled with countless treasures of iron, coal, copper, gold and other minerals yet unborn.
Virginia's prosperity and the growth of her banks in numbers and
assets are steadily mounting upwards, as shown by the reports of her
clearing houses. Her manufactures are on the increase and she is
becoming more prosperous day by day. Within her borders there are
four hundred banks with aggregate capital and surplus of
$41,355,000 and deposits of $120,514,000; of these institutions all of
the most progressive are members of the American Bankers' Association.
The bankers of the Old Dominion want you to know that notwithstanding the hard times through which the country has been passing,
that during the panic of last fall not a single one of her banks
closed its doors nor did Richmond or Norfolk issue any clearing house
certificates, but paid every obligation in cash.
Virginia wants you to know that while the State has always been
In the Democratic column her banks are opposed to paternalism and
the Socialistic idea of government guarantee of bank deposits or
postal savings banks.
She wants you to know that no State within the Union is more
desirous of helping toward the success of the American Bankers'
Association, and that notwithstanding the Civil War and its dire
effects, she yields place to no State for patriotism, love and loyalty
to our honored flag and our great and united country.
Nearly fifty years ago Virginia was the battle ground of the
greatest strife known in history and her men wore the gray; ten
years ago many of these veterans and their sons wore the blue
against a foreign foe. Sectional lines were erased for all time to
come. There is no North, South, East or West, but one common
country in which we all glory--the United States of America. Should
any ambitious nation or combined nations embroil our peaceable
country in war, I can safely promise you that not only Virginia but
all the old Confederate States will send more than their full quota
for the defense of our beloved and common country. (Applause.)
In conclusion may I inject a personal note by individually thanking this great organization for the many courtesies it has shown
me during my thirteen years service as one of its officers, express
my regard and desire for a continued prosperity, and having some
experience, may I coogratulate my successor, Col. Fred. E. Farnsworth, on the admirable way he has fulfilled his duties and for the
splendid report he has made to this convention. (Applause.)
Washington, West Virginia, Wisconsin and Wyoming responded
through delegates from these States to the effect that they would
send a written report to the Secretary for publication in the proceedings.
There was no response from Canada, Cuba, Hawaiian Islands,
Mexico, Porto Rico, or Isle of Pines.
President Powers: Gentlemen, the next.order of business is
the report of the Committee on Nominations, and the Chair
recognizes Mr. Yates, of Omaha, Chairman of the Committee
on Nominations.

Nominations and Elections.
Mr. Henry W. Yates, of Omaha, Nebraska: Mr. President
and Gentlemen of the Convention, I have the honor to present
the following report:
For President: George M. Reynolds, President Continental Bank,
Chicago, Ill.
For Vice-President: Lewis E. Pierson, President Irving National
Bank, New York, N. Y.
For members of the Executive Colncii, as nominated at conventions
of State Associations and certified to this Association by the secretaries of the respective State Associations:
James M. Elliott, President First National Bank, Los Angeles,
Geo. NV. Peltier, Vice-President California National Bank, Sacramento, California.
Fred G. Moffat, Cashier First National Bank, Denver, Colorado.
Alfred Spencer, Jr., President Aetna National Bank, Hartford,
Bion II. Barnett, President Barnett National Bank, Jacksonville,
L. A. Goddard, Vice-President State Bank, Chicago, Ill.
II. A. Chapman, Director Jersey State Bank, Jerseyville, Illinois.
Walter W. Bonner, Cashier Third National Bank, Greensburg, Ind.
Chas. H. McNider, President First National Bank, Mason City, Is.
Charles M. Sawyer, President First National Bank, Norton, Kansas.
Logan C. Murray, President American National Bank, Louisville, Ky.
George NV. Bolton, President Rapdies Bank, Alexandria, La.
James II. Edmunds, Vice-President National Bank of Commerce,
Baltimore, Maryland.
William Livingstone, President Dime Savings Bank, Detroit,
James A, Latta, Vice-President Swedish American National Bank,
Minneapolis, Minn.
T. NV. McCoy, Assistant Cashier First National Bank, Greenville,
DaVid H. Pierson, Cashier Bank of the Manhattan Company, New
York City, N. Y.
Hiram R. Smith, President Bank of Rockville Centre, Rockville
Centre, N. Y.
Luther NV. Mott, Vice-President and Cashier First National Bank.
Oswego, N. Y.
John F. Bruton, President First National Bank, Wilson, North
• C. E. Batcheller, Cashier First National Bank, Fingal, North Dakota.
E. NV. Eixby, Cashier First National Bank, Ironton, Ohio.

F. .T. Woodworth, Vice-President First National Bank, Cleveland,
J. C. Ainsworth, President United States National Bank, Portland,
William A. Law, Vice-President Merchants' National Bank, Phila.
delphia, Pa.
Robert E. Jame3, President Easton Trust Company, Easton, Pa.
W. L. Gorges, Cashier Harrisburg National Bank, Harrisburg, Pa.
A. S. Beymer, Cashier Keystone National Bank, Pittsburg, Pa.
Edwin W. Robertson, President National Loan & Exchange Bank,
Columbia, South Carolina.
J. C. Bassett, President Aberdeen National Bank, Aberdeen, South
John M. Miller, Jr., Vice-President and Cashier First National Bank,
Richmond, Va.
Miles C. Moore, President Baker-Boyer National Bank, Walla Walla.
Robert L. Archer, Cashier West Virginia National Bank, huntington,• NV. Va.
For membrs of the Executive Council from States and Territories
where the membership in the American Association is less than 100,
the total membership aggregating 581 members:
W. V. Cox, President Second National Bank, Washington, D.
L. A. Coate, Vice-President of Bank of Commerce, Boise, Idaho.
Frank Knox, President National Bank of the Republic, Salt Lake
City, Utah.
For member of the Executive Council representing the Trust
Company Section:
Oliver C. Fuller, Chairman Executive Committee, President Wisconsin Trust Company, Milwaukee, Wis.
For member of the Executive Council representing the Savings Bank
Edward L. Robinson, Vice-President Eutaw Savings Bank, Chairman
Executive Committee, Baltimore, Md.
For member of the Executive Council representing the Clearing
House Section:
E. R. Fancier, Chairman of the Executive Committee, Cashier
Union National Bank, Cleveland, Ohio.
For member of the Executive Council representing the American
Institute of Banking:
J. H. Puelicher, Chairman of the Executive Council, Cashier Marshall & Ilsey Bank, Milwaukee, Wis.
For Vice-Presidents of the different States and Territories.
.Alabama: R. P. Anderson, Cashier Selma National Bank, Selma.
Alaska: S. A. Bonnifield, President First National Bank, Fairbanks.
Arizona: A. G. Smith, Cashier Globe National Bank, Globe.
Arkan4as: II. L. Remmel, President Mercantile Trust Company,
Little Rock.
California: Joseph D. Radford, Vice-President ‘German-Americau
Savings Bank, Los Angeles.
Colorado: E. S. Irish, Assistant Cashier Denver National Bank,
Connecticut: B. G. Bryan, Colonial Trust Company, Waterbury.
Delaware: Philip L. Cannon, President First National Bank,
District of Columbia: George W. White, Vice-President Comine'rcial
National Bank, Washington.
Florida: George E. Lewis, Assistant Cashier First National Bank,
Georgia: Rufus II. Brown, Assistant Cashier Georgia Railroad
Bank, Augusta.
Idaho: Frank W. Kettenbach, President Lewiston National Bank,
Illinois: NV. E. Stone, Vice-President and Cashier First National
Bank, l'eoria.
Indiana: Charles E. Bond, Vice President Old National Bank,
Ft. Wayne.
Iowa: A. F. Balch, President Marshalltown State Bank, Marshalltown.
Kansas: NV. J. Bailey, Vice-President Exchange National Bank.
Kentucky: S. Thurston Ballard, Vice-President Louisville National
Banking Company, Louisville.
Louisiana: N. E. North, Cashier First National Bank, Lake Charles.
Maine: E. G. Wyman, Cashier First National Bank, Bangor.
Maryland: Waldo Newcomer, President National Exchange Bank,
NIassitchusctts: Frederick W. Rugg, President National Rockland
Bank of Roxbury, Boston.
Michigan: Dudley E. Walters, President Grand Rapids National
Bank, Grand Rapids.
Minnesota: F. A. Chamberlain, President Security National Bank,
Mississippi: Walter Broach, Assistant Cashier First National
Bank, Meridian.
Missouri: J. C. Schneider, President German-American Bank, St.
Montana: A. J. Davis, President First National Bank, Butte.
Nebraska: S. K. Warrick, Cashier First National Bank, Alliance.
New Hampshire: Frank C. Bates, Director First National Bank,
New Jersey: Dewitt Van Buskirk, Vice-President First National
Bank, Bayonne.
New Mexico: A. M. Turner, Vice-President Sierra County Bank,
Nevada; George S. Nixon, President First National Bank, Winnemucca.
New York: Arthur Kavanagh, Cashier National City Bank, New
North Carolina: W. H. White, Cashier First National Bank, Salisbury.
North Dakota: R. C. Kitten, President First National Bank,
Ohio: Samuel D. Fitton, President First National Bank. Hamilton.
Oklahoma: H. L. Jarboe, Jr., Cashier Oklahoma State Bank, Chickasha.
Oregon: T. G. Hendricks, President First National Bank, Eugene.
Pennsylvania: E. E. Lindemulh, President Clearfield Trust Company, Clearfield.-


Rhode Island: Frank W. Peabody, Cashier Atlantic National Bank,
South Carolina: J. P. Matthews, Cashier Palmetto National Bank,
South Dakota: R. H. Driscoll, Cashier First National Bank, Lead.
Tennessee: J. E. Fox, Cashier First National Bank, Rookwood.
Texas: W. H. Rivers, President Elgin National Bank, Elgin.
Utah: W. N. McCornick, of McCornick & Co., Salt Lake City.
Vermont: Bradley B. Smalley, President Burlington Trust Company,
Virginia: P. M. Pollard, Cashier Petersburg Savings & Insurance
Co., Petersburg.
Washington: Victor A. Roeder, President Bellingham National Bank,
West Virginia: Harry W. Chadduck, Cashier Grafton Banking &
Trust Company, Grafton.
Wisconsin: E. C. Zimmerman, Cashier Marathon County Bank,
Wyoming: T. A. Cosgriff, President First National Bank, Cheyenne.
Cuba: Norman H. Davis, Vice-President The Trust Company at
Cuba, Havana.
Hawaiian Islands: C. C. Kennedy, President First National Bank
of Hilo, Hilo.
Porto Rico: Mr. Mullenhoff, of Mullenhoff & Korber, San Juan.
It was moved and seconded from all parts of the hall that
the report of the Nominating Committee be received with the
thanks of the convention and that the nominees named by it
be approved.
President Powers: Gentlemen, you have heard the motion,
to receive the report of the Nominating Committee and approve of the same, which, of course, means to elect the
gentlemen named. All in favor of the motion will manifest
by saying Aye; opposed, No.
It affords me great pleasure, gentlemen, to announce
Nomielection of the gentlemen as named in the .report of the
nating Committee. (Applause.)
President Powers: Mr. Reynolds: You have been elected
over it durby the American Bankers' Association to preside
ing the coming year and it is with very great personal
that I now give to you this badge of office which distinguishes
you as President. (Applause.)
In doing so permit me to say that I take it off with more
pleasure than I put it on, and I doubt not you will do the
same. (Laughter.)
Sir, you are peculiarly fitted for this position. You have
been the treasurer of this association, you have been Chairman
of its Executive Council, and you have been Vice-President
of the Association. Now you have been elected President, and
I know that no worthier man has ever been selected to take
charge of the destinies of the association. It is with extreme
pleasure that I introduce you to the convention and turn
over the reins of direction to your care—so far as I am concerned relinquishing for all time direction of the affairs of
the association, and thanking the association for the many
courtesies received at its hands and the officers for their
cordial support during the past very successful year. (Applause.)
President-elect Reynolds: First of all, Colonel Powers, permit me to thank you for the personal reference that has been
made concerning myself, which I assure you I appreciate in
the highest degree; and, gentlemen of the American Bankers'
Association, for the honor you have conferred in electing me
President I thank you from the bottom of my heart.
I regard the American Bankers' Association as the greatest
organization of the kind in the world and naturally I have a
very high appreciation of the honor in being its President,
but I hold in much higher appreciation the confidence and
good will which your vote has shown that you have in me.
I have been honored so frequently during the past twelve years
by this association that I feel that if I were possessed of the
heart currency of which we heard yesterday in an amount
sufficient to discharge my obligations, I very much fear that
I would be in danger of being classed with the predatory rich.
The hour is very late, and I shall not detain you with any
further remark; and, instead of an address, I am• going to
tell you a story that the lateness of the hour causes to come
to my mind. A preacher one Sunday morning when addressing his congregation noticed his little boy up in the gallery
dropping green chestnuts with the burrs still on them down on
the heads of some people in the audience, and the minister
nervously motioned to the boy to stop it. The boy whispered
out "Never mind, father, go ahead with your preaching, I'll
keep them awake." (Laughter.)
I am not unmindful of the duties undertaken and responsibilities involved in my aceptance of this office, but I hope
with your co-operation and assistance to do everything that
I can not only to maintain the present high standard of
efficiency of the work of the association, but if possible to
increase it. I hope the members of the association as well
as the officers will each of them in their individual capacity
do all that they can to create the best possible relationships
between the bankers of the country and the masses of the
people, for I believe that we will never come up to the full
measure of our expectation either individually or collectively
ontil we have the utmost sympathy existing between the
people and the bankers. I look to the future with the greatest


confidence. In view of the speeches that I have heard here
this afternoon relating to the condition of business in every
State of the Union, I am almost inclined to believe that we have
had no panic in this country; in any event, it seems that
the effect of the panic has been dissipated, and that now we
are looking towards the future with every confidence that
we know we are again traveling on the road of prosperity with
little if anything to interrupt its progress.
Mr. John L. Hamilton, of Illinois: I have been commissioned by the members of this association to bestow upon our
worthy retiring President the badge of office and with it to
assure him of the association's appreciation of his services
and of the universal courtesy that he has always extended to
every member of it and of his untiring zeal in helping the
various committees in the work they were performing. I assure you, Colonel Powers, that we every one of us appreciate
in the deepest possible sense the services you have rendered
us. (Applause.)

Set of Silver for Retiring President.
Mr. Russell, former President of the association, of Detroit,
Before I undertake the very pleasant duty assigned me by
the association I should like to say one personal word. Ten
years ago the convention of the American Bankers' Association held in this city of Denver conferred upon me the greatest
honor of my life, and I came back to it to-day with no little
inconvenience to myself, to meet the old friends in the place
where so great honor was, as I feel, unworthily thrust upon
me. It has been a source of great delight, and I wish to express my appreciation for what the association did then and
for its kindness to me ever since, and to testify to the great
satisfaction that I have experienced here in the opportunity
of shaking hands with the many friends who have stood by the
association during all these years. (Applause.)
I am assigned by the Executive Council to make a presentation to our retiring President in appreciation of his excellent
services rendered to the association, the able manner in which
he has presided over this convention and his always uniform
courtesy. It is a very great pleasure to me that I have been
given this duty to perform, for if there is any man whom I
esteem and who I believe is a friend of mine it is Colonel
Josh Powers of Kentucky.
Eleven years ago we clasped hands, we looked into each
other's eyes, and we have been the best of friends ever since—
a friendship that will continue through life. .And, gentlemen,
friendship at our age means something. (Applause.) It is
said to be the fruition of love—better than love. I have the
most sincere friendship for Colonel Powers, and I know that
I represent every seat in this hall filled with people; Colonel,
you must imagine that every deelgate is here and that every
one in the association is behind me when I tender to you
this gift as a testimonial of the love and affection that they
bear for you, one and all.
It has been the custom in times past for the Executive
Council to select a punch bowl to give the retiring President,
and that custom I understand was about to be followed when
somebody said, "What is the use of giving a Kentucky gentleman a punch bowl? Possibly he has got one in every room
already." (Laughter and applause.) Then, appreciating the
fact that • the prohibition wave now upon the whole country
might in time reach even Kentucky, something better was
thought of, and it was arranged to present a set of silver.
So even if there is no drink to be portioned out in Kentucky,
these pieces of silver will ever hold the heartiest viands that
the charming hospitality of Colonel Powers has even been
noted for.
We ask and pray that God may give Colonel Powers long
life to sit at the head of the etable, to entertain his friends,
and with his family gathered around him. May he know
and believe that every one in this association knows him
and loves him and thanks him for what he has done and wishes
him. a long life and a happy one. (Applause.)
Retiring President Powers: My dear old friend: You have
awakened in my heart sentiments which I shall not only cherish
always, but which gives me a keenness of appreciation that
could not be made greater or brought closer to my very soul than
does this gift, coming as it does from the hands of George
Russell, of Detroit. True, we have clasped hands and looked
in each other's eyes, and a friendship was there inaugurated
which has ended in the fruition of love that one gallant man
from the great State from which you hail and the great city
that you represent meets and reciprocates from another man
from the old State of Kentucky. I thank you, sir, for what
you have said. I thank you, and the members of this association, for these beautiful tokens of your friendship and respect, and I assure you that they will be carried into my
home and that my children and my grandchildren will ever
look upon them as mementoes testifying to the appreciation
in which their father and grandfather was held by those with
whom he was associated in the American Bankers' Association.
President Reynolds: Mr. Pierson, I take pleasure in welcoming you as the First Vice-President of the association.
(Applause.) Among all the members of the association I know



of no one whom I would prefer to have act as my assistant
during the coming year, and it is a great satisfaction to know
that I am to continue for at least another year to be associated with you. (Applause.)
Vice-President-elect Pierson : Mr. President and Gentlemen.
I will not make a speech; I will simply thank you for the
honor conferred upon me. (Applause.)
President Reynolds: What is the further pleasure of the
Mr. .1. J. Sullivan, of Cleveland, Ohio: As a feeble expression of many courtesies extended to us in this city I desire
to offer the following resolution:
Resolved, That the delegates assembled at this convention do hereby extend our sincere thanks to the citizens of Denver, to the bankers
of Denver. and to the members of the Press for the ideal arrangements made for this convention, for the entertainment and reception of
the visiting bankers and guests and for all courtesies so hospitably
extended; to the telegraph and telephone companies for courtesies
extended; to the railway companies for the efficient transportation
facilities afforded, and to the hotel proprietors for the highly satisfactory accommodations furnished; and also that our thanks be ex-

tended to the distinguished gentlemen who have delivered admirable
and instructive addresses befOre us.
The adoption of the resolution was unanimously seconded
and carried by a rising vote.
President Reynolds: A motion to adjourn will b in order.
On motion the convention adjourned sine dieMEETING OF • THE NEW EXECUTIVE COUNCIL.
A meeting of the new- Executive Council was held at 8:30
P. M. October 1, 1908, at the Brown-Palace Hotel.
F. 0. Watts, President of the First National Bank, of Nashville, Tenn., was elected Chairman for the ensuing year.
Mr. Fred B. Farnsworth, of New York, was re-elected Secretary.
Mr. William G. Fitzwilson, of New York, was re-elected
Assistant Secretary.
Mr. P. C. Kauffman, of Tacoma, Washington, was elected
Mr. Thomas B. Paton, of New York, was elected Counsel
to the Association.
The Council votes to hold the next convention of the association in Chicago, the time to be fixed at the spring meeting
of the Council.
After disposing of routine business the Council adjourned.

The Continental National Bank
Capital, Surplus and Profits, $7,000,000.00

ALEX. ROBERTSON, Vice President
BENJ. S. MAYER, Asst. Cashier

F. H. ELMORE, Asst. Cashier
WILBER .HATTERY, Asst. Cashier
J. R. WASHBURN, Asst. Cashier

13(:)Pt Ft ID C)F' Ell RECTORS


Thirteenth Annual Meeting, Held at Denver, Colo., September Twenty-ninth, 1908.
The Trust Company—A Necessity - - Pages
Radicalism vs. Conservatism - - - - Pages
N. Y. Trust Cos. Under New Legislation Pages
Proper.Control of Trust Securities - Pages
Detailed Proceedings





Addresses of Welcome
Address by President
Report of Secretary
Report of Executive Committee Report of Committee on Protqctive Laws


151 to 152
153 to 154

The Trust Comfrzny—A Necessity.
BY BRECKINRIDGE JONES, President Mississippi Valley Trust Co. of St. Louis.

The trust company and the bank are fundamentally difCo-ordinate branches of finance, each
ferent institutions.
is necessary to meet the varyitig needs of a complex.
developed business community. In the rural district and in
the ordinary town and small city there is no occasion for
a trust company. There must be unusual conditions if it
can thrive there. This is not due to prejudice or want of
experience, but to the fact that the business on which a trust
company must live does not, as a rule, exist there. •
The financial requirements of scattered farmers er small
settlements are generally not sufficient to support even an
incorporated bank. There is not there the volume of business to make large surplus wealth, and life is not so strenuous but that the individual, having money not needed in his
limited business, has the leisure and familiarity with the
needs of his neighbors to enable him to properly lend such
surplus. The natural development is, first, the private lender.
Next, when the volume of business has sufficiently increased
to pay one to give all his time to it, the private banker.
With further development, when the volume has become
large enough and continuity of affairs so important as to
make depositors and borrowers unwilling to take the risks
of complications and delays incident to the death of the private banker and the administration of his estate, then comes
the incorporated bank. It meets all the requirements for
handling the movable wealth; gives lines of credit in proportion to balances; makes small loans; distributes them
among its depositors; makes them on such short time as to
anticipate the demands incident to the change of the seasons.
Individual investors still make the loans on real estate and
such other loans as may not be suited to the bank; or, it may
be, by State law, adjustable to local conditions, has given
limited power to its State banks to make such loans. Relatives or friends, having amPle time, act as executor, administrator. guardian or trustee. There are no corporate
mortgages large enough to require a corporate trustee; or,
if there are, one is sought in some large city, so as to give
credit where there is sufficient surPlus wealth to enable
issues of bonds to be sold or large transactions to be
But when the community has greatly developed, when
there has come a density of population, and an aggregation
of wealth with its diversified requirements and divers classes
of people, and when the race of life has become so swift
that to be successful one must give his undivided attention
to his own affairs, then there comes demand for some other
broader and more elastic financial institution.
History shows this sequence. American restless genius

was put to find a solution. Banks in New York City would
not make loans on real estate to people living outside the
city. Something more than a bank was needed. There was
a suggestion in the Agency houses in India that were such
prime factors in development there.
The New York Legislature in 1822 passed an act incorporating what is now the Farmers' Loan & Trust Company,
one of the purposes being of "accommodating the citizens
of the State residing in the country with loans on the security of the property (which cannot now be done without
great difficulty)." As this company was for the benefit of
the people who did not reside in the city, it became evident,
especially on account of the lack of transportation facilities in those days. that the interests, not only of the people but also of the corporation, would be subserved if it
could also act as their trustee. So in the year the charter
was granted the company was given power to accept and
execute all lawful trusts created by deed or devise—the first
instance in this country where trustee powers were given to
a corporation.
The same problem, that is, that the banks had not broad
enough powers to give full response to the needs of the
communities, was met in some like manner in Pennsylvania.
The Pennsylvania Company for Insuring Lives and Granting Annuities was given power to act as trustee in 1836.
Thus the seed was sown. In response to an economic need
that the banks did not satisfy, it took root, germinated and
produced more and, by development, better of its kind.
Soon the business of insurance, both life and fire,, grew to
such proportions as to require the incorporation of separate companies therefor. But the trust company had made
itself the, exponent in the broad field of corporate agency.
It naturally drew to itself other powers cognate to those
that had brought it into existence.
The wisdom of the fathers left in the States the right to
regulate their internal affairs. The States have had and
should always have their State banks, suited in each State
to the needs of its people and free from dominion of the
Federal Government or any of its agencies.
Yet the marvelous development that followed our independence soon made evident our need for some sort of. a
national or United States Bank. A national currency was
required; and the government found need for an acceptable
fiscal agent. The consumable products of the country had
to be moved from State to State and to foreign countries;
a recognized standard currency was required to facilitate
such exchange; there was a demand for an institution whose
credit was broader than State lines. Establishing a bank



was not 'among the enumerated powers of the Federal Government, but the Supreme Court held that when power is
given to the government there is implied the ordinary means
of execution and the reasonable selection of means, and that
a bank is a convenient, a useful and essential instrument in
the prosecution of the government's fiscal operation. (McCulloch vs. Maryland, 4 Wheat.)
Under this implied power Congress created the first and
second United States Banks and passed the National Bank
Act. None of these banks thus provided for was allowed
to lend on real estate. The acts creating them and their
history pulsate with the idea that their cardinal purpose
was to provide an adequate currency and thereby help public credit and incidentally to facilitate the exchange of
commodities. It was never claimed for either of the United
States banks that they were other than banks of issue,
discount and deposit. Their operations were jealously
watched and strictly confined to their charter powers.
To appreciate the necessity for a more flexible institution, one more easily adapted to local conditions, such as
the modern trust company, it clear comprehension of the
limitations placed by law on national banks is essential.
In 1862 President Lincoln, in his message recommending
the National Bank Act, gave the fundamental reason therefor that a safe and uniform currency could at once protect labor against the evils of a vicious currency and facilitate commerce by cheap and safe exchanges.
The act as passed has been repeatedly construed. That
you may have the line of thought clearly before you, I
quote from one decision quite at length, even at the risk
of being tiresome. A great court in a leading case repeatedly
cited with approval by the United States courts has said:
(Weckler vs. First National Bank, 42 Maryland 581.)
"So far as the purpose of the law is indicated by its title,
it is, 'to provide a national currency secured by a pledge
of United States bonds, and to provide for the circulation
and redemption thereof.' After prescribing in previous sections the mode by and the conditions under which banking associations may be formed, the 8th section declares
that every association so formed shall become a body corporate from the date of its certificate of organization, but
shall transact no business 'except such as may be incidental
to its organization, until authorized by the Comptroller of
the Currency to commence the business of banking.' Power
is then given to adopt a corporate seal, to have succession by
the name designated in its organization certificate, and in
that name to make contracts and sue and be sued, to elect
directors and other officers, 'and exercise under this act all
such incidental powers as shall be necessary to carry OD
the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences
of debt, by receiving deposits, by buying and selling exchange, coin and bullion, by loaning money on personal security, and by obtaining, issuing and circulating notes according to the provisions of this act.' This is the only portion of the statute to which, for the purpose of this case,
it is necessary to refer. By it the associations are not
simply incorporated as 'banks, and the scope of their corporate business left wholly to implication, but the kind of
banking which they can conduct is limited and defined. As
we read the language of this 8th section, it authorizes the
associations to carry on banking 'by discounting and negotiating promissory notes,' etc., and to exercise 'all such
incidental powers' as shall be necessary to conduct that
business. The mode in which the incidental powers may be
exercised is not defined, but all incidental powers which
they can exercise must be necessary or incidental to the
business of banking thus limited and defined. To the usual
attributes of banking, consisting of the right to issue notes
for circulation, to discount commercial paper and receive
deposits, this law adds the special power to buy and sell
exchange, coin and bullion, but we look in vain for any
grant of power to engage in the business charged in this declaration. It is not embraced in the power to 'discount and
negotiate' promissory notes, drafts, bills of exchange and
other evidences of debt. The ordinary meaning of the terms

'to discount' is to take interest in advance, and in banking
is a mode of loaning money. It is the advance money not
due till some future period, less the interest which would
be due thereon when payable. The power 'to negotiate'
a bill or note is the power to indorse and deliver it to
another so that the right of action thereon shall pass to
the indorsee or holder. No construction can be given to•
these terms as used in this statute so broad as to comprehend the authority or sell bonds for third parties on commission, or engage in business of that character. The appropriate place for the grant of such a power would be in
the clause conferring authority to 'buy and sell,' but we
find that limited to specific things, among which bonds are
not mentioned, and upon the maxim, expressio unius est
exclusio alterius, and in view of the rule of interpretation
of corporate powers before stated, the carrying on of such
a business is prohibited to these associations. Nor can we
perceive it is anywise necessary to the purpose of their existence, or in any sense incidental to the business they are
empowered to conduct, that they should become bondbrokers
or be allowed to traffic in every species of obligations issued
by the innumerable corporations, private and municipal,
of the country. The more carefully they confine themselves
to the legitimate business of banking as defined in this law,
the more effectually will they subserve the purposes of their
creation. By a strict adherence to that, they will best accommodate the commercial community, as well as protect
their shareholders.
"Such is our construction of this statute, and it is supported by the best considered authorities and the decided
preponderance of judicial opinion in other States.. This
eighth section is almost identical in terms (and as respects
the present question completely so), with the Banking Act
of New York, of 1838, ch. 260, and the Court of Appeals
of that State, in Talmage vs. Pell, 3 Seld. 28, held that
banking associations formed under the law have authority
only to carry on the business of banking in the manner and
with the powers specified in the act, and have no power to
purchase State stocks, to sell at a profit or as a means of
raising money, except when received as security for a loan,
or taken in payment of a loan or debt. In speaking of the
transaction under review in that case, that court says the
banking company 'purchased these bonds as they might
have purchased a cargo of cotton to send to market to be
sold at the risk of the vendor for the highest price that
could be obtained. No authority to traffic in either commodity is expressly given by the law of 1838. It is, therefore, claimed as a power incident to business of banking.
But the 18th section of the act declares that this business
shall be carried on by discounting bills, notes and other
evidences of debt, by loaning money on real and personal
security, by buying and selling gold and silver bullion, foreign coins and bills of exchange, etc. The subjects pertaining to the business of banking are designated, and the express powers of the association are limited to them, and to
such incidental powers as may be necessary to transact the
business thus defined by the' legislature.'"







In the leading case that was decided by the United States
Supreme Court a national bank sought to evade responsibility on a contract by pleading that its purchase of some
bonds of a municipal corporation issued in aid of a railroad
was beyond its corporate power. Its contention seems to
have been admitted as "too clear to admit of dispute."
(Logan County National Bank vs. Townsend, 139 U. S. 67.)
In Farmers' & Merchants' National Bank vs. Smith, 77
Fed. Rep. 129, Judge Thayer, who rendered the opinion,
"Concerning the power of the defendant bank to engage
In the business of selling mortgage bonds on commission, little
need be said, because it does not seem to be claimed that such
a power could be lawfully exercised by the bank. The brokerage business is entirely distinct from the business of banking
which it was authorized to transact. If a national bank can

lawfully act as broker in selling farm mortgages for a commission, no reason is perceived why it may not act in the same
capacity in selling any other species of property, real or personal. The national bank act does not in terms or by necessary implication authorize national banks to act as brokers in
negotiating the sale of securities, and it is generally agreed
that they cannot lawfully engage in such business. (Weekler
vs. Bank, 42 Md. 581; Wiley vs. Bank, 47 Vt. 546; First National Bank of Lyons, vs. Ocean National Bank, 60 N. Y. 278;
Talmage vs. Pell, 7 N. Y. 328.)"

As to what further power for investment in bonds has
been granted in late legislation (such as the Vreeland Bill)
and what effect this legislation has had on the charters of
the banks, there is still some doubt, as the courts have not
been called upon to pass on this question; but certainly any
power so granted would be strictly construed.

In First National Bank of Charlotte vs. National Exchange Bank of Baltimore, 92 U. S. 122, after discussing
the incidental power clause, the court said:
"Dealing in stocks is not expressly prohibited, but such a
prohibition is implied from the failure to grant the power.
In the honest exercise of the power to compromise a doubtful
debt owing to a bank, it can hardly be doubted that stocks may
be accepted in payment and satisfaction with a view to their
subsequent sale or conversion into money so as to make good
or reduce an anticipated loss. Such a transaction would not
amount to a dealing in stocks."

In Schofield vs. Goodrich Bros. Banking Co., 98 Fed.
Rep. 271, the court said:
"Each of these courts (U. S. and Nebraska) has held that
the purchase of stock of another corporation as an investment, and not as security or in payment of a debt, by a corporation simply empowered to transact a banking business
is beyond its powers and void, and that since such a purchase
is ultra vires and void it cannot be made or validated by estoppel. Bank vs. Kennedy, 167 U. S. 362, 366, 371; 17 Sup. Ct.
831; Bank vs. Hart, 37 Neb. 197, 201, 206; 55 N. W. 631."

Up till 1876 the courts uniformly held that a national
bank could not take a note secured by real estate and foreclose the mortgage upon default of the note. But in that
year the United States Supreme Court held (Mathews vs.
Skinker, 98 U. S. 621), that as between the parties the
contract should hold good even though the bank acted ultra
vires in making the loan and that the objection could only
be reached by the government. (National Bank vs. Whitney, 103 U. S. 99, and Fortier vs. New Orleans National
Bank, 112 U. S. 430.)

In Commercial National Bank, et at., vs. Pine, et at., 82
Fed. Rep. 799, Judge Thayer, who rendered the opinion,
"The act of Congress under which the bank was organized
confers no authority upon national banks to guaranty payment
of debts contracted by third parties, and acts of that nature
whether performed by the cashier of his own motion or by
direction of the board of directors are necessarily ultra vire&
The national bank may endorse or guaranty the payment of
commercial paper which it holds when it rediscounts or disposes
of same in the ordinary course of business. Such power it
seems the national bank may exercise as incident to the express authority conferred on such banks by the national bank
act to discount and negotiate promissory notes, drafts, bills of
exchange and other evidences of debt. (People's Bank vs.
National Bank, 101 U. S. 181, 183; U. S. National Bank vs.
First National Bank, 49 U. S. App. 67; 24 C. C. A. 507 and 79
Fed. Rep 296); but it has never been supposed that the board
of directors of a national bank can bind it by contracts of
suretyship or guaranty, which are made for the sole benefit
and advantage of others. The national bank act confers no
such authority in express terms or by fair implication, and the
exercise of such power by such corporations would be detrimental to the interests of depositors, stockholders and the
public generally. Norton vs. Bank, 61 N. II. 589; State National Bank of St. Joseph vs. Newton National Bank, 32 U. S.
App. 52, 58; 14 C. C. A. 61, 04; and 66 Fed. Rep. 691, 694;
Bank vs. Smith, 40 U. S. App. 090; 23 C. C. A. 80, and 77
Fed. Rep. 129." See Bowen vs. Needles National Bank, 87
Fed. Rep. 430; Seeber vs. Commercial N. B. of Ogden, 77 Fed.
Rep. 057.



In First National Bank of Lyons vs. Ocean National
Bank, 60 N. Y., 278, in arguing as to the extent of the
implied power of a bank, the court said:
"It does not necessarily include the business of a safe-deposit company or business of safe-keeping and storage for hire
or without compensation jewelry and valuables or property of
any kind."

In Pratt's Digest of the National Banking Law, there is
the following:
"The Comptroller of the Currency holds that while there
is no provision of the statute authorizing national banks to
invest considerable sums in the building of safe deposit vaults
for the purpose of making that a prominent feature of their
business, yet the investment of a moderate amount for such
purpose in cities where companies cannot be properly organized for the sole purpose of conducting this line of business is
not open to criticism. The comptroller holds that the matter
is one largely in the discretion of the directors of the bank."

