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TWO SECTIO
'ON TWO
SECTI O N
Held at Los Angels*, Cal., Oct. 3, 4, S, ( and 7 1921
EDITORIAL ARTICLE—
The Spirit o f the Bankers’ Convention
GENERAL CONVBNTIONADDRE88E8
COM M ITTEE REPORTS
NATIONAL B A N E DIVISION
A D D R E S S E S ..______
COM M ITTEE REPORTS—.!
8 T A T E B A N K DIVISION
RATINGS B A N E DIVISION
iMPANY DIVISION
@B
Q l8
mm
mm
IT B B R E P O R T S ....
’
For Index to Advertisements see page* 89 and 90
WILLIAM B. DANA
0 m * V * * * im . nssHtag ts Act at Otagw . t j WIUJAM ■. D iJU OOIOAHI. to ««e* rf Ubnilis «|
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TH E Girard Trust Company offers
individuals the services of its
for the care and examination of properties in Philadelphia
and vicinity.
This Department combines every advantage of a red estate
the added security of a trust company.
Girard Trust Company
BROAD AND CHESTNUT STREETS, PHILADELPHIA
Capital and Surplus
$
10 , 000,000
Member & Federal
Reserve System
EFFINGHAM B. M ORRIS
President
THE
Pennsylvania Comp;
for Insurances on Lives and Granting Annuities
TRUST AND SAFE DEPOSIT COMPANY
Capital and Surplus
C. S. W . PACKARD, President
BROAD STREET o f f ic e
Chestnut and Juniper Street*
SIT Chestnut Street
Philadelphia
Chartered to act as executor, administrator, trustee,
guardian, agent, etc., in Pennsylvania and other States.
Intersit allowed on individual and corporatism accounts
Edward B. Smith & Co.
165IBROADWAY
1411
NEW YORK
Members New York
and
Discount
OFFERS
Corporation of New York
Street, New York City
approved Bank and Bankers Acceptances at the best market
rates;
investment opportunities for
temporary funds; SPECIALIZES in
unusual
DIRECTORS
Davison, President
Union Trust Company.
L.
Hine,
President,
W.
&
Acceptances Discounted
New York State
First No-
Metals
President,
National
Total
Morgan, J. P. Morgan & Co.
'
Perkins, President, Farmers'
Company.
,
T}
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v
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^
H.
Sabrn, President,
Trust Company.
A.
H.
Wiggin,
$72,770,480.57
Capital
Surplus
Chase
$5,000,000.00
1,000,000.00
Endorsement
Unearned Discount
Guaranty
Sundry
President,
86,779.19
Reserve for Taxes, etc....
Loans Payable and Deposits
Acceptances Rediscounted and
,
President, Bankers Trust
Charles
1,175,851.43
Undivided Profits
Loan & Trust
c,
985.00
9,077,500.00
LIABILITIES.
City Bank.
H.
873,316.84 6,873,316.84
89,485.76
49,185,990.36
sold
with
15,988,698.56
323,670.61
.
Credits
..T-
Na»
309,318.44
.
tional Bank.
Total
...
JOHN
1921.
$62,429,364.95
_
Charles E. Mitchell,
President, National
James
and Loans
Bond
Cash and Due from Banks
Sundry Debits
Me,
Bank.
JohnMcHugh.
J. P.
30,
ASSETS
U. S. Certificates of Indebtedness
McGarrah,
chanics
SEPTEMBER
Central
tional Bank.
Gates
of Indebtedness.
STATEMENT
W.
Francis
i
Securities
Acceptances and United States Certificates
Geo.
%
for
High Grade Investment
Exchanges
52 Wall
DISCOUNTS
Inquiries Invited
Philadelphia
Stock
CHESTNUT ST,
PHILADELPHIA
$72,770,480.57
OFFICERS
McHUGH, President
E.
JEROME
DUDLEY H. MILLS, Assistant
C.
WAGNER,
Vice President.
THRALLS, Secretary-Treasurer.
Secretary.
M. GREACEN
Quotations and special offerings sent
1
BRIGGS, Assistant Secretary.
upon request.
K
Lee, Higginson & Co.
Established
44
43
Exchange Place
1848
State Street
The Rookery
CHICAGO
BOSTON
NEW YORK
Higginson & Co.
80
A
Lombard St., LONDON,
E. C. 3
complete service for the investor
covering all forms
of
Investment Securities
Foreign Exchange
Letters of Credit
Members of
Boston, New York and
the
Chicago Stock Exchanges
>&
•"'r
K .0*f;
To
Investment
Dealers
We
specialize
Bonds
and
in
High
Preferred
Grade
Stocks,
principally those of strong Elec¬
tric
Power
&
protected by
position,
in
To
power
and
Dealers
be
a
construc¬
desiring
hearty co-operation of
can
net asset
enterprising management.
those
zation
Companies,
favorable
wide margin of safety
a
earning
tive and
a
Light
such
of
accordingly
as
ours,
an
we
the
organi¬
feel
we
valuable service, and
invite
their
corres¬
pondence.
WC.Lan$eyS Co.
Investments
115 BROADmY, NEWYORR
MEMBERS NEWYORK STO CK EXCHANGE
BROWN
BROTHERS & CO.
Established 1818
Philadelphia
60 State Street
Boston
Wall Street
NEW YORK
4th and Chestnut Sts.
59
'
THROUGH our long establrender connectioffer here and abroad
ished completensservice to banks,
o the following
and individuals and
are
we
in
position to
a
corporations
facilities:
securities bought and sold.
Maturing investments collected.
Inquiries invited regarding the status
of investments which clients hold or contemplate purchasing.
Private
wire connections with Philadelphia, Boston, Baltimore, Chicago, Pitts¬
burgh and Detroit, enabling us to give prompt reports on securities in
Investment
those
Securities.
Listed and unlisted
1
'
markets.
Banks and bankers in all important cities may
arrange to issue these letters in dollars or in sterling over their own signature.
Brown Brothers & Co.'s Letters are among the oldest and best known
Travelers' Letters of
Credit.
*
abroad.
commercial credits are purchased
fayorable discount rates by bankers everywhere, being negotiable in
London
prime bankers'- acceptances, and "eligible" acceptances in
Imports and
Exports.
Drafts under our
at
as
New
York, Boston
Deposit Accounts.
received
We
on
and Philadelphia.
Those of banks,
corporations, firms and
individuals
York, Philadelphia, Boston and London.
solicit the deposits of firms and corporations doing an inter¬
favorable terms in New
especially
national business.
Credit
Reports.
The standing
abroad indicated on
Foreign Exchange.
and sold.
of firms and
corporations at home and
request.
Drafts and cable transfers on
domestic collections.
foreign countries bought
Foreign and
A Century of
/
BROWN,
Service
SHIPLEY &
COMPANY
Established 1810
Head Office,
Founders Court,
'
Lothbury
LONDON, E. C.
Office for Travelers
Pall Mall,
LONDON, S. W.
5 Nassau Street
New York
Investment Securities
Foreign Exchange
Letters of Credit
35
Throgmorton Street
London, E. C.
79 West Monroe Street
Chicago, 111.
Kidder, Peabody & Co.
18 Broad St.
115 Devonshire St.
NEW YORK
BOSTON
BRANCH
216
OFFICES
45 East 42nd St.
Berkeley St.
NEW YORK
BOSTON
Investment Securities
Foreign
Exchange
Letters of Credit
Correspondents of
BARING BROTHERS & CO., Ltd.
LONDON
It is
our
aim
to
have
Constantly available,
Prime Short-Term Investments
suitable for
Banking Institutions, Savings Banks and Cor¬
necessary for the
profitable employment of funds to be used as
porations, possessing the qualifications
which combine security
and maturity to
of principle, adequate interest
suit individual requirements.
return
We Deal In
U. S.
Treasury Notes and Certificates
Liberty and Victory Bonds
Bank and Bankers'
Acceptances
Municipal Notes
Equipment Trust Certificates *
Short Term Railroad and Industrial Securities
Prime short-term investments have tlie necessary
qualifications
"Secondary Reserve" as through their ready marketa¬
bility they can be easily converted into money.
for
We 'will be
pleased to send our daily
sheets upon application
quotation
DISCOUNT
HOUSE
OF
BROS. & HUTZLER
SALOMON
members
new york
27
PINE
NEW
stock
exchange
STREET
YORK
Telephone—Bowling Green
BOSTON
PHILADELPHIA
3050
CHICAGO
—ESTABLISHED 1847—
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Government, Railroad, Public
Utility and
Specialists
able
Industrial
Bonds,
in investments suit¬
for the
needs of individ¬
uals, trustees and institutions
security
..n,
.
,
underwritten
issues
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fiscal
STATISTICAL
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agents
INFORMATION
ON
FURNISHED
REQUEST
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New York Trust
Company offers
corporations, firms and individuals
a
thoroughly modern and complete commercial
banking service, including a highly developed
credit information
to
service
which is available
customers.
Special conveniences
are
offered
engaged in foreign trade.
foreign credit information
bearing
These include
and
current
foreign markets and
upon
those
to
opportunities.
data
trade
,
Long experience, covering the entire field of
trust
service, enables
us
offer unexcelled
to
facilities lor the administration of all
and
personal
corporate trusts*
Capital, Surplus & Undivided Profits
100
-
BROADWAY
57th St. &
Fifth
Ave
TRUSTEES
Otto T. Bannard
Mortimer N. Buckner
Russell H. Dunham
Darwin P. Kingsley
Samuel H. Fisher
Edward E.Loomis
Thomas Cochran
James C. Colgate
Alfred A. Cook
Arthur
J. Cumnock
John A. Garver
Howard W. Maxwell
Harvey D. Gibson
Ogden L. Mills
Thomas A. Gillespie
Edward S.Moore
Otis H, Cutler
Charles Hayden
Henry P. Davison
Lyman N. Hine
Grayson M.-P. Murphy
Robert W.
F. N. Hoffstot
Henry C. Phipps
Walter
Dean Sage
de
Forest
George Doubleday
Member Federal Reserve
Jennings
Junius S. Morgan, Jr.
System Cf N. T. Clearing House Association
ESTABLISHED 1837
NEW YORK
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temwifi
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AMERICAN & FOREIGN INVESTMENT
SECURITIES
CABLE
TRANSFERS
FOREIGN EXCHANGE
LETTERS
OF
10
CREDIT
A Tower
tuul
few1)8
tamUJ
I
of Strength
isa
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Constructive Banking Contact
BANKERS Trust Company is
active, well informed
an
institution
backed
by ample resources and ex¬
perience for the protection and pro¬
motion
of
its
customers1
interests.
Though large enough to handle the
largest business it is not too large to
give personal consideration
ness
done
Your
ments,
small,
on
a
more
to
busi¬
moderate scale.
commercial
banking require
whether they are large or
whether
national, will
benefits of
a
domestic
or
inter¬
receive
here
strong,
adequately
equipped organization.
all
the
Manhattan Island
on
town
gOTH ARE NEW YORK, but
complete
so
is
city, must bring here its
full
facilities.
the section
"uptown," with
Mercantile presents to uptown
its] magnificent stores, its hotels,
its industries, its countless busi¬
branch,
not
only its facilities, but that
policy of co-operation with cus¬
which
we
know
as
business, through its new
offices, its great railroad ter¬
ness
minals, its theatres, that it is
within
A
a
tomers
city
to
You
really
MERCAHTllli
111
TRUST
It
COMPANY
serve
this
which has become
nized since the bank's
city.
bank,
a
meet
up¬
Mercantile
are
to
inception.
and
call
the Mercantile officers.
Trust
115 Broadway,
I
invited
recog¬
Company
New York
Uptown Branch: Madison Avenue
and 45th Street
(Borden Building)
Member of Federal
12
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4
Reserve System
1
Internal Loans
of
Foreign Governments
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Foreign
^
-X ' Y"': ■'VV'-'.
submit in
information regarding
ternal loan of any
We
;:y
Department is
to
important
''v
any
one
European
in¬
of the
nations
and offer
own
Municipal
Industrial
Investment Bonds
A. B. Leach &
Co., Inc.
Investment Securities
62
Cedar
Street, New York
105 S. La Salle
Street, Chicago
v'"5
Philadelphia
Buffalo
Minneapolis
Boston
'
Baltimore
Detroit
Cleveland
Pittsburgh
*
ACTUAL NET MARKETS
•V
Wholesalers to
Banks
and
Brokers
United States Treasury
-rBonds
War P
United States
Federal Farm Loan
Joint Stock
Bank Bonds
Land Bank Bonds
C. F. CffiLDS and
The Oldest House in America
in Government
i
Notes
14
Company
Dealing Exclusively
Bonds
Wis Gametic Ewsn
Underlying and " Closed " Mortgage
Railroad
and
FIRST NATIONAL BANK BUILDING
2 WALL
ST., NEW YORK
Cities Service Company
A leader in the
Petroleum Industry
oil producing,
transporting, refining and market¬
its
through
large
ing subsidiaries.
serving artificial and
Public utilities
natural
gas,
electric light,
and
heating
water
to
power,
over
600
communities.
For
information
properties
on
them
or
regarding
these
the securities issued
write
or
call
on
Bond Department
Henry L. Doherty & Company
New York
60 Wall Street
16
HEIDELBACH, ICKELHEIMER &C0.
49 Wall
Street, New York
Dealers in
Foreign Exchange.
Import and Export Letters of Credit.
Travelers
Cheques and Credits.
Orders executed
and in
on
N. Y. Stock
Exchange
Foreign Markets.
Every form of International Banking Service
Ban k
of the
Manhattan Company
I
40
Wall Street,
STATEMENT OF
ew
York
CHARTERED
CONDITION—JULY
Resources
Loans
Discounts
and
.
and
Other Securities
Bank Premises
Due
from
Exchanges
for
.
.
7,949,639.00
.
.
.
.
.
8,091,846.62
.
.
.
Banks
.
.
3,078,055.38
.
.
.
6,868,706.65
Clearing|House
Other Cash Items
Capital
Surplus
Certificates
.
.
i, 1921
j(jabilities
$104,951,556.43
.
U. S. Govt. Bonds
k
I799
51,233,041.58
12,500,000.00
.
Undivided Profits
.
Unearned Discount
Reserved
for
Bills Payable
4,683,425.23
.
$5,000,000.00
.
with
Taxes
and
.
4,345,137.93
.
.
.
613,867.73
.
.
.
.
699,300.15
Rediscounts
Federal Reserve'Bank
.
,
.
None
Customers' Liability
Under Commercial Credits
Cash
•
•
•
•
•
•
.
.1
9,278,486.65
15,840,690.10
Acceptances
Deposits
g
•
•
,
•
•
•••••
9,653,161.19
,
179,163,980.64
$211,975,447.64
$211,975,447.64
OFFICERS
STEPHEN
BAKER. President
James McNeil, Vice-President
B. D. forster. Vict-President
Harrt T. Hall.
Vice-President
Edwin S. Laffey, Vice-President
RAYMOND
E. JONES, Fsrst Vice-President
P. A. Rowley, Vice-President
Frank L. Hilton.
D. H. PlERSON, Vice-President
V. W. Smith. Vice-President
O.
E. Paynter, Cashier
Vice-President
John Stewart Baker, Vice-President
f
Uptown
OrricE—31 Union Square, New York
Queens Borough Offices- -Jamaica, Flushing, Long Island City, Far Rocka way, Rochaw ay Beach, Rockaway
Parky Seasidty Richmond Hilly Elmhurst, Maspeth, Corona,
Brooklyn Offices—St.
The
accounts
which
are
College Point% Woodhavcn, Ridgewood, Fresh Pond
Johns Place and Cypress Hills
of Banks, Bankers and Trust Companies are cordially invited, upon favorable terms,
based upon this Bank's
known reputation for conservative and reliable banking.
lEntpirr ©rust (fumpaug
Condensed Statement of
>
Condition at the Close of Business, September 6, 1921.
RESOURCES
Cash
Vault
in
and
Banks
Other Bonds and Stocks
Loans
.
...
.
.
Bonds and Mortgages
.
.
$11,185,881.63
,
.
,
.
.
608,113.63
.
...
.
.
.
«
.
.
•
.
•
•
•
<
.
.
...
.
.
•
....
,
•
3,856,259.77
•
10,500,845.30
23
578,279.92
.
•
•
.
.
Accrued Interest Receivable and Other Assets
•
.
.
.
.
.
1,121,830.10
.
Acceptances
on
.
.
.
Liability
.
•
.
.
Customers'
.
•
.
Banking House and Real Estate
.
.
.
.
,
.
.
,
....
Bonds
,
.
New York State and City
.
1,085,962.12
.
.
750,336.46
«
$52,687,508.93
LIABILITIES
Capital Stock
,
....
.
.
Surplus and Undivided Profits
Acceptances
.
.
.
.
.
.
.
,
,
.
.
.
.
.
Reserved for Accrued Interest, Taxes, Rents,
etc.
Due London Office
Deposits
.
.
$2,000,000.00
2,045,564.27
1,085,962.12
274,907.58
.
.
.
.
.
.
.
.
.
63,501.40
.
.
...
.
.
47,217,573.56
.
..
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$52,687,508.93
HATHAWAY, SMITH, FOLDS & CO.
45 Wall Street,
New York
Commercial
Paper
'
CHICAGO
PHILADELPHIA
CLEVELAND
RICHMOND
PITTSBURGH
SCRANTON
SEATTLE
SAN FRANCISCO
DENVER
ST. LOUIS
MINNEAPOLIS
BOSTON
PORTLAND
ATLANTA
DALLAS
Emerson McMillin & Co.
BANKERS
120
Broadway
::
::
18
New York City
I
TIGHLY
-®- -*■
developed Domestic and
Foreign Departments, each
or¬
ganized to render a specialized service in
its
particular field, enable the Irving to
meet
every
requirement of both national
and international commercial
banking.
IRVING NATIONAL BANK
WOOLWORTH
BUILDING, NEW YORK
RESOURCES
1851-1921:
SEVENTY
OVER
YEARS
1
A
$2^oioooyooo.
BANK
BUSINESS
#
Goldman, Sachs & Co.
60 Wall Street
New York
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Commercial Paper
Foreign Exchange
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Letters of Credit
Investment Securities
137 So. La Salle St.
60 Congress St.
421 Chestnut St.
Chicago
Boston
Philadelphia
Title Insurance Building
Hoge Building
Los Angeles, Cal.
Seattle
„
14
Montgomery St.
San Francisco, Cal.
■
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,
411 Olive St.
St. Louis
19
1
7
INVESTMENT
New
Members
and
SECURITIES
York,
Boston
Chicago Stock Exchanges
Direct Private Wires
to
All
Principal
Markets
BOSTON
NEW YORK
CHICAGO
PROVIDENCE
PORTLAND
DETROIT
ESTABLISHED
1888
•
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1
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§
v
"Let everyone engage
is best
in the business with which he
acquainted "—PROPERTIUS.
Surplus And Reserve
pany
sonal
reserve funds of
be placed with
financial institutions outside
the Metropolitan Trust Com¬
advantageously. Liberal interest is allowed and per¬
attention is given to all business.
Surplus and
New York
can
We invite conference and
correspondence with bankers who
seeking a connection in New York. Our 40 years of
experience should be of value to you.
are
METROPOLITAN
OF
THE CITY OF
60 WALL STREET
NEW YORK.
716 FIFTH
AVENUE
>
I
MUNROE & CO.
Established 1851
r
PARIS
PAU
Oldest American Banking House in Paris
|
DEPOSIT ACCOUNTS
SUBJECT TO CHEQUE
IN PARIS AND NEW YORK
I
COMMERCIAL AND TRAVELERS'
LETTERS OF CREDIT
FOREIGN EXCHANGE
CABLE TRANSFERS
COLLECTIONS
x
JOHN
MUNROE
30 PINE STREET
&
CO.
NEW YORK
ESTABLISHED 1882
J. S. FARLEE & CO.
66 BROADWAY, NEW YORK
INVESTMENT SECURITIES
Specialists in Bonds
and Slow Securities
New
Securities for Conservative
Investment Always on Hand
England and Pennsylvania Securities—Special Attention
Curtis & Sanger
49 WALL STREET,
NEW YORK
Members New York, Boston and Chicago Stock
Exchanges
BONDS
SHORT TERM NOTES
ACCEPTANCES
COMMERCIAL PAPER
CHICAGO
BOSTON
21
t
OFFICERS
COLUMBIA
WILLARD
TRUST
V.
BENJ. L. ALLEN,
COMPANY
CHARLES
Vice-President
HOWARD
Vice-President
GEORGE
Vice-President
FRED O. MARSTON,
ROBERT I, OURRAN,
WALTER G.
ARTHUR W. HUTCHINS, Secretaryland Treasurer
KING, President
HOWARD BAYNE,
OLIVER
Vice-President
F.
C.
J.
Controller
RIDER, Assistant Treasurer
MILLS, Assistant
WAGSTAFF,
COLSSON
W.
Vice-President
KIMBALL,
E.l WOLFF,
E.
S.
Secretary
Assistant Secretary
KELLY. Assistant Secretary
PFIZENMAYER, Auditor
NEW YORK
Trust
Vice-President
MATTHEWS. JR.
Manager, Foreign Commercial Depart.
FREDERICK G. HERBST
Manager, Foreign Exchange Dept.
EDWARD FROEDE
WARRKN
EARLE
STERN,
R.
JUDD
Officer
Trust
.
ARTHUR
N.
WILLARD
M.
SPEDON
W.
MILLERD
MELVILLE
Officer
Assistant
W.
Women's
CARROLL
P.
Assistant
Manager
Branch
Bronx
BERRY
FRED
Manager
ALFRED
VIRGINIA
Officer
ATKINSON
B.
Manager
Assistant
Department
WEISS
HARRY
II. FURMAN
Assistant Secretary
TERRY
Trust
Office
Secretary
WILLIAM E. DOBBIN
Assistant Treasurer
MORGAN
Trust
Assistant
ELFE
Manager
Assistant
Officer
Assistant Trust
I.
Assistant
HARRIS A. DUNN, Vice-President
J. SPERIiY KANE, Vice-President
HENRY M. ATKINS
Asst. Trust Officer
ARTHUR DALY
Officer
Trust
Assistant
SAMUEL
HERBERT
W.
MASON
O.
BAKER
Secretary
Assistant
Uptown
Officer
P.
Manager
HAZELTINE
Trust
Assistant
Branch
VERNON
JOHN
Vice-President
ORRIN
Harlem
Foreign Department
Department
S.
GEO.
D.
Manager
Assistant
DIRECTORS
CHARLES
KEEP
H.
Board
of the
Chairman
BENJ.
ALLEN
L.
Vice-President
of the Company
ANCELL
President
BALL
H.
A
Best
HOWARD
Co.
BAYNE
Vice-President of the Company
SAMUEL
President
Seaboard National
UNION
York
FRANKLIN
Redmond
&
THOMAS
Vice-Pres.
A.
New
E.
Bank
BETHELL
N.
New
President,
BAYNE
G.
Q.
BROWN
Co.,
A.
Bankers
BUCKNER
York
Life
Ins.
Co.
CARLTON
Holly Sugar Corporation
NEWCOMB CARLTON
Pres., Western Union Telegraph Co.
EDWARD H. CLARK
Vice-President, Cerro de Pasco
Copper Corporation
GEORGE CRAWFORD CLARK, JR
Clark, Dodge & Co., Bankers
HAROLD BENJAMIN CLARK
White, Weld & Co., Bankers
EDWARD CORNELL
Attorney at Law
JOSEPH P. COTTON
Attorney at Law
MOREAU DELANO
Brown Brothers & Co., Bankers
JAMES M. GIFFORD
Attorney at Law
J. HORACE HARDING
Charles D. Barney & Co., Bankers
A. BARTON HEPBURN
Chairman Chase National Bank
WILLARD V. KING
President of the Company
MEMBER
OF
THE FEDERAL
LEHMAN
PHILIP
Brothers,
Lehman
Bankers
MARLING
Estate
E.
ALFRED
Real
PAINE, JR.
AUGUSTUS G.
President, New York & Pennsylvania Ce.
FRANCIS
ROBBINS.tJR.
L.
Attorney
NOAH
Attorney
SACHS
Sachs &
FREDERICK
*
J.
k
W.
Seligman
WILLIAM
Tucker,
Co., Bankers
STRAUSS
& Co., Bankers
TUCKER
& Co., Bankers
A.
Anthony
ELISHA
WALKER
President, Blair & Co., Inc., Bankers
FREDERICK
Peters,
W.
WHITE
White & Company, Chemicals
RESERVE SYSTEM
M. J. MEEHAN & CO.
Members New
2
York Stock Exchange
NEW YORK
RECTOR STREET
Chas. D. Barney & Co
Investment Securities
Members New York and
Philadelphia Stock Exchanges
15
1428 Walnut Street
Broad Street
New York
Philadelphia, Pa.
22
jfL
Law
at
ARTHUR
Goldman,
Law
at
ROGERS
C.
City.
CHARTERED
1853
United States Trust Company of New York
45 and 47 WALL STREET
CAPITAL
|f-
SURPLUS AND
-
-
$2,000,000.00
-
UNDIVIDED PROFITS
$15,020,679.60
-
f'f;|v::::-'vl;:^ I";.V:
fffflf
EDWARD W.
WILLIAM M.
'.f.:; " ..■?£|'
SHELDON, President.
KINGSLEY, First
WILLIAMSON PELL,
WILFRED J. WORCESTER,
;■
Vice-President.
Vice-President.
WILLIAM C. LEE,
.
Assistant Secretary.
FREDERICW. ROBBERT, Assistant Secretary.
THOMAS H. WILSON,
.
Assistant Secretary.
CHARLES A. EDWARDS, Assistant Secretary.
WILLIAM G. GREEN,
.
Assistant Secretary.
ROBERT
ALTON S. KEELER,
S.
.
Secretary.
.
Assistant Secretary.
OSBORNE,
.
Assistant Secretary.
TRUSTEES
JOHN
William
Lewis
Chairman of the
Board
Lyman J. Gage
'
Arthur Ourtiss James
Gemellus N. Bliss, Jr.
William M. Kingsley
Bdward W. Sheldon
William Stewart Tod
Henry W. do Forest
"William Vincent Astor
Chauncey Keep
Phelpe
Cass
STEWART,
Payne Whitney
Rockefeller
Ogden Mills
William Sloane
Frank Lyman
John J.
A.
Ledyard
No. 374
THE FIRST NATIONAL BANK
OF JERSEY CITY, N. J.
Capital,
-
-
-
-
-
-
Surplus and Undivided Profits,Deposits,
-
-
$1,000,000.00
-
-
$1,981,665.43
$10,030,234.27
-
OFFICERS
EDWARD I. EDWARDS, President
ROBERT E. JENNINGS, Vice-President
HENRY BROWN, JR., Cashier
JACOB R. WORTENDYKE, Asst. Cashier
•
Robert E. Jennings,
George T, Smith,
Edward
L.
Young,
DIRECTORS
v
Edward I, Edwards,
Lyman N. Hine,
Henry E. Niese,
Arthur G. Hoffmann,
Chas. A, Fulle,
23
YOURS TO COMMAND
The facilities and
experience of this Company are at
the command of out-of-town Trust
all times at
Companies, Banks and Bankers
York City.
desiring to establish connections in New
Requests for stock and bond quotations, credit information, and
data respecting all general banking and trust matters will be
of
given the prompt personal attention
Interest credited
monthly
on
our
executive officers.
daily balances
United States Mortgage & Trust
Company
Capital and Surplus $6,000,000
Four Offices in Manhattan
NEW YORK
Bankers and
Hartshorne & Battelle
Brokers
Members of the New York
Stock Exchange
You
25 Broad Street,
are
often asked questions
in ref¬
New York
erence
to
Foreign
impossible for
you
Bonds
that
are
to answer off-hand.
Investment Securities
Send
Specialists in
Booklet
our
Foreign Bond Statistics
Foreign Bonds
containing translation of German and
other
Liberty Bonds
for
bonds, and be prepared to give
accurate
your
Railroad Bonds
Registered Bonds
and prompt
customers.
information to
1
\
R. A. Soich &, Co.
all issues
'
A.
'
■
Foreign Bond and Currency Specialists
"Baby" Bonds
16-18
,$100—$500 denominations
Exchange
Place,
New
York
Telephone: Bowling Green 3230-9
24
'
.
,
;
V
.
•
.
.
.
•;
Battles
of
Business
building of
BATTLES of business are won byacquaintance and co-operation. The \
preparation
deposit.
former includes the
on
The latter
and
an
a
reservation of cash
getting the bank's aid in fortifying your
enterprise, strengthening its outposts, or in planning and carrying on a vigorous
campaign for new business.
means
The Seaboard National Bank is not too
large to give considerate attention
things which mean much to the welfare of the depositor. It is not
to the little
too
large to lend the weight of its counsel and support to the depositor whose
dealings are small, but none the less important to him.
You are cordially invited to make full
plete financial Service we have to offer.
use
of
our
facilities and the
>
com¬
The Seaboard National Bank
of
the
City
Total Resources
over
of New York
Sixty-seven Million Dollars
25
i
BANK
U NION EXCHANGE NATIONAL
\
NEW YORK, r
!
AVE«.£? 30th ST>
A
Commercial Bank
GEORGE B. CONNLEY, Cashier
SYDNEY H. HERMAN, President
ARTHUR D. WOLF,
••
,t.:;
I
;->■.
CARL m^LLER
EDWARD S. PAINE
hanway
inuM
J
FRANK M. WELTY
Cashier
ROBERT SHERWOOD, Ass't
Vice-President
WILLIAM SCHALL
?:
WILLIAM MINTON, Ass't Cashier
Vice-President
FRANK C. CAMPBELL,
Ass't Cashier
DONAHUE,
J.
EDWARD
Vice-President
LOUIS J. WEIL,
;
WILLIAM SCHALL & CO.
45 William Street
New York
-
-
Commercial Credits
Foreign Exchange
NEW YORK
BROADWAY,
52
Exchange
of the New York Stock
Members
Securities
Investment
Foreign Exchange
Commercial Department
■' "
A.'
CO.
&
BOISSEVAIN
V .' ''
-
'■
;■
... ,
Correspondents of
'/
■
" i''
^
MESSRS. PIERSON & CO.
HOLLAND
AMSTERDAM,
204
FIFTH
COMPANY
TRUST
LINCOLN
NEW
AVENUE,
7
YORK
STREET
WALL
72nd St.
BROADWAY and
BROADWAY and LEONARD ST.
OFFICERS
J.
Frank
Egan,
Alexander
Abeam
Hyatt,
M.
Frederic
P.
Davis,
Robert
E.
L.
M.
Ford, Asst.
Joseph H. Adams, Jr.,
Norman W. Andrews, Asst.
Member
W.
Hanson,
Federal
Asst.
H.
Reserve
Ernest J. Schilling, Mgr.
Selchow,
System
Foreign Dept.
Trust Officer
and New York Clearing House
CAPITAL AND SURPLUS,
26
v
Treasurer
Treasurer
Rogers W. Gould, Asst. Secretary
Secretary
Asst. Treasurer
Paul
Vice-Pres.
Vice-President
Nelson F. Griffin, Treasurer
Secretary
Joseph
Harry
William F. Fitzsimmons,
Lott,
S.
Secretary
Calhoun,
|
Owen Ward, Vice-President
Vice-President
Jones, Asst.
Chairman
Webb, President
Vice-President
Moses
Charles
S.
$3,000,000
OUT OF TOWN BANKS
wish to improve their own service to customers
through the co-operation of their New York correspondent,
are invited to communicate with the Bank Department.
who
Coal and Iron National Bank
of the
City of New York
Capital, Surplus and Profits $3,000,000.00
Member
New
York
Member
Clearing House Association
Federal
Reserre
Bank
JOHN T. SPROULL, President
ADDISON H. DAY, Cashier
DAVID TAYLOR, Vice-Pres.
WALLACE A. GRAY, Assistant Cashier
ALLISON DODD, Vice-Pres.
ARTHUR
WILLIAM H. JAQUITH, Assistant Cashier
A.
G.
LUDERS, Trust Officer
CHAS. E.QUINCEY&CO.
Established 1886
Members New York Stock
1
Exchange
..
.
.
j
Specialists in
U. S. Government
Bonds
U. S. Treasury
Notes
U. S. Treasury
Certificates
Land
Federal
Bank Bonds
Joint Stock Land
Bank Bonds
NEW YORK
14 WALL STREET
Telephone RECior 2801
Standard Oil
Unlisted
Stocks
Stocks
Bought, Sold & Quoted
I
v.
Information and all available data
\
on
request
C. C. KERR & CO.
2
New York
Rector Street
'Phone
6780 Rector
27
.
& Dominick
Dominick
1
MEMBERS
ESTABLISHED
of the
1870
'
NEW YORK STOCK
EXCHANGE
PREFERRED STOCKS
BONDS
Cincinnati
New York
115
NOTES
Wiggins Block
Broadway
HENRY L. FINCH
WILBUR S. TARBELL
WM. C. WILSON
FINCH & TARBELL
Members
of
the
New York
Stock Exchange
Equitable Building, 120 Broadway, New York
STOCKS
Bought and sold for cash,
AND
or
carried
BONDS
on
conservative terms
Inactive and unlisted secqrities
Inquiries Invited
28
THE BANK OF
JUGOSLAVIA, LTD.,
JUGOSLAV I A
ZAGREB
NEW
PLACING
IN
PLEASURE
TAKE
THE
OF
SERVICES
THEIR
DISPOSAL OF BANKS, TRUST
YORK AGENCY AT THE
COMPANIES AND BANKERS.
DESIRING
IMPORTERS
FROM
CORRESPONDENCE
ACCURATE
CREDIT
AND
INFORMATION
EXPORTERS
OR
•
TRADE
REPORTS ON JUGOSLAVIA INVITED.
THE
OF
BANK
JUGOSLAVIA,
NEW YORK
25
LTD.,
AGENCY
YORK
NEW
BROADWAY
CITY
Canadian Bonds
A Source
of
Authoritative Information
geographical
Canada's
position,
with the United States,
and the
her
trade relationship
intimate
the sound condition of Canadian finances
steady development of her extraordinary natural resources,
creating the present demand for Canadian
have all been factors in
-
Government and
Municipal issues.
'
The present
the
and
U. S. discount on Canadian funds, merely represents
working out of post-war readjustments, temporary in themselves
no
the
At
financial condition. In practically
countries the Canadian Dollar is at a premium.
reflection upon Canada's
all European
moment
Canadian Government
and Municipal issues
,
this House
a
valuable
source
of authoritative information
Government and Municipal Securities.
Service
For
to
simplify
your
on
Canadian
We have the means and the
transactions—advantageously, promptly.
Quotations, write
M. S. WHEELWRIGHT &
63
are
A decided advantage lies
with purchasers in the United States.
Brokers and Dealers who see
in this situation an opportunity to create new business, will find
selling far below their intrinsic values.
■
CO.,LIMITED
Canadian Investment Securities
Sparks St.
Ottawa
TRANSPORTATION BUILDING
CANADA
MONTREAL, CANADA
SECURITIES
FOREIGN
Our
Foreign Department specializes in
Argentine, French, Italian, Japanese, Swiss and Russian Government
Bank contract obligations on Marks, Francs and Lire good nine
Bonds.
months
from
date.
Foreign Currency (all issues).
IJIJNHAM £ (a
Investment Securities
43
Exchange Place New York
Telephones 8300-16 Hanover
29
Foreign Exchange.
BOND
&
GOODWIN
Commercial Paper
Acceptances and Investment
Securities
Pattfe of Untteb States
Member Federal Reserve System
Resources
Main Office:
$35,000,000
over
NEW YORK
Fifth Ave. at 32d St.,
A. D. Converse &. Co.
5
PHILADELPHIA,
COMMERCIAL TRUST BLDG.
Information
guidance
vestors
of
NASSAU
BALTIMORE,
STREET,
GARRETT
NEW YORK CITY
BONDS
for
Our Statistical Dept.
is
in¬
AND
at
the
banks,
is always
PREFERRED
available.
BLDG.
service
trustees
of
and
individuals.
SHARES
...
••
INDUSTRIAL AND PUBLIC UTILITY
I
SECURITIES
Codes: Western Union
Cable
..
Address:^^
Diversified list of offerings furnished on
application.
Montgomery
H.rtfi.U
Peahodv, Hougliteling &Co.
Incorporated 1918
Established 1865
10 So. La Salle
366 Madison Ave., New York
St., Chicago
Dealers in Conservative Investments
30
The Fourfold Advantage
of the
Trade Acceptance
'
d
.x
'
'
From
use
experience
our
we are
of the trade acceptance
has advantages
convinced that the
in buying and selling
for the banker, the manufacturer,
BECAUSE of ourthe af¬
filiation with close
the commercial and financial
the merchant, and
structure of the
New
country as a whole.
York Title and
We invite you
to consult us about
Our officers have made a careful
credit method.
Company,
study of trade acceptances and are ready to dis¬
business
cuss
their
and
problems
Mortgage
this better
offer
solution
our
able to
we are
friends
a
unique
circle of service and frc
with you.
OFFICERS
W.
WILLIAM S.
Assistant Cashier
AUSTIN TOBEY, Jr.,
IRISH,
Assistant Cashier
Vice-President
JOHN
VERITY,
P.
IRISH,
RUSSELL C.
WEBER,
Vice-President
ANSEL
nomies for
Assistant Cashier
President
JOHN
quently effect marked ecc
correspondents.
W. KRUEGER,
FRED.
HUBER,
JOSEPH
W.
BARGFREDE,
Assistant Cashier
Cashier
WILLIAM
J.
AHERN, Trust Officer
FIRST
NATIONAL
IN
Head Office
BANK
135
BROOKLYN
Broadway • New York
Established 1852
Broadway and Havemeyer St
Kings County Trust Company
342 to 348 Fulton Street,
Borough of Brooklyn, City of New York
Surplus, $2,500,000.00
Capital, $500,000.00
Undivided Profits, $430,000.00
v:
officers
JULIAN D.
P.
THOMAS
BLAKE
FAIRCHILD, President
.
Asst. Secretary
Trust Officer
HOWARD D. JOOST
Vice-President
Vice-President
Secretary
FAIRCHILD..
WILLIAM J. WASON, JR
JULIAN
J. NORMAN CARPENTER
BROWER, BROWER & BROWER
Counsel
Company offers to its Depositors every facility and accommo¬
modern Banking.
If you are not already availing yourself of the advan¬
The Kings County Trust
dation known to
tages
you
offered by this institution, the Kings County Trust Company
open
an
account.
will be glad to have
„
Commercial Trust Company of New Jersey
Jersey City, New Jersey
Capital, Surplus and Profits
GENERAL
BANKING
AND
TRUST
INTEREST PAID ON CHECK
FOUR
BUSINESS
over
POSITED
ACCOUNTS
$3,500,000
CENT.
PER
IN
INTEREST
SPECIAL
SAVINGS DE¬
DEPARTMENT
ON
DEPOSIT
OFFICERS:
CHARLES L. DECKER....
President
JOHN W. HARDENBERGH
S. LEROY HETRICK
Vice-President
WILLIAM J. FIELD......
EDWARD HENN__
PERKINS
Vice-President & Treasurer
ALBERT I. DRAYTON...
Vice-President
JAY
J.
S.
CARMICHAEL
LYMAN H. OPDYCKE
WILLIAM
Vice-President
HENRY CASTENS
ROBERT S.
HUGH
Sec'y & Asst. Treas.
SAFE DEPOSIT VAULTS AT MAIN OFFICE AND
TOFFEY
-Asst. Secretary
2nd Asst. Secretary
Comptroller
FIVE CORNERS BRANCH
Member Northern N. J. Clearing House
Member Federal Reserve System
V.
H. HILSON
Asst. Treasurer
Asst. Treasurer
Asst. Secretary
31
THE
PLAINFIELD
:
-rfAv
TRUST
plainfield, N. J.
COMPANY
;
'
Capital, Surplus and Profits
-COMMN*
-wr^?z
This
institution's
broad
over
$825,000.00
connections
and
strong organization insure efficient service.
OFFICERS
O. T.
Waring, President
F. Irving
H. H.
Kirbt,
.
Asst.
Pond, Vice-President
DeWitt
Walsh,
Adeli H.
Augustus V. Hbely, Vice-President
II.
Asst. Sec'y-Treas.
Douglas
Russell
Sec'y-Treas.
p
Hubbell, Sec'y & Treas.
C.
Davis,
Asst.
Doeringer,
Secretary
Asst.
Treas.
PATERS0N NATIONAL BANK
PATERSON, N. J.
United States and State
Capital
Surplus and Profits
Deposits over
-
Specialty.
;
-
-
GRIGGS, Chairman of Board.
JOHN L.
GRIGGS, Vice-President.
FRED. LABAUGH, Asst.
Vice-Pres.
WILLIAM M. TUTTLE, Asst. Cashier.
our
-
-
-
Collections
$600,000
$1,150,000
-$13,000,000
-
JOHN W.
Depository
I
ELMER Z.
HALSTED, President.
DANIEL H. MURRAY, V.-Pres. & Cashier.
JOHN L. CONNOLLY, Asst.
Vice-Pres.
CHAS. A. TSCHOPP, Asst. Cashier.
Quick remittances and small charges.
ACCOUNTS AND CORRESPONDENCE INVITED
The Passaic Trust
ESTABLISHED
The oldest and
Company
deposit
"
PASSAIC, N. J.
,
-
^
1887
-
largest Trust Company in Passaic.
CAPITAL, SURPLUS AND PRO 7ITS
$924,225.05
r
RESOURCES
$11,0000,00.00
Member of Federal Reserve
System
,
MORRISTOWN TRUST COMPANY
MORRISTOWN, NEW JERSEY
Member
WM.
Federal
B.
Reserve System
BOULTON, President
DIRECTORS
William B. Boulton
* President
G. G.
A.
Whitney, Jr.
Whitney Co., Engineers, N. Y.
Granville M. White,
I
Frelinghuysen,
Counselor-at-Law, New York
O.
H.
Kahn,
Kuhn, Loeb & Co., Bankers, New York
Henry
F. Taylor,
Vice-President
Morris
/
R.
Henry N.
The
„
t
.
.
v.
,
Vice-Pres. Mutual Life Ins.
Co., N. Y.
Nicholas F. Brady,
President New York Edison Co.
John H. B. Coriell,
Vice-President and Trust Officer
County's Largest Banking Institution.
Card,
f
Vice-President and
Secretary.
John T. Gillespie,
L.
P.
C. Gillespie &
Sons, New York.
H, B. Frelinghuysen,
Morristown, N.J.
Murray H. Coggeghall,
Coggeshall & Hicks. Bankers, N. Y.
.
'
7,.
•
.
Resources
over
$8,000,000
I
-j,
*
Co.
William R. Staats
1887
ESTABLISHED
Government,
Municipal
Corporation
and
Bonds
Commission Orders
Executed in All
Listed
LOS
ANGELES OFFICE
BUILDING
640 South
Raymond Ave.
FEDERAL
MEMBER
FRANCISCO BANK)
California Street, San
$71,383,481.14
67,792,431.14
.....
Employees' Pension
Fund
Francisco, Cal.
1921
JUNE 30th,
Asset*
SOCIETY
COMMERCIAL
SAVINGS
526
St.
OF SAN FRANCISCO
SAVINGS AND LOAN
(THE SAN
FRANCISCO
401 Montgomery
Spring St.
ASSOCIATED SAVINGS BANKS
RESERVE SYSTEM AND
THE SAN FRANCISCO
Deposits
SAN
LOS ANGELES
PASADENA
65 South
Securities
Capital Actually Paid Up
Reserve and Contingent Funds
$357,157.85
$1,000,000.00
2,591,000.00
OFFICERS
JOHN
TOURNY, Vice-Pree. A Manager
GEO.
A.
Secretary
SCHAMMEL, Asst. Cashier
H. MULLER,
GEO.
JOHN
GEO.
E.
T.
A. BUCK
TOURNY
KRUSE
L. S. SHERMAN
A.
BUCK. President
E. T. KRUSE, Vice-President
WM. D. NEWHOUSE, Asst. Secretary
G. A. BELCHER, Asst. Cashier
BOARD OF DIRECTORS
A. H. R. SCHMIDT
I. N. WALTER
HUGH GOODFELLOW
GOODFELLOW, EELLS,
General
MOORE &
A. H. R. SCHMIDT. Vice-Pres. A Cashier
WILLIAM HERRMANN, Asst. Cashier
R. A. LAUENSTEIN, Asst. Cashier
E. N. VAN BERGEN
ROBERT DOLLAR
E. A. OHRISTENSON
WALTER A. HAAS
ORRICK,
Atj*>rneys
American Fuel Oil & Transportation
Co., Inc.
Producers and Shippers
111
New York
Broadway
34
Y.&
■
•v-
-v
Uf
.
The
Omaha
National Bank
OMAHA, NEBRASKA
Established 1866
Capital
*
$1,000,000
Surplus (Earned)
Resources Over
H.
MILLARD, Chairman
WALTER
B.
A.
30,000,000
—
J.
W. HEAD, President
WILCOX, Vice-President
W.
1,000,000
-
WARD M.
DALE CLARK, Vice-President
O. T.
ALVISON, Cashier
BURGESS, Vice-President
FRANK BOYD,
Vice-President
•
J.
A.
EDW.
CHANGSTROM,
Asst.
Cashier
NEALE, Asst. Cashier
Boettcher, Porter & Company
INVESTMENT BANKERS
denver
colorado
35
•
TRUST COMPANY
THE CONTINENTAL
BALTIMORE, MD.
Accounts
Banks and Trust
the Reserve
Invites
of State
Companies
on
•'•ji?
««H
1
V,
r>Hi
•
i
n r
«">
i
z'~-
II
,
f.
Exceptional Facilities for
Handling Bill of Lading
in IFF!
_,TTT;;
jfT
•i "i
li
Z
afaifrtlftiWwpifipWyI P
Drafts and other
Collections
CAPITAL, $1,350,000
1,350,000
SURPLUS,
Correspondence Invited
CONTINENTAL TRUST
BUILDING
%
.
?
■■
DAVIES WARFIELD,
S.
'
PRESIDENT
ESTABLISHED 1873
National Bank
The Fort Worth
FORT WORTH,
TEXAS
Capital $600,000 ($200,000 earned)
Surplus and Profits $1,600,000
K. M.
VAN ZANDT,
R. W.
President
R.
H. P.
'
UNITED
'
\
Cashier
SANDIDGE, Asst. Cashier
JENNINGS, Asst. Cashier
K. V.
COLLECTIONS A
•
FENDER, Cashier
RAYMOND C. GEE, Asst.
Vice-Prest.
E. HARDING, Vice-Prest.
W. M. MASSIE, Vice-Prest.
ELMO SLEDD,
'
STATES
SPECIALTY
•
,
.
DEPOSITARY
THE FIRST
OF-
NATIONAL BANK
HOUSTON, TEXAS
SURPLUS,
CAPITAL, $2,000,000
•
J. T.-SCOTT,
F. M. LAW,
W. S.
F. E.
V
Cashier
Cashier
H. B. BRINGHURST. Ass't Cashier
J. W. HAZARD, Ass't Cashier
J. L.
Vice-President
COCHRAN,
*
G. G.
President
Vice-President
RUSSELL, Cashier
O.
W.
TIMMINS, Ass't
RUSSELL, Ass't
JACKSON, Ass't
!-•
WE INVITE
Cashier
I /
{DESIRING
ON THE
CORRESPONDENCE OF BANKS AND BANKERS
FACILITIES FOR HANDLING COLLECTIONS
UNEXCELLED
STATE
$500,000
OF TEXAS.
ORGANIZED 1866
36
In
May, 1922, will be celebrated in the city of Richmond,
Virginia,
race
Pageant portraying the history of the English
a
in this country
Englishmen
on
from the time of the first landing of
American soil at Jamestown, Virginia,
May 13th, 1607 to the present day.
We
cordially invite
Richmond
his
for
our
every
7
on
*
banker in the country to visit
May Pageant, and to make this Bank
headquarters during his stay.
OLIVER J.
AMERICAN
SANDS, President
NATIONAL BANK
RICHMOND, VIRGINIA
Birmingham
Trust & Savings Co.
BIRMINGHAM, ALA.
Organized 1887
Capital $500,000
Surplus (Earned) $700,000
OFFICERS
ARTHUR
TOM O.
W.
W.
i
•'
SMITH, President
BENSON CAIN, Aae't Cashier
SMITH, Vice-President
C. D. COTTEN, Ass't Cashier
H. MANLY,
Cashier
E.
MACLIN
EXAM
More Than
F.
W.
FINCH, Ass't Cashier
SMITH, Trust Officer
ELLIOTT, Ass't Trust Officer
Thirty Years in Business
Correspondence Invited
FOURTH NATIONAL BANK
ATLANTA
If you are not
to
become
that
are
so
familiar with
soon
as
daily winning
as
our
service through actual
possible.
us new
Surplus
Re»ource8
JNO.
JAS.
you
— _ _ .... -
M ,800,000.00
|
ENGLISH—Chairman of the
Board
FRANK M. BERRY-.
—Vice-President
JULIAN CLAYTON—
.Assistant Cashier
ROBINSON—— —Vice-President
T. W. TOWNSEND—.
.Assistant (pashier
OTTLEY
I.
D.
invite
President
K.
CHAS.
W.
we
-$20,000,000.00
OFFICERS:
JAMES
of it,
oustomers among Banks and Bankers everywhere.
$1,200,000.00
Capital
use
There must be much merit in methods
RYAN
HATTON
— —
ROGERS
Vice-President
.Assistant Cashier
EDW. H. DALY
.Assistant Cashier
WM.T. PERKERSON-Vice-Pres. & Trust Officer
HENRY B. LONGINO.
.Assistant Cashier
STEWART McGINTY
&AMUEL
B.
Cashier
—
BONDS
SHORT TERM
ervice
J.
FULLER.
—
...Auditor
STOCKS
NOTES
that does not end with the Sale of
genuine interest in
.
a
We have
Security.
customers that continues through¬
out the life of the investment.
a
Facilities
that
are
our
unexcelled, both in handling Securities originating
in the South and those selected from the financial markets
i
of the world.
We will
Private Wire
respondent, Hemp¬
hill, Noyes & Co.,
members
of
New
York Stock Exchange
gladly send
you our
current
list of offerings upon request
to our New York cor¬
SECURITIES SALES CO.
Jacksonville
Birmingham
37
Atlanta
New Orleans
THE
Wheeling Bank & Trust Company
WHEELING, WEST VIRGINIA
Capital, Surplus and Undivided Profits
$802,954.90
■
.
.
:Vv>S:;>"■;
■'
■
■
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v.-.i
-;:y ': •■' ;■
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'- : .v>.y.'
.
<:
■
'•/■•;1:
K
Transacts
Trust
'%vM ' ' ' ' 'V.
''£iv'
-J "'
.
.
' :
'
-V'
i" f
-'
. v'
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_
•
—
General Banking and
a
f
-
■
:■
1.
Company Business
OFFICERS
ALEXANDER GLASS, Chairman of the Board
I
8. O.LAUGHLIN,Vice-President
WM.H.SEIDLER,Asst.Cashier
S.W.HARPER, President
M. C. M AGE E, Vice-Pres. & Cashier
GEO.E.CARENBAUER, Sec'y
CARLE. LANG,Asst.Cashier
'
;.v
FIDELITY AND
TRUST
:•
COLUMBIA
COMPANY
of LOUISVILLE,
KENTUCKY
—SEVEN DEPARTMENTSTrust
Administration—Banking—Real
Bond-—Insurance—Vau It—Foreign
Estate
Travel
Surplus and Profits, $900,000.00
Capital, $2,000,000.00
TRUST ESTATES—in excess of
$50,000,000
CALDWELL & CO.
We
specialize in
(
SOUTHERN MUNICIPAL BONDS
214
Union
Street
•
NASHVILLE, TENN.
ST. LOUIS
CHATTANOOGA
BIRMINGHAM
Correspondents of Kidder, Peabody & Co., New York
38
The Leading
Financial Institution of the Carolinas
Offers
Complete Banking, Trust and Investment Services
WINSTON-SALEM, N. C.
HIGH POINT
ASHEVILLE
SALISBURY
Capital,
$1,333,100
Surplus and
Resources
Our
of
1,598,686
25,000,000
over
has developed
twenty-eight years' experience
degree
high
Undivided^ Profits,
efficiency
the
in
services
we
offer
banks, corporations and individuals.
Hoirje Office
Winston-Salem, N.
Correspondence Invited
C.
The National Bank
r
of Commerce
just iiKe you
weive
NORFOLK, Va. «
§
4iere
and
terests.
CAPITAL
would if
you
yourself, tdways~ah
the alert to
tions
collections
obey
to
instruc¬
your
protect
your
in¬
Reasonable rates.
$1,200,000
Hamilton National Bank
Surplus and
CHATTANOOGA
Profits
$1,700,000
WE
Resources
INVITE
YOUR
Officers
ACCOUNT
T.R.PRESTON
G.H.MILLER
.
JOHN
R*
D.
S.
HENDERSON
E.
B.
SHADDEN
C.
J.
J.
H.
Vice-President
'
SCHMOELE, Asst. Cashier
FANSHAW, Auditor
B.
F.
S.
TAYLOR,/Jr., Asst. Vice-President
R. CORNELIUS TAYLOR, Asst.
C. S. PHILLIPS, Asst. Cashier
F.
J.
LOWRY
A.
STRAUSS
.
D.B.HARRIS
'
,
.
.
.
.
.
•
Vice-President
.
,
Cashier
Assistant Cashier
.
.
Assistant Cashier and Auditor
.
.
.
Active Vice-President
.
V
.
W, E. HARRELL
~
.
President
.
.Vice-President
Active Vice-President
.
.
.
.
.
,
.
.
STAGMAIER
COHOON, President
TAZEWELL TAYLOR, Vice-President
ROBERT P. BEAMAN, Vice-President
A. E. WHARTON, Cashier
S.
.
.
-
...
.
.
C.M.PRESTON
OFFICERS
R.
$17,000,000.00
.
.
Assistant Cashier
.
.
.
.
•
Assistant Cashier
'
I
MISS LULA A. STRAIN,
MARKED
FEATURES
L.
Promptness, Courtesy, Safety and Reliability
Resources
over
$22,000,000,00
39
B.
LOCKWOOD
.
Secretary to Board of Directors
Manager Bond
Department
a
to
REMEMBER priming the old pump down on the farm—how
the
hard it
"the
was
sometimes to find
surplus had been used?
that little dipper
a
gourd of priming water when
Yet how refreshing
of American business.
The golden flow
business
over
is here.
It needs
around the well
priming.
of prosperity awaits that priming.
people in these United States to feed and clothe—
commerce are as sound as the
nation
110 million
The fundamentals of
but the cycle of progress has been
Only the
stream
full of water could coa^ forth.
Economic conditions have absorbed the surplus
We have
was
interrupted.
worthy of full-blooded Americans, the confidence in every¬
thing American, and the continued and increased helpful interest of the nation's
courage
financiers and bankers is needed
as a
priming to the already improving business
situation.
This institution believes in "priming
the
of American business." and
agricultural, commercial and
pump
is operating on the basis of greatest assistance to
industrial progress.
The National Bank of Commerce
In Saint Louis1
Resources
-
1
•
•
.
more
'
than
$75,000,000
'
John G. Lonsdale, President.
Bonds
OTIS & CO.
Acceptances
Stocks
Foreign Exchange
CLEVELAND
New York
Specialists in
Boston
OHIO
Detroit
SECURITIES
Listed and Unlisted
Cincinnati
Columbus
Wires
Private
the
Toledo
Principal
to
Markets of
United States and Canada.
Akron
Members
Youngstown
New York,
Dayton
and
Denver
York
Cleveland, Boston, Chicago
Stock Exchanges, New
Cotton Exchange and_ Chicago
Detroit
Board of Trade.
Colorado Springs
__L
McCLUNEY & COMPANY
Commercial Paper
418 OLIVE STREET
ST. LOUIS
Correspondents
RICKARDS, ROLOSON & CO., Inc.
LANE,1PIPER Sc JAFFRAY, Inc.
Chicago
Minneapolis
McCLUNEY
&
BAYNE,
COMPANY
HINE & CO.,
New York & Boston
San Francisco
LANE, PIPER & JAFFRAY, Inc.
Commercial Paper
Bonds—Bankers' Acceptances
MINNEAPOLIS
1
r
St. PAUL
•
Correspondents
BAYNE, HINE & CO.,
McCLUNEY & COMPANY,
RICKARDS, ROLOSON & CO.,
New York
St. Louis & San Francisco
Chicago
a
When you
think of St. Louis
>>
Think °f the Liberty Central
Our intimate
the
experience,
in
knowledge of commercial relations in St. Louis and
Southwest,
this
gained
is invaluable
lASJ*
to
territory.
sixty-eight
those
having
■
-
i
through
years
of banking
business
interests
.
Organized 1858
Liberty Central Trust Company
nvam. acMcvY ww
Broadway and Olive,
41
St. Louis,
Mo.
-r;
Men
in
The
strength and stability of this institution rest
alone upon
not
its complete facilities and services but
the character of the
upon
With
offer to
we
men
who direct its affairs.
in
experience
years'
thirty
obligations
:■
and to
you
fulfilling trust
your
clients
our
complete facilities and hearty co-operation.
BetrOti.TBidngpn
Wayne County and Home Savings Bank
Detroit, Michigan
Organized
1871
Surplus $5,000,000
Capital $4,000,000
OFFICERS
CHARLES
JULIUS H. HAASS, President
GEORGE WILEY, Vice-President
W. V. MOORE, Vice-President
WM. S. GREEN, Vice-President
EDWIN J. ECKERT, Vice-President
ARTHUR E. LOCH, Vice-President
COLLINS,
F.
Chairman
RUPERT PLETSCH, Vice-President
GEORGE H. JOHNSTONE, Cashier
GEO. J. PIPPER, Auditor
HUGH R. BURNS, Assistant Cashier
WM. H. McCLENAHEN, Asst. Cashier
LYMAN
L.
ROSIER, Assistant Cashier
GEO. C. JOHNSTON. Assistant Cashier
CHAS. H. NORTHROP, Asst. Cashier
GEO. F. BUHRER, Assistant Cashier
FRANK A. GROSFIELD, Asst. Cashier
GEO. A. BURNS, Assistant Cashier
JOHN W. SCHMITT, Assistant Cashier
DIRECTORS
A.
A.
Lkm
Albrecht
W.
Clarence M.
Leo
M.
Frank
John
H.
M.
S.
W.
Green
Burton
Julius
H.
V.
Moore
Ralph
B^red Gubnther
U.
Haass
Phelps
Grant
S.
Y.
C. Jbnks
James C. McGregor
A.
L.
John
Butzel
F.
Chas.
Wm.
Bowen
George
James
Collins
S.
Holden
Chas,
Croul
Donaldson
A.
Orla
Mercier
Race
Seyburn
Stephens
B.
Taylor
Wiley
THE
MichiganTrpst
GRAND
a
RAPIDS, MICHIGAN
Capital $1,000,000
Oldest
Serves
in
Surplus $500,000
Trust
any
Company in Michigan
Trust capacity.
A special Market for
Public
Accounting
LEWIS H. WITHEY,
Municipal Bonds.
and
President
Federal
Tax
Service.
NOYES L. AVERY,
Vice-President
HENRY
Vice-President
EMERSON W. BLISS,
F.
Vice-President
ARTHUR C. SHARPE,
Asst. See'y
Vice-President
GUY C. LILLIE,
Asst. See'y
Vice-President
C. SOPHUS JOHNSON,
Asst. See'y
IDEMA,
GORHAM,
CLAUDE HAMILTON,
JOHN H. SCHOUTEN,
A.
42
Secretary
In Michigan
Specializing in MUNICIPAL, INDUSTRIAL,
PUBLIC UTILITY and RAILROAD
we
provide
a
BONDS,
comprehensive and conservative
investment service in the Wolverine State.
Inquiries cordially invited
Harris, Smart. & Laws on
15O
Congress
Detroit
St.,W.
vt
1
>
T.
H.
HOLTZ & CO.
Investment Bonds
39 SOUTH
STREET
LA SALLE
chicago
EDWARD F.
B.
HARRY
Bonds
r
•'
*•'.
V'j :
r
•
'
'
We
Short Term
.
•
1
• •
•
■
•
'
"
■ ;■
kf...
'
••/A".•
V;." V
Grain
J.
SCHAACK
Cotton
Specialize in
UNLISTED SECURITIES
Notes
.
WEINAND
N.
EDWARD
Bonds
Stocks
'
JOHN
LELAND
SIGNOR
•
•/'
•••
-;':4
■
/
•
>■; j
/
231
Commercial
So.
61
Chicago
Broadway, New York
148 W.
Paper
Wells Street,
42nd
St., New York
MEMBERS
New York Stock
137 So. La Salle St.,
NEW YORK
ST.
Exchange
New York Cotton
Chicago
Exchange
Chicago Stock Exchange
LOUIS
Chicago Board of Trade
SAN FRANCISCO
SEATTLE
LOS ANGELES
Pittsburgh Stock Exchange
SCOTT
&
Investment
804-7 Harris Trust
STITT
Bonds
Building, 111 W. Monroe St.
CHICAGO
Telephone Randolph 535
44
"-N
SoxitK IkSolle
ncarJI eidi-son
VV#
}
Investment Securities
Salle St., Chicago—Ground Floor
14 So. La
•
Free of All Federal Income Taxes
Issued by
i
Counties, Cities, Districts
Public
and
Yielding 5%% to 7%
Latest
Utility,
Industrial
Municipal Bonds for
Banks, Institutions, Trust
Circular Sent upon Request
Funds
and
Individuals.
The Hanchett Bond Co.
(Incorporated 1910)
Capital $150,000
*
71 West Monroe
MUNICIPAL BONDS
39 South
Milwaukee
La Salle Street
CHICAGO
45
St., Chicago
Minneapolis
First National Bank
At
The recent merger of the
AT
Pittsburgh, Penna.
Peoples National Bank with the FIRST NATIONAL BANK
strength and facilities of that
wherever located, in
PITTSBURGH, PA., has added to the well-known
institution.
Its
services
offered to Financial Institutions,
are
performing all duties promptly and satisfactorily.
confidence of
j
$5,000,000.00
CAPITAL
SURPLUS
3,000,000.00
-
UNDIVIDED PROFITS
DEPOSITS
-
-
-
-
-
-
-
-
-
-
-
1,015,117.71
-
-
-
49,500,054.28
66,107,823.07
RESOURCES
OFFICERS
Robert Wardrop, Chairman of the
Lawrence
Frank
F.
E.
Sands
Brooks
Clyde C. Taylor
-
-
Howard Arthur
-
-
John K. McKee
-
-
Assistant Cashier
-
-
Assistant Cashier
-
Assistant Cashier
Vice-President
Wm. J. Frank
Assistant to the Pres't
H.
Fawcett
-
Assistant Cashier
P. W.
Thomas
B.
Hudson
-
Assistant Cashier
J.
Werts
Oscar Wilson
William
46
c
v
John DeM.
President
Vice-President
Vice-President and Cashier
Joseph W. Ward
J.
-
-
Board
Manager Foreign Department
Dahinden Asst. Mgr. Foreign Dept.
Paul
Ford
Asst. Mgr. Foreign Dept.
The
%
*
'
'
'
'
'
\
'
>
'
'
.
I
1
>'
Union Trust
of
'
!
;
,
,
'
Company
Pittsburgh
PENNSYLVANIA
CAPITAL AND
SURPLUS
$38,000,000.00
Transacts
General
a
Trust
Banking and
Company Business
OFFICERS
H.
C.
McELDOWNEY
RICHARD
J.
B.
JOHN
HAYES
A.
S.
HARVEY
EDWARD
L.
CREDE
S.
WM.
WYLIE
WM.
A.
WM.
I.
W.
DAVID
RALPH
P.
S.
Treasurer
Assistant Treasurer
-
-
-
Assistant Secretary
-
2nd Asst.
-
-
HILL
-
4th Asst.
-
-
-
-
PARKINSON
Secretary
3rd Asst. Secretary.
-
-
DAVIS
EULER
Vice-President
-
Assistant Treasurer
GRINSTEAD
I.
Vice-President
Vice-President
-
-
-
SMITH
J.
-
-
-
-
BERRYMAN
CARROLL
W.
-
-
ROBINSON
FLORENCE
-
-
-
CARR
Vice-President
-
Vice-President and Secy.
-
EVANS
CHURCH
JAMES
-
-
LIGGETT
S.
-
-
IRWIN
J.
W.
-
SCHOONMAKER
M.
SCOTT
President
....
MELLON
-
-
Secretary
Trust Officer
-
-
Trust Officer
Asst. Trust Officer
Auditor
....
Manager Bond Department
-
DIRECTORS
JAMES
BEAL
H.
J. FREDERIC
BYERS
GEORGE W. CRAWFORD
ARTHUR
HENRY
CHJLDS
BENJ.
V.
C.
F.
DAVIS
FOWNES
FRICK
JONES, Jr.
PHILANDER C.
JAMES
J.
M.
H.
LOCKHART
RICHARD
WILLIAM
H.
C.
KNOX
LOCKHART
B.
L.
MELLON
MELLON
McELDOWNEY
LEWIS A.
PARK
HOWARD
PHIPPS
DAVID
REED
A.
WILLIAM B. SCHILLER
J.
M.
SCHOONMAKER
GEORGE
FRANK
E.
M.
SHAW
WALLACE
THE WASHINGTON LOAN & TRUST COMPANY
JOHN B. LARNER, President
WASHINGTON, D. C.
The
DEPARTMENTS
First
Banking
Trusts
Trust
Re a Estate
Company
Safe Deposit
in the
National
Foreign
Capital
Investments
Resources
$13,000,000
MAIN
OFFICE
T'
F Street Corner
Ninth
fyswy (ampbpu
WEST
END
BRANCH
,
Seventeenth Street corner G Street
opposite State, War
and Navy Bldg.
48
Charles
and
Lexington
Streets
BALTIMORE, MD.
VAN LEAR BLACK,
W.
BLADEN LOWNDES, 1st Vice-Pres.
SAMUEL M.
J.
H.
F.
HANN, Vice-President
ALFRED
BEATSON, Vice-Pres. and Secretary
HfcNRY
D.
MAHLER, Treas. and Asst. Sec'y
Asst. Sec'y and Asst.
M.fSCOTT,
Treasurer.
HARLAN, General Counsel
HOWARD
President
GEORGE L.
R.
WARFIELD, Trust Officer
HOWARD
EDWARD
STROTT, Assistant Secretary
WERNS1NG, Asst.
to
1st'Vice-Pres"
DIRECTORS
VAN
LEAR BLACK
President
SPRIGG
D.
CAMDEN
Pres. Un. Tr. & Dep. Co., Parkersburg, W. Va.
CHARLES
M.
COHN
Vice-Pres. Con. Gas, Elec. Lt. & Power Co.
HOWELL FISHER
Vice-Pres.
It It ill'
Bartlett Ilayward
Co.
SOLOMON FRANK
Capitalist
FRANK A.
The Arundel
JOHN S.
FURST
Corporation
GIBBS, JR.
Gibbs Preserving
HENRY
D.
.
Co.
HARLAN
Lawyer
WILLIAM
A.
HOUSE
Capitalist
JOSEPH
P.
KENNEDY
P.
Kennedy Foundry Co.
W.
BLADEN LOWNDES
Vice-Pres. Second Nat'l Bank, Cumberland
mum
SEYMOUR
MANDELBAUM
Capitalist
GUSTAVUS
G.
OBER, JR.
Ober & Sons Company
JOHN
WALTER
SMITH
Capitalist
GEORGE
WARFIELD
/
CLARENCE
Coal
THOMAS
FIDELITY
BUILDING
CHARLES AND LEXINGTON STS.,
Acts
Pres.
W.
WATSON
Operator
A.
WHELAN
Fidelity and Deposit Co. of Md.
BALTIMORE.
Executor, Administrator, Guardian and Trustee, Manages Estates and Collects Incomes,
Rents Safe Deposit Boxes and Receives Valuables on
Storage, Does a General Banking Business. Interest
Allowed on Deposits.
Issues Letters of Credit and Travelers' Cheeks.
as
BANKING, INVESTMENT, TRUST, REAL ESTATE AND FOREIGN DEPARTMENTS
AT CLOSE OF BUSINESS SEPTEMBER
30, 1921
RESOURCES
Stocks
Loans
Cash
and
and
in
Bonds
-----
Discounts
Vault
and
-
-
-
Depositories
-
-
-
-
-
-
-
Due from Customers under Letters of Credit
-
-
-
-
.
-
Total
.
-
-
-
-
-
-
-
-
-
$7,761,707.87
7,197,571.35
2,861,506.89
48,747.15
$17,869,533.26
LIABILITIES
Capital Stock
Surplus and Undivided Profits
Deposits
Liability under Letters of Credit
Total
-
-
-
-
-
$1,000,000.00
-
1,942,747.16
14,878,038.95
-
48,747.15
$17,869,533.26
COMPANY
THE BALTIMORE TRUST
STREET, BALTIMORE, MD.
25 EAST BALTIMORE
SURPLUS AND PROFITS $2,350,000
CAPITAL $1,000,000
Does
extended
Credit
a
general banking and fiduciary
Loans made on
and
commercial
condition.
ments of
We
of well established
tions of States,
our
industrial and public
We also purchase the obliga¬
utilityl corporations.
Through
entire issues of
purchase for our own account
securities
Cities, Counties, etc.
Institution is at all times prepared to
pertaining to investment securities.
Bond Department this
expert advice on any matter
1
give
Correspondence and interviews invited
Treasurer
TURPIN
II.
GALE
Vice-President
O.
D.
MASON
Vice-President
HOWARD
ROY MUELLER
Vice-President
ROBERT L. GRAFFLIN
WILLIAM
President
INGLE
BRADLEY HAYS
ALLEN
G.
collateral, including
merchandise in transit or storage.
mercantile customers based on state¬
C.
business
W.
Assistant Treasurer
FENHAGENf, Jr. 1
Secretary
LEEKE
N.
Assistant Secretary
ESTABLISHED 1804
BANK OF MARYLAND
NATIONAL UNION
THE
AT BALTIMORE,
MARYLAND
Resources More Than
Capital, $1,000,000
$10,000,000
GOLDSBOROUGH, President
WALTER W. BEERS, Cashier
Cashier
HORACE R. FORD, Assistant Cashier
PHILLIPS LEE
JOHN
LOUIS
E.
E.
BOISSEAU, Vice-President
CREAMER, Assistant
.
DIRECTORS
John H. Morgan,
Marburg, Capitalist
Edwin G. Baetjer,
Venable, Baetjer and Howard,
Attorneys-afc-Law
Philips Lee Goldsborough, President.
Edward P. Gill, Wm. D. Gill & Son,
Inc., Lumber Merchants.
Wm. A.
Cator
& Co.
S.
Sterett
Mc Kim,
Vice
-
C.
Bruce, The Bartlefct-Hay-
ward Co.
T.
Davis
Hill, Corkran, Hill & Co.,
Packers.
President,
Savings Bank of Baltimore.
Edmund C. White, W. W. Boyer
John E. Boisseau,
&
Vice-Pesident.
John F. Davies, Insurance
Co.
CORRESPONDENCE SOLICITED
ACCOUNTS AND
Excellent connections for
Albert
Attorney-at-Law.
Franklin P. Cator, Armstrong,
States, at rates depending upon
Southern Atlantic Coast Cities and
maintained by correspondents with us.
collecting items on
balances
MARYLAND TRUST
N. W. Corner Calvert
COMPANY
and Redwood Sts., Baltimore, Md.
Capital, $1,000,000
TRANSACTS A GENERAL TRUST
AND BANKING BUSINESS
OFFICERS
Robertson
L. S. Zimmerman, President
Carroll Van Ness,
Vice-President
Vice-President & Treasurer
Griswold,
Vice-President & Trust Officer
Bird, Secretary & Asst
Treasurer
Geo. W. Collars, Asst
Secy. & Asst. Treaa.
James
Jervis Spencer, Jr.
B.
DIRECTORS
Frank H. Gunther
E. H. Bankard
Gwinn
Albert Bernet
Richard
F. Donaldson Brown
John T. Hill
Robert Garrett
J. Barry Mahool
B. Howell Griswold, Jr.
C. Wilbur Miller
Robertson Griswold
John
jame8
G. Rouse
L. sellman
Theodore E. Straus
Richard H. Thompson
Carroll Van Ness
Herbert A. Wagner
Arthur G. Wellington
Henrt B. Wilcox
L, S. zimmerman
Correspondence and Interviews Invited
50
CHARTERED
1864
SAFE DEPOSIT AND TRUST COMPANY
OF
BALTIMORE
13
SOUTH
STREET
Capital, Surplus and Profits
Acts
as
$4,400,000
over
Trustee of Corporation
Mortgages, Fiscal Agent for Corporations and Indi¬
Transfer Agent and Registrar
Depositary under plans of reorganization.
Acts as Executor,
Administrator, Guardian,-Trustee, Receiver, Attorney and
Agent, being especially organized for careful management and settlement of estates
of every charater.
viduals
,
.
Fireproof building with latest and best equipment for safety of contents.
_
Safes for rent in its large fire and
burglar proof vaults, with spacious and well
lighted coupon rooms for use of patrons.
Securities held
on
deposit for Out of Town Corporations and Persons.
DIRECTORS
H.
WALTERS, Chairman of Board
WALDO
JOHN J. NELLIGAN, President
JOHN
SAM'L
ROBERT
NEWCOMER
NORMAN
JAMES
ELISHA
H.
H.
JOSEPH
B.
CLARENCE
JOHN
W.
SHOEMAKER
BLANCHARD
ISAAC M. CATE
GEORGE
M.
M.
B.
H.
RANDALL
PERKINS
LEE,
3rd
KIRBY,
TUCKER,
C.
WILLIAM
R.
JENKINS
P.
SPAMER, 2nd V.-P.
Vice-President
4th
Vice-President
R.
Assistant Treasurer
S.
OPIE, Assistant Secretary
ALBERT
BOSLEY, Assistant Treasurer
ARTHUR
MARSHALL, Vice-Pre.'t
GARRETT
C.
ANDREW
GAMMIE, Treasurer
R.
GEO.
W.
P.
STROBEL,
Real Estate Officer
ROLAND
L.
GEORGE
GIBSON, Secretary
PAUSCH, Auditor
MILLER,
Assistant Cashier
HUBNER, Assistant Secretary
A Short Term Collateral Trust Note with Four-Fold
Bankers lend Manufacturers and
endorsement or collateral.
About 300
different
*
Merchants
100%
their
on
plain
Security
note
without
OUR COLLATERAL TRUST NOTES are issued in
maturities of from 2 to 12 months, in
amounts of $500 or
multiples thereof, and secured by the quickest and safest of all assets,
except
cash, to wit: Commercial Open Accounts, Notes and
Acceptances Receivable, which we assign to
the Fidelity Trust
Company, Baltimore, as Trustee, ratably and without
preference, for the
benefit of all note holders, as follows:
.
Banks
have
purchased
these Notes.
Have you?
If not, why
now?
not
_
_
WITH
A
MARGIN
OF 25%, two name Commercial
Open Accounts, Acceptances and
Notes Receivable, sometimes further secured
by lien, purchased by us from responsible Manu¬
facturers and Jobbers who guarantee the
payment for 100% thereof, upon which we pay about
80% on receipt of documents, and the balance only as collections are received
by us.
WITH A MARGIN
which the Purchaser has
OF 10%, Retail Time Sales Lien Notes for
Motor Vehicles, upon
paid one-third or more cash, the balance usually due monthly, for
less charges.
We require the endorsement, guarantee or
repurchase
agreement of the Dealer (except on Ford
cars) and we retain a lien on all cars, which are also
insured against Fire and Theft.
which
we
100%,
pay
WITH A MARGIN OF
10%, Notes, Acceptances and Drafts covering the sale of Motor
Vehicles from the Manufacturer to the
Distributor and Dealer, upon which the Purchaser has
paid 10% or more of the net wholesale price, plus war tax and
freight.
We advance 90% to 100%
of the unpaid balance, less
charges, and usually require the endorsement, guarantee or
repurchase
agreement of the Manufacturer, and retain a lien on
all such cars, which are also insured against
Fire and Theft.
Our Collateral Trust Notes
1.
The
2.
are
our
direct obligation, secured by:
The
$5,700,000 Cash
Capital and
Surplus of the Company.
obligations of many thousands of original Purchasers,
Manufacturers,
Jobbers,
Retailers
and
Individuals,
with
liens upon Cars,
Insurance, etc.
3.
The
4.
The
Write for
endorsement, guarantee or agreement to repurchase
100% by the firms selling the receivables to us.
our
minimum
margin
of
25%
and
10%,
as
above
for
explained.
descriptive folder, financial statement, specimen note and discount rate.
COMMERCIAL CREDIT COMPANY
Cash
Capital $4,500,000
Surplus $1,200,000
BALTIMORE
Affiliated
COMMERCIAL ACCEPTANCE TRUST
Cash Capital and Surplus
over
with
.
$1,400,000
COMMERCIAL CREDIT COMPANY, Inc.
Cash
CHICAGO
Capital $750,000
NEW ORLEANS
Represented in
the
Principal Cities.
of
Philadelphia
Broad and Chestnut Streets
CAPITAL $3,244,100
Solicits Deposits
"
v
of Firms, Corporations and
Individuals—Interest Allowed
■
Is
fully equipped to handle
its Banking,
all Business pertaining to a Trust Company,
Safe Deposit Departments
in
Trust, Real Estate and
i
§
Edu). S. Buckley, Jr., Treasurer
Edward Y. Townsend, Secretary
George H. Earle, Jr., President
S. F. Houston,
Vice President
John A. McCarthy,
Edgar Fetherston, Asst. Treas.
Trust Officer
Robt. D. Ghriskey, Asst. Sec. and Asst. Tr.
Officer
Directors
Wallace Hallowell
Bayard Henry
J.
Frank C. Roberts
Samuel F. Houston
John Gribbel
Gustavus
James'F. Sullivan
George Woodward,D.
Louis J. Kolb
George H. Earl, Jr.
Cyrus H. K. Curtis
52
7'
W. Cook
Treasury Building, Washington
ANY AMOUNT OF ANY ISSUE
BOUGHT AND SOLD
Wire
or
telephone at
our expense
Member Federal Reserve System
CITY HALL
SQUARE
SPRUCE
SPRUCE
PHILADELPHIA
8200
MEMBERS
PHILADELPHIA STOCK
EXCHANGE
INVESTMENT
SECURITIES
UiAiBL
LAND TITLE BUILDING
53
PHILADELPHIA
8200
The
Oldest
Insurance
Title
Company
in the
World
,
THE REAL ESTATE TITLE INSURANCE AND TRUST COMPANY
of
523 Chestnut
Philadelphia
Broad Street Office, 45 So. Broad
St.,
RENTS SAFE DEPOSIT BOXES
Member of the
Surplus and Undivided Profits, $3,400,000.00
V.2',-
•
DANIEL HOUSEMAN
Vice-Pres. and Trees.
JEREMIAH N. ALEXANDER
JOHN
Asst. Secretary
H.
/
Philadelphia Clearing House
Capital, (Full Paid), $1,500,000.00
President
BECOMES SURETY
EXECUTES TRUSTS
RECEIVES DEPOSITS
FRANCIS A. LEWIS
(Lincoln Building)
'
(Opposite Independence Hall)
INSURES TITLES
'
OFFICERS
••
'
'.'rV.'I:'.•
;'.v
W;'
CHARLES S. KING
KING DICKSON
JAMES R. WILSON
Vice-Pres. and Trust Officer
Vice-President
.
A.
AARON L. DEETER
FAIRLAMB
Asst. Trust Officer
Asst. Treasurer
Sec'y and Asst. Treas.
WILLIAM McKEEv Jr.
Asst. Manager, Title Dept.
DIRECTORS
William H. Shelmerdlne
William Wood
Charles T. Quin
Walter A. Rigg
Owen J. Roberts
Howard A. Stevenson
Samuel M. Freeman
Charles E. Heed
Henry M. DuBois
Charles W. Welsh
Frank H. Moss
John A. Rigg
Francis A. Lewis
George McC all
Isaac W. Roberts
Trust Funds kept separate and apart from Assets
of Company
•
•
$19,514,066.19
PHILADELPHIA
6324 Woodland Ave., West
325 Chestnut St.
CAPITAL $5,200,000
1431 Chestnut St.
Philadelphia
SURPLUS $16,000,000
Member Federal Reserve System
Funds Held in Trust More Than $250,000,000
Pays Interest
on
Deposits
Executes Trusts of Every
Description
Securities and Valuables taken for Safe
\
/
Keeping
Wills Safely Kept Without Charge
WILLIAM P. GEST,
J. C. NEFF, Vice-President
W. G. LITTLETON. Vice-President
President
T. H. ATHERTON, Vice-President
GEO. H. KYD, Treasurer
S. W. COUSLEY, Secretary
DIRECTORS
HENRY W. B1DDLE
G. COLESBERRY PURVES
WILLIAM P. GEST
SAMUEL T. BODINE
EDWARD WALTER CLARK
JONATHAN C. NEFF
JOHN S. JENKS, Jr.
SIDNEY F. TYLER
CHARLEMAGNE TOWER
EDWARD. T. STOTESBURY
DANIEL B. WENTZ
MORRIS R. BOCKIUS
JOSEPH E. WIDENER
INCORPORATED
GUARANTEE TRUST
and
1871
SAFE DEPOSIT CO.
WEST-PHILA. BRANCH
316, 318 and 320
South
9
52d
St.
Chestnut Street
CENTRAL
Philadelphia
SAMUEL
F.
1415
HOUSTON, President
HOWARD
E.
H.
W. GOODALL,
YOUNG, Treasurer and Secretary
BRANCH
Chestnut
Street
Vice-President
THIRD NATIONAL BANK
PHILADELPHIA
A Commercial Bank in
a
Capital, $1,000,000
LEWIS
G.
R.
DICK,
BRINTON
W.
Surplus and Profits, $1,300,000
President
WM.
ROBERTS, Vice-President
CLIFFORD WOOD,
Commercial Centre
T.
TOMLINSON,
Assistant
Cashier
RAYMOND R. BOSWORTH, Assistant Cashier
Cashier
S.
HERBERT
WHITE, Assistant Cashier
We solicit the collection of drafts and other items that require personal
presentation,
shall give good service at a reasonable charge.
Our department is wellequipped, and all branches of our business conducted on intelligent and liberal lines.
and
-
"..j..
HARPER &, TURNER
Investment Bankers
Stock
Exchange Building
Philadelphia
530
Spruce Street
439
Scranton
•
Penn
Street
Reading
PHILADELPHIA
Capital
.
.
.
Surplus and Profits
E.
F.
.
.
.
.
.
$3,000,000
.
8,000,000
SHANBACKER, President
R. J. CLARK, Vice-President and Cashier
G. E.
W. K. HARDT, Vice-President
W. A. BULKLEY,
Ass't Cashier
W. R.
A. MacNICHOLL,
Ass't Cashier
HUMPHREYS, Vice-President
STAUFFER, Ass't Cashier
ESTABLISHED 1866
BODINE, SONS & CO.
COMMERCIAL PAPER
129 SOUTH FOURTH
PHILADELPHIA, PA.
STREET
REILLY, BROCK & CO.
Bankers
INVESTMENT
SECURITIES
GOVERNMENT
RAILROAD AND
MUNICIPAL,
CORPORATION BONDS
PUBLIC SERVICE
V
'
t
306
T,
CHESTNUT ST.
4
PHILADELPHIA
THE
TITLE
LAND
BROAD
AND
TRUST COMPANY
STREET, CHESTNUT TO SANSOM,
Capital, $3,000,000
PHILADELPHIA
First Trust Company in the Philadelphia Clearing House
Surplus, $9,000,000
Deposits received upon which interest is allowed
Titles to real estate insured
Loans
on
mortgage and approved securities
Trusts
executed
burglar-proof vaults
Safe Deposit Boxes rented in
.
President
WILLIAM
R.
NICHOLSON
Vice-President and Treasurer
Vice-President
EDWARD
H.
LEWIS
BONSALL
Secretary
Vice-President
HENRY
R.
LOUIS A.
ROBINS
DAVIS
P.
GEIGER, JR.
Trust
I
CLAUDE
Officer
A.
SIMPLER
DIRECTORS:
William*R. Nicholson
Henry R. Gummey
Samuel
S.
Sharp
John W. Brock
Ralph H. North
Joseph
E.
Widener
Edward
H. Bonsall
Frederick J. Geiger
William
M.
Elkins
56
George D. Widener
Eugene W. Fry
Percival E. Foerderer
George W. Elkins,
Gyrus
H.
K.
Jr.
Curtis
♦
■'
:
a y
::
■
'
.
aaw'A-
->vv
'
;v
w aa;.:va
,
CHARTER No. 1
ANY GOOD BANK IS OF COURSE WELL AND
FAVORABLY
KNOWN
MUNITY.
IN
ITS
COM¬
I
.
BECAUSE OF
OWN
ITS
UNIQUE HISTORY (BEING
THE FIRST BANK CHARTERED UNDER THE
NATIONAL
BANK
WORLD-WIDE
ACT) THIS BANK HAS A
REPUTATION.
WE ARE SERVING CORRESPONDENTS FROM
ALL
SECTIONS
AND
WE
TERMS
OF
INVITE
STATES
UNITED
THE
YOUR
BUSINESS
ON
MUTUALLY PROFI TABLE.
FIRST
NATIONAL BANK
OF PHILADELPHIA
Capital,
$1,000,000
Surplus,
4,000,000
Trust Funds,
Henry
Frank M.
T.
G.
Brengle, President
Hardt, Vice-President
Ellwood
DIRECTORS
■
J. Franklin McFadden
Benjamin Rush
Thomas S, Gates
.
Stotesbury
Levi L. Rue
Henry L. McCloy, Secretary
Denney, Trust Officer
;
Story Jenks
Edward T.
John C. Wallace, Treasurer
Frame, Vice-President
Nelson C.
John
175,000,000
Arthur H. Lea|
Adolph G. Rosengarten
J. Howell"Cummings
W. W. Atterbury
Edward Roberts
Henry G. Brengle
Samuel M. Vauclain
Ledyard HeckscherJ
Charles Day]
,
\
41 5 Chestnut Street
::
::
.
Broad and Chestnut Streets
Northeast
PHILADELPHIA
Corner
1
.'I.':-:
Wv
&
SECURITIES
MEMBERS NEW YORK AND
15
BOSTON STOCK EXCHANGES
State Street, Boston
24 Broad Street, New
York
,
SPRINGFIELD
PROVIDENCE
NEW BEDFORD
HARTFORD
International Trust Company
45 Milk Street,
BOSTON, MASS.
BRANCHES:
Summer
115
BOSTON
Street,
Fields
Uphams Corner
)
\
Corner
DORCHESTER, MASS.
Roslindale
Hyde Park
Capital $2,000,000.
v
'■
1
'
Deposits
over
Surplus and Profits $2,800,000.
-i-,'.
$29,000,000.
:
;
••
.
TRUST
DIRECT CONNECTIONS THROUGHOUT THE NEW ENGLAND STATES, THE INTERNATIONAL
COMPANY PLACES AT YOUR DISPOSAL THEIR COLLECTION SYSTEM. ASSURING YOU OF PROMPT
RETURNS AND CREDITS.
CORRESPONDENCE INVITED.
MEMBER FEDERAL RESERVE SYSTEM
WITH
OFFICERS
CHARLES G.
BANCROFT, President
CLIFFORD B. WHITNEY,
Treasurer
JEWETT, Vice Pres. and Sec.
MURRAY, Vice President
B. FARNHAM SMITH. Vice President
GARLAND, Asst. Secretary
HOWARD NORTON, Assistant Secretary
A. FRANCIS HAYDEN. Vice President
THOMAS F. MEGAN, Assistant Secretary
HENRY L
THOMAS
W.
A.
EDWARD
GEORGE W.
ISHEPHERD, Asst. Treasurer
LAWRENCE
S.
CHARLES D. M.
BEARSE,
Asst.
A.
Treasurer
BISHOP, Asst. Treasurer
JOSEPH J. CARSON, Assistant
Treasurer
Assistant Treasurer
CHAPMAN, Asst. Treasurer
E. SMITH,
RICHARD
HOTCHKIN & CO.
53
STATE
STREET
BOSTON
Tel. MAIN
-
9
Cable
460
SPECIALISTS
address
TOCK1N
IN
MANUFACTURING STOCKS OF NEW ENGLAND
58
THE NATIONAL SHAWMUT BANK
OF BOSTON
OFFICERS
Chairman
President
WILLIAM A. GASTON
ALFRED L.
AIKEN
VirA«Pf^Qir]pnt&
NORMAN
I.
ROBERT S.
W.
A.
ADAMS
JOHN
POTTER
BOLINGER
ADDISON
BURNHAM, Jr.
L.
WINSHIP
FRANK A. NEWELL
FRANK
NICHOLS
C.
Cashier
JAMES E.
Assistant
HENRY F.
FRANK
RYDER
Cashiers
SMITH
WILLIAM
HOUGHTON
GEORGE H.
SOULE
S.
LEON
GEORGE E. FICKETT
ERNEST H.
MOORE
H. WHITE
EDWARD
A.
DAVIS
Auditor
CLARENCE
Assistant
E.
Managers,
.yyj
DUNAVEN
Foreign
.FRANK H. WRIGLEY
v.,.••
TOWN
EARL F. FILLMORE
o
A-A.
S.
FREDERICK E. JACKSON
*
Department
WILLIAM J.
:
vVf
-y
-tw
HARTNEY
V«"%y'y ;\ ''vl-AAA. *v.7.-.;'.;v.V':'.LC
Capital, Surplus and Undivided Profits
over
V.-
$22,000,000
Coffin & Burr
INCORPORATED
Purchasers and Distributers of
Government,
Municipal, Corporation and
Public
Service
Bonds
BOSTON.
NEW YORK
PORTLAND
*-.V- \"
A.*/:
PHILADELPHIA
Capital
'
$850,000
THE NATIONAL BANK OF COMMERCE
OF
PROVIDENCE, R. 1.
Established
C. PRESCOTT
HENRY
Surplus and
Undivided
Profits
$1,300,000
1851
KNIGHT, President
L.
FRANK
WILCOX,
W.
EDW. B.
W.
Vice-Pres.
& Cashier
GALE, Vice-President
FESSENDEN, Asst. Cashier
HOWARD PERRY,
Asst. Cashier
-
-
-
$1,500,000
Surplus and Undivided Profits,
-
-
$1,700,000
Capital,
-
-
-
Worcester Bank & Trust Company
1
WORCESTER, MASS.
MEMBER FEDERAL
RESERVE SYSTEM
•<a
WM.
D.
JOHN E. WHITE, President
1
LUEY, Chairman
ALVIN J. DANIELS, Treasurer
GENERAL
SPRINGFIELD
BANKING
BANK
NATIONAL
SPRINGFIELD, MASSACHUSETTS
Preside
HENRY H. BOWMAN,
ROBERT W.
WALLACE
RALPH P. ALDEN, Vice-President
PHILIP S. BEEBE,
Cashier
DAY, Vice-President
V. CAMP,
Cashier
ERNEST J. WHEELER, Asst.
$500,000.00
Capital
1,000,000.00
SURPLUS AND UNDIVIDED PROFITS
.9,250,000.00
DEPOSITS
Collections
Cashier
WINSOR B. DAY,
Cashier
on
Springfield and vicinity handled promptly and at low rates
One Hundred and Twenty-nine
Yean Old
Hartford-£tna National
HARTFORD,
Capital $2,000,000
C. E.
A.
G.
E. M.
FURLONG, V.-Prest.
BRAINERD, Cashier
CRAMPTON, Asst. Cash.
Total
COfiN.
Surplus and Profits $3,000,000
CHASE, Chairman of the Board
F. P.
A.
SPENCER, Jr., President
H. T.
HOLT, V.-Prest.
W. S. ANDREWS,
Asst. Cash.
D. W. HUBBARD,
Asst. Cash.
Resources Nineteen Million
60
Bank
Dollars
CANADIAN
GOVERNMENT, MUNICIPAL AND CORPORATION
"|
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SECURITIES
I
.
A.
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E. AMES
Members Toronto and
74
Investment Securities
HEAD
•'
'it*. i* ir-'.Mt
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'Vlv'.V'-'..
& CO.
Montreal Stock Exchanges
Established 1889
Broadway, New York
Chicago
Harris Trust Build'g,
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OFFICE—UNION
BANK
BUILDING, TORONTO
VICTORIA, B. C.
MONTREAL
Canadian Government and Municipal
Bonds
Housser, Wood & Co.
10-12
King St. East
Toronto, Canada
Correspondence Invited
The
Largest National Bank in Syracuse
COLLECTIONS
RECEIVE PROMPT ATTENTION
Salt Springs
National Bank
,
FRANCIS H.
JOHN
ISAAC
H.
W.
GATES, Chairman of the Board
GATES, President
WILLIAM J. BOURKE, Cashier
MUNRO, Vice-President
CHARLES A. HITCHCOCK,
Capita! $800,000
N. Y.
Vice-President
JAMES E. GERE, Assistant Cashier
Surplus and profits $380,000
1
Resources $6,225,000
-
i
COMPANY
TRUST
UTICA, N. Y.
General Banking and Trust Business. Close
Personal Attention of Officers Insures
Satisfactory Results to You
;V
-
'
Officer*
—WILLIAM 1. TABER.
President
Secretary
Sec.
c__
WATSON T. DUNMORE, Vice-Pres.
F. C. THURWOOD,
EDGAR
EDWARD FUESS, Asst.
*..*
B. ODELL, Vice-Pres.
F.
H.
D.
G. JONES, Vice-President
DOOLITTLE, Vice-Pres.
and Trust Officer
OUR BUILDING
AT SENECA SQUARE
S. B. FRENCH, Vice-President
and Mgr.
61
Bond Dept.
G. LVNN
JAMES
MARRIOTT, Treasurer
H. ROLLING,
Asst.. Treas.
C. T. WIENKE, Asst. to Pres.
R. E. ROBERTS, Auditor
/
The
Advantages of
a
Canadian
account
,
with this Bank will
services of
and
our
518
ment
you
branches in Canada
Newfoundland at your
HTHE accumulation
of funds,
of your items on
are
will be
disposal.
through
pay¬
Canada, will enable
make Withdrawals when exchange
to
rates
place the
most
favourable and Interest will
paid at the best current rate
on your
balance.
0UR facilities
and
Branches
New
York
San
always at your service
are
enquiries
welcomed.
are
Abroad
London, Eng.
Francisco
Havana,
Seattle, Wash.
Portland, Ore.
Mexico
Cuba
Kingston, Jamaica
City
Port of Spain, Trinidad
Bridgetown,
Barbados
THE CANADIAN BANK
OF COMMERCE
Capital Paid-up
$15,000,000
Total Assets
(as at 30th Nov., 1920)
Reserve Fund
$15,000,000
$480,760,624
Head Office and Foreign Department
Toronto, Canada
» t T E
p^viinLTsrk,
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84 Branch** In
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twEgrmpiES
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MA1MMJWWJ4
BRANCHES OF
S .V^WfrA j^MismdicL
OCEAN
THE ROYAL BANK
"*7
OF CANADA
■imm.
■TfiiSfc.
JSfair
nwi/^„t,
ftAftftApOS
_
CANADA
-f IVC'Avf
1
MO
Newfoundland}
MAfTiN'frJt h
/cR^AOfr"
626
WEST INDIES
5Stt!2LMtil'5 «»r Mi7»
49
cum
a
porto rico
dominican republic
6
haiti
2
indies
20
french west indies
*
british west
CENTRAL 4 SOUTH AMERICA
ARGENTINA, BRAZIL t URUGUAY
6
COLOMBIA
t
VENEZUELA
4
BRITISH
3
GUIANA
1
BRITISH HONDURAS
1
COSTARICA
UNITED
new to«k
STATES
crnfea
*,««,
si)
1
EUROPE
LONOON (Rninw. St., CC
PARIS (*# *«. 4m #—*n
S)
ImfHmlrt)
BARCELONA (RMw M> CMVmi BJ
TOT*L
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I
730
ATLANTIC
SOUTH
OCEAN
We Invite
correspondence from Banks, Importers and
Exporters interested in the establishment of
business
West
or
trade relations with Canada, the
Indies,
Central
and
Great Britain, France or
South
America,
Spain.