As the statutes of the various States seem to contemplate
the running of the safe deposit business as a distinct power.
expressly given to trust companies or safe deposit companies, it is submitted that running a safe deposit business
is not a banking function.
Congress has recognized this distinction. This is shown
by the express powers it has given trust companies in the
District of Columbia to do a safe deposit business. Acting
as transfer agent and registrar stand in same category.
"It has been held by the highest courts of Maryland (Lazear vs. National Union Bank of Baltimore, 53. Md. 78),
and Minnesota (First National Bank of Rochester vs. Pierson, 24 Minn. 140), that a national bank has no power to
purchase commercial paper, or acquire any title to such
paper by purchase, made admittedly not in the way of discount, or by lending money on the credit of it. * * *
The contrary has been held by the Supreme Court of Ohio
(Smith vs. Exchange National Bank of Pittsburgh, 26 Ohio
St. 141.) * * * This view seems to be much preferable
to that taken in the Maryland and Minnesota cases, in
which the construction placed upon the law appears to be
very narrow." Pratts' Digest of National Banking Laws,
pages 10 and 11.
It is strange to note that practically all of the cases interpreting the incidental powers clause have come up at
the instance of national banks themselves. It seems implied
powers have been assumed and nothing said so long as such
assumption resulted in profit, but as soon as it brought
liability there has been an effort to escape by pleading
ultra vire& The National Bank Act provides that if the'
directors shall knowingly violate or knowingly permit any of
the officers, agents or servants of any bank to violate any
of .the provisions of the act, the comptroller is to proceed
in court to close the bank. No case, so far as I have been
able to find, has been brought by the comptroller in the
courts as provided by the act.
It is likely the comptrollers have exercised a restraining
influence outside the courts, but it seems there has been
some disposition to let the assumption of 'powers adjust
itself, and the laxity in this regard was the less to be expected, since in such a large class of cases the question of
excessive power could be raised only by the government.
The courts have not hesitated in specific instances drawn
to their attention to hold national banks closely within their
corporate powers. Not only the courts, but also publicists
generally have asserted that it is wholesome public policy
to restrict the operations of corporations to their charter
rights. The course of the Interstate Commerce Commission
along this line is publicly recognized and commended. The
leading political parties vie with each other in the assertion
of the policy of so checking corporations and trying to
keep them "bridle-wise." But if the much advocated policy
of having the Federal Government license and take control
of the great industrial corporations should be enacted into
a law and the lethargy of the government in restraining national banks followed as to such industrial corporations,
the law might be a great engine moving towards centralization and possibly not afford the restraint anticipated by



its advocates. The decisions referred to make no new law.
They embody but the application of principles well known
when the National Bank Act was enacted. But the marvelous development of this country created a demand in financial lines for corporate agencies that could keep step with
the complexity of progress.
The enormous multiplidation of -government securities
during the Civil War, and the fast increase of railroad and
other corporation bonds shortly thereafter, when coupled
with the lawlessness following the war, made a demand for
safe-deposit companies. Corporate trustees were required
for corporate mortgages. There was called for a corporate
agency to transfer and register securities. New issues of
securities had to be underwritten and syndicates of various kinds had to be formed. So diverse, intricate,
complex and voluminous were these matters that the private banking houses, the ordinary agencies in matters of
thits kind, were put to their wits' ends. In the many emergencies bank officers, government officials and the public
winked at the exercise of many unauthorized powers by
the national banks. Many practices begun with excuse were
-continual without excuse.
In the twenty-second annual issue of the Directory of
Transfer Offices of Railroad, Mining Stock and Miscellane•ous Securities in the United States and Canada, published
in New York, I find national banks given as transfer agents
•of twenty-one companies which have an aggregate capital
stock of nearly five hundred million dollars. Poor's Manual shows' that national banks are registrars of stock of
•over seventy-five corporations, among which are some of
the largest in the United States. In the vast aggregate of
transfers in these active stocks during the year there cerlainly would be extensive liability if the work of transfer
and registration were negligently done. There are also
instances where national banks have been made trustees in
corporation mortgages.
Over and again national banks have acted as agents and
depositaries for the safe keeping and exchange of securities in matters of consolidation and reorganization of corporations and as such have had outstanding hundreds of
millions of dollars worth of receipts and interim certifi-cates.
There are instances where national banks have become
subscribers to syndicate purchases and underwritings of
stocks and bonds of railroad and other corporations. I
have seen a list of the subscribers in such a matter where
the subscription of one national bank was for an amount
equal to its capital stock. There is an instance too well
known to be specified where a national bank is generally reputed not to solicit or care for ordinary commercial accounts,
and where its published statement shows that the aggregate
of stocks and bonds owned other than government is in excess of its capital and surplus and in excess of its bills
In mentioning these matters it is material to have in
mind the following provision of the National- Bank Act and
consider whether it was intended that a national bank should
incur liabilities of the character mentioned.
Section 5202: "No association shall at any time be indebted,
or in any way liable, to an amount exceeding the amount
of its capital stock at such time actually paid in and remaining
undiminished by losses or otherwise, except on account of demands of the nature following:
"First: Notes of circulation.
"Second: Moneys deposited with or collected by the association.
"Third: Bills of exchange or drafts drawn against money actually on deposit to the credit of the association, or due thereto.
"Fourth: Liabilities to the stockholders of the association
for dividends and reserve profits."

In these halcyon days of grace when almost in letters of
fire we see the irritation caused by corporations which are
said to be "breaking the law," when some public officials
are trying to make themselves the incarnation of law enforcement, when a public official of high degree is pilloried
by another of higher degree because he lets a corporation
commit an act said to be "without authority of law" and
when another public officer of commanding position is pro-

scribed from a great political party because he has accepted
employment from a corporation that it is said "breaks the
law," is it not wise and prudent to review our course and
see if our financial institutions, however honest and honorable they may be, licensed by and under immediate government control, have not drifted into practices which are
termed by authority as "without color of law."
It is submitted that, under the principles and provisions
as set out above, the national bank has no power to have a
separate safe deposit department and run it as a business;
has no power to act as transfer agent or registrar of
stocks; no power to act as trustee under a corporate mortgage; no power to own stocks of any kind unless taken for
debt; no power to buy or sell other than government bonds
generally or on commission; and that if a loss should occur by reason of its doing either of these unauthorized things
and the bank should be sued by one who had incurred loss
thereby, the bank could successfully plead ultra vires. That
national banks have not these general trustee powers was
generally recognized during the agitation of the financial
question in the last Congress. Congressman Vreeland, one
of the authors of the Aldrich-Vreeland Compromise Currency Bill, has said:
"I do not think it would be to the advantage of the national
banking system to enlarge the field of its. operations along the
lines above indicated (performing the functions of trust companies.) It seems to me that the more closely national banks
continue their business along truly commercial lines, the
stronger and more successful they will be." (See Trust Companies Magazine, June, 1008, page 301.)

The limitations of national banks being thus defined, it
was evident that they could respond only partially to the
broader needs of the country.
These limitations have been set out at length because the
national banks are the extensive and typical banking institutions; but the limitations that are set out as to them in
principle apply to State banks and saving banks. A proposition that seems to be generally conceded is that the bank,
of whatever character, is limited to the exercise of banking
The savings banks in many States were powerful auxiliaries, but they were pure banks of deposit, closely restricted
by law and existed only in a minority of the States.
The State banks ceased to be banks of issue, coincident.
with the rise of the national banks, and in most States were
pure banks of deposit and discount, with the right to lend
on real estate.
No agency or trustee powerswere given any of these institutions, and these powers in the trust company brought related and incidental powers and appealed to that large part
of the public whose needs were not met by the other institutions. The broad powers of trust companies are too well
known to require reciting here, and could not be discussed
in detail here without unduly adding to the strength of this
paper. The public does not do business with the trust company as with the public administrator, sheriff or designated
public depository because the law forces them so to do,
but because as free citizens they do business where their interests are best subserved.

Every developing country needs different classes of financial institutions. Trust companies are in nearly all of
the United States; in the District of Columbia by special
act of Congress; in Porto Rico, Cuba, Hawaii and the
Philippines; in Mexico and South Africa; the Argentine
Republic and throughout Australia and Canada. The unity
of a financial system with agencies of varied powers is well
illustrated by the wide-awake, up-to-date Japanese. The
Bank of Japan aims at re-discounting commercial bills; the
Yokohama Specie Bank at supplying funds needed for foreign trade: the Hypothec Bank at advancing funds against
security of real estate conductive to agricultural development, while the Industrial Bank of - Japan is modeled after
and has practically the same powers as the modern trust
company in America. While there are no trust companies
as such in various European countries, in each of them


there are institutions that practically correspond to our savings banks and State banks, and notably in Germany and
France there are numbers of large institutions that perform
agency and investment functions analogous to those of the
American trust company. Variety in the units that make
up the financial system is everywhere illustrated.
That the trust companies were needed is shown by their
growth in number and resources. The record is:

Trust Companies in United States.
35 •
$ 122,000,000
(Deposits, 1908)

Not included in these figures are the hundreds of millions
of dollars of assets of trust estates held in trust by the
trust companies. No effort will be made here to state the
variety and volume of the well-known intricate and valuable
services rendered by trust companies. Suffice it to say that
they have increased generally in the same proportion as
have the deposits.
That this growth has not interfered with the progress of
the banks, but has contributed thereto, by aiding in the general development of the country is shown by the increasing
business of each class of banks.
(Taken from Report of Comptroller of Currency.)
National Banks.
State Banks.
Not given
Savings Banks.


$ 501,407,586


Now, what as to the stability of trust companies? Does
their history vindicate the wisdom of the statutory provisions and legal safeguards under which they exist in the
several States? Trust companies are most numerous in
New York, where they have flourished for more than a third
of a century and where their aggregate resources are more
than one and one-quarter billion of dollars, and yet in the
history of trust companies in that State the official reports
show that every deposit liability and every liability to a
trust estate has been met dollar for dollar. No other class

of institutions can make such a showing. The record is
superb almost everywhere. There are more than one-third
as many trust companies as national banks. The deposits
of the trust companies are about six-sevenths those of the
national banks. "Out of 1,723 total banking failures in the
United States within the last fifteen years, the national
banks contributed 341, State banks 524, private banks 631,
saving banks 158 and trust companies only 69. This includes
the suspensions of the past year and brings the figures of
banking mortality up to December 31, 1907." (Trust Con34-panies Magazine, January, 1908, page 7.)
When the panic of last fall began in New York with the
discovery of machinations on the part of some owners of'
a chain of banks, popular anxiety soon extended to a number of trust companies. It is interesting to note that of the
amount advanced by other institutions (in the main, trust
companies) to help trust companies then under a run, every
dollar has been repaid and every trust company in New York
that suspended within the last year has either resumed or
been absorbed, with a settlement in full of all its liabilities.
How quickly trust companies there, where the fire was
hottest, have recovered from the panic and how solid they
are in public confidence is shown by the following statement of high and low deposits of New York City and New
York State trust companies during 1907 and 1908:

Greater New York
State of New York

Dec. 19th.


Greater New York
State of New York

June 4th.

Feb. 8th.

July 25th.

Throughout the United States during the last year there
were twenty-seven trust companies suspended payment and
nine of these have resumed, three have been absorbed and
fifteen are in liquidation. Outside of the losses incident to.
the failure of two trust companies—one the California Safe
Deposit & Trust Company of San Francisco and the other
the New England Trust Company of Providence, R. I.,
both of which were looted by officers who are now in prison,
—it is estimated that the losses to depositors of failed trust
companies in the last panic will not aggregate $400,000,.
and this is practically covered by stockholders' liability.
Such is the record of over 2,200 companies having aggregate resources of over four and one-half billions of dollars.
Such are our financial institutions. All are susceptible
doubtless of improvement, but useful, stable, conservative,
responsive to the business needs of our great country as
they have arisen. They show by their respective growth,
under the voluntary patronage of the people, that each
class is a logical and necessary part of our vast and intricate financial system, in which all of the parts should work
in harmony, and be conserved and not condemned by every
enlightened and patriotic citizen.

Radicalism vs. Conservatism.
BY CoL. F. H. FRIES, President of the Wachovia Loan & Trust Co. of Winston-Salem, N. C.
Mr. Chairman and Gentlemen of the Trust Company Section, Ladies and Gentlemen:
Four years ago, when the American Bankers' Association met in the City of New York,. it was my privilege and
pleasure to respond to the call of the Executive Committee
of the Trust Company Section and to present on that occasion a few thoughts on the subject of "Conservatism."
Trust companies were being rapidly organized at that time
all over the country and the liberal powers granted to
them in their charters were being abused by so tnany that
it became a matter of serious concern lest the business and
name of the "Trust Company" might suffer in consequence.
For that reason "Conservatism" was the keynote of that

session and has since been the prevailing sentiment of
many of the leaders who have spoken and written on trust
company Matters.
The influence of this conservative force has undoubtedly
been felt, the efforts put forth to unify and strengthen.
the trust companies have unquestionably borne good fruit,
and the recent panic has impressed lessons that otherwisewould have gone unheeded.
The panic of 1907 was peculiar in that the storm center
of it was where the largest and strongest timber of the '
financial forest stood thickest, and trust companies located
there were twisted and torn, in common with National
and State banks, and several of them fell, leaving un-



doubted proof of the fact that trust companies as well as
other financial institutions are not exempt from the evil
effects of extravagant ideas and distended credits that
usually precede these seasons of disturbance. It is, however, a matter of mutual and universal congratulation that
so few causalties occurred and that already, within a year's
time, the trust companies of our country are enjoying many
evidences of returning prosperity, in increased deposits and
growing business; this is evidence unmistakable of how
surely they command the confidence of the public and how
deservedly popular they have become.
The Trust Company Section has wrought many changes
since 1904; through its efforts many States have adopted
uniform laws protecting the name "Trust Company," and a
clearer idea as to its proper and peculiar field seems to
be gaining ground; the management of the affairs of this
section has much cause to be encouraged, if not completely
satisfied, with the progress it has made. There is still
work to be done that internal evils may in time be surely
and completely corrected, and continued and persistent
effort should be made toward this end.
There are, however, grave dangers looming up upon our
horizon that bear evidences of an approaching storm, that
may be quite beyond our control and that may swamp the
very best of our institutions, unless its fury is abated
before it strikes; these dangers should also command our
serious attention; and our best thought and endeavor should
now be turned in that direction to ward off the impending
The gravity of these dangers arises from the fact that
an unenlightened public is largely influenced if not controlled, by active and energetic politicians, who are either
themselves deceived, or who are seeking their own advantage regardless of the consequence. Under their fostering
care there has in recent years developed a political mania,
imbued with the prevailing idea that any and all evils, real
and imaginary, in which the public may be interested, can
be corrected by legislation.
It is a well defined mental and nervous disorder that
threatens in its development all corporate interests,
especially those of a quasi-public nature, and in its last
and most recent form it involves the interest and may be
the very existence of many trust companies.
The gravest danger lies in the present tendency of this
mania, which seeks to manage and control the financial
institutions of the country, principally because it has
found no more fertile field in which to develop than the
one of putting the Government into banking business for
the supposed good of the people. For the want of a better
name we designate it "radicalism," meaning thereby the
embodiment of these radical ideas concerning financial matters, that have been advanced by politicians and that are
now presented to the people. The tendency of this "radicalism" is to nationalize all financial institutions and blot out
altogether State institutions, such as State banks, savings
banks and trust companies.
Allow me to call your attention to some provisions of
certain prominent bills recently introduced by members of
Congress, that seek to give to National banks all trust
company privileges, that would have the deposits of all
National banks guaranteed by the United States Government and the one that would put the United States Government directly into the banking business, through a
postal savings bank.
It does not require a very careful or far-reaching analysis
to reveal the end of all this, if it is permitted to become
a part of the law of the land. The danger is great to all
banks, but it is most imminent to the State banks and
trust companies, that have much to lose and nothing to
gain by these proposed measures, and yet some of the
officers of these same banks and trust companies do not
seem to apprehend the danger that threatens them and
even make light of it in public print.
The seriousness of the situation becomes more apparent
when one studies the platforms of the two strongest political parties that together control National legislation; they

are not very different, at least not so widely different that
these parties cannot agree upon a measure if they choose
to do so; one of these parties declares for a postal savings
bank which has been recommended by the President and
his Postmaster General, while the other party declares
for a guaranty of bank deposits, and if that is not possible,
then for a postal savings bank. The two parties can carry
these measures if they will, and being thus pledged they
are far toward doing so.
The postal savings bank is perhaps of more concern to
the Savings Bank Section than to this, and yet a majority
of the trust companies represented here to-day no doubt
carry savings fund accounts and interest bearing deposits
that represent a majority of their business; it is proper,
therefore, to consider the bearing of this measure upon
trust company interest. These savings fund accounts represent largely the savings of communities in which the
institutions are located and most or all of these accumulated savings in the hands of such institutions are invested in these localities, and are instrumental in building
up and advancing the interests of the towns and sections
of country in which they are situated. If carefully loaned
there investments are quite as safe and far more beneficial
to these communities than if collected by the postmaster
and sent away to be invested by the Postmaster General
or other Government official, in some Government, State
or municipal bonds of the more populous sections of the
country. If this is not done, it is proposed to take the
moneys gathered in the Postal savings bank and deposit
them in the nearest United States depositary or some
National bank to be designated by the PostmaAter General,
such deposits to bear two or two and one-half per cent.
interest. The practical result of this will be that each
postal money order office will become an agency for gathering deposits at all hours that these offices are open, in some
cases as late as nine o'clock P. M., for the benefit of the
nearest United States depositary or designated National
bank. This would certainly be directly to the detriment of
the agricultural and thinly settled sections that would lose
these deposits, it would weaken the banks already there
and make it harder to organize others that would be of
special advantage to the immediate section. These deposits, too, would only yield to the depositor 2 per cent.
or 21 2 per cent. interest, which would be a direct loss to the
people because higher rates would be obtainable from other
banks that are or might be organized there.
It is claimed that postal savings banks are needed to
cultivate a spirit of economy and thrift among the people.
What are the statistics in regard to this? The savings
bank deposits in the United States aggregate the sum of
$3,480,000,000, an amount equal to one-third the savings
bank deposits of the entire world, and the average deposit
is 50 per cent. larger than in any other country. The deposits here average $41.00 per capita of our population
against $11.00 per capita in Canada and $23.00 in Great
Britain. If these deposits should go into the Postal savings
banks at the proposed rate of interest, the loss to the savings bank depositors alone would be $34,800,000 per annum
and the loss to other depositors still greater. There is no
real demand for this Postal savings bank on the part of
the people, and no real need of it.
The fear is also correctly expressed, that this would lead
the Government directly into a general banking business.
The guaranteeing of bank deposits by the Government
with a tax on these deposits, or on the capital of the banks,
to create a fund for the reimbursement of losses to depositors is the most insidious of these radical ideas yet
proposed. It is not a new idea, and where it has been tried
in this country it has failed. It does not seem to harmonize with the ideas of a democratic form of government
such as ours has heretofore been; more than that, it is
bad for the Government to attempt to guarantee deposits
of one set of 'financial institutions to the detriment of
others, and that, too, by a tax that takes from the prosperous and conservative to make good the losses of the incompetent and speculative, or for the Government to as-

sume the losses itself in the effort to care for the people,
who should care for themselves, and who would do so to
their greater good if left alone. This idea, if carried out,
is paternalism indeed.
This fund is called a guaranty fund, and the idea is
prevalent that the Government stands for all bank losses.
This is not so; it is not a guaranty fund,at all; it is simply
a segregation of a certain per cent. of each bank's assets
into a common fund against which the losses are charged,
if the fund holds out and the losses are paid; if it is insufficient, as was the case in the panic of 1837, when the
plan was tried in New York State, the losses are not paid;
there is no guaranty about it. Recognizing this fact, it is
called by some insurance of bank deposits and the broad
argument is made, that as such it protects the banks and
the depositors as in the case of other insurance. It is not
insurance either. When a person in any line of business is
unwilling to carry all the risk incident to that business,
he pays some responsible company a premium, and this
company, in consideration of that premium, contracts to
pay back certain losses under certain conditions. This
protection is available now to all bank depositors if they
choose to avail themselves of it. Insurance is a matter of
contract based upon well known and yet definite rules,
where the protection is purchased and paid for or jointly
assumed under a voluntary and fixed agreement.
The guaranty plan proposed is quite different; there
each bank is taxed according to its capital or deposits, and
this fund thus gathered is subject to the losses, without
reference to the risk or hazard that one institution may
incur over against another. There is no contract or agreement, neither is there any possibility of adjusting losses;
the strong hand of the Government takes from the tills of
one class of institutions and gives to another without any
just consideration. This is not insurance; it would be
much more appropriately described by some other name,
that would equally describe some of the practices of the
Baron Knights of the Middle Ages.
The argument is advanced in defence of this guaranty
plan that note holders and depositors of the bank stand
upon the same footing and they should be equally protected; that if the Government guarantees the one it could
with propriety guarantee the other, and that if a guaranty
fund can be legitimately gathered by taxation in one case
it can be in the other. There is really a wide difference
between the two as will appear when it is considered that
the banks are not compelled to take out circulation unless
they elect to do so, and they thus willingly assume to pay
the tax on this circulation, which goes to make up the
guaranty fund for this purpose; on the contrary, National
bank notes are made a part of our circulating medium,
they become practically a legal tender for the payment of
debts, and the public so receives them. There is in this
instance practically no alternative on the part of the holder;
he receives them as a circulating medium from any and
every National bank that issues them, but it is left optional
with the bank whether it will issue notes or not, and to
what amount. In the case of the bank depositor it is
quite different; there the depositor or holder of the certificate need not deposit if he chooses not to do so; in fact,
he deposits where he pleases or changes his deposit as he
likes without restraint or compulsion, while the bank under
the proposed measure would be taxed for a guaranty fund
whether it wills it or not, and that, too, not for the benefit
of its own customers or depositors, but for those of another and perhaps far distant bank over which it has
absolutely no control and of which it has perhaps no knowledge, except that its management has been faulty and its
end premature.
The injustice and unfairness of this measure becomes
most apparent when it is known that it absolutely ignores
the rights and interests of all State institutions, and seeks
to impose a burden upon the better and stronger National
banks that will redound to the direct benefit of the poorer
and weaker ones without any 'compensation whatsoever.
The apparent security offered by the Government guaranty


would make the weakest and poorest "guaranteed bank"
equal in the eyes of the average depositor to the largest
and best managed institution in the land. The good name
and accumulated surplus of a bank are assets that have
cost much time and effort to get, and a law that would
impair or fail to protect them would impose hardship and
work irreparable loss. So valuable are these assets that
no bank would afford to lose them, and no court of justice
would fail to recognize their value should the constitutionality of such a law ever be tested.
The influence of such a measure would be detrimental
to the banks, the bankers and the people; under such a
law the bank itself would have no special inducement to
accumulate a large capital and surplus or build up a name
for conservative management; on the contrary, the interest
of the stockholders would be best served by the prompt
distribution of its earnings and a reduction of its capital
to the least amount that it could successfully operate with,
while profits and not safety and reputation would be its
main concern. The consciousness of having deposits guaranteed would give to the speculatively inclined banker just
the assurance that would lead him to take undue risks for
the sake of extra profit, and to the lazy and slothful it
would give confidence that would cause him to become less
vigilant and careful, while to the people it would give a
narcotic that would render them less watchful and more
indifferent to true merit and trustworthiness.
It is claimed that a guaranty fund would protect depositors in time of a panic. No matter what the fund
amounted to ,it would not be effective in time of a panic,
such as that through which we have just passed, unless
this fund was available for immediate use, which would
mean a vast amount of actual currency hoarded in the
vaults of the United States Treasury and different State
treasuries for that purpose at all times. It is folly to
consider such a guaranty fund available for immediate
payment of depositors at any and all times. The recent
Comptroller's report shows that there were in 1907 as many
as 19,746 National, State and private banks, with aggregate
deposits of $13,077,300,000. If 5 per cent, of this amount,
which is the figure named in Mr. Fowler's bill for a guaranty fund, be set aside, it would equal a fund of $654,980,000. This approximates 20 per cent, of the total
banking capital of the country. It exceeds in amount 23%
per cent. of all the currency in circulation in the United
States, and it is more than $7.50 per capita of our entire
population. The withdrawal of this sum or any material
part of it from the channels of trade would work serious
detriment to our commercial interests and entail great loss
upon the banks of the country. To avoid this loss and inconvenience this fund would of necessity have to be invested, and if invested it would be no more available than
the current negotiable assets of the banks. It would
then become a fund available at some future time, and
neither the knowledge of a guaranty fund nor the fact
that ample security is available at some future time will
prevent a panic, as those can testify who have reason to
know that currency and only currency will answer while
the scare is on, and in the panic of 1893 gold or gold certificates alone seemed to have the power to satisfy; an invested guarantee fund will not prevent a panic, for panics
arise from other causes, and panics will continue to come
so long as credits are as easily expanded and as suddenly
contracted as they have been and are still in this high
strung and rapidly developing country of ours.
In addition to all this, history has already proved the
futility of the scheme. "The Safety Fund System" in
the State of New York worked well in normal times, but
notwithstanding the complete and efficient machinery under
which it operated it failed completely in the trying years
of 1837 to 1842; the Oklahoma laws so often referred to
have practically just become operative and are by no means
a success, as the proposed amendments testify.
Perhaps the most radical of the proposed measures which
we will discuss is giving to National banks trust company



There has not been a time since the days of specie payThe character of the business primarily done by trust
companies is of such a nature that State courts must have
ments, or perhaps since the time of President Andrew
immediate and complete jurisdiction over them, and all Jackson, when as many thoughtful and able men are studylaws and judicial decisions bearing upon trust interests are ing the financial problems of our country as to-day. The
most jealous of these rights and of this jurisdiction, and
newspapers are presenting these subjects with more or less
it is proper that this should be so. A due regard and care
ability and public speakers are discussing them upon the
hustings, banking associations everywhere are making
for these trust interests make it necessary that trust
them the subject of their deliberations, while the financial
companies should be State institutions that are directly
amenable to the laws of the States in which they are char- journals—and their name is legion, more in number than
tered and operate, and under which the various trusts exist. ever before in the world's history—are full of articles
setting forth plans deisgned to solve every difficulty, and
These State laws are made to deal with executors, adthat, too, from every standpoint and every side of each
ministrators, trustees, assignees and agents, that are the
servants of the court, and with estates and trusts that question. In addition to these a "National Monetary Commission" of nine Senators and nine Representatives has
must of necessity vary greatly in character in different
been appointed by Congress to consider and recommend
States, which represent rural, manufacturing and mining
needed changes in our monetary system and laws relating
or other interests, and different states of civic development
to banking and currency. Let us hope that the labors
and thought; while the vast number and complicated charof all these statesmen will result in a thorough underacter of the laws and decisions affecting the inheritance of
property are more or less peculiar to each commonwealth. standing of the question and an early presentation to
Congress by the Commission of a wise, comprehensive and
This Trust Company Section has tried to harmonize a
few of the most essential and simplest of the various laws just bill, that will meet all serious defects, and that it
will be passed without undue delay.
affecting trust companies and knows something of the diffiThe real defects are not so numerous as they are glaring,
culties that are in the way of any Serious changes in this
and the remedies may be much simpler than would at first
direction. Trust companies should certainly remain pecuappear.
liarly State institutions.
The best scheme so far proposed to solve the financial
National banks doing a strictly commercial banking
problem is the establishment of a "central bank," of large
business are solely under Federal authority and control and
capital and surplus, so controlkd and regulated as to pronaturally farther removed from these peculiar local conditect the Government's best interests and so organized that
tions and this State control, and one would think that they
it may become the guiding and controlling factor ambng
would be the last to want to take up this line of business
the banks of the country, with which it must of necessity
and the least circumstanced to do so.
be in perfect harmony and accord if it is to be most useful
The delegation of trust company privileges to National
and efficient.
banks would scarcely be considered seriously in the face
This central bank would be the depositary of the Govof these facts and the many differing and exclusive State
laws affecting trust affairs, if it were not that it appears ernment funds, as well as the reserves of National banks,
and the medium through which National financial deals
as a part of Mr. Fowler's bill, the scope and character
would be consummated; it would regulate the rate of exof which has commended it as the most scientific and
change and control the export and import of gold, and
complete that has yet been presented to Congress, and
Mr. Fowler's position and influence is such as to give it should exert a salutary and much needed influence upon
the banking interests of the country.
great weight.
It would issue currency to the National banks on coin
National banks have their peculiar business and trust
companies theirs; there should be no conflict between them, or bullion, or its equivalent, taking what the banks have
and the contemplation of this proposed measure fills us to give, namely, their current assets, and not what they
neither have nor can get when most needed, namely, Govwith apprehension and alarm, especially when it is supported in this way. To give to National banks trust com- ernment bonds. This currency would be issued by the
"central bank" as it was needed and in the discretion of
pany privileges can mean but one thing, if it is to be taken
seriously, and that is to strike a fatal blow at State insti- its management, in normal times, at crop moving times,
tutions and compel them to become National institutions, and in times of panic, the form of the issue being the same
at all times, the amount alone varying with the necessities
and thus force them under Federal control.
Trust companies chartered by the State might hold
of the case and the amount of good assets that the bank
their own for a season, but how long could they do so if could command, and limited to a fixed aggregate amount.
National banks should seek to do trust company business, Doubtless these assets would have to passed upon by a
with their deposits guaranteed by the National Government
board of bank officials similar to the officers of the "Naand they themselves perhaps fed by hundreds of post offices tional Curr.ency Association" provided for in the Aldrich/
without other cost to them than the payment of 21 2 per Vreeland bill, who would also supervise the bank examinacent. interest on deposits, which other institutions and they tions of the members of the association, so that they and
themselves might in some sections be willing to work to, the management of the central bank could be intelligently
secure at 3 per cent. or even 4 per cent.? If these condi- advised as to the condition of all the associated banks and
tions should prevail, there would soon be no place for other
their assets at any and all times.
financial institutions than National banks, and no occasion
The State banks and trust companies could co-operate
in the formation and government of these associations, and
for any sections in the American Bankers' Association.
These dark clouds upon the horizon are driven before the examinations could be made by expert accountants or
a wind of popular 'prejudice aroused against corporations examiners for both National and State institutions, the
and financial institutions, that is embodied in the often effect of which would be to bring all banks and trust comrepeated and generic terms "Trusts" and "Wall Street," panies to the same general method of accounting and
and to them is traced nearly all the ills that the body standard efficiency; while the supervision might be under
politic is heir to. The. panic just passed gives prominence the same board, the reports would necessarily go to the
to these questions, and .the imperfections of our National
Comptroller of the Currency or to the State bank commisfinancial system are under the circumstances unduly exsioners, as the ease might be, the National and State Govaggerated. Bank failures are being paraded and literature ernments giving to the association the necessary powers
advocating a Government guaranty is being diligently cir- of supervision, if not control. Bank examinations as they
culated in every section where banks have failed or confi- are made 'to-day are much better than formerly and are
constantly improving, as every bank officer knows, and
dence has been at all shaken.
It does not follow, however, that we need give way to yet they are lacking in the most important matter, namely,
these apprehensions nor fail to put forth our best effort an intelligent examination of the assets, which deficiency
such an association would be instrumental in correcting.
to meet existing conditions.



If there be virtue in the insurance of bank deposits there
is much more in the •insurance of bank assets: The one
would* only protect the depositor and the other would
protect not only the depositor but all creditors of the bank
and . the stockholders as well. Banks now protect themselves against serious loss from burglary and defalcations
by burglary and fidelity insurance in the same • manner.
This would not only provide protection to the creditors
and stockholders of the bank, but in addition would place
each bank's assets under the intelligent and watchful eye
of an interested party, whose direct concern would be to
scrutinize the loans, thus materially and practically aiding
the management of the bank and checking the examiners
with whom they would necessarily co-operate.
It would enable each bank, both National and State, to
-protect its credit at its own expense, and if the standard
of loans materially differed in different sections or under
different trade conditions, the insurance would still be car• red, only at a different rate to suit the hazard assumed;
it would automatically work each bank or trust company
towards a fixed standard, and while they would be equally
protected, each would carry its own burden, commensurate
with the character of the business it was forced to do. This
.credit insurance would no doubt become as popular and as
general as the other lines of bar* insurance, perhaps even
more so, because the publication and knowledge that one
institution was thus protected would in itself make it necessary for others to do likewise. It would meet the idea of
a guaranty fund and would be perfectly fair and equitable
to all parties concerned. It would be fair to National banks
and much fairer to State institutions, that would suffer
greatly under the proposed guaranty plan, unless the respective States offered similar advantages to their own institutions. To me the insurance idea is much more satisfactory
than to contemplate the National and State Governments
going into the proposed guaranty business, or to see them
assume to manage a guaranty fund gathered by compulsory
The cost of such insurance could not be very much, as
the following figures taken from the Comptroller's last
report will show; they cover a period of 43 years from 1865
to October, 1907, and include all the panics and depressions
in business that intervened and all the National banks that
. have failed during that time.
The total losses for the period are as follows:
Average loss to depositors per annum
50c. per $1,000
Average loss to creditors per annum
73c. per $1,000
Average loss to capital surplus per ahnum..$1.44 per $1,000
Average loss to loans per annum
73e. per $1,000
Average loss of resources per annum
40c. per $1,000
The monetary and financial system of the United States
was designed under very different conditions from those that
obtain to-day, and the remedial legislation that has been
had from time to time to correct defects and render it more
suited to changed requirements have left it cumbersome and
inadequate to say the least of,it. The time has been, and
is now, when the country needs a thorough renovation of its
whole system, not only to correct the patent defects in the


old, but to fit a new measure to the present and future needs
of the rapidly and widely extending commercial interests of
the country. In reaching the final conclusion, due regard
should be paid to the smaller State institutions and their
interests duly protected, for these institutions, quietly doing
the business of the rural and remote districts are no less
important to the country and its welfare than the promotion
of the interests of the large banks that will care for the
expanding trade in this and foreign lands.
When under such a perfected system there is a central
head and guiding influence, with ability to control and
power to execute, when the banking interests are intelligently
directed, instead of each community of banks through clearing houses or as individuals acting for themselves as best
they can; when actual currency requirements are promptly
met in obedience to demands of commerce; when the causes
of impending panics can be promptly and adequately dealt
with, then they will disappear and our financial interests
will attain their desired and deserved position among the
most favored nations of the earth. When national banks
and State institutions maintain ample and equal reserves;
when the character of all barik assets are as carefully looked
into by examiners as in the efficiency and honesty of the
officers and clerical force; when banks insure their own
• assets according to their respective hazard, then prompt
discipline will be more frequent, failures less possible and
depositors, creditors and stockholders will be most securely
protected. In all this the people are much concerned; they
of necessity are directly allied with the banks, for the interests of the banks and the interests of the people are the
same, and what is to the material welfare of one is to the
material welfare of the other. It is therefore important that
all these questions be fully and thoroughly understood by
the people themselves.

The Trust Company Section could do nothing better or
more to the interest of its members than appoint a strong
committee to confer with the Monetary Commission and
seek through proper and efficient channels to guard the interest of the trust companies of the country from the
influence of this "radicalism" that does not fail to assert
itself, and through a well directed "conservatism" counteract the evils that must inevitably follow if the necessary
effort is not made and these interests are not vigilantly
The Trust Company is peculiarly an American production,
its development represents the growth and enterprise of the
business interests of the country, and its future rests with
the conservative element of the people. It would be a
national calamity if they should be crippled or their usefulness impaired by this "radicalism" that threatens them,
and such a calamity ;you'd leave its mark upon our country
for many years to .come. Believing in the ultimate good
sense and justice of all the people, let us do our utmost to
properly present these matters to them, relying upon their
good judgment to see that "conservatism," which stands for
justice and right, shall prevail against "radicalism" with all
its disturbing and baneful tendencies.

New York City Trust Comfianies under Present Legislation.

L. L.


Vice-President of the Equitable Trust Co. of New York.

In no history of human experience are cause and effect
more clearly in evidence than when we have to deal with
financial disturbances and their outcomes, although the results are dependent upon so many circumstances unforeseeable and difficult of analysis, that it is only after the
events have rolled by and new conditions have been evolved
and the hypotheses and conclusions have become realized
facts, that the direct connection between each step and
the final outcome becomes apparent. Thus it was that when
we parted after our successful convention at Atlantic City

last Autumn, perhaps very few, if any, had any positive
convictions as to what the coming year would bring to us
of experience and trial, embracing the most violent and farreaching financial disturbance that this or any other country
has probably ever seen.
We must all now admit that there were at that time innumerable signs indicating that the conditions under which
we were living and thriving were not all that they should
be. One of our leading bankers, in a well-directed speech
before the Chamber of Commerce of New York, had referred



reached since the Crimean war in 1848. An idea of the
tremendous loss entailed to investors throughout the country with the attending shrinkage in credit and borrowing capacity can be gathered from the fact that the shrinkage of fifty active stocks from Jan. 2, 1907, to Aug. 26,
1907, was $1,235,084,738, and of this the railways represented $891,319,720, and the industrials $343,765,018.
How serious the disturbance in money was going to be
was strongly brought home when on Aug. 12, 1907, New
York City offered $15,000,000 of its bonds at 4% and received bids for only $2,713,485, and Mayor McClellan, after
making strenuous efforts to find a further market, said:
"I find that in the present condition of the market that
there are no takers of city four per cents. at par except contractors forced to take bonds in settlement of their claims."
Finally at 4 % an emergency syndicate of bankers guaranteed the sale of at least $20,000,000 of an offering of
$40,000,000 and made the sale a success. This action did
much to give confidence to the financial situation as evidence of a disposition on the part of financiers to come to
the front to support the city credit and relieve the strain.
But such action could not stem the tide which was setting in.
Between Aug. 22 and Dec. 3 the National banks in central
reserve and reserve cities lost $87,000,000 of cash, and
during the same period the country banks increased their
cash holdings over $46,000,000. During about the same
time the currency of the country was increased by new
National bank notes, Clearing House certificates through the
country by. $74,000,000, and by additional Government deposits and gold imports aggregating In all upwards of
$273,000,000; it can •be seen how fully the response of
financial institutions in the great centres was to the possible needs of their brethren in the smaller communities,
even to an extent unwarranted by the general conditions
prevailing throughout the country.
The trust companies of New York city were to a large
extent depositaries of the funds active and inactive of
banks, bankers and financial institutions throughout the
United States and I should like every member of this
association to appreciate just how promptly and fully
these trust companies fulfilled their obligations to their
depositors under conditions which have never been equaled.
On Jan. 1, 1907, the deposits of New York State trust
companies amounted to $1,084,376,517 and their total resources to $1,365,245,430, and on Jan. 1, 1908, following
the panic, they had reduced their deposits to $732,278,460
and their resources to $1,012,747,930. Taking the case of
the trust companies of New York •City we find that from
the high record of 1907, of $1,017,813,344, on June 4, their
deposits dropped to $587,069,518 on Dec. 19, 1907. In other
words these trust companies paid out to their depositors
during this period the enormous sum of $430,753,000, or 42%
of their total deposits.
Abnormal conditions thus created in the money marAs in our private life so in our National finances the
ket, it must apt be lost sight of, were not peculiar to
seems to have been one of exceeding cost and
year 1907
expenditure. The Government statement at the end of the this country alone, for the last week in October London
advanced its bank rate from 41 2 to 512%, and on Monday,
fiscal year, June 30, 1908, shows a deficit of $59,656,361, and
following Thursthe increased deficit for July and August amounting to Nov. 4, advanced it again to 6%, and the
day to 7%, the highest record since 1873, at which figure it
total deficit for the preceding four$28,728,000 brings the
was maintained until Jan. 2, 1908. The Imperial Bank of
teen months up to $88,434,361, with reduced revenues of
preceding we had a surplus of $87,- Berlin also advanced its rate by successive moves until it
$65,000,000. The year
%, its previous maximum having been 7% on
000,000. The Government disbursement was $659,552,124, reached 71
revenues in any year except 1906- Dec. 15, 1906.
being in excess of the
In spite of these phenomenal rates of interest at home,
1907 and $54,500,000 more than in the year when we conSpain, landing armies in Cuba, there was exported from Europe to the United States on
ducted our war against
Nov. 30 nearly $100,000,000. A little late to do much good
Porto Rico and the Philippines.
except to help in the restoration of confidence the United
of financial disturbance came
With the first premonitions
steady liquidation of American se9urities on the New York States Government increased its deposits in the
Europe was also experiencing its diffi- banks of the country, as follows:
Stock Exchange.
Whole c'try.
Other cities.
culties and was a large holder of our securities, which they
At New York.
Aug. 3
were influenced to dispose of through the agitation in the
These balances were gradually Increased until,
press and by the administration's hardly understood atti$226,750,898
Nov. 16
Federal control and individual
tude towards corporations,
the shock which was
In order to demonstrate further
wealth. England was struggling to uphold its National
commercial and monetary
credit while its consols sold at 84 5-16, the lowest point given to business by the financial,

to the currency laws of the United States as "disgraceful" and characterized the lack of elasticity in the currency as "barbarous." Necessity not having as yet pointed
the way, we were very slowly coming to the point where
some remedial change was a thing of the near future
and much time was being devoted to reconciling conflicting views on the most expedient method of revision of our
financial laws, when an acute emergency intervened and
brought about immediate action.
The extravagance of this country and of the times in
which we live are well recognized and are prevailing in
Europe as well, and with extravagance goes as a necessary
concomitant material advances in the price of raw material
and labor. At the same time the world was engaged in
new developments and extensions of industries as never
before. Capital was extended to its limit and was doing
more work than it could in safety be depended upon for
and any unexpected withdrawals from it would be conducive
to forced reductions that would be far-reaching in their results. There had also been in the last. ten years vast
destructions of property which had to be replaced. The
cost of the Boer war had been fabulous to England, and
this was followed closely by losses to both sides in the
Russo-Japanese war and the internal struggle which ensued in Russia with its accompanying unsettling of credits,
hindrance to trade and depreciation of the value of its
National debt. Then there was the great destruction of
property in the earthquake and fire at San Francisco, and
the natural timidity aroused by similar manifestations in
Chile and elsewhere. There was also considerable danger
felt by many at the rapid commercial development in Germany where speculation had been going to great,lengths for
many years, and where heavy taxation and an overbearing
military regime combined to create what might lead to a
serious situation. Labor in the meantime had throughout
the world become more insistent in its demands. It was as
though the laborer felt that advancing prices and increasing production could never stop. Usually the employer of
labor was too much occupied with the rush of orders in
which prompt deliveries were of far greater importance
than the prices demanded and cheerfully paid to resist demands for higher wages, and usually was faced with the
difficulty that if he did not submit his laborers would leave
him and seek employment elsewhere, and he would in the
end have to meet similar demands from new labor in nine
eases out of ten of inferior grade. It is, I believe, generally
recognized that conditions which impose excessive wages
are usually accompanied by a minimum of return on the
part of labor. This would, of course, materially increase
the cost of production and this is exactly what we find to
have been the case, for it was reflected in nearly every
known commercial activity from the railroad earnings in
the United States to the far away diamond mines of

panic of 1907, we have only to look at the record of the
clearings for 1907, showing a reduction of $15,000,000,000
over the preceding year.
It must not be supposed, however, that such an extraordinary movement and strain passed without classification of
the strong from the weak and without disclosing some conditions which prosperous times had protected from view.
After the financial storm had passed the danger points
were left bare to observation, just as jagged rocks appear
on the beach after an ocean storm has washed back the
sand which had covered them. The deposits of trust companies had thus receded and in some cases had left bare
methods and practises, perhaps not wholly reconcilable with
good principles of banking or trust company business.
These conditions did not rest alone with such trust companies as developed weakness, but were present also in
some of the National and State banks.
These practises may be stated briefly, as:
First—The controlling of a so-called "chain" of financial institutions by a single interest or group of interests
by means of reciprocal loans secured in each of the institutions involved. This could be carried on almost ad
infinitum, there being required merely a nominal margin to
make the loan appear sound.
Secondly—The promotion or financing of speculative enterprises by financial institutions where the object was
quick returns of hoped for profits and remunerative commissions for services rendered.
Thirdly—The promotion of new syndicates requiring
large dutlays of cash with possible further obligations for
new and competitive enterprises having their earning
capacity yet to be demonstrated and their success calculated on successes of previously similar enterprises leaving the failures of other similar enterprises out of the
calculation. These syndicate operations differed essentially
from those of the preceding era which, while new as a
rule, were consolidations and extensions, with known earnings and ascertainable savings through reduced costs of
united operation. At the present time, of the institutions
which suffered from these or any other causes, all have
resumed without loss to any depositors, except in the case
of two National banks. Only one trust company closed
its doors to its depositors, and this company has since resumed business, strengthened by additional capital from
its stockholders, and anticipating payments to such of its
depositors as consented to deferred part payment, and paying in full on demand to such as did not consent.
Following on the heels of the panic in November, 1907,
Governor Hughes appointed a committee for the purpose of
recommending legislation and suggesting changes in the
State banking laws. The committee consisted of six
heads of representative institutions, National banks, State
banks, trust companies and savings banks, and lost no time
in the formation of a report, the main features of which
have since been incorporated in the New York State banking laws by the State Legislature.
In order to fully understand the present legislation with
reference to trust companies in New York, it will be necessary briefly to trace the history of their corporate existence.- They arose first by special charter and many companies now exist claiming special priviliges than granted
them, and not now generally given to trust companies by
-the Banking law of the State, and their reports were variously forwarded, in some cases, to the Comptroller of the
State and in others to the Ssupreme Court. By the law
of 1874 they were first placed under the supervision of
the Superintendent of the Banking Department and required
to make semi-annual reports in writing in such form, and
containing such information as to the affairs, business conditions and resources of the corporation as he might require.' From that time until and including the present
the authority of the State Banking Superintendent has
been great and increasing. In 1887 a law for the general
incorporation of trust companies was passed, and in 1893
their powers were very fully enumerated and their restrictions increased. In April, 1906, the first statute with direct


reference to a reserve was enacted calling for a reserve of
at least 15% of the aggregate deposits. The whole might
and at least one-third must be kept in cash, one-third might
consist of Government bonds, State or officially authorized
bonds and the balance might be on deposit, subject to call
in a banking institution approved by the Superintendent of
The salient points in the law governing trust companies
in New York City, as amended by the new legislation,
are that its capital must be at least $500,000 paid in in
cash and dividends to the full extent of the earnings cannot
be paid until at least 20% of the capital has been accumulated in surplus. Its capital must be invested in bonds and
mortgages on unincumbered real property within the State
not exceeding 60% of the value thereof, or in the stocks
and bonds of the State or of the United States or of any
county or incorporated city of the State, especially authorized, and of this capital 10%, but not less than $10,000,
must be registered in the name of the Superintendent of
Banks and held by him in trust as security for the depositors and creditors of the institution. It must carry a reserve of 15% entirely in cash against demand deposits,
and in the case of trust funds and time certificates of
deposit commencing 30 days before the date of maturity of
the obligation. Each certificate of deposit must show the
date of issue and the date of maturity. It may not hold
stock in any private corporation to an amount in excess
of 10% of its own capital and surplus nor in any moneyed
corporation the par value of which is in excess of 10%
of the total amount of the stock of such other moneyed corporation issued and outstanding. This restricted investment of capital is quite an important item and is often
lost sight of in the consideration of the safeguards of a
trust company as compared with a bank, which may use
its capital in its regular business. There is also, as with
banks, a stockholders' liability for any default in payment
of a debt or obligation to an amount not exceeding the
par value of the stock. An enumeration of authorizations
to do business would be tedious and unnecessary as they
are general and pretty well understood, but some of the
restrictions embodied in the recent enactments are not so
well understood. For instance, no loan exceeding one-tenth
of the capital stock of the trust company can be made to
any director or officer of the company, and no loan without
the consent of a majority of the directors, as further explained. Also no loan shall exceed 10% of the capital and
surplus unless secured by collateral worth at least 15%
more than the amount of the loan, in which case it may
be 25% of the capital and surplus, but the total liability
of any such individual, corporation or firm, secured or Unsecured, may not exceed 25% of the capital and surplus.
Furthermore, the trust company may not loan upon the
"securities of one or more corporations, the payment of
which is undertaken in whole or in part severally, but not
jointly, by two or more parties" unless the borrowers
"shall have paid on account of the purchase of such securities an amount—equal to at least 25%—of the amounts
for which they remain obligated in completing the purchases for such securities," or if the trust company is liable
directly or indirectly for the repayment of any part of
the loan, or if the loan including any right of renewal
exceed the period of one year. No loan shall be made, secured by the capital stock of another moneyed corporation, if by the making of such loan the total stock of
such other moneyed corporation held by it as collateral
shall exceed in the aggregate 10% of the capital stock of
such other moneyed corporation. Many restrictions are also
placed around the conduct of the officers of trust companies intended to further safeguard the instituions. Where
the matter concerns the depositing funds of the company
in other institutions or making discounts or loans for his
or any other director's personal benefit all such loans must
have the approval of the majority of the directors, and a
knowing violation of such rule makes officers or directors
liable under the Penal Code. In addition, all loans of over
$1,000 must be reported to the directors or a committee



of them at the next following meeting and statements under oath of the officers of the institutions filed showing that
the loans have been thus submitted.
In addition, at least once in every three months, the
superintendent designates a day on which a very full report is made to him concerning the affairs of the company
and examinations are made by the Banking Department at
least twice a year, investigating the conditions and resources of the company, its mode of conducting and managing its affairs, the action of its directors, the investment
of its funds, the safety and prudence of its management and
the security afforded to those by whom its engagements are
held, and such other matters as• the Superintendent may
It is obvious that the laws with regard to trust companies in New York, where they do not deal with the
amount of strength in capital, surplus and reserves which
they must maintain in order to be trusted to invite the
deposits of the community, are directed to prevent abuses
and to frustrate efforts on the part of those having control
to use their resources for purposes not tending to strengthen the security of depositors, and further to restrain investment in ways clearly unwise. These laws, good and
salutary and well thought out as they are, and in every
way fit models for other communities intending to develop their trust company and banking legislation to follow are, after all, of prime importance, chiefly to the
weaker brethren. Good banking cannot be created by law,
bad banking may in many ways be thus prevented. When
we study the laws of New York on this subject, we are apt
to have our attention drawn away from the real state of
affairs as they exist in the conservative and well governed
institutions of the city, which are the almost universal rule.
These institutions have weathered every storm and for
many decades have protected and wisely managed the many
estates and trusts in their hands and have been the safe
repository of huge volumes of funds; on Jan. 1, 1906, ex-

ceeding the deposits of all the Clearing House banks of
New York by upward of $88,000,000. The proof of the pudding is in the eating thereof.
We have now traced the trust companies of New York
city through the conditions leading up to the panic and
seen how magnificently they acted in responding to the
calls of their depositors during those times of anxiety and
disturbance which marked the end of the year 1907. We
have seen that they paid out $430,000,000, reducing their
deposits to $587,000,000. Their average deposits for the
week ending Sept. 26, 1908, were $936,011,700, a recovery of
$349,000,000. We thus find them after the battle is over
more strongly entrenched than ever before in the public
confidence, and with duties and responsibilities toward their
clients and the financial world which in their past and their
present they have shown no inclination to shirk.
And now in closing it is fit to say a few words with
reference to the immediate future. We are being blessed
with abundant crops and a satisfactory recovery in business.
The stocks and bonds of our leading railways and industrial corporation have largely regained their losses
in value during the panic year, money throughout
the world has once more assumed normal conditions, the
cost of labor, while still high, has been much reduced
and a more sane and temperate attitude is apparent
among our leaders and the community generally. Indications are not wanting of the gradual return to normal conditions in every field, in fact, each day adds new
evidence of a healthy solid recovery in every direction.
The lesson that has been tanght by last year's experience
will last as long as the present generation of bankers remains in the field of activity. The vindication of sound
banking has never been so complete and sweeping, and has
only been accentuated by the distressing handicap of a
most anomalous currency system, which we must hope will
in the near future be placed upon a more solid and scientific basis.

Securities Held in Trust, Methods for Their Control
and Safeguarding.
BY JOSEPH N. BABCOCK, Trust Officer, The Trust Company of America, New York.
The accounting of trust companies in their various trust
capacities is a subject which should, and doubtless does,
receive the careful attention of all trust company officers.
Yet an examination of systems in use in various companies
shows such divergence in method as to lead one to believe
that a discussion of certain principles which should be
controlling in all systems would be of value and interest.
The art of accounting in our National and State banks
has received the attention of many able bank officers and
expert accountants over a long period of years, and a large
amount of literature on the subject, embodying the results
of such attention, is now available. Moreover, a long series
of banking defalcations has brought out new systems, from
time to time, to guard against particular methods of embezzlement and to perfect a system of checks and counterchecks designed to safeguard the bank in every possible
way, while at the same time preserving as much simplicity
in form and method as possible.
In a word, the art of bank accounting is, as one may say,
to a certain degree, standardized, and any bank may easily
obtain the data to put in a proper and effective system of
accounting, adapted to its particular needs, and containing
all of the most approved checks and counterchecks which
the experience of the past and the combined abilities of
hundreds of. able and experienced accountants have been
able to devise.
This, however, is not so as regards the accounting of our
trust companies in their various trust capacities.
The accounts of a trust company as executor, trustee,
guardian or in any other of the numerous trust functions
in which it may act, is ordinarily, as a matter of practice,

kept entirely separate from its banking business. This is
also required by law in some States, and while the legal
form of such accounts, that is to say, the form in which
they must be filed with the Court, for instance, has received
some attention, the general methods of keeping such accounts on the books or of safeguarding the securities involved has not been the subject of much examination by
experts nor is there, to my knowledge, much literature
available on the subject.
The consequence is that every trust company is practically thrown on its own resources and that systems in
use are many and various, some serving the desired purpose
fairly well, others inviting to loss by looseness of method
and lack of ordinary safeguards.
In this connection and as illustrative of the importance
of the subject, I recall the statement made by the Hon.
Pierre Jay, Banking Commissioner for the State of Massachusetts, in an address delivered before this Section two
years ago, that defalcations in the banking institutions of
the United States at that time reached the alarming average
of one a day. Mr. Jay also said "a proper system of accounting will prevent more embezzlements than a proper
system of auditing will disclose, and it will save many a
naturally honest man from yielding under a great stress
to the temptation of stealing, which a loose system of accounting at least fails to discourage."
Mr. Jay's remarks were perhaps more particularly directed to the banking side of the business, yet it cannot be
gainsaid that the trust accounts present special opportunities to the dishonest, by reason of the known facts that the
securities held may, in some instances, not be required for-


years, and that therefore the chances of discovery of loss
and detection of the guilty party are reduced to a minimum.
I conceive it to be one of the main objects of this association that, through the interchange of ideas between the
members, systems of accounting may be simplified and
standardized, proper safeguards may be introduced, and in
general that methods of doing business may be improved
to the mutual advantage of members of the association and
their clients and "Cestuis que trustent."
It is, of course, impossible within proper time limits to
examine at this time into the whole question of "Trust
Accounting." I have therefore considered only one single
phase of the subject, i. e., the actual securities or valuables
themselves, which form the subject matter of nearly all
trusts, from the standpoint of their proper entry, control
and, safeguarding.
The term "Securities in Trust" is intended to cover, and
should cover, all securities and valuables which come into
the possession or safekeeping of the trust company in connection with its manifold functions, except its own investments, collaterals under loans, bonds for certification only,
and, of course, any valuables placed in its safe deposit
vaults, in the case of companies maintaining such a separate department.
It is essential in the first place that this classification
should be rigidly adhered to, so that all securities held for
trusts, or for clients, should be held in one department,
properly equipped for the care and accounting of same.
This department, usually called the Trust Department, is
constantly receiving and delivering securities and valuable
property, in accordance with some trust function such as
executor, or trustee under either individual or corporate
trusts, or as special depositary or agent for its clients or
banking correspondents, or under escrow agreements of
various kinds, including those covering securities deposited
under plans of reorganization, or for the foreclosure of
corporate mortgages, of which the trust company may be
trustee. The amount of such securities and valuables held
in the trust companies throughout the country is incalculable, there being, of course, no statistics available, yet
some idea of the enormous total may be obtained from the
fact that the books of the company which I have the honor
to represent, alone show a total on hand of some five hundred millions of dollars—of course in face value.
These securities and valuables are of every conceivable
kind, from personal property, jewelry, valuable documents,
to notes, bonds, stocks, mortgages, etc., and are received
under all sorts of accounts entirely separate and unrelated.
The first requirement naturally is a complete record of
the valuables in each account. This we may call the Trust
Securities Ledger. This, of course, is kept by all companies, in some form or other, in many cases the accounts
being divided into classes, viz.: trust accounts, escrows,
special deposits, etc., and a separate book being kept for
each. These separate books, however, may advantageously
be considered as parts of one general set, exactly as depositors' ledgers are divided for convenience alphabetically.
Some companies content themselves with this record, even
making the entries of receipts and withdrawals directly
on the same, with no provisions for counterchecks or safeguards. This, of course, is very loose practice. All securities should be entered on the Trust Securities Ledger at
their face value. In the majority of the accounts under
consideration, the trust company is not concerned, at least
from an accounting standpoint, with the market or actual
value of the trust assets. It is true that in certain classes
of accounts the trust company is chargeable with the appraised or purchased value of assets and must account to
the Courts or interested parties on that basis, but in such
cases separate and fuller records must of necessity be
carried, and this can readily be done wtiliout in the least
interfering with the trust record of the securities themselves;
In which it will be found to be simpler and more satisfactory
to carry everything at face values.
Anything in hand which has no face value should be


given a nominal value of say one dollar, in order to get it
into the books properly. Stocks should be entered at their
value in dollars and not as so many shares.
Now, in order to secure the necessary counterchecks on
the trust securities ledger, controlling accounts should be
opened in the general books of the company, or at least
should be under the control of some bookkeeper other than
the Trust Department bookkeeper. Such accounts should
be: on the debit side, the totals of all securities held, under
such classes as it is most convenient to divide them, such as
mortgages, bonds, stocks, miscellaneous; and on the credit •
side, the totals of all trusts, also divided into any convenient
classifications, such as trusts, escrows, special deposits, etc.
A system of original entry of all transactions should be
employed, which should be so inter-related to the method
of depositing in or withdrawing securities' from the valuts,
that no entry could be made in the books unless the securities were actually deposited or withdrawn, and no securities could be deposited or withdrawn without the corresponding entries in the books. All vaults should have
double combinations; one combination in charge of the
trust department, the other, or controlling combination, In
charge of an officer or designated person outside of the
department. The controlling account on the general books
should be checked from the actual transactions in the
securities themselves, by the person holding the controlling
combination. The Trust Securities Ledgers should be proved
and balanced with the controlling accounts at stated intervals by the taking off and totalling of all balances. It
facilitates greatly the taking of trial balances to have the
securities ledgers loose leafed and to have a specially ruled
and colored sheet for each class of securities, I. e., one
ruling and color for bonds, one for stocks, one for mortgages and one for miscellaneous items. The controlling
accounts, however, should be in a bound book. Audits and
examinations of the securities in the vaults and comparisons of same with the books should be made as frequently
as possible. Such examinations take considerable time in
cases where large amounts of securities are held, and if
done by outside accountants are expensive. They can be
readily done by other departments, however, as they require
little more than the counting of securities. No examination
of trust securities is regularly made by the Baking Department in the State of New York, and I presume that this
is also the ease in other States
It will, perhaps, have been observed, that the key to the
complete control of securities by this system is in the interrelation of the method of original entry of transactions with
the system of .depositing securities in or withdrawing them
from the vaults. I venture the suggestion that what is
known as the ticket system will be found to meet the requirements of the case most satisfactorily, although there
are doubtless other methods, and in order to make perfectly
clear what I mean by inter-relation of original entry and
vault system, I will ask your permission to illustrate by a
concrete example.
Let us say that there is delivered to the trust company,
or it has purchased, a block of bonds. As these are received
at the counter a numbered ticket with a perforated stub or
counterfoil is made out by the counter man, giving the
details of the transaction, title and number of the account,
etc. This is initialed by him, and by the checker, and then
handed to the officer in charge, together with the prepared
receipt or check in payment. The ticket is 0. K.'d by
the officer, the stub detached and held as a memorandum
for the vault and the receipt or check signed and delivered.
The ticket is turned over to the bookkeeper for entry and
listing in numerical order and is then left with the bonds
until they are ready for the vault. The stub in the hands
of the officer is a check on the deposit of the security in
the vaults, and when the deposit is to be made, it is handed
over to the officer holding the controlling combination, compared by him with the ticket, the securities recounted by
him and placed in the vault, the ticket and stub both
initialed by him and the stub passed independently by him



to the auditor or general bookkeeper in charge of the controlling account, who either makes his entries direct from
it or compares it with the debits and credits to his accounts
received from the trust bookkeeper. The ticket is then
filed away in its numerical order. When securities are
withdrawn a delivery ticket approved by the proper officer
serves as a vault requisition, and upon the withdrawal of
the security from the vault the stub is immediately detached
and handed to the general bookkeeper as before. Both the
receiving and delivery tickets are listed in numerical order
in a journal, consequently the journal balances must be the
totals of all securities on hand and in the vaults, and must

agree both with the balances on the Trust Securities Ledger
and on the controlling accounts.
In this manner a complete system for the control and
safeguarding of securities is established, with practical
checks and counterchecks, which would require the collusion
of two or more officers and employes to get around.
I am happy to say, in conclusion, that I believe that instances of such collusion have been very rare in the annals
of our financial institutions.
Let us, for the trust companies, by careful vigilance and
the use of every safeguard, strive to maintain for the future
this honorable record.

115 Devonshire Street

56 Wall Street

Investment Securities
Foreign Exchange
Letters of Credit
Agents and Attorneys

Detailed Report of Proceedings,
Thirteenth Annual Meeting TRUST COMPANY SECTION, Held at Denver, September 29, 1908
TuesdaY, September 29th, 1908.


President Babcock: Gentlemen, we will call this thirteenth
annual meeting of the Trust Company Section to order. The
Rev. Dr. Bayley will invoke the Divine blessing.
Rev. Frank R. Bayley, D.D., pastor Plymouth Congregational
Church, Denver, Col.: I once knew a quaint old minister who, going
to an ecclesiastical gathering and being asked to lead in prayer, said:
"I came expecting to make some remarks, but perhaps I can give them
in the form of a prayer." I have no such purpose you may be sure,
gentlemen, and I ask that we may all enter with sincerity and reality
into this moment of devotion. Let us pray.
Almighty God.
We thank Thee for the beauty of this morning.
It is good for us to commit ourselves to Thee for the needs of the day.
We remember the dear ones whom we have left behind—the wives
and the children, and especially any who are in sickness or sorrow or
distress. Be Thou kind and gracious to us all and to them, we
beseech Thee. We thank Thee for the glory of the world in which we
Jive, for our plaie and our part in this marvelous time. Help us
to remember that all things come of Thee and without Thee nothing
in this world is strong and nothing holy. We thank Thee for the
marvelous material development of the world in which we live and for
the power that is lodged in man's hand and in man's mind to grasp
great things and to wield mighty powers. We thank Thee for the
measure of recognition which prevails among us as a people; of the
supremacy of things that are moral, of the things everlasting. We
thank Thee for the hosts of men who put righteousness above gold,
who have not bowed the knee to mammon and who care more for the
service of their fellow man than for self-aggrandizement.
We pray for Thy blessing upon these men gathered here, for Thy
direction and gracious aid in all their business. We pray Thee help
them so to live that the Holy Spirit, under whose banner they are
gahered, may be redeemed from base use and may come to stand for
human service rather than for covetousness and rapacity and may take
its place again among the things that are peaceful and holy in men's
thought. Help us, we pray Thee, to live for the good that we may
do for high and holy ends, in the light of the eternal purposes to
which we must give account and which if we do not serve them will
bruise and crush us.
Great God! Hear our prayer as now, we trust with united hearts,
we acknowledge Thy supremacy in our praise; and may we remember
that in this world we have nothing which we have not received from
Thee, and that we are in all things God's stewards. All these things
we humbly ask, praying that the simplicity of our minds and the
sincerity of our hearts may commend us to Thee and may bring us
gracious answers of peace. Amen.
President Babcock: I have the honor to present His Excellency, Henry A. Buchtel, Governor of Colorado. (Applause.)

Address of Welcome- by Governor Henry A. Buchtel.
It is always a pleasure to speak a word of welcome in the
name of the State of Colorado and in the same of the city of
Denver, for the reason that any national convention finds here
an atmosphere of hospitality. People who come from everywhere, as you do, find if not their relatives at least friends from
their old home towns. You know, Denver and Colorado is made
up of the best blood and the best brains from everywhere, attracted here for a variety, of reasons. One is that of health.
More people have come here for that reason in the earlier
history of the State than for any other. That gave us a beginning of the finest families on earth. So money came in from
every part of the world and was invested here in the early days.
To-day we are attracting people by other considerations than
those of health, because we have a greater variety of resources
than any State in the Union and because there are more ways to
make money here than can be found in any other State. It is
well understood, I suppose, by all of you that the real aristocrats
of the American Bankers' Association is that group of men who
belong to the Trust Company Section. I hope I shall not, have
any one here opposing this view which I am now taking about
what constitutes the real aristocracy of this association
(laughter). In reading your proceedings of last year I was
interested in noticing that there was an effort made to have
people distinguish between a trust company and a trust. There
is a very clear distinction made by Mr. Dooley, who makes
almost all our accurate distinctions for us in these days, you
know. He describes a trust as an institution that is making an
effort to sell out to the trustful (laughter). But nobody ever
heard of a trust company that wanted to sell out, because the
laws in all the States appear to have been made particularly for
their benefit. I believe you are investigated less than any other
concern on account of your very high character. So you have
more ways of making money than anybody else on account of
the fact that it is recognized that you ought to have more ways
of making money than anybody else. While you are here and

discussing all sorts of questions, of course, you will be making
an effort to devise methods of conducting your business with
greater accuracy and despatch, and one bit of advice that I
want to give you is to learn how to use this "Interior aetis Detector" that I am wearing. (This was a reference that the
Governor made to a hearing apparatus that he wore over his
This is not a hearing machine. I assure you .I can hear all
I want to hear without making use of any machine; most anybody can—especially if they occupy a political position.
Let me tell you that when you learn to use this machine you
can hear a man's heart beat and you can detect whether he
is telling you the truth or is lying to you. I wore it at the
Governors' Conference in Washington for the purpose of detecting what particular political job the Governor with whom I
was conversing was seeking. Of course, almost all of them
were seeking something—the United States Senate, for one
thing, but not all; some were not. (Laughter.) Well, in conversation with such men, for instance, as Governor Johnson and
Governor Folk I explained that I did not wear this instrument
in their case because it was perfectly manifest without any
Now, we want you to have a very happy time here. Tomorrow I shall have an opportunity to speak to the whole association—those that are not aristocrats as well as those that
are; and when one talks to the ,four million, of course, it is as
interesting as to have the opportunity to talk to the four hundred. While you are here you will find many ways with which
to enrich your conversation when you get back home. You will
come upon delicious humor here every fifteen minutes—that is,
if you keep your eyes open and, of course, all bankers are supposed to do that. You will come upon such humor, for instance,
as my friend Dr. Lennon came upon when he invited my friend
Barry O'Connell to dinner. Barry used to be a miner, and he
was one of the Democratic leaders in our last legislature. I
say one, because sometimes parties have more than one leader.
Barry was always a great friend of mine. You see, we had
three mutual bonds that brought us close together. First, Barry
is an Irishman and I am a German. (Laughter.) Secondly,
Barry is a Democrat and I am a Republican. Thirdly, Barry is
a Catholic and I am a Methodist. (Laughter.) Barry used
to come into my office more frequently than anybody else and
we became very intimate. At the Good Fellowship Dinner that
I gave, inviting members of the house and the senate and the
Justices of the Supreme Court and people connected with the
State institutions and, of course, the bankers, because we all
borrow money from the bankers, you know, and must keep on
good terms with them, Barry made a speech. The Chief Justice
of the Supreme Court, who happened to be the only Democrat
on the bench of seven members, was present, and the Methodist
Bishop, Warren, said Grace, and a Roman Catholic priest pronounced the benediction at the end of the dinner. So you see I
had everything there was going. That is the way that we have
out here. Well, as I say, Barry made the speech of the night.
He said: "The Governor has committed two very serious
offenses here at this dinner to-night. First of all, he has
violated the Constitution. The constitution says there shall be
three departments of government, the legislative, the judicial
and the executive, and that these three departments shall be
kept separate. Yet the Governor has gone to work and mixed
them all up together here. And, worse than that, he has
viola.ted the Scriptures"—Dr. Bayley can appreciate what that
means, and the local bankers, on account of the fact that I am
a minister. Most of you doubtless do not know that, but we
take ministers to make governors of out here in Colorado. (Applause.) But we don't make all our United States Senators out
of ministers, however. (Laughter.) Well, Barry continued, and
went on to certify that St. Paul said in such and such a verse
and such and such a chapter in one of his letters to Timothy,
that Timothy was to use no longer water, but to take a little
wine for his stomach's sake, and Barry said "The Governor has
violated the Scriptures in having a dry banquet." Of course, it
must be a dry banquet if I gave it; but, gentlemen, we had more
different kinds of water to drink than anybody in Kentucky
ever heard of. Well, that night Dr. Lennon invited Barry to
come over sometime and take dinner with him. Barry said:
"All right, what is the matter with my coming to-morrow?" The
next day was Friday, and Dr. Lennon said: "Very well, come
to-morrow." Now, Barry was a Catholic and the Doctor had
forgotten about it, and he had a very hearty meat dinner. Just
at the end of the dinner he remembered, and said: "Barry, I
beg your pardon, I never thought about it being Friday and that



you were a Catholic." Barry replied: "Don't say a word, I am
not going to throw it up now." (Laughter.)
So, if you keep your eyes and your ears open here, as I said
before, you will find your list of stories greatly enriched and
you will want to come back to Denver, not ten years hence, but
next year again. (Applause.) If you desire to pass a resolution at this session that every meeting of your.association while,
time shall last shall be held in Denver, why, gentlemen, understand we will 0. K. It and approve the program. (Applause.)
President Babcock: I have next the pleasure of introducing
Col. William E. Hughes, President of the Continental Trust
Company of Denver, who will welcome us on behalf of the
financial institutions in this city and State:

Address of Welcome by Col. Wm. E. Hughes.
Mr. Chairman and Gentlemen of the Trust Section of the American
Bankers' Association:
In the name of this city and on behalf of the trust companies I extend you a most hearty and cordial welcome. The man who receives
into his house a guest would I imagine be rightfully charged with a
lack of taste were he to call attention to the luxurious and tasteful
appointments of his home, his well selected library, his costly rugs
and rich paintings. The same rule may apply to one who gives
welcome to a city. The word "welcome," like a few other words in
our language, is so comprehensive in itself that one cannot well
amplify or add to it; so beyond the assurance that no one can be
gladder to see you than we are and'leaving you to discover if you can
the matchless beauties of your surroundings; I shall in this address
with your permission pass to such other thoughts as occur to me.
Gentlemen; I think we are to be congratulated that this assembly
is in no sense partisan. I take it it is perhaps about equally made up
of the two great political parties, and while. we are not politicians
and not here to talk politics we happen to meet at a time when there
is great interest being felt on all public questions, and it is almost
impossible to totally abstain from expressing political opinions regarding them, as politics and finance are closely allied.
It is a truth I think apparent to all that there is a great moral
awakening in the land, and neither of the great political parties can,
in ins opinion, hope to retain or acquire power that does not promptly
recognize this fact and some other self-evident truths. It is a truth
I think that that prime iniquity, the tariff, must be radically reformed; that individual and State rights must be more fully recognized; and the honesty and independence of the courts be at all times
maintained, and that trusts, corporations and combinations, especially
those dealing with the necessaries of life, must hereafter do their work
in the open and under the supervision of government, state or national.
Political bribery and secret political campaign contributions and all
blackmailing must go. Our forests and other national resources must
hereafter be better preserved; the standard of all trusteeships must be
raised and a better system, of banking and currency must be given
to the country.
How much we can accomplish and just what we are to do here I
do not of course know. We are to counsel together, I assume, tell
the truth and do all the good we can to others and to ourselves.
ancient days a philosopher who lived and died long before the
Nazarene gave His great moral lesson to the world, immortalized
Himself by giving to His friends and followers in eight simple words
a code to live and die by. These simple words were, "Tell the truth
and do good to others." This code, though not so intended, founded
a true religion; and upon it there has been to my mind no improvement since.
The American Bankers' Association, it seems to me, is especially
qualified to speak as to trusteeships and as to banking and currency.
As citizens, too, we are of course interested in all questions affecting
the public good and the public finance, they being inseparably associated, so it may not be amiss in passing to give our views upon some
of these public questions at least.
First—As to that paramount question, the tariff. We have the
promise of both Republicans and Democrats that there shall be reform
here. We know, however, from experience how little faith is to be
put in party promises on the eve of election. Had the Republicans re•
formed the tariff last Congress when they had the power they would
have better entitled themselves to the support of the country; and if
the Democratic leaders had talked abolition, and radical reform
of the tariff, and little else, they would have put more life into their
party and greatly increased its chance of winning. You can't talk
nonsense and abstractions to the people in election times and impress
We are Democrats ourselves, at least some of us are, but not the
kind that ever believed in free silver, government ownership of railroads, government guarantee of bank deposits, initiative-referendum,
16 to 1, the double standard, government loans to farmers and greenback inflation.
The Democratic party was once something to be proud of. It might
be yet if it could get rid of some of its leaders. Democracy has been
a name to conjure with. Its meaning, "Government by the people,"
has from the beginning captivated all climes and countries. No party
in this country has lived as long or stood as much as the Democratic
party. Its vitality has been wonderful. The many nostrums it has
had to take in the last few years have been hard to swallow, and some
of those doses have been altogether too much for old-fashioned
Democratic stomachs like mine. Still, we have stuck to the party,
and we and the party still survive, and expect to survive and to go
many times yet to victory and defeat under the old benner.
would go to victory this time if we had one of our old-fashioned
leaders. I don't mean that we must necessarily have a Jefferson, a
Tilden or a Cleveland. A Woodrow Wilson, a Johnson, or any one
of a hundred good old-fashioned Democrats would do. One that was
not a dreamer, an experimenter and an issue hunter, and who had not
been a perpetual candidate, one believing in and advocating a few
old-fashioned time-honored principles, chief among them that the common individual man was to be and remain henceforth the supreme
object of regard in this government and not the trusts and corporations. Not that we would ask government aid for this individual man,
but that there be no government hindrance.
The trouble with the man full of isms and who is badly educated
politically is, you can't tell just what he may do under emergencies.
Some one defines education to be that ouality that best enables the

individual to do the right thing in emergencies. Can you trust all of
the present political leaders in emergencies? As one of our New
York papers (Harper's Weekly) the other day said, "Suppose within
the next four years the United States Treasury was to again run
short of gold as it did in Mr. Cleveland's time, what is to prevent the
President front directing the United States Treasurer to pay in silver
all the millions of coin obi:gations outstanding? Then what would becotne of your single standard and. the business of the country? Mr.
Bryan as President would have the power to so direct without let or
hindrace from Congress or the Courts, and would he not be justified?
He has never recanted the, double standard, it has simply ceased to
But it would become an issue quickly enough in the
be an issue.
event of such a happeniog as that to which we have alluded as possible
If not indeed probable during the next four years; and what better
could be expected of Mr. Bryan? Would he give the lie to every word
he has ever uttered, and never recanted respecting the true relations
of the two metals? Would he fly in the faces of the millions of free
silverites whose apostle Ire has been and who have stood behind him
all these years? Would be have the moral right to break faith with
them? And who would have a just claim upon him to do otherwise
than put the country upon a silver basis, when with full knowledge of
the fact that this has always been the cardinal principle of his
creed, the people had elected him President of the United States, and
so according to the new interpretation had conferred a mandate upon
him to carry out the people's will without regard to the disposition of.
the other branches of the government.
However, Gentlemen of the American Banker' Asi3ociation, we
have the promise of both of the great parties that most of the reforms
we ask for shall in the end be brought about, and we have this to congratulate ourselves with, the country is safe, and its finances are safe
(barring emergencies) whichever party wins, I think, too, the election
will go all right for the personality of the leaders is going to count •
in this election more than ever before. The party leader that can be
trusted under extraordinary circumstances to do the right thing is the
one a large proportion of the people are going to support this time.
The issues are not widely different .on the vital questions. So you can,
if you like, "pay your money and take your choice," as the saying is.
If you pay money as a campaign, contribution to either party see
to it that the payinent is duly published—it looks better so; besides,
a reformed popular taste demands it.
Antagonistic political parties are a good thing. I mean. great parties, like Republican and Democratic, Radical and Conservative. Not
those mushroom things that come and die with every moon. Great
parties usually divide upon the great questions that underlie government--not on what shall ye eat, or what shall ye drink, or wherewithal shall ye be clothed, or whether ye shall be allowed to drink at
all. It is better, too, for a country to have these two great parties
pretty equally divided, and to not have them divided by longitudinal
or latitudinal lines. I am an old Confederate soldier and a Democrat,
and yet I say to you frankly that I want to see a divided South, div
ided upon all the great political questions. It will be better for the
South—better for the entire country. Shortly after the formation of the
government the Conservative party was called "Republican Democratic." If that was its name now we would in my opinion have a divided South at this election. We may have it as it is.
But, gentlemen, I have proceeded along this line farther than I intended, and asking pardon for the digression, returning to the question of popular demands, allow me to say that the masses, as I understand it, are not wanting or demanding government guardianship
or government guarantees. What they demand is to be let alone and
they will work out their own salvation, socially, financially and
Now, as to banks, banking, trusts and trusteeships, I wish to say
that I am opposed and I am in hopes this American Bankers' Aso'
elation is opposed to having governement (or anybody taxed by
govereninent) to guarantee bank deposits,'and if they are so opposed
that they will by proper resolutions speak out and say so. This guaranteeing, as I view it, is all wrong in principle. There is no more
sense in guaranteeing your banks than there is in- guaranteeing your
insurance companies, your butcher or your baker. Governments are
not organized to be guardians of the people and to make their
selections and elections in the various walks of life, and it should not
do it. All you want of government, all you ought to have from it,
all it ought to be and is organized for, is a kind of police duty, as it
were, to stand guard, to do the fighting, to keep people off you and
off your property—that is all you pay it for or ought to pay it for.
All exercises of judgment, all selections fpf agents and agencies must
be left to the people if we expect them to grow or be any account.
Freedom and not supervision and guardianship makes a self-reliant,
energetic, hardy race. Freedom is what is valuable under government. Don't check or restrain any exercise of admitted freedom, unless the exercise Commits some aggression upon the person or property
Besides, as Mr. Taft the other day said, to guarantee
of another.
bank deposits is a bid for and premium to reckless banking.
As to our more especial department, trusts and trusteeships, I want
to say that I can conceive of no higher religion than to be faithful
to a trust, or to put it substantially in the words of Mr, Van Dyke in
the August "Scribner": "There is no curse so terrible as that which
lights a fire for him who gives away his honor anti betrays those who
follow and put their trust in him." No association of men who do not
subscribe to this sentiment and in their hearts feel the full force of
position. A
it should ever be in a trust company or in any trust
trust has always been regardd as the most sacred of obligations and
from the days
its violation as a breach of trust and a criminal offense
guarantee the faithof the Common Law, so don't ask government to
ful performance of trusts, but have government put the trustee in
when he commits a breach.
rambling address
Gentlemen, with an apology for my somewhat
during your stay
and promising you the best time we can give you
will want
here, with the hope that youe visit will be so pleasant you
trespass upon your
to come again, thanking you, I shrill no longer
time and patience.