Bank
New
Head Office:
York Agency:
St.
Montreal, Que
Capital and Reserves,
68
$41,000,000
William
Total Resources,
$520,000,000
63
/.
INTERNATIONAL
INVESTMENT
SERVICE
Opportunities for international trading
better
were never
or more numerous
than
at
present.
Canadian issues
in many quarters
account
are
strongly favored
in the United States
on
of their attractive yields and sound
security.
Bankers, Trust Companies, and others
who handle funds for investment,
may
always assured of prompt and efficient
be
ser¬
vice, and of reliable and accurate informa¬
tion
by commanding the services of the
investment
banking house of Aemilius Jar-
vis & Co., Limited.
The volume of international business
handled by this
house for United States
clients is its
recommendation.
yEmilius
Jar vis
Building
Toronto, Canada
own
jar vis
'
issi
Co.
35 CoptL all Avenue
London, E.C.2, Eng.
INVESTMENT BANKERS
Canadian
Government
M unicipal
and
Corporation
Bonds
Bought and Sold
Dominion Securities
CORPORATION" LIMITED
head
MONTREAL
officei
TORONTO
Established 1901
26
kino
st. e.
LONDON, ENG.
./•
65
(INCORPORATED 1832)
/oCS2^\
CAPITAL PAID-UP
RESERVE FUND
$9,700,000
$18,000,000
$220,000,000
Total Assets Over
w:m
GENERAL
H.
EXECUTIVE
A.
OFFICES: TORONTO
RICHARDSON, General Manager
BRANCHES IN CANADA:
11 in Prince Edward Island
Quebec
42 in New Brunswick
133 in Ontario
46 in Nova Scotia
20 in
•
34 in Western Provinces
24 in Newfoundland
West Indies:
PortO RlCO—San Juan, Fajardo, Ponce
Cuba—Havana
Dominican Republic—Santo Domingo, San Pedro de
Marcoris, Santiago de los Caballeros
Jamaica—Black River, Kingston, Linstead, Mandeville, Montego Bay, Morant
Port Antonio, Port Maria, St. Ann's Bay, Savanna-la-Mar, Spanish Town.
Chicago
Boston
W. H. Davies, Manager
W. Caldwell, Manager
New York
H. F.
F.
W.
Patterson,!
Murray
Bay,
.
JAgcntS
London, Eng., Branch
55
E. C. MacLeod, Manager
Old Broad St., E.C. 2
Correspondents
GREAT BRITAIN:
The London Joint
City & Midland Bank
Limited; Bank of England; The Royal
Bank of
Scotland.
FRANCE:
Credit Lyonnais;
'
Comptoir National d'Escompte de
Paris.
UNITED STATES:
National Bank of Commerce, New York;
Bank, Philadelphia;
Bank, Baltimore;
National Bank, Minneapolis;.American National Bank, San
Francisco; First National Bank, Seattle.
The Bank of New
York, N.B.A., New York;
National Bank, Chicago; Fourth Street National
Merchants' National Bank, Boston; Citizens' National
First
First
Special facilities for making prompt collections in Canada, New¬
foundland and the West Indies.
Accounts of Banks, Corporations
and Individuals conducted on most
favorable terms.
Correspondence Invited
66
Foreign Banking Service in
Canada's Commercial
Capital
The Union Bank of Canada
placed the
headquarters
Foreign Department in Montreal because at
of its
this point it is best able to
business
serve
men
inter¬
ested in Canadian-American trade.
Its
location
and
private
branch offices in New
Vancouver
enable
wire
connections, with
York, Toronto, Winnipeg and
this
office
to
keep
closely
in
touch with conditions in both Canada and
the United
Union
Bank of
States.
Canada
Montreal
Its operations in the
Canada, the United States
it at all times to handle
at the closest
A
exchange markets of
and Great Britain enable
foreign exchange business
possible rates.
Canadian Bank for Canadian Business^
Union Bank of Canada
BANK"
J.OI CANADA
UNION
49 Wall
Street, New York, N. Y.
Resources
$169,000,000
THE DOMINION BANK
Established 1871
Head Office: TORONTO
CLARENCE A. BOGERT, General
Manager
Capital Paid Up......
$6,000,000
Reserve Fund and Undivided
Total
Profits, 30th June, 1921
Assets, 30th June, 1921
We have Branches
or
Agents at
Canadian Branches make
a
every
7,819,000
125,918,000
——
banking point in Canada and
specialty of business
our
sent them from Abroad
Foreign Exchange—Commercial Credits
Collections receive prompt attention
Correspondence solicited
'
v'';
London Eng. Branch:
73
V
.v.
Cornhill E. C. 3
S. L.
Jones, Manager
'
'
.
•
1
»
'•"
..•••
New York Agency
51
C.
S.
Broadway
Howard, Agent
Canadian
Government
Our lists
and Municipal Bonds
comprise the
and Government
highest grade Municipal
Bonds obtainable in
Canada.
Correspondence invited.
Wood, Gundy & Co.
INCORPORATED
14 Wall
Toronto
Montreal
,
York
Street, New
Saskatoon
Winnipeg
London, Eng.
Canada
The Merchants Bank of
ESTABLISHED 1864
Head Office:
MONTREAL
Capital Paid Up
$10,500,000
Rest and
Undivided Profits
$9,743,375
Sir H.
MONTAGU ALLAN, C.V.O.
F. HOWARD
D.
MACAROW, General Manager
C.
T.
A.
Supt.
MERRETT,
E.
Chief
W.
President
WILSON, Vice-President
of
and
Branches
Inspector
MELDRUM, General Supervisor
CANADIAN COLLECTIONS
Having
399
Branches
are
W.
M.
38
RAMSAY and
Canada,
coast to coast,
unsurpassed.
NEW YORK AGENCY
LONDON, ENGLAND,
and cor¬
this Bank's
throughout the Dominion
and Agencies in
respondents in every town from
facilities for making collections
WALL STREET
Agents
J. B. Donnelly, D. S. O.,
C. J. CROOKALL,
OFFICE, 13 Cornhill,
Manager
INCORPORATED 1855
THE MOLSONS
Head Office:
MONTREAL
OVER 130 BRANCHES
Capital Paid Up
Reserve Fund
WM.
5,000,000
-
MOLSON
MACPHERSON, President
C. PRATT,
SPECIAL ATTENTION
General Manager
GIVEN TO COLLECTIONS
UNITED STATES
RECEIVED FROM THE
68
IN CANADA
$4,000,000
-
EDWARD
BANK
ESTABLISHED
1875
IMPERIAL
OF
-
Capital Paid
PELEG HOWLAND,
/
CANADA
$7,000,000
up
BANK
Reserve Fund $7,500,000
A. E. PHIPPS, Gen'l Mgr.
President
HEAD OFFICE—TORONTO
We solicit the Canadian Business
of American Banks
at any
of
our
Branches.
Prompt Attention is Assured
I
220
BRANCHES
1
IN CANADA
AGENTS
New York
Buffalo
Bank of the Manhattan Company
Marine Trust Co.
Boston
Detroit
National Shawmut Bank
First and Old Detroit National Bank
Philadelphia
Chicago
Fourth Street National Bank
First National Bank
Corn
Exchange National Bank
Great Britain
Lloyds Bank, Limited, Head Office, Lombard Street, London, E. C.
CORRESPONDENCE INVITED
your
Arm
and
Giant/'
The
most
a
midget
compact,
dependable Weapon known.
manship is of the
and
tellers
your
"Little
The
matic.
depositors-
equal to
any
a
Auto¬
reliable
Work¬
highest grade
very
pistol made, regardless
of name,
make or price. Every detail of
design and mechanism the perfection of
the
We
in
Specialize
Fire
Arms
for the needs
of Banks and
accidental discharge
possible.
Financial
we
send
you a Bayard
approval?
We
utterly im¬
Made of Blue Steel.
25 Calibre.
Institutions.
May
Holds 7
pistol maker's art.
Cartridges. Safety device makes
_
$14.00
Shoots
32 Calibre,14.50
380 Calibre,___.
COLT'S
15.00
on
Wholesale
also
carry
a
prices for quantities.
complete
line
of
Cartridges
High Grade Imported
Pistpls and Shotguns.
and Domestic Field Glasses, Binoculars,
Import Trading Co.
258
New York
Broadway
69
Head Office: 71,
LOMBARD STREET, LONDON, E.C.3.
(30th June,
($5
1921.)
=
£1.)
CAPITAL SUBSCRIBED
-
$359,323,900
CAPITAL PAID UP
-
-
-
71,864,780
RESERVE FUND
-
-
-
50,000,000
DEPOSITS, &c.
...
1,709,927,775
ADVANCES, &c.
THIS
-
...
701,532,355
BANK
Colonial
The
and
Agency
HAS
Foreign
of
-
OFFICES
1,600
Department:
&
Foreign
ENGLAND
IN
CORNHILL,
Colonial
Affiliated
THE NATIONAL BANK OF SCOTLAND LTD.
17,
&
LONDON,
is
Banks
WALES.
E.C. 3.
undertaken.
Banks:
LONDON AND RIVER PLATE BANK, LTD.
Auxiliary:
LLOYDS AND NATIONAL PROVINCIAL FOREIGN BANK LIMITED.
Banque Guyerzeller
>.
/
-
I
Societe
Anonyme
ZURICH
SWITZERLAND
Established 1894
Paid
Up
Capital
Frs.
6,000,000
Every description of banking business transacted.
South African
Railway Records
COUTII AFRICA'S government railways,
pv-v/
and
passengers
)BRANCHES^p|. last
kafricaymm
to
16,164,700
tons
rolling stock last
and
of freight
year.
figures indicate how closely the various
parts of the great South African Union are being
with others.
64,455,487
The government
the
These
carried
all,
both records in the history of the
added considerably
year,
roads.
in
miles
19,118
brought in touch
Throughout this territory, rich in natural
resources.
opportunities for development, the National Bank of South
Africa maintains
nearly 500 branches, which
readily available
are
withfall the advantages of direct and complete banking facilities
through
our
New York Agency.
NATIONAL BANK r SOUTH AFRICA
LIMITED
New York Office, 44 Beaver Street
Paid
up
Capital and Reserves Exceed $27
ANTWERP
LONDON
BOMBAY
Banque Beige Pour L'Etranger
Filiale de la Societe Generale de
Belgique
(Until 1913 Banque Sino Beige)
Fr. 100,000,000
Capital
Fr.
Reserves
16,000,000
Head Office: Brussels
Branches:
MANCHESTER
PARIS
LONDON
BUCHAREST
COLOGNE
In
Egypt:
In
China:
'
CAIRO
ALEXANDRIA
PEKING
SHANGHAI
TIENTSIN
•
Banco
de
Cartagena,
Madrid
Beige A. Kouyoumd jisky & Co., Sofia
Bankverein, Vienna
Affiliated
with
Ste Franco
Wiener
New
York
Agency:
MEXICO CITY
-
-
-
-
67 Wall Street
-
BANKING CORPORATION, S. A.
March
(Incorporated
Successors
to
MEXICO
CITY
27,
1920)
BANKING
COMPANY,
A.
S.
(,Founded in 1903)
OFFICERS
EMAN
L.
HERBERT
F.
J.
JOHN
BECK, President
P.
LEWIS,
Vice-President
CLAUSEN,
FREDERICO
GWYNNE
Vice-President
KLADT,
POOL,
EDUARDO
LIC.
Manager,
Foreign
DUNKERLEY, Vice-President
Assistant
BAZ,
Cashier
Secretary
Department
-BOARD OF DIRECTORS
HARVEY
EMAN
A.
L.
BECK,
President
LEWIS L. CLARKE, President, The
can
JOHN
Ameri¬
J.
S.
J.
DAVIS,
President,
General
HAFF,
HERBERT
P.
DE
Invites accounts of banks
G.
LEWIS,
& Co.
HARRY
Vice-President
PARADA,
Capitalist
various
Fundidora
Monterrey, S.
of Mexico,
WRIGHT,
Rolling Mills &
EDUARDO
de
N.
departments will be sent
71
on
through
request.
Director,
Fierro
y
A.
G. Amsinck
inc.
Prest.
Consolidated
Foundries Co., S. A.
Capitalist
YTURBIDE,
and bankers, firms, corporations and individuals
Full details of the facilities offered by us
our
de
CARL HOLT SMITH, Manager,
LAMM, Capitalist
JORGE
Compania
Acero
Managing
PRIETO,
ADOLFO
Kountze Bros., N. Y.
JAMES
Attorney-at-Law
LEWIS
Equipment Company of New York
DUNKERLEY, Vice-President'
FURMAN,
DELBERT
Exchange Nat. Bank, New York
CLAUSEN, Vice-President
HENRY
F.
S.
BASHAM, Attorney-at-Law
MERCANTILE
INDIA
OF
Limited
Head
Office
LONDON
15 Gracechurch Street
Capital authorised and subscribed
Capital paid
up
£1,050,000
t
Reserve Fund and Undivided Profits
New York Agents, Bank of
64 Wall
BRANCHES IN INDIA,
STRAITS
MALAY
£3,000,000
£1,227,638
Montreal
Street
BURMA, CEYLON,
SETTLEMENTS,
FEDERATED
STATES, CHINA and MAURITIUS
72
NATIONAL BANK OF INDIA, LIMITED
REGISTERED IN LONDON UNDER THE COMPANIES
ACT OF 1862 ON THE 23RD
MARCH,
1866.
Established in Calcutta, 29th September, 1863
Bankers
to
the Government in
Kenya Colony, Africa and Uganda
Subscribed Capital
£4,000,000
Paid-up Capital
£2,000,000
Reserve Fund
£2,500,000
Number of Shareholders
1,835
Head Office:—26, BISH0PSGATE, LONDON, E.C.
2.
BRANCHES
CALCUTTA
KANDY
BOMBAY
NEWERA ELIYA
MADRAS i;
ZANZIBAR
KARACHI
MOMBASA
CAWNPORE
(British
„
NAIROBI
LAHORE
i"y!l
NAKURU
AMRITSAR
East
°0l0ny
Lfrisa
KISUMU
DELHI
ENTEBBE
TUTICORIN
1 Uganda
KAMPALA
COCHIN (S. INDIA)
JINJA
CHITTAGONG
RANGOON
MANDALAY
TANGA
ADEN
DAR-ES-SALAAM
( Tanfn"
)
_
yVfa
I Territory
ADEN POINT
COLOMBO
AGENCIES
GALLE, CEYLON: Messrs. CLARK, SPENCE & CO.
EDINBURGH:
Messrs. MONCREIFF &
GLASGOW: Messrs.
HORSBRUGH, 46 Castle St.
MACKENZIE, ROEfERTON & CO., 176 St. Vincent St
BOARD OF DIRECTORS
ROBERT
CAMPBELL, Esq., Chairman
ROBERT WILLIAMSON, Esq., Deputy-Chairman
Sir JOHN P. HEWETT,
ROBERT MILLER, Esq.
G.C.S.I., K.B.E., C.I.E.
J. N. STUART, Esq.
Sir CHARLES C. McLEOD
J. A.
J. D.
LONDON BANKERS
,
BANK
NATIONAL
TOOMEY, Esq.
NIMMO, Esq.
PROVINCIAL
AND
OF
ENGLAND
UNION
NATIONAL BANK OF
BANK
OF
ENGLAND,
LIMITED
SCOTLAND, LIMITED
The Bank grants Drafts and Telegraphic Transfers on all
places where it is represented: negotiates and collects
Bills of Exchange: undertakes the Purchase or Sale of Indian
Government and other Securities: collects Pay, Pen¬
sions, and generally transacts every description of Eastern Banking business.
The Bank receives Deposits for
fixed periods, not exceeding one year, at rates to be obtained on
application.
The Bank opens Current Accounts, and provided
they do not fall below £200, allows Two per cent per annum
on the
minimum monthly balances.
Interest
OFFICE
HOURS
10
TO
73
3—SATURDAY
10
TO
12.
Banc
o
State Bank of
the Portuguese Colonies
ESTABLISHED 1864
York Agency,
New
Esc.
Capital
Esc.
48,000,000
OFFICE
HEAD
Paid-up Capital
93 Liberty Street
Reserve
Esc*
LISBON
24,000,000
Funds
26,000,000
STATEMENT
;;(V:
December, 1920
for the year ended 31st
;
^
ASSETS
•
Esc. 23,449,494585,5
hand.............
Cash
in
Cash
with
5,174,679*32,2
other
"■
Investments—
Stocks
I—
Escudos..
actual value)—quoted in
(at
^
^ ^
■ ■
quoted in Foreign currencies—
Frs.
2,684,752
)
£
474,265
[
at par of
Lits.
11,359.98
Exchange*
3,243,489*25,5
Esc.
.
........
Current
accounts..........
Current
accounts—agents
....
and correspondents...
bills, etc
....
...
...
.......
municipal loans
........
(Law 27th April, 1901).....
Mortgage and
Predial mortgage loans
Sundry impersonal
Government
treasury
account
(as
Securities (as per contra)
per
....
contra)
......
Bank premises
.........
.....
fittings..;
and
Furniture
Payments made on
:
(as per contra)..
accounts
......
....
account of interim
...
...
—.......
.......
......
receivable....
c
5,934,981*91,5
456,899*85,5
63,365,296*02,4
..J..'
88,437,520*39,9
248,496,368*58
..............
39,522,353*08,5
93,431,433*48,1
—434,993*89,7
...
832,709*81
...
108,976,455*83
.....
14,087,820*31,1
...........
182,652,494*13,4
...
...
2,821,258*07
.
.....
77,992*01,4
.........
981,860*40
-
...
Inland bills discounted
Advances against
.
2,691,492*66
—
Foreign bills
Bills
I
J
400,000
Pts
dividends for 1920 —
Esc.
879,134,611*98,2
LIABILITIES
paid
Capital
up—
'
,
general operations—
For
Portugal and colonies..
.
2,000,000*00
fund for predial operations.
Permanent
Extra
Esc. 18,625,000*00
3,375,000*00
.
Abroad—£750,000
Guarantee
reserve
fund
fund
reserve
Cash
deposits
4,100,000*00
J..__
......
Esc.
......
24,900,000*00
92,573,228*47,9
52,417,392*99,3
294,081,219*18,7
14,742,629*93,1
2,554,514*55,8
15,860,139*88,1
724,843*05,4
108,976,455*83
14,087,820*31,1
182,652,494*13,4
950,863*50
917,307*45
...
........
...
...
Current
accounts.
Current
accounts—agents
Current
accounts—credit balances of loan accounts.
...
and correspondents
Cheques and bills payable..
Head
and
office
.
....
...
......
transit
branches—amounts in
....
Sundry impersonal accounts (as per contra)
Government
treasury account
Securities deposited in guarantee
Obligations four and
Predial
one-half
in
(Law 27th April, 1901), etc...^
...
...
311,122*65
233,091*06,9
7,409*67
42,773,370*25
6,370,709*03,5
...
...
Vales for customs duties...
Notes
custody (as per contra)..
per cent., etc..
.....
Pension fund...
...
......
of advances and-or for safe
colonial obligations six per cent.
Unclaimed dividends...
...
(as per contra)..
....
...
circulation
a...
...
Profit and loss
:
#}
Esc. 879,134,611*98,2
'
BRANCHES
(77 IN ALL,
LOCATED IN)
Paris
Brazil
London
24,000,000*00
_Esc. 20,800,000*00
Ji
.....
deposits
Fixed
...
-
......
.....
Portugal and Adjacent Islands.
Angola
Guinea
East
India
& West Africa
China
Tipior
1
1
NEW YORK AGENCY—93 Liberty
74
St.
THE UNION BANK OF AUSTRALIA, limited
Established 1837
Incorporated 1880
Capital Authorized and Issued
£9,000,000
Paid-up Capital £2,500,000}
Reserve Fund
Reserve
£
~
Together
Liability of Proprietors
*
The
£2,750,000
£5,250,000
£5,000,000
.
Total Capital and Reserves
£10,250,000
Bank has 42 Branches in VICTORIA
38 in
NEW SOUTH WALES
19 in QUEENSLAND
14 in
■
SOUTH AUSTRALIA
■
20 in WESTERN AUSTRALIA
3 in
■
TASMANIA and
46 in NEW ZEALAND
Head Office: 71
Cornhill, LONDON, E. C.
Manager, W. J. Essame
Drafts upon
the Branches
from the Bank's
Cable
are
Assistant Manager, W. A. Laing
issued by the Head Office, and
may
also be obtained
Agents throughout England, Scotland, and Ireland.
and
Local
Address
RABAUER
.
Long
Distance
Telephones—BROAD
.
0416-7-0658-3978-4308
R.
M.
BAUER & CO.
25 BROAD ST., NEW YORK '
United States and Canadian Representatives
of
Anglo-Austrian Bank
WITH
BRANCHES
1
Austria
;
IN
4
..
Jugo-Slovania
Czechoslovakia
-
.
;
Roumania
Hardy & Co. G.m.b.H.
Berlin
We
.
Italy
Solicit
inquiries from
Banks and Financial
institutions in
FOREIGN
Bonds
Exchange
Shares
Currencies
/"
Ltd.
Standard Bank of South Africa,
with
which
is
incorporated
the African Banking
Corporation, Ltd.
HEAD OFFICE
10 CLEMENTS
LONDON, E. C.
LANE, LOMBARD STREET,
7_____________£10,000,000 or $50,000,000
£2,229,165 or $11,145,825
Authorized Capital
Paid-up Capital
Reserve Fund
£2,893,335 or $14,466,675
..£77,913,302 or $389,566,510
-
Total Resources
?
Bankers to the Government
of the
South Africa in the
Union of
Cape Province; to the Imperial
Government in South Africa;
,
and
to
the
Administration of
Rhodesia.
and Agencies
About 450 Branches
throughout
Amsterdam
East
Branches
also
Africa;
and
South
at
Rotterdam,
and
Holland.
W. H. MACINTYRE
AGENT
68 WALL
ST., NEW YORK
representing
Also
The Bank «f New South
with
Bank Premises, Cape
Asia
hundred
and
Wales
thirty-five
(335) Branches throughout Austral¬
asia, Fiji, Papua (New Guinea).
Town, Africa
Banking Corporation
Broadway, New York
Head Office: 35
Francisco: Robert Dollar
San
£
three
Building
An American Bank rendering complete
service for trade with the Orient
%
.
/^|PENS deposit accounts in the Far East, and pays interest on
balances.
4k
Negotiates bills of exchange.
Issues commercial letters of credit.
in the Far East.
imports
and
Supplies
exports.
Issues travelers
Effects settlements
trade
and
credit
Finances
information.
letters of credit.
Your
inquiries
are
invited
Branches in the Far East
Hongkong
Shanghai
Canton
.
Manila
Hankow
Peking
Correspondents in India and throughout the Far
76
Singapore
Tientsin
East
Capital
Surplus and Undivided Profits
$5,000,000.00
$9,000,000.00
INTERNATIONAL BANKING CORPORATION
Owned by the National
HEAD OFFICE:
H. T. S.
San Francisco Office: 232
60
WALL
STREET, NEW YORK
GREEN, President and General Manager.
Montgomery Street
EASTERN
CHINA:
City Bank of New York
London
Canton, Hankow, Harbin, Hongkong, Peking,
JAPAN: Kobe, Yokohama.
INDIA:
EAST
Bishopsgate, E. C.
Shanghai, Tientsin.
PHILIPPINES: Cebu, Manila.
STRAITS SETTLEMENTS:
Bombay, Calcutta, Rangoon.
DUTCH
Office: 36,
BRANCHES
INDIES:
CARIBBEAN
Singapore.
Batavia, Sourabaya.
BRANCHES
REPUBLIC OF PANAMA:
Colon, Panama.
DOMINICAN
San
REPUBLIC:
Pedro
de
Santo
Domingo, Sanchez, San Francisco de
Macorie,
Macoris, Santiago, Puerto Plata, Barahona, Le
Vega.
EUROPEAN
BRANCHES
FRANCE: Lyons.
SPAIN: Barcelona, Madrid
BRANCHES OF THE NATIONAL CITY BANK
OF NEW YORK
in
ARGENTINA
the commercial
BRAZIL
CHILE
CUBA
BELGIUM
centers
PERU
of
URUGUAY
VENEZUELA
PORTO RICO
ENGLAND
.
ITALY
RUSSIA
Commercial and Travelers' Letters of
Credit, Bills of Exchange and Cable Transfers
bought and sold.
Deposits received for fixed periods at rates to be ascertained
on
application.
Chartered Bank of India, Australia and China
Incorporated
by Royal Charter,
1853
Capital (Gold)
$15,000,000.00
Reserve
Fund
$18,000,000.00
Undivided
Profits
$1,048,005.00
Total
Assets
$354,663,720.00
Branches
Philippine
in
China,
Japan,
Islands,
Java,
StraitsSettlements, Indiaand
Burmah, and Agencies in all
the principal cities of
and
Australia.
Europe
Travelers'
Credits issued, available in all
of the world. Foreign
exchange bought and sold.
parts
CALCUTTA OFFICE
Head Office: 38
Bishopsgale, LONDON, ENGLAND
WILLIAM BAXTER, Agent, 44 Beaver
Street, NEW YORK
77
Banking Facilities in
In 80
its
Italy
maintains
extended
to offer a com¬
Cities distributed throughout Italy this bank
branches, which together with widely
own
foreign branches and affiliations enables
mercial banking service of exceptional
us
breadth and com¬
pleteness.
Our New York Agency will be glad to confer with
bankers and customers regarding their extension of activities
abroad.
FOREIGN
BRANCHES
Constantinople
London
New York
AFFILIATED INSTITUTIONS
BOEHMISCHE UNION
(FRANCE):
BANCA COMMERCIALE
ITALIANA
MARSEILLES, NICE, and other important
BANCA
COMMERCIALE ITALIANA
BANCA DELLA
and branches.
cities.
E BULGARA:
ITALIANA:
FRANCAISE
BRUXELLES and
branches.
BANCA COMMERCIALE ITALIANA
BUCHAREST and branches.
BANCA UNGARO
ITALIANA. LUGANO
ANVERSOIS: ANVERS,
CREDIT
SOFIA and branches.
BANQUE
BANK: PRAGUE and branches.
SVIZZERA
ET
DI CREDITO
COMMER¬
CIALE: VIENNA. TRIESTE and branches.
BANCO ITALIANO: LIMA and branches.
BANCO FRANCES DE CHILE: SANTIAGO,
VAL¬
SOClETA
E ROMENA:
BUDAPE8T.
ITALIENNE
ITALIANA
PARAISO.
POUR
L'AMERIOUE DU SUD: PARIS, EUENOS AIRES.
SAO PAULO. RIO de JANEIRO, and other import¬
ant cities in Argentine and Brazil.
BANCO
FRANCES E
DE COLOMBIA
ITALIANO
BOGOTA.
Banca Commercialeltaliana
NEW YORK AGENCY,
Authorized Capital
Capital full paid
62-64WILLIAM STREET
Surplus
$80,000,000
$31,200,000
1
1,286,817,065
62,400,000 Lire=One Dollar
Resources
Five
AqtUS
GUIDO PEDRAZZINI
JOHN STEWART DURLAND
SIRO FUSI
FRANCESCO SAROLI
Head Office,
FRANCO
EDOARDO ROFFI
ERNESTO GAMPER
PERTUSIO
FRANCESCO
RIPANDELLI
MILAN, ITALY
Every Dot
A Branch Office
Of Our
Correspondent
Banca Italiana
di Sconto
With
over
178
3,000
Branch Offices and
authorized Agents and
Correspondents at our disposal,
it is to be expected that maximum
service can be given to Individuals,
Firms, Banks and
doing business
are
Bankers who
with or con¬
template doing business with Italy.
Discount
ms Trust Company
Italian
399
78
BROADWAY NEW
YORK
Foreign Exchange Service
OUR Foreign Draft Service enables banks throughout the United
of the world, and
States
we
are
to
draw their
already taking
care
francs, lire and marks,
Far Eastern
States
as
draft
own
on
any part
of the foreign exchange business in sterling,
well
Scandinavian, Central European and
as
exchange for nearly three hundred banks within the United
and for many
foreign banks and commercial firms,
banks
we can
offer
Correspondence is invited
unsurpassed facilities for this class of business.
with
as
wishing this service.
Capital {fully paid)
$4,000,000
-
-
Surplus and Undivided Profits
-
-
-
-
$625,000
FOREIGN BANKING CORPORATION
56 Wall Street, New
York
OFFICERS
CHARLES A. HOLDER
T. FRED ASPDEN
E.B.MACKENZIE
IRVING V. SCOTT
President
Vice-President
Secretary
Treasurer
IN
SPAIN
Six of its "own branches in
important Spanish cities enable the
Anglo-South American Bank, to offer exceptional facilities for
the prompt
and efficient handling of import and export business
with Spain.
These branches
are
located at:
Madrid
Vigo
Valencia
Barcelona
Bilbao
Seville
Other
Anglo-South American
'Bank, limited
New York
.
Agency, 49 Broadway
79
branches in
Paris
Argentina
Bradford
Chile
Manchester
Peru
Mexico
Hongkong
and
Banking Corporation
Incorporated by Special Ordinance of the Legislative
Council of Hongkong in 1867
Paid
up
Hongkong
Capital,
V
815,000,000
Currency
Sterling Reserve Fund
.
.
£2,500,000
.
Sil verReserveF und .Hongkong
Currency
Reserve
819,500,000
.
.
Liability of Proprietors,
Hongkong Currency
.
.
$15,000,000
.
Deposits 31 Dec., 1920, De¬
mand, Hongkong Currency $337,000,000
Deposits 31 December, 1920,
Fixed, Hongkong Currency $114,000,000
December,
31
Assets
Total
1920, Hongkong Currency $554,000,000
Head Office,
Head
Hongkong
cies
J. A. JEFFREY,
Agent
in
ments,
office in
China,
Street, New York
The Yokohama
34 Branches and Agen¬
India, Java, Straits Settle¬
Philippines and other parts of the Far East;
London,
36 Wall
Hongkong,
Japan,
England;
Lyons,
France; New York and
San Francisco in the United States.
Specie Bank, Ltd.
Yokohama, Japan
Subscribed
Capital, Yen 100,090,000
Reserve Fund, Yen 53,000,000
Capital Paid-up, Yen 100,000,000
BRANCHES AND
AGENCIES AT:
Batavia
Newchwang
Bombay
Buenos Ayres
New York
Calcutta
Peking
Rangoon
,
Osaka
Changchun
Rio de Janeiro
Darien (Dalny)
Fengtien (Mukden) San Francisco
Saigon
Hamburg
Hankow
Seattle
Harbin
Shanghai
Honolulu
Shimonoseki
Hong Kong
Kobe
Singapore
Sourabaya
Sydney
London
Tientsin
Los
Angeles
Lyons
Tokyo
Manila
Tsingtau
Nagasaki
Vladivostoek
Kai Yuan
Tsinanfu
N agoya
London Office:
7, Bishopsgate, London, E.C.2
T. OKUBO, Manager
HEAD
OFFICE:
YOKOHAMA
80
The Bank
of
Taiwan, Ltd.
Incorporated by Special Charter,
Head Office:
1899
TAIPEH, TAIWAN
Capital Subscribed
Yen
60,000,000
Capital Paid Up
Yen
45,000,000
Yen
12,581,000
Reserve and Surplus
KOJURO
........
NAKAGAWA, Esq.,
SHUNROKURO MORI,
President
Esq.,
Vice-President
Directors
TSUNEKICHI IKEDA, Esq.
KUMEMATSU
TADASU
MORINAGA,
GUNJU KAWASAKI, Esq.
Esq.
MASUMI
BRANCHES
ESAKI,
Esq.
DENKICHI TAKITA,
HISAMUNE, Esq.
Esq.
:
JAPAN—Tokyo (General Manager's Office), Kobe, Osaka, Yokohama, Moji.
TAIWAN—Ako, Giran, Kagi, Karenko, Keelung, Makung, Nanto, Pinan, Shinchiku,
Taichu, Tainan, Takow, Tamsui, Toyen.
CHINA—Amoy, Canton, Foochow, Hankow, Kiukiang, Shanghai, Swatow.
OTHERS—Hongkong, London, New York, Singapore, Semarang, Soerabaia, Batavia,
Bombay, Bangkok.
New York Office: 165
MASAJIRO
Broadway
ARAKI, Agent
London Office: 25 Old Broad Street
New
CHASE
NATIONAL
NATIONAL
CITY
BANK
NEW
EQUITABLE TRUST COMPANY
IRVING
Correspondents
TRUST
YORK
HANOVER
NATIONAL BANK
Cable
York
BANKERS
BANK
COMPANY
TRUST
UNION TRUST
BANK OP
NATIONAL
NATIONAL BANK
COMPANY
COMMERCE
BANK OF THE MANHATTAN COMPANY
GUARANTY TRUST COMPANY
Transfers,
:
CENTRAL
COMPANY
FARMERS' LOAN & TRUST COMPANY
and Letters of Credit issued; the Negotiation and
Exchange and other Banking Business transacted through
well as correspondents in all parts of the world; offer ex¬
ceptional facilities for handling transactions in the Far East.
Collection
Bills
of
various
our
Drafts,
of
Branches
as
International Acceptance
The Bank of Chosen
Incorporated
by
Charter
Special
Government,
Capital Subscribed
Capital Paid-Up
Total Resources
Imperial
of
Bank, Inc.
Japanese
1909
.
Yen
80,000,000
Yen
50,000,000
Yen
600,000,000
.
.
.
.
.
.
Pine
31
Street, New York
Conducts Financial Transactions
HEAD
OFFICE
of
International Nature
an
Keijo (Seoul), Chosen (Korea)
Dollar
Governor, S. MINOBE
Deputy Governor, T. KANO
Foreign
Directors
S. OHTA
S.
KATAYAMA
FOREIGN
S.
Acceptance
YOSHIDA
DEPARTMENT:
Parts
S. KAKE*
Bills
TOKYO
spondents and the Bank's general foreign business to be
Exchange
Transfers
Principal Branches:
Mukden,
Dairen,
Newchang, Harbin, Antung.
Negotiated
and
Pyongyang,
PAUL
M.
DANIEL
WARBURG
G.
WING
Vice-Chairman of the Board
Changchun,
F.
ABBOT
GOODHUE
President
Japan: Tokyo, Osaka, Kobe, Shimonoseki.
China:
All
Effected
Chairman of the Board
Manchuria:
On
World
Foreign Exchange Bought and Sold
Drafts
Issued
and
Telegraphic
addressed to the Foreign Department)
(Korea)
Chemulpo,
Wonsan, Pusan, Taiku.
the
Opened
Collected
(All communications relating to the arrangements of corre
Chosen:
of
Opened
Credits
of
Credits
Shanghai, Tsingtao, Tientsin, Tsinan.
Siberia: Vladivostok.
New
York Agency,
Capital and Surplus Subscribed
$15,250,000
165 Broadway
81
SEIDMAN & SEIDMAN
Certified Public Accountants
NEW YORK
CHICAGO
GRAND RAPIDS
NEWARK
Credit Examinations
Periodic Audits
Special Investigations
ROCKFORD
WASHINGTON
JAMESTOWN
lax Investigations
Cost Finding
System Installations
EXAMINATIONS AND SYSTEMS
.V.
*
foY
•••
•••
Banks and Trust
Companies
• •
McARDLE, DJORUP & McARDLE
Accountants and Auditors
FORTY-TWO BROADWAY, NEW YORK CITY
BANK SPECIALISTS
EXAMINATIONS
—Detailed reports
directors' State
Examinations by former Federal and
New York
Banking Department Examiners
with supporting schedules and constructive recommenda¬
tions—Special investigations.
SYSTEMS
;
Modern accounting systems installed in Banks and Trust
Companies—Introducing uniform departmental proofs and
executive and clerical organization—
departments—Segregating earnings and
expenses—Treatment of Reserves and Accruals—Budget System—Centraliza¬
tion of control in Branch Bank Organizations—Organizing internal Audit
Block
System—General
of
survey
Allocating the duties of the various
Department.
TAX SERVICE
*
Federal Income Tax Returns, or re-
PreParat*on
vised
or
amended returns for previous years—Repre¬
senting Banking Institutions in
conjunction with Federal Field [Auditors.
FOREIGN DEPARTMENTS.
'
Commercial
Audit System
Foreign
Exchange,
and
Accounting systems installed in
Foreign
in
Departments
exchange
dealing
arbitrage—Internal
devised for trading and other divisions.
Commercial and Foreign Trade
Audits
Investigations and Audits for Credit Purposes
83
in
Ability to Render Efficient Service
by Experience and Organization
Is Achieved
Nachod & Kuhne has specialized in foreign exchange
and
organization, with responsible connections throughout
the
Since 1852 Knauth,
has
developed
an
world, especially qualified to handle the foreign
ness
We have
draw their
drafts
own
abroad in places
make
rates
on
with
and
or
which banks and bankers as principals can
European countries or remit by money
or
mad,
as
service available promptly we have inaugurated a daily
favorable rates by telephone, tele¬
desired.
Market rates by telephone to nearer points or by tele¬
Closing rates by mail.
graph to more distant points, one or more
Our
times'daily.
telegraph code quotes ten currencies in a ten
K. N.
&
order to payees
without banking facilities.
quotation service and will quote the most
graph
all parts of the
specialized in the transmission of funds to Europe and
world, and have arrangements under
To
transactions of American busi¬
American Banks and American travelers.
men,
K.'s reputation for
word message.
intelligent and accurate service is
world^ wide.
Knauth,Nachod & Kuhne
Public
"';!v
MEMBERS OF THE NEW YORK STOCK EXCHANGE
NEW YORK
Equitable Building
i
Maitland, Coppell & Co.
62 WILLIAM STREET,
ORDERS
EXECUTED
AGENTS
OF
FOR
ALL
CORPORATIONS
NEW YORK
INVESTMENT SECURITIES.
AND
NEGOTIATE AND
ACT AS
ISSUE LOANS
BILLS OF EXCHANGE,
TELEGRAPHIC
LETTERS
The National
OF CREDIT on
Provincial & Union Bank of England, Ltd., London
Messrs.
Paris
Mallet Freres & Cie.,
Banco Nacional de Mexico
AND
ITS
BRANCHES
Agents for the Bank of Australasia, etc.
TRAVELERS'
AVAILABLE
LETTERS
OF
THROUGHOUT THE UNITED
84
CREDIT
STATES
HUTH & CO.
NEW YORK
30 PINE STREET
Foreign Bonds and Investment Securities
Commercial
Credits,
Deposit Accounts
Foreign Exchange
Correspondents of
FRED?
HUTH
CO..
&
London
Merrill, Cox & Corey
COMMERCIAL
31
boston
nassau
PAPER
street
NEW YORK
philadelphia
correspondent
Merrill, Cox & Co.
chicago
st. l
uis
cleveland
portland
atlanta
dallas
san francisco
omaha
losangeles
Merrill, Cox & Co.
COMMERCIAL PAPER
COLLATERAL
CLEVELAND
LOANS
INVESTMENT SECURITIES
ST. LOUIS
DALLAS
PORTLAND
SAN FRANCISCO
76 west monroe street
ATLANTA
LOS ANGELES
OMAHA
CHICAGO
correspondent
BOSTON
MERRILL, COX & COREY
new york
85
PHILADELPHIA
/
MEN AND
j A
x*
REMARKABLE
of-the
banking house
has
He
BUSINESS
By. RICHARD
work has
of
beep
SP1LCAKC
done by
Brooke, Stokes
Income and analyzed the
traffic, the
the
costs
United States ratio of Costs to
.and
income
brought
exactl> the
value hack
of
all
on
the
details
Philip
&
B.
Co.,
of
Fiaher,
of
fifty
one of
Philadelphia.
operation,
or
partners
maintenance,
the
railroaded
the
more of
the
to the
.down
every bond of
these
the
of
railroads.
simplest'form,showing
*
•
*
Mr. Fisher
has
.
a
^particular interest been a railroad
an
in his
Work.
outline—as given
by him.
*<TN 1912
A
we
,
engineers,
as
Here
determined, if
would
possible,
determine, as far as
this
which
bonds. For
dean of
the
man,
was
is an
purpose
college
»
to
his
«
Investigate
went out possible, the
to the.
we
of civil
father before
him;
outline of
what he
*
so
he hAd
did—merely
the-railroads
Relative
value.of
to
a
point
all
railroad
engineering, who University of
inder the
specialized in
close
to the
recommended, six
railroad work.
supervision of a
"At first
recently
We
we used
member of
graduated
started this
•
our
various
force at
firm.
*
sources of
work
who had
Pennsylvania,
.
•
*
mation
based
latter
»
railroad
we^had bee*
working for
were,
*
.
information;
*
*
annual
*
*
reports and
some time
other
sources of
we
found
*
•
unsatisfactory,
different
on
that all of
information.
either
because of
these*
methods of
sources
After
6f infor¬
inaccuracies or
trouble with
accounting in force
because
the
with
were of
they -were
various
little value railroads' annual
railroads. This
for
reports, which,
"We accounting.
although cor¬
threw
away all of
owing to the
source of
the
rect
was
the
enough,
methods of
4
one
information,
commerce
comparative'purposes,
work
diverse
we
had done
and
many
reporta of
We
months
determined to UBe
the
therefore sent a
In
copying these
railroads
only
addition,
man
to-the
reports by
to*
had in
wa»obtained
interstate
hand, as
turn
figures from
they arehiot
who
obtained them
XI. II.
same
spent
way that
published in
Copeland
all-from the
we
V,'
did.
detail.
&#Son, of
commission.
the
,
sworn
Washington,
"Using
which
at
interstate
the{iuterstate
commerce
-
times
Nevir Tor^who
commence
commission in the
reached
eight men
commission's
and .fit
reports as a
tistical steadily for four
other
analysis of
basis, our
times fell
years..
In
force,
as low
During'this time
certain
fifty-one
as. four
we
leading
into the
mAn,
particulars, notably
completed a
railroads,
subject than
the
detailed sta¬
a
covering a
question
worked
*
•
stpdy
any one
and
classification
we
period-of
of
know
ten-years.
of all
had
maintenance, we^went
of
before^ In
1916'this
their
further
work.was
bonds,
addition, we
covering some
Into supervising the
compiled
interrupted, due to
"In
of
firm
government
completed
"As
•ur
it,
thought
railroad
railroads
safety,
work-and
the fact
twelve other
thattbjpisapd^ of issues.
the
Last fall
member of
members of
we
the
the
service.
•
we
keep
that
bonds,
we
but
have
re-commenced
the
we
quotations
we
this
organization
went
work, and
have juat
yields of
all of
only be
these bonds
able to
will also
up to
be able
will not
investigated
\
marketability,.yield
"The heads
of
shown
some of
and
and
date,,it i»
to pick recommend the
out
the ones
purchase of
from all
good
which arei
the issues
the most
of all
other
the
desirable
the
attractive,
factors.
considerable
largest
considering
Important officers
interest, and in financial
and
some
institutions in
one of
prolonged what
instances have
several
Philadelphia have
we
hours. Two
permission to
intended to be
assembled their
send the
New York
ine the
An
most
heads of
work in
interview of
their
institutions have
detail."
minutes
statistical
w/itten
departments to our
asking for
\JO ONE except a
office to
into
«
appreciate
through
so
,It is
If
hot
doubtful
there is
known
ticularly
fully
well.
if he
who.has had
magnitude of the experience
in
job that
Mr.
appreciates
anything so
to one
of the
exam*
person
the
complete
individual
who
statistical data
its
and so
has
relating
a
to
analyzing
properties
Fisher
undertook
worth.
can
and put
detailed
fair
elsewhere-in
knowledge of
America,
securities. railroads,-*and
rAilroad
it is
par¬
Members
140
nth
St.
shingto"
!
t.
Paul 1
ltimore
SECTION
OF
Commercial
THE
Financial Qhronicle.
&
Copyrighted in 1921 according to Act of Congress by WILLIAM B. DANA COMPANY, in office of Librarian of Congress, Washington, D. O.
Vol. 113.
NEW YORK,
the
On
THE
The
Commercial
and
•f 128 pages or more,
CHRONICLE.
Financial
Chronicle
is
newspaper
by telegraph and cable from its
news
own corre¬
spondents relating to the various matters within its scope.
The Chronicle comprises a number of added
Sections
or
Supplements,
periodically, and which form exceedingly valuable adjuncts of the
weekly issues.
*
.
tinent
in Europe the States out¬
are
now
portion of that con¬
taking in hand their own economic
problems and moving gradually but steadily on the
The speeches to
road of rehabilitation.
the conven¬
emphasized the fact that the three years which
The Railway and Industrial Section, issued twice a year, is furnished
have
Chronicle.
The Railway Earnings Section, issued monthly, containing the sworn
of earnings
even
side of the Central and Eastern
tion
without extra charge to every annual subscriber of the
returns
hand, the Committee was hopeful
published in time for the earliest mail every Saturday
morning, with the latest
issued
other
enough to believe that
weekly
a
No. 2940.
OCTOBER 29, 1921
elapsed since the armistice are entirely too
short
a
period in which reasonably to have expected
and expenses, filed each month with the Inter-State
Commerce Commission, is also furnished without extra charge to every an¬
spectacular economic reconstruction after so ruin¬
nual subscriber.
ous
The Electric
without
extra
Railway Section, issued twice
charge
to
a
year,
It
war.
a
is also furnished
annual subscriber of the Commercial
every
and
was
shown
habilitation after other
repeatedly that such re¬
great wars—a rehabilitation
Financial Chronicle.
The
State
and
City Section, issued semi-annually, is also furnished
without extra charge to every subscriber of the
The
Bank
and
Quotation
aished without extra
charge to
within
the
is likewise fur -
subscriber of the Chronicle.
present Bankers' Convention
published from time to time, like
Section.
Chronicle, including all the Supplements, are Ten Dollars
Terms for the
United
States.
Thirteen
postage) in Europe, and Eleven and
WILLIAM
DANA
B.
Pine
Front,
and
a
a
whose
(which
Half Dollars
and
Depeyster
now a
includes
getting fairly under way.
sons,
especially, is more than could have been
Our
country's progress on the road to nor¬
own
Publishers,
Streets,
New
mal
York.
conditions
was
Association.
complete
index
the
to
advertisements
appearing
in
of the Bankers' Convention Section will
present issue
be found on pages
impressively set forth in the
Survey submitted by the President of the
Mr. Drum's
INDEX TO ADVERTISEMENTS
A
Judged by such compari¬
confidently prophesied even in November, 1918.
Economic
the
matter of familiar history
what has been achieved already, by England
and France
Half Dollars in Canada.
COMPANY,
completion is
—occupied much longer than three years in even
Section, issued monthly,
every
Besides these Supplements, others are
the
Chronicle.
general conclusions were,
first, that "the world is recovering from the most
serious
and
89 and 90.
social up¬
far-reaching economic and
heaval in modern times" and that "the
most essen
tial element in the restoration of stable
is
THE SPIRIT OF THE BANKERS' CONVENTION
.
The strong impression on the mind of those who
attended the American Bankers' Convention at Los
Angeles,
or
who have read the speeches and reports
made before that
soned
convention, is the prevalence of rea¬
hopefulness regarding not only our own coun¬
try's economic situation, but regarding that of the
world at
the
large.
This note was distinctly struck in
report of the Economic Policy
which Paul
Committee, of
Warburg was Chairman.
In our own
country, this review declared, "there is every reason
to
believe that when
images have been readjusted and
normal balance is re-established between industries
and between
uew
career
nations,
of
our
country will enter upon a
prosperity and advancement."