Reply to Addresses of Welcome and Annual Address by
the Ptesident, Mr. Philip S. Babcock.
Gov. Buchtel, Col. Hughes:
On behalf of the Trust Company Section of the American
Bankers' Association, it is my great pleasure to acknowledge


and to thank you for the most cordial and beautiful welcome
you have extended to us in convention here assembled. We have
gathered from the East and the West—from the North and the
South in this beautiful capital city of this Centennial State to
deliberate on matters which concern us in the daily routine of
our business life; to listen to the words of advice of those who,
by experience and ability, are competent to, instruct us so as to
the better conserve the interests of the people whose agents we
are; for in the largest sense the trust companies of the country
are closer to the people than any other form of financial institution. Our depositors look to us to safeguard their material
wealth in life and to distribute it unimpaired after their death ;
to protect the widows and children. Met, as I have said, that
we may by full and free discussion best learn to conserve the
great interests entrusted to us. It is fitting and a great pleasure
to us to be welcomed by the chief executive of this great State
and by a foremost representative of the State's financial institutions. We will enjoy the hospitality you have so graciously
extended to us and will carry back to our homes its pleasant
memories with minds and hearts broadened by our stay, all too
short, in your beautiful city and State and by the friendly intercourse with your people. On behalf of the association. I thank
you again.
Gentlemen, when you honored me at Atlantic City last year
by electing me your president I am sure the fact was overlooked that the president is expected to make an annual address.
Our officers and Executive Committee have remedied that oversight by preparing a program which touches on all topics which
might come under the president's address, and have invited to
carry out that program men so far more competent than I to
handle their topics that my own remarks will be very brief.
Since our last annual convention in September, 1907, our
financial institutions throughout the country, and I might say,
financial institutions throughout the world, have had, if I may
use the simile, very stormy weather. Some few, very few, if
we think of the great armada which set sail, were not able to
weather the storm—the waves were too high and engulfed them
—some few limped into port battered but not beaten, and, temporarily laid up for repairs, were again, under the careful and
painstaking work of skillful hands, fitted out as safe and worthy
vessels ; but the vast majority safely weathered the storm,
scudding, mayhap under reduced sail, perhaps at times under
bare poles, but safely making harbor and with the rising sun of
renewed prosperity and confidence, what a mighty fleet it is we
see and how worthy the trust and confidence of all people.
Gentlemen, it is not for me to explain the causes of that
stormy time—our crude currency system, our over-expansion of
credits, our manipulators of banks and trust companies for their
own ends, our reckless law-makers, enacting legislation, State
. and national, without rhyme or reason; all of these, with many
other, were contributory causes; but while striving to remedy
the evils as they have been shown and to guard strenuously
against others coming in, I think we of the banking fraternity
should not fail to recognize and to be proud of the great, glorious
strength of our financial institutions as a whole. We represent,
gentlemen, a very high and noble profession. The trust companies, as I have said, are peculiarly close to the great masses
of our people. To us are entrusted the funds of widows and
orphans—to us men look to safeguard their funds for the rainy
day which may come at any time; to us great enterprises of incalculable good to our people and to the development of our
beloved country are brought to be financed; men make us their
executors, the most sacred duty that can devolve upon us. May
we prove faithful to the trust reposed in us, profit by our mutual
intercourse and friendly discussion here to-daY and return to our
homes and associates with a full realization of our duties and
our opportunities.
President Babcock : Next in order is the report of the secretary, which I will ask Col. Branch to now read:

Report of Secretary.
New York, Sept. 1, 1908.
To the Members of the Trust Company Section of the American
Bankers' Association.
Gentlemen; The financial statement for the past year is as follows:

Sept. 1st, 1907, by Credit Balance
Sept. 27th, 1907, by Appropriation by Executive Council
May 5th, 1908, by Appropriation of Executive Council
Aug. 31st, 1908, by, Sale of two Trust Company forms. $24.00
Sale of three Trust Company Proceedings

Clerical force, Chairman Executive Committee
Printing and Stationery
Petty Cash
Sundry Expenses
Furniture and Fixtures
Expenses of Convention



August 31st, 1908, by Credit Balance



Notwithstanding the stringency of the times through which the
country has been passing since the last convention held at Atlantic
City, your secretary is pleased to report that the section has progressed
rapidly and steadily.
During the fiscal year ending September 1st, 1908, 931 trust company members paid their dues to the American Bankers' Association,
amounting to nearly $25,000. This is the largest membership in the
history of the section and shows a net increase over last year of 85
members. Forty-six were dropped from the rolls owing to failures,
non-payment of dues, consolidations, liquidation and other causes, but
to take their place and place the membership list where it is 131
Trust Company Section members were added to the rolls during the
same period. The aggregate resources of members of the section is
about three and a half billion dollars.
American Trust Company Section,
American Bankers' Association by States.
August 31.
August 31.
1905 1906 1907 1908
1905 1900 1907 1908
13 13 20
10 10
New Hampshire 2
16 18 20
New Jersey
49 49 56 50
25 29
New Mexico
New York
70 78 80 91
12 16 21
N. Carolina
12 15
North Dakota
D. of Columbia 5
35 34 41 43
12 11
Pennsylvania 117 132 145 151
29 32 41 50
Rhode 'island
19 21
So. Carolina
Ind. Territory 2
South Dakota
10 14
17 27 26
9 18 21
12 16 18
9 11
10 10 13 13
10 12 16 20
10 12 12 12
13 15
14 16
12 14
NIassachsusetts 13 29 29 32
W. Virginia
11 11 10
Minnesota .
9 12 15
17 20 24
632 713 846 931
states having a membership of ten are entitled to a vice-president of
the section.
During the last year the section has had its separate office where
tench neeeary routine work has been done. It is to the intereat of
the section and its welfare that a separate office should be continued.
Much can be accomplished by a permanent secretary who is thoroughly
familiar with the details of trust company business. The work of the
section can be broadened and as organization be made more concrete
and effective by the appointment of more committees and by the selection of members who have the time and inclination to transact the
necessary business twelve months in the year.
At the close of this convention I will enter another business field.
During the eight years I have been your secretary I have seen the
section grow from a membership of 207 to its present large proportions. Over two-thirds of the trust companies of this country are
now on your rolls and it is hard to estimate the limit of their power
for good if it is systematically and properly applied.
It is with a feeling of regret that I bid you farewell in this my
eighth and last annual report. I take the opportunity to thank you
one and all, officers and members, for the kindly consideration you
have always shown me, and the hearty support and assistance you
have rendered during the entire term I have occupied the position of
With best wishes for the success of the section and to you, one and
all, God speed, I subscribe myself for the last time.
Respectfully yours,
JAMES R. BRANCH, Secretary.

President Babcock: What is the pleasure of the meeting
with respect to the secretary's report?
On motion, the report was received and approved and ordered
placed on file.
President Babcock: Next in order is the report of the Executive Committee, of which Mr. H. P. McIntosh is chairman.

Report of the Executive Committee, by H. P. McIntosh,
To the Members of the Trust Company Section of the American
Bankers' Association.
On behalf of your Executive Committee I assure you that this committee is pleased to meet so many representatives of the members
of the TrUst Company Section of the American Bankers' Association
at this, the thirteenth annual meeting of this section, and I have the
honor to make the following report:
The Trust Company Section was organized in 1896 at St. Louis,
and its places of meeting since then are Detroit, 1897; Denver, 1898:
Cleveland, 1893; Richmond, 1900; Milwaukee, 1901; New Orleans, 1902;
San Francisco, 1903; New York, 1904; Washington, 1905; St. Louis,
1906; Atlantic City, 1907, and Denver, 1908.
As a preliminary to your committee's report some statistics showing
the growth and present strength of trust companies will be interesting.
Twenty years ago there were less than one hundred trust companies
in the United States, while the forthcoming report of the Comptroller of the Currency will contain a summary of reports from 920
trust companies, with aggregate deposits of $2,157,478,378, and
aggregate resources of $3,257,422,561. This is an increase over 1907
in number of companies, of 126, or 16 per cent., and in aggregate resources of $184,0)0,000, or 6 per cent.
These reports do not, however, pretend to include all trust companies in the country, the comptroller having no authority to compel
the rendering of such reports, and hence the increase above noted has



no necessary significance, and may be accounted for wholly by greater
success in getting companies to report to the comptroller.
The most accurate statistics regarding trust companies are found
in the book of trust company statistics published each year by the
United States Mortgage and Trust Company of New York City, the
1908 edition of which is not yet available. The 1907 edition contained
reports from 1,480 trust companies, with aggregate resources of
It should be noted, however, that even the United States Mortgage
& Trust Company Statistics are incomplete, not containing the reports
of all trust companies.
In reporting the deposits of trust companies as above only the deposits of the banking departments are included, no account being
taken of trust funds for investment or actually invested.
Your committee, ably and diligently assisted by the State vice
presidents, has strenuously endeavored to increase the usefulness of
the section in practical benefit to its members, and also to increase
its membership, and while the result of their efforts in the latter are
not as gratifying as they wish, probably on account of the stringent
times, these are quite satisfactory, being as follows:
Statistics of membership for 1907-1908:
Membership, September 1, 1907
Dropped from rolls during the year for non-payment of dues
Added to rolls during the year


Present membership
A net increase during the year of
Your committee, on account of the valuable assistance it has received from the State vice presidents, is confident that tile efficiency
of the section will be increased by increasing the number of these.
The by-laws of our section provide that each State having ten or
more members in this section shall be entitled to a vice president.
Your committee recommends that this by-law be amended by striking
out the word "ten" and inserting in its place tile word "five," and
that the following addition be made to the by-laws, viz.: That any
State having less than five trust companies, all of whom are members
of this section, shall be entitled to a vice president.
Your committee urgently requests each member to increase the
membership of this lection by bringing to the notice of non-members
the benefits they may derive from said membership.
Six years ago a collection of forms used by trust companies was
made, but your committee realizing that great improvement has doubtless been made in these since then, and also recognizing the diversity
of bookkeeping systems in use by trust companies, requested all members of this section to send to the secretary copies of such forms as
they are now using, and appointing a committee consisting of Jos. N.
Babcock, trust officer of the Trust Company of America, New York
City; Mr. Geo. H. Stuart, third assistant treasurer of the Girard
Trust Company, Philadelphia, and Mr. Chas. L. Mosher, third vice
president of The Guardian Savings & Trust Company of Cleveland,
to arrange and codify these. This committee met in New York this
month and nas reported as follows:
"New York, September 10, 1908.
"Mr. H. P. McIntosh, Chairman Executive Committee, Trust ComAmerican Bankers' Association.
pany Section,
"Dear Sir:
"The undersigned Committee on Trust Company Forms have the
honor to report as follows:
"Pursuant to your instructions your committee has examined and
classified the forms received from various companies by the secretary
in response to your letter of last June to the trust companies members of the section.
"Your committee regrets that a more general response was not
made to yew* request for forms, only nineteen companies out of the
total membership of the section having been heard from.
"Your committee is of the opinion that the forms submitted would
prove of great interest to all members of the section. Your committee has, therefore, arranged these forms in a binder, classified
according to the various departments or functions of the trust company and will place them on exhibition in the secretary's office during
the next convention of the association at Denver, September 29, 1908.
Your committee also regrets that the time at its disposal since
its appointment has not been sufficient to enable it to cover the subject as completely as it should be done. It is nevertheless the opinion
of the committee that the forms submitted to them show a marked
improvement over the forms in use some six years ago when the last
book of forms was published by the Trust Company Section, and
your committee feel that the time is now ripe for a new book of
forms which should be classified, arranged and indexed in such a
manner as to form a complete guide to the most approved methods
of accounting for all classes of business covered by the various
functions of the modern trust company. •
"Your committee believes that such a book would be a matter of
proitt rather than expense to the association, as there would probably
be a good demand at a reasonable price for a complete work such as
the committee has in mind.
"Your committee therefore recommends that a book of trust company forms, as outlined in this report, should be published by the
Trust. Company Section during the present year, under the direction
of • a committee appointed for the purpose, and that the secretary,
under the direction of the committee, should be authorized to make
the necessary arrangements for the printing, copyrighting and sale
of such a book for the benefit of the section.
"Respectfully submitted,
"JOS. N. BABCOCK, Chairman,
- (Signed)
Your committee approving of the recommendation of the Committee
on Forms has re-appointed the above-named gentlemen as a committee
to fully carry out its recommendation during the present trust company year.
The report of the Executive Committee of this section for 1904
"The members of this section have previously been advised of an
arrangement made by your committee with tile Audit Company of

New York by which that company offers to advise with members of
the section as to any detail of forms and systems of accounting without charge."
Your committee, realizing that such service might still be of great
assistance to some trust companies, especially the younger and less
experienced, inquired of the Audit Company of New York if this
arrangement is still in force and has received its reply that it is, by
consultation at its office or by correspondence regarding any accounting technicalities which may help the trust companies, without charge.
Your committee wishes to call your attention to the most valuable
trust company literature contained in the volume entitled "Proceedings, Trust Company Section American Bankers' Association, 18961903," and the reports of proceedings published yearly since 1903.
These volumes should be a part of the equipment of every trust company as they are full of information of the greatest value to trust
company officers and other employees. Many of the leading financiers,
attorneys, railroad men, accountants, etc., have contributed to these
volumes. We are quite sure that all trust companies would be benefited by prescribing that everyone of their employees should take a
course of reading these volumes.
In view of the fact that some of the year books are becoming
scarce, your committee recommends to the Executive Committee for
next year the publication of a volume which shall contain the year
books for the years of 1904, 1905, 1906, 1907 and 1908.
Gentlemen, in conclusion your committee feels that the Trust Company Section should enter upon a larger career of usefulness than in
the past, if that be possible, and make its organization so helpful
and necessary to trust companies that every member of this section
will feel that it cannot afford to withdraw and every non-member
will feel that it must Join our section. There is much for our section
to do and in no way can so much be done as by establishing a bureau
or secretary's office—
First.—To gather and keep up to date as nearly as possible statistics regarding trust companies, including,
(a) Their number.
(b) Their itemized statements, showing deposits, etc.
(c) The number that actually undertake trust business.
(d) Figures as to the number of failures, showing losses involved, etc.
The need of such statistics is evident, for there is now no authoritative and complete source of information on these and other points
regarding trust companies. To collect and have published matters
of interest to trust companies.
Second.—To maintain an index to current financial literature similar
to Poole's Index to Periodical Literature, though on a very much
smaller scale. Such an index kept in the secretary's office would
enable the secretary to furnish members and committees upon request with information as to the periodicals or books, their dates and
pages, where may be found articles on subjects about which they
may inquire. Just at present, for example, it would be useful to
many trust company officials to know where they could get a list
of printed articles on guaranty of deposits, postal savings banks,
branch banking, central bank, currency and other live topics.
In connection with this it would be useful to have at the secretary's
office bound files of the more prominent financial periodicals, accessible to members who cannot otherwise consult such files. This work
would be of value to all members of the section.
Third.—To collect legal decisions and preserve a record of legislation affecting trust companies introduced into or passed by the legislatures of the several States; thus much could be done toward unifying trust company legislation.
Fourth.—To keep up and make as useful as possible to members
the files of trust company forms, records, blanks, information about
publicity, business methods, effective advertising, etc.
Fifth.—To assist, in such ways as may suggest themselves from
time to time, in the work of educating the public as to the functions
of a trust company, its superiority as trustee over the individual
trustee, and otherwise endeavor to promote the growth of the trust
company as an institution. This is a service not to the trust companies alone, but to the public at large.
A bureau or secretary's office conducted on the above lines will make
the Trust Company Section an aggressive, conservative and powerful
factor for good to its members and the general public, and be serviceable not only to individual members of the section, but also to the
various committees appointed from time to time, which often feel the
need of reliable statistics to aid them in their work. If desired the
most important information gathered each year could be published
either in separate form or in the report of the annual meeting, as the
report of the secretary, or embodied in the report of the Executive
All this would, of course, involve increased expense, though the
amount need not be large; but it would seem to be money well used
and would certainly not be burdensome to an organization with such
resources behind it as the Trust Company Section has.
Your committee will be pleased to receive suggestions for topics
for discussion or subjects for addresses at our next annual meeting,
and desires to call your attention to the program of this
and invites full and free discussion of the papers and topics,
thanks tile various members for the uniformly courteous manner
the valuable
which they have received our communications • and for
assistance many of them have rendered us.
The Trust Company officials of the country as a class have
understood the high character of the responsibilities which
they have risen
upon them, and the splendid records made show how
to give the best that was in them to the sacred duties
and, if possible,
Upen us now rests the responsibility of maintaining,
that the trust
bettering the good record already made. Realizing
maeltinery of our adcompany has become a necessary part of the
carrying on of great corvancl-g civilization, essential alike to tile
individual; useful to
porate enterprises and to the business of tile
means, and capable
the man of large means and to the man of small
nation, let us •
of licreasing adjustment to the needs of our great
live up to the opportunity and duty of making the trust company
rise each year to a stronger and better
Respectfully submitted,
II. P. McINTOSH, Chairman.
President Babcock:

Gentlemen, you have heard the report

of the • committee, with its several recommendations.
shall be done with it?
On motion, the report was accepted and placed on file.


Mr. J. J. Sullivan, of Cleveland, Ohio: Believing that the
sentiment of the meeting is in accord with the recommendations
of the committee respecting the amendment of the Constitution
and by-laws, I offer this resolution:
Resolved, That the by-laws providing for vice presidents be
amended as follows: Strike out the word "ten" and insert in its place

the word "five," and add to said by-laws the following: "That any
State having less than five trust companies, all of which are members of this section, shall be entitled to a vice president."
I move the adoption of this resolution.

Mr. L. L. Gillespie, of New York City: I second the adoption
of the resolution.
President Babcock: All in favor of the adoption of the resolution will manifest it by saying Aye, and those opposed, No.
Mr. John H. Holliday, of Indianapolis, Indiana: With a view
to furthering the business of the meeting, Mr. President, I offer
the following resolution :
Resolved, That a Nominating Committee of five be appointed by the
chairman, which committee shall receive names in writing from delegates present, from which the Nominating Committee shall select five
members of the Executive Committee for the term ending in 1911,
add which shall be reported back to the convention for its action.

A Member: I second the resolution.
President Babcock: All in favor of the resolution will manifest it by saying Aye; those opposed, No.
President Babcock: The Standing Committee on Protective
Laws is next in order, and I will ask Mr. Lynn II. Dinkins, the
chairman, to read It:

Report of Committee on Protective Laws.
To the Chairman and Members of the Trust Company Section.
Your Committee on Protective Laws begs leave to report that since
the last meeting it has continued to address itself to the task of exciting Interest among bankers in the several States toward securing
legislation looking to the protection of the use of the word "trust,"
suitable provisions for State supervision and denouncing as a crime
the circulation of false reports concerning the condition of banks and
trust companies.
In many of the States no session of the legislature has been held
since our last report and in others legislation us to one or more of
the points suggested has failed. So far as the committee can learn,
the failure of such laws to pass, in each case, was due to their tardy
presentation to the respective legislatures and not to any adverse

Practically every banker to whom your committee has written regarding these matters has expressed himself as strongly in favor
of all of the measures, and in many cases the State associations have
passed resolutions looking to the introduction of Finch measures in
their respective legislatures. Your committee urges all members of
time sect!, n to see that bills relating to the respective subjects be introduced early in the session of their legislature, in order that there may
be no failure to secure time passage of the laws upon this score.
We now believe that in each State the sentiment of time bankers
and people may safely be counted in favor of these measures and all
we now require Is sufficient interest upon the part of our members in
order to secure the practically universal enactment of such laws.
Perhaps the most significant and important changes, both in protective and constructive laws relating to trust companies and trust
funds during time period under review, are time new and amended
enactments in Massachusetts and New York. In the opinion of the
committee the present statutes of these States afford, in many particulars, models which other Commonwealths would do well to follow,
making only such changes as are necessary to meet local conditions
incident to a less populous territory and smaller per capita wealth.
The fact that the Banking Commissioners in these States were formerly officers of our section and of this committee should be a source
of pride and satisfaction to our membership.
The Mississippi legislature of 1908, chapters 110 and 111 of the
laws of 1908, partially covers the subject matter under discussion
by providing, among other things, for State supervision and the revision of quarterly statements by the State auditor, which makes for
the security of both banks and depositors.
Alabama, by its new code, which went into effect May 1, 1908,
provides in Section 3528 for time use of the word "trust" in the
name of trust companies, and in Section 3530 prohibits the use of
such word by corporations of any other character. No limited or other
partnership is allowed to use the word "trust" as part of its name.
This State has no law punishing the malicious circulation of reports
derogatory to tile financial standing of trust companies.
Oltlo, at the session of its last legislature, passed a banking law
covering all State institutions. This law provides for State supervision, minimum reserve, and makes it a criminal offense to circulate
a derogatory report concerning the financial standing of such institutions. The law in question is not compulsory upon the banks until
the year 1910, but your committee is advised that the sentiment among
banks is such that it is not unlikely all conservative institutions will
comply at once with its requirements, provisiou for such immediate
compliance being made in the act.
In Louisiana the statute which the Standing Committee of the Association has been advocating authorizing the payment of deposits made
under the names of two or more persons to either of said persons,
whether the other be living or not, was passed.
In conclusion, your committee deems it not out of place to refer
to the movement. which seemns popular with some politicians in
various States, for the enactment of laws providing for the State
guaranty of deposits. This plan. commonly called the Oklahoma plan,
Is not only radically socialistic in its tendencies, but directly operates


to take the property of one bank for the payment of the debts of
another. Your committee feels that the adoption of such a plan
would have the effect of placing at a discount the individual credit
and standing of an institution and would tend to lower the grade of
all •such institutions in the particular State. It, therefore, strongly
recommends the adoption of an appropriate resolution deprecating the
enactment of such legislation.

On motion, the report was received and ordered placed on file.
President Babcock: I will appoint as the Nominating Committee John H. Holliday, of Indianapolis; Wilbur M. Baldwin,
of Cleveland; David V. Webster, of Chicago; Roland L. Taylor,
of Philadelphia, and A. L. Abrahams, of Denver.
President Babcock: We will now listen to an address from a
gentleman who needs no introduction—Mr. Breckinridge Jones,
President of the Mississippi Valley Trust Company, of St. Louis.

"The Trust Company—A Necessity," by Breckinridge Jones.
[Mr. Jones' paper in full will be found on pages 137 to 141
of this publication.]
President Babcock: The next address will be delivered by
Mr. F. H. Fries, President of the Wachoria Loan & Trust Company, Winston-Salem, North Carolina.

"Radicalism vs. Conservatism," by F. H. Fries.
[Mr. Fries' address in full appears on pages 141. to 145.]
Mr. Parker, of Quincy, Illinois: I think it would be a good
idea to have a committee appointed, as suggested by Mr. Fries in
the paper that he has just read; and I make a motion to that
effect, that the Chair appoint a committee to take into consideration that suggestion.
Mr. McCarter, of Newark, New Jersey.: I move as an amendment that the suggestion be referred to the Executive Committee
of the Section for action.
Mr. Parker: I accept the amendment.
President Babcock: All in favor of the motion will say Aye;
opposed, No.
We will now take a recess until 2 O'clock.
Adjourned until 2 P. M.
President Babcock: The first address to be delivered this
afternoon will be by Mr. Lawrence L. Gillespie, Vice-President of
the Equitable Trust Company of New York.

"New York City Trust Companies Under Present Legislation," by Lawrence L. Gillespie.
[Mr. Gillespie's address in full is printed on pages 145 to 148.]
President Babcock: We will now listen to an address by Mr.
Joseph N. Babcock, Trust Officer, The Trust Company of
America, N. Y.

"Securities Held in Trust, Etc.", by Joseph N. Babcock.
[We print Mr. Babcock's address in full on pages 148 to 150.1
President Babcock: The next order on the program is brief
addresses by vice-presidents of the various States. The secretary
will call the roll of States and, as each State is called, the vicepresident from that State, or some one else in his absence, is
expected. to respond.
Alabama: (No response.)
Mr. H. L. Remmel, of Little Rock: In the absence of the
vice-president from our State I have been requested to make a
brief response. We think that we have made great progress in
Arkansas in the last twenty years. Twenty years ago we did
not have oven ten banks in the State. To-day we have 375
banks, with deposits of between $40,000,000 and $45,000,000.
The condition of the people is prosperous; the farmers are
harvesting good crops, and the business men are in good financial
condition. During the panic of last year we had no failures,
except one, and that was the case of a small bank which was
looted by the officers.
We had a very well-attended convention at Hot Springs this
Summer, at which time the subject of postal savings banks and
the guaranteeing of Bank deposits were discussed, and both
measures were unanimously voted down. (Applause.)
The principal industry in our State is lumber. Of course, the
panic affected the lumber interests; the consumers practically
cut off their demands, but the mills did not shut down entirely,
some of them that had been running day and night simply
stopped running at night. Now they are running on full time
again, the demand is increasing, and the price of lumber has
advanced $2.50 a thousand.
Our principal mining is coal mining. While we have had
strikes at times, operations have again been started up.
Recently we have developed a new enterprise, namely, rice
culture. Few people would have thought that we would be
raising rice in Arkansas, yet the rice we produce to-day we think
Is better than any imported from abroad, and better than the
rice raised in Louisiana.
We do not know anything about hard times, and if any of
you folks have got tired of banking in these northern climes and



want to invest your money in a good, safe place, why come down
to Arkansas and we will show you what we can do for you.
Oh! I want to say one more thing. The good people in
Colorado have got gold mines. I have heard it asked many
times what made this city of Denver, and it was said that it is
because of the gold and silver mines up here, together with the
climate. Now in Arkansas we have something better than gold
and silver mines, we have diamond mines, and we have already
produced over 300 splendid examples of diamonds, and experts of
Tiffany & Company in New York have pronounced them among
the best diamonds to be found in any land. So come to
Arkansas and bring your ladies and get one of our diamonds.
California: (No response.)
Mr. Ralph W. Cutler: Mr. President and Members of the
Trust Company Section: It is a matter of great regret that the
vice-president for Connecticut is not present at the convention.
I have been asked not to let the roll-all go to the next State
without saying a word on her behalf. Information is requested
in regard to legislative enactments. In our State the legislature
meets biennially, and 1908 happens to be an off year. The next
session ,of our legislature will be held in January, 1009, and
many bills relating to banks and banking will be introduced.
One idea in especial lies very near the heart of the conservative
bankers of the State. We have in Connecticut two Bank Commissioners who make semi-annual examinations of the different
trust companies and State banks, one commissioner coming alone
in the Spring, and the other in the Fall. These examinations
must necessarily be superficial in their character, owing to the
large number of banks to be visited. What we earnestly desire
is to establish a single-headed commission with a corps of experts who will make a thorough and careful examination of every
bank that they visit, taking their own time in doing so. We
hope to establish a State banking department along these lines,
conforming to the insurance department already so well established, and we hope that at the next convention the vice-president from Connecticut will have something to report upon this
The banks of the State went through the panic safe and sound
—no weak spots developing anywhere. No pay-roll checks were
issued upon trust companies, and I am proud to say, that no
clearing-house certificates were issued in any part of the State.
Currency was scarce, as it was everywhere else, but by helping
each other and using judgment, cash payments were made
wherever absolutely required, so that no actual distress existed
anywhere. Of all the banks in our State nine-tenths are members of the American Bankers' Association, and every trust company in the State of any importance is a member of the Trust
Company Section. Our bankers are unanimously opposed to the
idea of government guarantee of deposits. One of the prominent
papers of the State sent letters to every bank, asking opinions
of the officers on the subject, and in response the answers were
unanimous against the idea, believing it to be socialistic in its
character and pernicious in its development.
Our manufacturers are hopeful and full of courage, and are
receiving many more orders than was the case three or four
months ago.
Our life insurance companies are doing a wonderful business,
and going on from strength to strength. Our fire insurance
companies, in spite of heavy losses all over the country, are ably
handled, risks are carefully scrutinized, and I assure you, gentlemen, that your policies in any Connecticut fire insurance company are perfectly safe.
Business, generally speaking, is very good indeed. Our large
tobacco crop will help all branches of trade materially, and we
believe that with a continuance of the Republican administration
and the election of Mr. Taft we shall see continued improvement
in business everywhere, and a return to our old-time prosperity.
I thank you, gentlemen, for your courteous attention.
Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts and Mississippi. (No response.)
Mr. C. F. Enright: We have in this country four kinds of
banking institutions, with the deposits divided about as follows:
Savings banks
Trust companies
State and private banks
National banks

equals the latter in resources and liabilities and should have all
the protection of the government thoroughly around it that is
given to the national banking system. It should also be recognized as a governmental depository, the same as the national
bank. On account of its importance in the financial system it
should be accorded the same consideration in time of panic
and distress as is accorded to the national banks, and in order
to obtain this it should be under a national system of control.
On account of the odium that has attached to the word
"trust" in connection with combinations of a different character
from that of the legitimate trust company, there is no doubt but
that trust companies have suffered and will continue to suffer
by reason of the misunderstanding on the part of a large part
of the public connecting the trust companies with the idea of
trust or combination, which is held more or less in disrespect.
There is no doubt but what the word "national" attached to
the name of bank is an emblem of credit and one that commands general respect, and to attach the word "national" to
the name of a legitimate banking trust company would not only
neutralize the unfavorable idea the public hold on account of
word "trust," but would give it the same credit mark which the
national banks now enjoy.
I cannot imagine, how any honest, conscientious trust company official would oppose the nationalization of trust companies when it would mean stricter supervision, uniform system of doing business, and bring the trust companies to be
recognized by the Federal government and the public at large to
the fullest measure of importance in the financial world to which
they are entitled.
I regard the trust company, in addition to its many measures
of usefulness, the logical banker for the individual, and while
the business of the trust company is growing daily as its
facilities and usefulness is becoming understood, I can imagine
nothing that would promote the progress, permanency and
endurance of them so much as to bring them under one system
of national character, which would give them the stamp of
governmental approval.
The limit of time prevents a lengthy discussion of this subject at this time, and the above ideas are offered for the purpose of having them considered and reflected upon at home in
the hope and with the view of having them taken up and pushed
forward in due course.
Mr. Breckinridge Jones: If I may be permitted to say just
a word also from Missouri. As this suggestion of Mr. Enright
will go into the record I would like to have along with it the
very clear statement that I believe there is no power in the
Federal government to provide for a national trust company.
Mr. Enright, of Missouri: Are not the trust companies of
the District of Columbia now under the supervision of the
Comptroller of the Currency?
Mr. Jones: I will answer that. Yes, they are; and the
very fact that Congress has provided for trust companies in the
District of Columbia, where they have full power to do as they
please, only emphasizes the fact that it has not power to do it
anywhere else.
Mr. Enright: I assume that we can have whatever we desire
through the Congress of this great country.
Mr. Jones: Even President Roosevelt has said that the Constitution was a living organism and that it could be expanded
to do whatever we wanted it to do; nevertheless, I do not believe the American people are ready to accept that view. (Applause.)
Mr. Festus J. Wade, of St. Louis, Mo.: Brother Jones and I
always have the misfortune to be on different sides of every
question. I would like to have him point out to me the section
of the Constitution that authorized the establishment of national
banks. National banks were created 75 years after the Constitution was adopted. The authority that created the national
banks was the Congress of the United States. Now, there is
nothing prohibitory in the Constitution against creating national
trust companies. True, there is nothing authorizing the organization of national trust companies, but it is equally true
that there is nothing authorizing the organization of national
Mr. Jones: If my Brother Wade had listened attentively to
a paper that was read at the morning session he would have
known more about the subject than his remarks would now
seem to indicate that he knows.
Nevada: (No response.)

This division of deposits indicates on its face the needs of
the different kind of banking institutions as shown.
In the different States different laws govern the management
of trust companies. Some States permit them to take savings
deposits, others prohibit taking deposits at all. Some States
permit doing a commercial business, while others confine them
entirely to collateral business. By having a national charter
a national trust company would possess that uniformity of
character that would confine it to a uniform business throughout the United States.
While the examination and supervision in some States is up
to the standard of national examinations, national examinations
ought to be better than the average examination by State departments.
The trust company system is now as important a factor in
the financial world as the national banking system. It almost

New Jersey:
Mr. DeWitt Van Buskirk:
The President and Gentlemen of the Trust Company Section:
As vice president for New Jersey it is my duty to bring to the attention of this association any changes in the laws of our State governing trust companies, or any other matters of importance affecting
the status of trust companies.
I beg to state that there has been no legislation in our State during
the past year which in anywise changes the conditions existing a year
ago, and the only matter of importance has been a decision of our
highest court. with regard to taxation of bank stock and placing it
upon the same basis of taxation as that now applicable to trust
company stock.
The whole question involved in this controversy was whether the
money of banks, national and State, to the extent that it was invested in non-taxable securities, should be exempt. Under the laws
of our State it has been determined that they should be.



We, in common with the other banking interests of the country,
have passed through a very trying period since the last meeting of this
association, and I am glad to be able to report that not one trust
company or bank in the State of New Jersey failed to meet its obligations. When so many of the trust companies and banks across the
river from our State, in the great city of New York, were going to
the wall, it might reasonably. have been expected that the same
trouble would extend to us, especially to those in the communities
so closely affiliated with the city of New York that we are almost a
part of it.
While the statistics of the banking department show that there was
a falling off in deposits for the time being, it is safe to say that not
one institution was in serious trouble, and every one of them is now
nearly back to its normal position. I give you some of the figures:
The Commissioner of Banking and Insurance reported upon the trust
company business of the State of New Jersey, as of December 31,
Deposits aggregating $130,868,109. The gain for 1906 was $17,051,706, or over 13 per cent. The number of depositors increased
37,409, over 15 per cent. The total resources increased over 7 per
cent. Surplus and undivided profits increased $1,101,023.
Bonds and mortgages constituted 14 per cent, of the total assets;
stocks and bonds, 29 per cent.; collateral loans, 27 per cent.; notes
purchased, 11% per cent.; real estate, furniture, etc., 3 per cent.;
cash on hand, 1 8-10 per cent.
Sixty-eight trust companies were then doing a prosperous and lucrative business in the state, with aggregate resources of $181,784,400.
In the following six months the number of trust companies had increased to seventy-one, with total deposits of $139,913,417 and an
increase of resources to $185,758,274. The reports to the department
Indicate larger aggregates generally; in the various items reported,
but surplus and undivided profits show $171,596 decrease, a precursor
of the 1907 depression. On December 31, 1907, the number of trust
companies was seventy-four, an increase of six for the year. Deposits
bad shrunken to $125,711,509, a decrease of nearly $10,000,000 in time
deposits and $4,400,000 in demand deposits, and a shrinkage of more
than a million and a half in surplus and undivided profits. Stocks and
bonds on hand, by depreciation and sale, fell off $4,600,000, and loans
"Other liabilities" increased
on collateral nearly $8,200,000.
$2,500,000, and cash on hand increased more than $2,000,000, conclusive evidence of the conservative management of the trust cornpanies of New Jersey in the preparation for any emergency.
The reports to the State Banking Commissioner of June 30, 1908,
show a marked recovery and encouragement in all departments of the
"Other liabilities" stand $1,130,000, against
trust companies.
$4,039,000 in the preceding December, being $2,900,000 decrease. Total
deposits increased $6,547,000, standing at $132,258,529, being a gain
of nearly half of the loss at the lowest depression. The cash on hand
was more than double the legal requirement upon demand liabilities,
and surplus and undivided profits regained over a million of dollars
from the low figures of 1907. There was a gain of 23,636 in the
number of depositors, though the total of deposits has not reached the
high-water mark of June 29, 1907.
Some of the lessons to the trust companies of New Jersey of the
panic of 1907 were:
1. That State supervision is a benefit and to be encouraged, and is
not antagonistic to the welfare of banking institutions.
2. That our trust companies were as strong and as much relied on
by the people during the crisis as the national and State banks.
3. That cash in bank and investments on call loans: in a larger
proportion to deposits and a smaller investment in long-time loans,
is necessary, notwithstanding nearly one-half of the deposits of trust
companies of New Jersey are time deposits.
Sanity in the department must be presumed. Given this, the people
—depositors and others—are less likely to stampede than if they had
not this safeguard.
• While conservative methods, if an institution lacks them, will be
insisted on, it is for the good of all banking interests that such
should prevail, and that the reckless banker should be eliminated.
Real, honest supervision and thorough examination is a good thing
for every institution, and the more that customers and the public are
impressed with the thoroughness of this supervision, the less liable
are they to distrust and get needlessly concerned about the safety of
their moneys on deposit.
Guaranty of bank deposits, if workable, might, to a degree, prevent
senseless withdrawals in panic times, but assuming, as most of us.
believe, that this panacea is neither fair to the banker nor practicable,
the next best safeguard is rigid and thorough supervision of every
institution. This expense should be borne by the State. Some part
of it could, however, be assessed against the institutions examined.
New York has recently enacted a code of laws governing this and
kindred subjects, which were drafted under the direction of an experienced and practical trust company man, who is now bank commissioner of that State, Mr. Clark Williams, late president of the
Trust Company Section. Some such code of laws in each State would
strengthen all. Loose or no regulation, resulting in suspension or
failures in one State, are apt to induce unrest and distrust of the
banks and trust companies in neighboring and other States.
It is suggested that the Trust Company Section request the American Bankers' Association to appoint a committee to draft a uniform or model law, incorporating the best features of the laws of
the various States, which have well-organized banking departments,
and to urge the associations In the several States to have enacted
a law on the general lines which may be prepared by this association, providing for intelligent and thorough State supervision on upto-date lines.
Vice President for New Jersey.

New York:
Mr. Alfred M. Barrett:
Mr. Chairman and Gentlemen of the Convention:
The vice prestilint for New York, finding it impossible to be present
at this gathering, gives me the opportunity of addressing you at this
time upon the trust company situation in the State of New York.
Since the holding of the last convention we have had, as you all
are aware, a condition of affairs in the banking world in New
York which has commanded the anxiety and the attention of not only


the people of our own State, but also that of the public mind in
general throughout this country.
A financial storm, such as has never before been known, broke
over the financial community in the State of New York, the effect
of which has been widespread and far-reaching. A situation which
was then strained almost to its limit has since become eased and
strengthened by the passage of new and wise laws and by the appointment of a man well known to us all, as superintendent of banks of
the State of New York, the former president of this association, Hon.
Clark Williatns.
The new laws which have recently been passed (some twenty in
number) have done much to safeguard the banking institutions of
the State of New York and to place the superintendent of banks in a
position where he may direct, in a great measure, what financial
institutions in the State of New York can or cannot do.
The trust companies of the State of New York (in the Borough of
Manhattan) will be required, after February 1, 1909, to carry a cash
reserve of 15 per cent. The minimum reserve required in other parts
of the State will be 5 per cent. in cash and 5 per cent. on deposit
with reserve depositaries.
Under the new law trust companies are prohibited from investing
in more than 10 per cent, of the capital stock of private corporations. The establishment of trust company branches without permission being first obtained from the superintendent of banks and without $100,000 additional capital for each branch, has been prohibited.
This has been the occasion of some of the smaller institutions dispensing with some of their branches.
Prior to the passage of these new laws (recommended by Superintendent Clark Williams) there was a certain lack of supervisory
power by the department of banking. Since the passage of these
new laws, the results which have been obtained by the banking
department quite clearly show how absolutely necessary it is that
sufficient power be vested in the superintendent of 'banks in order
that he can be, as he should be, the guiding power.
The law affecting loans made by trust companies provides that not
more than 10 per cent. of the paid in capital and surplus of any trust
company may be loaned to any one person, firm or corporation; except that in the Borough of Manhattan, of the City of New York,
25 per cent (and elsewhere in the State 40 per cent.) thereof in total
may be loaned on security worth at least 15 per cent, more than the
amount loaned. The law before its amendment permitted trust companies in the Borough of Manhattan to loan 40 per cent. on security.
The law relating to mortgages provides that second mortgages shall
not be made if the prior liens on the property exceed 10 per cent. of
the capital and surplus of the trust company, or if all the mortgages
thereon, as a whole, exceed two-thirds of the appraised value of the
property as found by a committee of the board of directors.
No loan can be made subsequent to November 1, 1908, directly or
indirectly, upon real estate security, by a trust company in the Borough of Manhattan if its total loans upon real estate security exceed, or will exceed by the making of such loan, 15 per cent. of its
total assets or by trust companies elsewhere in the State, if such
loans exceed or will thus be made to exceed 25 per cent, of its total
Depositaries.—No funds can be deposited with any other monied
corporation except such as have been designated as a depositary by
a vote of the majority of the directors or trustees of the depositing
institution, exclusive of any director who is an officer or director of
the depositary so designated.
Report of Directors.—Directors must hold regular monthly meetings. A copy of the loans in writing must be made to each director
at such meeting or to an executive committee of not less than five,
by a- designated officer who shall verify the report by affidavit and
file it with the records of the corporation showing all purchases and
sales of securities and all discounts and loans of $1,000 or over, with
a description of the collateral and the total liability of any borrower
whose liability has been Increased by $1,000 or over since the last
regular meeting of the board.
A report shall also he made to each meeting of the board of
directors of all loans in existence at the time aggregating $50,000
and over.
Misconduct of Officers or Directors.—The penal code, section 595,
as amended April 27, 1908, makes it a misdemeanor for any director,
officer or employee of a banking corporation to deposit funds of the
corporation with any other corporation on condition that a loan shall
be made to any director, officer or employee of the depositing institution; or to intentionally conceal from or fail to report to the
directors any loan or any purchase or sale of securities, or to agree
at the time of issuing a certificate of deposit that it shall be paid
In advance of its maturity.
Previous to the late panic there were in the State of New York
eighty-nine trust companies, with a capital of $67,950,000, and those
companies have a surplus and undivided profits of $175,288,342.
During the panic four of these trust companies suspended, three
of which have since resumed—one only being now in the process of
liquidation, all of the depositors having been paid in full.
Deposits of the trust companies of the State of New York in
August, 1907, prior to the panic, were $1,087,664,000.
The average deposits reported to the banking department for the
week of September 19, 1908, were $1,063,299,000. This shows a loss
(since the panic) in deposits of but $24,000,000.
There are now eighty-eight trust companies doing business in the
State of New York.
Our present laws put the supervision of our banking institutions
squarely up to the banking department of the State, where it properly
belongs and always should have been.
Trust companies in the State of New York from their very inception have been phenomenally successful, but a fact not generally
known, but much to their credit, is that there has never been a
failure by which the depositors have lost even one dollar.
Assistant Secretary Guardian Trust Company of New York.
North Carolina: (No response.)
Mr. W. M. Baldwin:
The conservative bankers of Ohio are rejoicing over the fact that
they now have a law, passed by the last State legislature, relating



to the orgatilittion and inspection of State financial institutions. This
law is the result of a long struggle on the part of the officers of
conservative banks and trust companies who have sought for a number of years to have the legislature pass a bill authorizing State
inspection as an efficient method of enforcing the requirements of the
law. The victory which was won last winter makes us feel like the
old Roman who exclaimed: "Vcni, Vidi, Vinci!" (I came, I saw, I
We have sought to have legislation authorizing State inspection
of banks, because the conservative institutions of Ohio have always
conformed rigidly to all of the essential principles of safe banking
which any law could possibly require, and they have observed these
principles as consistently as could be demanded by any reasonable
bank examiner. We have constantly regarded our institutions as being
the trusted guardians of public and private funds, the protection of
which has been held by bankers of integrity to be a sacred duty. We
court inspection and desire to have the methods and policies of our
institutions placed before the public in an authorized and legal way.
This object will be accomplished by means of the sworn statements
which are required to be published in the newspapers.
The law provides for the appointment of a State superintendent of
banks, who has charge of the execution of the law in relation to
banking companies, savings banks, savings societies, society for savings and loan associations, savings and trust companies, safe deposit
companies and trust companies, and every other corporation or association having the power to receive, and receiving, money on deposit,
now existing and chartered or incorporated, or which may hereafter
become incorporated under the laws of the State.
The superintendent of banks may employ such examiners to assist
him in the discharge of the several duties imposed upon him as be
shall find necessary. The State bank superintendent is bonded in the
sum of $50,000 and each examiner in the sum of $10,000, with surety
which must be approved by the government of the State. A heavy
penalty is provided for anybody connected with the State department
should he impart any information learned through examinations, and
the circulating of any false statements concerning any institutions
governed by this law is expressly forbidden and made punishable.
Neither the superintendent, nor any examiner appointed by him, can
be interested directly or indirectly in any national bank, or in any
bank, or other corporation or association, which comes under their
The law further requires that no less than four reports shall be
made to the superintendent of banks each calendar year at such times
as he shall require. Financial institutions are forbidden to advertise
their capital stock as being larger than the amount actually paid in.
State bank inspection is the chief point won in the passing of this
law; for although the old law contained commendable provisions, yet
the law could not be properly enforced by reason of the fact that
the State authorities were unable to obtain sufficient information concerning the methods employed by an institution. With State inspection, however, every legal provision relating to the protection of
deposits can be rigidly enforced.
The percentage of reserve which the banks must carry is carefully
provided for by the new law. This provision requires that commercial
banks shall retain in their vaults in lawful money, at least 6 per cent.
of all demand deposits; at least 4 per cent, of time deposits and a
total of 15 per cent. on all deposits, a part of which reserves may
be deposited with approved agents.
While the banks are not compelled to comply with the regulations
of the new law until 1910, many of the conservative institutions have
already submitted to its requirements and are conducting their business along the lines designated. The first report under this act has
been called for by the superintendent and published in the newspapers, it being a very exhaustive one, following in a large measure
the form used by the comptroller of the currency for national hanks.
The inspection of State banks in Ohio, as provided by this law,
will place the State institutions on a higher plane in public estimation. While there are hundreds of banks that will feel no restraint
because of the law, having for many years followed rigidly those
practices which have been made the basis of legislation, yet many institutions will be required to check up their affairs with the law's
provisions. This will strengthen the banking situation throughout the
entire State and establish a larger confidence in financial institutions.
State inspection will give such assurance of absolute safety that
much of the money which has been hoarded heretofore will be deposited with savings banks and trust companies. We have waited
for State inspection for many years and welcome it as the official
means by which conservative banking methods will receive the seal
of the State.
In conclusion I wish to speak of the strong financial condition
which the trust companies of our State have maintained, notwithstanding the unparalleled stringency in the money market.
While a few institutions have failed as a result of unconservative
methods in management, their liquidation has so far progressed that
I am perfectly safe in saying that every depositor will be paid in
full, and sonic others have suffered a considerable diminution of their
deposits because of a lack of confidence on the part of the public;
yet many trust companies have regained deposits lost during the
stringency and some have made large increase in total deposits.
There are seven trust companies in Ohio having capital and surplus amounting to more than $1,000,000 each; while three of these institutions have each set aside surplus funds aggregating $2,000,000 or
more. Practically all of the trust companies have accumulated a
significant surplus fund, which is an evidence of a determination on
the part of the management of the various banks and trust companies in the State to safeguard their depositors in every possible way.
Oregon: (No response.)
Pennsylvania: (No response.)
Rhode Island: (No response.)
Mr. W. Z. Dozier: I regret that I have no figures to give
showing the financial condition of our State. I can only make
a report in a general way. In the recent panic there was only
one failure in the State, and immediately after the failure the
bank was taken in hand by another institution and all the depositors were paid in full.

Our State is fortunately situated in that its industries are
diversified. The eastern section of the State is devoted to
mining, the middle section to farming and stock raising, and the
western section to the cotton industry, and all these are in a
flourishing condition. We have a very progressive State organization which holds instructive and enthusiastic meetings each
year in different sections of the State and we have a group
system: connected with the State banking system.
Texas, Vermont, Virginia: (No response.)
Mr. P. C. Kauffman, of Tacoma: The vice-president for our
State is unable to be present, much to my regret; but I cannot
let the opportunity pass without saying something as to the
condition of Washington and the great Pacific Northwest.
At the meeting of this section in 1901 I stated that the deposits of the three States of Oregon, Washington and Idaho—
constituting what is known as the Pacific Northwest—were at
that time $60,000,000, a figure which was over three times the
deposits of 1896. To-day, according to reports of the authorities, the deposits in the single State of Washington aggregate
conaiderably over $150,000,000. The single city of Seattle
shows deposits of nearly $70,000,000; my own city, Tacoma,
nearly $16,000,000, and Spokane $20,000,000, while we have
a dozen smaller cities with deposits running from one to four
million dollars east].
During the past year the banks of the State of Washington
met the condition that faced them in splendid shape, there being
only one small failure, and that. was caused through bad judgment in the management of the bank. Since then, however, that
bank has been reorganized and every depositor will be paid in
At the convention we held in June the subject of postal savings and a guarantee of bank deposits came up, and they were
unanimously condemned in no uncertain terms. (Applause.)
Before I sit down I want to say that next year in Seattle
there will be held what is known as the Alaska-Yukon Exposition and, on behalf of the citizens of Washington and Alaska, I
extend to you all a hearty invitation to come there and see the
wonderful resources of that section.
We shall be heartily
pleased to welcome you one and all.
West Virginia :
Mr. C. H. Harvey, of Huntington:
Mr. President and Gentlemen: In a very short time after our meeting at the great bathing resort, Atlantic City, there swept over this
country a most depressing financial wave, one that not only tried the
nerve and business ability of the small banker, but the largest
bankers of our country, and greatest financiers had to strain their
nerve and call into 11542 every latent energy they possessed to steer
their financial institutions past the breakers confronting them into a
safe and calm luirbor.
During these trying times, while the great reserve cities and central
reserve cities were issuing clearing house certificates (scrip, as it was
commonly called), in West Virginia, our section of the country, we
were perhaps a little more fortunate. We never had to resort to
issuing of scrip, being shippers of currency. We found our reserve
and central reserve correspondents would not promise to ship us currency should we need it, therefore, in self-defense, we ceased shipping, and never for a moment stopped paying out currency over our
counters, and furnished all of our manufacturers' pay rolls as usual.
In West Virginia we have strong banking laws, superior to many
States, and much better than the national banking law. At the last
session of the legislature we passed amendments that were improvements, and we hope at each succeeding legislature to further amend
until we -will have the best in this or any other country. As we are
now rivalling the world in our rapid progress in the output of forest,
coal, .frult growing, grazing and agriculturing pursuits, we intend to
keep abreast of the times in banking and conservative banking law.
The negotiable instrument act is now a law in our State. We have
a law that it is now unlawful for any individual to do business and
use the name. or term of bank, banker, banking company or trust
cotnpany until they have taken out a charter and complied witii
all the statutes governing banks and trust companies; and as our bank
and trust company laws are very strict, we have eliminated to a large
degrsie the wild cats from this branch of business.
We have in West Virginia the enviable distinction that a depositor
has never, since the organization of the State, lost a dollar by the
failure of a bank. Yet, with all this, I am heartily in favor of some
plan of insuring or guaranteeing the deposits. In this I am not alone;
the honorable commissioner of banking of our State, and I believe one
of the best in the country,• is a strong advocate of this reform in our
banking law.
There are several amendments we would like to have, and I hope
to get, to our banking and trust company law:
First —To make it a penitentiary offense for any one to start or
circulate reports detrimental to or might cause a run on a bank or
trust company.
Second.—That the judiciary shall, when there is a trust company
in this bailliwick, appoint it in preference to an individual to all the
fiduciary appointments.
Third.—As the nation has set the example, the depositories of the
state should be banks of its own creation. And as time rolls by and
new conditions confront us, keep abreast of the times and amend our
banking law to meet the conditions, and not allow our State banking
laws to become as antiquated as our national banking ,laws are at
the present time.
President Babcock : We are fortunate in having with us
this afternoon one of the former presidents of the section—the
distinguished Superintendent of Banks of the State of New York,
Hon. Clark Williams, and I am sure we should all be glad to
hear a few words from him.

Mr. Clark Williams, of New York: Mr. President and members of the Trust Company Section: It is a great gratification
to me to be with you to-day. I am on my vacation and I am not
indulging in experiences such as have engaged our attention for
the last nine months; I am not talking busines. Indeed, I feel
like the man who went fishing on the banks of the Erie Canal
and fell in. A friend passing by saw him floundering in the
water and cried: "Hello, Jim, how did you come to fall in?"
He replied: "I didn't come to fall in, I come to fish."
(Laughter.) Having been placed so prominently before you I
cannot do less than express to you the message I bring from
my constituents in the State of New York. There we have
20 per cent. of the banking power of the United States under
our supervision, and I am confident that had that banking power
been represented in an assemblage which had taken action instructing its superintendent of banks as to how he should speak
upon two questions there would have been no doubt as to their
determination. I am here to tell you that it will be very satisfactory to that 20 per cent. of the banking power of this country
if this section goes strongly on record against the government
bank deposit guarantee proposition, whether it be State or
Federal. (Applause.) And they would also like to have this
section use its influence by proper expression, if it be your will,
that adequate State supervision of financial institutions is a
wise thing to have.
Gentlemen, I thank you for the opportunity you have given
me, and again I express my great pleasure in meeting so many
of my old friends in the work to which I gave much of my effort
and all of my heart. (Applause.)
President Babcock: While the roll-call of States was proceeding Mr. Webster was engaged in another room in the meeting of a committee. He is here now, and I ask him to respond
for Illinois.
Mr. David V. Webster, of Chicago. There really is not very
much to say from Illinois, apart from the general condition of
business. There are 417 banks organized under the State laws
with deposits of $89,000,000 and total resources of $516,000,000.
Thirty-seven of these banks, with total resources of $400,000,000,
are licensed to accept and execute trusts. There are a number
of foreign companies which have made the requisite deposits of
securities with the auditor in order to do business in the State,
and there are two organizations definitely incorporated as trust
companies, but aside from these the business is handled by the
trust departments of these 37 banks, and much of that business
is done in Chicago.
Generally speaking, business has been pretty dull for the past
six months and we think it is likely to be so for the next six
There is nothing to say on the subject of trust company legislation, because there has been none. Several amendments with
relation to State banks were passed by the last legislature,
which consisted mainly in the placing of restrictions upon the
making of loans to an excessive amount.
Mr. F. H. Fries, of Winston-Salem, North Carolina: I would
like to offer the following preamble and resolution:
Whereas, The Legislative Committee has recommended that the
members of the Trust Company Section, in meeting assembled, record
their disapproval of the guaranteeing of bank deposits.
Therefore be it Resolved, That we enter our protest against the
enactment into law by either the Federal or State government of any
provision that pledges directly or indirectly the credit of the nation
or State for the guarantee of bank deposits.
I would like to have incorporated with this—although the
committee did not recommend it—that we also disapprove of the
proposition to establish postal savings banks as well.
Mr. Lynn II. Dinkins, of New Orleans, La.: I would like to
state that the President of the Savings Bank Section, who was
conferred with about this matter, thought it would be inopportune for that section or for this section to pass such a resolution as this at this time. They have a legislative committee
which has been to Washington once or twice on this matter, and
I believe they have the matter well in hand and can give it the
requisite attention.
President Babcock: I would like to ask the gentleman who
offers the resolution whether he has considered whether or not
such a resolution can properly be considered by this section, my
understanding being that it would require a two-thirds vote of
the section first in order to consider it.
Mr. Fries: I do not make the motion now in reference to
postal savings banks, but simply in regard to the guaranteeing
of bank deposits.
Mr. J. J. Sullivan, of Cleveland, Ohio: I desire to second
the adoption of this resolution. I am quite sure I voice the
sentiment of the bankers of Ohio when I say that we are unalterably opposed to the proposition to guarantee bank deposits.
Mr. Fries: I am a democrat, and therefore you may know
that there are no politics in it when I offer a resolution of this
Mr. Breckinridge Jones, of St. Louis, Mo.: I am a democrat,
too, and I am opposed to the guaranteeing of bank deposits;
but I have a serious desire for the welfare of this section and
I believe the section will live long only on condition that it
keeps within the limits of the purposes for which it was organized. This section was created to discuss questions that are
- peculiar to trust companies and not to take up questions that


are of a general banking nature. Nothing could be more unfortunate, in my opinion, than if we were to go outside of our
functions and trench upon a matter that is properly within the
province of the parent body—the American Bankers' Association.
Mr. Fries: Did not the Savings Bank Section pass a resolution similar to this?
Mr. Jones: Yes, and they did wrong, in my opinion. Now, in
the Constitution and by-laws of the American Bankers' Association, these words appear, creating this section:
"A Trust Company Section, whose scope shall embrace matters of interest to trust companies in so far as such matters are
distinct from banking."
If that restriction had not been there the American Bankers'
Association would never have consented to the formation of
this section, and I believe that nothing could be more hurtful
to us than for us to disregard the fundamental law upon which
the organization is based. We will have an opportunity to express ourselves on this question, when it comes up before the
parent association to-morrow. Let us keep to the work that is
germane to the Trust Company Section.
Mr. Festus J. Wade, of St. Louis, Mo.: Two years ago at
St. Louis, when the convention was held there, an alliance, both
defensive and offensive, was made between Brother Jones and
myself at the instigation of Mr. Clark Williams, who was then
in the trust company field, to the effect that we should take
opposite sides on every question in order to bring out the
fullest discussion. (Laughter.) Now, finding Brother Jones on
the negative side, which is very unusual for him, I must take
the positive side and oppose his views.
This is not a political question. In the State of Kansas both
parties have endorsed this heresy. It is in the realm of an
economic question attacking the growth and the prosperity of
trust companies as well as banks. We get our charters from
the States in which we do business. Already one State has
passed a guarantee law, and if you choose to organize a trust
company in that State you must not only protect the depositors
of your trust company, but you must protect the depositors of
every other trust company and every other bank in that State.
Is that a trust company situation? Is it a banking situation?
Is it not a fundamental situation for the protection of our
stockholders and our depositors if we believe it is wrong?
Should we be afraid of meeting the issue? Shall we recognize
the guaranteeing of deposits or shall we condemn it? Suppose,
as a hypothetical proposition, that the parent body should
approve of this idea and it is contrary to your views. Would
that convert you? Why not let them know to-morrow the views
of the Trust Company Section, as they know the views of the
Savings Bank Section?
Mr. Fries: I offered this resolution because I thought it
lay very close to the interest of trust companies—much closer
than it did to banks. However, I do not wish to embarrass the
section by pressing it, and, if it is the runs); of the Chair that
it is not a proper resolution to come before this body, I will
withdraw it.
Mr. Jones: I submit that the resolution is out of order because we are a section of the American Bankers' Association
and the Constitution of the parent association applies to us.
That Constitution says:
"Resolutions or subjects for discussion (excepting those referring to points of order or matters of courtesy) must be filed
with the secretary at least fifteen days before the annual convention and submitted to the Executive Council."
I submit that it is in violation of the spirit of that Constitution for us to entertain this resolution.
Mr. McCarter, of Newark, N. J.: I am sorry that this discussion has come up at all, but it has proceeded to such an
extent that I am fearful of the result now of any lack of action
on our part. I should hate to take up a newspaper to-morrow
morning and read that the Trust Company Section failed to
declare itself on this momentous subject. Therefore, inasmuch
as our friends, the gentlemen of the press, are here and will no
doubt make mention of this discussion in their report, I move
the previous question regardless of constitutional rights.
(Laughter and applause.)
Mr. Parker: I would like to discuss this question at length
if time permitted, but I shall be very brief. When the American
Bankers' Association consented to the creation of this section
it did not take away from us the right to discuss and declare
our opinions upon any subject. Now, my friend, Mr. Jones, did
not read the second clause of Article VII. of the Constitution
and By-laws of the American Bankers' Association, which says:
"But any person desiring to submit any resolution or business in open convention may do so upon a two-thirds vote of the
delegates present." Now, sir, I believe we are a unit in this
matter. One speaker this morning said that the hope of the
country lies in the mugwump. I have been a mugwump for
some time and I feel quite independent and I never know how
I am going to vote until the nominations are all in. Now this
matter has been brought to our attention and I think we should
take action upon it. If I were killing a snake I should stamp
all around and on it and stamp pretty hard. Here we have a
vicious proposition in the matter of guaranteeing bank deposits
and the establishment of postal savings banks. The Savings
Bank Section has taken action upon one of those propositions.
Let us take action upon the other. (Applause.)
Mr. McIntosh : The latter part of this Article VII. does not



say that a resolution must be referred to the Executive Council
before action can be taken upon it; it says that it "may be"
referred. You see, it is optional.
Mr. Dinkins: I wish to say, in behalf of the Committee on
Protective Laws, that before it made the recommendation which..
has given rise to this resolution, the matter was referred to
the attorneys for our company as to whether or not it would
be proper under the constitution of the American Bankers' Association and the by-laws of the Trust Company Section for us to
take action upon it, and their opinion was that it would. It
was only after the receipt of that opinion that the committee
made its recommendation.
Mr. H. L. Remmel, of Little Rock: In our State we emphatically voted against the proposition to guarantee bank
deposits. Now I am in favor of the adoption of this resolution.
Let us vote upon it as a resolution, irrespective of any question of construction of any section of the Constitution.
Mr. Jones: Gentlemen, if you are going to meet an issue, why,
meet it like men. If you take this action, take it because you
say that you believe it is right. Don't take the position that
some gentleman said here—whether it is constitutional or not.
I challenge any gentleman here to say in good faith that he
will vote for this resolution irrespective of the constitutionality
of it.
Mr. McCarter: I am perfectly willing to face my people at
home on the question of violating the constitution of this association, but I should be afraid to face them if after this discussion I did not vote to pass this resolution.
Mr. Sullivan: I think we all understand the principle involved in the general proposition. As to the constitutionality
of it, I had something to do with this constitution; I was chairman of the committee last year that revised it. We are all
respecters of law, and by right we ought to be. Now, if we
adopt this resolution we will by no means trench upon the constitution. We are quite a factor within ourselves, regardless
of the American Bankers' Association, and if we have views
on this proposition, as I am quite sure we have, let us declare
them. (Applause.)
(Cries of Question! Question! Question !)
Mr. Jones: I move to amend the resolution by reciting a
preamble something like this:
It being the opinion of this section that the subject matter
of this resolution is of interest to trust companies in so far as
such matters are distinct from banking, therefore be it resolved
so and so.
Mr. Fries: I think I will accept the amendment.
Mr. A. A. Jackson, of Philadelphia: It occurs to me that
if we adopt the resolution in that shape it won't amount to
anything. Is not the business that we do a business that
banks do?
Mr. Parker: We are here to defend the life of trust companies which is assailed under this guaranteeing of bank deposits proposition. In voting affirmatively on this resolution
we are voting in defense of our very lives as trust companies.
A Member: I move that , his resolution be recommitted to
the committee with instructions to present it to the American
Bankers' Association and ask their adoption of it.
(Cries of No! No! No!)
Mr. Fries: Mr. President, I misunderstood the purport of
the amendment that Mr. Jones made to my resolution when I
stated that I would accept it. I desire now to state that I do
not accept the amendment.
President Babcock: Then the question before us will be, in
accordance with the constitution of the American Bankers'
Association, under which we are acting: Shall this resolution
come before the section? On that it will require a two-thirds
Are you ready for the question?
(Cries of Question! Question! Question!)
All in favor of bringing this resolution before the section will
rise and remain standing until counted; all opposed will now
Now the question is on the resolution as offered by Mr. Fries.
All in favor of the adoption of the resolution will rise; all
opposed to it will now rise.

Lessons Revealed by the Panic.
President Babcock: The next item on the program is "What
Lessons for the Trust Companies were Revealed in the 1907
panic?" We should be glad to hear from Mr. Rhoades, of Boston,
on this subject.
Mr. Rhoades, of Boston, Mass.: I think the discussion here
this afternoon has taken so much time that it would be asking
too much of you to hear anything that I might say. Indeed,
what I could say on the subject has been very thoroughly
covered in the remarks of the vice-president from New Jersey,
Mr. Van Buskirk. The primal lesson to be learned is one of a
more strict supervision by the banking departments of the
several States. We had that in Massachusetts, and in New
York the law is about the same. There should be a more
strict supervision and the holding to personal accountability for
their trusts of the officers of the different institutions.
Mr. W. Z. Dozier, of Tennessee: I would like to make a

motion regarding the proposition to establish postal savings
banks. I have not put it in writing, but my motion is this, that
we disapprove of the adoption of the postal savings bank plan.
Mr. Dinkins: The Savings Bank Section is quite able to
take care of itself and it don't want us to adopt any such
Mr. Dozier: I did not make the motion for that purpose. We
do not expect any thanks from the Savings Bank Section for it.
We have expressed ourselves against the proposition to guarantee bank deposits; and I think we should express ourselves on
the proposition to establish postal savings banks.
A Member: I second the gentleman's motion.
President Babcock: All in favor of entertaining the motion
will please rise, because it will have to be by a two-thirds vote.
All opposed will now rise.
President Babcock: Next in order is the nomination and
election of officers. Nominations for president and vice-president are made from the floor; nominations for members of the
Executive Committee and for vice-president will be made, pursuant to the motion carried this morning, by the committee appointed for that purpose.
We are now ready to receive nominations for president.
Mr. Breckinridge Jones :• Among those who have been most
faithful and capable in the work of this section is a gentleman
whom I desire now to place in nomination for president. He
is an officer of one of the oldest trust companies in America,
and during the last year has filled the position of vice-president
of this section. He deserves tile honor and I am sure his
nomination will meet with the approbation of every gentleman
here. I nominate for president of the section Mr. A. A. Jackson, vice-president of the Girard Trust Company, of Philadelphia, Pa. (Applause.)
Mr. Festus J. Wade: Mr. Jones and I are in perfect accord;
I heartily second the nomination that he has made.
President Babcock: Are there any other nominations?
On motion, nominations for the office of president were declared closed, and the secretary cast the ballot of the section
for the election of Mr. Jackson and he was declared duly
elected president of the Trust Company Section for the ensuing
President-elect Jackson: I feel very much embarrassed to
have had such a speech made about me. I have done nothing
this past year to deserve so great honor. I appreciate your
action very much indeed, and next year I trust that I may be
able to do something to earn the office which you have now
given me. (Applause.)
President Babcock: Nominations for vice-president are next
in order.
Mr. L. L. Gillespie, of New York: I nominate for vicepresident Mr. H. P. McIntosh, president of the Guardian Savings & Trust Company, of Cleveland, Ohio, who has served as
chairman of the• Executive Committee during the past year
with marked ability and untiring energy. (Applause.)
Mr. Sullivan: I second the nomination most heartily.
President Babcock: Are there any other nominations?
On motion, nominations for the office of vice-president were
declared closed and the secretary cast the ballot of the section
for the election of Mr. McIntosh, and he was declared duly
elected vice-president of the section for the ensuing year.
Vice-President-elect McIntosh : Gentlemen, I appreciate deeply the honor conferred upon me and I trust I may prove worthy
of it. (Applause.)
President Babcock: The committee appointed to nominate
five members of the Executive Committee and vice-presidents
for the various States will now report.
Mr. Holliday: Your committee report recommending the
election of the following five members of the Executive Committee:
A. L. Abrahams, Denver, Colo.
F. H. Fries, of Winston-Salem, North Carolina.
Howard G. Bayne, New York City.
John Stites, Louisville, Ky.
E. J. Parker, Quincy, Ill.
On motion, the nominations were declared closed and the
secretary cast the ballot of the section for the election of the
gentlemen named and they were declared duly elected.
President Babcock: We will now proceed to the election of
vice-presidents for the States, with the understanding that
States not represented the vacancies will be filled by the
Executive Committee.
Vice-presidents for the various States were then elected as
Arizona: Byrd Brooks, cashier, Merchants' Bank & Trust Company,
Arkansas: Clifton A. Breckenridge, president, Arkansas Valley
Trust Company, Fort Smith.
California: B. G. Tognazzl, cashier, Central Trust Company, San
Colorado: J. Arthur Connell, president, Colorado Title & Trust Company, Colorado Springs.
Connecticut: Francis Parsons, treasurer, Security Trust Company,
Delaware: Gen. T. Coleman Du Pont, president, Wilmington Trust
Company, Wilmington.



Georgia: William V. Davis, vice president, Savannah Trust Company, Savannah.
Illinois: Latham T. Souther, cashier, Sangamon Loan & Trust Company, Springfield.
Iowa: A. E. Ellis, president, Security Trust & Savings Bank,
Charles City.
Kentucky: William G. Wetterer, secretary, Louisville Trust Company, Louisville.
Maine: E. G. Merrill, president, Merrill Trust Company, Bangor.
Massachusetts: Herbert A. Rhoades, president, Dorchester Trust
Company, of Boston.
Michigan: Prank W. Blair, president. Union Trust Company, Detroit.
Missouri: Edward Buder, treasurer, Mercantile Trust Company,
St. Louis.
New Jersey: A. McCracken, president, Central Trust Company,
New York: Harold A. Davidson, president, Lafayette Trust Company, Brooklyn.
Ohio: Edgar Stark, trust officer, Union Savings Bank & Trust Company, Cincinnati.
Pennsylvania: E. C. Emerick, treasurer, Susquehanna Trust &
Safe Deposit Company, Williamsport.
Rhode Island: Charles Perry, president, Washington Trust Company, Westerly.
Vermont: Bradley B. Smalley, president, Burlington Trust Company, Burlington.
Virginia: S. Quarles, vice president, Virginia Trust Company, Richmond.
Cuba: Norman H. Davis, vice presedent, Trust Company of Cuba,

President Babcock: I will ask Mr. Fries and Mr. Jones to


escort the president-elect and the vice-president-elect to the
The president-elect and the vice-president-elect were then
escorted to the platform and invested with their respective
badges of office.
Mr. Breckinridge Jones: Before we adjourn I desire to call
the attention of the members to the magazine called Trust
Companies, published by Mr. C. A. Luhnow, in New York. It
is the only magazine devoted exclusively to the interests of
trust companies, and I think it deserves all the help we can
give it, and I would suggest that all our companies subscribe
for a sufficient number of copies of this magazine to send one
to each director with their compliments.
Mr. McCarter, of Newark, N. J.: I desire to second the suggestion of Mr. Jones. The magazine to which he refers is
certainly an admirable one, and is doing a good work, and for
my own part I will pledge that our company will subscribe for
at least twenty copies of it.
President Jackson: I would state that I have found Mr.
Luhnow, the publisher of this magazine, to be a most courteous
and estimable gentleman, and he is endeavoring to conduct his
magazine in a manner to deserve our commendation.
Mr. Taylor: Is it understood that the remarks about this
magazine are to be included in our proceedings?
President Jackson: The chair so understands.
Is there any further business to come before the meeting?
If not, I declare the meeting adjourned sine (Tie.

Seventh Annual Meeting, Held in Denver, Colo., September Twenty-Eighth, 1908
Proper Treatment of Savings Deposits
Effect of Panic on Eastern Savings Banks Detailed Proceedings Address by President
Report of Executive Committee




Report of Secretary Report of Committee on Auditing Committee on Revision of Constitution Report of Committee on Uniform Laws Committee on Postal Savings Banks




The Proi5er Treatment of Savings De,osits When Taken by
State Banks and Trust Companies.
BY PIERRE JAY, Massachusetts Bank Commissioner.