So
Commit¬
troubles will be eradi¬
plain were these indications that, in the
tee's
opinion, "most of our
cated
more
quickly and cured more thoroughly if
economic laws
ments
are
are
allowed free play" and no experi¬
made "to
cure
by legislative action."
all existing economic evils
conditions
time"; but, second, that "the United States is eco
nomically
so
interdependent with the rest of the
permanent pros
world that it cannot have full and
perity without world prosperity," and that, "while
in the restoration
time is the most essential element
of
normal
men
and
of
operation of nat¬
working toward readjustment
conditions, it lies within the power
governments to assist the
ural economic forces
from their path."
buying power
which, along with the excessive use of credit,
brought on the great reaction of 3920, has been
cured, in the view of this Economic Survey, by the
fact that "surplus stocks have been reduced gradu¬
ally throughout the year and replacements have be¬
come increasingly necessary"; also by the fact that
"progressive decline in the cost of manufacturing
has taken place."
In industry as a whole, "the costs
of materials, labor and construction have declined."
In other words, "we are setting our house in order
and approaching the day when restoration of norma]
consuming power shall carry with it a return of
by removing artificial obstructions
The
great excess of production over
BANKERS'
88
production, normal consumption and full
normal
All this leads to the deduc¬
employment of labor."
tion that "if we face conditions as
consider
they are, if we
situation in the light of sound funda¬
our
laws, if we realize that our prob¬
mental economic
lems
CONVENTION.
but the natural and necessary results
are
the
world-wide disturbances attendant upon
of the
war,
if
recognize that time, after all, is the greatest
we
healer,
.
.
then we need not fear the future, but
.
face it confidently, and may be sure that it
may
holds
difficulties that
no
cannot overcome."
we
Perhaps no other conclusion was more positively
emphasized by the convention than the spirit of opti¬
mism which
prevails,
after the long and trying
even
peri od of business reaction, throughout the middle and
western
was
portion of the United States.
That attitude
visibly growing, even at a time when Eastern
markets
were
in the grip of
financial apprehension.
Possibly the relatively more rapid revival of hope
and courage
in the West was explainable by the fact
recently critical problems of foreign trade
that the
foreign finance were problems which presented
themselves to the minds of Eastern
rather than
and
Western bankers.
Nevertheless, the existence of this distinctly hope¬
sentiment, in banking communities which have
ful
so
lately been confronted with the fall of prices in
agricultural commodities, almost below cost
many
of
production, and which have had to face the prob¬
"frozen Credits"
lem of
as
a
result of absolute in¬
ability of such producers to pay their long-extended
The radical change
debts, is of high significance.
in attitude
by the South, as soon as recovery of cot¬
ton from its low midsummer
period
recuperation, longer
of
or
nomically
powerful
more
world's trade
than
ever
before, the
larger than ever before, and prosper¬
ity and accumulated wealth greater than e\rer
be¬
giving theories or arguments,
facts Avith which every one of you
In this I am not
fore.
but Avell-known
is familiar.
"These
older
ruin rested
prophecies of permanent economic
fallacies—first, that trade could
two
on
remain permanently in a state of paralysis when one
community was able to produce something which an¬
community Avished to purchase; second, that
other
principal could ever be paid on
neither interest nor
unprecedently large war debt because the taxes
and revenues of the pre-war period had been insuf¬
an
ficient to pay
it.England A\ras declared to be on the
times and by her
road to economic ruin half a dozen
economic writers,
own
Avars
during the century of costly
and
which ended with the Battle of Waterloo,
which raised the British
public debt from £50,000,-
The total Federal revenue of
the United States in the fiscal year before the war
was not one-third of what was required solely for
000
to
£800,000,000.
interest
on
the
public debt when the war was over.
"Nobody in 1861 would have admitted the possi¬
'
i
the
after
that
shorter, as the case might be, even the belligerent
nations turned out to have become richer and eco¬
price had made possible
bility of the American people, without impoverish¬
ing themselves in the process, paying aggregate an¬
nual taxes twelve times greater than they then Avere.
But the American people did it and the loAA^est sum
to which the annual tax revenue ever got after the
Civil War
France
Avas
was
more
than
times within the compass
not
seven
times that of 1861.
declared to be economically
ruined three
of two centuries.
She had
only been depleted of men and treasure, by the
eventually disastrous campaigns of Louis XIV, of
Napoleon, and of the Franco-Prussian War, on all
three occasions she lost, like Germany, great por¬
liquidation of the old crop holdings without com¬
tions of her national domain.
plete demoralization of the market, is as typical
casions she had to pay an
of
section's
that
feeling
a^
the optimism
of the
West.
Perhaps the most hopeful note of all came from
the
for
really notable address of Alexander D. Noyes,
so
York
many years
"Evening Post," but
"First
as
to
precisely such
mism about the
are
connected with the
capacity.
Mr. Noyes
not
perspective.
It is no se¬
history that there has always been
period of despondency and pessi¬
future after every other great Avar.
a
hearing to-day the first prediction of a
ruined and bankrupt
means
now
similar
historical
cret to readers of
We
a
analogy from the past, saying:
an
world, and this is not by any
the first time that
even
the economists have
But the
predictions have never heretofore come true.
On
the contrary, it is the strange testimony of history
proved that the war could not be paid for.
was
as
by the Keynses of that day as the German indemnity
is asserted to be to-day.
But the economic history of
France after 1720 and 1815 and 1871 is an open book
to all of us."
the Financial Editor of the New
New York "Times" in
drew
which
On the tAvo later oc¬
indemnity to the enemy
positively declared impossible to pay
'The annual comrentions of the American Bankers'
Association—with their comparison of
Avho form
but
of
opinion, not
on
vieAvs by men
the basis of vague hopes,
tangible realities—always give accurate re¬
flection of the real trend of American
ment
can
expert judg¬
regarding the present and future of the Ameri¬
financial and business situation.
Thus consid¬
ered, the Los Angeles Convention Avas altogether a
reassuring event.
It
Avas
not less so in its recogni¬
tion that the slow and deliberate pace
financial
recovery
for return to
of the present
is itself the surest preparation
fundamentally sound conditions.
Index
Ad
to
ertisements
Page.
Page.
AKRON, OHIO.
41
37
& Co
18
85
,
Securities Sales Co
41
Hunter-Dulin & Co
Co
86
B.) & Co., Inc..
Merrill, Cox & Co__
85
Otis & Co
Staats (William
41
13
COLORADO SPRINGS, COLO.
Asia
41
MEXICO
Otis & Co
Canadian Bank of Commerce
41
Mexico City Banking Co.
85
Banca Commerciale Italiana.
41
MINNEAPOLIS, MINN.
Hathaway, Smith, Folds & Co
18
Lane, Piper & Jaffray
41
Otis & Co
DENVER, COLO.
Leach
Boettcher, Porter & Co
.-.it-
32
MILAN,
DAYTON, OHIO.
51
BAYONNE, N. J.
18
Otis & Co
Birmingham Trust & Savings Co
41
m±
____
38
Securities Sales Co_
__1
_
37
Childs (C. F.)
BOSTON, MASS.
& Co
Ames
Nova Scotia
66
Goodwin
30
& Co
4
Sanger
Fisk
Sachs
21
/
&
224
Co.
58
Kidder, Peabody & Co
FORT
'
2
Merrill, Cox & Corey.
85
National Shawmut Bank
GRAND
& Co
41
&
Hutzler
7
Stone & Webster..
N.
31
31
Pour
N.
71
(A.
Camden
Safe
224
A
Asia
N. J.
32
Co
Estabrook & Co
Hartford Aetna National Bank..
—
American
Ames
(A. E.)
Protective
&
Credit
Service
Bank
of
Becker
Banking Corporation.
Bond
&
Corn
Ames
(Harvey)
36
—
___
Holtz
Hornblower
Follds
&
74
81
29
Jugoslavia, Ltd.
31
23
17
Bank of Nova Scotia
N. J.
...
66
Bank of Taiwan, Ltd
^
81
Bank of United States
;
..
22
Bauer
81
(R. M.)i & Co—
Becker (A. G.)
75
& Co
44
Bernhard, Scholle & Co.Outside Back Cover
LISBON, PORTUGAL.
Nacional
11
71
Barney (Chas. D.) & Co
29
Banque Beige Pour l'Etranger
Ultramarino
74
LONDON, ENGLAND.
Boissevain & Co
26
Good win..
&
Brown
—
Brothers & Co
Canadian Bank of Commerce
78
Chartered
Bank of
Bank of Taiwan, Ltd
Nova
Scotia
66
81
Bank
of
India,
62
Australia
China
Childs
Brown, Shipley & Co
4
Coal
14
Clark, Dodge & Co
Chartered
Bank
of
India,
62
Australia
China
&
Hallgarten & Co
Higginson & Co.
(Fred 'k)
Weeks
20
International
45
Jarvis
Leach
13
Bank.,
Burr
27
59
....
Trust
Co
22
—
Converse (A. D.) & Co
30
Corn Exchange Bank.
48
65
Curtis
21
5
2
& Co.
&
8
National
67
...
Dominion Securities Corporation
Huth
Coffin
Iron
Columbia
77
Dominion Bank
&
&
77
(C. F.) & Co
6
Canadian Bank of Commerce.
30
4
79
19
30
Bankers Trust Co
Jugoslavia, Ltd
18
& Co., Inc
78
...
Ultramarino
Bank of
CITY,
Commercial Trust Co. of New
Jersey.__
First National Bank
King, Hoagland & Co
(A. B.)
____219
Bank'of Manhattan Co.
44
Co./
& Co___
&
Nacional
Banca
37
JERSEY
45
_
Smith,
(H. T.)
76
Bank
5
Hanchett Bond Co
79
Banking Corporation
Banca Commerciale Italiana.
224
Goldman, Sachs & Co..
i
Bank of Chosen
Securities Sales Co
45
& Sons
31
61
Banca Commerciale Italiana
Firfct National Bank
21
Hallgarten & Co
Hathaway,
Asia
Baring Brothers & Co.
Elston, Allyn & Co
Fisk
219
Anglo-South American
Cover
.
Service
...
14
Back
34
& Co......
Anglo-South American Bank.
76
;
(A. E.)
30
'_
F.) & Co
Sanger
Credit
66
Inside
&
&
44
Exchange National Bank,
Curtis
Protective
American Trust Co..
Bond
& Co
Goodwin.
Childs (C.
28
-
Transport Co
Associated Bankers Corporation
61
Nova Scotia
(A. G.)
—
Corporation
.219
Hongkong & Shanghai Banking Corp'n. 80
Banco
& Co
& Co.__
American
Corporation
38
ILL.
37
,
NEW YORK CITY.
Aldred
60
CUBA.
39
Co
32
ORLEANS, LA.
American Fuel Oil &
HAVANA,
Bank of Chosen
Bank
CHICAGO,
/
58
.
KOREA.
&
NEW
76
76
CHATTANOOGA, TENN.
Caldwell
58
8
Securities Sales Co..
Bank of
Banking Corporation
National
-
HARTFORD, CONN.
JUGOSLAVIA.
Hamilton
38
BEDFORD, MASS.
National Newark & Essex
Banking Co..
CHINA.
218
CANTON, CHINA.
Asia
Co
Clark, Dodge & Co.
66
HANKOW,
Banking Corporation
13
Deposit & Trust
Trust
38
NEWARK, N. J.
JACKSONVILLE, FLA.
B.) & Co., Inc
CAMDEN,
Central
__
Estabrook & Co.
42
Bank of Nova Scotia
Y.
(Harvey) & Sons.
Leach
&
NEW
HOUSTON, TEXAS.
BELGIUlil.
l'Etranger
BUFFALO,
Fisk
Caldwell
36
HALIFAX, NOVA SCOTIA.
Asia
Kings County Trust Co
BRUSSELS,
Bank
RAPIDS, MICH.
HONGKONG, CHINA.
Y.
First National Bank.
Beige
MORRISTOWN, N. J.
Morristown Trust Co
222
...
BROOKLYN,
Banque
68
68
NASHVILLE, TENN.
Michigan Trust Co
59
Bros.
68
29
WORTH, TEX.
Fort Worth National
13
Lee, Higginson & Co
Salomon
J
68
42
6
Leach (A. B.) & Co., Inc
s
...
Wheelwright (M. S.) & Co., Ltd
42
58
...
International Trust Co
Oti
61
68
Wood, Gundy & Co
13
41
Union Trust Co
18
__
20
Co
B.) & Co., Inc
& Co
19
Hornblower & Weeks
&
(A. E.)
Royal Bank of Canada
20
Wayne County & Home Savings Bank._
58
-
Hathaway, Smith, Folds & Co.
Hotchkin
18
Molsons Bank (The)
43
Otis & Co
59
(Harvey) & Sons.
Goldman,
& Co., Inc..
14
_
Burr
&
78
Merchants Bank of Canada.,
14
Harris, Small & Lawson
Leach (A.
Bank of
ITALY.
Dominion Securities Corporation
Hornblower & Weeks
Bond
...
MONTREAL, CANADA.
DETROIT, MICH.
37
Caldwell & Co.
(A. B.)
35
Hathaway, Smith, Folds & Co
BIRMINGHAM, ALA.
Curtis
71
Merrill, Cox & Co
13
__
Mechanics Trust Co
Estabrook & Co_
61
,
18
50
Deposit & Trust Co
&
74
CITY, MEXICO.
Hathaway, Smith, Folds & Co
^
National Union Bank of
Maryland
Coffin
Banking Corporation
COLUMBUS, OHIO.
DALLAS, TEXAS.
50
F.) & Co
SB
MANILA, P. I.
49
__
Maryland Trust Co
Bros.
34
_
30
;
_
Leach (A. B.) & Co., Inc
Brown
R.) Co
36
Fidelity Trust Co
Childs (C.
IB
8B
LOUISVILLE, KY.
Fidelity & Columbia Trust Co
51
.,
Continental Trust Co..
&
SB
Merrill, Cox & Co
18
Leach (A.
Otis & Co
Brooke, Stokes & Co
Converse (A. D.) & Co.
44
Co
50
•.
Commercial Credit Co
G.) Sc Co
Goldman, Sachs &
CLEVELAND, OHIO.
37
BALTIMORE, MD.
Safe
Becker (A.
Hathaway, Smith, Folds Sc
ATLANTA, GA.
Fourth National Bank
Baltimore Trust Co
ANGELES, CAL.
28
26
Hathaway, Smith, Folds
LOS
Dominick Sc Dominick
Otis & Co
AMSTERDAM, HOLLAND.
Pierson & Co
Merrill, Cox & Co
Pag*.
CINCINNATI, OHIO.
Otis & Co
L_
85
Banking Corporation
&
Sanger
Discount
Corporation of* New York
Doherty (Henry L.)
77
Dominion
64
(Aemilius) & Co..
& Co
Dominick & Dominick
Dunham
—
Bank
&
1
.
16
28
67
Co
29
Lloyds Bank, Ltd
70
Empire Trust Co..
18
Mercantile Bank of India, Ltd.
72
Estabrook & Co
88
44
Merchants Bank of Canada
68
Ewen
Merrill, Cox & Co
85
National Bank of India, Ltd
73
Farlee (J. S.)
Peabody, Houghteling & Co..
30
National
Lee,
Higginson
Leland
(E.
F.)
&
Co.
2
& Co.
Salomon Bros. & Hutzler
7
Sanderson & Porter
221
Scott & Stitt__
Stone & Webster
----
...
Wilsey (R. E.) & Co
44
222
46
Bank of South
Africa, Ltd
Standard
Bank of
South Africa, Ltd
Fedde
&
Pasley
Finch
&
Tarbell
—
__
76
Fisk
Goldman, Sachs & Co
Hallgarten & Co
80
Hartshorne
(Harvey)
&
15
—
21
..219
68
Wood, Gundy & Co
Specie Bank
71
75
Bank of Australia
Yokohama
& Co
63
Royal Bank of Canada
Union
(Wm. Carnegie).
& Sons
Battelle
28
.224
19
6
24
INDEX
90
ADVERTISEMENTS—
TO
Page.
Page.
Page.
Smith, Folds & Co
Hathaway,
Hongkong &
Weeks
& Co
--
—
Co..
Import Trading
69
-
81
77
Bank..
International Banking Corporation
International Acceptance
Irving
19
National Bank...
Italian
78
Co——
Discount & Trust
27
25
6
84
3
13
2
C.) & Co.
Kerr (C.
& Co
Kidder (A. M.)
-.
Peabody & Co...
Kidder,
Kuhne
Knauth, Nachod &
Langley (W. C.) & Co..
Inc..
Leach (A. B.) & Co.,
Lee, Higginson
..
& Co
...
44
& Co..
Leland (£. F.)
26
84
22
Lincoln Trust Co
Maitland, Coppell &
Co
Meehan (M. J.) & Co
.
28
Megargel (R. C.) & Co
...
McArdle, Djorup & McArdJe.
83
18
...
& Co
McMillin (Emerson)
—:
72
12
68
Mercantile Bank of India
J
Mercantile Trust Co.
Merchants' Bank of Canada
85
20
21
Merrill, Cox & Corey...
Metropolitan Trust Co
(John) & Co
Munroe
Africa, Ltd...... 71
National Bank of South
9
Co
New York Trust
41
79
Otis & Co
Park-Union
Foreign Banking Corp
Peabody, Houghteling
Qulncey (Chas. E.) &
& Co
30
.....
27
Co...
Royal Bank of Canada..
63
Hutzler
7
221
Salomon Bros. &
Sanderson & Porter
Bodine, Sons & Co..
Boles
&
&
Brooke, Stokes & Co
Brown
Brothers & Co
Coffin
&
1
25
24
& Co
Soich (R. A.) & Co
10.
Co.
Speyer
Standard Bank of
South Africa, Ltd... 76
First
National Bank.
_
57
Fisk
(Harvey) & Sons
_•
—
55
—222
.220
Bank of Canada......... 67
Exchange National Bank..
26
Union
Union
Co
& Trust Co.... 24
United States Mortgage
23
States Trust Co..
United
White
.
Corp
J. G.) Management Corp
(The J. G.) Engineering
White (The
Winslow, Lanier & Co.....
Wood, Gundy & Co
.
.
223
223
.224
68
National Bank
Fourth Street
Sachs & Co
55
Park Union Foreign
Co
...
85
Insurances on
Lives, &c............Inside Front Cover
Philadelphia Trust Co....—........... 57
Merrill, Cox & Corey.
52
Real Estate Title Insurance & Trust Co. 54
Reilly, Brock & Co
56
Real Estate Trust Co.......
Salomon Bros. &
VA.
Bank
;
PITTSBURGH,
Bank of
&
Leach
(A.
•
•
*
& Co., Inc
Hunter, Dulin & Co..,
Plainfield Trust Co...
&
Hornblower & Weeks
Canadian
OMAHA,
35
__
Munroe
& Co..
Hunter, Dulin & Co..
Staats (William
11
PASSAIC, N.
PATERSON,
Paterson National Bank
34
Hathaway, Smith,
Leach (A. B.)
Liberty
MO.
Co....
._
__
Folds & Co..
& Co., Inc....
Merrill, Cox & Co.
National Bank of
„
Lane, Piper &
33
Hunter, Dulin &
SAN
....
;
38
19
18
13
41
41
85
Commerce..40
& Co
DIEGO,
41
CAL.
64
68
C<!>
UTICA,
Citizens Trust
Y.
N.
61
Co
Brooke, Stokes &
D. C.
Co...
..
...
Co
Washington Loan &
Trust Co..
WINNIPEG,
W.
..
86
48
48
VA.
38
Co..
CANADA.
of Canada
...
...
Wood, Gundy & Co
67
68
WINSTON-SALEM, N. C.
Wachovia Bank & Trust
WORCESTER,
Worcester
Yokohama
Co
...
39
MASS.
Bank & Trust Co
YOKOHAMA,
PAUL, MINN.
Co........
69
Imperial Bank of Canada..
Jarvis (Aemilius) & Co —
...
...
60
JAPAN.
Specie Bank, Ltd
...
...
80
YOUNGSTOWN, OHIO.
Jaffray
33
N. J.
Securities Co
Housser, Wood
Union Bank
44
62
67
65
61
of Commerce
WHEELING,
Central Trust Co
ST.
J.
Scotia..,
Dominion Bank
VA.
McCluney & Co.
...
...
Passaic Trust & Safe Deposit
...
.......
Co.....
...
-_1........ 35
_
R.) Co
61
66
& Co
(A. E.)
WASHINGTON,
Caldwell & Co
PASADENA, CAL.
Ames
CANADA.
& .Co.-..--... 18
35
21
TORONTO,
Hathaway, Smith, Folds
Becker (A. G.) &
...
41
Otis & Co
Wheeling Bank & Trust
85
......
OHIO.
TOLEDO,
37
LOUIS,
76
Corporation
Asia Banking
National Bank
...
.
81
Ltd
Bank of Taiwan,
Munsey Trust
RICHMOND,
61
JAPAN.
58
20
59
ST.
FRANCE.
TAIWAN,
62
18
85
...
Goldman, Sachs & Co
PARIS,
N. Y.
National Bank
Salt Springs
R. I.
Estabrook & Co..
wi-.-
Bankers Trust Co
....
...
...
PROVIDENCE,
NEB.
Bank
National
SYRACUSE,
Wood, Gundy &
Folds & Co..
Hathaway, Smith,
American
Merrill, Cox & Co.
Omaha
ORE.
Bank of Commerce
Merrill, Cox & Co
60
Springfield National Bank
Dominion
59
20
Burr.
PORTLAND,
58
Estabrook & Co
Canadian Bank
-.33
.....
PORTLAND, ME.
Coffin
MASS.
SPRINGFIELD,
Bank of Nova
N. J.
National Bank of Commerce...
CAL.
.
13
47
i
PLAINFIELD,
76
Corporation..
Asia Banking
18
Union Trust Co
.
OAKLAND,
46
14
46
Smith, Folds & Co
Bj
SHANGHAI, CHINA.
TIENTSIN, CHINA.
Co—'1
National Bank.
Hathaway,
76
Corporation. - -—-- -
Asia Banking
PA.
Pittsburgh, N. A
ilds (C. F.)
National Bank of Commerce. — ......... 39 ! r' •"'•■/«
' V; ':-vV
/ - C".v«-~ £' -V:."-:.
,
7
1
55
B.) & Co
Third National
Banking Corp
SINGAPORE, CHINA.
.....__
Hutxler
Smith (Edward
—.
Smith, Folds & Co
Hathaway,
for
Co.
Hornblower & Weeks...i
NORFOLK,
18
56
13
32
Co
Co., Inc
Leach (A. B.) &
44
62
19
18
79
G.) & Co....
Becker (A.
Goldman,
Smith, Folds & Co
Pennsylvania
WASH.
SEATTLE,
19
54
Harper & Turner
Land Title & Trust
18
Folds & Co
Hathaway, Smith,
Bank of Commerce
& Safe Deposit Co
Guarantee Trust
&
36
PA.
SCRANTON,
Canadian
Goldman, Sachs & Co../*
McCown
BARBARA, CAL.
Dulin & Co
Inside Front Cover
Girard Trust Co
Hathaway,
of Commerce
SANTA
Hunter,
224
Stone & Webster.......
Underwood Typewriter
54
Fidelity Trust Co
First
& Co..
....
(A. D.) & Co
Converse
25
82
Smithers (F. S.)
...
Burr..
Commercial Trust Co
C
Smith (Edward B.)
53
30
86
4
59
53
30
Goodwin
26
Seidman & Seidman..
...
Westwood
Bond
National Bank
Seaboard
22
56
& Co
Barney (Chas. D.)
Co
Schall (Wm.) &
76
PA.
PHILADELPHIA,
—
Dulin & Co
Canadian Bank
Corporation.
Asia Banking
& Co.
(A. G.)
Hunter,
PEKIN, CHINA.
20
85
44
65
62
Goldman, Sachs & Co
1®
Hathaway, Smith, Folds & Co.
18
International Banking Corporation
77
Merrill, Cox & Co...
85
Park Union Foreign Banking Corp
79
Sanderson & Porter
-221
San Francisco Savings & Loan Society.. 34
Staats (William R.) Co
34
Becker
21
& Co
Munroe
Shanghai Banking Corp.. 80
Hornblower &
Huth
18
.
& Co-_.._..-._ 17
Heidelbach, Ickelheimer
FRANCISCO, CAL.
SAN
FRANCE.
PAU,
ZURICH,
-
35
...
Otis & Co...
Banque
41
-
SWITZERLAND.
Guyerzeller
..
...
....
70
American Bankers' Association
47th Annual
Convention, Held at Los Angeles, Calif., Oct. 4
INDEX
CONVENTION
TO
Our Part in the World's Commerce, *F. O. Watts
91
...Page
--
:!
To-day—A
John S. Drum--
-
international
The Deficits,
ter
Report of General Counsel
98
Report of the Commerce and Marine Commission
Bond
...
Debased
Report of Committee
Page 109
-
Public
Opinion
Can
Credit and
Railroad
Restore
Prosperity, Wm. Sproule.-
——
Address of Welcome
.
Report of Committee of Five
on
Par Check Collections
-.-Page 187
Page 125
Report of State Secretaries
-..-.Page 140
Page 141
..Page 141
Section-
products which
tious.
In
tional
late
the
International Trade.
of Officers..--Page 141
are
the great interna-
not only carriers of the trade but
are
comparatively small population,
iish
the Dutch.
or
their
colonies
by
and
nation with
a
for example,
as
These people are not only
of commodities but in
A great vol-
commerce.
thus be controlled
may
a
the Eng-
manufacturers
larger way they also secure, through
a
from
other
surplus
producing nations,
products of all kinds, which they distribute in the markets
of
the
world.
considerable
A
is due
merce
part of
fact that they
the
to
their
trading
on a
large scale.
agencies,
a
coin-
The fundamental
These consist of exporting houses
,
or roore trading countries.
.
basis of all international
...
trade is rela-
,.
.
♦
goods
This
to surround
nations may
among
for
cations.
,
goods
is simple
it.
between
barter
basis for trade
two
place,
particular
and involves
no
Or, in the second place, there
nered or multiple trade.
its
The
be, in the first
That is,
one
an
between
may
be three-cormay pay
imports by sending products to the first country.
example,
we
turn,
export
analysis,
of food
our
to
manufactured
years
have
supply of
raw
These European nations, in
world,
such
are
paid for by
In
final
our exports
paid for
the
products which Europe sends to Brazil.
In
are
so
changed.
endowed
Few countries
by nature with
in
the
such a rich
materials as has the United States.
Our ex-
ports, therefore, during the early history of the country, con-
were
Brazil.
of the United States during the past
greatly
has
largely
to
trade
been
which
We
by
fifty
world
sisted
Europe and these in turn
manufactured
The foreign
For
Brazil.
products
imports of coffee
for
.
export food
import coffee from
products to European nations.
Early Period.
or
exchange of
great compli-
country
Exports of the United States in the
of
some
trading! nations,
very
~
TT
„
Character
...
tively simple, notwithstanding the mystery with which
attempt
the
for international
merchant marine, and especially the essen-
tial financial organization.
,
foreign
have developed all
business organizations which are necessary
and
trade may arise
basis of international
That is, the accumulated capital of the older countries is
often invested in the newer nations. This capital, in mot*
ing between nations, under normal conditions, takes the
*01'm
goods and is not gold as is commonly supposed,
After these investments of capital are once made In a coun
try, the interest on them may also be paid in the form of
goods or exports of food or raw products from-the new country to the old. The European nations have invested laige
amounts of capital in the South American countries. Investments in railroads and other private or government securities of these South American countries have been made
through exports to them of railroad rails and equipment of
various kinds. International trade cannot be understood
by thinking simpry of the particular debtor and creditor,
*)l]st roust be approached from the point of view of the total
exchanges which are made between the peoples of the two
times, however,
exchanged in this world
trade
a
produced by the people of other na-
modern
trading nations
of
ume
place,
through the investments of one nation in another nation,
they also produce, either directly or indirectly, commodities
which
third
Financial Delega¬
.
chiefly the
traders carried
international
were
Meeting at London, June, 1921.
the International Chamber of Commerce
of
Page 141
—
Report of Nominating Committee—Election
By F. O. Watts, President of the First National Bank in St. Louis, and Chairman of the American
The Nature
189
-.Page 140
World's Commerce
the
Our Part in
In ancient times
-..-----Page 188
Resolutions.-.--
on
Report of American Institute of Banking
Report of Executive Council and Administrative Committee.Page 126
tion to
-----Page 187
Report of State Bank Division.
Page 124
Annual Report of the Executive Manager
.... —
....
Report of The Savings Bank Division...
-.Page 124
;
Page 186
Report of Trust Company Division
Page 123
.....
Response to Address of Welcome..
Page 134
...
Report of Protective Committee and Protective Department.Page
..Page 121
-
State Legislation..
Report of the Committee
Public
,
...
on
-
Report of the Insurance Committee
---Page 118
—
Page 189
Page 183
Report of the National Bank Division
-Page 116
Economic Intelligence in Public Opinion, Dr. Henry T. Suzzallo
Federal Legislation...
Public Education
Report of the Public Relations Commission
Currencies and Shattered Credit of
Europe—Cause and Effect, Francis W. Hirst.
on
on
Report of Committee
Scheme, Sir
_
-.Page 181
Report of Committee
.--Page 102
Meulen
Page 129
95
—
Credits—The
Drummond Fraser
Page 128
—i
-----Page
Country-wide Economic Survey,
—
..Page 127
—
Report of the Agricultural Commission..
Page
.
..
Our Free Country, Judge Charles F. Moore
Our Situation
PROCEEDINGS.
Report of the Economic Policy Commission
Readjustment after the War—Past and Prospective, Alex¬
ander D. Noyes
1\ 1921.
to
of
sold
as
raw
to
products,
the
In
the last forty
regions of the
or
materials
to be
raw
used
in
nations of the world,
years
our
including food, decreased from
mestic
fobd commodities,
populated
Europe,
the great manufacturing
either
densely
expbrts of crude materials,
a
total
of 84% of
exports in 1880 to about 50% in 1920.
our
do-
Much of this
BANKERS'
92
CONVENTION.
growth
population in the United States a larger portion of our
food production is required for our native population, notwithstandingfthat during these decades there had been an
enormous increase in the production of food supplies.
The
three-fold increase in our manufactured
products since
of
1880 represents an
astounding development of the manu¬
facturing industry
in the nation during a
comparatively
contributed to this
progress, as for example, the abundant supply of crude ma¬
terials used in the manufacturing industry, the efficient
railway system of the country which has permitted the car¬
rying of raw materials long distances at low costs, as well
as the highly developed technical ability of our business
organization, including a very efficient labor supply.
The foreign commerce of the United States, during this
earlier period, required a very simple organization, both
with respect to the exporting agencies as well as the finan¬
A number of factors have
short period.
cial
which in a large way sold them¬
necessities and hence do not
These commodities are
selves.
primarily
products which we had to sell were
food and crude materials
competition which is encountered when a
the keen
meet
This was largely due to the
connected with it.
ones
fact that the
country sells its
There is, for ex¬
manufactured products.
with re¬
spect to wheat as compared with a manufactured product.
Simple food commodities and crude materials differ less *n
grade and quality than do manufactured products.
Not¬
opportunity for debate and higgling
ample, less
have been
withstanding this character of our exports, we
making commendable progress during
in
Our
machines, typewriters, and
foreign markets.
manufactured goods in
selling
sewing
machinery,
harvesting
the past thirty years
commodities have been success¬
various other manufactured
similar products from other
which have been responsible for ex¬
fully sold in competition with
The firms,
nations.
ploiting the foreign markets for these
products, have set a
marketing for other firms.
standard for successful foreign
Stimulus
War
The
the fact that with the enormous
decrease is due to
period, for demand was great
war
thus able
were
on
such large profits.
of
means
industrial prosperity is much greater
trade
dependent upon the existence of this export trade and
is idle
to suppose
for the sake of argument,
If,
domestic business is
would
follow
not
continue at this
should
sells
would assume that the
we
90% and the foreign business 10%, it
domestic
the
that
still
would
business
Not only is a particular business which
its products
of
part
trade.
90% volume if the 10% of foreign business
disappear.
a
it
that the United States can be generally
by relying exclusively upon this internal
prosperous
of
than the percentage
A considerable part of our domestic
would indicate.
but
business is 7% or 18% of our domestic
significance of it from the standpoint
business the real
is
There is no
proportion is,
this
what
exactly
knowing
whether our export
abroad dependent
upon
brought unfortunate results to many
Many of our people had not
traders.
of our foreign
affected by the existence of a
cultural
of
ence
much
means
of
a
as
market abroad
a
an
for
manufactured
In
sents what
and
many
those
engaged in
quantity production.
increased
abroad,
the
case
of the sale abroad
of
repre¬
In most
volume
of
cases,
manufactured prod¬
decreasing cost
goods,
a
part
of
so
which
that with
are
sold
there is a lower unit cost of production which Is
shared
States has,
a
manufacturing
in
might be called that surplus product of the in¬
ucts follow the economic law of
ing
the
especially
instances,
the part
which makes possible the economies of large scale
dustry
often
products inas¬
increased demand for farm products on
manufactured articles, that part
an
the exist¬
foreign market for these manufactured goods
workers
the
food products, the agri¬
be greatly affected by
industry would
business.
or
foreign market for prod¬
Even though we exported no
ucts.
in
by
the
domestic
consumer.
The
United
for several decades, been in process of develop¬
surplus
productive power
which
was
during the war period on an enormous scale.
together with the
European countries,
the
in
credit
price revolution, has
demonstrated
had
conduct foreign trade skillfully un¬
sufficient experience to
conditions that prevailed during
der the abnormal
the post¬
The net result, in the case
of many
transition period.
banking organizations, has been un¬
firms and international
favorable, and it is to be
regretted that we have had to
into such a short period of
condense so much experience
deterrent effect upon main¬
time, since it is likely to have a
traders
of some
Because
unfortunate experiences we
tending to lose some of the advantages
are
stated, that the principles
tion of
underlying foreign trade are the
underlying domestic trade, yet the
those
as
same
which we should
While it may be true, as is often
expected to retain.
have
international
expected to hold all
could not reasonably have
we
trade.
this
interest in foreign trade
Even if we were skillful
foreign banking.
and
proper
the
taining and creating
States.
in
.
The Effect of the War Upon
world's
Europe.
situation is in
and what organizations
the foreign markets
on
part to secure our proper
our
in
conditions
The
commerce.
understand what the
must clearly
we
commerce,
necessary
our
these
well
as
the productive
situation in
the financial and banking
Europe, before the
must be appreciated.
countries,
was our
war,
as
65% of our
best customer, taking more than
exports, and there is not reason
nent, with her dense
share of
market—
chief
Europe—both in respect to the industries or
forces,
role in the
States is to assume its proper
are
this
applica¬
kind of de¬
can come only from experience and
a large degree by great numbers in
principles requires a specialized
these
If the United
to suppose that this.conti¬
population and her highly developed
industrial
organization will not in good time and season
again be
great source of demand and
a
supply for commodi¬
ties of all kinds.
But
this
foreign trade for its prosperity, but even other industries
are
disorganization of banking
armistice, the general
domestic trade. These
7% to 18%.
estimates run all the way from
and particularly
the latter stages of the war,
During
since the
war
in this foreign
business men and bankers to engage
trade which promised
and
to
There was thus enormous pressure
relatively little effort.
both
able to
Many individuals
sell in foreign markets with
commodities.
supply vitally necessary
firms
and price was, in many
It was largely a question of being
object.
cases, no
and
during the
organization or skill to sell the products
usual
made as to the proportion
Numerous estimates have been
of supply for commodities of
period. This trade required no un¬
all kinds during the war
the United
which our foreign trade bears to our
to such a
respects that our country became
large extent the single source
this is not possessed
Trade to Domestic Trade.
Foreign
of
of
It is unfortu¬
during the past six years.
the United States
some
volume
nation a? has been the case
of world trade come to a
tailed knowledge which
Relation
international
wonderful opportunity and such a
trade has such a
nate in
Trade.
Foreign
Our
to
of the development of
Never in the history
as
a
result of
the war,
her industries
for
and financial institutions,
products has been
Europe falling
with its unprecedented de¬
capital and the disorganization
struction of accumulated
from
of
Europe's demand
exports to
seriously reduced, -our
the pre-war average of
65% to 54%
1920.
in
Normal replacements
be
made during
and extensions in industry
the war,
ope's industrial machine is but a shadow
Revolutionary
and other
that was needed for reconstruction
ings, which normally flow into
voured by
military activities.
period
armistice.
of hostilities
Transportation
close of the war,
purposes.
This occurred not only dur¬
but
has
systems
continued since the
everywhere
casualties, disease, and undernourishment, but
International
well.
and
inexperienced
when
Current sav¬
capital equipment,- w^re de¬
Labor has suffered not only
of disrepair.
state
of its former self.
destructive activities have been
absorbing much of the energy, since the
ing the
could not
Eur¬
with the result that to-day
boundaries have
are
in morale a»
New
been changed.
Governments have appeared jat a
conditions were
in a
from war
unpropitious for them.
time
As a conae-
93
SECTION.
BANKING
quehce of the multiplicity of unfavorable factors, the mech-
tional trade, their gold equivalent alone is the significant
anism of international trade has been so disrupted that it is
factor in so far as the maintenance of their nominal parity
scarcely able to function in those places where its ma-
now
countries
The
of
industrial
Europe whose
has
machine
A nation with
is concerned.
balance
a
indebtedness
of
against it, and burdened with a depreciated currency, is in
chinery is needed most and where it was most perfected.
position to maintain gold payments.
no
The inflation of the
handicapped
currencies of all the late belligerent nations has added a
only by a lack of capital and ability to command raw
factor in the exchange situation of equal importance to the
reached
not
the
point of greatest stagnation
materials, but by
are
still greater handicap,
a
in which to dispose
a
lack of markets
of the goods which they could produce,
balance of indebtedness under which the nations are strug-
The currency disorders will prevent a return to par
gling.
of the largest part of the popu-
of exchange as long as the inflated condition exists, regard-
lation of Europe is so depleted that it is a sub-normal con-
less of whether the exchange of goods for goods strikes a
The effective buying power
It lacks the ability to
sumer.
ucts of its
countries of Europe be
of indebtedness would not bring the exchanges back to par,
supplied with goods, but credit also
unless the inflated currencies were also rectified, or the cur-
must be advanced in order that payment
be made by
for the goods may
rencies of other nations inflated in proportion to their own.
Currency inflation in most European nations has been
the consumers and the wheels of industry set
It must not be forgotten that in the last analy-
in motion.
sis goods are
Even the overcoming of the present balance
balance or not.
Not only must the impoverished
industry.
own
utilize effectively the prod-
produced only in answer to a demand on the
part of consumers, and the power to consume is predicated
The volume of trade
growing at an ever-increasing rate.
has not kept pace with this tremendous increase in circu-
lating media.
Under such conditions, it is hardly to be ex-
To bridge this gap in Europe,
pected that the currency of these countries should command
long-time credits must be advanced to cover the period un-
the same purchasing power in the markets of the world that
upon
til
tl^e power to produce.
Europe's power to
Temporarily,
ing
satisfactory method for deferring payment for the
a
commodities Europe wants and needs,
The
her
exceeds
consume
produce. / The trade problem is thus one of find-
power to
of
balance
is gold.
is
great at present
so
trade
This method is obviously impossible at
furthermore,
and
favor
ideal deferred payment for settling
The
balances
present,
our
but cannot pay for.
method of settling balances is no longer
that the customary
practical.
in
trade
from many points
of view.
would
be unsatisfactory
to
us
When the prom-
ise is not kept, a discount on the paper currency necessarily
which varies with the expectation of redemption,
arises,
Obviously, the quantity of paper money outstanding will be
a
prime factor influencing the exchange rate of the inflated
currency
in the internatinoal market,
We still hear much complaint regarding the effect of the
present exchange situation on the American exporter. The
regard to production costs, as a result of the exchange situa-
It
is
merely
the
most
Gold merely transfers the power to command
ment in lieu of
In ultimate
analysis production costs are a price and cannot long re-
gold, which will accomplish this, will be just
main abnormal due to a "high" or a "low" rate of exchange,
The only really important issue to be met
No particular rate of exchange can permanently hold any
that the method of payment ultimately de-
assurrance
will command in
upon
tion, are not as important as is often assumed.
Any arrange-
satisfactory.
cided
Paper money will remain at par with gold only so long as
the promise to redeem on demand is kept.
advantages that apparently accrue to certain countries with
/
goods and commodities at some future date.
an
is but a promise to pay standard or basic money,
Ultimately goods and commodities must square
makeshift.
is
money
satisfactory
settlement.
the account.
as
Their paper
standard, and their money is irredeemable.
While gold is the ideal deferred
payment, it is, nevertheless, a deferred payment and not an
ultimate
All have ceased to maintain the gold
they formerly did.
industrial momentum is acquired.
an
the future an equivalent ex-
advantage, since in the last analysis foreign trade must be
an
exchange of equivalent values.
The real difficulty, so
far as exchange rates are concerned, is not their particular
change value for the present unpaid balances.
level, but their fluctuating and uncertain value from day to
The Effect
Depreciated Exchanges and Inflation.
of
problem is not what to do but how to do it
The
of
means
re-establishing trade between
economic basis is what
is required.
In the past two years
i.*
*
*
^
^
^
i.
j«
*
a,
,
With better knowledge and understanding of the real
conditions in other countries, stability In the exchanges will
develop naturally and all handicap of this nature will disappear.
explanations have been given to account for the
numerous
But the exchange problem is only one of the many prob-
suffer-
lems of world commerce which have resulted from the war.
Among the first of these has been the depreciation of
the exchanges.
To overcome this, a system of barter was
devised ; that is, an exchange
of goods for goods direct on a
This plan was seriously attempted in numer-
large scale.
ous
The
the nations on an
difficulties from which international trade has been
ing.
u
,
day.
instances, but practical experience has shown that the
results of this method
were
negative.
failure of this plan is quite obvious.
The reason for the
Countries with
a
de-
predated exchange have no goods of which to dispose.
If
they had such a surplus, their exchanges would not be de-
So interdependent has the economic and industrial organization of the world become and so interlocked is the prosper-
ity and welfare of the nations that no one or several nations together can find a solution for these difficulties,
These problems require the co-operation bf the business
men
of all the nations, and for this reason such an organ-
ization as.the International Chamber of Commerce is to be
welcomed and encouraged.
At the recent meeting in Lon-
don of this body, business men and bankers from the lead-
preciated, or if they were, they would not long remain be-
ing nations of the world assembled to consider these inter-
low
national, industrial and financial questions.
A depreciated exchange is no
par.
when
goods are available
for export.
serious handicap
What is lost
by
a
The action of
this organization, as expressed in part by its resolutions,
depreciated exchange in buying abroad is gained in selling,
should command the support of business and financial men.
As
This organization does not confine itself to resolutions, but
the
problem has been stated, "Trade, after all, is but
a
perfected system of barter, in which money serves as a term
through the, appointment of working committees in each of
of
the nations, co-operation of the governments, and other busi-
comparison."
While
factor
Europe's adverse balance of trade is
in
the
responsible for the present chaotic condition of
governed
excess
would
by
of
by
the
exports
pie princi-
"balance
over
of
imports,
trade"—that
vice
or
is
versa.
A nation with
a
depreciated
will suffer from an adverse rate of exchange,
though its foreign trade is in balance.
The International Chamber of Commerce is thus becoming not only
a
great international clearing house for the
It
but it is also becoming the chief source of activity for car-
cur-
even
It must be remem-
bered that so far as money units are concerned in interna-
organizations is secured for putting into practical op-
most constructive plans for world industrial rehabilitation
"balance of indebtedness" and the conditions
of each nation's currency.
ness
eration plans for international (bo-operation in commerce,
an
probably be truer to say that the rates are governed
the total
rency
dominant
Exchange rates are often said to
pal European exchanges.
be
a
exchange situation, that factor alone is not
rying out these industrial and economic reforms.
It does
this without political influence by the creation of proper
international public opinion and co-operation on these ques-
tions of international importance.
Among the most significant actions of the London Coqgress was
the appointment of active working committees to
BANKERS'
94
debts, reparation pay¬
of inter-allied
the questions
study
ments, and foreign exchange, with the purpose
of suggest¬
questions and
ing the most feasible plans for settling these
Meulen
This is the most promising
plan of. international credits.
of Europe
method of restoring some of the weaker countries
industry, since it affords a method of granting
normal
problem
long-term credits, which is in reality the Crux of the
Bankers' Association is fortunate to have
The American
of
Chairman
Committee present,
this
Drummomd
Sir
Eraser, the distinguished English banker and business man,
The Future Outlook fob Oub Foreign
United
for
outlook
future
States
is,
in
perhaps,
particularly encouraging,
Commerce.
the
not
foreign
commerce
nevertheless, there can
but,
be
question as to the large part which our country must
no
We have developed an enor¬
play in the world's commerce.
producing
surplus
mous
tured goods,
and
especially of manufac¬
capacity,
must develop all the machinery neces¬
we
sell successfully our products in the great markets
sary to
We have passed
of the world.
from
have accumulated
We
nation.
debtor to a creditor
a
stock of gold.
abnormal
an
therefore, be willing to buy as well as to sell, and
We must,
the most careful consideration should be
given to the com¬
policy of our Federal Goverment as it affects for¬
mercial
and
tariff
The
question
United
the
in
States has
unfortu¬
nately been subjected for many years to the biased consid¬
eration of political
commercial
most
business
or
or
should
the
have
industry
was
all
could,
important
perhaps, afford the luxury or inconsistency of almost any
kind
of
a
illogical
tariff
which
system
itself
in
which
but
might not only have
also
been
radical and fre¬
was
quently changed with every change in political party domi¬
But
nance.
of
our
have reached that stage in the development
we
varied
affected the fundamental basis of for¬
This has enormously
These nations do not have at present any large
countries.
to buy
They have no gold with which
of
They owe the United States this large sum
imports.
It would
money.
which
therefore, that the basis upon
seem,
proceed to resurrect our export trade wdth
can
we
be
In the first place, before there
exchange of goods between the United States and
an
must be imported into
in
credits
order
If
she can
be necessary for
banking and investment
industries, and especially in the case of our
It must
take into consideration
the
advantageously produce everything which it consumes.
must have a market for our
We
rapidly increasing surplus pro¬
our
in
the tendency manifest in our foreign
prior to 1914.
Even before the war our exports of
change
no
trade
manufactured
products had
made
trade
imperative
in
ucts
tion
competition
trade
a
But, of outstanding importance is the necessity for
some
a
tariff policy which will continue in operation for
sooner
during the past quarter
adjusted itself to
radically different
was
ing business to the
one
of
(Century had no
a
tariff act when another
enacted and the
process
If
heavily indebted to
sell
to
us
we
goods in
one
of readjust¬
the changing
corollary to
character of our
Not only were we faced with
but
in
also
instances by a
many
credit organization sup¬
ported by powerful financial interests, closely allied
and
in some
The effects of the war
with their Governments.
instances
the normal development of our foreign trade was un¬
in
some
respects
in
that
governmental credits placed
basis.
With
selves at
temporary necessities
this trade on a favored
return of peace conditions we now
a
find our¬
disadvantage through the lack of a wide
a
knowl¬
For every
thousand
The American exporter
the
war
of
domestic
raw
goods in their
transactions
when
only be met satisfactorily through an intimate
can
knowledge of the foreign trade methods of different coun¬
As long as we continue to treat
could not
relatively small.
can
banks
render
can
work
valuable assistance in
the
Ameri¬
essential
that must be carried on in this country.
sev¬
educational
Every banker should have a working knowledge of the
We cannot
be
obtained
war, our
elsewhere.
ciples of over-seas financing and
prin¬
the best methods of co¬
operating with foreign banks.
Federal
our
a
a
were
capital
large volume of European capital
securities.
But
the
war
Keserve
One of the most important
investments abroad
We had for many years been
absorbing market and
in
this trade as unim¬
portant, great improvement is not likely to develop.
con¬
products, manufacturing, whole¬
de¬
This
tariff policy that we did when almost 90%
Up to the period of the
invested
to the apparently
situation
markets,
new
are
sales to foreign countries were made up of raw ma¬
terials which
In addition
to him.
it is
our
saling and jobbing transactions, which result.
same
who received his training during
period now finds in vogue methods that in many
veloping both in respect to price and terms of credit.