One of the most remarkable achievements of the last hundred years is the accumulation, largely by wage-earners, of
a fund of some $12,000,000,000 in the savings banks of the
world. The vastness of the amount and the innumerable
army of depositors both indicate the absolute necessity of
the savings bank in our modern industrial life. The prosperity of a country may almost be measured by its savings
deposits, and that nation or State which neglects to make
adequate provision for the savings of its wage-earners has
laid a heavy handicap on its development and prosperity.
About two-thirds of this immense fund have been accumulated in the European countries, where government and
municipal, as well as trustee, savings banks have reached
a high stage of development. A study of the various European systems brings out two points which may be appropriately mentioned here; first that they are generally
established by national legislation, and second that as the
funds are generally invested in the credit of .a nation or a
municipality their safety is unquestionable, and could be
imperilled only by dishonest or negligent management.
In the United States, on the other hand, we have never
had national legislation on the subject, but it has been left
to each State to decide what agencies it shall establish to
care for the savings of its citizens. The result is that while
some States have made admirable provisions, others have
made none at all, and all too few have approached the question from the standpoint which the foreign system recognize
as fundamental, namely, the absolute safety of the funds
The agencies at present receiving savings deposits in this
country and the States in which they are to be found, appear to be the following:
1. .Uncapitalized or "mutual" savings banks with invest2.


ments regulated by law. In the Nei England and
Middle States with occasional banks elsewhere.
Capitalized savings banks with investments regulated
to some extent by law. Most savings banks of this
class also receive commercial deposits. In Ohio, Michigan, Iowa, Texas, Louisiana, Nebraska, •California,
Montana, Colorado, Wyoming and Idaho.
State banks and trust companies with investments of
savings deposits regulated by law. In Vermont, New
Hampshire, Connecticut, Rhode Island and Massachusetts.



State hanks and trust companies with investments of
savings deposits not regulated by law. In almost every
other State.
National banks, none of whose investments are regulated
by law, except that they may not invest in real estate
mortgages. In every State.

It will be seen, therefore, that outside of the States included in the first and second groups, and to a considerable
extent even in those States, the savings of the country are
deposited in classes of institutions which were never intended to be used as savings banks, viz.: State banks, national banks and trust companies. And furthermore that as
the investments of these institutions are substantially unregulated by law, the investment of savings deposits in a
majority of the States is without legal regulation, and consists for the most part of commercial paper representing
ordinary business risks.
Since, then, a very large proportion of our wage-earners
are obliged, for lack of other agencies, to deposit their savings in suck institutions, it seems proper to trace briefly
the origin of the savings deposit and to inquire whether
it does not differ in its nature and in the purpose for which
it is deposited from the deposit of the merchant, which is
merely a margin for the loan which the bank has made him,
or from that of the non-borrower who deposits in order to
use the credit of the bank in paying his bills.
The earliest savings banks, in both England and the
United States, were organized by benevolent persons who
offered, as trustees, to invest the money of those who,
through lack of experience, were unable to invest it themselves. There was no connection between the savings deposit and a loan, nor did the depositor wish to make use of
the credit of the bank in any form whatever. The money was
placed in the bank for safekeeping and investment. These
informal institutions were soon given the sanction of law
in both countries; and the investments authorized for trustees of savings banks in Great Britain and in our Eastern
States are substantially the same as those approved for
trustees appointed under wills or by the courts.
In these uncapitalized banks, therefore, savings deposits
not only are invested as trust funds but are everywhere
regarded, morally, as trust funds, although court decisions
classify them as mere obligations of the bank. On the



of money now withheld from circulation. Furthermore, it
other hand, in capitalized banks savings deposits are not recannot fail to increase the confidence of those who have
garded as trust funds, either legally or morally.
whether deposited in capitalized Or uncapitalized banks, already deposited their savings in the banks and render them
there can be no question that they are put there for iden- less timid in times of stress.
Against theextension of the segregation principle, it is
tically the same purpose, and generally by a class of people
urged that the two functions of receiving savings deposits
whose education and training does not enable them to distinguish between the two kinds of institutions:
and commercial deposits should never be performed by the
The Pittsburg iron-worker invests half his savings in the
same institution; that there should be savings banks for
mutual savings bank, and the other half in the trust com- . savings deposits and commercial banks for commercial depany across the street. Is there really any difference in the
posits. This is eminently sound and it would undoubtedly
nature of the two deposits? The Providence mill-hand puts
be well for the wage-earner if the trustee savings bank
his savings in the mutual savings bank on Saturday night system prevailed all over this country. The fact is, howand awakes on Monday morning to find that involuntaiily
ever, that while it grows vigorously in the Eastern
he has become a depositor in a trust company. Has his deStates, it is making but little headway elsewhere, and even
posit changed its nature in consequence?
in the Eastern States the receipt of savings deposits by
The more I study this subject the clearer it seems to me State banks and trust companies is increasing perceptibly.
that, morally and essentially, savings deposits, wherever deTherefore, the question is not merely—what is theoretically
posited, are trust funds and should be invested accordingly. best, but what .can reasonably be done under existing circumstances and tendencies to better protect savings deIn no State does it appear that mercantile credits, in
which so large a proportion of our savings deposits are inIt is also argued by the State banks and trust companies
vested, are sanctioned by statutes or by courts as proper
investments for trust funds. All courts and the laws of that to be required to invest savings deposits in securities
of more established value than mercantile credits will serimany States require trustees to invest their funds in securities or loans of established and permanent value. What ously diminish their profits. The answer is first that for
an anomaly it is that while the investment of individual savings deposits safety, rather than large dividends, is the
trust funds is everywhere carefully supervised by law or essential thing; and second, that profits will not be so
by the courts, the investment of that great composite trust largely diminished as they imagine. In 1906 the total assets
of Massachusetts savings banks with their restricted infund, the laboriously accumulated savings of the wagevestments earned 4.01 per cent. and the total assets of
earners, should in so many States be.entirely unregulated!
Massachusetts trust companies, practically unrestricted,
Should not all savings deposits be invested in the same
4.51 per cent. In 1907 the figures were 4.09 per cent.
manner by whatever institution they are received? And is earned
and 4.67 per cent. respectively.
not the wage-earner entitled to have his savings invested in
I have been very glad of the opportunity to bring this
approved securities whether he puts them in savings banks,
matter before you in somewhat concrete form, because it has
State banks or trust companies?
• been suggested at meetings of the Section so often in a
This is a principle which has been adopted in, and placed
general way that I believe it will fall on minds not altoon the statute books of five of the New England States. It
gether unprepared. As the membership of the Section inalso appears, in a less complete way, in the banking law of
cludes all of the five classes of institutions which I have
Michigan. At its convention in June the National Associaenumerated as engaged in receiving savings deposits, its
tion of Supervisors of State Banks unanimously resolved to
members can hardly fail to have been impressed with the
recommend its adoption in every other State in the Union. inequalities of the laws and regulations under which they
The practical working of the principle is this: All savings are working, and there can be little question that the inadedeposits are required to be kept in a "savings department." quacy of the savings bank system in some of the States
The accounts and investments of the savings department and the total lack of it in 'so many others, has been the
are entirely separate from those of the commercial depart- cause of the agitation for a postal savings bank.
ment, or bank proper. The investments of the savings deThere is nothing radical in the segregation plan which I
partment consist of those securities and loans which in each
have outlined. It requires no new institutions. It drives no
respective State are considered proper investments for sav- existing institutions out of business. It permits a profit to
ings or trust funds. In case of failure or dissolution,.the contiiffre to be made from the administration of savings desavings depositors have a first lien on the assets of the
posits. The laws of several states, notably Ohio, Michigan,
savings department, and if these are insufficient, they have
Utah, Oregon, Washington and Idaho already provide that
an equal claim with other creditors of the institution on its a bank may conduct two separate businesses or departments,
general assets as well as on the investments of the capital "commercial" and "savings." The segregation plan secures a
stock and on the stockholders' liability.
legal and actual separation of these two fundamentally difSuch a segregation, legally required and extensively ad- ferent classes of business, and requires savings deposits to
vertised, cannot fail to increase the confidence of the laborbe administered and invested in a manner which should
ing classes in the banks, and to bring to them large amounts command the entire confidence of the public.

Effect of the Recent Panic on the Eastern Mutual Savings Banks
By Joirrr C. GRISWOLD, Secretary Excelsior Savings, New York.
"Mutual" as used by savings banks, for instance, means
"common" according to "Webster's," therefore we understand that the moneys of all depositors in mutual Ravings
banks are put in common and the depositors mutually and
in common receive such profits as this common fund may
earn. "Mutual" further means "reciprocally given and received."
In the Eastern States so termed "mutual savings banks"
predominate, and in most of these States "mutual savings
banks" only are by laws recognize& or permitted. For

several generations the inhabitants of these States have
grown to their majority with one clear understanding regarding savings banks at least, viz.: that the money there
deposited and its earnings all belong to the depositors in
common, and the officers having charge are selected for their
The statutes of the various States referred to (such as
relate to savings banks) are plainly and clearly drawn as a
whole, and so well originated, and amended where needful,
under the sharp supervision of those unselfish philanthropic



and able men identified with savings banks, whose memory
is venerated, that it may be said that if these laws are
complied with faithfully no such bank can reach a position
which would endanger its depositors. Savings banks are
supposed, I believe, to be entirely separate from connection
of interests with any other class of banking. When the
Hon. Levi P. Morton was Governor of the State of New
York, in his first message to the legislature he particularly
recommended that savings banks be made entirely independent of banks of discount and deposit, whether State or
national, and trust companies. "Any tendency to merge
these interests in the same personnel in the same room or
suite of rooms leads to confusion of interests and gives great
occasion and opportunity for unbusinesslike proceedings and
irregular methods," said a former superintendent of banking
of the State of New York, and quite properly said.
Mutual savings banks are supposed to be, and it is believed are, managed and their affairs administered, free
from politics and personal pecuniary gain to the trustees or
directors of their elected or appointed officers, except that
active officers are, as would be expected, remunerated for
their time, energy and talents. They are practically employees of the bank, expected to perform duties exactly as
are professors, superintendents, managers, etc., in all trades
and professions. Those trustees or directors (of some institutions) who are members of committees appointed for
the purpose of investing the bank's funds or of disposing of
securities or for other work of bank are for such actual
attendance paid a slight stipend, the amount of which
is usually determined upon by the majority of the board
of trustees, exclusive of the members of such committee.
All other earnings of such mutual savings banks 'after
payment of general necessary expenses—rent, taxes, interest, stationery, etc.—are the undisputed property of the
depositors, as is well known, whose numbers are composed
of both sexes and we might say include samples of every
grade of education, ability and financial responsibility.
Taken collectively such aggregation of depositors is not
fitted to manage or to take active part in the management
of their possessions so deposited, therefore these funds are
invested by a board of trustees selected for that purpose,
owing to their high standing as to character, ability, reliability and responsibility, and so selected as provided by
the statutes of the different States in which they are located.
The mutual savings banks of the East have';well withstood the rigors of the financial winter from which the
country is emerging, as was to be expected of them. The
trust placed in them was faithfully kept. Few depositors
were in fear as to the solvency of their savings bank during the most distressful times of the panic period, nor of
its ability to supply funds to all depositors whose necessity
required, and this fear apparently disappeared entirely by
January 1, 1908.
Such research as has been possible for me to make in the
brief time since allotted this subject shows that in the
States of Maine, New Hampshire, Pennsylvania, New York,
Maryland, New Jersey and Delaware there was on deposit
in savings banks on or about July 1, 1907 $1,905,074,60.39
and on or about July 1, 1908
thus showing a decrease in deposits of but
or .00675 per cent.
The reports of Massachusetts are computed to October 31,
annually, those of Connecticut, October 1, annually. In
Virginia, savings banks statistics are not kept separate
from statistics of commercial banks.
In New Hampshire there are 46. savings banks, 9 guar-

anty fund banks and 6 State banks or trust companies
having savings departments.
In Pennsylvania all savings banks are purely "mutual,"
except one of capital $10,200, which was incorporated prior
to the adoption of the Pennsylvania constitution in 1874.
In New Jersey all savings banks are "mutual," except
one incorporated by special act of the Legislature in 1869.
In Vermont there are 22 mutual savings banks and 27
trust companies. The trust companies are stock companies and are permitted by law to receive savings deposits
same as savings banks.
In all the remainder of the districts included in my research, save Virginia, it is reported that all savings banks
are "mutual." Virginia statistics were not furnished.
No savings bank located in New York, Connecticut, Massachusetts, Delaware, New Jersey, Pennsylvania, New Hampshire, Vermont, Maine and Maryland, failed to pay depositors strictly in accordance with their legal contract. In
a few larger cities and towns, centres of bustling trade,
it was deemed by savings bank managers that it was for
the best interests of the depositors and the community to
require 30, 60 or 90 days, (as their by-laws read), notice of
intent of depositors to withdraw more than $50 to $100.
In instances where need of more was made clear by the
depositor payment was made therefor promptly.
As the banks and trust companies of the City of New
York, in which a large sum in aggregate was deposited by
the savings banks, were in no position to supply such an
enormous amount of currency as might, if permitted, be
required by savings banks depositors, whose sole desire
was to put it out of circulation by hiding it as of old in
chimney corners, etc., the savings banks of the City of New
York (the then center of excitement) advised with the
Clearing House Association, and it was mutually decided
best that the savings banks require notice of withdrawal
beyond a limited sum.
This action, which brought content and satisfaction to all
interested, and beyond question opened the way wide for
reason to travel, was followed for like purpose and with
like result, by savings banks in several other larger cities
of the country.
In treating this subject, upon which I have the honor to
address you, the endeavor has been to be as brief and trite
as possible. It is proper for me, however, and I do with
pleasure refer to the many institutions located in other
States, which care for the savings of the people, but under
laws permitting stock companies to act as savings banks,
and permitting such institutions to perform various other
duties, such as pertain to trust companies, commercial
banks, etc.
Many such institutions, as we.all know, have grown to
immense proportions, and like their relatives in the East,
the "mutual savings banks," they stand pillars of strength.
The savings institutions of these other parts of our country during the period treated, it is to be believed, likewise
merited the esteem and trust placed in them.
As the years go the question whether savings banks
shall be mutual savings banks or shall be stock savings
banks may be determined in favor of one or in favor of the
other; in either event, we are all a unit, I know, in thinking
that the absolute safety of such depositors' deposits must
be uppermost in the minds of those whose guidance the
statutes to govern are to be prepared.
The deposits should not, in any way preventable, be jeopardized. All that the human mind can, with unselfish skill,
invent which will tend toward assurance of safety of principal, together with the best income thereon, should be at
the disposal of institutions caring for savings.
I thank you, gentlemen, for your attention.


Detailed Report of Proceedings.
Seventh Annual Meeting SAVINGS BANK SECTION, Held at Denver, September 28, 1908

President Teter: We will now have the pleasure of listening
to an address of welcome which will be presented on behalf of
the Denver Bankers by Mr. W. T. Ravenscroft, President of the
Federal State and Savings Bank of this city.

essary to take advantage of its sixty-day notice of withdrawals,
and all wants of customers were promptly taken care of. Business
interests suffered but little and after the first few days had passed
it would have been hard to discover, as far as this city was concerned, that the country was passing through a financial crisis.
Denver has no distinctive savings banks. By this I mean none
that take savings exclusively, all doing a commercial or trust business as the case may be. This is accounted for, no doubt, from the
fact that the city is comparatively new and its citizens have not
yet formed the same kind of saving habits found in older States.
Denver is • to be congratulated upon your visit, for the American
Bankers' Association is certainly a most important organization
which has already left its imprint on the finances of the country. It
has before it still greater problems which its conservation and the
sound judgment and ability of its members will enable it to solve
in a way that should and will affect any new system of finance and
banking which the future may bring forth.
The savings bank section especially gets close to the masses of
the people, for whatever is done in the interests of the savings of
the people of small means both in the way of education along lines
of thrift and economy and the better securities of savings when
once in the bank, is of inestimable service to them. There is also an
unselfish side to the upbuilding and betterment of the savings business where every dollar of deposits is a special and peculiar trust,
the safe keeping and profitable handling of which must earn for
you from your depositors a "Well done, good and faithful servant."
I hope, gentlemen, that this may be the most profitable meeting
you have ever had, and that your pleasure while here may be abundant. I heartily welcome you to this glorious country of sunshine
and exhilarating atmosphere, from whence comes the great portion
of the gold and silver you so much delight to see flowing into the
tellers' windows of your respective institutions.
Our happiness will only be complete if we can feel at the end of
your visit that you have enjoyed every moment of your time to the
fullest extent.
Again, I bid you a hearty welcome.
President Teter: Mr. Ravenscroft, I thank you on behalf of
the section for your kind words of welcome.
There has never
been a moment since we were invited to come to Denver that we
were in doubt as to the nature of our reception; at the same
time, when we arrived at this beautiful city of the mountain and
the plain we were almost embarrassed with the glorious showing
of the hospitality for which the town is so famous. I can assure
you that we are going to enjoy it to the utmost. When some
of us left our homes the thermometer was around 90 degs., and
when we reached here we found that you had already cooled
the atmosphere for us.
Indeed, such hospitality is thoroughly

Address of Welcome by W. T. Ravenscroft, President, Federal State
and Savings Bank, Denver, Colo.
• Mr. President and Gentlemen:—It is my pleasant duty to extend
to you a most hearty and cordial welcome to Denver, the Queen city
of the Centennial State. We are glad that you have honored us with
your presence, and we extend our hand in all friendliness and hospitality.
This city is the greatest convention city in the United States, and
yearly welcomes numerous representative gatherings, but I am sure
none of them have had a more sincere and heartfelt welcome than I
now give to this body on behalf of the bankers of this community.
I am also sure that our citizens in general view this gathering with
great respect, and are more than glad to have you with us, knowing
that this convention not only has the' interests of the institutions here
represented at heart, but the good of the people at large as well.
I hope I may be pardoned for saying that we who live in Denver are proud of our city and State, possessing as they do so many
attractions peculiarly their own. This city is remarkable when one
stops to think that it has been only about fifty years since the first
house was built, while to-day we have over 200,000 inhabitants. Our
population is in a sense cosmopolitan, and I have no doubt any one
of you will pass on our streets people from your own home who are
now prosperous citizens of Denver.
Our State is rapidly developing along every line, and I believe
offers more opportunities than any State in the Union. Our large
mining resources, once Colorado's principal asset, are now overshadowed
by our agricultural interests, and the many new irrigation enterprises underway are yearly turning heretofore worthless land into
the most productive farms in the world. The fact that we possess
within our boundaries immense bodies of coal and an unusual variety
of raw materials make it more than probable that we will within
the near future place our manufacturing in the foreground.
Our banks are in a healthy condition, the total deposits of the
State being about $130,000,000, $00,000,000 of which is held by
the Denver banks. nits city is the financial center of a vast territory, and is daily increasing its prestige in banking and business activities. Colorado emerged from the recent panic with the largest
cash reserve of the country, the average being, according to statistics compiled, 42.53 per cent., while the reserve in Denver banks
in many cases was over 50 per cent. This city went through the
panic without resorting to the clearing house certificate plan of
adjusting bank balances, daily settlements being made in cash as
usual, and the small amount of secured cashier's checks issued to
the public were soon cancelled. No savings institution found it nec-

Annual Address of President Lucius Teter.
Our meeting to-day is held in a city far from the centres where
most of the savings banks of our country are located. This means
that most of you have traveled many miles to attend this meeting,
and I congratulate you as well as the section upon the effort which
you have made.
There . is much that is inspiring in all that we see around us.
When we recall the fact that this beautiful city of Denver wee
founded but fifty years ago, we can realize what is meant by "Western push and enthusiasm," and while in these newer sections of
our country great sums have not as yet accumulated in the dormant
accounts of savings depositaries, financial institutions of the West
are trong and vigorous and managed by men who are abreast of
the limes and eager to serve the communities in which they live;
in fact, if it were not for them much of the progress, the beauty
and the grace of these Western cities would be impossible.
The method of shifting our meetings each year from one section
of the country to another makes it possible for. us to know, each
community better and give further evidence of the unity of our
country and the unity of purpose in the American Bankers' Association, and I find in this unity of thought and purpose on the part of
our American bankers a promise of strength and co-operation for
the future that means more for the stability of American financial
institutions than could possibly be secured by any of the devices
urged by political adventurers.
The year that has passed since our last convention is one that we
will all remember for a long time. The financial crisis of 1907 appeared shortly after our meeting at Atlantic City, and the officers
of your section, as well as the members of the various committees,
were kept busy attending to financial conditions at home, so it is
that with little exception the activities of your officers have extended over only about one-half the year.
While this may have been to a certain extent an off year in
association activity, I am glad that it has been a year in which the
great advantage of bankers' associations has been demonstrated. It
must appeal to the most casual observer that the splendid co-operation -of the bankers throughout the country contributed more than
anything else to the definite and systematic efforts which checked
the possibilities of a great panic and brought us quickly to a reconstruction period.
I hold that the broader acquaintance and the confidence which we
learn to have in each other through these associations have more to
do with making these conditions possible than anything else. With
this thought in mind, it would seem to me advisable for us to work

DENVER, Sept. 28, 1908.
PRESIDENT PETER: This meeting will come to order. Our
proceedings will he opened with prayer by the Rev. Dr. Banks,
Pastor of Trinity M. E. Church of this city.
By Rev. Louis Albert Banks, D.D.
0! God. We thank Thee this morning that we are permitted to
come to this meeting with health and strength and bright sunshine
and pure air and the glorious day opening before us. We thank
Thee that the storm has passed and that the day is so beautiful, and
we pray that all the storms of our lives may pass like that; that
we may have such faith and confidence in Thee and so do Thy will
and work our purpose in life that though storms may come and weeping may endure for a night joy shall come with the morning.
We pray, Our Father, for Thy blessing upon this convention. We
pray that Thy gracious blessing may be upon all the men and
women who have come to attend it. We thank Thee for these men
who have so much of the confidence and faith and good will of their
neighbors in the communities in which they live. We thank Thee
for the era of confidence and faith of man in man that has made
these great institutions which they represent possible in the earth.
We pray, Our Father, that these men may so do their work and
may so execute the trusts committed to them that they shall add
to the confidence and faith and good will of humanity.
Let Thy blessing rest upon all the delegates here assembled. We
pray that their families may be blessed, that their homes may be
saved and protected in their absence. We pray that the delegates
may be protected from danger and accident in their journeyings that
they may come again after their labors are happily ended to their
homes in peace.
Oh God. Let Thy blessing rest upon all the work of this convention. Let Thy blessing be upon this Section of the American Bankers' Association and each of its members. Grant unto each one that
day by day in handling the trusts of life, in dealing with the physical
things of this world that are so essential to our daily lives, that
We may deal with them realizing that they mean to us to be but
the emblems of the higher spiritual things of faith and honor and
truth and justice and love and brotherhood, so that we may use
the physical and at the same time gain through it the spiritual and
the higher and nobler use of life, For Jesus Christ's sake, Amen.



to the end that eventually the American Bankers' Association and
its several sections shall include as nearly as possible all of the
banking institutions of the United States. Our secretary will report the splendid increase in membership in the section since our
last meeting. I am very glad of this, but it still remains a matter
of considerable regret to me that there are outside the membership
of the American Bankers' Association a large number of the substantial mutual savings banks of the East. I believe that we should
Immediately take some steps to the end that these be brought into
the membership of the American Bankers' Association and close
working relation with our section. I understand that there is some
objection to the membership fees established by the association in
connection with these mutual savings banks. If this is the difficulty, we should see whether it cannot be remedied. But I suspect
that the greater reason is that as yet these institutions have not
come to see the great advantage to be derived from membership in
the American Bankers' Association. We should also let them understand how much they can help us by joining our ranks:
Important reports will be made to you by the chairmen of the
various committees. Details of the action of our executive committee will be reported by the chairman, Mr. Creel*. The secretary's
report will contain a financial statement and will tell you of the
growth of the section and of some of the various activities of the
year. A report of the Committee on Uniform Laws will be made
by the chairman, Mr. Johnson. The question of uniform laws for
State and savings banks throughout the different States is of great
importance and it is very desirable that the laws of the several
States shall be made as nearly uniform as possible and of such a
character as amply to protect and safeguard both the depositors
and the banking institutions. This is a great work and will take
years to accomplish, but, as was the case with the Negotiable Instruments Law, the thing to do is to make a start and keep everlastingly at it and definite results will be secured.
You will recall that at our last convention we continued our Committee on Auditing; this committee will present to you an excellent
report which I believe will prove of much use to savings bank officers. I would recommend that this committee be continued so that
there may be a centre where suggestions in the way of new and
improved methods may be received, acted upon and systematized.
All things considered, probably the most important committee of
this year is the Postal Savings Bank Committee which you authorized
at the last meeting. Immediately following our meeting at Atlantic
City your president appointed a committee consisting of Colonel
Charles E. Sprague, New York; ex-Governor Myron T. Herrick,
Cleveland; Mr. C. La Rue Munson, Williamsport, Pennsylvania, and
P. Le Roy Harwood, New London, Connecticut. Owing to the necessity for handling considerable detail work, Mr. F. R.. Morrison, of
Cleveland, was subsequently added to the committee, with the
special duty of acting as its secretary.
It seemed impossible to secure a meeting of the committee during the latter part of the year 1907, or the early part of the year
1908. In the meantime your secretary and president watched the
matter of postal savings bank legislation at Washington and on the
first of March made a visit to Washington with a view of familiarWe avoided discussing the
izing themselves with the situation.
merits or demerits of the proposition with members of Congress,
going simply with the idea of acquainting ourselves with the situation. We satisfied ourselves that there was no probability of postal
savings bank legislation during the existing session of Congress and
having made arrangements for copies of various bills then before
Congress to be sent to us, we returned home.
At the meeting of the Executive Council of the American Bankers'
Association in May your officers were asked to report what we were
doing in reference to the matter, and acting on the suggestion of
your president the council asked us to furnish a synopsis of the
bills pending before Congress. This synopsis was prepared by Mr.
Morison and was published in the August number of the American
Bankers' Association Journal.
A very satisfactory meeting of the Postal Savings Bank Committee was held in New York City, August 7, at which time the
subject was carefully considered and a set of principles agreed upon.
A final meeting of the committee was held in the City of Cleveland,
September 15, and a report prepared, which report will be presented to you to-day.
I am thoroughly convinced that some definite stand should be taken
by this convention and that of the Atnericark Bankers' Association
at this time. There is no doubt that an earnest effort will be made
to pass some postal savings bank legislation during the coming
winter. Therefore if we wish to take any part in the matter, we
must pass such resolutions at this meeting as will be approved of
by the entire association and appoint a committee to represent us
in the further consideration of the subject.
I should like to thank the officers of the section and the various
members of the Executive Committee and of the special committees
who have done stich loyal work during the past year and have
made possible the satisfactory reports that you will hear to-day.
Especially should our thanks be given to our loyal secretary, Mr.
Hanhart. The volume of correspondence arriving at the office of the
section is now very considerable and the greater part of this requires
his personal attention. All of your officers, including your secretary,
are busy men in their own lines of work and we owe them a great
deal for their efforts in behalf of this section. The success of the
Savings Bank Section thus far has been remarkable and I trust that
in the coming year and in all the future years we may maintain
high standards in all that we undertake. This history of the past
shows us that there has been a great work for the savings bank section and I believe that there is even more to be done in the future.

officers, and to report fully at the spring meeting of the Executive
Committee, there to receive further instructions as to its future
Mr. Johnston, of Schenectady, N. Y.: I desire to second the
adoption of that resolution.
President Teter: Gentlemen, you have heard the resolution.
Is there any discussion of it? If not, all in favor of its adoption will signify it by saying Aye; opposed, No.
President Teter: I will appoint as the gentlemen to constitute the Nominating Committee, whose duty it is to nominate
officers for the ensuing year:
John C. Griswold, of New York City; Lynn H. Dinkins, of
New Orleans, La.; and Mr. Noel, of Chicago, Ill.
We will now listen to the report of the Executive Committee.
Mr. Creer, of Cleveland, 0. Just one word before presenting
the formal report. At our meeting last spring it was with some
distrust that we decided to make the experiment of holding the
meeting of the Savings Bank Section on Monday, a day earlier
than the meetings of the American Bankers' Association have
heretofore convened. J desire to congratulate the section upon
the splendid attendance that we have this morning, notwithstanding the fact that many of our delegates have not yet
arrived owing to the lateness of trains.


New Orleans, November 11, 1902
San Francisco, October 20, 1003
New York, September 13, 1904
Washington, October 10, 1905
St. Louis, October 16, 1906
Atlantic City, September 24, 1007
Denver, September 28, 1908
Since the first of this month we have enrolled 23 members, makingour total membership 1,546 to date.
Appropriations amounting to $4,500 were made during the year
by the executive council of the association, and the following were

Mr. John C. Griswold, of New York City: Apropos of the admirably set forth suggestion of the President in his address
toward increasing the membership of the section, I beg leave to
offer the following resolution:
Resolved, That the President be directed to appoint a committee
of three, of which the incoming first vice-president shall be chairman, to be known as the Membership Committee; the special duty
of the committee shall be to investigate thoroughly the subject of
increasing the membership of our section in co-operation with the

Report of the Executive Committee,
Denver, Colo., September 28, 1908.
To the Members of the Savings Bank Section, American Bankers'
Gentlemen:—Your Executive Committee begs to report briefly upon
its work for the year just closed.
During the year the committee has held four meetings; two at
Atlantic City, N. J., on September 4, 1608, and another since our
arrival in Denver in order to present our request for an appropriation
to the finance committee of the general association which meets
this morning. These meetings have been interesting and vell attended.
Following out the instructions given at the last convention, the
subject of a separate day for our meeting at the annual convention
was taken up at the spring meeting of your committee and conference
was held with the Trust Company Section Committee with the result
that for the first time we are to-day testing the experiment of having
a day for our section meeting and the meeting a day earlier. At
the same time the committee on revision of the constitution presented several amendments which were approved by the Executive
We are pleased that our counsel, Mr. Paton, has been appointed
general counsel of the American Bankers' Association. We shall
continue to have the benefit of his advice.
We regret that through illness we were deprived of the presence
of Mr. H. B. Chapman at our meeting. We are pleased to announce
his recovery.
At the meeting in May a committee was appointed to forward the
sympathy of the section upon the death of Mr. Tong, our vicepresident for Indiana.
Appropriations amounting to $4,500 'were granted by the general
association for the year, while our total expenses are somewhat in
excess of this amount, as shown by the report of the secretary.
The accounts of the secretary have been audited by Mr. Burns,
who was appointed to that task at the Lakewood meeting.
By invitation of the Committee on Postal Savings Banks, your
chairman has attended several important meetings of this committee.
Our membership shows a substantial growth. Many banks already having savings departments and memberships in the general
association have requested enrollment in our section. Membership,
September, 1907, was 1,224, while to-day it is 1,550. A comparison
will impress the importance of the section. In 1895 the general
association had rounded out 20 years of the history, its membership
was just about the same as that of this section at the present time,
while its income was about one-half of the amount of annual dues
paid by the present members of the Savings Bank Section.
Respectfully submitted,
Chairman Executive Committee.
We will nOxt listen to the report of our
President Teter
Secretary, Mr. Hanhart.
Report of Secretary.
New York, September 28, 1908.
To the President and Members of the Savings Bank Section of the
American Bankers' Association:
Gentlemen:—The membership of the Savings Bank Section on the
1st of September aggregate 1,523 as against 1,224 at the date of our
last convention; a considerable portion of this large increase in
membership (greater than in any previous year) is due to the enrollment of many State and national banks and trust companies, already members of the general association, who have large and
flourishing savings departments, and are keenly and directly interested in our work; indeed the savings business of some of these
banks is larger than their commercial business.
The following figures of membership at our several conventions
may prove of interest:


our expenditures during the fiscal year from
September 1, 1908:
Printing and stationery
Stenography and typewriting
Expenses, Executive Committee
Auditing Committee
Postal Savings Committee
Convention expenses
Salary of secretary
Book of proceedings
Counsel's fee

August 31, 1907, to




With our present membership of over 1,500, we will have to be
prepared to meet a somewhat increased scale of expenses; the expense
for salary and rent require no increase, but the items of printing,
postage, etc., will necessarily be larger; great care and rigid economy
are enforced to keep our expenditures at the lowest possible point.
As usual, all expenses were approved and studied by the Executive
Committee, and a special committee audited the financial accounts
of the secretary.
The book of printed forms has continued in some demand, and 618
copies have been sold so far, the net total cost of the work has
been to date
Receipts from sale
Leaving a net balance of
which is being used for the benefit of the association, under orders
from the Executive Committee; there are on hand 82 bound books
and 100.unbound books. Respectfully submitted,
President Teter: We will now have the report of the Committee on Uniform Laws.
Mr. Cook, of Kansas City, Mo.: Mr. Johnston asked me to
say that a slight amendment or correction was now being made
in the report, and is being transcribed downstairs by a stenographer, and he desires that the reading of the report be deferred for a few moments.
President Teter : Very well ; we will receive that later. I
will now call for the report of the Committee on Audit.
Mr. Robinson, of Baltimore, Md.: Mr. President and Members
of the Savings Bank Section. I beg leave to submit the following report:
Report of Committee on Auditing.
Baltimore, September 1, 1908.
To the President and Members of the Savings Bank Section of the
American I3ankers' Association:
The Committee on Savings Banks' Auditing owes its existence to
a word of exhortation from our honored ex-President, Mr. Edward E.
Duff, who, at our St. Louis meeting in October, 1906, urged the Savings Bank Section to take steps towards placing greater safeguards
about those who have the custody of the savings of the people.
The trustees and officers of savings institutions are not properly
discharging their trusts unless they are alert in seeking to raise
the standards of banking ethics among their employees, as well as to
Install correct methods of accounting for the purpose of preventing
irregularities in the routine work of their banks. Savings bank men
must be educated to appreviate the high privilege of their call.
ing and to sympathize with any measures designed to shield them
from the dangers of loose and careless bookkeeping. During the past
few years the public conscience has been stimulated to an unusual
degree; trusteeship has taken on new responsibility; much has been
placed in our hands and much shall be required of us. Your committee has approached its work thoroughly aware of the difficulties
in the way because of varying conditions encountered, yet hoping
that through its investigations some forward steps might be suggested to our members, many of whom are earnestly asking this
committee 'to advise them how their work may best be done. Last
year we sent a series of eight questions to about 100 representative
savings banks in different sections of this country; the replies received
indicated such a deep interest in the subjects discussed that the convention directed the committee to continue its labors and to report
to the 1008 meeting. This year we sent a list of 22 questions, all
bearing upon accounting methods, to every member of this section, and
500 responses have been received. These replies have been tabulated
and we have tried to gather up the results.
We find that the old method of posting from cash book or blotters
has been largely superseded by posting direct from deposit ticket or
withdrawal receipt. We were interested to learn that 80 per cent.
of the larger banks have found the new method desirable, and we
are glad that so many of the younger banks have made a right
start, for 60 per cent, of those having less than 2,000 accounts were
using the modern method. Many banks compare the passbook with
the ledger whenever a transaction occurs and some post direct from
passbook to ledger—about 25 per cent, of all the banks record the
old and new balances for proving correctness of the posting. This
is a highly desirable practice which we cordially commend. Further
allusion to this subject is made under the heading "Adding Machines."
We find that interest postings receive the same diligent care accorded to counter transactions. The coupon system of posting and
proving alluded to in our report last year seems to be gaining ground
and we repeat our view then expressed that this system may be
adopted with advantage by all savings banks having over 2,500
accounts and where more than two clerks are employed.
The. day of the old-fashioned bound ledger seems to be passing;
one-half of the larger banks (from 6,000 accounts and upwards) use
the card ledger; the loose leaf is used by more than 50 per cent. of


the smaller banks—while the bound book is used only by 123 out
of nearly 600 banks.
Notwithstanding the foregoing, your committee is somewhat divided
on the subject, the majority being in favor of loose leaves or cards
(cards preferably) for any and all accounts to which they may be
put, while the minority does not favor use of the loose leaves or cards
for depositors' ledger accounts, nor for general ledger accounts, believing that greater freedom from the danger of falsifying accounts
is obtained by the use of bound ledgers for such. The minority does
approve of the use of either cards or loose leaf books for other
records, With this explanation your committee is disposed to favor
the card ledger, but the situation in each individual bank must determine this question. ;In the matter of counter space it is claimed
that the card system occupies much less room. Our information as
to the danger of misplacing ledger cards leads us to believe that in
practice this annoyance is seldom encounte;ed. A colored slip of cardboard is sometimes inserted in the place of cards when removed for
posting, making it easy to replace correctly. Some ledger cards have
the final digit of card number so placed that inaccuracies in filing
are almost impossible.
Nearly all the banks beard from use the balance column in their
individual ledgers. Many use a separate Column for interest or dividends. We commend the use of the balance column, as well as the
practice of many banks in posting interest in the balance column in
red ink.