$1,000 of export business there results
dollars
is es¬
sential in the development of foreign trade.
now
volume of domestic business, dependent upon
sideration is taken of
was
a
instances
imports and exports, is far greater than the statistics indi¬
our
exporting primarily
specialized sales competition, aided by foreign Governments,
tries.
The actual
of
were
changed methods of financing he finds keen competition
markets.
follow the
we
In addition to the sales problem there de¬
cur¬
idle to expect an active and large sale of our
eral
who had at
subsidized sales organiza¬
deliberately
by prohibitive duties the ability of those nations
cate.
of mer¬
This vacillating
conditions began.
new
and illogical policy must be stopped.
tail
of our foreign
methods
edge of the habits and customs of other nations that
time.
Business
our
situation radically different from our
a
problem when
products.
raw
upon
devising
This gradual change
those of foreigners
with
faced with
were
former
in
changes
disposal a highly trained,
fortunate
either cannot produce at all, or cannot economically pro¬
place of equal im¬
a
American manufacturers, selling their prod¬
chandising.
duction, especially that of our factories, and we can very
duce.
reached
which had been taking place in the character
their
relief
determining with respect to
appear as
The war acted as a stimulus, but pro¬
foreign trade.
duced
advantageously exchange those products for others which
we
large part of
period since the close of the war brought into
The
as
States is not and does not and cannot
only
marine—and,
ing must, in final analysis, be an exchange in
financing problem.
time.
not
'products.
trade
some
\ means
trade—merchant
veloped
fact that the United
This
recognition that successful international trad¬
above all, a
iff
policy which can be placed in operation and remain in
world's commerce it
organization but also export agen¬
carrying
adequate
products
these
to develop machinery and acquire
us
experience to conduct this trade.
cies,
secure
to secure our share of the
are
we
that
of goods for export.
and create a surplus
will
Europe mujSt be granted long-
her factories.
set, to work
term
nations, raw products
Europe by which she will be able to
manufactures, when we must devise a more consistent tar¬
effect for
States and the European
the United
between
trade
eign
portance with that of raw materials.
business men.
in the earlier days, when the extrac¬
products
raw
which
question
unprejudiced study from
The United States,
tive
It is essentially a
party organization.
of gold,
billions of dollars.
have loaned Europe many
finally
certain factors that
eign trade.
We have
trade, that is, an excess of exports over imports.
purchased back securities, imported large amounts
Europe, or between Europe and other
of
the immediate present,
the
absorbed ft
We have had a favorable balance of
large amount of gold.
can
The
in addition
investments and
our
Europe is relatively simple.
explain the detailed working of the ter Meulen plan.
to
back
bought
supplies, we
With our exports of food and war
condition.
surplus of goods for export.
rehabilitation.
of international industrial
the
Not
of the world.
thus do the least injury to the commerce
of less importance was the endorsement of the ter
to
CONVENTION.
changed this
of
development
merce
the
is
our
our
greater
as
agencies now existing for the
world
participation in
unified Federal Reserye Banking System
amendments made to
known
System.
the
the original act, especially
Edge and Webb-Pomerene laws.
'
com¬
with
those
BANKING
Even American bankers scarcely
of this
appreciate the strength
system as it has demonstrated itself during the war
period.
great commercial nation.1
any
those most familiar with the
litical
criticism.
test
applied
to it
No
workings of the Reserve banks
banking system ever had such a
economic
that of
as
Federal
our
System
Reserve
and
-iidly acquitted
such
is
safe
is
a
It
to
in
Whatever
latter
and
The
hold
But it
both
of banking.
banking,
foreign
must be made if we are to se¬
foreign banking system, for no nation can do a
our
international
foreign
business and depend upon the
trading
banks of other great
international trading nations for their
We are in position to
banking and trade service.
it
be to some of our people, the
may now
Progress in the realm of human efforts is
policy.
a
however justified
and
was,
social and
forefathers the po¬
our
of events has made necessary the abandonment of
larger comprehension of the possibilities for human
but a
service, whether considered from the viewpoint of idealism
ethical
from the viewpoint of
or
or
business considerations.
these larger possibilities come larger obligations and
With
The people of the United States have con
greater duties.
much
tributed
share of the world commerce.
our
Edge Banking Corporation should be perfected as a
basis of
great
of
that
connection,
where further development
cure
defects have ap¬
domestic and foreign system
our
the
minor
the basis of experience.
on
that it will in all essentials stand
predict
basis of
is
itself.
be corrected
can
isolation
to
have been, and however appealing on sentK
mental grounds
progress
peared
attractive
this policy may
•luring the war, and in all important assentials it has spleri-
world power, political,
a
However
economic.
recent
States is
The United
credit to its managers, though little sympathy is given by
to
banking machinery equal to that of
develop international
too close to this period to give full
We are yet
95
SECTION.
world civilization
to
in ideals and techno¬
logical advances during the past century, and
this splendid
because of
history of the past, it is safe to assert that our
people will not default in their present and future obliga¬
tions
human
to
to
adherence
because of
progress
narrow
a
and selfish
gospel of restricted nationalism.
a
Readjustment After the War—Past and Prospective
New York "Times."
By Alexander d. Noyes, Fin ancial Editor,
Readjustment after the
might almost say
one
war
is
a
pretty broad subject;
utterly intangible subject.
an
It is a
question, however, into which all other economic questions
of the day are
The
merged.
experience
of the past year
taught us that it is not a problem of the former Euro¬
has
pean
belligerents alone, and not a problem of Europe alone;
the vital question
but
mind is
it presents itself to the finapcial
as
readjustment, the rehabilitation, the economic
the
of
reconstruction
those
half dozen
nations
European
whom fell the full shock and strain of
on
the four years' con¬
Certainly no more difficult and baffling problem
has been
presented tg the financial mind in at least a century.
In¬
It is literally true that never in all the
have
history
such
on
a
irredeemable
scale
as
floating debts been so great, that never
the currency of so many
has
taneously
so
currencies been inflated
to-day, that never have government defi¬
cits and government
powerful nations been simul¬
far depreciated in terms of gold, and that never
history, therefore, lias the problem of restoration
in
tional credit, resumption
of international
of gold payments and the bringing
In some respects, opinion on the
of economic rehabilitation is more doubtful and
question
pessimistic
now
the armistice.
"ruined
than at any moment since the signing of
We began again last summer
Europe," of
a
to hear talk of
no
chinery of 1800 seemed
ferent that I
discussing the subject.
am
business
of the European situation, as
vision
They
which
seem
economic
element
cannot
the
forest
because
of the trees.
only the misreading of
to embody not
to me
but the misunderstanding of the human
history,
in
see
I see it, are distorted by the
the ignoring of certain
economic progress and
perfectly well-known facts in the European finance of this
very
past year.
There is no banker and no business man
who does not realize that the world
the
stands to-day at one of
great turning-points of economic history.
confusion of 1914 it was a frequent saying
which
the
would
same
emerge
world
as
Even in the
that the world
from the huge conflict would not be
with
made
all, 1913 and 1912 appear almost as remote from
present-day economic situation and economic problems
the
1890
as
But
1873.
or
recognition that it
world which would emerge
how
or
business world as
the
succession of utterly mistaken beliefs and er¬
marked by a
I need only mention the belief, which
predictions.
powerfully influenced the markets when peace negotiations
discussed in 1915 and 1916,
were
be demoralized
would
trade
that the American grain
by the huge mass of accumu¬
lated wheat which would move out from Russia to the out¬
side world
as
the blockade of the Dardanelles was
as
soon
lifted, and that European labor at starvation wages, lower
the
than
pre-war
level, would be turned into competitive
the armies were disbanded, driving
as
soon
mistaken
predictions of war-time be¬
the misconception of the
cause
facts which then existed did
views
and
stop with the ending of the war.
history
complete and disastrous an illusion
so
economic
situation
fully shared by
based
on
that
our own
that
Asia and
nitely
as
of 1919, an
business community, and which was
limit to the rise
enormously increased trade with Eur¬
an
South
America would be conducted
the basis of those prices and
on
regarding an
illusion which was
the assumption that there was no
of prices and
ope,
We have no assur¬
P§i;haps there was never in
that it has stopped now.
ance
I mention these
producers out of the market.
mistaken
not
as
of
a
indefi¬
preposterous
inflation of credit at American banks.
The
very
and
country
much
its
banking interests know now, and
to their cost, how
completely the whole situa¬
But if the business community
was
totally wrong in its view of the
misjudged in 1919.
wrhen
be
everyone
provoked and the character of the
can
we
Possibly the
has
prevailed
foreseeing that economic
had known it would
we
look
first campaigns made absolutely certain.
changed economic
a
In those respects the war period was
adapt itself to them.
roneous
be
from the great war by no means
of what the new conditions would
assumed foreknowledge
be
would
altered world politically, the man¬
business community was slower in
began that to most of us, when we think of the
since the war
was
in which the war was
History has been
rapidity during the seven years
tion
That it would be a vastly
very
such amazing
that which had suddenly been precipi¬
tated into it.
ner
Everybody knows to-day that the ex¬
of 1865.
men
of
of 1860 to the American
pectation has been absolutely fulfilled.
American
These judgments
the finan¬
far away, belonging
to the European business men
1815 and the financial machinery
that they can
personally hold an opihion altogether dif¬
It is because I
sweeping
completely to another economic era, as the financial ma¬
as
production
hope of Europe's economic reconstruction.
equally
to the conviction that when peace should return,
A good many
"bankrupt world."
serious financiers have gone so far as to say
see
of na¬
exchange to a normal basis been apparently
impossible of solution.
so
a
paper
world's
an
cial machinery of 1913 would seem as
deed, we may go much further back in such unpleasant com¬
parisons.
with
.Nevertheless, thoughtful financiers even then held
change.
matter at
flict.
confronted
be
would
conditions
(ientlemen:
As
a
sure
wras
that the almost
more
world's economic out¬
optimistic two years ago,
how
unqualified pessimism that
recently has any better justification?
plain matter of fact, it has seemed to me
that the judg-
CONVENTION.
BANKERS'
of
ment
the situation
which
like the judgment which
finds
now
voice
generally,
so
then expressed, is character-
was
ized by absence both of historical perspective and
Into
the
First
as
of
ers
forces which
make
to historical
history that
of insight
perspective.
there has
It is
precisely such
always been
ter every other
We are not hearing to-day the
gre^t war.
first prediction of a ruined and bankrupt world, and
not
by
the first time that
means
any
have proved
that the
predictions have
could not be paid for.
war
heretofore
never
But the
On the con-
true.
come
this is
the economists
even
by the people?
The one
would
been de-
have
the sober financial
the other by
as
It is a common remark, by those who take the wholly
secret to read-
no
paid
judgment of July, 1914.
economic progress.
period of despondency and pessimism about the future af-
a
ally
Glared as impossible
pessimistic view of the situation, that the lately belligerent
European states have as yet made little serious effort and
real headway toward getting out of the deplorable
no
eco-
nomic situation in which they were left at the return of
peace.
The continuing public deficits, the continuing cur(notably in Central Europe), and the
inflation
rency
ex-
treme depreciation at which those currencies now stand
on
the foreign exchange market are pointed to
proof of
as
Now as regards this argument,
trary, It is the strange testimony of history that after the
the assertion.
period of recuperation, longer
first remember that the similar period after the ending of
be,
even
richer^
the belligerent nations turned out to have become
and
economically
world's
the
trade
and accumulated
I
not
am
shorter, as the case might
or
powerful
more
larger than
than
wealth greater than ever before.
giving theories
In this
arguments, but well-known facts
or
with which every one of you
two
in
a
fallacies—first, that trade could remain permanently
state
produce
of
paralysis when
something
which
community
one
another
be paid
on
the taxes and
sufficient
to
it.
pay
to economic
road
economic
ended
England
ruin half
a
the
Battle
before
the
war
1861
the American
be
to
times and
signs
were
discouraging
more
the
on
by her own
gold
any progress
whatever,
1815 before the Bank of England
payments and its
notes
were
quoted
It was fourteen years after the ending of
the American Civil War before the resumption of specie
payments.
Not only had our irredeemable paper currency
heen inflated further during that interval, but a strong
political party was opposing any further return to gold
wars
The
of
what
was
the public debt
one-third
when
the war
would
have
admitted
paying aggregate
process,
required
was
1861.
France
times
within
More than four years after the surrender of Lee
values.
the American dollar was openly quoted at a depreciation
14 per cent, greater than in April of 1865, and a wild speculation for the fall in the dollar and for the rise in every-
was
annual taxes
men
campaigns of
Franco-Prussian
like
twelve
times that of
seven
two
She had
not
and treasure, by the eventually
Louis
War,
centuries.
on
XIV,
all
of Napoleon
of
and
three occasions she lost,
Germany, great portionsl of her national domain.
the two later occasions she had to pay an
enemy
which
On
indemnity to the
positively declared impossible to
was as
pay
quite
Because
an
an
of
aware
danger of historical
unprecedented economic
burden
bearable fifty or one hundred years ago,
sarily follow that
fold greater will be bearable today.
breaking point.
a
Germany
analogy,
proved to
it does not
similar burden ten-fold
a
or
a
be
neces-.
hundred-
Somewhere there may
nearly
was
century in
a
re-
covering from the Thirty Years' War, and the downfall of
the Roman
Empire
was
such results are impossible.
across
the
one
last
one case
exceedingly
creased
burdens
after
every
which
War
debts
this
of
of
in a concrete way,
be done to put economic Europe on its feet, what,
*iad
anything, has been done in the three years since the armistice, and what remains to be done.
three outstanding
The
problems of belligerent
Europe
The
deficits had to be removed, the terrific
adverse balances of foreign trade had to be reversed, and
enormous public
the wholly unheard-of inflation of the paper currencies had
somehow to be corrected.
Has anything been done already
in these essential ta^ks?
The question of public deficits
has been touched as a rule very ineffectively.
a
England is
notable exception, for whereas in the fiscal year ending
we
ask why the results
last March her Exchequer reported a
interesting fact in
ental
been
But we do not need to rest on this
Let us inquire what,
that
the
and
war
producing
the
even
the
on
history
than
power
the
shoulders
of
the
power,
tax-paying
faster
piled
the
in-
huge
of
pro-
surplus revenue of
applied to redemption of debt.
Europe
presents a
But Contin-
distinctly unfavorable show of
It has yet to begin to grapple1 with the problem,
progress.
In the matter of foreign trade, the history of the period
since the armistice has been peculiar.
a good part of
During 1919 and
1920, the dislocation of Europe's producing
industries and shortage of supplies led to such imports of
very
latest
previously
heaped up by the
rate
mination of hostilities?
consideration.
1230,000,d00,
great
had
from
far greater war in less than three years after the ter-
with March, 1919, her excess of public expenditure over
Indeed, I do not know why
than
our despair at the absence of spectacular recovery
a
Public revenue was £1,690,000.000, in the fiscal year ending
an
gressive nations.
back
turn of peace, may it not be that we are unreasonable in
in-
But if
power
after the re¬
were postponed for seven and fourteen years
and not in the other, we shall come
century—namely,
wealth-accumulating
economic recovery from a great war
We cannot therefore say that
followed by six centuries of
dustrially paralyzed Europe.
followed in the
prestige, the
future career of unexampled financial
mere preliminaries of
when it emerged from war were plain to everybody.
open book to all of us.
the
England and the United States, each destined at the time
to a
But the economic history of France after 1720
and 1815 and 1871 is
am
My point is simply that if in the case of two such nations
as
by
the Keynses of that day as the German indemnity is asserted
to be today.
long remembered as Black Friday of 1869.
times
declared to be economically ruined three
the compass of
in Germany, ended in the collapse which the markets
possibility of
to which the annual tax revenue ever
sum
only been depleted of
disastrous
the
But the American people did
got after the Civil War was more than
the
was seven years after
again at par.
people, without impoverishing themselves in
it and the lowest
be
the outward
and
than they had been in 1919, it was human nature for the
which
greater than they then were.
I
Few if any watchers of the sit-
thing else, exactly similar to what has lately been happen-
Nobody in
the
eon-
Yet surely we have no right to overlook the fact that it
over.
the
same
Waterloo, and which raised the
of
not
was
solely for interest on
the
financial community to despair of
of the United States in the fiscal year
revenue
elapsed
had resumed
public debt from £50,000,000 to £800,000,000.
total Federal
precisely
nation expected Europe to get on its economic feet in the
because
declared
was
dozen
to
We are an impatient people, and nowhere more so than
in matters of high finance.
period had been in-
pre-war
open
to
principal could
nor
writers, during the century of costly
with
British
of the
revenues
wished
large war debt
unprecedently
an
was
wars
tention.
to
able
was
community
purchase; second, that neither interest
ever
great
must
first year after the German surrender, but when three years
is familiar.
These older prophecies Qf permanent economic ruin rested
on
all
and prosperity
before,
ever
before,
ever
we
we
war
to
find
inconceivable
go
the
any
accumulation
of
public debt
in
further
explanation,
magnitude
belligerent European States.
ceivable than the rate of increase
need to
any
the tax
were
But
more
revenue
was
inconactu-
foreign products that the foreign trade even of England
showed
in the calendar year 1919 an excess of imports
amounting to £662,000,000, as against
maximum
France
1920.
£783,000,000 at the
of war time and only £134,000,000 in 1913.
even
increased its import balance during 1919 and
But in the case of that nation
a
very
extraordinary
BANKING
change has occurred in the present year.
six months of 1920
risen'to
in
the
so
huge
sum
13,900,000,000 francs,
not
occurred in
not been
some
down
the
trade
with
There
matter
indemnity.
duplicated by
them
still
was
import
the United
remains
the
war
which
on
that the attention of
to
currencies.
In
base
conclusions.
It
present day.
because
been
a
is at
At
at
this
the
Whether because of
of
and
war
the
notorious sinner in this
least
even
the end of
the
war
paper
000,000
since
July
of
1914.
From
that
17,000,000,000
of
irredeemable paper money circulating in
November, 1918, the
German
has
currency
500,000,000 marks,
subsequently
been
nearly five times
or
Certainly it is not to be wondered
1914 and that the mark has fallen
market to
The
paper
present market.
that
prices in Ger¬
at
the
on
foreign exchange
should
hundredths of
one
of
the
at
last
to
devote
traveling
Here
circulation
to
a
carrying the
and it has
year,
than
the
out¬
largest
total
the wildest days
In
presses.
Russia
traveler literally
paper
not
in
is not
It
I have
the
figure the
the
been
the
one
way
in
has
world
it is
so
It leads
of
process
effected
in
prescribes
of 1879
the
again
economically
are
as
whole.
a
It
will
it
will
have
to
be
publicly
ex¬
which
han¬
can
of
so.
France," which
ten
of
months.
a
contraction
precisely the
it
has
our
has
done
economic
with
more
specie resump¬
own
behalf of that resumption had agreed
government
bonds
to
purchase
for
gold
a
against the currency, but it had refused to consent
reserve
bond
a
2,-
how
achievement.
which
way
been
even
than
always
remarkable
very
and
less
no
Considering
effected.
was
issue
issue
designed
to
take
the
up
paper
money.
largely
was
put out to enable the government to meet its war-time defi¬
cit,
has
retired
this
2,500,000,000
through
paper
selling
long-term government bonds, using the proceeds to
the
government's debt
the
group
of
an
its mind to do
Bank
currency
this is
The legislation on
correct
one
feat
into
France
has been reduced
within
courage than that with which
in
redeem its paper money at
ever
another
or
money
past,
been
experience
to
astonishing
solvent government
a
issues of the
money
paper
gradual
or
probable that any of the countries which
just mentioned will
In
par.
how
the
6,600,000.000 francs at the beginning of the war, got
in November, 1920.
From that high
has
do, however, to accept either position without examin¬
ation.
400,000,000,
world
700,000,000 francs
It
performed
But
to 39,600,000,000
up
tory
to assert
the
have
against
Bank
that
of
off
France and calling
debt.
of economic
eyes
shown
belligerent
We
the
Is
it
either
fair
that Europe is making no
headway in
problem
our
to
pay
so
notable
reconstruction
when
we
chapter of financial his¬
a
this?
as
I
issued
paper
have before
ruined; and it leads another to question the possibility of
rehabilitation
of
the
paper
solving
apparently economic chaos.
of opinion to conclude that these countries
economic
France
has
currency
15 per cent.
inflated currency if it has made
up
for his
money
expenses.
is
this
to
country where
a
suitcase
1920,
nearly
or
France, recognizing that its inflated currency
revolutionary printing
get to
a
the
on
of
£316,000,000,
increased the country's paper
by the French assignats in
French
we
in
money
reached
cent
a
From the maximum of £36S,200,-
December
the huge volume already
from
standing at the beginning of this present
paper
an
were
worth
The Polish mark is practically worthless
government lias actually
more
be
in
to
balance
The
;
a
shown
tion
which
currency,
currency 150 per cent,
ever
81,-
depreciation of 96 per cent.
a
Austrian
1/3 cents, brings nine
its
to
in three years.
have increased to seventeen times what they were in
many
20
increased
over
inflated
might have been
as
as
dle
stood
currency
England,
13,000,000,000 import trade balance
has
regard, and I think the bal¬
Germany's
their
nothing—in
it has
slowly, yet is gradually gaining control of its
but
reduced
port
Germany has
17,000.000,000 marks to which it had risen from 1,900,-
with
1920,
turning
between the two possible causes.
as
and
prescisely
the 1
reparations burden
unsound principles of finance,
1919
consider.
can
doing
the first to take the matter in
hand;
was
outstanding
been
paper
to
up
In
war-time currency notes.
000
should be drawn
as ours
since
ever
notable change began.
very
moved
is natural
primarily to countries in which utterly unprecedented
inflation has continued
currency?
expected,
the
nations
a
balance, particularly .in their
of
those
are
France,
England and Italy the paper money issues increased
largely
during that period of after-war inflation.
But with 1921
European state, but in all
market such
a
then
paper
States.
question
and they do not in the
govern,
England, France and Italy
as
repudiation with¬
pattern whose imitation great
European nations
a
What
paying
have two very distinct sets of action and
policy
we
ance
I such
This remarkable achievement has
any other
forfeiting its rights to
least set
progress has been made this year in cutting
portentous
since the
or
out
whereas
previous year
any
1875, when the French government
the Prussian
of
as
But the facts do
not prove that a government can resort
to
first half of 1920 exports
actually exceeded imports
—something which had
since
During the first
97
it continues to possess these
resources.
as
the surplus of imports into France had
a
SECTION.
have
thus
European
that
seen
briefly
what
nations
others
have
have
certain
of
already
the
accomplished
nothing
all in the way of economic
reconstruction; that, on
trary, they have plunged deeper and deeper
armistice into
the
of
morass
unsound
lately
accomplished.
at
con¬
since the
ever
finance,
the
infla¬
paper
repudiated.
But to admit that fact is something very dif¬
tion, misused credit and public deficits.
ferent
from
asserting
tried to show that under similar
circumstances, though on
future
economic
their
Does
anyone
passed
that
their
power
seriously
are
economic
crippled for ail
that,
suppose
the paper obligations of
over
—nominally valued
and
a
time.
sponge
revolutionary Russia
were
replaced by
intelligent government, Russia would
be
not
of the great economic powers of the modern world?
currencies have
been inflated
to
been
a
canceled
before
that these
union,
very
states of ours,
ment
of
Germany and Poland and
it
had
sunk
to
nothing.
history under the sound
the
money
ated,
so
Constitution.
These
lies
in
France,
and
that
and
facts
its
a
in
to
It is
a
the
American
under
and
the
their subsequent
sound government
40,000,000,000
the
years
prosperous
repudiate the paper
We know
money
The
Napoleon less than ten
powerful
had
francs
was
sound-money
government
afterward, became the
nation
nation
resources
cannot
be
paper
entirely repudi¬
of
the
European
only prove that the real wealth of
natural
of
and
the
energy
a
so
experience
ent
world
is
It
to
to
a
the
struggle
ruin
of
out
through
and
of
ruined world.
always easier to
point out what will.
prove
close
have
the
have
also
exactly
the
emerged from
inflated
currency
How, then, is the pres¬
its present
by
much
the
economic
more
was
exhaustion
difficult
war
dilemma
if
it
is
war,
it
what will not happen than
not
The
had
undertaking
governments had
economic
in
difficult in 1915 to
show
to
sight.
be
9
basis,
a
how
but
the
left
the
when
their
way
final
war
was
during the
unsurmountable obstacle
They will have to feel their
reconstruction hereafter.
But
there
are
way
at
to
least
things which will have to be done and whose achieve¬
will
really mark
nomic conditions.
the
path of return to normal
A V
of
economic
eco¬
A
Experienced banking opinion will probably
process
way
brought to
war
sound
no
to feel
to surmount each seemingly
came
very
short
a
would be effected and in what condition
belligerent nations would
over.
at
argue
It
that the prevalent idea of
finance of the
some
long
without
passed
years
I
really going to emerge from it?
ment
nation
nations have
states and without
of
of its people
economically ruined
that
most
world.
scale,
experience in former
same
Paper
they
many people to the
now
issued by revolutionary France
yet
u
one
almost the first of all to try the paper experi¬
were
when
of
when
point of intrinsic worthlessnesS.
strange perversity which has blinded
fact
this
smaller
a
were
I believe, in trillions—and if the
now,
present group of fanatics at Petrograd
sane
if
and
resources
But
recuperation will not
agree that the
be
fully under
until the budgets of public expenditure in the greater
BANKERS' CONVENTION.
98
at least approximately
European states are
far controlled as to
so
balanced; until
stimulated and their consumption
ensure an equilibrium of exports and
production is so far
their
currencies of the larger states shall have
possible a reasonably
exchange market, at a much nearer approach
imports; until the
sufficiently reformed to make
been
stable foreign
Ileal economic stability will pos-
today's.
parity than
to
until the Central European states come
in the matter of the suicidal trade ernbar-
sibly have to wait
their
to
senses
Treasury bills and which in thirty years would be, next Nv
England, the most important investor of its own capital in
foreign countries of any market in the world^
The conclusions, gentlemen, which I have tried in this
imperfect way to set forth, have to do evidently with the
more or less distant future. They cannot minimize the
gravity and complexity of the problems which immediately
surround the question of economic readjustment after the
war. They give no excuse for relaxing the efforts of en-
imposing on one another. It
agreement on reduction in national
armaments. It may have to be postponed until the inevitable day when, as a result either of the great famine or of
an accumulation of other causes, the Ited Terror in Russia
lightened financiers to resist with all their power the progress of unsound economic policies in Europe, and to bridge
over, by all the expedients of sound international finance,
the unavoidable period of economic chaos sand dis-
previous dictatorships of mad fanatics.
It may not be assured until experience shall have shown
what
Germany
can pay
on
reparations account and
A good many more years are likely to elapse before the
greater part of Europe shall have emerged from the finaneial aftermath of the great war. We do not know what
new chapters of industrial distress and financial reaction
we must pass through before the readjustment is effected.
What we do know is that there is no short and easy road
of return to sound conditions; that with nations whose
wild inflation of currency and credit has brought them into
which they have been
goes
have to await some
may
the way of all
goes
be paid, and until Germany
how it shall
adopted
achievements
thes^e
of
Each
and rational domestic
sane
a
may
herself shall have
financial program.
seem
to the eyes of
to be pn the very remote
economic uncertainty.
Yet history has its les-
present-day financial observers
of
horizon
in
son
regards
these
^lso, and we are bound at least to
civilization as tested in
modern
and
the past and in the light
in the light of human nature
consider the probabilities
if return
to normal conditions of life is to be achieved.
What American financier, looking at the group of bankrupt and quarrelsome American states of 1786, nearly at war with one
anbther and confronted internally with armed rebellion
of
by
disbanded
necessity of these great changes
the absolute
the American
states
several
the
soldiers, could have imagined
the funded debt of
and entering its own great career of
Continental
union of 1789, assuming
What European financier in
and prestige?
solvency
two or three
Europe
tinental
the
after the Battle of Waterloo, when Conwas outwardly insolvent and when even
years
English trade was
described as having fallen into the most
of living men, would
trade and the Continental European markets of the nineteenth century?
What Northern merchant or banker of 1866, surveying
grinding depression in the memory
have
predicted the British foreign
South,
devastated
the
its repudiated paper, its
social an-
governments controlled by Northern troops of occupation,
would have predicted the South
of 1880 and 1900?
What political economist, studying the
archy, its disfranchised
plight of
economic
overthrown,
eminent
it,
war
indemnity
within
of
three years,
ventured to
have
city seized by communists,
its gov-
Rhine provinces torn away
its rich
Prussian army encamped on
from
a
1871, with its armies sur-
France in
its capital
rendered,
5.000,000,000
its territory, and a
payable in cash
francs,
imposed on it by the conqueror,
picture a France
would turn out to be the
would
which ten years later
largest foreign investor in
British
tress.
their present state of economic chaos, the way out of it is
through contraction, and that contraction brings its own
financial hardship and distress.
Nevertheless, we have the testimony of all modern history to prove that eventually the world will be able to
meet these problems and surmount them. It is the business
of the banking community to keep in mind another lesson
of history—that when the long and trying period of readjustment after a great war had at last been completed, the
process of building up again the world's accumulation of
goods and capital has without exception led the way to a
wholly unparalleled era of economic prosperity and progress. But for anything like this, Europe itself must prepare
the way.
When the new dawn of world-wide prosperity will come,
I do not pretend to guess. What form the new prosperity
will take, it is equally premature to predict. It is the hope of
every thoughtful financier that we shall live to see a better
world than the world of pre-war days—a world better financially and economically, as well as better politically, a world
as free from unbridled tyranny of capital as from blind
and destructive restraint on capital. All that is for the u^iknown future to determine. But the responsibility of the
banking community, notably in this country of ours, which
the war has placed in the forefront of international power
and prestige and of economic usefulness in the work of
readjustment, will be very great. It is largely in your hands,
gentlemen, that the question will rest as to whether the
foundations of the world's new prosperity shall be built up
the Constantly shifting sands
solid rock of sound finance.
on
of experiment or on the
Our Free Country
By Judge Charles F. Moore.
When I
told
one
of my friends in the East that your
sociation was generous
this convention, he
as
you
too
are
Counsel, Seaman Paper Co., New
As¬
enough to bring me all the way to
said: "Well, that's certainly fine so far
concernd, but it strikes me it's carrying a
joke
He was
take,
United States is ample to
journey,
such
protiably right; but if
I have every reason to
your
invitation was a mis¬
be thankful that you made
ege
to
make every mile of it a
In spite
of the prolonged period of my
visit to the Pacific Coast.
stand, therefore, how much
has afforded me.
fices
and
reach
a
great personal
hardship in order to
coveted goal, as, for instance,
Heaven;
While
of interest and pleasure the trip
Sometimes we are obliged to make sacri¬
endure
to
even
short sojourn
on
is the case in going
experience on this trip.
the western border of the
but that was not my
a
earthly existence,
You can under¬
people that could be found;
and it was my privil¬
of one of the best of the party.
disquieting incident from start to finish.
to share the quarters
even
by rail sometimes encounters
irritating problems, and it
railway attendants do not
solving them.
went into
render a great deal .of
the ticket office of a
Washngton on
reservation to
I
finally succeeded
or a
assistance
occasion when I
New York station to make
the midnight train. When
in getting the attention
of the ticket
requirements, he said, "Do you
lower?" I inquired the difference in
agent and told him my
upper
preplexing and
frequently happens that the
I recall, to illustrate, an
a
an
I came on
It was freighted with
There was no
in
I came were
real joy.
could be provided.
The traveler
this is my first
compensate a long and wearisome
happily the auspices under which
the best train that
it.
to
as
the best
far."
York.
want
cost.
BACKING
Then
he
than
said,
the
upper
I
upper.
"Well,
higher; but if
"Why,"
I
on
give
can
account
on
"should
upper
you
account
are
vise you to take the
its
than
higher
1
the
willing to
be
that
pay
If
For that
lower; although,
than
the
being lower than the upper."
I
believe
bed
an
would
on
was
ad-
so
vention
may
similar
to
our
through
the
•bled
cross
ous
and
crossed
order
that
possibly in
that
cerning
to
in
some
made
once
they
quarters
by
of
the country;
independent,
it
railroads;
the
It
laid
each
as
another
he
track
said,
the
the
double-
sibly do
but I
so,
to
have
gratify the inclination.
years in the
had
not
the
opportunity to fully
However, since I have lived
East, have
now
the matchless panorama of the
Pacific
less traversed the broad
or
and
many
with my own eyes looked upon
stretch
slope and have
more
of wondrous mountains
plains that lies between, I shall henceforth be satisfied
for, while I may have
of the
It
well, perhaps,
venturers
who
settlers
tions
on
eastern
our
established
themselves
the best of it.
seen
discovered by ad-
was
shore
on
and
that
It is conceivable that had they
country.
fornia
that America
landed
come
they might have
here
that
been
of
none
well
so
them
would
side
arising out
of
an
overcongested
might have tarried in this second Eden,
of
with
have volunteered to
cross
ture into the uncharted
our
condi-
out
gone
to
ex-
They
first parents
Pioneers might not
the ranges of the Rockies
wilderness east of the
or
ven-
to
of
an
the
jfortified outposts, and Broad-
Indians who
frequent it.
now
until
Virginia
called
and
Jesse
They
which
up
last
at
steered
they
found
settlement
a
of
account
on
of
the
was
a
set out
New England
located
He
Nor did
he
position to say, "I
a
will
know
a
of
and
the
to-
home for
lost
was
Ilis only
west
that
and
purpose was-
the
old
was-
world
entering the
back
shape of the earth had
His only aim
told you so."
to infinite pains to
go
rea-
When
ultimately
America
extremity
sailing
insist
special significance.
any
led
not in quest of
was
not
benevolent.
which
voyage
eastern
might be reached by
was to
A
triumph in
man
a
put himself
or
a
woman
controversy.
If
Columbus had been content to wait
that long trip wouldn't'
have been necessary.
All of us who have
encountered the
sharp practices of the world know very well it isn't
square,
But sailing due west, as he
did, there was no tfay for him
to
avoid
Canal
boat
the
had
had
tains
on
since
I
discovery
not
to
been
trip;
but I
unable
was
of
this
continent.
constructed
into land.
run
this
to
I
at
that
The
time,
Panama
that
so
his
discovered the Itocky Moun-
take to myself no
get around
them
special credit,
to
or
sail
above
them.
Then there
are
wanderlust.
those who
Their
led
are
to
eagerness
endeavor.
Witness the
many efforts that
wasted
by
on
explore
pels them to tireless effort, without
an
overpowering
regions
new
any real purpose
im-
in the
and heroism of the
energy
made to reach
were
the
habit
it
second
had
experiences
excursion
gaso-
which
it
they
was
io-
from
name
of
of
was
to join their friends at
Was
settled not by design
may
Dr.
Cook
of
more
is
to
which
readily
be
is
the North
be
utterly
Pole, the
meaningless
avoided.
commended
Consider, too, the motive
tiers of America to
cross
for
breaking
for
I
to
sometimes
making
the
think
long-distance
a
these
first
with
a
fixed
derness
the
that
they set out
that
to endure
the
unborn
blessings
came not
so
of
lay not ahead
record of
of
set-
greatly obliged,
was
not
on
your*-
I do not believe
their
the privations
of the wil-
generations might inherit
and
new
them
but
better
civilization,
they might obtain
behind
as
for
them.
It
is
the
ica, many to avoid persecution, not a few to avoid
prosecution.
it
Since its very beginning, therefore, the United States
was
peopled by
as
and
men
the land of the
women
eager
free, because
to be free from
the things they had to endure elsewhere,
but by acci-
By
some
sort
of sophistry
we
have persuaded ourselves
that the craving for
liberty is indulged only by men of lofty
Hendrick
River,
Hudson
which
came
bow
and
over
serves
as
a
a
popular pas-
discovered
highway
the
between
for
the
benefit
discovered
seems
pursuit to
to
have
which
had
very
generation.
of
both
Hudson
a
Bay
mania
few
places.
and
for
devote
Some
the
years
Hudson
later
Strait,
discovering water—a
their
attention
in
this
ideals and virtuous impulses.
If
the yearning
most
virtuous people in
the world
jails and penitentiaries;
a
as
a
virtue, then the
the Inmates of
measure
of their virtue.
host of people who have no conception of
an
count
the
are
escape from the clutches of the law.
for
the
members
great desire of so many
of
which
our
and the longer the term of their
confinement the greater the
is
That is not necessarily true,
to be free is essentially
are
by
the
<
perilous journey
history that they fled from other lands to Amer-
of America has been known
Thus it ap-
am
The inducement for their migra-
this
popular
a
on
much for what
what they might
escape.
tion
I
but again I insist it
purpose
solely
countless
They
prompted the early
mine that they made the trip.
moment
a
which
the Atlantic.
planned and
Albany and New York City, with Sing Sing intermediately
Hudson
the
course
established
Discovery and exploration shortly became
Hudson
did
for coming;
dent.
time.
that
their
pursued
their way and landed at Plymouth Rock.
pears
old Mrs.
what he had long contended, that the earth
and
or
Virginia resort, but, owing to their poor seamanship, they
lost
He
account
they discovered,
as
wonderful
Virginia,
another party
his
always
attempt to find it.
no
to them
•,
of
making
prove,
in
not
are
on
their
Reading the glowing accounts published in the American
newspapers
out
mouth
into its banks.
families
set
the
into
the James River, which stream took its
James
member of
a
discovery and giving the pole absent treatment.
their motor boats and
wrangling
coast.
Jamestown, because,
on
discovery is
places is sometimes made for other
new
likewise
oppressed.
door.
A few rest-
compelled to land to replenish their supply of
Thereupon
oated
world launched
inviting river,
iine.
maxim that
necessity is the mother of
Discovery is but another name for invention.
the
buffeting
the
them,
welfare in
it
less souls of the old
way
after
come
us or our
The only object there could be in
finding it is that
than
more
Fate happily decreed it should be otherwise.
much
should
world.
might still be the trail of the original American Indi-
after
who
location
way
of
all
actual
be
instead
en-
Mississippi,
still
ans
out to
and the other great interior cities
might
Chicago, St. Louis
nothing
tliefir efforts,
deliberately set
familiar
which
.round
neces-
population.
as our
did in the other, until evicted
by force.
the
first to Cali-
content
have
that
plore the regions beyond until driven to it
by the dire
sities
;
comparatively small portion
a
world, nevertheless, I have surely
is
first
seen
for
discovery of America he
was
the country.
Like many of you, no
doubt, I have always been eager to
make the aequaintanc of the world
as far as I could
pos-
bring myself to
in
single moment.
a
a
Columbus
en-
and
cannot
hardship that they might thereby estab-
estate
Search for
sons,
prosper-
became
their enterprise, and
entirely unselfish
Therefore almost every
con-
been
were
the
pioneers
the boundless bene-
course,
result of
a
and
Necessity's large family.
comment
had
is
invention.
con-
shipper
which,
government
then,
this
provoke
disgruntled
a
trans-continental
generosity
might attend
as
with premeditation
they
mind for
The extent of the
pilgrimage made by the bankers of the
States
recognize, of
had
never
discoveries
Indeed, I do not believe that they had
trip,
Eastern
they
better
a
for
wholly ungrateful, but I
that
that
lish
sea-
sick that I canceled
my engagement and abandoned the
I
accrued
dure ail manner of
account of its
By that time I
not
am
or
and
I have already told
upper
that have
the
but somehow I have
of jveneration
some avow.
fits
the
I
reason
as
feeling
than
sleep in
you
99
be all wrong,
may
same
prefers
when you go to
up
get up.
higher
"everybody
convenience.
the lower is higher
you.
lower
lower
replied,
obliged to get
get down when you
is
going higher it will be lower."
the
he
of
lo>Ver
being
its
the
the lower, if you are
you
"Because,"
lower
of
you don't mind
asked,
upper?"
understand
you
SECTION.
There
liberty except
That may
ac-
to go to Congress,
terms of
the
Constitu.
'
BANKERS' CONVENTION
100
tion
"privileged from arrest
.sessions of their
that
body affords
those who
gress
membership of
small percentage of
therefore, who cannot go to Con-
immunity to a very
need it.
Many,
must go to jail.
analyze human
that ever since
the world began the life of the frontier—the pioneer existence—has been welcomed and even sought as a means
to effect deliverance from the restraints and limitations of
a
well-establshed civilization.
Countless ventures have
been made into solitary and untried places not because men
want to be alone, for we are sociable creatures by nature,
and, all else being equal, we are disposed to group ourselves
together.
But this very grouping of people, whereby the
density of population is increased, of necessity curtails the
liberty of the individual; and it is against this which we
revolt and to escape which we flee from the multitude.
There are men in this audience, I have not doubt, that
When
takes
one
the
to carefully
pain
human purpose
and
nature
,
the
going to and re-
But the limited
the same."
turning from
during their attendance at
respective houses and in
it is manifest
permanently except
their vacations and
vseek their rest we find them going into the heart of the
wilderness.
Why is it so?
They can have infinitely more
comfort in their own well-appointed and orderly homes,
better food to eat, better beds upon which to sleep, better
service and accommodations of almost every kind.
But
they leave these things behind them because they want to
get away, from restraint.
They want to be free from the
constant, interruptions of the crowd.
They want to be
where they will not be halted at every turn by the uplifted
hand of the traffic cop or hurried along by his command to
"step lively."
They are weary of following the directions
of sign-boards and heeding the warnings to "keep off the
grass." They seek relief even from the unwritten laws of
conventionality and rejoice, like so many children, to get
induced to live anywhere
could not be
in the
they take
crowded city; yet when
agers and superintendents and train despatches, conduo'tors, brakemen and flagmen. That is why we have traffic
regulations and issue orders. They all restrict the freedom of movement, but make it possible to keep moving,
Every law on our statute books is in a sense a restriction
of personal liberty, but it is supposed at least to be there in
the interest of universal freedom. The authorities tell us
that laws are of two general classes, written and unwritten. An unwritten law is a principle so manifestly right
that it is universally recognized, though it may not always
be observed. A written law is an enactment of a legislative
body which may or may not be right. Some laws are written because they are unspeakable.
Has it ever occurred to you that if all men were honest
and upright and virtuous we would have only the unwritten
code and there would be no need for courts and jails to
guarantee the enforcement of the law? The trouble is we
all have to be cumbered with a lot of mandatory and prohibitive statutes because some people cannot be trusted. I
am denied privileges, as you are denied privileges, because
there are some who abuse them. Just because one or two
of them may be vicious, not a dog in the whole town is permitted ot run at large without a muzzle. So the kindliest
collie, though he may be old and rheumatic and toothless,
must be put in irons because some low-bred cur hasn't
enough sense to attend to his own business. The same is
true of people. I am not permitted to rest my foot on the
brass rail while I enjoy a social glass with a friend just
because some of you cannot be sociable in moderation. One
evil begets another. Because some of our people are selfish
and vicious we must all be subjected to the annoying restraints of courtless laws, which are frequently conceived in
ignorance and administered with arrogance,
But in spite of the inconvenience to which we may be
subjected and the unreasonableness of the restraints placed
upon us by the law of the land, we have come to under¬
cut of their Sunday clothes and play in the dirt.
stand that it is far better to endure them all than it is to
America
settled and'her population has been repermit every man to choose his own course without let or
cruited throughout the subsequent generations of her exhindrance, for we must recognize that it is better to give
istence by refugees seeking to escape intolerable conditions
up some of the personal liberties to which we are entitled
the countries from which they emigrated; and that is
rather than abandon all authority and leave ourselves at
why this has come to be known the., world over as a free
the mercy of the passionate mob.
country.
But this very assembling of the oppressed multiOne serious difficulty is that few of us are willing to actudes has gradually diminished the measure of our liberty,
cord to others the same measure of freedom we want for
until how the United States is a free country in the sense
ourselves. It has always been so. One of the things that
that the National Museum is free—because we charge no
induced the coming of the Pilgrim Fathers to this country
was
in
was their
admission.
desire to escape religious
persecution. They were
hunting for a place where they might worship God accordIIuman nature has its own inherent limitations that hedge
ing to the dictates of their own consciences. But no sooner
it about and restrain its activities.
The. nearest approach had they found such place than they themselves became
to freedom is found in the solitary existence of the man
intolerant and insisted that no one should worship God at
who makes his habitation in the untrodden wilderness far
all except in the manner they prescribed. It is a strange
There
is no
absolute freedom anywhere,
such thing as
thing that in all ages the wisest and best appear to have
been unable to discriminate between piety and bigotry,
Even in the year of our.Lord 1021 some are so blinded and
embittered by sectarian pride that they had rather see the
world eternally lost than to have it saved by any method
other than their own patented process. From the standpoint
of the average churchman the world is divided into two classes, those who subscribe to my creed and the heathen,
Nor was it very long after their arrival here that our
civilization were fastened upon them.
forefathers began to feel that liberty was a good thing for
When
consider the human family as a whole, strange
themselves but entirely too good for other people. Laws,
and paradoxical as it may seem, the only way to increase
you know, are always made for other people; never with
liberty is to diminish it.
In other words, the freedom of
any thought that they should be applied to those who
the whole people can be preserved only by the curtailment
make them. The early settlers of America first gave their
of individual freedom.
attention to restricting the freedom of the Indians; then
Society cannot long exist without regulation and the
when that work was well under way they proceeded to reorderly administration of its affairs; and that is governstrain each other. In the latter direction the work was
ment.
When two or more people undertake to l*ve together
begun with commendable wisdom and so continued for
Adam was a free man
when it
was found, as it is written, that it "was not good for man
to be alone" and Eve was created to share his life his freedom vanished.
Robinson Crusoe enjoyed an unusual measure of freedom
in the silence and solitude, of his sea-girt
island until Friday came ashore.
The nearest approach to
a
free people recorded in history is found in the unfettered life of the American Indians before the handcuffs of
beyond the confines
for
a
of civilization.
little while, with none
to say him nay; but
we
there must be
either concession or
demonstrated again and
locomotives
That
One
cannot
pass
experiment has been
or
must go
the
contention, as has been
again within our own homes. Two
each other on
the same track,
tried too often without success.
the siding, else one or both
other must take
into the ditch.
That is why we have general man-
many
generations.
their own which was of
wTas the issuance of a
Declaration of Independence. Its purpose was to serve
notice on all the world that it was America's intention thereafter to be free, and the world so understood it at the con-
The first definte political act of
vital and far-reaching importance
BANKING
of
clufcion
joint
a
discussion
George'Washington.
I
Americans have for that great
with all
but,
pen,
veneration
the
I
due deference,
It is alleged at the out¬
men
them
badly damaged in the handling after their cre¬
are
I do not know
ation.
equal in
are
community in which all the people
a
is
asserted
also
that
which are included "life, liberty
These rights may not have
pursuit of happiness."
and the
alienate a piece
self, or in the manner in which he would
real
of
some
estate
all
in
race
get
free-for-
With reckless
Jefferson also had
good deal to say about government
a
being based 011 the consent of the governed, but we all know
well that
very
consents to be governed at all,
one ever
no
be
document
found
was
intended
was
after that it
other
known
government of our own,
a
the
as
We
Constitution.
amendments effected
no
consent
common
wavered
in
the
avowed
our
political
of
by judicial interpretation and by
people.
We have
allegiance
to
campaign the candidates
before the people and
once
In
principles.
of all
parties
go
ever
made
its
ac¬
quaintance and few would recognize it. if they should meet
it face
to face.
ful contestants
the
011
the election is over and the success¬
When
inducted into office they lay their hands
are
Holy Bible and solemnly swear to support the Con¬
stitution, although many of them do not even properly sup¬
port their families.
If
you
will
to Washington year after
go
year
and acquant yourself with that unselfish group of men
who
are
may
sit day after day in the national capitol to support the
willing
so
Constitution you
to neglect, their
will
sooner
own
later
or
affairs that
be confirmed
they
the
in
conviction that has
come
dependent solely
The
on
maintained
made
tions
is
It
with
most
of
is
us
that
have
we
so
continuously preached the doctrine of freedom and personal
liberty that
we are prone
enjoyment of
time
little
tual
and
benefits
We
are
own
for
the
a
and
so
little
too
about
discharge
of
free country is
reciprocal covenants.
rights
that
personal
our
obligations.
protection
of
his
Yet I am persuaded a care¬
citizenship account of very many of us has been overdrawn
individual's claim for
is
conditioned
upon
performance
of
a
clearly defined service.
and future requirements
to
even
make
whether
is
yet
than
to
insist
right that may get us into trouble.
upon
the
epitaph reciting just such
r,r-r
a
frightful storm of unbridled and unregenerate human
A
swept
the greater portion of the earth,
over
leaving in the wake of the ebbing and flowing tides of war
and desolation.
broad expanse of waste
one
Thrones have
tottered, governments have fallen and the very foundations
civilization
of
fill
us
for
possible cleavage and disintegration.
task
ourselves to the
devote
to
mutterings of dis¬
The world's social structure
with dire forebodings.
us
The
shaken.
threatenings of revolution are audible and
bears evidence of
is
been
have
content and the
Peoples of the earth
who have been driven to desperation
oppression,
by ceaseless
bondage, have obtained
acquainted, and
released from political
suddenly
freedom with which they are un¬
a
of them are ill-prepared to enjoy it
many
Drunken with the fermented spirit of their
without abuse.
new-found liberty, they are defying the
ized
authority.
It is in
redeem
to
and
government
large measure the work of America
a
from its prolonged social
the world
example that there
delirium, to
teach them by precept
tranquilize the frantic nations and
and
restraints of organ¬
the demands of constituted
scorning
be no enduring peace or liberty
can
that is not safeguarded by the
orderly administration of a
potential government.
America
lias
May
of
long been looked upon as the
Shall
we
we not indeed become a
the
nations,
kindly light of
which
all
world's ideal
not make it so and keep it so
filling
perpetually
in fact?
fixed star in the constellation
the
with the
heavens
wisely tempered liberty, by the guidance
a
henceforth
may
move
fearlessly on
in the
orbits they were ordained to pursue.
us
keep in remembrance the everlasting truth re¬
corded centuries ago, that
we
"righteousness exalteth a nation"
cannot endure.
All the fortified de¬
fenses, iron-clad battleships and armament the vast wealth
country
provide cannot afford us protection
can
a
forsake
the
principles of
uprightness
upon
first establshed.
God
of
Lord
a
Beneath
our
of
fathers,
our
whose
Dominion
over
old—
battle-line—
known of
far-flung
awful
hand
we
hold
palm and pine—
Lord, God of Hosts, be with us yet,
Lest
tve
forget—lest we forget!
if
which we
con¬
exercise of
It
of welding it to¬
gether and preserving its integrity.
This may be illustrated
a case:
adequately in¬
long way from us does not mean that we are not
passion has
.
an
or
The fact that the intense heat of the conflagration
imperiled.
•
by
protected
amply
are
we
their country free.
We need to determine forth¬
political world is aflame.
The
for all that belongs to us; better once in a while
concession
if they crave the survival of the
institutions which have made and kept
When
principle is involved it is not always expedient to
tend
should give serious thought to the present
this country
were
no
people
The time is at hand when it is imperative that the
we
faithful
red ink.
and the balance written in
contract containing mu¬
The
government
of society.
creation for the common good,
common
would demonstrate that the
of this
the
of
and that without it
a
de¬
examination and auditing
ful
have
we
and
of the indivdual to draw upon which is dependent
sharing
busy exercising personal pri¬
personal
our
offensive
the deposit of his share.
upon
And let
demanding
Citizenship in
our
The state properly organized
wealth .of
a
by the individual members
thereto
wealth
a
the right
of
these
them with others.
vileges and
to think too much about
becomes
strength resulting from the accumulated contribu¬
fensive
democracy.
little nourishment.
very
trouble
great
that if the Constitution is
me,
commonwealth, and the term
meaning.
to consider its full
that bunch for its support then it must
on
be able to subsist
to
He should
I wonder how many of us have stopped
used advisedly.
and
plbdge themselves to defend it against
although few of them have
comers,
its
never
I
understand that his induction into American
We refer to the state as a
domination;
foreign
less than eighteen itmes, to say nothing of
provided
the
all
That
It has been amended in the man¬
ner
every
Independence
great deal about the Constitution, which still nom¬
a
inally remains in force.
the
of
us
of
step further.
principles of which were embodied in that
instrument
great
rid
to
planned to form
was
the fundamental
hear
Declaration
the
right the colonists went a
all
with¬
ting on the harness.
with
it
from
here
gravitate
citizenship is not so much taking off the bridle as it is put¬
sured.
all
the-quantity and quality of
people
vvish the naturalization of the foreign-born citi¬
given to
marriage.
When
that
sped along;
if he'd been wrong.
as
could be made more serious and impressive.
zen
except the man who in a sober moment contracts a second
worked
he
right—as
dead
as
freedmom
sincerely
of
trouble.
he's just
thought whatever of giving anything in return.
out any
getting into
without
happiness
hunting
in a
from us
away
while others cannot run
with it,
away
street
the
across
gotten
Some chase it
instance.
every
and
but ifi
deed of conveyance,
a
rights have
The pursuit of happiness is not a
marked degree.
abandon
executing
by
these
way
expatriate him¬
in the sense that one would
been alienated
with certain
endowed
are
men
"inalienable rights," among
right—dead
was
j
quarters of the globe for the benefits they may obtain
is
anything.
body of William Jay,
maintaining his right-of-way.
We have so widely advertised
American
each
They are not only not equal to
any sense.
other, but many of them are not equal to
It
if
in this generation then some of
created equal
are
It may have been
equal."
but my observation teaches me that
in the early days,
so
all
created
are
men
He
died
But
nevertheless com¬
am
conditions have mater¬
ially changed since it was written.
"all
Who
product of Jefferson's gifted
correct in its every statement, then
that
Here lies the
7
worthy
all
the opinion that if the declaration was
piled to express
set
and
George
King
between
share
10L
SECTION.
J
.
CONVENTION.
BANKERS'
102
the
and
tumult
The
shouting
humble
And
God
Lest
Far-called,
all
Lo,
Is
navies
our
Nineveh and
with
Judge of the Nations, spare
Lest
forget—lest
we
us
For
yet,
Drum, President of the American Bankers
received in the Economic Survey that was re¬
Information
business had
ported to the Executive Council, the nation's
war-time
just experienced a rapid fall from the height of
activity.
six
for
that
American
of
had
years
been
mar¬
eager
reached the
all kinds had
products of
for
point at which they could no longer consume and pay
had mounted
Costs of production
production.
excess
our
steadily for years, and at length had become so
high that
which
countries,
The
created
had
destroyed
and
debts
great
duction
been
what the cost of
reduction
a
all products, and brought
domestic purchasing
in
unemployment.
and
readjustment of the entire economic machine, and
forces
resist
the
was
natural
was
tendency
a
favored
if
slight increase in the output of
positions
had
that
come
to
times,
had
it
found
necessary
articles throughout the year are:
short,
in
and
It
lessened
of joint, and
out
was
with
uncertainty.
They
men
contem¬
were
,
purchases of new equipment and
Surplus Stocks
sup¬
Reduced.
Taking the country as a whole and considering
there is
of finished goods
and
reduced
been
replacements
as
all classes
surplus of manufactured com¬
a
the
of
hands
the
in
have
groping
producers.
gradually
These
throughout
surplus
the year
have become increasingly necessary,
In many industrial
rapidly in the last six months.
<
picture of conditions in this country today, that this
second
work:
prices of iron
plies by farmers.
stocks
with the idea of getting at the facts, of getting a
was
construc¬
and
steel and their products;
Fourth,
centres manufacturers are
true
in
'■
Third, comparatively small reduction in the
more
for the facts.
activity
of
;
modities
Business,
stagnation
comparative
'
to
Impose for the successful conduct of the war.
plated its condition
steady decline in the output
this survey for the
First,
affect.
in
were
operating under restrictions and reg¬
Government
the
that
ulations
normal
in
business
Great industries were
whole
unit.
a
commonly given by the men whose reports
reasons
up
these
tion;
as
Systems of taxation devised to meet war conditions, but
of
by iron
implements,
production of these commodities in the country as a
The
of
finished goods
place has not been shared
taken
has
of war-time prosperity.
through the flush
obstructive
and
seasonal increase in the demand for them.
is considered
to
There
readjustment.
toward
working
up
depletion of surplus stocks of these
products, heavy machinery and farm
and steel
unwillingness to take losses, and men were
give
unwilling to
them
whole
a
production of
and is commonly
Second, delay in railroad repair and replacement
there
naturally,
quarters,
a
Whatever
readjustment had started.
many
gradual
the
goods that had accumulated a year ago;
as
manufactured
reports received in this survey to two causes:
in
First,
pro¬
there has
This increase has been
and clothing,
food
of
articles
ascribed
made neces¬
Changed conditions had
had
sary
a
decreased
industries devoted to the
in
noticeable
most
make
the debt-paying
debt-making period had ended and
begun.
that re¬
power
period
In
has
employment
by
slight increase in the output of some
a
essential
reduction of the output
sulted in decreased consumption, a
of manufactured goods,
of
This reduction
producing them had been.
in values did not uniformly affect
a
and measur¬
Although pro¬
six months ago.
was
measured
as
Second,
reduction of the prices of our products, regardless
The
than it
products in the last few months.
demand inevitably resulted
The sudden decline of foreign
about
the country is
of finished goods throughout
output
smaller
ably
great wealth, simply did not have the means to pay.
a
guard-
considerably smaller than it was a year ago,
foreign
they could not be absorbed by foreign consumers;
In
dust,
on
calls
guarding
gressively throughout the year, our reports show
countries
The
kets
builds
The Volume of Manufacturing.
the country and consolidated the
throughout
men
her trust
iron shard—•
or
that
Association-—Being the Retiring President's Annual Address.
Spring, when I gathered the opinions of bankers and
Last
business
tube
dust
Country-Wide Economic Survey
Our Situation Today—A
By John S.
vet,
us
Thy mercy on Thy People, Lord!
forget!
we
the law-
not Thee to
frantic boast and foolish word,
And
Tyre!
without
heart that puts
reeking
valiant
All
loose
use,
forget—lest we forget!
we
In
fire—
the
Gentiles
Hosts, be with
of
For heathen
away—
sinks
of yesterday
pomp
our
one
melt
headland
and
doon
Lest
forget!
we
the
as
breeds
lesser
Lord, God
yet,
us
boastings
Or
heart.
contrite
a
forget—lest
we
On
and
Hosts, be with
of
Such
we
that have not Thee in awe-
Wild tongues
Captains and the Kings departStill stands Thine ancient sacrifice,
Lord,
drunk with sight of power,
If,
dies—
The
was
survey
undertaken.
I
sought the opinions of
representative of the industries of the
the bankers and men
This is
ceived.
to
obtain
credit
limiting production to orders re¬
reported to be due partly to the
to
inability
.surplus stocks and partly to un
carry
certainty caused by fluctuations in the
prices of raw ma¬
terials.
country, and the information these men possessed by reason
of
close
their
than
one
with
contact
thousand
the
tionnaires sent out and. in addition to
of
business.
nation's
reporting the progress
readjustment, discussed the situation in their communi¬
ties.
This
picture
of
They
come
our
situation
from
the
is
prepared
ranges
of
from
New
these
re¬
and
Mexico
Wyoming and Texas, from the mines of Montana and Ari¬
zona
and
vania
tres
and
in
from
States
Utah,
West
tier
the
coal
mining
regions
of
Pennsyl¬
Virginia and Ohio, from the industrial
York
New
the
from
of
extending
and
Pennsylvania
industrial
from
the
and
and
New
agricultural
Atlantic
Ocean
to
cen¬
England,
and
the
mining
Great
Lakes, from the cotton regions of the South, from the great
grain
States
of the Middle West, from the forests of
Northwest—from every part of the country.
A
Manufacturing.
of
progressive decline in the costs of
taken place
costs
of materials, labor
manufacturing has
In industry as a whole, the
during the year.
and construction have declined in
the order named.
-i
ports.
Cost
More
bankers and others replied to the ques¬
the
The larger part
of the drop in the cost of
place during the first six months of the year.
decline
revival
recent
sents
When
been
has
in
checked
the
and
prices have
materials took
Recently this
steadied.
clothing industry in New York
pre¬
reduced production.
clothing industry declined produc¬
good example of the effects of
a
activity
in
the
tion of wool textiles was decreased
demand for clothing sharply
When the
accordingly.
increased
a
short time ago, and
manufacturing took an upward turn, a shortage
cloth
The
soon
creased,
developed.
but
clothing
The
price
of
manufacturers,
woolen
of woolen
in¬
textiles
unable to get clotb
BANKING
found
themselves after
position where they
a
The
long period of
show, has been due to two
First, reduced
103
prices
the
on
wholesale
as
considered in
prices.
in
hours
of
work.
work after
In
other
Wage reduc¬
of
rates
instances labor has returned
trying by strikes to resist
wage
to
in this survey
cuts, and in still
after
months
een
large scale.
Competition
the
for; em¬
industries
many
in
which
reductions have
wage
greater efficiency and
a
the
prevailing freight rates unprofitable; and
been
ber
of
copper,
the
to
greater volume of per man produc¬
in this survey are
of
reduction
common
that notable
the
of
cost
and
fall
decided
a
lead,
iron
and
lumber.
post-war activity all
At the peak of
these metals and lum¬
produced in great quantities,'and when the de¬
were
overstocked.
selves
excep¬
labor
home
at
mand slackened mihers and lumber producers found them¬
lumber had
Reports received
construction
in
war-time and
tion.
tions
have
that
foreign demand have greatly reduced the consump¬
of
tion
and
by reason
1
the existence of large surplus stocks
Inactivity
in
armistice, has been restored during
slight the cost of labor has been decreased
Reports
ago.
attribute this decrease in production to:
been reduced at a very slow rate during the year.
and for eight¬
war
the last year, and particularly in the last six months,
in
and
costs
Increased efficiency of labor has been the natural result
a
to-day than they were a year
Second, prices so low as to make production at prevailing
Third,
on
quaniities
First, lack of demand;
duced wages.
unemployment
Metals^
and in smaller quantities than six months
ago
opened them again, re-employing part of their forces at re¬
ployment, largely eliminated during the
and
.
put may be regulated at the will of the producer, are pro¬
longer
or
pay
manu¬
.
duced iin smaller
others manufacturers have shut down their plants and then
of
transportation and selling,
Natural products, such as lumber and metals, whose out¬
peen effected by the voluntary
by labor of decreased
steadily
proportion
undoubtedly have been factors
Lumrer
duction has occurred in the last six months.
acceptance
same
causing the disparity between the decline of wholesale
Wages.
tions in many instances have
declined
and retail prices.
whole the greater part of the wage re¬
as a
have
greater extent than into
a
facturing and wholesaling,
same wages;
Second, increased efficiency.
industry
also
Costs of
entering into retailing to
and
In
whole
throughout the year, although not in the
causes:
longer hours for the
wages or
Retail
reduced activity in
unable to fill orders.
were
reduction in the cost of labor, reports
this survey
SECTION.
and
are
it
The
metals
had
mined
been
and
the
been cut at peak costs of labor and materials,
consequently when demand fell off and prices declined
impossible to sell these stocks except at prices that
was
apparent in three great industries—railroading, coal mining
would
and
duction.
the
building trades.
Railroad
scales
wage
still
fixed by the Railroad Labor Board, a Government
and
the
enforcement of shop
continued
the period
increase
agency,
in
the
efficiency of skilled railroad labor.
work that could be performed
number of
a
an
Besides increasing
by one.
by causing much lost motion, these rules, in effect,
limit the work
man
a
In the coal mines wages are
kept at
are
war
while wages in metal mining have come down.
been
in
slight reductions In the
some
the
wages
building trades, but in most
made only after costly strikes that
degree
levels,
There have
of skilled laborers
these have been
cases
have offset to
great
a
reduction in cost that might have accrued from
any
reduced wages.
The efficiency of men in the building trades
in the country as a whole has not increased,
although there
exceptions to, this.
are
In neither
railroading, coal mining
nor
the building trades
The
decreased
price of lumber and
however,
been
has
other
some
for
building
some
slight
decline in construction costs.
Taxation
Taxation
in
remained
or
decrease
the
and
Increased
the
in
year;
taxation
is
increased
no
due
case
is
largely
no
the
whole,
reports received
in
the
of
cost
transportation.
follow the decisions of
course,
in
rates,
of
since increased
none
rates were made effective in
Prices
Wholesale
steadily
clined
of
Finished
August, 1920.
Goods.
throughout
the year.
Food products,
been
ward
de¬
rapidly than most other finished goods in the
more
early part of the year, have dropped in price at
rate
which
a
less rapid
during the last six months, and recently the fall has
checked
turn
in
altogether, and there has been
some
food
products.
^
a
slight
up¬
Considering manufac¬
increasing Oriental demand
an
Copper
production
zinc
and
is
Labor costs in the metal mines and in the lumber indus¬
six
As in the manufacturing
months, according to our reports.
industries, this has been due to competition for work re¬
sulting from unemployment, and to the consequent reduc¬
tion in wages and increase
of efficiency. Costs of machinery
supplies used in metal mining and lumber producing
have declined
main
during the year, but not as much as the costs
Transportation costs and taxation, of course, re¬
high.
The
prices received by producers for metals and lumber,
lower
considerably
of lumber, however, have
months than in
a
the
in 1920,
a very
have
Retail prices
half year.
Products.
much smaller output of cotton result¬
great reduction in acreage, and eliminating from
consideration
duction
were
declined more rapidly in the last
the preceding
Agricultural
ing from
they
than
greatly in the last six months.
effects
the
of
climatic
conditions,
the
pro¬
is as great as it was last
of agricultural products
Our reports are that surplus stocks that existed after
harvest
last
autumn
been
have
gradually
decreased
throughout the year, but the new harvest, of course, pro¬
The
another
surplus.
great
carry-over
recently indicates
now
at
a
rapid
more
a
output of agricultural
markets
for
uniform and
livestock.
Reports
cattle,
activity
hogs,
in
from
products does not
parallel in the livestock industry.
curtailed
rate
V--
-
sustained
re¬
has developed quite
on.
The
find
reduction
tiiat
steadily
been
has
of cotton
duced, and the quickened demand
operated to decrease
operation was greatly reduced.
but the output of lumber in the
low.
tured goods as a whole, however, the price decline has been
progressive from month to month.
mines and
try have been reduced in the last year and in the last
duces
prices of manufactured goods have decreased
many
low.
very
Inter-State Commerce
the
but minor changes have taken place
months
remains
Except for
Freight
few
Pacific Northwest,
the
year.
Commission and
last
the
Southeast
a
in this survey attribute
in
year
operated to increase production in the lumber district
to
part of the reduction in the costs of production to any
decrease
In
six
greater State, county and municipal levies.
On
remained
last
altogether, while the output
gradually cut down, but they remain abnormally
not declined
sections has either
stationary during
reported.
have been
while
Transportation.
industrial
that
of labor.
responsible
shut down
large.
and
have the hours of work been increased.
materials,
•
has
fixed by agreements that will
expire until next spring, and
those
pro¬
During the year the surplus stocks of metals and lumber
is permitted to do, and in many cases
force payment for work that actually is not done.
not
of
the costs of
over
of these conditions continued production was of
mills were
lumber
for
profitable return
a
out of the question, and
course
These
men
net
In view
rules made during
of Goyernflient control have made difficult
shop rules have compelled the use of
costs
are
not
Low prices and
sheep and
breeding
and
wool
have
fattening
received in this survey are that in a
BANKERS'
104
reduction in values and the diffi¬
large number of eases the
finance their opera¬
culty of obtaining adequate credit to
livestock
forced
have
tions
CONVENTION.
cattle
their
sell
to
men
In
some
factor
rest.
the Agri¬
livestock pool and
The $50,000,000
feed.
the
of surplus stocks of hay and
causing the accumulation
in
other
with
natural
industrial
the
buying
reduced
and
purchasing
foreign
by
products at home.
reduction
This
for
ranging States this condition has been an important
slaughter, breeding herds along
reduced
ducers of
in
-
output of manufactured goods
the
Jn
thrown millions' of men out
of
has
centres
pro¬
,
employment and consequently has operated to reduce fur¬
the national buying power.
ther
tion of natural products is
of natural
Thus increased consump¬
prevented, increased purchasing
is prevented,
products
increased
cultural Relief Bill were largely designed to remedy these
by producers
conditions.
production of finished goods is prevented, increased employ¬
Labor
clined
in
costs
than in
six months
last
more
de¬
of labor is
ment
the
Comparatively little of
first.
the
have
rapidly in
stock-raising
and
agriculture
throughout the year,
steadily
for
his
and
clothes
planted, but the steady and material decline in the costs
and
his
of
for
labor
had
place
taken
cultivating
at
time
the
harvesting
and
crops
effected
have
a
implements and supplies have not declined in cost
Farm
rate comparable
a
reduction in labor costs, and
to the
whatever reduction in these items has taken
place has come
Transportation costs have not been
in the last six months.
reduced.
and
the
f'nished goods
family need and normally
Smith,
and
man,
he
the miner,
the same fix.
in
are
he
that
Brown, the
consume.
normally produces, so he has cut down production.
the
farm
family
products
normally
And
is out of work and cannot buy either
White, the laborer,
that he and his
the finished goods
or
use.
Changed Problems.
,
While
the farm implements
buy
other
and
shoes
Green, the manufacturer, cannot sell the quantity of goods
great reduction in agricultural costs as a whole.
at
cattle
him to
to enable
crops
were
reduction
this
prevented, and the circle revolves.
Jones, the farmer, millions strong, is not getting enough
by farmers and ranchers for
prices received
To understand it clearly
What has caused this situation?
agricultural products and livestock have, of course, fallen
it is well
to consider
briefly the development of production
greatly in the last year, the,decline in the last few months
and consumption and
marketing in the United States since
has
been
not
appreciable, and
they
to
going to drop, and in some cases are tending
rebound.
are
Itetail
prices of these basic products and
the
of
decline
last year
with
commensurate
not
been
to
the
the nation's birth.
of
that
the
We have
has
in the last year and in the
last six months.
This lessened demand is ascribed in reports received in this
to two causes:
survey
it
now
stretches
industrial structure, and
developed
broadly
one
for
has
hundred
one
for
Except
every
South in
the
the
after the Civil
years
increasing its productivity, increasing its marketing facili¬
ties, increasing its
common
of
prosperity from year to year.
Towns
wilderness.
the
have
sprung
into cities and great industrial centres.
steadily during the last year and during
The volume of "frozen credits" in the
the last six months.
country as
six
whole has decreased substantially in the last
a
months, although the reduction in agricultural, metal
mining and livestock regions has not been as great
in the industrial
Credits
that
remain
before
extended,
non-liquid consist
1920 and
be liquid.
to
clined
depressions in
Sharp
throughout
were
taken
finished goods,
steadily
chiefly
of those
the
as
a
whole,
Very
year.
lines,
some
extended this year.
ex¬
ports of cotton and certain other agricultural products have
taken
upward turn.
an
national lines.
panied
the
of
the
Economic
States
of the chart that
Survey,
I
have
the great
and
brief summaries of conditions in
from
which
reports
were
tural States of the Middle West and the
received.
in the agricul¬
West, in the West¬
mining and cattle-raising States, in the lumber produc¬
ern
True, the progress of prosperity lias been halted at
had
We
our
temporary business depression.
War.
the
We had
Several times some parts
period of railroad receiverships.
of
times.
period of readjustment after the Civil
had poor crop years, followed by financial strin¬
gencies and
economic machine have broken, and we have had to
our
stop to repair them.
But
the
on
'
before
whole,
the
great
war,
the
country
steadily forward, unperplexed by any except inter¬
moved
problems, producing more and more each year, always
nal
concerned very much with
direct effect
worlif
of
part
in
the
world
New
affairs.
world's
this country to take
and
production
conditions changed
a
larger part in
the old
ways
Our country has become the great creditor
world,
credit
no
along this line until the great war broke
Then the world began to call on
larger
a
foreign affairs that had
the United States.
on
continued
We
out.
all time.
1
States of the South,
cotton
and for
operated exceedingly smoothly.
accom¬
prepared
Broadly, this is what the reports show:
In
foreign products in an intricate
that, for all its complexity,
production that were involved in it, in normal times
and
never
of our situation to-day, drawn along
appended to this report
each
Business.
To take the place
first
down.
and
trading products for one another at home and abroad, and
The Nation's
That is the picture
up
all the factors of finance and transportation and marketing
have de¬
recently
and
country
the
across
have
Railroads
part of the country have been traded for
of exchange
system
We have
believed, at the time they were
however, have "frozen" credits that
Exports of
little.
one
those of other parts and for
that
districts, and "frozen credits" growing out "
of export loans have been reduced very
extended
as
Products of
out
grown
built
been
have
try, both liquid and non-liquid, still is greater than normal,
but has declined
steadily,
developed
has
part of the country
United
the
years
industrially, economic¬
territorially,
expanded,
War,
First, the lessened volume of business; and
Second, the increase in the value of the dollar.
a
r
-
fifty
and
Farms
The volume of credits carried by the banks of the coun¬
across
hundred and five
millions of highly intelligent people.
ally.
has decreased
until
great continent possessed of great natural wealth, a highly
States
Throughout the country the demand for short-time credits
thirteen colonies crowded together on the
seaboard
Steadily
Credits.
country that in one hundred and fifty years
a
spread from
Atlantic
farmers.
paid
prices
six months, but the rate
the last
and in
has
of
them have fallen steadily
commodities .manufactured from
in
that
the whole have dropped about as far
natural products on
as
is
opinion
common
the
reservoir of
ability.
the
world's gold
for
nation
and
the
Our problems are no longer merely
problems caused by bad weather and poor crops and domes¬
ing regions of the Northwest and the Southeast, there has
tic
been
world problems.
a
great reduction in buying power consequent upon
slackened
demand
for
in their value without
of
finished
In
the
Atlantic
a
natural
products
industrial
regions
the tier
prices
reduction
of
New
of
States extending
of
financial
If world
England,
the
Middle
from the
Mississippi River
production consequent
upon
stringencies.
They
are
have
be
international
and
influences in the process of readjustment could
be divorced from domestic influences
now
Atlantic Ocean to the Great Lakes and the
a
reduction
*
goods.
been
a
commensurate decrease in the
States and
there has
and
a
this country would not
considering the problems of readjustment; it would
solved
them
and
would
be walking in
But this could not and cannot be;
the
old path.
world influences now
henceforth must have a powerful bearing even on the
lems that in former years were
and
prob¬
considered purely domestic.
BANKING
Fundamental Principles.
to-day
be
must
based
our coun¬
recognition
full
upon
of
and
The
world
recovering from
the
serious
most
far-reaching economic and social upheaval in modern
times, and the most essential element in the restoration of
stable conditions is
Second:
The
time.
United
is
economically
so
interde¬
with
full
permanent prosperity without world prosperity.
and
Third:
world
the
it
that
have
cannot
While time is the most essential element in
restoration
of
of
rest
of
normal
natural
shown
equitable
products
and
erratic,
cases
that
the
relationship
finished
movement
between
goods,
nevertheless
toward
a
the prices of
while
the
011
conditions,
rate
the
have
also
shown
slow
whole
The reports
that
adjustment of prices and costs
within the power
it lies
during the last six months.
received
the
three
influences that more than all others
and governments to assist the operation of natural
men
and
proper
some
has
survey
and
has
in
pro¬
ceeded steadily during the last year, and at an accelerated
States
pendent
the
and the lumber
man
Domestic Problems.
these
This
is
miner, the livestock
producer therefore has been greatly reduced.
fundamental principles:
First:
105
of the farmer, the
Intelligent study and discussion of conditions in
try
SECTION.
The
First:
which
delayed
domestic
retarding this re¬
are
these:
are
adjustment
adequate
prevents
that I have
great
of
reduction
the
of
of
cost
the
prices
labor,
of
the
economic forces working toward readjustment by removing
innumerable commodities and services in the cost of which
artificial obstructions from their path and by so conducting
the
their affairs
serves
that
vainly trying to
|Fourth:
is
oppose
curative
the
small; if the full
be
to
them.
exercised
universal
of
power
it
be
must
economic
of natural
work
to improve conditions is
men
through
consciousness
awakening
the
and
through
of
a
actions
guided by that consciousness.
Fifth:
time,
There is
nor
no
Sixth:
the restoration of
hasten
Delay in
but
serve
of legislative
the removal
the
operation
restrictions
time of
war,
only to hamper and to harass, is preventing
now
of natural
economic laws
that
are
Seventh:
The natural
artificial
structure
political
cannot
result
by
exigency
improve
The
of improved
tion
existed
element in
any
means,
than
situation,
the
Common
by
but
is
or
long
the
eco¬
by
requirement,
economic
in
our
prompted
run
must
conditions"
toward
which
Prerequisites
principles should be considered the
products
the
ducers the
on
other,
one
as
hand
will
finished
and
give
to each
and
old
world
There
that
were
their
that
the normal
railroad
productive
normal
of
by
the
machinery
shall
find
those
been
stabilized
The simple fact
raw
"When
restored,
that
social
the United
foreign countries
stability
States must
^narkets for the
her mines
buy, at prevailing prices of manufactured
words,
ished
goods has not
in
the
the
been
reduction
in
commensurate
the
price of fin¬
with the decline
price of natural products, and the purchasing power
better be asked:
these might
going to recognize the impor¬
'less
of
which the rail¬
in
Government
business'
which have suffered
-
railway operation
of
costs
going to
be ad¬
reduction
in keeping with the common
point
and when are shop rules that prevent
of
enactment
mon
sense
to
tinues
the
As long as the
Government delays
railway relief legislation that com¬
demands; just as long as the Government con¬
control
respects,
these last three questions depends
answers to
to the first.
answer
the
just
and
operations
as
long
of the railways
the
as
cost
so
in vital
of railway labor
remains out of line with the common price
and
"When
down?"
be eliminated?"
Upon the
the
the
goods, the finished products that they need and normally
other
'v.-
.
the labor costs that.are the most important
are
going to
restore
is that the farmers and other producers
In
policy
in values of services,
the
so
question,
in business?
tendency—just
long will it be before railroad rates come down.
In
effect,
took
"The
of
have
require
that
control
an
whom
annual
we
are
$900,000,000
return
a
it
year,
of that
in
the
of
your
The Inter-
in the Government.
Your average earnings
been
when
-
war
centralized
Government said
the
Commerce Commission says they are
State
they
what
is
railways:
exigencies
000,000.
you
this
the
over
properties be
buy.
Situation.
railway employees, from giving full value for their wages
materials do not receive enough for their products
to enable them to
fully employed in pro¬
other industry from the effects of too much
than any
Government
a
factories.
her
more
Railway
Government
the
the
international trade relations—may
financial
is
"When
They must
products of her farms and her forests,
excess
and
have
will be
going to be applied to the railways,
to
war,
ob¬
get together and discuss the railway situ¬
that
the
in
social, finan¬
and
and destroyed in the
economic-,
chief
the
equitable price
entitled?
ways are
the nations of the
war.
is
justed
,
When
abroad
in
of
restoration
resumed.
Third:
of
a
disrupted
wasted
was
and
proper
rates going to come
factor
exchange of products of one country for those
of another—the
be
be
economic order and stability in
reconstruct
wealth
must
men
of pro¬
purchasing power—which means simply the abil¬
Second:
a
of producers and the others will proceed naturally,
goods and
group
ity to trade—to which its product is naturally entitled.
cial
of
tance of making the financial settlements to
relationship between prices and costs, and between prices
on
em¬
the hundreds of
eliminated
been
have
restoration
a
Whenever
more
There must be re-established such a harmonious
natural
it is expressed in
as
influences
"When
whose opinions have been consolidated in this sur¬
services
production, for the installa¬
ductive enterprise.
Stability.
of
vey:
of
channels
proper
'
and labor and capital
they have been clearly recognized and forcefully stated by
First:
from its
ation, the question most frequently asked is this:
principal prerequisites of stability and prosperity, as
men
unsound system of taxa¬
an
the
war.
In the light of these
the
opinion,
to
Instead
three
com¬
equilibrium will have been removed, trading between one
group
are
Three
transportation,
products at the same time that they
*
The
before
of
costs
methods of production, and for full
ployment of labor.
country is progressing are not necessarily the same as those
that
high
that is necessary for increased
deterrent
"normal
due
thereby prevents the accumulaiton of working capital
harmfully.
Eighth:
and also
This is
and normal movement of
The continuation of
Third:
stacles
remedy business conditions.
artificial
the
factor,
shop rules that impair its efficiency.
sustained
tion that diverts working capital
functioning of natural laws, and
rather
important
reports that make up this survey, is that when these three
Legislation that seeks to bolster
nomic
The
net return for natural
will
legislation,
most
employment of labor.
modities of all kinds to market and operate to reduce the
working
to restore stable conditions.
not
the
which prevent the natural
and
business that may have been necessary in
on
is
slow adjustment of the compensation of labor and
to
Second:
for the economic ills of the
measures
conditions.
normal
labor
prevent full
increase the costs and therefore the prices of finished goods.
panacea
artificial
can
to
to the continuation of
forces
economic
of
cost
both
The power of one man or one small group of
aid
to
men
those forces instead of
they move with
worth $18,900,-
last
three
years
and we shall guarantee to
amount.
The
managers
place in control of your properties will see that
properly maintained.
find it necessary or
From time to time we may
desirable to make certain additions or
BANKERS'
100
and
betterments,
time
the
shall do
we
will
we
comes
do
When
at your expense.
so
fair thing
the
the
in
CONVENTION.
of
way
understanding.
That was the
of
hundreds
millions
and in
of
millions
made
betterments
dollars
during
dollars,
The roads owe the Gov¬
account
on
period
the
of
and
additions
Federal control,
of
quarters there is apparent a desire, based on
some
by current income, to offset the debt of the roads
Government against the Government's debt to
effects
The
of
withholding
the
Many roads are forced
others must purchase supplies and equipment on
exj)enses;
credit extended
able
sufficient
a
of
surplus
working
of credits at
unnecessarily to tie
time
a
when
banks
the
huge amounts
up
of
the
burden.
It has made it
needed repairs,
these
and has deprived thousands of men of em¬
this time would
at
men
doubt that the employment of
no
give
that would be reflected in greater
has been the experience
And
to
while
it
has
delayed
strictions
that
take
their
public
the freedom of action that is necessary for
tion
the
of any
railways to their
burden
of
enormous
owners
it handed
Labor
entirely divorced
agency,
Commission,
After
were
Railroad
the
management
them also the
to
from
Government
The
Board,
steadily
rising
for
of rates to
Commerce
years,
railway
a
wages
Compared with the decrease
in the value of the commodities that the roads
karry,
that
small, and does not permit the reduction
very
point in keeping with the lower level of other
farmers
found
able
to
to
a
one
traffic
of the
so
depression of trade, of which railway rates
causes,
railway workers
in
has reduced the volume of railway
considerably that
purchasing
were
power
a
becoming
to the
purchasing
alrekdy
which they
power
As the element
and not rates of wages,
wages
railway employees have therefore
duction in
suffered the
ha^been
whole.
Attempts to maintain
no
wage
re¬
resisting.
What is true of railroad labor is true also of labor
and values that
scales based
on
as
work
in
Compensation
a
very
large part of the
of
and more evident to labor, as well
more
it wants, and must accept work at a
wages
integral and inseparable factor in the cost
an
living, and both the
quire that they
dual
of
rates
ate
labor
that
have
have
upon
of
First:
They are
reduce
of
general reduction in so important
production
work longer hours for
common
of work¬
for
about
reductions.
This
is true
manufacturing industries, who
same wage
tendency, however, has
reductions, and it has been based
ness
to
on
per
factor in the costs
a
The
purchasing
of
power
would
farmers
the
be
increased, workmen would find more employment, the cost
of
living would come down, and all business would receive
an
impetus that would
A
carry
far toward normal condi¬
us
Labor's standard of living would not be
tions.
notable
of
example
effects
the
impaired.
of disproportionately
high rates of wages is found in the building situation.
States.
United
For
<
social
as
well
as
relief from this shortage is necessary,
A
economic
reasons
but in spite of this
great need for new dwellings and in spite of the readiness
of
of
hundreds
soon
the
as
of
thousands
cost
in
workmen
accept
the
to
persons
construction
of
resumes
prices,
building trades
a
build
its
houses
proper
as
rela¬
large percentage of
remain idle rather than
reduction in the wage rate.
a
Wage'rates are, of course, not the only factors that re¬
Shop rules that impair
quire adjustment.
of labor by restricting its output
the efficiency
and increase the cost of
production in industry are an important influence working
to
keep up the prices of finished goods.
The Excess
The
hundreds
of
Profits Tax.
well-informed
and
experienced
men
throughout the country whose opinions I asked in prepar¬
ing the First Economic Survey that was made last spring
almost unanimous in their condemnation
and
is
as
the
more
even
disastrous
more
of the excess
a
natural
wage
unwilling¬
of
the tax
have
been more
against its continuation
emphatic.
It is difficult to
a
effects
widely felt the protest
understand why, for the sake of
raising
relatively small amount of revenue, Congress should
promise that amounted almost to a party
a
the Treasury
ful tax
a
year
of
President and the Secretary of
would continue this universally harm¬
longer than is necessary.
The tax is actually not a
tion
dis¬
pledge,
and the demands of public opinion, and con¬
sider legislation that
day.
been to resist
relinquish the "higher standard of living" that in¬
of
large part
corresponding decline in the costs of manufactured
a
goods.
their labor and
cuts or have agreed voluntarily
the
a
the wages of labor could not fail to bring
as
the recommendations of the
The
of
power
unemployed.
A
in some instances of men in
to
upon
They keep up the prices of finished goods, and
regard
wage
effect
factor in causing unemployment, and
a
the consuming
notably of farm labor, of workmen in the metal mi<aes, and
have either accepted
and disproportion¬
double
a
Labor.
recognized that their full employment de¬
wage
have
profits tax, and in this Second Survey it has been shown
reasonable compensation
voluntarily accepted
consumer,
itself:
thereby
that
men
Labor occupies the
together.
therefore
wages
good and economic law re¬
common
down
come
position of producer and
were
have received reports in this survey of groups
pended
#ie
with
keeping with the average level of values.
Wages are
suc¬
employees themselves, and to the entire public.
I
be
naturally
must
public in general, that labor cannot find full em¬
prices
longer exist cannot be permanently
injury to industry, to
it
marked
which
a
cessful, but while they continue they cannot do otherwise
than
the
at
proportionate to the value of the goods it produces and
wage
short time ago 25 to 30% of
out of employment.
is total
sell
not
that
to
nearer
So
pay.
tionship to other values and
are
could
they
point
services and commodities.
The common
for
demand
the
months
many
shortage of hundreds of thousands of homes exists in the
several
12%. last July.
It is the
x
prices
was
It is
as
cost-determining
a
Inter-State
the
made
been
the rate-fixing body.
reduced
decrease is
re¬
efficient opera¬
increases that had
wage
during the period of Federal operation.
retained
many
When the Government turned ba|ck
business.
recover.
labor.
paying its debts to the rail¬
from the railway
away
from mar¬
thereby reduce the purchasing power of all labor, employed
Wages.
the Government has continued to impose
ways,
crops
lesser degree the manufacturers and retailers
a
down
or
And
for
resist
those
Second:
Railway
time
long
a
labor.
decrease.
rates
for
reasoning that made some retailers and some
manufacturers
it
of railroading in this country that
traffic increases
volume of
the
consumption, greater pro¬
greater volume of railway traffic.
duction, and a
when
impetus to business
an
which
lower prices.
When
of labor is
the position
that
as
they believed prices would
the
as
same
additional
impossible for the roads to make
There can be
ployment.
and
country
business generally can ill afford to carry such an
because
ket
ployment at the
capital to make necessary repairs and replacements.
The result has been
same
prompted some farmers to withhold their
by the manufacturers, and very few have
accumulate
to
the
before
down
come
prices they wanted, they sold at the prices they could get;
high rates of interest to meet their current
borrow at
been
which
must
down.
regard to the first point,
fundamentally
to the
the roads.
payments to
the
railways are entitled are manifest.
to
is
Congress
and
assumption that capital expenditures should be absorbed
the
With
The Government owes the
of
hesitating about paying the debt.
ernment
supposed to have established, and on the
the cost of living
wage rates can come
adjustments."
roads
flated wages are
argument that
working capital.
tax on profits, but a
It is apparent
confisca¬
to everyone who
BANKING
has
observed
its
operation
that
it
impairs
the
SECTION.
of
working
capital of the country and makes impossible that full devel¬
opment of productive enterprise which is essential to
able and
The
products
goods that
it
compared
materials.
raw
It
can
with
three
restricts
great
situation,
of labor and
impair
its
those
the
of
farm
volume
products
of
the
tion
obstacles
to
manufactured
readjustment—the
adjustment
the continued
of
the
the
kets for
so
widespread and they
tions that
Progress
But
of
in
is
and
on,
there
modicum
of
we
a
have
been
the
few
are
serve
with it
carry
consumption
and
people of the
United
States
shelter, transportation, and
and
services
that,
population, have
fantastic to
from
the
the
to
come
be
employment
of
'
1
development
of
It
the
volume of purchasing
",
i 1
'« ''
Gods.
tive
effort
that
entire people, and in the nature of
things there is
for anything but confidence in the
no
have
justment Is
our
more
a
full power to help in
our
struggle
between
that the process of read¬
groups
of producers,
improving its
at the expense of the others and is
striving to attain
so as
to benefit
,
extent
of
its
from
recovery
lar groups, and the
the
world-wide
lation
stagnation that grew out of the waste and destruction of
ligerent
that
nation.
stand
other
in
It
is
free
from
the
the way of restoration
countries.
Its
social
of
Despite
eminently
the
its
indebtedness
own
creditor
nation
countries have.accumulated
man
power
The
many
the demoralizing
to
within
borders for
its
are
losses
the
almost
of
a
of
it
the
has
the
other
greatly
unlimited
war
lias
been
nations.
of
while
debts.
There
third
pre¬
The
covery,
other
Its
but at the
same
slowness of
enhanced
is
the
the
value of the
the
an
war-stricken
restore
their
dollar
small
is
as
the
wealth
to
support
to
the
common
coin
slogans
and
catch-
of
of other nations.
abroad
may
that
be
in
productive
in
necessaries
this
powers
raw
to
the
would
The
abroad
are
It
are
their
is
as
pay
States
refusal
if
some
to
Of course
not
that
the
a
people
that war-time
consumed,
as
as
surplus
European
.s
very potent force in check¬
ing the decline of the prices of natural products.
a
an
to liquidate his products,
and
so
has
influence tending to work an improvement in busi¬
a
of exports
whole.
The effect of the increase in
the volume
of foodstuffs illustrates very well the importance
are
a
to
catch-phrase
mean
of
the
year.
that millions of people
showing their displeasure at
purchase commodities that
re¬
they need.
of people, customers of retail stores,
"buyers'
did
prosperity
resulted
strike" in
not
want
to
was at an
in
any
buy;
reduced
pur¬
It
was
way.
it
end, values
was
simply
were
being
Never¬
certain mistrust of and antagonism to retailers as a
group
and the retailers themselves could
ers
long
believe
that
had
not
caused
help looking for the
the
supposed "strike."
tendency to personify forces made the retail¬
some
powerful
ago some of them
national
improve somewhat the condition of the
farmer, helping him
only work
theless, the phrase "buyers' strike" could not fail to create
that
gradually increasing, and the partial restoration of foreign
to
antagonisms
can
reduced, and people did not have the money to buy.
The natural
It has reacted
been
the phenomenon that
was
proceeds, the value of exports of foodstuffs and cotton
a
in
end
pervasive power had suddenly acted upon
mysterious power
markets undoubtedly has been
lias
understood
the minds of millions
not
finished
the
and directed them not to
buy.
struggling
buy and to
evident
are
that in
by refusing to buy, designing to force prices down
chasing
absorb.
show
com¬
strike"
United
impossible
materials and
survey
re¬
matter for
a
makes it
effects
injury.
It is popularly
by
unfortunate in the
their
conditions gradually improve, and as
readjustment at home
as
to
only to obscure the vision and befog
serve
and
reason,
room
population and
foreign countries that
full
received
is
influence
quantities of American
Reports
stocks
it
recovery
goods which they naturally
ness
tendency
between producing groups
Our Production.
and
time
the
pride, but it is also
been
by
which in the nature of things
they cannot express
loss
United States is fortunate in the
rapidity of its
parative
to
than
slogans
population.
World Conditions
for
rather
These
tailers
for
expendiency
pretending
tliey express fundamental economic forces and move¬
that
"Buyers'
increased
sources
become
world,
huge national
resulting from
compared
that
political
ments
fered.
there
by
phrases and to substitute them for sound
reasoning, preach¬
ing that they describe economic conditions and
depreciation that the currencies of other nations have suf¬
of
guided
disturbances
stability in
has escaped
money
be
particu¬
tendency to let the enactment of legis¬
sound economic requirements.
the United States has fared better than
any other bel¬
war
pros¬
The second is the mistaken idea that
legislation can de¬
flect the operation of economic laws
business.
the
and
condition
own
perity by keeping the other fellow down.
room
gradual improvement of
In
pro¬
than all others
problems.
that each group is capable of
the
become
more
to be made by the American
going to exercise
The first is the mistaken idea
consuming
to
effects
is necessary
we are
would
resulting
power
whose
the
the solution of
lower
is ail
facts, and, by obscuring them, to prevent
functioning of that intelligent, united, co-opera¬
the
people and the demand for these necessaries.
the normal
obscure
the proper
Every step in the process of readjustment is doing its bit
restore
influences
people if
of life.
the maladjustments
permanently
think it
we
*
nounced in the last year have served
other commodities
many
social
a
are
instead of cowering
going to the other extreme and preach¬
or
*«■
food, fuel, cloth¬
necessaries
that
assume
would
war
power of the
with
need
of
forces
r
False
to
The
natural
interest best if,
our
fear,
manifestations
great
of normal
return
a
full
natural
that
operating to restore stable conditions.
\
,
Three
normal
the
we
■"
•
•
1
labor.
ing,
shall
power
production,
to
but
are
approaching the day when the restoration of normal
consuming
restore foreign mar¬
recognize the facts, face them
honestly and cour¬
ageously, and consider how we may best support the. forces
house in order
our
help to
ing that everything will be all right if
that
setting
are
And upon
the pre-eminent creditor nation of
the
as
maladjustment
can
right,
signs
last
and
produc¬
riding
in pessimistic
in
our excess
goods.
problems
We
undeniable
improvement
than it consumes,
more
prosperity that
wording to remedy.
a
Readjustment.
of
Domestically,
months.
be
our
spite of these problems the process of readjust¬
going
at least
and
parallels to
one
pros¬
straight to ruin.
Rational examination of
condition to-day must prove to the
greatest doubter that
world-wide
discussion of the effects of the others.
a
domestic
large part of the responsibility for
creating
a
our
world is
our
excess
alike in their manifesta¬
so
discussion of the effects of
a
large extent
ment
are
on
There is nothing in either the
domestic or the foreign
situation to give rise to the
pessimistic conclusion that the
rail¬
profits tax—vary in importance, but the
injury they work
is
States,
world, rests
enforcement of shop rules that
of
full
our
financial machinery that will
compensation
efficiency, and the continuation
influence
be absorbed in the markets of
the world.
the United
and
potent cause of unemployment.
slow
their
States produces
it is essential to
profitably be made and sold, and therefore
becomes another very
These
way
The United
reason¬
helps to maintain the higher cost of finished
as
and
perity.
equitable prices and full employment of labor.
tax
107
foreign markets
"they" had caused it.
And not
discovered who "they" were; and in
publicity charged that the banks had advised the
people not to buy1!
Thus, the
use
of
one
wide
and
thoughtless,
not
to
say
little phrase has created at least a
malicious,
measure
antagonism in ahd toward three groups—the retailers,
banks
and
the
entire
consuming public.
of
the
BANKERS'
108
CONVENTION.
•
of
retary
of the Treasury is aware
We have instead a
dred different
the year 1922.
Its Effect.