We find the card system extensively used for registering signatures
and pedigrees, alphabetical name indexes, fire insurance records,
mortgages, investment registers, dormant account searches, etc.—for
these uses cards seem especially adapted—they are easily handled,
compact, and all represent live, active matter.
The alphabetical name indexes in some banks carry the active and
closed accounts together. We think it desirable to extract the closed
account cards and file them in a separate cabinet. If when accounts
are opened and closed the index cards are dated, they carry enough
information oftentimes to avoid trouble in looking up the old ledger
accounts. Dead signature cards are filed with final payment, or
placed in special cabinet in correct numerical order or according to
date of closing.
We like the practice of some banks in using "stop cards" to take
the place of signature cards of. those accounts which for special reasons should be referred to the officers if payment is demanded, the
original signature card being filed in a special drawer. This obviates
the danger of making payments on lost books, attached accounts. etc.
Eighty-five per cent, of banks reporting use of the adding machine
for various purposes (54 banks having between 10,000 and 20,000
accounts only four do not use the machine). The smaller banks
seem to use them as liberally as the larger ones. No other single
,agency contributes so much towards facility in taking off trial balances. Many banks using card ledgers employ adding machines in
taking off balances before end after transactions, proving the correctness in the day's tranctions absolutely. This method is also
feasible in certain loose leaf systems which have been brought to
our notice. Primarily these machines are used for trial balance work,
but many other uses quickly suggest themselves until they become an
invaluable adjunct in the work of the bank.
Our inquiries under this head were framed so as to learn how often
a complete and actual trial balance was taken and how much time
was required to do the work. It is highly gratifying to learn that in
most institutions this subject receives the careful attention it deserves.
It is safe to assert that if the trial balances are surrounded with adequate safeguards—if they are frequent enough and if absolute and
unvarying accuracy is insisted upon—there can be very tew irregularities possible. In large institutions the balancing of ledgers should
be shifted among the clerks so that no one shall receive the same
ledgrr to balance two years in succession. The general totals should
be kept by one of the officers or chief clerk and the ledger clerks
sl.ould not have access to these figures. We have found that a third
of those banks having less than 10,000 accounts take off their trial
balances monthly. Nearly one-half of the larger banks take them
off semi-annually and one-third of all the banks take them off at
odd times. We approve of this latter method if it is employed in
connection with the regular balancing which is usually coincident with
the interest periods. One institution takes off its trial balances every
six months, immediately after interest is credited, and at irregular
intervals outside auditors are employed to take a balance at some odd
season. Of course, these examiners come in unexpectedly to the clerks
of the bank. A large force with several adding machines can complete the work in a very short time in even our largest banks and the
regular Work is but slightly interfered with: It is highly important
that the work of balancing the ledgers should be compressed into the
least possible time. This is difficult because of the strain of work at
interest periods, and yet it is gratifying to report that 60 per cent.
of the banks complete this important work in less than a week; 10
per cent. do the work in from one to three weeks; the rest of those
reporting can give us no reliable data. We, of course, realize that
often a stubborn error will elude the vigilance of the bookkeeper for
weeks, but no bank officer should allow an error of any amount to
remain unfound indefinitely, but a period should be set within which
all errors must be located.
We also find that many of the banks divide their ledgers into several sections to facilitate the work of balancing—this makes the
counter work a little more complicated but yields ample fruits forthe extra labor involved.
The practice of allowing interest semi-annually is followed by more
than SO per cent, of the banks. A small number pay interest quarterly, while a few of the larger banks still adhere to the annual
period. Over half the banks pay interest upon the monthly balances,
but • most of the large Eastern banks pay upon a quarterly basis—
in some the semi-annual balance is used as the basis of reckoning.



Nearly three-fourths of all the banks allow interest from the first
of the month upon deposits made during the first few days of the
'month. A few still adhere rigidly to the old rule that interest
commences on the first of the month following the depostt.
Nearly all the banks are protected by their charter provision in
the matter of requiring notice for payments if desired. During the
past year this privilege was largely availed of, though many banks
report, with a show of some pride, that they have never found this
step necessary. Many of the large banks in the East required notice,
not because of their individual needs, but because the general commercial and banking conditions demanded that de savings institutions
conserve their cash resources and thus protect those commercial
banks with whom they carried balances. If these large concerns had
yielded to the clamor of their depositors for currency, the situation
would have been strained to the breaking point. Their action is
now commended almost universally. It is wise in the opinion of this
committee that every savings bank should have the right to require
60 or 90 days' notice for the withdrawal of deposits in order to protect itself from losses resulting from forced selling of securities
during time of general financial stress, as well as to protect the
depositors themselves from *the dangers of carrying cash on their
persons, or from storing it in unsafe places in their homes. But no
solvent savings bank should make use of this defence if it alone is
singled out and its integrity assailed in times of general prosperity.
It is interesting to learn that the general practice of the banks is
not to impose any penalty upon those depositors who do not draw
their balances according to notice given. Forfeiture of interest is
exacted by only a few institutions, although heavy losses may have
been entailed in the sale of securities to meet prospective demands.
The attitude of the savings banks towards their panic-stricken
depositors seems to be one of tolerance, although the burden may
be placed upon the larger number of depositors .who do not lose their
This is one of the most interesting and important topics taken up
by the committee—the supposed difficulties in the way of proving the
accuracy of income received lead most banks to abandon it as impracticable. Only 92 banks out of nearly 600 have a system which
safeguards their interest receipts. In most savings banks investments and loans are largely stable. It would be but a slight task
for one of the officers to review the receipts of a given period—say,
monthly—or to charge the treasurer with the income expected during
a future period. Changes in investments, or loans can be easily
adjusted. This matter was treated in some detail in our report last
year, and we earnestly commend this subject to the thoughtful consideration of our members. The officer receiving the income of a
bank should insist upon some method of having his accounts reviewed. The resultant satisfaction of the officers higher up and of
the trustees will be sufficient compensation for the added work.
One of the largest institutions in the East deems the matter of
such moment as to maintain a separate auditing department in
which practically a duplicate set of general books is kept and an
unfailing check is thus maintained on their income receipts.
This is a subject to which many of our banks have given little
attention. Less than 5 per cent. of the banks practice scientific
amortization; about the same number roughly charge down the premium annlially, while the large majority charge off the entire amount
at time of purchase. Some State laws provide for statements based
upon amortized values, but banks may keep their books according to
the old method of par and market values. We strongly urge all
banks to charge their securities down so that at maturity at least
they shall appear on their books at par. One bank reported that all
bonds maturing within ten years are carried at par. Certainly no
bank should value its securities in such a Way as to make the income yield appear greater than it actually is. The friends of
scientific amortization are making progress, and this subject will
demand increasing attention.
One-fifth of the banks responding employ outside auditors, but only
37 publish the results of these audits. We feel that savings banks
offer a valuable field for the energies of the public accountant, and
if the matter is intelligently and tactfully brought to the attention
of bank officers we believe the practice of public audits would
become more general. One insuperable obstacle seems to be that
all of the passbooks cannot be verified. A large Eastern bank overcomes this difficulty in a measure by employing extra clerks having
no connection with the regular staff to make interest entries on
passbooks as presented. These men compare the passbook balances
and report any discrepancies to the officers. During the period of
their employment, which lasts about six weeks, they verify about
one-third of the total number of passbooks. Any book which may
have been manipulated is, of course, liable to be presented. The
method seems to be at least a partial solution of the vexing problem.
Many banks under State supervision and examination feel that they
are adequately protected, but not infrequently they are forcibly reminded that such examinations afford but meagre defence.
There are many excellent practices in use by various banks which
suit their peculiar needs but which are not susceptible of general
adoption. Much careful thought is being given by savings bank men
everywhere to simplify their work and to reduce liability to error.
All of these matters cannot be alluded to here, nor can we find space
to record many valuable suggestions capable of wide application.
We feel grateful for the considerate treatment accorded to our
inquiries, for we realize that it is no easy matter to answer satisfactorily, within a brief compass, some of the questions upon which
we sought information.
We must admit again, as we reported last year, that we have only
touched the subject of auditing in a superficial way, and the few
suggestions we have thrown out may be of little use to many, but

if only a few of our members are helped the labors of your committee will not have been in vain.
Respectfully submitted,
WM. HANHART, Secretary,
Mr. IIass, of Denver, Col.: Mr. President, I move that the report of the Committee on Audit be received with the thanks of
this section, and that the committee be continued for another
Mr. Flynn, of Troy, N. Y.: I second the motion.
President Teter: All in favor of receiving the report with
the thanks of the section and continuing the committee will
signify it by saying Aye; opposed, No.
Mr. Smith, of Chicago, Ill.: I rise for information, Mr. President. Is this report to be printed so that it may be in the
hands of the members?
President Teter: Yes, sir. I was about to say that as this
report is a rather technical one, and at the same time a very
valuable one, it will be published at length in our proceedings.
I would also say that on account of the very strenuous work
of our Secretary. a large part of these various reports are already in print. We hope to have the annual proceedings in the
hands of members this year not later than the 1st of November.
Next in order will be the report of the Committee on Revision
of tile Constitution.
Mr. P. C. Kauffman, of Tacoma, Wash.: Mr. President and
Gentlemen, your committee found that there were several provisions of our constitution that were inconsistent with the provisions of the Constitution of the American Bankers' Association, and therefore it was deemed advisable to make some
amendments to our Constitution and By-Laws so as to make
them conform to those of the parent association. There is no
constitutional provision whereby our constitution can be amended.
I suppose, however, that under strict Parliamentary law, this
body has ample power to make such changes as are necessary.
We have this morning added a special section to our report
as printed, namely, providing for the appointment of a committee on nominations a year in advance. That is Section 9.
Now, our report is as follows:
Report of Committee on Revision of the Constitution.
Tacoma, Washington, August 10, 1908.
Savings Bank Section, American Bankers' Association:
Gentlemen: We hereby recommend the following amendments to Ms
Constitution and By-Laws:
Strike out Sec. 2 entirely.
Re-number the sections up to the present Sec. 0, making Sec.
Sec. 5.
Strike out Sec. 7 entirely, and insert as a new Sec. 6, the following:
'Sec. 6. The President and Vice-President of the section shall be
members ex-officio of the Executive Committee, and ex-Presidents if
still members of the Association shall also be members ex-officio for
three years after expiration of their term of office.
Add Sec. 8 under a new number Sec. 7.
The Constitution and By-Laws as amended will then read as follows:
Section 1. The administration of the affairs of this section shall
be vested in a President and First Vice-President of the section and
an Executive Committee of nine members, who shall serve until their
successors are chosen or appointed.
Sec. 2, No President nor Vice-President nor retiring members of
the Executive Committee shall be eligible for re-election for a period
of one year after the expiration of his term of office.
Sec. 3. The Executive Committee shall select its own Chairman
from among its members, and shall also select a Secretary of the
section, who may or may not be a member of the section.
Sec. 4. The Executive Committee shall, as soon as may be after
their organization, divide themselves by ballot into three classes of
equal number designated as the first, second and third class, of which
the first class shall remain in office one year, the second class two
years and the third class three years, and at each annual election members of the ExeCutive Committee shall be elected for a term of three
years to fill the vacancies of the retiring class.
Sec. 5. The Executive Committee shall have power to fill vacancies
until the next annual meeting and may adopt all necessary rules for
the business of the section.
Sec. 6. The President and Vice-President of the section shall be
members ex-officio- of the Executive COmmittee, and ex-Presidents, if
still members of the Association, shall also be members ex-officio
for three years after expiration of their term of office.
Sec. 7. The President, First Vice-President and Chairman of the
Executive Committee shall represent the section in the Executive
Council of the Association.
Sec. 8. Each State having not less than five savings institutions,
members of the American Bankers' Association, shall be entitled to a
Vice-President of the section; such Vice-Presidents to act generally
in an advisory capacity to the Executive, but not to be entitled to
Sec. 9. A Committee on Nominations shall be appointed every year
at the close of the convention meeting, to serve for the following year.
Respectfully submitted,
P. C. KAUFFMAN, Chairman.
Mr. Dinkins, of New Orleans, La.: I move the adoption of
the report.
Mr. Breckinridge Jones, of St. Louis, Mo.
: There is one
clause of the report that it seems to me ought not to be

adopted, and that is the one referring to the proposed appointment of a committee a year in advance to nominate officers.
Now, it is a matter of history in the American Bankers' Association that so long as there was a coterie of men who provided
for the selection of officers in advance the American Bankers'
Association did not prosper. It took twenty years to develop
the membership of the American Bankers' Association. I rethember very well the fight over the election of officers in the
Association at the meeting held in Detroit, and the struggle that
was had to overturn the coterie of men that had been providing
for the succession of themselves and their friends in the directorate of the Association for years, and when that was accomplished and those men were overturned then the American
Bankers' Association began to develop. I believe that if the
clause here provided for is adopted and a Committee on Nominations is appointed this year to suggest the names of officers
for next year it will be within the power of the committee to
provide for the succession of themselves and their friends and
the dominion of the Section. and it will result in the same
situation that faced the American Bankers' Association at the
time I speak of. I believe it is unwise, and I believe that this
body will best subserve its own interests if the nomination of
officers is left to the initiative of all the members in open session. I feel more free to make this suggestion, gentlemen, because I have never been and never expect to be and never would
be an officer of this Section, but I represent an institution that
is a member here, and I feel that this is a matter of sufficient
importance for us to pause and be wise at least.
Mr. Edens, of Chicago, Ill.: A motion has been made, as I
understand it, to accept the report. Does the acceptance of the
report itself change the Constitution, or does the discussion of
such points as this come up later?
President Teter : It is the acceptance of the report of the
committee that is before us now; that is all. And, if I have
the permission of the gentleman who made the motion to say a
word at this point, I think I can say something that will probably straighten this matter out and will also cover the point
that Mr. Jones has raised. In our present Constitution there is
nothing that tells us how we are to amend or revise it. Now,
in the absence of anything in the Constitution about that I
would rule that we should follow the same plan that is provided in the Constitution of the •American Bankers' Association,
namely, that in amending the Constitution notice must be
given to members before the Convention. Now that has not
been done in this case. You have to-day for the first time a
new Constitution of the Section proposed. You have heard
from Mr. Jones an objection to one clause of the Constitution.
There may be other objections to it. Therefore, with your consent, I would rule that we simply receive this report to-day, have
it printed in our proceedings, and bring it up in regular order
for final consideration at the next convention, and then we can
act upon it wisely after full consideration.
Mr. Edens, of Chicago, Ill : I believe the majority of the
gentlemen here from Illinois will agree with me in the statement that some of the members of the committee that it is proposed to appoint might decide to remain away from che next
convention, and then the members in attendance at the meeting would be helpless to do anything. Now, sir, I submit that
this Section is perfectly competent to select its own officers. I
would like to see this report returned to the committee with instructions to strike out this clause to which objection has been
President Teter: I am ruling that the discussion before us
now is on the report of the committee and not upon the adoption
of the Constitution.
Mr. Kauffman : At the meeting of the Executive Committee
at Lakewood your Committee reported the revision that we
have just read with the single exception of this one clause.
That clause was not suggested at that time, but was suggested
by a number of members of our body in letters received since
we arrived here. It was not contained in our original report
nor were we particularly anxious to present it, but we did so at
the request, as I say, of several members. Of course, if that is
deemed objectionable by the majority of the members here
present it can be eliminated.
Mr. Creer : I would move as an amendment to the motion
before the house that the report be received and printed in the
proceedings and action thereon deferred until the next annual
Mr. Dinkins: I will withdraw the motion that I made and
second the one now made by the gentleman from Cleveland.
Mr. Jones: Voicing the suggestion of the gentleman from
Illinois, I move that the clause as to the appointment of a
nominating committee be eliminated from the report of this
President Teter: The chair must hold that it is impossible
to eliminate anything from a report of a committee.
Mr. Creer : I submit that the report of a committee is the
property of the body appointing the committee, and therefore
that this body can do what it pleases with the report.
President Teter: The chair rules, unless he is overruled,
that this Section should first receive the report and then if it is
wished to change any feature of it a separate motion to that
effect must be made.
Mr. Jones: Then, sir, I move as a substitute for everything
that is before the house at the present moment that the report


of the committee be referred back to the committee with instructions to eliminate therefrom the clause in question.
President Teter: That motion the chair rules is in order. Is
it seconded?
Mr. Creer: I will second it.
President Teter: All in favor of the motion made by the gentleman from Missouri that the report be referred back to the
committee with instructions to the committee to eliminate from
It the clause relating to the appointment of a Nominating Committee will signify it by saying Aye; opposed, No.
President Teter: We will now listen to the report of the
Committee on Uniform Laws:
Mr. John H. Johnson, of Michigan: Mr. President and Gentlemen. The report is as follows:
Report of Committee on Uniform Laws.
Denver, Colo., September 28, 1908.
To the Members of the Savings Banks Section:
Gentlemen: Our Committee on Uniform Savings Banks Laws can
only report progress, as we find the more we investigate the proposition before us, the larger, the more important and the more necessary our task appears.
Our first step was to ascertain existing conditions in the different
States by obtaining copies of the banking laws of those States or of
the general laws or special charters under which the banks were
In the use of the word "banks," we refer primarily to savings
banks, but indirectly to any bank that operates a savings department.
In the brief time at our command we attempted to review the
different laws, but after a careful study of the situation concluded
that it required first of all a trained legal mind, which brings us to
the point that the recent action of the Executive Council in providing
our association with the general counsel, affords us the very best
possible a gency. Briefly, we are convinced that one of the most important tasks and most splendid opportunities given the association
is through this very subject, and we would consequently ask that
the preliminary work started by our committee be continued, and.
further, that this section ask that our counsel, Mr. Paton, he added
to that committee, and that they proceed at once to the drafting of
what might be termed a skeleton outline of a savings bank law,
this outline to embrace the cardinal features desired, namely: Articles
of • Association, Corporate Powers, Management, Banking Department,
Deposits. Reserve, Limit of Loans and Investments, Liability of
Stockholders, Use of the words Bank, Banker or Savings, Earnings,
Surplus and Dividends, and Provisions for Amendments. Supplementing or Repeal.
Your committee realizes that for the moment at least it is impossible to draft a uniform law, such as the Negotiable Instruments
Law, that could be enacted in the various States, yet feels that instead, our purposes will be more quickly served and the desired
results brought about by adopting a standard and then bringing the
different States up to that standard in the requirement or requirements in which they may be lacking. For example: one State may
have adequate laws, quite up to our ideas, and yet not have a proper
banking department and supervision; another may have all the
desired features and yet have no restrictions as to investments, and
so on.
We know that the realization of this much to be desired result
is likely to be rather a tedious task, yet if persisted in, it will
ultimately result in the establishment, not only of uniform State and
savings laws, but possibly a universal system of savings banks,
respected and trusted alike, from Maine to California.
Later it may be desirable to bring these under one general head,
such as now governs the national system, but without in any way
curtailing or interfering with the rights of the respective States
to legislate for themselves. This is a suggestion only, yet worthy
of serious thought.
Respectfully submitted,
Accentuating this statement, I have in hand a letter received
from a gentleman representing one of the oldest States
in the
Union, in which he says:
"We have no general savings bank laws in our State, no
organized banking department. Sadly lacking indeed."
I think that tells its own story.
Mr. Dinkins: I move the adoption of the report.
Mr. Collins, of Detroit, Mich.: I second the motion.
President Toter: All in favor of the motion that the report
be received, and adopted will signify it by saying Aye; opposed,
President Teter: An address will now be read by Mr. Frederick C. Nichols, of Fitchburg, Mass. This is a paper prepared
by Hon. Pierre Jay, Bank Commissioner of Massachusetts, who
was unable to come, and he requested Mr. Nichols to read his
The Proper Treatment of savings Deposits When Taken by State
Banks and Trust Companies.
[Mr. Jay's Paper in full will be found on pages 162 to 163 of
this publication.]
President Toter: We will next listen to an address by Mr.
John C. Griswold, Secretary of the Excelsior Savings Bank of
New York City, on "The Effect of the Recent Panic on Eastern
Mutual Savings Banks."
The Effect of the Recent Panic on Eastern Mutual Savings Banks.
[Mr. Griswold's paper in full is given on pages 163 to 164 of
_this publication.]
Mr. Kauffman: Mr. President, the Committee on the Revision



of the Constitution is ready to report on the matter, which was
recommitted to us.
President Teter: Gentlemen, give your attention to the report
of the Committee on Revision of the Constitution.
Mr. Kauffman: The committee reports eliminating Section 9,
to which objection was made, and adding the section providing
for amendment, to which we give the number 10. Therefore,
without reading the report in full, I will state that our report
Is practically the report that we made before with the exception that we have stricken out Section 9, to which objection was
Mr. Jones: The Chair having ruled, as I understand it, that
the consideration of this report cannot be had at this meeting,
but must go over to the next meeting, I now move that the report of the committee be received.
President Teter: The Chair does not desire to be understood
as being arbitrary about this at all. If the convention wishes
to act upon this report now the Chair has no objection.
Mr. Jones: Then, sir, I move that the report be received and
the committee discharged with thanks.
Mr. Rhodes, of New York City: I second the motion.
President Teter: All in favor of the motion will say Aye;
opposed, No.
President Teter: Before we adjourn for luncheon I desire to
announce that the Committee on Nominations will meet on this
platform immediately upon adjournment, and they request that
all members who have suggestions to make are invited to present them; they would particularly like to hear from gentlemen
representing different States.
An adjournment will now be taken until two o'clock.
Adjourned until 2 P. M.

President Teter: Ap there are matters that will likely occasion discussion this afternoon the chair would announce that the
usual rule will be followed limiting speakers to five minutes
Mr. Harvey, of Huntington, W. Va.: Mr. President, I think
this Postal Savings Bank business is a matter of such extreme
importance that it should be fully discussed without any limit
of time on the speakers.
President Teter: If any speaker exceeds five minutes a
motion will be entertained to extend his time.
The report of the Committee on Postal Savings Banks will
now be presented by Governor Herrick.
Report of Committee on Postal Savings Banks,
Denver, September 28th, 1008.
To the President and Members of the Savings Bank Section:
1. It is our opinion that unless imperatively demanded by public
needs the functions of the United States Government should not be
extended to the spheres more properly occupied by State governments,
or by corporate or individual effort.
2. The savings systems of the majority of the States, with the
modern facilities for transacting business by mall, are adequate
to the needs of the people, and the safeguarding of their deposits.
It is evidenced by the record of this Association that it is the
constant endeavor of the banking fraternity to improve these conditions in the remaining States.
3. Although, in our opinion, no great detriment will result to
the existing savings bank system from the establishment of postal
savings depositaries inasmuch as the present facilities are superior
to any that could be afforded by the Government, or to those of
the countries where postal savings banks now exist, yet the previous
experiences of the United States Government in conducting banking
institutions, and notably in connection with the Freedmen's Savings
& Trust Company, do not encourage us to believe that the proposed
postal savings system would be managed more wisely or with better
success than the existing savings institutions.
4. We think it preferable to educate the newly arrived foreigner
to American methods rather than to accommodate our methods to his
5. We point with pride to the record of the savings institutions
of the United States. While the figures for 1907 are not yet available, during the year 1906 the aggregate net loss to depositors was
the trivial sum of $120,000, being three-ten-thousandths of one per
cent. on a total of three billion five hundred million dollars in savings deposits, whereas, the proposed Government rate of two per
cent. would have deprived the depositors of at least fifty million
dollars in interest in the same year.
6. We submit that our savings institutions have performed a great
service throughout the United States in the developing of the country.
A large proportion of the deposits in these institutions is invested
in first mortgages to build homes and in municipal bonds, all of
which investments have greatly assisted in the up-building of the
various communities.
• 7. We hold that the history of the financial institutions of the
United States demonstrates that in safety and in adaptability these
institutions are developing as the country develops, through a process
of evolution, and that the record of the past is a sufficient guarantee
for the future that our present banking facilities will steadily grow
to meet all the requirements of the country.
8. While we believe the basic objections we have urged against a
Postal Savings System are unanswerable, we further submit that the
bills now pending in Congress for the creation of that system should
not be enacted into law, because specifically wrong in the following
particulars, to which many others could be added.
A. The exemption of deposits from legal process is vicious, as it
would provide a depositary for funds of the dishonest and the

fraudulent, where they could place their money, draw interest so it,
and be free from attachment, which would prove a serious menace to
the business interests of the country.
B. In the use made by the Government of the funds coming into
its possession through the postal savings depositaries, the provisions
of the bills do not assure a wide and equitable distribution of the
funds deposited nor prevent the centralization of the people's money,
which belong to and should be retained in their respective communities.
C. No provision being made for a time notice for withdrawals, the
Government Might at times be seriously embarrassed, to the great
detriment of the general business interests of the people.
Respectfully submitted,





Mr. Herrick: Having read the report I desire to offer the
following resolution:
That this report be received and placed on file, and the committee
continued, as there is still further work for the committee to perform.

Mr. Latimer, of New York: I second the motion made by
Governor Herrick.
President Teter: Gentlemen, you have heard the motion that
the report be received and placed on file and the committee continued. Is there any discussion of it? If not, the question
will be put. All in favor of the motion will signify it by saying Aye; those opposed, No.
Mr. John Schuette, of Manitowoc, Wis.: Is it in order now
to discuss this question? I think both parties ought to be
President Teter: Is it the pleasure of the meeting to accord
to the gentleman from Wisconsin five minutes' time?
Mr. Herrick: For my part, I quite agree that the gentleman
ought to be heard, although I was about to make this suggestion, namely: the matter is disposed of as far as we are concerned, and it is a question that is going to come before the
main meeting of the Association, and will doubtless occasion
debate in which everybody will have an opportunity to take
President Teter: The Chair will put the question on allowing
Mr. Scheuette an opportunity to be heard at this time. All in
favor of so doing will signify it by saying Aye; opposed, No.
President Teter: Mr. Scheuette has the floor.
Mr. John Schuette, of Manitowoc, Wis.: Mr. President and
Gentlemen of the Section: If the plan that has been proposed
Is carried out a new bank will be established in every banking
town throughout the Union, in all about 18,000 Government
postal savings banks, particularly doubling the number now in
existence, unless the banks unite to insure their depositors
against loss.
The guaranteeing of deposits is the wish of the majority of
the people as well as a large proportion of the interior banks.
The Republican party has recognized it by promising Postal
Savings Banks; the Democratic party, in its platform, provides
for the insurance of bank deposits, and if this cannot be attained then it will pass a Postal Savings Bank law.
In spite of these solemn pledges, some influential and powerful financiers assert that we will never have either, but I do
not believe that platform pledges can be violated with impunity
and the will of the people ignored.
Here, then, is the bankers' alternative, either to insure their
depositors or to compete with 18,000 new Government postal
savings banks, created with the stroke of a pen, operating
simultaneously all over the country.
Every one agrees that these Government banks, considered
the safest, would be the strongest competition imaginable. They
would, after once being established, remain forever, and such
a situation would bring about irretrievable loss, not alone to
savings banks but to nearly all banks for all time.
As these Government banks would draw largely the deposits
from other banks, the latter would soon be compelled to give
their depositors the same measure of safety as the Government
offers in order to retain the depositors left to them and to compete for new business.
Why do we not forestall this threatened danger by uniting
in urging Congress to pass a Deposit Insurance Act, which
would be equitable to the whole people and more satisfactory
than the postal savings banks? The latter only insure a class,
a limited number, thus not preventing bank runs. If such an
act is passed it would exclude the Government from going into
the banking business.
It must be admitted that deposit insurance will prevent bank
runs, nerve racking and worry, and bring hoarded money into
The main objections to the proposed plan come from a few
large bankers who fear they will lose their advantage over their
smaller competitors. Their main argument against it Is: That
it would encourage reckless banking.
But why? By insuring depositors? The banker's capital, his
double liability, and his reputation are not insured, nor is he
insured from criminal prosecution in case he does reckless banking. Why, then, should be be more reckless than he is now?
I contend that he would be less.

The second objection is that there would be no incentive for
the depositor to discriminate between a conservative or honest
banker as against a reckless and dishonest banker. This Mr.
Fowler answers by saying: "Not one in a thousand knows the
inwardness of a bank; it is blind faith." To this I can testify.
When in selecting our Chicago reserve bank. I used the utmost
caution to choose what was considered the safest and strongest
fiduciary institution in the city, namely, the National Bank of
Illinois, but in -spite of my caution it failed about eleven years
ago and I was caught.
The third objection is that it would savor of paternalism or
socialism. In reply I would like to know why? It would be
more so than the Government now exercises over railroads and
other interests, which supervision is admittedly in the public interest. This would apply if the Government established postal
savings banks, but not by regulating banks.
Mr. J. B. Forgan, the most indefatigable objector to deposit
insurance, I believe was the leading spirit to induce the Clearing House banks to apply this very plan, by assessing all these
banks, to pay the depositors in the failed Walsh banks, in exchange for the assets. This action averted a general panic.
Why not apply the same remedy to the whole banking system?
All bills and other proposed remedies increasing liability or
promising better supervision, stricter laws and enforcement and
more publicity will avail nothing. As Comptroller Eckels says:
"No system, no matter how elastic, or volume however large, can
offer relief as long as confidence is disturbed, and credit wanting, money hoarding will go on, and additional issues but add
to the hoarding."
The people want security for their deposits the same as the
Government demands for its deposits. Why not give it to
them? Or will you let the Government take our deposits and
guarantee them?
Mr. Herrick: Mr. President and Gentlemen, I desire to offer
the following:
Whereas, This savings bank section of the American Bankers'
Association represents the savings of the people of the United
States, and
Whereas, The record of these banks for conservatism, stability and
unselfish devotion to the interests of their depositors, is unparalleled in any country in the world, and
Whereas, The loss to their depositors has been so small as to be
absolutely a negligible quantity.
Therefore be it resolved, That inasmuch as any plan for a scheme
to make each of these banks responsible by taxation or assessment
for the acts of one another or to connect them with the national
banking system is economically unsound in principle, confiscatory in
form and inimical to the best interests of its depositors, stockholders and borrowers, It would discourage individual initiative, the
best products of the American mind, it is a specious form of
paternalism and socialism, it would tend to encourage speculation
and an undue expansion of credit;
Therefore, be it resolved, That we enter the most solemn protest
against the enaction into law, either by States or by the nation, of
any principles so subversive to sound economics and so revolutionary
in character.
I move the adoption of this resolution.
Mr. Solomon: I second the adoption of this resolution.
Mr. Herrick: I ask the privilege, Mr. President, now that the
resolution has been seconded, of saying a few words on the subject. I think this is a question that interests not only the members of this body, but every man, woman and child in the
United States. I believe sincerely in the wording of this resolution. I believe the record of the savings banks of the United
States is such as to entitle us to speak in no uncertain terms on
so fallacious a proposition as is the one that has given rise to
the resolution that I have offered. It is and should be in no
sense a question to be settled in a political controversy, but it
is a question that should be disposed of after argument and
careful consideration so that the sunlight of wisdom may be
let in upon it to the end that no one will ever have the temerity
to present it to Congress.
Let me call attention to a few practical illustrations of the
absurdity and futility of such a law as is proposed.
are in the United States about fourteen billion dollars of deposits; there are in circulation, currency, gold, silver and coin
about three billion of dollars;'there is probably in the pockets
of the people about one billion of dollars; there is held in reserve possibly nearly two billion dollars more; we cannot tell
those sums precisely, but in any event there are probably about
twelve billions of dollars—represented by what? If you are
going to liquidate all the banks to-day and pay fourteen billions
of deposits what are you going to pay them with? Three billions
of dollars. Where, then, are the other eleven or twelve billions?
Where do they originate? I speak to you who are versed in
banking, experts on this subject; I submit that all the balance
of that sum, eighty-five per cent, of which practically is based
on loans and credit. Yet it is proposed to guarantee, to link up
every bank in the United States with every other bank,Sand to
guarantee the deposits of this currency, gold, silver and coin.
And you guarantee what? Eleven or twelve billions of credit
based on loans simply. Think of the absurdity of it. Why, if
you are going to guarantee anything, why not go to the origin
of it all and guarantee the credit and the loan. That shows the
absurdity of the matter. It is like lifting yourself up by your
boot strap, or like a snake swallowing his own tail. Take the
instance in New York City during the last panic where there
were failures to the amount of $98,000,000. Under the Okla-


homa scheme—for it is a scheme—what would have happened?
We would have had an assessment of one per cent. on the deposits of the State of New York, which would have produced
$44,000,000. Would you have had that sum on hand in currency, withdrawn from circulation? Would you have had it in
bonds? How would you administer that fund? In addition to
that, you would have had to make an assessment of $48,000,000
on the banks of New York in order to make up the balance.
Why, gentlemen, I assert that such action would have precipitated the entire country into ruin and disaster. As it was,
the people were on the verge of ruin. And it was all .due to the
fact that the depositors were frightened—not that they needed
the money. What is the result—the effect? It is this, that there
is a loss of about $15,000 that all this fuss was about. Credit
is re-established, equilibrium has again asserted itself, and we
are all right once more, with the loss of only about $15,000; to
collect $44,000,000 and then $48,000,000 more!
Let me cite the case of the Knickerbocker Trust Company in New
York City. It failed for about $50,000,000. Under this Oklahoma plan those depositors did not need the money; it has been
so proven, and to pay them the money that they did not need
and did not want, under this Oklahoma plan you would have had
to make assessments and pay in $50,000,000. Now, what happened to the Knickerbocker Trust Company. I speak. of that
because it is a good index of the whole scheme. It was just
this: The stockholders got together, the company was in the
hands of receivers, and the stockholders, patriotic in their purpose, desired that all of the 17,000 depositors should be paid,
and, in order that they might not go to the disaster of final
liquidation and the payment of large sums to the receivers,
evolved a plan which was to place the stock in the hands of
three voting trustees to continue for five years. Those trustees
were named, Mr. Ledyard, Mr. Frick and I happened to be the
other one. The voting trustees asked the stockholders first, before they would appeal to the depositors, to make good on their
side. They agreed to do so; they agreed to pay in two and a
half millions of dollars as a guarantee that the stockholders
would permit them to open the institution. Very well. Upon
that agreement the institution was opened and the time-deferred
three per cent. interest, one, two and three years, at intervals
of months, when they might have their money; the institution
opened, and it has more money to-day on hand than it had when
it closed its doors in the panic; it has anticipated the depositors'
demand, and it has accomplished one thing that they did not
foresee, and that is this: With all of its tremendous assets
it was investing that money—where?
Throughout the United
States. They were accused of being a little rapid and rather
optimistic in their investment, but they gave the stockholders
the value of their stock; there were enterprises going fbrward
on which they had agreed to loan money all over the country,
and this at once resulted in starting up labor in many quarters
of the United States and permitting the institution to meet the
obligations that it had made.
Now, I maintain that instead of the closing of an institution
and then an utter irresponsibility on the part of stockholders,
which is a legitimate part of this scheme—I maintain that they
have some duties to perform as well as the men who manage
an institution and not to permit the vultures to take away
without protest the assets of the concern and sell them out at
auction, which is a wanton and unnecessary waste. I contend
that the records of the banks of the United States clearly assert
that such a course is not necessary. Now, it has been said on
the other hand: "Oh, well, this may trouble the banker; we are
not so much interested, but the depositor must be paid." My
friends, you cannot separate the interests of the banker from
the interests of the borrower and the depositor. I speak now
for an institution which I know more intimately than the others,
the mutual bank. Out of all the savings in the United States
in these mutual banks there are upwards of three billion dollars;
there are seven millions of stockholders; there is not one dollar
of stock in those institutions; and those institutions make about
four-tenths of one per cent. profit. I speak of our own institution. We have 80,000 depositors and $50,000,000 of deposit3,
and our profits on the deposits is four-tenths of one per cent.
Where does that money go? It has been used in building up
the West. Those old institutions hold the bonds of the towns
and villages ihrougout this whole western country. The municipal bonds is the best security we have. Why, gentlemen,
the reason why a municipal bond brings such a high price is
because of the billions that are invested in them. I maintain
that an assessment of one per cent, or a fraction of a per cent.
on those institutions would be felt throughout the whole United
States in the increased price of municipal bonds. I tell you,
my friends, this is no trifling matter. The depositors of this
country have not been demanding anything of this sort. Why?
Because their loss has been practically nothing. This has come
from the hot-foot battle of politics. Why, I heard of a man at
Lincoln the other day who had come up from Oklahoma reading
some of the absurd advertisements. One man was advertising
for money and had offered eight per cent., and it was said that
he was warned by the Governor—Governor Haskell I suppose
it must have been—that they would only pay four per cent.
So he said, "Very well, I individually will pay the other four
per cent. myself." (Laughter.) Then, too, the statement was
made that there was a man proposing to start fifteen banks in