"the
interests
bloc."
agricultural
best
organized
was
it is convinced,
it are
that efforts to repeal
farmer whose
bloc's purpose to guard.
is the
interests it
the economic
a
the excess profits tax
that
ments
all, but a
actually is not a tax aD
costs of production of manu¬
restricting the purchasing power of the
by
that
farmers;
restricting the volume of finished
farmers it is
of the
restricting the purchasing power
factured goods it is
goods that
by restricting manu¬
restricting employment; and that by restrict¬
profitably can be made and sold; that
facturing it is
restricting the markets for the farmer's
ing employment it is
products.
reiterated until
agricultural bloc must be aware rf
all the members of the
controverted.
and they have not been
them,
v
I
been iterated and
These arguments have
There were,
Indeed, members of the
Senate and House Committees that
the tax bill
who favored the repeal of the ex¬
considered
effective as of January 1,
prevent friction in the ranks," to use the
profits tax so as to make it
cess
Rut "to
1921.
Senate committee, the committee
words of a member of the
way
gave
Ilou^e and to the agricultural bloc, and
to the
has. recommended
infliction of
that a
measure
that must result in the
higher prices for finished goods,
chasing power for the farmer, and-a
is neces¬
the agri¬
have defeated the very purpose for
cultural bloc will
it
restricted market for
Thus, if the tax is continued another year,
sary.
and
It
is this pitting of producing
against groups, this following of delusive standards,
groups
shouting of misleading slogans, that prevents the
this
■
prosperity.
common
restoration of stable conditions
fied and co-operative
uni-
effort of the entire people of the coun¬
this
In
survey
all
in
parts
I
have
them from
have learned
tried
■
to give you the facts as I
the reports of bankers and others
of the country who are in close touch with
business of all kinds.
I have tried to picture the progress
readjustment and to outline the influences that are re¬
of
unified action that is necessary to
It is not enough to
But
should
be
basis
this
:
of
for
the facts means nothing
action.
And
our
concern
How can the American Bankers' Associa¬
tion, with its 24,000 members in thousands of communities
States, consolidate its strength and unify its
efforts
to
and
so
widely separated
along its own
thousands of other
perhaps of the direction which their ef¬
ignorant of the thoughts of the
lines,
hankers, ignorant
forts
effective,
fully
the latent
32,000 banking units
united in a common policy and a common effort
find expression both in group action and individ¬
for public good that lies in the
be
must
To... bceome
taking.
are
power
that will
ual action.
banking strength of the country may
and made a great force
the American
have
the bankers of the
have
our
divisions,
We have .the
machin¬
creating a union
We have the State Secre¬
Section, establishing a contact
organization and the States
all
represented.
associations, each with its intensive
well equipped and ready for use in
taries'
We
in active economic leadership.
banking thought and action.
of
be consolidated
Bankers' Association, in which the na¬
strength of the banks is
tional
through which
to-day all the necessary media
have
We
the
between the national
organizations and thus between
country.
commissions and committees, our
our
sections
Executive Council meetings three
times
All these agencies
are constantly giving careful consideration to the problems
that arise from time to time, and to means of solving them.
jrear and
convention once a year.
our
but they cannot put them into
all the banks of the
They can work out policies,
That
effect.
can
be
only by
done
country.
'
•
unless it is
immediate
in the United
an
have 32,000 banks in
working, each alone and each
The Bankers' Opportunities.
knowledge
the
make the force and power
fully effective?
of our banking system
communities
to dis¬
How are we going to get that
responsibility?
tarding it.
made
well as in the public in¬
how are we as bankers going
question is,
The
charge that
a
-
community a duty of
economic leadership that he must
terest.
and
•
be the community
small or ever so large, every
discharge in his own interest as
* ;
Action Rased on the Facts.
Be his bank a $50,000 bank, or a
in this country owes to that
banker
economic education and
We
try toward the common good.
to stand
in which it is situated ever so
policies like these that do more than any¬
prevent the
to
public re¬
It is no longer
behind the counter and make
$1,000,000 bank, or a $1,000,000,000 bank,
ery
else
thing
'
banking system has
the
corresponding increase in the
a
loans and receive deposits.
various State
is acts and
It
which
formed.
was
it
sufficient for them
reduced pur¬
products be continued for a year longer than
farm
with
carried
of
importance
sponsibilities of men engaged in banking.
is essential to
that by keeping up the
labor ;
economic structure would
Responsibilities.
Growth of Bankers'
reasonable and equitable
manufactured - goods and to full employment of
prices of
credit and exchange,
become a more and more important factor in
life of nations, and to-day it is so fundamental
increasing
The
development of productive
it prevents that full
enterprise which
the period of barter
progressed through
systems of currency,
need that without it our whole
1"
confiscation of working capital; that by impair¬
ing capital
90%
included
breakdown.
agricultural bloc has turned deaf ears to the argu¬
The
thousands of dollars to a billion
24,000 of them, representing fully
Bankers' Association,
has
present-day
banking has
their proper
anybody in
to "put one over" on the
attempt
an
to
burden; that it does not hurt
particular or business in general, and
society
As
that the excess profits tax
share of the tax
systems of banking laws.
American
the
in
the
to serve
This bloc is convinced, or
of nearly
than
half a hun¬
These 32,000 banks
banking strength of the entire system, are
of the
known as
group
that places upon corporations
just tax
a
It
a
financial and economic affairs
banking system that consists
in strength from a few
dollars, and nearly
the farmer.
of
at least asserts
is
however,
Congress,
in
exists
There
hands
miles and operating under
three million square
harmful effects might end with the year
Uneconomic Legislation and
banks does not lie in the
independent units dotted over an area of more
32.000
range
I
our
capable by their actions or exercising a pow¬
the country.
And public opinion
demanded the retroactive repeal of the
1021, and not go on through
strength of
few men,
a
of
of it, and experts in the
Department are aware of it.
that its
branches spread among all
of the nation.
Fortunately or unfortu¬
erful and unified influence on
The President is aware of it, the Sec¬
profits tax.
so
few
banking strength consolidated in a
a
communities
nately, the
continuation of the
widespread harm that is done by the
fax.
Europe,
large institutions, each with its
public opinion is aware of the
excess
and official advice
not, as they
has been such that we have
,
Intelligent and Informed
Treasury
in
have
the
injures others.
it
system
banking
American
development of the
intensely democratic
The
for
illustrations of the mistaken Ideas that this is a struggle
between groups and that legislation can change the course
of economic laws so as to help one class at the same time as
than the halls of Congress
look no farther
We need
as
effective
common
make the
banking system
of the country
agent in the restoration of normal
prosperity?
conditions
Merely
to indicate the
possibilities that lie within our
that in the last year 1
bankers' associations, I want to say
have
three times tried to make use
strength
Twice
First
I
of the unified
banking
of a public character.
the banks, in connection with the
of the country in efforts
have
called
Economic
on
Survey and again
Second Survey, to provide
in connection with
accurate information from
this
which a
*
BANKING
SECTION.
country-wide picture of business conditions might be
prepared,
that facts
so
Both times
country,
the
to
base action might
response
instant.
was
and
best
in
which
they
judgment and opinions in
individual
The banks of the
asked
were
And they can discharge that
duty
be obtained.
recognizing the effort of public service that
intended
their
which
on
to
to
the
the country
last
six
weeks
to join in
I
have
repeal of the disastrous
excess
profits tax.
banks
The
domestic
of
will be
or
successful
the banks have joined in
pointed,
is
conditions
thought and action has been had, and
There
to
has
always been
going into "politics."
san
politics," of
in the
we
larger
sense of the
of the country
an
is
this
now
association
might better
"parti-
Association
financial
rest the
The
of
the
information
we
provide,
use
for
have
have
can
no
greater
as
actions
as
of those
of
ure
far
as
facts, of dispelling mistaken ideas that
prosperity
can come to any
onisms, of preventing
ods,
the
far
as
enactment
of
laws
rather than for sound economic
"v;
5''
political
the
'
'
'
,
>'
•/
\
; ;
fullest
*'
of
way
and
restoration
a
of
for-
stable
But
*-
the world-wide disturbances attendant
recognize
we
we
that
time
bankers and
as
degree
our
are
after
all
is
the
as
association
an
to create
power
«an
use
enlightened
operating to restore normal conditions and
prosperity—then
.j.
•
'
'
.
,
v;
•••
1
■/'.
being replaced
working to rebuild the productive
need
we
not
face it confidently and may be
may
,
..
palliatives; if
normal
.
*
is
war
being
conditions
problems, both domestic
many
if
war;
difficulties that
'
?'■*
■
the
forces that
reasons.
^
'*
are
prosperity is
political'
political expediencies and bring the
country to work
sanely, intelligently and in union with the great economic
expediency
^
V
and
and
any meas-
:
/j
•
sta-
public opinion and to awaken and direct an economic consciousness that will wipe out
producing group antagonisms
coun-
class out of class antag-
through
of normal
social
as
standing in the
to
possible by educational metn-
as
that
true
are
or
ac-
consideration
sane
toward
move
greatest healer ; if we do not seek vainly to obstruct
natural
forces by artificial measures
designed to serve as panaceas
actions and public
possible in the light of
is
upon
them
upon
quainting the people and the legislative bodies of the
own
As prices
prerequisite
Steadily,
necessary results of
they
duty than that of
try with the facts, of guiding their
disappearing.
equitable basis the full
purchasing power that
If we face conditions as
they are; if we consider our
situation in the light of sound fundamental
economic laws;
if we realize that our problems are but the
natural and
primary responsibilities of government.
banks
despondent view that
problems are
welfare of
wish
may
or a
irresistible.
should
and of having them make such
international situation that
conditions and normal domestic and world
prosperity.
the forces that are working to solve
these
banks
the entire people.
We should go into
politics with the purpose of being helpful, of
placing such
facts
a| we may be able to gather at the disposal of legis-
lative bodies,
are
an
foreign countries
eign,
always not to class welfare, but to the economic and
eye
on
necessary
It
But
themselves.
concern
Bankers'
the
capacity that measures their ability to
consume, and as foreign production increases world markets
for! American goods
are being reopened,
press
the
in
nor
abroad improve, the wealth wasted in
of "the science
sense
matter with which
no
a
and
aversion
an
meant
through
pessimistic outlook
a
recovered.
united strength,
by "politics" is
word, in the
is
American
great
in
If
should
our
the aversion is well founded.
course
of government," there
This
bility
immaterial; the point is that
forward to exercise the full influence of
sporadic
Gradually influences preventing the restoration of
stable
response
indication of the possibilities that lie in union of
an
by
the world has sunk into permanent
depression,
public effort; the way has been
a
situation
sustain
can
ing strength of the country expressed itself.
Whether this
initial effort to consolidate the influence of
the banks has
been
not
In closing, it is well to
say that there is nothing in our
again instant and country-wide, and the unified bank-
was
best
community of action
a
Conclusion.
question-
the
by
gave
effort to bring about the
common
a
asked
but
the medium of this, their
great association,
uaires and in discussibns of conditions
in their communities,
Within
action,
was
assist,
answers
100
•
...
•
•-
•y:"
,
•
■
-
.•
''
*.
•
the
future, but
that it holds
no
cannot overcome.
we
.•
,
.
fear
sure
.y.
;"
v
•
.
v"'
.
■..•••
:.
'.v-;' "t!f"
v'-tv."
■
•
.
'■-i-.
•
■
••n.v-'v
'
■
International Credits— The
"
'
*
'
«
Meulen Bond Scheme
ter
By Sir Dbummond Fraseb, K.B.E., M.Com.,
Organizer, Lon Jon, England.
I
come
not
from
before you from our little island with
modesty and
little
a
J.
Chairman of
the
the
Congress
When
President, Mr.
your
Watts,
trepidation.
of
the
I
S.
received
Drum,
Mr.
Delegation
Chamber
of
F.
at
ferred- upon me by this invitation.
I
became
address such
I
a
by
the magnitude
coming before you to try to convince
I
going to lay before
am
which
great nation
I
ask
you,
humble
ter
years
sible
and
the
please,
of
upon
Meulen,
world.
an
The
I
that
of
banker,
the
who
this
only
is
be
scheme
is
two
spent
in working out the details, so as to meet every pos-
contingency.
ference
in
It
was
September,
adopted
1920.
and
League of Nations in December.
Finance
Section,
consisting
of
by
by
A
M.
the
the
Brussels
Council
of
the
(France),
Sir
Henry Strakosch (South Africa), and Mr. ter Meulen
(Hoi-
land)
choice
why
fell
so
authorized
upon
me,
unworthy
an
to
find
in March,
an
1921.
organizer,
This is
and
will
to
war-stricken
enable
their
of
normal
revenue;
oversea
confidence in
countries
governments
to
to
pay
keep their
that it will render pos-
revenue-producing assets of bor-
purchase essential imports which will
purchasing power of these countries;
most important—to
secure, with the collateral
outlet
the
'
for
exports
stagnation of
It
does not
were
and
thus
oversea
further
dislocated
at
excessive
the
recovery
It
Is
the
conditions
countries
care
that have
been
bond,.a safe
prosperity
to
restored
to
be
which
These
owing to the war-denuded
to
have
the
undertake to stabilize exchanges.
being replenished
war.
restore
trade has checked,
previous
of
prices
their
of
the
tackled.
normality,
in certain
export
trade
When
the
countries
trade
in
after
each
these
ex-
stocks
of
the
these
conditions
exchanges will
take
of themselves.
Since
I
became
the
organizer the scheme has been
uni-
versally accepted by exporters, bankers and by the World
Cotton
their
were
it
restore
the dormant
that it will enable
lending countries—of which yours is the
the
of
Sub-committee
Avenol
Con-
scheme, will
mobilization
the
changes
the
to
the
restore
in
Europe.
am
scheme
author
Amsterdam
of
that
way;
rowing countries
scheme
between
countries
this
ability of importers in
sible
now
audacity
my
that
expenditure within
that the scheme
commerce
great
a
in
ability to
my
and only
one
bear in mind
whereby
the
of
you
is the
and
war-stricken
to
instrument
launched
Mr.
you
rehabilitate* trade
can
the
their
As time went on, how-
doubtful
more
O.
con-
gathering of distinguished bankers, and
overwhelmed
am
and
more
claim
trading; that it will re-awaken
the
Commerce
London, I Was thrilled with pride at the distinction
ever,
I
invitation
through
American
International
the
Conference
and
the
Congress of the International
Chamber of Commerce.
'
In Appendix I to this address I have
given a synopsis of
the
reason
the way
exponent appears before you
to-day.
I
in which the scheme is being applied to Austria,
have also given
(Appendix II)
copies of the resolutions
CONVENTION.
HANKERS'
110
by the two al>ove-mentioned Interna¬
passed unanimously
tional Conferences; and I have added
(Appendix IV).
•scheme
the official text of the
,
.
lending countries to deal with.
sand the investors of the
which I suggest
(Appendix III)
draft plan
have added a
It is
Will meet this situation.
I
the principle of your own
on
approved national securities, to finance essen¬
who possess
of
stimulate the productivity
imports—i.e., goods which
tial
giving
country—by
the
bond,
them
the power,
The scheme proposes
credit.
necessary
the formation of
international organization for the provision of guaran¬
an
tees which,
the one hand, will protect the autonomy of
on
and
the borrowing countries,
the other hand will offer
011
adequate security for lenders.
from
Purchases
sales
foreign
the
to
must be made
The purchases
countries.
with the private exporters
It notifies what
of bonds.
commercial credits to be granted by the
exporting countries.
if
weekly, fortnightly or monthly revenue, such as
a
State monopolies, etc.
from Customs duties,
the nature and value of these
Of
securities are care¬
examined and a gold value assigned to them, and
permission to issue bonds to the gold value of the assets
pledged is then granted to the government of the borrow¬
ing country. These assets will be managed by the borrow¬
ing country or, in cases of necessity, by the International
fully
Commission
which
011
soon
or
the
by a
specially appointed
borrowing country may be
the total amount of
as
used
collaterar security,
as
currency
As
in five, ten or fifteen years,
These bonds, which will be
agreed rate of interest.
an
Sub-Commission,
represented.
bonds is fixed, the borrowing
country issues bonds maturing
at
will
be
payable in whatever
the exporter desires and will be
issued by the im¬
This will gen¬
of the lender's country; but it does
porter's government in the same currency.
erally be the currency
not follow that
this must necessarily be so.
rower's
tionals or, itself, is
accordance with the wishes of the com-,
in
be handed over by the government
will only
of the borrowing country to
as
have
been able
to
there is
Thus,
for
an
such of its national importers
national
payable to bearer.
payment of maturing bonds;
very
meet three specific demands:
provision of interest and sink¬
probable defaulters.
porters to whom it issues
will
to
it
upon
its commercial status.
for
a
It knows well that any
the country.
And this
country trying to regain world con¬
exporter who holds or
offer
sift most carefully the im¬
bonds.
bring discredit
serious matter to a
fidence in
the
of pos¬
The last of these is
unlikely contingency, for the simple reason that the
default
a
into
whose
In
ordinary transaction,
an
from
turns
is
tions.
stands
to
of such
that
reason
a
revival
to all
benefit
of confidence
by the gradual restoration of normal
parties,
it
in the com¬
unsuitable
are
for ordinary
banking accommo-
exporter naturally wishes to hate the trans¬
The
dation.
conditions.
will only step in where the
that the bonds
obvious
conditions
action carried through with the minimum
the
govern¬
it for further transac¬
stability of the borrowing countries will be followed
mercial
It is
re¬
transactions has been satis¬
with
through,
borrowing
The
government.
series
a
carried
released and
the importer and from the im¬
liberty to employ
at
When
factorily
his
to
then
when the importer has met
is automatically
the bond
the exporter to
back
porter
ment
by the bond.
secured
obligation
This
importer's ability to pay.
the
in
But he has not suf¬
satisfied.
honesty he is
confidence
is
He will only
transaction with importers whom he know;,
the
confidence
borrowing govern¬
balance its budget at no distant date.
is in a strong position.
too,
exporter,
financial
the issue of the
commission will allow
no
will be able to
ficient
his
The importer is armed
they are satisfied that the
until
bonds
ment
obligations
revolving credit al¬
This naturally creates a
because
to give
exporter willing
an
of
why those
satisfactory collateral security on a sound
a
basis,
issue
an
is no reason
covered by the collateral bond.
ways
The
by
used
be
not
applied,
having
there
fixed,
been
of the credit.
of risk, while at
time he is willing to grant longer
same
credit than is
Therefore, with the bonds
usual with the banks.
as'
a
col¬
lateral, he can make arrangements for the finance through
such as the corporations formed under the
corporation,
a
Such
Edge Act.
corporation would naturally give those
a
bond as satisfactory
longer advances against a ter Meulen
security, because it obtains its funds from its own deben¬
tures at
15 years,
5. 10.
Bonds
The
subscribed by investors.
for Essentials Only.
Where a default occurs,
has pledged the bond is obliged
fortnight to the borrowing government.
because they finance foreign
These bonds
be issued for non-essentials, because
non-essentials
stimulate the economic life of the bor¬
hinder rather than
rowing country.
No
attempt
•
so
far has been
made to define essentials.
application will have to be decided 011 its own merits.
What
may
in
essential
be
essential in one country may be a non¬
an
another.
"Whatever view one held six months ago
of
securities—such
Meulen bond—for essentials only.
the ter
as
will be attracted to these cor¬
that investors
reason
porations is
form of ter Meulen bonds, i.e.,
borrowing country is certain to
is
This created
and purchase of bonds against the debt
sible but not very
a
reservoir of credit in
security.
The revenue from 1 the borrow¬
ing country will be adjusted to
ing fund;
this neces¬
The bonds may be in excess of the
credit.
Each
the creation of a
adequate
reservoir of credit takes the
bonds
should
satisfy the government with regard
standing or securities.
to their
return
bonds
open
will not
bonds
But with the
determine.
may
the choice of importers
in
government
borrowing
having
freed from the self-interest of the lend¬
mission.
The
used
not appear, therefore the bor¬
provided the revenues from the pledged assets
managed
surplus
any
which provides the guarantee for its na¬
country,
er's country
are
The outstand¬
bond is that the government
ing feature of the ter Meulen
of the lender's country does
A
security for the
required are such as yield a regular and,
The securities
course,
war-stricken
plus
of the sale of bonds, &c., which may form
the commission
as
bonds
with
government of a
step is for the
Commission to purchase these de¬
the sinking fund,
of
out
sity should hardly ever arise.
enter
of the Scheme.
specific assets it is prepared to pledge as a
revenues
sales
special, approved cases.
country to apply for the issue
possible,
and
by
It is not intended to
of another.
Working out
first
be balanced
must
thrpugh the private importers of one country
finance governments except in
The
International
discrimination
with
countries
foreign
position of the sinking fund will
that
bonds
reserve
a
through the
which will attract the
command the confidence
to
the
estimated
is
it
from the proceeds
war-stricken nations,
to enable
designed
is
scheme
The
Meulen Bond Scheme.
tek
market,
back the bond and the exporter sells it on the open
faulters'
Tiie
of the principal when
If the issuing government does not buy
the bonds mature.
enable the
"Edge" Corporations.
cash the coupons for interest
they fall due and to the repayment
as
If he holds it as an
investment.
investment, he has the right to
required by exporters is a matter for the banks
The funds
of a default falls, unless
whom the ultimate liability
upon
he wishes to hold it as an
States
other
found
and
of independence
imposing of commercial,
the
transport and
barriers,, necessity has swTept all before her
a
simple
and has
of enabling these countries to define
way
approved imports, which they can obtain by means
ter
Meulen
tion.
The
bonds,
principle
treaties
between
example
of the
being
tween
without
taken to
the
delay of
underlying
the new
the
recent
business-like manner
without
commercial
States may be considered as an
in which steps are
facilitate normal commercial
the States
of the
official interven¬
relations be¬
undue delay or red-tape
restric¬
tions.
But
one
must
go
a
step farther.
by the government must go;
Legislation spoon-fed
and industry must be left to
BANKING
t
■
manage its own
i'
•
,
affairs.
No credit
scheme, however good,
be successfully
adopted unless trade is freed from
can
time
restrictions.
sary in
the
Bureaucratic
war-time,
must now
States to
new
control,
although
be removed.
pledge their
countries
apply for these
I
have
much
had
for
turned
impressing
already
the
countries
are
long-term
periods,
to
neces¬
be
overcome.
and
be
so
used
will
dominate
sity, just
The
the
as
the
affect
Before the
goods
Credits
change, and
Scheme—ter
not
as
The
import and
Meulen
bonds—of
exporters
the
equilibrium,
The
amount.
machinery
the
War,
machinery for the payment
in
or
no
the
of
rate of
another
of
was
foreign
remained
required
to
was,
comparatively speaking,
of
this
a
small
As gold flows into
to
bank credit/would
of
in
war
consumable
it
productive
goods,
expansion
It
is
more
of
financial
equally
now
the
greater
violent
the
which
change,
taxation
and
a
country
reduced;
recognized
chasing
tect
brought
It
a
that
of
the
rise
in
hinder
about
huge
nomenal
pro¬
war
without the
and
heavier
currency.
taxation
and
the
in
the
rates
trade
cost
of
of
activity.
would have been checked by
purchasing
world-wide
reaction
slump in prices.
to
power
the
the
demand
early
in
for
ex¬
Heavier
a
transfer
of
in
the
usual
was
brakes
to
once
rent
1920 produced
rlthe unavoidable result
of bank credit
was
a
was a
be
The
catastrophic
drastic
the
and
contraction
to
which
prosperity.
countries
from
of
alone
their
pay
To restrict the credit
America
are
and
other
exporting
interdependent.
For the
revolving passage of goods
spirit
all
en¬
other
Europe would entail the
machinery will be enabled
the
we have
by which the
to
countries
equilibrium between
an
would
and
way
of
and
link
of
together
the
world.
government's
a
cur¬
stopped—and
enable
secondly,
importers
the
to
;Meulen
ter
bond,
exporters—because
pay
remedy which will bring about
return to normal
a
con¬
ditions.
Now I
come
to the crux of the whole matter;
Finance.
The
importer will want to know that the exporter will
be able
to
finance
exporter has
out
the
transaction until he
Open Credit.
requirements,
This open
can
Exporters give credit with
rely
own
resources
largely
banking
upon
importers to pay their
Cash Credit.
to
accommodation.
revolve in
These two factors—expansion of credit and currency for
for world-wide specula-
conse¬
the ability
way.
*
,.
This is represented
&c., transfers, which also
with¬
or
and, to meet seasonal
revolving credit has ceased
by cheque, cable,
the transfer of
mean
banking
ac¬
commodation.
Bill Credit.
was-mainly
Before the
war
the international
European bill, which settled the
a
ments of oversea trade all over the world.
banking accommodation.
When
mate
bills
the
by
that
50%
of
these
European market;
banks
as
the
the
were
bulk
of
This also
broke
war
in
circulation
these
bills
means
I
out
cur¬
pay¬
esti¬
outside
held
were
self-liquidating interest-bearing securities
(a
profitable substitute for gold).
(4)
Bond Credit.
required
for
quickening
dation
the
is
the
credit.
to
the
these
trade.
the
where
is
of
the
securities
for
European
in
the
bonds,
interest
of
diminishing
nationals,
to
place their home affairs
collateral
their
of
safeguard
as
so
the
on
sound
a
the
into
investors
revenue
the
borrowing
must
to
as
have pledged
countries
benefit
come
Just
lending countries
order
Just
credit.
the
issue
Before
the
of
productive
the
of
must
tain the
and
accommo¬
Edge Act Corporations
into
borrowing
governments
investors.
the
machinery
confidence
banking
reconstruction
owi?
their
of
Again
the
credit"
Corporations
stimulate
financial
lack
development of enterprises requiring long-
This
national
must
new
the
But it is not the bankers' duty to find
for
"frozen
turn
governments
their
so
required.
and
This is the
removing
stagnant
accommodation
countries
in,
to-day for
their
in order to show that
The
pay.
four reservoirs to tap:—
now
security from their
cur¬
Floating Debts and Frozen Credits.
a
they will have time for recuperative
productivity—will be
the
not adequate to continue to
expenditure and
re¬
could
expenditure and revenue—because the
printing press
restore
war
banks
simultaneously with
power
countries
co-operative
will
pro¬
goods at the high price-level reached.
government
productive
exports
Thus, firstly,
term
government.
goods at any price.
tailment of banking accommodation,
the supply
of
financial
new
living,
foreign
gold base not working—who had to meet the phe¬
inevitable
finance
the
said at the time
was
reaching abnormal heights, because the pur¬
strained by traders—with
the
the
war-stricken
(3)
Immediately after the armistice the machinery
again
expansion
the
the ter Meulen bond as the
simple instrument
rency
voluntary loans would have pre¬
fluctuations
naturally
power
individual
cart
restraints
higher rates for loans would have prevented
the price-level
Thus
naturally melt the "frozen credits"
recommencement of the
corresponding Increase
a
machinery—credit
attractive terms for
vented
and
impossible to finance
was
an
countries, because all countries
The consequent increase
expenditure.
gressive rise in the cost of living.
that
the
(1)
by
broke out the belligerent governments
purchasing power, without
enable
equal reduction of bank assets
untouched.
countries to regain their
(2)
usual
to
With regard
but it would leave the cash
with the elasticity in expansion
poses,
the War
financial machinery without the
provide for
in the
gradual transfer of
individuals
With regard to "frozen
credits,"
the application of the ter Meulen
bonds for productive
of
war
from
quence of the lack of confidence of exporters in
Finance During
the
voluntary, continuous-
contraction of bank credit.
financial
charge is increased.
Directly the
banks
automatically create
the
automatically but affectively regulated
interest charged.
an
constant.
gold flows out the price-lavel is reduced and the interest
used
the
one
ex¬
maintain
the price-level is raised and the interest
charge is
as
of
sources
only
reduction of bank liabilities
(deposits
a
mean
(government securities);
disturbance in the
rates
prices
gold
to
expansion and contraction
was
would
would
country
bank-notes
"floating debts,"
which
equilibrium of the balance of trade, i.e., to keep the pricelevels in
to
and notes)
League does
participating countries
the
one
level
of
the
lender.
a
from
export
gold.
upon
American
member of
a
the financial
world
bar
neces¬
they have faith in the scheme.
as
liuctuations
the
economic
upon
a
cause a
governments and traders to
repay the banks.
shrinkage
does
long
services
normal
over
This is where
necessity
based
provided by the banks with little
ordinary
bridge
system of credit is based
America is
war
for
when the terms would not be
scheme, because
and
and
revive
Finance Before
of
closed
situation.
so
borrowers.
for
deposits
is
pur¬
is
the terms would
will
bank
There
be relieved of these two bur¬
can
by the issue of
war-stricken
of America
the
borrowing
door
is
thus
Nations
being interested
to
These
that
able
solidarity is
of
reconstruction
and
burdens to carry, viz.,
"frozen credits."
loan, sufficiently attractive to
so
quickly
credit.
open,
bonds
is
dens,
this
sound
a
The absence
not
were
Meulen
later date,
International
League
are
it
not
and
And the pledge necessary for the bonds
at a
International
for
The
used
which
forward
for the 50 years loans.
onerous
be
debts''
in which the people
way
to
the experience
longer-term
years.
if
even
ter
transitory period.
can
50
will
but
use,
governments
from
see
material
raw
looking
say
their
bonds
necessitate
The
onerous.
can
the
of
already
purposes;
I
productive
which
be
that
import
into
over
purposes
such
bonds.
new
in
left the people with two
heavy
"floating
The diffidence of
assets has
upon
tion
war¬
Necessity will bring this about,
especially if exporters of
the lending countries will
msist upon importers of the bor¬
rowing
SECTION.
I
•
support
money
of
governments
basis
in
lending
action,
in
enable them
order to
countries
order to
to
main¬
equilibrium of their budgets.
the
war
oped,; organization
the
for
European
foreign
market,
investment,
a
highly
devel¬
all
legiti-
met
BANKERS'
112
CONVENTION.
other con¬
tinents.
This enabled the European money market to con¬
trol international finance, in which the cumulative effect
of the small investor played so important a part.
These
foreign investments proportionately stimulated exports of
the European countries, which are the most densely popu¬
lated in the world.
The imports into Europe of foodstuffs
and raw material were received in exchange for the ex¬
ports of manufactured goods and services.
development of enterprise in
demands for
mate
equilibrium of trade is the
this
restore
To
paramount
In other words, the burden of the longrequired for the rehabilitation of the produc¬
credit
credits"
now
wheels of the
investors.
of
lubricated
be "shifted" from the "frozen
held by the banks (which are clogging the
present financial machinery) into the hands
Thus the old financial machinery will be
of Europe must
tive power
and
new
a
quired because they
machinery created.
Both are re¬
dovetail into each other.
National
Corporations.
Export
should be National Export
by a pro rata
guarantee of the government, banks and other financial
institutions.
America, England, France and Italy—the four
is that there
My suggestion
Corporations, in each
lending country, backed
whom the peace of the world depends—
example. America, formerly a debtor coun¬
great powers upon
should set the
market for eapitol, is
now a great creditor country; and she can only maintain
her exports by investing capital abroad.
England during
the war has only parted with a fourth of her foreign invest¬
ments, and may be depended upon to provide capital for
development in foreign countries.
She has not only a sur¬
plus to invest, but has the mature experience of genera¬
tions in the issuing and the holding of foreign securities,
not only by private individuals but also by insurance com¬
panies and other trust companies. France can be depended
upon to do her share, because the thrift of her population
is proverbial; and she likes and knows how to manage
foreign investments, as is'evidenced by her large holdings
of foreign securities by the small investor.
Italy, for her
full development, requires the sympathetic stimulus of an
international security, in place of a merely national one.
When she realizes the inwardness of her co-operation with
America, England and France, I am convinced that the
depending upon the European
try,
fullness of.
her response
In all these
will cause amazement.
countries a new public has
been created, who
which represents
government loan, free of interest.
These people require
to be educated in the advantages of a.foreign security bear¬
ing a good rate of interest, the proceeds of which would
be used to fructify enterprise.
In England, where the popu¬
lation has been educated,
I estimate that one billion
dollars of legal tender paper money
(Bank of England
notes, currency notes, Scots and Irish Bank notes) are held
by the people, i.e., are not required for the ordinary circu¬
carry
in their
pockets or tills paper money
a
lation and
bank cash reserves.
must be so to a
If this is so in England, it
other countries named.
greater extent in the
Investors' Money
Adequately Safe-Guarded.
Export Corporation
which I suggest backed by the
guarantees, is obviously far superior
backed by a subscribed capital.
The attraction to investors would be so great that the de¬
mands upon the corporations in the different countries for
government and bank
separate corporations
to
the
sound collateral
by
the
I
of home exporters covered by
foreign securities, would be more than met
legitimate requirements
from the people for investment in
respective corporations in the various lending countries.
can see as in a vision the money from the bonds of the
the flow of money
corporations raised from the
deposits
The
inducement to them to take their share
tee
liability
international organization in
increased
would be the restoration of | the former in¬
This would immediately
the equilibrium of the budgets without
taxation.
The chairman of one
countries.
announced at his shareholders' meeting
prepared to recommend his board to join
that he would be.
guarantee for a British
in such a
I
to the vital
All these bankers are alive
thetically inclined.
And
Export Corporation.
bankers who are also sympa¬
of other prominent
know
international organization.
that the present spirit of international co-opera¬
importance of
I believe
tion
the difficulties
removes
I don't mind
telling
And I well remember the
could get it from my
banks they
in
invested
of such a corporation
and simple in those countries which
would
accumulations
charged would cover
The Interest
example.
allowed,
plus expenses, plus a
raise
a
capital
With
tutions.
the power
margin whose
to replace the
sum
banks and other insti¬
statecraft,
rata guarantee of the government
pro
formerly
countries can
And other
securities.
foreign
their
interest
the
corporation!
the finance and management
would be easy
follow
quite happy, because if they
they required from the
get the accommodation
not
Thus
chair¬
all the ex¬
afterwards that I had made
me
porters among my audience
could
Personally,
formation of such an
owning that I urged the
institution five years ago.
man
would have encountered
one
in suggesting such a measure.
six months ago
all due respect to the power of
of finance is the power that is going to
safeguard
democracy.
It may
not
be argued that the issue of ter
Meulen bonds does
corporation in lending
to that is that there are other
justify the setting up of such a
But the reply
countries.
ment would
curities could be readily pledged, if
These se¬
Act.
not have sanctioned the Edge
it were possible to get
long-term credit for productive uses
the accommodation for
which it is beyond
Govern¬
the American
otherwise
securities;
satisfactory
the powTer of the banks to
supply and
unless safe¬
government and the
beyond the fancy of the investors to purchase
guarded by the guarantee of their own
banks.
home
* Such
corporations
bridge
would
over
transitory period, when it would again be possible to
of,
loans
say
reasonable
50 years for
terms
to
individual investors.
guarantee would be a small per¬
centage of the money borrowed from the
the
people direct, just
capital and reserve funds of the banks is a
percentage of the deposits of the people.
dence of the
issue
the war-stricken countries on
acceptable
and
The total of the pro rata
the
small
Once the confi¬
pople was assured there woujd be no
limit to
that could be borrowed for productive
the amount of money
use.
justify the possibilities of such a corporation I should
To
like
to
mention
done in my own
cipality,
some
the cotton
trade,
feeding and clothing
the
examples of what has already been
country for the banks, the nation, the
lond system.
as
the
well
transit of
the
goods,
welfare
muni¬
and the
of the people
o
Banks.
The inducement to the
ternational commercial relations.
help to maintain
each of the countries
big English banks
people, concurrently financing
trade.
of an
named
of the five
required beyond the formation
machinery would be
and in other
themselves of their
No new
increased productivity.
the
by
ridding
the
be
would
credits"
"frozen
smoothly and as effectively as the bank
finance domestic
governments
The banks would act as agents.
of the guaran¬
guarantee.
ing part in the
on
foreign trade as
Edge Bill.
corporations under the
as
The
formation
has permitted the
But, unfortunately,
they have not made much progress.
The English Govern¬
ment is willing to guarantee a large sum under the Exports
Credits Scheme.
But this is more or less sterile.
The
French Government has given evidence of its willingness
to do something on the same lines.
And it seems to me
that Italy would not like to see herself left in the cold.
The machinery required for collecting the money will neces¬
sitate the home banks and other financial institutions tak¬
problem of to-day.
term
American Government
The
of
We
have concentrated
number of joint
ches.
These branches
the doors of the
our
banking system into a small
stock banks with a large number of bran¬
have carried
people.
the deposit system
to
In normal times the amount de-
BANKING
posited per head of the population is three times what
in
was
the
eighties, when the banking system
years'
many
hard
fighting,
motherly legislation.
and
period.
itself
from
it
aftet
grand¬
The margin between the amount bor¬
rowed—deposits—and
counts
freed
had,
the
amount
investments—was
The result
that forty
was
lent—advances,
increased
fourfold
dis¬
in
the
of freedom from
years
SECTION.
the
113
for
money
building the machinery
mills.
This
years.
It has been
of the mills.
one
of the main
It has provided
The people
naturally take
a
reasons
for the
intense pride in their milli,
an
secured
efficient
management.
that operatives of enterprise and
the ranks to the management of the mills.
credit
machine
when the
to
ance
tended
and
unequalled
solidity,
them
of
the
perience I have known of
have lost their money.
all the banks have emphasized the
war
their
unexampled
broke out.
war
Since the
of
superlative
a
small
depositor.
international
import¬
They have also
ex¬
intact.
managed
The Nation.
As
a
In my own ex¬
in which the loan-holders
no case
trustee I have managed trust
steady, increas¬
a
ing income to the beneficiaries, while their capital has
mained
operations.
capacity have risen from
in the loans, which has provided
money
On
the
trust money
other
hand,
as
trustee I
a
When, during the
war, the government for the first time
continuous loan
a
on
re¬
have
in gilt-edged securities, the capital
value of which is half what it was, and the
accepted investments in the form of
Thii
It frequently happens
in
position to give the people of England
success
chiefly on account of their financial stake in them.
has
the
continuous supply of capital.
Legislative restrictions had placed joint stock deposit banks
a
of
equipment
system has been in effective operation for 40
income, though
apparently the same, is greatly'reduced by the deduction of
the much heavier
income tax.
tap, they obtained all the home money borrowed, after ad¬
justing tlie rate of interest allowed
deposits and foreign money.
The
on
Transit
bonds, bills,
Savings. Asso¬
ciations educated the people,
through press publicity, volun¬
tary workers and house-to-house canvass,
&c., to put their
genuine savings and surplus current income into the
bonds,
which gave them the best interest.
that
the continuous rise
not
was
in
The practical result
the wholesale and
the government.
to
raising money
Treasury Bills had
liability,
with
which
us
to note
of
15
that
A
the
the
system,
to be carried
the amount
a
raised
of
bond
But it is extremely
on
still
im¬
any
satisfactory
tap to-day is raising an average
week
of
is
the
by
week,
proceeds
in
multiples
being
used
to
of
25
replace
the
required
money
the capital exxjenditure.
disturbances
for
and
spectaular
in
ernment.
The
of
loans,
iias
revenue
the
served
The result is
practical value of the
lar of
special
stunts
government
average
interest
paid
a
is
one-sixtieth
of
significant testimony to
co-operative spirit.
Every dol¬
borrowed
Sinking fund
found
by
To-day they
the
new money
people
for
bond
the
on
are
The Manchester port—35 miles from the sea-board
importance after London and Liverpool.
Feeding, Clothing
The
feed and clothe
small sums,
This
and
Welfare.
Co-operative Societies of the United Kingdom, who
is
quarter of the population, have raised in
a
repayable at short periods, 500 million dollars.
in
invested
land, buildings, factories, warehouses,
stores, &c., with a handsome proportion of self-liquidating
cash
The
resources.
surplus
profits
are
returned
to
in the form of dividends.
(co-operators)
consumers
the
With
regard to the Welfare of the people, I have—as Chairman
touching
from
the
of
themselves
members
large Co-operative Holiday
a
hundred
a
thousand
all
the
homes—raised
required for
money
building, purchase and furnishing of the Guest Houses' in
the beauty spots
of Great Britain and Ireland.
When I tell
that these people have all strictly limited incomes, and
you
that, In consequence, the loans are all in small sums,
tion of which
are
repaid
we
say
how—as
mickle."
Our ideal is
every year
in
a
by ballot,
you
Scotland—"every lickle
a por¬
will
rea¬
makes
a
strenuous, educative and recreative
holiday in the summer-time and the formation of reading
rambling, social and literary clubs, folk-lore sing¬
ing, dramatic study and the old English country dancing in
the winter-time.
16
:
-
sums.
Manchester
to the occasion
in
44
money-;
;
in small
the
system.
circles,
provides:
on
being
the
Per Cent.
Interest
is
developments
lize
been less than that paid by the gov¬
population
United Kingdom.
the
In spite of strikes and other social
spite
wat;
by the corporation
short-dated mortgage bonds for
on
the money
of
rose
getting a good return for their money; and
Association,
the Manchester Corporation has raised
years
construction
and Treasurer for 28 years
Municipalities.
all
all
and found
by
revolving outstanding
this period and
the
Ship Canal, the people of the district
power
bills in multiples of 5 thousand dollars.
For thirty
required for
capital
—ranks
This was,
purchasing
funding loan failed to make
dollars
whole
as
during
the bill debt.
on
million
dollars,
bond
continued
to-day.
pression
When the group of London financiers failed to obtain the
Previous to this continuous method of
the
on
was •
retail prices
only arrested but actually reduced.
course, due to the transfer of the people's
Goods.
of
bank
National
raderie which I have never seen
The result is the creation of
a
bonne cama¬
equalled, coupled with an
absolute assimilation of the spirit of service.
GO
Rates and taxes
I
15
—.
Wages
Other charges
6
—
Salaries
could
tact plus a
4
.
Thus the
take
the
result
particular interest
is
that
scrutinized.
item
Quite recently
a
of
the
And
management.
expenditure
is
carefully
proposed luxury expenditure
This defeat shows that
defeated.
was
every
in
financial interest
a
by the people is much more effective than the control
cised
by Parliament
over
exer¬
Government luxury expenditure.
ficent
tem
Lancshire
cotton
mills
nanced by the small money of the people.
are
Some
are
These loans
small
The interest
on
mills pay the
full amount
are
entitled
and
for
to
from
the
are
government.
recover what
Thus
the
they
poorest
The
to
the
r
the
best
ever-widening circle of people
finer than the mere common interest
of
It brings them into the all-embracing arms
brotherhood.
OF
the
The loans provide the bulk of
THE
OF
FINANCIAL
COMMITTEE
OF NATIONS.
THE LEAGUE
Financial
Supreme
in Paris and
4th.
REPORT
THE
application for the International Credit Scheme was presented
Committee of the Leogue of Nations by Austria through
first
The
Council of the Allies
a
they
dorsed
by
in March 1921.
The Committee met
Council on April
delegation consisting of M. J. Avenol, Sir Drummond
and Dr. Gliickstadt reached Vienna on April 15th.
The
provisional reply was sent to the Supreme
special
Drummond Fraser
policy
investor get the best yield.
possible sys¬
only
APPENDIX I.
SYNOPSIS
amounts.
Those who are not liable for the
paid by the mills can easily
universal
not
classes, through a common financial stake,
OF
comparatively
the loans is paid free from tax, that is, the
income tax.
sorts and
achieves
investment
continuous
share¬
for
periods
in my own country, with magni¬
entirely fi¬
holders; but the majority are loanholders.
short
system, which I had the honor of
war purposs
into something far
a
have given you illustrate
just been advocating.
financial results, but draws an
of
world-famed
bond
in¬
money
But I must not exhaust
results convinces me that the broadest
of
of all
return of one's
a
The examines I
This short-term
initiating for
money-getting.
Cotton Trade.
The
secures
fair rate of interest.
all the principles I have
people of Manchester not only provide the funds
a
other instances of the advantages of
many
patience.
your
100
but
give
investment which
an
15
proposed
in their report
the Financial
dated April 28th was entirely en¬
London—May 31st--and the full
Committee in
*
BANKERS'
114
report of the Committee and
Nations
the
of
two
The suspension,
1.
trian
The
2.
for
that
immediate
and
effective
Government
Austrian
dertaken
to
financial
all
and
political
should
measures
REVIVAL
taken
be
Austria have un¬
in
parties
internal
the
situation.
certain
out
carry
specific
proposed
policy
Committee
The
2.
the
all. classes of the population.)
on
of
in
effected
the
in
order
to
the
following:
addition
that
internal
substantial
a
of
the
to
recourse
printing
has offered guarantees for external credits,
receipts,
custom
half
Commission
the
On
on
a
the
basis
sure
the
capital
in¬
tobacco
State
all real estate of the country;
on
the
of
the
from
revenues
Issue shall be
Bank of
new
of
Control,
addition
in
full
and
searching
discussions,
THE
of
Meulen
ter
offered
assets
present
Bonds,
ton
known
signed
-
offered
prepared to authorize the issue
be
will
by
the
the ter
as
whenever
and
Committee, acting in
Commission
once
its
International
the
for
of
Agent appointed
an
capacity
Credits
the Inter¬
as
Scheme*
in
Meulen scheme,
THE
AT
wherever
administration
tine
of
in
those
CONGRESS
Export
utilization
of
Commission
special
direction
the
of
OF
The
3.
financial
of
advances
be
will
will
be
also
and all the
of
increased
THE
give
to
general
and to supervise the initiation of the pro¬
reform.
repayable, and will be
first charge
a
the
on
THE
OF
REPORT
TIIE
the
of
this
the
1914
by
Austro-Hungarian
administration.
former
by
the
two
the
of
the
is
whole
slavia
six and
some
centre
Rumania
of
instead
stead
fifty
was
the
capable
Treaty
million
Bosnia
of
Galicia
of
of
important
instead
and
only.
Her
of
business,
foreign
Transylvania
Dalmatia
of
eighth of the
an
weak
a
and
market
whole
is
approval
they
as
body
of
plan
geographical
position
in
for her internal industrial activities, and the purchase of
from
abroad, assure Austria of an economic future if her
necessary
material
Public Finance
is
placed
The possibilities
water
of
It is
energy.
of
is
of
There
The
chase
capable
barriers
have
has
paid
been
kronen
the
end
the
put
is
horse power,
250,000
employment of
important
a
tenth
of
practical
62
of
more
the only
after
into operation
of
kilogram
is
roses
hoarded
foreign
estimated
that
State
officials
to
the
meet
decided
the
very
amount
milliard Swiss francs.
will
be
over
exports is about
of
be
printing
employed
foreign
of
to
are
with
to
in
currency
the
Congress.
therefore
the
I
am
as
significant,
very
plain
a
the
of
was
and highly
testimony
scheme
the fact
linked
as
from
a
means
that the ter
with
up
definite
pro¬
and that their provision
purposes,
consideration, decided to support what
of international credits
Men
Committee
natural
Credits.
on
its
to
business
Federal
drawn
Reserve
as
a
of
means
men
on
rehabilitating
Europe.
to expect
Board
should have
men
testimony from practical
a
virtues,
that when the American delegates return
urge
their fellow business
on
vantages of the ter Meulen scheme; for much depends
the
modified and
as
actively supported by the American
was
That the American
Atlantic
country they will
own
takes
the ad¬
men
the attitude which
on
in regard to' the discounting of bills
up
against ter Meulen bonds.
By
the
the
the
economic
nature
of
in
very
important part
reconstruction,
financing of
the
because
she
has
the
things she mostly stands in
plan
ference
last
which
first
was
has
autumn
be
regarded
to
as
situation,
European
to
means
need
must
play
during the period
provide
at the
through
the
Europe
with
so
an
of
many
Brussels Financial
fire
of
criticism,
far devised
Con¬
and
and financial experts.
men
the best instrument
America
trade
The endorsement of the ter
of.
promulgated
passed
steadily in favor with business
grown
has
It must
the supply of
for
Europe pending the re-establishment of the gold standard.
The
In
press.
1920
only
was
the
million
families
by
one
Month
is
porarily,
of
export
of Credits.
Meaning
services
enable
to
foreign
and therefore
can
of
their
only purchase
That
cannot
be
in
Vienna
is
no
less
of
restored
selves
position
she
occupied
and
services
to
pay
certain
for
the
At present the latter have little to export
credits
goods is strictly limited.
our
goods if
we
They
revive their purchasing
power.
for
the purpose
to participate should
place them¬
are
governments of countries desiring
in
communication
SIR
furnished them
with—
DRUMMOND
DRUMMOND
THE
"Internationa!