Oklahoma, and the authorities looked up his record and found
that he had failed once in his own name and once in the name
of his wife. Men the Commissioner of Banking in Oklahoma
proposed that they would limit the number of banks. So a suit
was brought to prevent the location of a bank in Logan County
and not to permit any more banks in the county. A decision
has just been handed down in that case holding that there was
nothing in the law to prevent anybody from starting all the
banks they wanted to.
I prophesy that if we take the only examples that we have
—the one in New York and the one in Michigan—as an indication of what will happen, that the day will come when that
great State of Oklahoma will rue the day that it introduced a
system which will encourage speculation and inflation of credit
that is bound to redound to its everlasting discomfort and disgrace. I want to repeat one more what I believe to be the crux
of the whole situation: This is not money, gold or silver or
coin, but it is endorsing a product which originates,in your note
where you borrow money of the bank; 86 per cent. of all that
we are talking about is based on loans. Think .of the absurdity
of a man putting his note in a bank for $1,000 and having it
put to his credit and having it guaranteed by all the banks in
the United States, and then going off and making himself irresponsible so that he cannot pay the note, but if he could
transfer that deposit that is good and the note originates the
deposit! Why, it is absurd. I maintain that if you do the one
thing you must do the other, and if you do both it shows the absurdity of it. Gentlemen, it is sixteen to one. It is sixteen
honest frugal people guaranteeing the success and the hoarding
up of some fellow who is improvident and cares nothing for his
business. I suppose for a time the structure is strong enough
to carry it, but ultimately it must fall because of its absurdity
and unsoundness.
Now just permit me a moment on this insurance proposition
and about what Mr. Forgan has said, as the gentleman from
Wisconsin says. There is a great difference in an insurance
company from any scheme of this kind. The insurer does not
have to take anything that he does not believe is a good risk—
Mr. Schuette (interposing): Nor the government either. They
are precisely on the same level.
Mr. Herrick: Every bank in existence has got to stand the
assessment under your plan.
Mr. Schuette: Ah! That is not the point. The examination
is the same.
Mr. Herrick: Oh, well, the national banks have to stand it
if this law is passed as a national law; and, if it is a law that
pertains simply to the States, why, it depends in each State on
how they pass the law.
Mr. Schuette: I understand, Governor, your great influence
in Congress, and I want to ask you this: Will you promise
not to exert your influence against an enabling act and allow
me to come In; you can stay out if you want to, but will you
oppose such a law—an enabling act? •
Mr. Herrick: My friend, I do not believe that the scheme
of combination that you have in mind is a good one. For one
reason, I do not believe it is a good one because it would be the
formation of a banking trust. If you take a number of banks
In a community and let them get together and form an organization, as we are obliged to do sometimes in cases of panic,
you legalize the establishment of an organization of capital that
makes it impossible for the little fellow, a single bank, to exist.
Now about insurance. A reputable life insurance company
is not obliged to be responsnale for one of these graveyard insurance companies. It is responsible to the assured, that is all;
it can select its risks. So a fire insurance company can select
Its risks. Now, suppose you pass a law getting them all together—
Mr. Schuette: I differ with you entirely. A fire insurance
company makes rates. It does not make any difference whether
there is a risk or not, the price is the same thing, precisely on
the same level. Because each bank, small and large, must have
a certain capital, they are examined and they are on precisely
the same level; the government examines the small bank as well
as the big one.
M. Herrick: Why, it is a scheme by which the government
Is asked to give something for the advantage of one citizen,
of one bank, as against another citizen. That is another reason
why I oppose it.
I maintain that this is a good thing to discuss because it cannot stand the light of argument for any length of time. We had
it out in our State and we have practically got through with it;
It began in our legislature last winter, and it has passed on.
I am sorry that a question of this kind should have obtained
so much root in the minds of the people.
Mr. Creer: I call for the previous question.
Mr. J. J. Sullivan, of Cleveland, Ohio: I am strongly in favor
of the resolution, and I hope when the- question is put upon its
idoption that it will be adopted by a unanimous vote.
withstanding that, I am not in favor of the call for the previous
question, and I trust my friend Creer will withdraw his demand
for it. We are all bankers and citizens of this great Republic,
and this is one of the live questions of the day, and it ought to
be fairly, intelligently and fully discussed.
Mr. Creer: My purpose in calling for the previous question
is that I believe this discussion is out of order and not germane

to the matter before us, which is the proposed postal savings
bank and the report of the committee on that subject, while this
discussion has been switched over into a discussion of guaran
teeing of bank deposits.
Mr. Herrick: My friend is mistaken. The report of the committee was put in and a motion was made and carried disposing
of that report. -Now this is a new question that came up in
regular order.
Mr. Creer: I do not desire to seem to be at variance with my
elders from my own home city whose judgment I respect, but I
submit that the question of guaranteeing bank deposits does not
come into the realm of the savings bank business.
Mr. Sullivan: I ask my friend Creer if he will withdraw his
demand for the previous question?
Mr. Creer: If the Chair thinks that I am in error I am willing to withdraw it.
Mr. Sullivan: Oh, in that event you would have to withdraw
it anyway.
President Teter: The Chair would state that the report of
the Committee on Postal Savings was read and was passed upon
and disposed of, and then under our regular order we were ready
for open discussion. Now the Chair rules that Colonel Sullivan
is within his parliamentary right in proceeding to discuss the
general subject and he has the floor.
Mr. J. M. Dinwiddle, of Cedar Rapids, Iowa: I would like to
ask the gentleman who last spoke when this matter of the proposed Postal Savings was disposed of. Some of us over in this
part of the hall have not heard of it yet.
Mr. Festus J. Wade, of St. Louis, Mo.: Mr. President, I desire
to say on this matter that—
Mr. Sullivan: One moment. The chair has ruled that I have
the floor, and I am going to finish what I started out to say and
I am not going to be interrupted. (Laughter and applause.)
I am disappointed that any banker would on a question of this
character demand the previous question with a view to shutting
Off debate. I am for the broadest possible discussion of this
subject, although I say in advance that I am opposed to the
general idea of guaranteeing deposits. I believe, as Governor
Herrick has said, that it is foreign to the fundamental principles
of good government and that it should not be seriously considered by any intelligent people. Now that I have finished
what I had in mind to say, I have done.
Mr. Dinwiddie : There are a few of us who gave up the opportunity for a very pleasant outing this afternoon for the sole
purpose of listening and taking part in a discussion of this question of Postal Savings Banks—
President Teter: I want to be entirely fair, but I think the
gentleman from Iowa is out of order. The question now before
khe meeting is the resolution offered by Governor Herrick. Is
there any further discussion of that resolution?
Mr. Harvey, of Huntington, W. Va.: Yes, I desire to speak
to that resolution. I am sorry that I am not a public speaker
that I might the more properly give voice to the sentiments that
are in my mind—
Mr. Creer: I rise to a point of order.
President Teter : The gentleman will state his point of
Mr. Creer: I demanded the previous question for this reason:
Governor Herrick read the report of the Committee on Postal
Savings and then he followed it up with a resolution and asked
that the Committee be continued as he thought there was further
work for it to do, and that motion was carried. But there has
been no discussion whatever of the question of postal savings
Mr. Herrick: If the gentleman will permit me to make a
statement. The Committee presented the report, asked that it
be received and filed, and that the committee be continued. Now
that was agreed to. Then the Chair asked whether there was
any discussion, and one gentleman got up and discussed it—
he discussed it out of order, for the matter was already disposed
of, hut he was permitted to discuss it. Then after he had
finished I came forward and presented a resolution on the
guarantee of deposits, and that resolution was seconded and is.
now before the house.
President Teter: The chair desires it clearly understood that
there is no objection on his part to having a discussion of
the subject of Postal Savings Banks when such a discussion
shall be in order, but the question before the house at the
present moment is the resolution offered by Governor Herrick.
Mr. Harvey: That is what I rose to speak. to, Mr. President.
President Teter: Then, sir, you may proceed.
Mr. Harvey: I am sorry, as I started to remark, that I am
not a public speaker so that I could the better make myself
intelligible to this audience. There are conditions confronting
us, I submit, that we should face in a broad and patriotic manner. Years ago the American Bankers' Association hooted the
idea when it was mentioned by several of us that there ought
to be appointed a strong committee to prepare a currency
bill for submission to Congress—a measure that the bankers
as a whole could endorse, and they dilly-dallied along with
the 'matter until the convention at St. Louis and they then
did appoint a committee. What have we to-day in the shape
of a currency law? An abortion. The Vreeland-Aldrich bill is
worse than no bill at all. The Fowler bill would have been
much superior to it. But I am opposed to both measures. I





submit that the American Bankers' Association ought to have
gotten together years ago and discussed the matter and framed
a bill that the bankers of the entire country could have endorsed, and then we would have had to-day a currency measure that we could live under. Now, gentlemen, there is another condition confronting this country. Public sentiment is
demanding it. If you sneer at it, there will come a time when
you will regret it. We ought to act and act wisely. We should
look at conditions as they are. Surely unless something is
done the politicians, who know nothing about financial affairs,
will enact a law that will be as bad or worse than the VreelandAldrich bill. Now is the time to act. There shduld be a
strong committee appointed to get up some kind of a bill to
lay before Congress that will prevent a bill being passed that
we cannot live under. I am not advocating a guarantee of deposits or an insurance of deposits or any particular plan, but
I contend that a committee ought to be raised that will devise a plan to take the place of something that we may think
Important to suit the conditions of the country. There should
be some plan to protect depositors. Let us be consistent. The
Commonwealths of the country, the municipalities, the counties—the United States Government will not deposit a dollar
in the banks there, no matter whose bank it is, unless the
banks put up a guarantee that the money will be returned on
demand. Why should we protect the biggest depositor, I ask,
and not protect the smallest depositor? The little depositor
is or more importance to the banks than the big depositor.
Why? The little depositor deposits his money in the bank
and lets it stay there waiting until he can accumulate sufficient
money to enable him to build a home or to start in business.
What does the big depositor do? Why, the first thing you know
he draws a tremendously big check and you have got to meet it
without a moment's warning. You have no opportunity to
loan out his money at a profit, while with the little fellow who
is leaving his money in your bank until he can accumulate
enough to buy a home or to start a business, you have got
plenty of chances to loan his money.
Gentlemen, I tell you that unless we do devise some plan to
protect the small depositor Congress will surely pass a Postal
Savings law of some kind and will open every post office in the
United States for the receipt of deposits from small depositors.
That will deplete the deposits of the savings banks throughout
the entire land. I am speaking more especially of the rural
districts. The money that is in the country, in the small
towns, is colleted in by the banks there and is loaned out to
the people in the community; we loan these deposits to help
build homes, to help start business enterprises, and that money
remains out in circulation. Money, gentlemen, is the blood of
commerce, and when you stagnate the circulation of money lethargy ensues and the nation dies. It is the same as if you
were to stop the circulation of the blood in your body.
Mr. Festus J. Wade, of Missouri: I rise to a point of
order that the gentleman is discussing the Postal savings
Bank project and not the resolution before the house.
Mr. Johnston, of Schenectady, N. Y.: The Postal Savings
Bank matter involves the question of guaranteeing deposits.
President Peter: Gentlemen, I have been allowing considerable latitude in this discussion, but now I would ask
gentlemen to be as brief as possible, inasmuch as you may
want to discuss the subject of postal savings later on when
that subject may be properly before us.
Mr. Harvey: The only reason I referred to postal savings
was to call attention to the fact that unless we adopt something better it will surely come into effect. Now, as I started
'to say, under that proposed bill all the money taken in by the
postoffices must be sent to a depositary of the United States
in a central reserve city. That would bleed the rural districts
of the country of the money that should remain there for circulation in that district. Gentlemen, if you will make some
investigation, as I have, you will find that there is a large
amount of money that is in hiding. Two or three weeks ago a
gentleman came to me and -said that his father had $1,150
locked up in a trunk at home, and he was afraid that his
father might be robbed—
President Peter: Is the gentleman now discussing the subject of guaranteeing of bank deposits?
Mr. Harvey: Yes, sir; the insuring of deposits—some plan
to insure or guarantee them so that the people will bring out
of hiding their money, money that we need for the commerce
of this country. I. see that gentlemen are getting impatient,
and with what I have said I will be content and stop.
Mr. Wade of St. Louis, Mo.: I want to take exception to
the statement that has been made that the government in
States and municipalities requires in some sense a guarantee
of its deposits that the deposit guarantee idea of Oklahoma
is intended to be put into action. In one case it is entirely
voluntary. You are not obliged to take a government deposit
nor a municipal deposit nor a State deposit and give a guarantee. But according to this fallacious notion of the guarantee of deposits, if it becomes the act of the legislature or the
act of Congress, you or your institution and your assets are
obliged to guarantee my integrity and my solvency and solidity.
There is a well defined line of demarkation between being
forced to do something by a legislative act and a voluntary act
on the part of those conducting financial institutions. In the




guaranteeing of a State deposit you go into it voluntarily, but
if you are managing a savings bank and getting your charter
from the State of Oklahoma you are not only guaranteeing the
depositors that put their money in your institution that your
institution is solvent, but you are guaranteeing the solvency of
every man, reputable and disreputable, wise and unwise, within
the entire confines of that State, that he will return to the
depositor the money he has placed therein. Do not let us confuse the proposition with that which is voluntary and that
which is intended to be forced upon us as representing financial
institutions. In a discussion of the savings bank proposition
it is a totally different idea from the guaranteeing of deposits.
Confine your debate, if you please, to the question of government savings banks on the one side and this fallacious notion
of the guaranteeing of deposits on the other side. Do not
let us get confused. If you are in favor of the guranteeing of
deposits why not at the same time pass a ivy and by the same
powers that be that each borrower shall endorse or guarantee the loans of every other borrower? (Applause). Why get
off on this guarantee question and confuse it with the other
question, which is not a matter at this time that attacks all
the financial institutions, whether they be savings banks or
national banks or State banks or trust companies?
Mr. Harvey: I desire to say in reply to Mr. Wade that
my idea was to appoint a committee that would get up a law
that only banks that wanted to insure their deposits could do
so--not to force every bank into it.
Mr. Wade: I heard the gentleman say also that the American Bankers' Association had devoted some time to framing a
law to relieving the condition that existed last October. I
happened to be a member of that Commission. No set of men
that you can appoint on a committee made greater personal
sacrifices of time than did the members of that commission to
try to frame a satisfactory law. We may not have possessed
the wisdom of the gentleman who spoke last, but we did the
best we knew how; we were not in control of the halls of
Congress, but we did have enacted in the Vreeland-Aldrich Bill
the principles that the American Bankers' Association have
enunciated—not as we would like to have them, but nevertheless the principles for which we fought were recognized.
Mr. Johnson, of Detroit, Mich.: May I add a couple of
comments in support of Governor Herrick and also of Mr. Wade
and in correction of Mr. Harvey's misstatement—unintentional,
as I am sure it was. In the first place, you will pardon me
for referring to the Postal Savings Bank matter for a moment
The deposits would not be sent to central reserve cities; and,
In the second place, what may interest you, as Mr. Wade has
stated, the State of Oklahoma does not recognize its own child
for it requires a State warrant or surety bond for every dollar
of its municipal deposits that is put into any bank in the
State, be it State or national bank. (Laughter.)
President Teter: Gentlemen, are you ready for the question,
or is there further discussion?
Mr. Breckinridge, of Arkansas: I wish to move a substitute for the motion that I understand is now before the
house. My substitute is this: That action upon this resolution
be deferred until the subject comes up in the general meeting of the American Bankers' Association. Now, upon this I
desire to say just a word or two.
President Peter: Is there a second to the substitute motion
offered by the gentleman from Ark,ansas?
A member: I will second it.
Mr. Breckinridge: This is a meeting of the Savings Bank
Section, a subordinate organization of the American Bankers'
Association; tomorrow there twill be a meeting of the Trust
Company section, another subordinate organization, and the
day after tomorrow there will be a general meeting of the
entire American Bankers' Association, consisting of members
of these two sections and of bankers proper. Now this is a
complicated question in very many respects. I will not attempt to go over the points that I know exist in the minds
of very many of the gentlemen present, but as final action upon
this question is certain to come up in the general meeting of
the American Bankers' Association I submit that we should not
anticipate such action here.
Mr. Herrick: I am willing to accept the substitute motion
of the gentleman under one condition, and that is that he
unite With it the question of postal savings. I think it is
proper that the general meeting of the American Bankers' Association should discuss and pass upon these questions finally and
not have them disposed of here.
Mr. Breckinridge: The postal atvings matter is in somewhat
of a different parliamentary status from this question. Of
course, by unanimous consent, that subject could also be referred to the general meeting of the American Bankers' Association.
President Teter: The question is on Mr. Breckinridge's
Mr. Sullivan, of Ohio: I contend that the motion made
by Mr. Breckinridge is not in any sense a substitute for Governor Herrick's resolution, and I suggest to Mr. Breckinridge
that it would be more proper language if he were to frame
his motion in different words.
Mr. Breckinridge: My motion is a substitute for the question before the house, the question before the House being the



resolution of Governor Herrick, and I think in essence his
proposition is about the same as mine, namely, to defer final
action here and let the subject be passed upon finally in the
general meeting of the American Bankers' Association.
Mr. Herrick : I think the matter of guaranteeing deposits I's
such a ridiculous one that it ought not to be treated with any
seriousness at all. We should sit down on it good and hard.
Mr. Jones: But suppose we take one action and the parent
Association should take the other action. We would be presented before the American public in a very amusing light. We
are all here as part and parcel of the American Bankers' Association, and here is a question that we are discussing that is
on the program for discussion in that association and will
come up there for general action. I think it would be discourteous for this subordinate body to attempt to forestall the action of the parent association.
Mr. Herrick : .But this is a question that relates to the
business of this section purely; savings banks, and it does
not in any way interfere with the functions of the general
meeting of the association.
Mr. Griswold, of New York City: Would it be proper for
the Chair to name a committee of three to prepare a proper
form of the opinion of this body, setting forth its like or
dislike in reference to the subjects under discussion, and then
put it before the. meeting for a vote? (Laughter).
President Teter: Gentlemen, the question is on Mr. Breckinridge'h substitute motion, which is in effect not to do anything
but to put the whole matter up to the parent association.
All in favor of the substitute motion will say Aye; opposed, No.
(The result of the vote being in doubt a division was ordered, whereupon the substitute motion of Mr. Breckinridge
was declared lost.)
President Teter : The question is now on Governor IIerrick's
resolution. All in favor of its adoption will signify the same
by saying Aye; all opposed, No.
Mr. Dinwiddle, of Iowa: If it is in order, I would move that
those present who desire to do so be now granted the privilege
of discussing the subject of postal savings banks.
President Teter: A motion is not necessary, as the Chair
will recognize any gentleman who desires to discuss that
Mr. Johnston, of Schenectady, N. Y.: I desire to speak on
that question, Mr. President. There is a great advantage to
any speaker who wishes to set forth facts in having for hearers
then who above others are accustomed to dealing in facts. It is
possible that what I have briefly to bring to your attention will
not be new, but if your attention at this time is called anew
to certain facts I believe some good will come of it.
Now, the advocates of postal savings banks state:
That the government guarantee for deposits in postal savings
meet the approval of depositors.
That the system will be so universally spread throughout the
country that people in small towns where there are no banks
will avail themselves of the postal savings banks established
That foreigners who send their money to the old country
under present conditions will leave •their money here in government postal banks if such are established. That money
wnich is now hoarded because of district of banking institutions
will be brought into circulation through postal savings banks.
Now it is regarding these propositions briefly stated that I
wish to state some facts. As to instituting postal savings
banks for safety, there is at present in the neighborhood of
four billion dollars in the savings banks in this country. The
total amount of savings has been increasing from year to year
since the savings bank system was established until it has approximated this enormous amount. During this time government bonds could be purchased in small amounts by any depositor in a savings bank for most of the years at a rate
of interest exceeding that which is proposed to be paid by
postal savings banks, and yet the government bonds of to-day
are not held to any great extent by savings bank depositors.
It is the same with first class municipal securities. It is the
savings banks who take the people's money on an average of
three to four per cent. and invest it in these securities. The
savings banks have attested their confidence in the government of the United States and are building up confidence in
the building communities of the country and in the minds of
savings bank depositors and educating the large foreign element to such confidence. Is not the proposal to institute
postal savings banks set forth in such a way as to discriminate
somewhat against the safety of banking institutions as compared with the government of the United States? It is argued
that when money is place4 in postal savings banks by people
who would not put it in savings banks they will when larger
amounts have been accumulated put their money at larger
interest in savings banks? Does that argument hold good?
That they will prefer postal savings banks for small savings
and savings hanks for large amounts? Is it reasonable that
national banks chartered by business men for the purpose of
dividends will loan this postal savings bank money for people to build homes with, at from 4 per cent. to 5% per cent.

interest when they can get six per cent. for their money,
and as has been shown in times of panics, will send it to
large commercial centers for from 10 per cent. to 20 per cent.,
or still larger rates of interest?
•The bank of which I am the treasurer has within the past
few years loaned to the people in the vicinity of the bank
two millions of dollars of their savings for the purpose of
building homes. ,How much of the savings bank money that
has gone into the, building of homes would be put into mortgages, school district, village and municipal bonds by national
Investigation in foreign lands, as well as our own, has
shown that the miserly hoarding of money by people who
should deposit it in banks is done, although every facility is
given them for the safe investment and depositing of their
Regarding the depositing in postal orders by people, residing
in small localities where there are no savings banks, it is a
fact that the amount of international money orders issued outside of the large cities is very small. In several counties that
I have investigated the mosey orders are almost entirely taken
out in the principal town. Government Postoffice statistics
show that the average life of a postoffice internui ivaai money
order is seven days; that the average amount of the postoffice order is $15. Do not these statistics establish the fact
that the money orders purchased by the transient foreign element and sent to the old country is largely for transportation
of that money, and not for the purpose of saving it, and
would any particular amount of it be deposited in postal savings
institutions, if established? On the other hand, would not
postal savings banks draw from banks which pay no interest,
and from trist companies and savings banks? Would not the
tendency be to increase the rate of interest paid in postal banks,
so long as the money was brought under the control of the
government, and through it, placed in the custody of banking
institutions who could use it to great advantage in the accumulation of dividends, gradually increasing the rate of interest
allowed. in the postal banks until it approximated the highest
interest paid by savings banks and trust companies, and under
such conditions, how could the semi-charitable institutions in
which only certain officers are paid for services, whose trustees
are for the most part without pay, survive as savings institutions.
Are not the savings banks of this country worth preserving,
and should they be given over for the theory advanced, or the
main reason given, of satisfying a transient foreign element?
Can we afford to throw away something that is unique in American history for a theory that has little or no foundation, in fact?
Men who have watched the growth of the savings bank business for years know its true value to the business of the country,
and to the building 'up of high standards of public confidence.
The statement is made that "only a portion of savings bank
business will be affected if postal savings banks are instituted."
Will it stand inspection? Will not the tendency be toward
wiping out the savings banks because of an ever increasing
salaries force, having its center in the politics of the country,
and a vast accumulation of money which may be controlled by
the administration of the government. Sinews that now make
up much of the strength of business interest in various states,
as an independent force, will be placed under the control of a
central power.
We submit that when the savings banks of the States of New
York, Massachusetts and Connecticut are discriminated against
for institutions in which the people may place their spare earnings, that it will be time to inquire into the administration of
the United States.
The best interests of our country demand that we investigate
carefully the proposition for postal savings banks in the United
States, before giving our voice in favor of such institutions, in
preference to savings banks controlled by the various States of
the Union.
Mr. Dinwiddie: One gentleman a moment ago, speaking in relation to guaranteed bank deposits, remarked that that question
would come up day after to-morrow before the bankers proper.
Another gentleman, speaking in relation to guaranteed bank
deposits and postal savings banks, said that the subject of
guaranteed bank deposits concerned the banks, whereas the
postal savings question concerned principally savings banks.
Now I contend that these two remarks might mean that the
Savings Bank Section need expect nothing from the American
Bankers' Association generally. I do not want to think that. I
believe that we are as much bankers proper as are the other
bankers. I do not believe we want to allow it to become
thought even that the American Bankers' Association is an association of national bankers and that we have no particular
interest in the association. I do not believe we want it to be
thought that we are simply an adjunct to the association. I
believe when we come here, we come as part o the American
Bankers' Association, and anything that is for thZ interest of the
fraternity at large is for our interests as a whole. I believe the
American Bankers' Association must help us to fight our battles,
and I do not want to go before them saying that we have taken
it upon our shoulders to do this or that, but what we resolve to
do here let us do jointly, together, and let us insist on receiving
the support of the American Bankers' Association in everything




that we do. We do not want postal savings banks. The banks
proper, granting for the moment that there are such, evidently do
not care so much about that question as they do about the question of guaranteed bank deposits. Let us link them up. If we
can help them defeat guaranteed bank deposits let us do so, and
then let us ask them to help us defeat postal savings banks.
To do this we must enlist the energy of every member of the
American Bankers' Association, whether he is a banker proper or
what not. Fifteen thousand members of an association comprising State banks, National banks and savings banks is a
mighty strong organization. Let us work together. (Applause.)
Mr. Briggs, of Denver, Cob.: The remarks of the gentleman
from Iowa caused me to rise to make a motion along the line
of his suggestion. I believe at the coming session of Congress
this question is going to be acted upon, and that the savings
banks are in graver danger now than any other financial institutions in the country. The question of guaranteeing of bank
deposits is now a political question and will solve itself, but the
question of passing a Federal savings bank law has been endorsed by the political parties of this country and is a vital
question before us. Now, I move that it is the sense of the
Savings Bank Section that the American Bankers' Association
oppose the passage of any bill by Congress establishing Federal
savings banks. (Applause).
A Member: I second that motion.
Mr. Ford, of Louisville, Ky.: I heartily agree with the sentiment expressed that this section should not make itself purely a
subordinate body of the American Bankers' Association. It is a
part of that great association. But it seems to me that it is
entirely competent for this section to go before the American
Bankers' Association and declare its opinion on any question like
this and as for the support of that association in carrying it
out. I therefore suggest to the gentleman from Denver that he
word his motion in this way: That a committee be appointed to
present to the American Bankers' Association the report that we
have heard read from our Committee on Postal Savings Banks
and request their support in carrying out the sentiment expressed in that report.
Mr. Briggs: I will accept that. My motion was intended to
get the American Bankers' Association to express itself publicly
py some means upon this subject as well as to give us the
benefit of their assistance.
Mr. Johnson, of Michigan: I think the position taken by the
gentleman who has just spoken is the proper one and that we
ought to act upon his motion as originally made. When we have
done that then if you choose we can name a committee to present the subject before the general convention.
Mr. Ford: There is no real difference between Mr. Briggs and
myself. I merely suggested that there be added to Mr. Briggs'
motion that the report be read before the American Bankers'
Association as expressing the sense of this body.
Mr. Briggs: I will re-word my motion so as to read that it
Is the sense of this section that we oppose the establishment of
Federal savings banks in the United States, and ask the support of the American Bankers' Association to defeat the same,
and that the Committee on Federal Savings Banks of this section
be requested to present this motion to the American Bankers'
Mr. Dinwiddie: I second that.
Mr. Johnson: I would like to ask if the gentleman from
Denver refers to the Standing Law Committee of this section
when he speaks of the committee? If the gentleman will recall
the latter clause in our report this morning, we called attention
to the codifying and ultimate uniformity that we hoped to obtain
in the savingS banks laws of the various States, and I may say
that our committee has been in close touch with National and
State legislation and we recognize the growing tendency that
way, and we only thought that if we get busy early and shape
legislation along the lines recommended by our committee that
we will do away with even the growing sentiment for Federal
savings banks, we will create a uniform savings bank system of
our own building, built by our experts and not ,by politicians;
and I suggest that if you leave that question in the hands of the
standing law committee it will receive most careful consideration
and nothing in the law of legislation that affects any of our
rights as bankers, as business men or as citizens, will in any
way be lost sight of.
Mr. Briggs: I cannot see how my motion conflicts in any
way with the duties of the committee. Certainly we shall be
very glad to have the support of the committee.
President Teter: In using the term "Federal" savings banks
I suppose Mr. Briggs really meant postal savings banks.
Mr. Briggs: Yes, certainly.
President Teter: The question before the house is the motion made by Mr. Briggs. All in favor of the motion will say
Aye; opposed, No.
Mr. Dinwiddie : I do not want to occupy too much time, but
there is another thing that I want to speak of. It has been
suggested that the Standing Law Committee is looking after
legislation in the various States. I take it that that is to secure
uniform laws along certain lines. Now I can see wherein it is of
considerable advantage to the national banks of the country, because they are national under the national law, to come to these
meetings and to belong to the American Bankers' Association.
What I want to say is, what particular advantage it is for the






State and for the savings banks to be part of that and yet
have the parent association say that it wants to stand aloof
from local affairs. It does stand aloof from local affairs, from
local banks, because what legislation affects one affects all. But
It is not so with State banks and savings banks. We can get
actlion of the committee that Mr. Johnson speaks of along certain
lines, but where can the State associations and the bankers
of the State who belong to both the American Bankers' Association and the State Associations get the benefit that they are
entitled to from the parent association to go along with the
benefit to the national banks if the American Bankers' Association insists in keeping out of local affairs. I contend that there
are times when the American Bankers' Association lends its
efforts to furthering the desires of the bankers of different
States if their desires are agreed to by the State, National
and savings banks. i would like to have this body—
perhaps not by motion, but let each person resolve himself into
a committee of one to impress on every member of the American Bankers' Association that he meets that the State and
savings bank people want the benefit they are entitled to,
whether it be local or not, if they ask for it after agreeing upon
what they should get. The State of Iowa now desires to have
certain legislation enacted. We believe that with the aid of a
certain committee of the American Bankers' Association we
might accomplish it. Is that a thing that the American Bankers'
Association calls local? Would it refuse to lend its aid to an
object of that kind? If they do are they not discriminating?
Mr. Creer: I had a few words to say upon the postal savings bank question, but I am going to refrain. This morning
I congratulate the section upon its large attendance. This
afternoon I have come to the conclusion that having a separate
day set apart for our meeting may be really a detriment to us.
I see on the program for Thursday afternoon there is to be an
address by Festus J. Wade, of St. Louis, on the subject of
guarantee of bank deposits. I submit in all fairness if that
time and that place were not the proper time and place for our
friend from Wisconsin and our friend from Ohio, and all the
others that have had something to say on the subject to speak
of guaranteed deposits. This is a meeting of the Savings Bank
Section, and if we are to have these gentlemen—for wliose
opinions we have very much respect—come in here on the one
day that we have and inject discussion of questions that are
not purely questions affecting savings banks then we are going
to be robbed of the privilege and the time that we hoped to
have had in our full day's meeting.
Colonel Sullivan did me an injustice when he intimated that
I wanted to strangle discussion. I did not want to do that, but
I say there are men here to-day, experienced, earnest savings
bank men, who had something to say on this postal savings bank
question, and who could not say it for lack of time, and you
and I will be the losers by not having had the benefit of their
So, gentlemen, I ask you as savings bank men, whether yOu
are connected with purely mutual savings oanks or trust companies, with savings departments or State banks that have a
savings department, that you will carefully guard the time and
have a proper idea of the eternal fitness of things on all subjects that shall come up for discussion on the floor of this
section so that we shall not again trench upon something that
is coming up in the general convention. (Applause).
President Teter: The hour is growing late, gentlemen, but
we will hear from any one else who has a word to offer. If
there is no further discussion, we will hear from the Committee
on Nominations.
Mr. Griswold, of New .York: Mr. President and Gentlemen
of the Association: As Chairman of the Nominating Committee
I am requested to submit the following nominations of officers
for the ensuing year:
For President of the Section—John H. Johnson, of Detroit, Mich.
For Vice-President—William R. Creer, of Cleveland, Ohio.
For three members of the Executive Committee to serve three
years—W. T. Ravenscroft, President of the Federal State and Sayings Bank, Denver, Colorado; A. W. Johnson, Treasurer of the
Schenectady Savings Bank, Schenectady, N. Y.; Robert J. Wood,
Chairman of the Board of Directors of the Interstate Trust and
Banking Company, New Orleans, La.
And for Vice-Presidents of the various States as follows:
Alabama—Eugene F. Ensien, Cashier Jefferson County Savings
Bank, Birmingham.
Arkansas—Charles McKee, Vice-Presidents State National Bank,
Little Rock.
California—James R. Kelly, President IIibernian Savings and
Loan Society, San Francisco.
Colorado—Alva Adams, President Pueblo Savings Bank, Pueblo.
Connecticut—Lyman S. Caplin, Treasurer Mechanics' and Farmers'
Savings Banks, Bridgeport.
Florida—J. M. Stevens, President Union Savings Bank, Jacksonville.
Georgia—George M. Brown, President Georgia Savings and Trust
Company, Atlanta.
Corneau, Assistant Cashier of Western Trust and
Saving. Bank, Chicago.
Indiana—J. Woolverton, President St. Joseph County Savings Bank,
South Bend.
Iowa—J. M. Dinwiddie, Cashier Cedar Rapids Savings Bank,
Cedar Rapids.
Kansas—T. M. Walker, President Atchison Savings Bank, Atchison.
Kentucky—Attilla Cox, President Columbia Trust Company, Louis-



Louisiana—G. A. Blaffer, Vice-President Commercial Germania
Trust and Savings Bank, New OrPans, La.
Maine—E. A. Noyes, Treasurer Portland Savings Bank, Portland.
Maryland—Robert M. Rother, President Hopkins Place Savings Bank,
Massachusetts—Frederick C. Nichols, Treasurer Fitchburg Savings
Bank, Fitchburg.
Minnesota—F. Otto Willius, Assistant Treasurer State Savings
Bank, St. Paul.
Wisner, President %First National Bank,
Mississippi—F. G.
Laurel, Miss.
Missouri—Thornton Cooke, Treasurer Fidelity Trust Company,
Kansas City.
Montana—E. P. Chapin, Vice President State Savings Bank, Butte.
New Hampshire—J. E. Fernald, Vice-President Loan & Trust Savings
Bank, Concord.
New Jersey—Adrian Lyon, President Perth Amboy Savings Institution, Perth Amboy.
New York—Everett Smith, President Schenectady Savings Bank,
North Carolina—W. L. Scales, Cashier Richmond County Savings
Bank, Rockingham.
Ohio—It. Wiebenson, President United Banking and Savings Company, Cleveland.
Oregon—Lansing Stout, Cashier Hibernian Savings Bank, Portland.
Pennsylvania—G. C. Purves, President Philadelphia Savings Fund
Society, Philadelphia.
South Carolina—W. D. Morgan, President Bank of Georgetown,
South Dakota—Isaac Lincoln, President First State Savings Bank,
Tennessee—P. D. Houston, Cashier First Savings Bank and Trust
Company, Nashville.
Utah—David Eccles, President Ogden Savings Bank, Ogden.
Vermont—C. P. Smith, President Burlington Savings Bank, Burlington.
Virginia- -R. M. Kent, Jr., Cashier Capitol Savings Bank, Richmond.
Old National Bank,
Washington,—W. , D. Vincent, Cashier
West Virginia—II. C. Harvey, Cashier American Bank and Trust
Company, Huntington.
Wisconsin—C. R. Carpenter, Cashier Commercial and Savings
Bank, Racine.

President Teter: Gentlemen, you have heard the report of the
Committee on Nominations. Are there any other nominations?
There being no other nominations the question will be put upon
the reception of the report of the committee and the election of
the gentlemen named.
All in favor of accepting the report of the committee and
electing the gentlemen whose names have been read will signify
the same by saying Aye; opposed, No.
I take pleasure in presenting to the section the Presidentelect, John H. Johnson, of Detroit, Mich. (Applause).
President Johnson: It would be very ungrateful in me if
I did not at least acknowledge the' compliment that you pay
Michigan to-day. I take it that your action is not a recognition
of any special service that I may have rendered, but is rather
a compliment to the bankers of my State who have worked
hard for many years in presenting to the banking fraternity of
America a savings bank law that is progressive along the very
lines that we all want. On behalf of Michigan, then, I thank

you; and as far as I am concerned personally, I assure you that
I will endeavor in the year to come, with the aid of the wisdom
of the gentlemen with Whom you have associated me, to care
for your interests to the best of my ability; I will endeavor to
put upon my work the impress of earnestness, carrying underneath it all the principles that the Commissioner from Massachusetts lead before you in his very able paper this morning,
that we are the guardians of the great trust funds of the American people and that we cannot be too careful in any movements
that we make. I feel, gentlemen, that the work of this section
which will devolve upon these committees—the Postal Savings
Bank Committee and the standing Law Committee—will be very
heavy and serious, and it will be my utmost endeavor to appoint
on those committees only gentlemen who will take an interest
in the work and who will guard our interests sacredly, carefully
and unselfishly.
Gentlemen, I thank you very much indeed. (Applause).
Mr. Teter: Mr. President, in handing you your badge of office
I trust I may transfer to you something of.the loyalty that has
come to me during the past year from the officers of the section.
President Johnson: Gentlemen, I present to you the VicePresident-elect.
Vice-President Creer: I thank the members of the section
for the honor conferred upon me. With Mr. Johnson I feel
that I have done nothing personally to deserve your favor. I
believe the Revelator has said: "I am . Alpha and Omega—the
first and the last." I won't give the rest of it. You have honored
Ohio in the past in electing the President of the largest savings
bank in the Middle West, and you have honored now the representative of one of the smallest. They raise everything in Ohio.
(Laughter and applause.)
Before we close, gentlemen, I think it wise to offer a couple
of resolutions, as follows:
Resolved, That the thanks of the section be tendered to the
officers for the dignified, energetic and progressive manner in which
they have handled the affairs of the section during the past year. .
Resolved, That the thanks of the section be tendered to the bankers of Denver for their gracious reception, and to the owners of
Brown-Palace Hotel for the pleasant and generous treatment of our

. The resolutions were variously seconded.
President Johnson: Gentlemen, all in favor of the adoption
of these resolutions Will signify it by rising.
Is there any unfinished business?
Mr. Herrick: I would request that in referring the matter of
postal savings banks to the meeting of the American Bankers'
Association the resolution that I offer be also referred to the
convention at the same time.
President Johnson : If there is no objection, it will be so
ordered. Is there any new business? Is there anything that
we can do for any member? If not, then I would announce
that there wilt be a meeting of the Executive Committee immediately after adjournment, and I now declare this meeting of
the section adjourned sine die.

Fidelity Trust Company
Capital, Surplus and Undivided Profits over $8,000,000
Resources over $25,Q00,000
ALLOWS INTEREST on daily balances of $1,000
or over, subject to check at sight, and transacts
a general banking business.

TAKES ENTIRE CHARGE of Real and Personal

•AUTHORIZED BY LAW to act as Executor, Trustee, Administrator, Guardian, Assignee, Receiver,
and in all fiduciary capacities, both under court
and personal appointment.

GUARANTEES TITLES of Real Estate throughout New Jersey.

RENTS SAFES and stores valuables in well-guarded
Burglar and Fireproof Vaults.

ACTS AS TRUSTEE under mortgage, Registrar and
Transfer Agent of Stocks and Bonds of Corporations.

UZAL H. McCARTER, President
JOHN F..DRYDEN, Vice-President
ANTHONY R. KUSER, Vice-President

JEROME TAYLOR, Trust Officer
FREDERICK W. EGNER, Secretary and Treasurer
JAMES H. SHACKLETON, Asst. Sec. & Asst. Treas.