Credits,"
FRASER,
K.B.E., M. Com.,
ORGANIZER,
Trafalgar House,
APPENDIX
SCHEME
before
FOR
FOR
currencies
sum
as
goods
Waterloo Place,
London,
S.W.I.
III.
than
in the programme
proud
a
our
unless
is
satisfied
a
produce
rehabilitating their industries.
note
It
to
ability to purchase
more
the provision of
by creditor countries to inpoverish countries tem¬
them
milliard.
payments.
credits simply means
things they will need in future.
The
by
increasing
the
provision
commodities and
of imports
equal to the foreign pay¬
the program carried out in its
50 million dollars,
government.
is
which ensures, that, the credits
adopt the ter Meulen plan is
pur¬
once
30
population.
The currency reform outlined
entirety will place Austria in
is
the merits
necessary
careful
impoverished countries of
their
to
credits
disappear by
their
immensely
the
This
men).
resolution
estimated
grain which
loss of
a
strengthened with the addition of foreign
coming from Austria herself.
The deficit of the trade balance
ments
par¬
by the American delegates
most representative
by the Provisional Economic and Financial
this
of
other side of
con¬
The government
expenditure
formerly the currency
will
resolutions
a
credit scheme which is
on
currencies
the
passage
delegates at
The
for imported
causing
These subsidies
one-tenth of
than
Com¬
permanent
League of Nations.
The
now
meeting expenditure is the
kronen,
currency—the
milliards;
75% yet
9
compelled
was
kronen
12
rose
per
at
number
or
government
and
that is required.
all
year's budget.
The
700,000
kronen
nationals
above
business to
source
of which
although the adjacent countries,
supply
of
choice of credits and
required.
government not
abroad
could
current
1922.
the cereals
development,
in the
actively supported
the ter Meulen system
as
Meulen
The
extremely
the other hand bank deposits remained stationary.
The programme adopted by Austria will
encourage saving, restore confi¬
dence amongst bank depositors, and thus Austrian credits in the form
of
one
the
of
were
American
Congress,
the
of
in the timber exports of the forests.
the
as
her
to
the
at
amount
currency
Prices
much
as
the
promise.
an
considerable
of
from
removed,
of
estimated
of
stuffs
sold
in
month
causes
food
are
be
to
half
great wealth
chief
of
of
country.
is
producing
is
full
This would diminish by one-half the total coal
the
Agriculture
capable of
are
establishment
CONGRESS OF THE INTERNATIONAL CHAMBER OF COMMERCE.
known
of
sound foundation.
a
calculated
is not yet exploited.
sumption
on
the future
which belongs to the State is
power
the
in all the countries affected, to furnish
(on each occasion
used for essential and
are
It is
Jugo¬
her artistic treasures of an old civilization aqd
understanding of the languages, habits and methods of the Successive
and her banking system which has never failed to supply the
raw
the
advises
and bankers
men
determining factor in the American decision
The
States,
credits
of
reconstruction
accompanied by measures of internal financial reform.
covers
of
Central Europe are unique,
her
necessity
Europe:
restoring the economic life of the world.
the
her
only, the
only, and the whole of Poland in¬
communications
the
of credits for the
by the Provisional Economic and Fi¬
steps towards the equation of budgets ;
inhabitants,
half million inhabitants, with
a
recognizes
auspices
(Extract from the leading column of "The Times," July 2nd.)
Government,
Austria
the
OF
League of Nations:
Congress
Congresses
leaders
Meulen
large, expensive and efficient
a
To-day the Austrian Republic is less than
Empire, with
Coalition
had
Empire
Emperor and his advisers with
an
CHAMBER
gov¬
Congress is prepared to support the ter Meulen scheme
enthusiastic
especially
more
DELEGATION.
introduced
Congress
Business
In
accordingly
respective
programme.
Imports, exports and transit have
change
profound
this
impoverished countries of
Peace.
ruled
They
European countries
their
INTERNATIONAL
put into operation
Committee
The
vided
independent existence.
spite
induce
ticipations."
A
appointed
representatives interviewed maintained that Austria
in
established.
to
all information and to lend all assistance
indispensable centre of the economic life of Central Europe,
active and
an
OF
and
"Further,
THE
Austria is the
be
countries
government
arid
end the
modified
the
proceeds of the external loan provided for in the
EPITOME
"That
under
devastated
"To this
temporary advances.
the Agent,
to
gramme
the
Credits.
establishment
distinguished
assigned assets.
A
The
shall
it
COMMERCE.
of
2.
promo¬
and urges all engaged in the cot¬
apply for approval of the issue by them of ter Meulen bond6.
ac¬
Agent will be empowered to supervise:—
The
that at the
the best instrument for
offers
ernments to
at
1.
CONFERENCE.
importers
as-
the decision of the Council of the League of Nations.
cordance with
This
result of
passed:
should' urge
mittees of business
be made under the control
Financial
national
be at
Government will
the Austrian
by
security for these advances.
as
a
recognizes the existence of various credit schemes,
unanimously recommend that exporters to impoverished
security for temporary advances on the following
as
The advances will
2.
as
were
industry and in the-financing of it to avail themselves of the ter Meulen
scheme
as
assets
COTTON
resolutions
imports into impoverished countries by exporters in other countries
nancial
The
following
the scheme which
moment
of
is that
The Com¬
by the Austrian Government.
Scheme,
conditions:—
1.
the
WORLD'S
Conference
the
Lon¬
financial restoration should make it possible to value
Credits
International
the
(held in
leading representatives of finance,
and the contemplated formation of other schemes, it is of opinion
the three representatives
to
under the powers conferred upon them in connection with
mittee therefore,
Commerce
1st.)
Austria, four members should be nominated by the Financial Committee.
The programme of
TRADE,
towards
of the Internation Chamber of
Congress
June 27th to July
tion
...
resentation
of
advance
of
II.
OVERSEA
Both these Congresses were attended by
While
to foreign subscription which shall carry with it a corresponding rep¬
on the Board of Directors.
open
stage
OF
marked by the conclusions reached at the World's
(held at Liverpool and Manchester, June 12th to 22nd).
Conference
the
don,
and inde¬
strong
a
;.
The Austrian Government
in
by
of
future
cessation
monopoly and from forests and mortgages
and
Cotton
AT
immediate
ensure
Committee
Financial
the difficulties neces¬
the acceptance of the ter
the recognized scheme for assisting the recovery of healthy
as
of Issue.
press.
cluding the
the
conditions for trade, was
of the Budget at the earliest possible date.
flotation
Loan
Bank
be
to
currency
Central
pendent
important
very
Meulen bond,
by the Financial
endorsed
and
Delegation
of
remove
industry and commerce from all countries of the world, and,
the
The balancing
reform
The
by
requires:—
1.
3.
improve
to
measures
A
and
(This will entail heavy sacrifices
The
character
APPENDIX
for
for the removal of trade barriers between Austria and the Successive States.
The
international
League of Nations has done much to
sarily involved in the problem of restoring Austrian credit.
of relief credits.
respect of reparation and
the most stringjent measures
improvement of her internal financial situation.
urged
was
indication that the trade barriers will be
removed.
representative
the
of
period of at least 20 years, of the liens on Aus¬
a
There is already every
war.
The
to the restoration of Austrian Finances is the
following conditions:—
in
assets
the
gradually
'
adoption by Austria herself of
the
It
published by the League of
was
'
essential preliminary
The
fulfilment
Delegation
15th.
June
on
CONVENTION.
THE
ESTABLISHMENT
PROVIDING
CREDIT
FOR
COLLATERAL
1.
The primary object would
be
OF
EXPORT
EXPORTERS
CORPORATIONS
AGAINST
SECURITY.
to supply international
credita by the
granting of loans to' exporters for 'the purpose of facilitating the export of
goods to and the development of industry and enterprise in
foreign coun-
BACKING
tries.
The
Corporation
would
also
serve
commercial
a
as
(bureau.
funds
of
the
(debentures)
Corporation
would
It is proposed than
issue of
for
should be
of
terms
cepted
five,
the
on
ten
"loan
fifteen
or
book"
be
main by
that the loans should be
they
books
the loan
system,
being
should
be
ac¬
registered
In
3.
to
of
should
attractive
an
the
form
of
issue
an
of the authorized loan
and
institutions,
to
as
but
share
of
is
be
pro¬
capital to the
callable
the
in
except
event of
winding-up of the Coroporatioh.
Power
4.
be
would
taken
increase
to
authorized
the
increase
up
It
5.
funds
taken
is
the
on
terms
same
be
required
authorized loan
to
finance
exporters
issue
is
and
the
any
of the
credit with
open
of
cent,
per
proposed, such credit to be increased
Any
ter
Meulen
would
be
effected
importer
security
to
the home
to
the
-of
currency
other
and
by taking
home
the
to
of
held
sums so
of
rata
pro
borrowed would
the
the
plus
exporter would
fault
This
security.
bond
Meulen
ter
The
exporter.
collateral
debt due from the foreign
transfer of the
a
exporter
by
satisfactory
length
of the
default
ter
bonds
Meulen
other
or
being made by the foreign importer
by the foreign importer
itself purchase the
maturity;
realization
they
issued.
are
the
During the
it
is proposed
purchase
price
period
which
would
must
the
on
assigned assets is in the hands of the participating Government the Inter¬
national Commission at any time may, and in the event of default
shall,
require the participating Government to transfer the administration of the
The
cil
participating Government shall have the right of appeal to the Coun¬
League of Nations against this requirement, and the decision of
the
of
the
Council
VIII.
In
that the Corporation
then
treated
be
the
(1) Out
these
of
the
or
elapse before
the
Meulen
ter
sion
consideration
but
both
whom
of
it
would
(a)
be given to the application first in
to
point
of time.
In
granting facilities under the ter Meulen scheme it would be
directly
indirectly the foreign importer
obligations.
j
the
In
the
banks.
business
;
conduct
with,
compete
but
In
nor
of
its
would
business
the
on
particular
the
or
his Government of any part
*
the coupons falling due in the next year of all
bonds at any time outstanding in each of such currencies,
Corporation would
as
useful
a
in
of current
no
sense
auxiliary,
discounting
other accounts to be operated
or
to
upon
by cheque.
(2)
The
IX.
bonds
ports
members
of
whom
Government and
be
of
a
the
and
Board
13.
After
a
to
by the guaranteeing banks (who could, if necessary,
and
account
a
their
making
Corporation would be set out in
It would
remuneration
in
be
order
sum
a
deed of
ensure
the
services
Any
all
pedite
provision for depreciation and for such
might be required, the profits would be carried
as
of
excess
profit would be divisible
rata
pro
in
and
the
to
as
accordance with
to
the
credit of
that
to
as
balance
per
of
per
cent,
among
cent,
among
scheme to be framed, which scheme
the amount but also to the duration of the
not only to
a
loans.
might from
time
to
time
and
in
special
circumstances be
neces¬
by
an
additional guarantee of the
guaran¬
teeing Government.
The share capital
15.
ized
loan-issue,
the
meet
which
a
cases
the
of
in paragraph 3 being
additional
paragraph
credits
should
must
be
'think
obtain accommodation
command
their
the
II.
to
on
imports,
"TER
and
shall
shall have
devolve
upon
be appointed
discretion to
Commission
shall
XIII.
participating Government,
be
regarded
is
ex¬
as
collateral
schedule
a
of
up,
in
approved
falling within the definition of
raw
con¬
im¬
ma¬
primary necessaries.
Particulars
of
each
transaction
be
must
registered with the Com¬
which, before countersigning
a registered bond, will satisfy itself
approved import and that the period for which it
to be granted is a reasonable one.
approved
XIV.
The
lateral
for
where the
imports
XV.
as
an
conditions
same
govern the pledge of its bonds as the col¬
on
private account shall apply in cases
participating Government pledges its pvvn bonds as collateral for
on
credits
for
as
imports
Government account.
After
having received bonds, duly countersigned;
pledge them with the exporter.
XVI.
(а)
Pledged bonds shall be dealt with
In
tract
with
bonds
who
(б)
the exporter,
they
as
shall
are
importer to fulfill his
the coupons
released,
them
return
to
shall
his
the importer will
follows:
as
the absence of any failure
by the
be
con¬
their due date, and the
on
returned
Government
to
the
importer,
forthwith.
In the event of the importer not fulfilling the terms of his con¬
tract, the exporter (or his assigns) may either hold the bonds
until
in
maturity
accordance
or,
if he prefers, he may at any time sell them
with
the
laws
viding that, before the bonds
and
of his country, pro¬
reasonable opportunity
customs
sold,
are
be
constituted
of
covering
a
such
his
sale
shall
be
applied
by the Council of the League of
and
sub-commissions,
by
the
exporter
towards
claims
against the importer.
Any surplus not
required for this purpose shall be accounted for by the exporter
to the
participating Government.
SCHEME.
(c)
Any
coupons
or
or
purchased
bonds
returned
by such
to
the'participating Government
Government
shall
in accordance with the regulations to
them the exercise of its functions.
the assigned assets shall not be utilized
on
borrowing country the Commission will draw
national
appoint agents
of the scheme being to facilitate and
purpose
import of other commodities, provided that, where the
the
ceeds
BOND
financing of
International
Commission
be given to the issuing Government to
repurchase them
by paying to the exporter the amount of his claim.
The pro¬
under present circumstances are
unable to
reasonable terms in the open
market, may be able
necessary to attract funds for the
an
the
with
terials and
IV.
MEULEN"
in this clause.
countersigned by the
is
ports which will
for
auspices of the League of Nations.
The Commission
Nations,
.and
THE
cent.,
be
shall
the confidence
essential
under
for
For such
sultation
of the author¬
per
issue,
fit..
In order that nations which
I.
to
OF
to
will be free to fix such
purpose
satisfied that the import of such other commodities will
securing the above purpose, it shall have the discretion to permit
special exceptions to the above rule, subject to such conditions as it
may
be paid.
APPENDIX
TEXT
limited
or
im¬
assist in
liability of the guaranteeing Government to
14
satisfactory remuneration
OFFICIAL
per cent,
own
account,
import of such raw materials and primary necessaries as will
borrowing countries to re-establish production especially for ex¬
port, bonds secured
make advances to home exporters against transfers of debts due
foreign importers plus collateral security but without recourse to the
home exporters in case of default.
In such special cases it is considered
should be covered
before
fundamental
the
from
that the risk
pledge its
own
for credits for approved
registration,
the
to
sary
shall,
that the credit is for
necessary
collateral
to
its
on
any, to be given, as it may think fit.
be communicated to the Commission.
The bonds shall
shall
bond
The
mission
i.e., the guaranteed share capital, at
the guarantee redemption account would thereafter be
main¬
holders
It
Each
of
equal to the nominal,
have regard
14.
terms
enable
to make ade¬
necessary
to
redemption account until there stood
shareholders
the loan
would
the
subordinate officials.
sinking funds
amount
tained.
the
of
the In¬
including the security, if
XII.
for
guarantee
which
by the guaranteeing
experience and ability.
reserve
to
Board of Directors consisting
nominated
provide for frequent Board meetings, for Committees
deal with special departments and for the
appointment of
provision
of
men
a
would
Governor and
quate
be
as
imports
private account, and for the latter
on
in proof of
for
credits for approved
be used for any other purpose than those
specified
X.
'
grouped).
12. The Government
settlement
would
for
the bonds to its nationals
terms,
not
participating Government will be free either
collateral
as
lend
to
as
Commission may determine, for the
redemp¬
bonds sold in accordance with paragraph XVI.
Any surplus remaining after the provision of these services shall be
at the free disposal'of the
participating Government.
Commission
The management would be vested in
11.
of
in such foreign currency or currencies
reserve,
ternational
XI.
contrary serve
at maturity 10% of
outstanding in each of different countries.
tion of any
.
it would not undertake accepting or
the keeping
cardi¬
a
Commission shall purchase and hold,
Government shall satisfy the Commis¬
purchased and holds, foreign currencies suffi¬
has
the bonds
should they be given in such way as to relieve
case
or
of their
10.
no
the
revenues
it
(ft) A sinking fund calculated to redeem
These
principle that in
binding.
follows to
Cover for
scheme
impossible
as
participating
that
be prepared to
be
these questions shall be
on
assigned assets shall be applied
cient to provide—
of
As between two applicants equally
from the
bonds:
should
proceeds
as
League of Nations
revenues
the service of
of de¬
case
the
of
The
by the home ex¬
or
the Corporation would
principle.
same
accommodate, preference would
9.
these
assigned assets shall be administered by the participating Gov¬
by the International Commission, as a majority of the Council
of the League of Nations may determine, on the
proposal of the Interna¬
tional Commission.
Nevertheless, in cases where the administration of the
collateral.
effective operation
would be treated
nal
issue
or
in special circumstances, be
granting of credit all home exporters would be equally entitled
to apply for credit facilities so far as the funds allowed, and all applications
to
to
The bonds shall be
The
ernment
In the
entitled
authorized
assets.
trade.
oversea
be
-
The service of
collateral security and hold it as an investment pending
the
of
be put into
8.
then
bonds, which will be obligations of the issuing
Government, shall be specifically secured out of the revenue of the assigned
grant credits covered by satisfactory collateral security for the development
of
shall
in which it is to be issued shall be determined by the participating
in agreement with the Commission, in accordance with the
conditions applicable to the particular transactions in
respect of which
(c) A
7.
can
Governments
gold value approved by the Commission.
may
In the
collateral security.
the market, but would be held until redeemed.
on
participating
Government
other col¬
or
credit allowed
the
of
in general correspond to that allowed by him
porter the collateral security would not, except
placed
of
with such date of maturity and rate of interest, as the Com¬
decide and shall, in particular, enumerate the assets pledged
against the bonds.
The denomination of each bond and the specific cur¬
foreign importer, and would be considerably shorter than the period
event
against the security
r
such form,
in
mission
object of the Corporation would be to provide funds to
bonds
carry
lateral
these assets, shall determine the
approve
assets to itself.
The primary
6.
The
V.
VII.
interest.
carry
its
an
extent
increase of the authorized loan issue.
any
to
per cent,
the original shares.
as
to
the
issue
loan
probable that pending the placing of the authorized loan issue
will
these assets.
VI.
that share capital to the extent of
be
gold value of the credits which it would
rency
cent, by or on behalf
per
amount, provided
on
would
It
cent, by the home banks and other
be
not
it
issue, i.e.,
to
as
per
would
investment
behind them.
guarantee
some
would be subscribed
Government
•financial
the
loans
be
take
cent,
per
-
This share capital
of the
the
make
that there should
posed that this
exten
by the nationals of exporting countries.
The Commission, after examination of
IV.
bonds to the
order
desiring to participate shall notify to
are prepared to assign as security
for commercial credits to be granted
and
transferable.
necessary
countries
they
original loan
an
that
and
years,
in the
provided
authorized;
of
the Commission what specific assets
the people.
from
115
The Governments
III.
information
|
The
2.
loans
SECTION.
the
approval
either
with
Commission,
in
the
the
of
the
same
conditions
Canceled
bonds
Commission,
or
in
a
be
forthwith
canceled
be prescribed by the Inter¬
be
different
may
subsequently, with
replaced
by other bonds,
currency,
governing the original
in
accordance
isaus of bondi.
CONVENTION.
BANKERS'
116
Currencies and Shattered Credit of Europe
The Deficits, Debased
—Cause and Effect
By Francis W. IIikst, Former
have just listened and full of your mag-
we
optimism
American
nificent
After the very eloquent ad-
Gentlemen:
and
Drum
Mr.
dress to which
which
is
encouraging
so
toueh upon the sad realities of the European
mine, Mr. Noyes, yesterday
I notice that an old friend of
warned
We
optimist
of
was
to his neighbor, "Is there any
or
But the optimist would say, "Pass the
the jug?"
think Sir Drummond Era-
Our definition—and I
cream."
pessimist
and
One of them, the pessimist,
people at table.
to his friend
say
in
Well, I noticed in the papers, gentlemen, that you are being criticised for not giving unlimited credit. The critics
say :
"Haven't you accumulated all this gold, and what is
it for if you are not going to lend it out freely?"
And, un-
Credit depends, I suppose, upon the credibility of the customer.
The accumulation of gold beyond a certain point
an
definition
taken from two
milk
traveling missionaries.
American optimist said to me that
optimism, and
vvoukl
pessimistic,
It was not meant for tourists or even for
Meulen scheme.
fortunately, as I suppose we all know, gold is not credit,
American
the
too
railway companies and steamship companies,
hotels and
discussing the question the other day of pessimism
were
and
against being
properly
very
you
situation.
/
He said very firmly that that was not the object of the ter
said, to
painful duty, as the Chairman has already
is my
to
other side of the Atlantic, it
those of us who come from the
Editor, London "Economist/'
does not help the American banker, does not help the American
But the loss of gold in Europe and the
Government.
excessive issue of inconvertible paper money are playing
havoc with trade and credit all over the world,
the
Just before I left London and was wondering how I could
the hope of selling
present the situation over here, I saw in riding up the
Well, I would not myself go further than this at the pres-
said that any one who would buy a suit of clothes from him
would be given a rouble note of 10,000 roubles. That
buys goods from
who
man
them to
Jew
a
I would say that
of optimism.
direction
the
the future;
depends upon what
regard
opinion you have as to
probable policy of the great Powers and more especially
the
of the Governments of the United States and Great
If those hopes
month
at
Britain.
which we have now of what may happen next
Washington
be fulfilled I
should
should be an
Well, geneltmen, I came to this beautiful and marvelously
fruitful country at the invitation of the
in Europe.
nomic
I
was
of
conditions
Europe,
now
exhausted by over four
of disastrous war and by nearly three years of restwars
I felt very
and armed peace.
greatly honored when you, sir [addressing President Drum],
to address
this most important gathering
of per-
haps the most important class of people in America.
And I
asked
me
will do my best now in the compass
of
to sketch what I must describe as our
a very
short address,
political and financial
When
you
ployment
the gaunt spectres of famine and
see
stalking
world
the
around
unem-
allow
must not
you
yourselves to become permeated with cynicism or pessimism,
is
It
duty,
our
gentlemen,
find
economists,
as
it, to proclaim the remedy.
deinoeratic
to
enlighten public opinion.
avoid quackery.
cannot
for the facts.
of
men
aware
the
bankers,
to
For in these days of
when almost
government,
and almost every one has a vote, the
is
as
to diagnose the disease, and if we
study the problem and
can
"By the
what is a rouble worth, what is the rouble
way,
exchange to-day?
pound."
If
every
one
can
read
first indispensable step
we
do not do that, you
So we must ask for full publicity
I believe that if all the bankers and business
United
States
and
Great
Britain
were
fully
of the truth and would co-operate together, I believe
ble note—-amounted to rather less than half a dollar,
I
in
see
a
notes as follows—and you will see what the
wheels
the
revival of
of
credit, but
commerce
a
and
to
real, genuine
promote not only a
recovery
of trade from
this deep, after-war depression.
I
am
very
glad that
old friend, Mr. Drummond Fra-
my
dations
can
be
laid
by the
Government—and
lieve that they will—I feel
sure
is
greatly to
operating will tend
very
Scottish
When
I
was
on
caution
the
with
I
really
be-
that the scheme which he
worst difficulties of the situation.
combines
If only the foun-
I
remove
can
sime
assure you
of
the
that he
Lancastershire experience,
point of leaving England, feeling the
financial difficulties of the cost of travel, I applied to him
for
a
ter
Meulen
bond
to
finance
me
through the various
this
short time ago, only the beginning of July, that I saw
The present rate is 221,600 roubles to the
sign up:
English
pound; 64,000 to the American dollar; 4,400 roubles to
French franc; 600 roubles to the German mark;
to
mark.
Polish
the
after looking at this
Well,
the
15 roubles
sign
1
thought perhaps the best thing I could do, in order to ex-
what the
the universities
to
thought I would go
really
position
and buy for ten shillings
a
of you would like to look at them, you are
come
quite wel-
For ten shillings I bought—well, here is a
to do so.
50-shilling Czar rouble note, and they are worth ten
garian note.
one
of
Here is
Polish
the
a
very
magnificent Polish note, with
printed
heroes
marks, for which I gave six pence.
note
it,
on
prettily printed, too, and it is only worth
Italian
Here
Here is a Ru-
Finnish note, and here are some
Here is a
Here are 25
marks.
are
Polish
them—five
six pence.
and some Greek money.
nian notes, which are worth,
And here
100
Here, is a 100-erown Austrian note, very
I think.
are. some
for
Here is a Jugo-SJavia
forget what they call
five francs—I
for
crowns,
times
Here is a Bul-
much, I might add, as the Soviet note.
as
was,
large number
And, gentlemen, afterwards if
of depreciated paper notes.
any
a
seiyis here, and is going to address you.
position is now,
for this is only a little while ago, I am only talking of a
German
re-
Soviet
recent message from Moscow that the
Government has issued official exchange rates for its own
manian note.
month, would be able to
quite as gen-
So that it amounted to—this 10,000 rou-
it looked.
together at Washington
next
"To-day it is 100,000—100,000 rou-
And so I thought it over and I came
to the conclusion that the tailor's offer wasn't
myself that the American and British Governments, acting
start
I hear the other day it was 80,000 to the
And he said:
erous as
plain
tragedy.
So that evening I happened
friend of mine from the Treasury happened to have
supper with me—and I told him about this, and I said:
financial and economic situation,
asked to describe the financial and eco-
submissions, petty
less
presidents of two of
universities, for the purpose of endeavoring to explain
and discuss the situation,
years
seemed a very handsome offer.
—a
bles to the pound."
optimist.
your
And that tailor
Strand on the top of a bus, a tailor's sign.
optimism depends on an optimistic frame of mind in
to
is
optimist
an
in
Scotchman.
a
time in
ent
of
definition
it—our
confirm
will
ser
very
prettily printed Estho-
I think, six pence, or a shilling,
ten Czecho-Slovaeian crowns,
shilling.
for which I gave
•
Now, that is the position.
turesque idea, if you will
That gives you an idea, a pic-
look at these notes, of the true
situation in Europe.
I
noticed, by the way, in that quotation that
I gave from
Soviet Government
old silver rouble is worth 10,000
Russia, that the official exchange, the
officials
of the
admit
new
that
paper
the
roubles—officially admits that, and offers
to give a note for 10.000 paper
in exchange for anyone
roubles, which it will print,
who will fish out of his hoard, for
they are all hoarded, of course—one of the
silver roubles.
BANKING
They can't borrow.
depreciation amounts
That shows you in a moment what the
rowing powers.
And every Government which has once started on that
to.
will
go
of the old
reaches the level
logically until it
on
own
people nor the people
they have lent it, or think that as soon as they
as soon as
have lent it, this money will evaporate just as the money
French, to the point that its notes are not worth the paper
lent them before has evaporated in these confiscatory issues
they are printed upon.
all of these Governments pursue this policy so
of paper money and this depreciated paper currency.
Why do
Now, gentlemen, what is the meaning of it all?
You may say then, why don't they tax?
Government,
nomic disasters within the control of a
a
I will give you
The answer is in most cases the taxation is
heavy that it would pay the Government to re-
the answer.
For, of all eco-
they take steps to stabilize their currency?
So
they won't lend it.
fatal to trade
Why, for instance, after the Armistice, didn't
and to credit?
They have exhausted all of their bor-
Neither their
abroad will any more lend them money, because they know
force,
fatal descent, unless it is pulled back by some strong
117
SECTION.
already so
flue-
It is quite easy to have taxation, and we have
tuating and depreciating paper currency is the most ruinous
duce it.
to a nation's trade and
proved it now, quite easy to have taxation so heavy that if
morality.
•,
you want
Well, I think I can explain the cause, but before doing so,
let
add
me
just one word: do you realize that these paper
private incomes of the 400,000,000 people in Europe—more
repudiating of your debt without saying that you are
the
than three times the population of the United States—if
are
A friend of mine, the other day, who had
half those private incomes are now being taken by the tax
large debt due to him in Itiga, had paid off to him that
gatherer and in other forms of competition to pay for the arai-
repudiating it?
Wbt,
which was a pre-war 10,000-pound debt, he had that
paid off in the new paper roubles, of which we have a speci-
He got 35
here, in money that was worth 35 pounds.
men
pounds for his 10,000-pound pre-war debt, and that was in
a
Well, now, gentlemen, if half of the
really a means of repudiation, simply means
currencies
a
to increase the public revenue you proceed to re¬
duce the taxation.
country which was created by joint action
That is what is going
ain, France and the United States.
French pre-war
The
less.
or
Government is really repudiating its debt more
And every
on.
one-third
of
3% note is
now
worth about
one-quarter of what it was before.
or
chasing power of
third
of Great Brit-
Italian,
pre-war;
The pur-
French franc is not quite
paper
a
one-sixth;
I
German,
one-
suppose
about one-thirtieth ; Austrian, perhaps 1/100, and the
now,
So you see in Europe these pro-
Iiussian perhaps 1/10,000.
stagds
gressive
of confiscation of both public and private
Can
property.
surprised
be
we
public and private
that
credit should be in such condition that Sir Drummond Era-
the very skillful scheme be has, try to ao
has to try, by
ser
something to patch them up?
depreciation of
of these countries have
a
currency
definite and a very
large deficit between their tax revenue and their expendiIn
tures.
the
of
case
more'
than double the tax
recoverable from Germany.
But in all the States which 1
And
referred to there is a large deficit.
have
friend of mine, one
made
a
of
our
a
able
very
leading bankers, Mr, Henry Bell,
he said
back and gave an address, and in this address
very
clearly that, as far as lie could make out, in
expenditure
on anna-
a
rather interesting
rather hopeful fact, because,
if when President
for the deficits.
really
a
Now, that is
Harding and Miv Hughes are successful next month, really
it looks as if ibeymight
successful—and
about
such
be able to bring
throughout the world from
change of policy
a
preparations for war to preparations for peace and from
suspicion to confidence—and after all everything depends
on
confidence, in the sense of security—they might be able
to
bring about such
and
reduction
a
of armaments, of armies
navies, that most of these deficits would automatically
disappear, and the Governments would then be in position
not
only to pay some of their debts but also to stop this tor-
rible
To
show
you
how
rapidly these currencies
saying June, 1920, and June,
fell
from
800
Polish marks
Polish
to
marks to
1921—the
the
the paper pound.
paper
go
I was given the other day a declaration issued by the merchants of San Francisco, in which they pointed out—and l
won't trouble you to read it now, but it is an excellent sumI think—they point out that in 1898 at the first
Hague Conference, an unsuccessful attempt was made to
niary,
reduce the growth of armaments, and they argued that if
big reduction were now to take place a sum of no less—
annual sum, annual fund, of no less than 4,000 million dollars would be saved, set free for the purposes of
trade and
for the restoration of credit. And they express every hope
that the Administration of the United States—it is, I tlfink.
a resolution of the Chamber of Commerce—they express the
hope that the United States Administration will succeed in
bringing about the great and substantial reduction, and
that if they do that they say they feel sure there
recovery in trade and in
unemployment,
will be a
•
and
so on,
to $580,000,000.
Well, now, 1 think that I have, to some extent at any
rate, fulfilled the purpose for which I came to the best of
my ability.
I would say that there is only one sovereign
remedy, and that is public economy, peace and good-will
nations. The doctrines which have been preached
in your country and ours by—for, after all, we have a com-
among the
mon
ancestry—by men
like Cobden and
bankers know very well that capital and credit are
to
8.000
militarism which
they find that the most convenient
West, and he told me
with this idea, I think perhaps rather than try to
whenever they have saved a
armies and their bureaucrats.
that they come
they print the money,
Norwegian farmers are
fond of improving their farms
and borrow of the bank for that purpose. So,
great improvers, arid are so
so
that they like,
little money, to put it in the
bank; and that he had noticed the
thing to do is to print money to pay tlieir generals and their
And
the
As I came along on the
certain place in the Middle
fruits and the rewards of saving.
farmers are very extraordinarily thrifty, and
Polish currency
pound
Franklin, John
Bright and Thomas Jefferson, Gladstone and Sumner—you
was
I am right
that these Governments, instead of reducing the cost of
their armies,
000,000 to $1,208,000,000. and that the cost of your navy—
these are the official figures—had risen from $59,000,000
You
1
That was in one year,
And I attribute that to the aggressive
ment, to the present year, when President Harding is proposing it, that the cost of your army had risen from $92,-
}ris idea of a banker's paradise. And
develop
the various perils that still exist, the German peril and the
French peril, and so on, I will conclude with this statement
of his, as to what a banker's paradise is.
He said that he
had noticed in the State to which he belonged that the Irish
down,
displayed during that year by the Polish Government.
see
paying taxes. No wonder that our foreign trade, no wonder
that your foreign trade, is suffering. Nri wonder there is
a certain amount of depression.
train I met a banker from a
depreciation of the paper currencies.
noticed that during last year, between—I think
in
taxation has been tremendous—instead of saving their
money and putting it into the banks, and instead of buying
goods, these millions, hundreds of millions of people, are
I was looking at this matter the other day of your own
present expenditure or armaments, pretty well ac-
ments,
domestic tax-payers and consumers of the United States,
because that increase of expenditure and that increase of
expenditure, and I noticed that the cost of the army had
risen from the year 1898,' when the Czar proposed disarma-
all the cases of the Governments the
counted
Instead of saving
the British Government,
came
and lie
being drawn out of trade and capital.
buying goods—and this applies to some extent to the
careful examination of these budgets when he was
Brussels last year representing
and
reve-
and the greater part of the deficit is put down as sums
nue;
at
present expenditure of
the
France,
French Government is
the
or
a
The real reason for that kind of
is because all
ies and navies and bureaucrats, you can see what vast sums
are
BANKERS'
118
said that lie
he
thought that
have
half by Norwegian farmers and half
have two doors to this
he would
would
Irish
the
doors
in
go
was
deposit their
controversies
of these
from
the
bank
the
think
cially
between
the United States may be assisted
posited.
I
existed
have
which
what
the
among
want in
we
Europe is
and
Governments,
little
a
also
by this settlement, and
that we shall be able to lead the nations of the world along
more—espe-
doubt
no
Britain
Great
fully fine relations which exist between Great Britain and
which the Irish had de-
money
by
the satisfaction of both parties; and I hope that the wonder-
through the other door the Norwegian farmers would go to
borrow
to(j>—a little more
might conclude
I
And
and Ireland have now a fair likelihood of being adjusted to-
and
money,
Irish habit.
excellent
home, that there is now every hope that the long and sad
by Irish farmers; and
one
this
saying that I am very glad to hear, from messages from
solely inhabited
bank, and in
to
of
district, and he would
monopoly of that district, which
a
all the people, and I dare say you need it,
banker's paradise would be
a
A bank would be placed in the
this:
CONVENTION.
the path of economy and peace.
among
Economic Intelligence in Public
Opinion
By Dr. Henry T. Suzzaixo, President, University of Washington.
Mr. Chairman, and
Association:
the
time
Gentlemen of the American Hanker*
The problems of American
being to be international in
And
scope.
difficulties for the American
elements
transient
subsidence, that I
operations
wish
of
business
is
a
to-day to emphasize the
problem of domestic public opinion.
You know the human
particularly
ogy,
when
it
under
operates
large grants
freedom without large grants of intelligence.
have to do in the United States of America
not
having caught up with freedom)
his
(education
is to give
us
fairly
a
period, and in that period each individual, with
right to think, begins to think about everything that he
has
no
facts to think with.
Now, I do not
-
satirical in the discussion of
propose to be
what I regard to be one of the most fundamental
in
of
And all that
you
prosperous
future of American
the
begin with
business, but I
problems
merely want to
generalization, and that generalization is this:
a
That the American people are sadly in need of an economic
education,
manifested
as
other periods than this,
that
we
are
American
any
by
we
need
all
the
publican
or
of
nesses
traditional
more
more
economic
the
nations
people have not
and individual
power
education
simple
one
Democratic
tendency
in
that
their
our
than
more
nomic
common
people, they
are more
a
That
is
have
Anglo-Saxon traditions,
to
readily followed
say
eco-
the
to
economic
on
in
case
the
which
I
in-
United
wish
to
few illustrations to suggest the long
lines of evidence to support such a conclusion.
the friend of British foreign trade.
Government
American
us
of
United
States
England is
Until very recently, the
has
been
the
enemy
of
foreign trade.
adequate.
with
morals,
co-operation,
but
the German Nation
and nowhere in the world
was
under-endowed
it
as
has
not
was
there such
with
before
an
the
organ!-
can¬
not handle the Government will be compelled to deal with,
as
in the
of the establishment of the Federal Reserve
case
Where, for instance, the great agricultural
System.
duetivity of
should be;
our
cannot
seriously criticise the attitude of
eminent toward
the American
from the
cal
German business.
citizen, however,
From
the
volve such vast expenditures of wealth that
banking concerns can take
of
we are
But there is a distinct limit, and that distinct limit is
faith that the slogan, "Less government in busi-
ness
ever
just
so
where
will
there
be
govern-
no
There is going to be government in busi¬
long as there are abuses in business, and
democracy,
a
or a
no one
republic which has
the welfare of its people at heart, the privilege of regulating
public and private morals.
ferent direction'.
we
have got
to
The way of
submit to
a
have been reared
accept it
we
dif-
a
certain amount of regulation,
not because personally as business
we
is in
escape
We are all beginning to recognize that
on
men
we
believe in it—
the old tradition—but because
we
the inevitable fact occurring so deep in our life
as
cannot stop it, and so
make the most of it.
to accept it and
we propose
The answer is
a
correct one, that gov-
ernmental regulation of business is going to be required by
a
democratic public opinion; and
never
the 20th
in
more
century, as perhaps in the 15th and 16th. will business
come
it pleases with itself.
of
government
sound
sense
Our task
regulation for
is
substitute
to
another,
and the capacity for
one
one
founded
kind
upon
understanding the limita-
tions of the fiat of government, and then
a
men
back to that absolute freedom to do what
we
shall have, in-
constantly irritated public opinion, dealing dean
educated public opinion deal-
ing with it appreciatively and constructively,
Our public opinion began to operate more or less violently
upon
business
because
of
we
But
going to be pushed to the point in this country,
will deny the right of
tions of
long
to
I have
no
imperative necessity of public welfare.
ar
an
questions upon which
as
resources
deal with
standpoint of its domestic and international politi-
Why,
no series of
be necessary
may
the point where private business has not the
or
going to operate that great institution of business
of it, it
for the Government to take hold of the great problem of
changing about fifteen
morals.
care
reclamation.
severely criticise it
you may
What is the situation in the United States?
as
German Gov-
the standpoint
it
but where the issues of the public welfare in-
structively with business,
You
pro-
country may be left to the individual,
eminent supported on the firm foundation of the
economic
the basis of German civilization.
enterprises
in
engage
may
stead of
was
to
business organizations are
The business that the banking organizations
zation of the public opinion of the
controlling crowd in gov-
institution which
right
any
corporate
or
handle shall be left to the banks, but what the banks
and business
take another illustration from that nation
wonder-
fully endowed
political
the
I admit
that with the highly developed in-
ment in business.
more
with
Government
where individual
that
a
always will sur-
democracy,
certain validity in that slogan that with our
a
the
larger Influence, legitimate
the generalization
One has only to cite
war;
that there is
organization,
begin.
Let
It is sloganized to-day under the expres-
a
sion, "Let us have less government in business."
democratically organized,
into that confidence
grown
fluence, with government, than is |the
States.
round business.
Re-
and the result of it is that the great
questions, and they have
which, in
become
have
to think and to assert that has char-
leaders of other countries
the state of
the public mind,
ness," is
reason.
acterized the growth of the American people under extreme
free conditions;
must recognize that it must take into account
in
badly frightened
so
who know do; that in
men
nation in the world, and for
In
continuous
where we are
willing to let tlie
life
the
its
upon
itiative of the American people, particularly in business/the
is very peculiar in its psyschol-
race
insist
to correct evils that it believes to exist, then that business
But it is precisely because
the
upon
Democratic people that
great
a
that subsidence of domestic irritation in the interference of
external
a
right to aspire to better standards of living and to its right
business leader seem, for the
being, to have subsided.
of
the media
in
for
seem
of the domestic problems which have created intense
many
time
business
political
twenty
issues
of
years ago.
divided
are
no
longer
political equality and self-government
about the Revolutionary War:
of human slavery
and the
nor
our
country
Great political
as
the questhey were
yet about the great issue
maintenance
of
the
unity
of
a
BANKING
free people, as was the
about the Civil War.
case
Our at¬
tention is not focused
purely upon political questions.
political questions
Our
problems of social welfare, and
are
our
problems of social welfare centre chiefly about economic dis¬
We live in
putes.
economic age,
an
where every
the street, because the delicate structure of
man
upon
palpatating
our
SECTION.
move
119
the other end
to
over
men
operation, because
we can no
forever
must
rations, proceeds to think about economic questions, where
of the
at
man
accepted it
the bottom he ascribed
part of his fate.
as
conspicuous changes
vidual
that
he
does he in
to
the
olnger
no
the
in
Now,
persist
which
in
leaders
think
he
long
as
giving
they
To-day there have been such
mind
of
the
blames it
democratic
attention
no
is true,
and
his
to
Providence,
upon
explanation
themselves
to
have
no
nor
blame it
way
long
as
will
men
intelligent
of
in
economic
education, he is going
to
And if
adequate explanation of his own,
so
It must
two
into
masters
of the masters to
sponsibility of
And
so
have two conditions constantly operating in the
we
United States
economic conditions.
on
On the
hand
one
we
so
The
the
on
explanation, by the dreamer and the idealist,
hand,
and
with
with
no
gogue who
purely
no
of the fact of
sense
the
on
t£e economic realities
technique of operation,
for the
satisfaction
of
his
an
one
or
have the dema¬
we
exploits the discontents and the passions of
Now, such
ex¬
for
street
personal
own
men
egotism.
condition could not exist if the natural, the ex¬
a
Within
pass
their job individually
the
upon
concentrated
and
schools educate
shall
press
great
organized
youth
our
have
wider
in educating
economic
by seeing
way
to
relatively
for
ment
simplicity, and
sidewise into the
cal education in
of
adult
Of
banking
We
used
we
to
realize what situation
think
that
institution
the
have
we
of
gotten into.
business
was
a
the soil of Germany he shook the economic sta¬
upon
bility of the whole world.
few
to
And
recognize that when
we
Russian dreamers and exploiters proceeded
play
upon the discontent of human
a
in Russia
nature, without keep¬
in
association
an
arose
by
a
day-to-day adjust¬
But your
son
has
you
give him.
And he can't.
of facts and
terms
My friends,
structure of
of
modern
economic
life
fell
barter.
And
one
this is
as
as
our
that
is
economic institutions.
as
And
as
a
of the solemn obligations
definitely to get behind the
colleges and schools of business administration.
in
are
I
he
theory to co-operate with these great schools of busi¬
and how little the business
right down to
comes
you my own
west of the
the
is willing to do when
man
specific service.
economics
difficult at
can
not
be
every
man
also
shall
times
to
put
the year, into
brought
up
give
In
an
attempt to redeem
visionary tendencies of pure idealistic
be
who
has been trained in
trained
some
of
our
the
in
branch of the business which he teaches.
it
I
We have the largest school of busi¬
Mississippi River.
theory we insist that
abstract
some
experience.
that man's business
there is not anything in our life
delicately put together
A
upon his ap¬
practical
And yet we find
men
in for three
it just is not convenient to make the arrangement.
civilized
the plane
enter
principles
the
to
to
Before he enters
months of
whole
on
You entered at the bottom,
ing in account the fundamental facts of human nature, that
back
have
have been greatly surprised to see how perfectly willing we
ness
foot
You
in the great industries in which
or
prenticeship in business.
economics from
certain Emperor stamped his
once a
business.
foundation with which to enter
or
But
recognize that
the
business that experience of twenty or thirty years must be
rather tough instrument that could stand all kinds of jolts.
we
conditions.
And you assume, because you have
done it, that he can do it.
ness
course
complex
complex situation which
be interested.
you may
modern
opinion.
the
lot of you have made a great success without much techni¬
of such
and that the
understand
with the complexities and taken the problems
changing conditions.
to
a
education
the
as
followership.
a
into your business and make your
merely through being in
success
grown up
it that the
to
in economic truth
use
men
issues, doing it in
re¬
life-time business has changed
our
could not step
sons
background
they
implies the
but will likewise
relatively simple
accumulated for him
day, would do
division
problem of educating and carrying along with him American
perienced, the gifted and the trained economic leaders of the
thinking in economic terms from day to
problem.
therefore, falls into
understand not merely the processes, technical processes of
industry and commerce,
country, who
are
the
specialist in business who will
entered with
have the constant
we
man
solve the
the education of
means
One is the education of the
opinion; and in the second place
hunger of the
summons
that in humility they will
first
gradually and mastered them.
of the
masters and
can
have the massing of a large amount of ignorant individual
ploitation
opin¬
highly educated economic leadership.-
more
a
The second division
Your
seems
appreciation,
distinct divisions.
two
to sympathize with him, will give him.
wayfarer, who
that
men
demo¬
by that intelligent education
or
The problem of economic education,
public opinion.
explanation
of* the
appreciate those who
possess
from
plausible
a
know what they don't know and with what
knoweldge they
the next
most
of
by both: through the vigor of leadership
followership,
will
the
longer force tliem to do their
understand the atmosphere of public
or
ways,
thirsty is the mind of the modern democratic American he
accept
instrumental¬
And that public opinion is made in
just one
which gets the confidence
on
difficulties
the
to
the
as
crudely and he is going to theorize ignorantly.
seems
indi¬
the system and the other
upon
that
as
some
find
pay
it to Providence and
wholesome, old-fashioned
himself, but he blames it
fellow.
Well, in
in the economic life
wrong
other
Business cannot work just by understanding
ion around it.
something went
the
accept co-operation in the midst
cratic opinion.
itself.
the old days if
to
into spontaneous and intelligent co¬
Now, I honestly believe that American business
duty.
economic life is constantly
affecting his living and his aspi¬
; before the individual did not think about it at all.
and
ity and to educate
some
business enterprise, because
So that
experience, which is two years old, can¬
Now, I believe always in dis¬
to date.
cussing things from
standpoint of realities.
the
And
we
particularly is that true in the face of two modern condi¬
have tried in that same school of business to engage in an¬
tions,
other experiment,
in
its
The first is that industry
units of
is tremendously expanding
operation; capital cannot work without la¬
bor, labor cannot work without capital;
credit
there
to
he
ern
a
a
versity, making the two things supplement each other, and
of productive industry.
saves
way
to make
these
units
aspiration that will give
are
a
man
primarily by putting
or a
wish
a
head.
And
tieing
people together,
as
we
move
desire
co-operation
ways
011
by which
men can
away
the
He has to do it
the outside of your head, or
inspiration
upon
the inside of your
from coercion
force
of fear,
as a
we
that lie needs,
method of
have got
to
and the theoretic training explains what is
done in the business.
thing
to
a
take
long
our
ways
are
take
the
American
able
boy and give
to
do
In other words, we
tion
must
ever
train
do it.
because the
foreign trade, and to pay them a salary while
lip worship of
mere
find it far easier,
learning, but they are very cautious how they will
We have been
ment.
But I
off always looks better to us, to get them
sixty or seventy Chinese students, who are as¬
sets for future
they
wants to control you he has either
club
or an
the
of this structure.
only two fundamental
If
work, each
a common
us
got to do it by coercion or by education.
idea
so
And when you tell every
specialized function, is to give them
be controlled.
an
money
do whatever he pleases under the gifts of mod¬
can
common
There
around, they get
quarter and then back into the uni¬
practical experience gives him the vital reach for the facts-
business from every margin
in
a
that
liberty, the only
with
and
And so, running the year
out into business for
be accumulations out of human thrift for the
may
purposes
man
industry unless the public
banks cannot give
of combining apprenticeship with abstract
theoretic education.
come
a
a
it
in
him
the
specific service.
to
business ipan.
Once you trained
privilege.
manage¬
don't want from the business man
theory of co-operation.
down
same
merchant marine
Forget it.
The co-opera¬
No school can
We don't pretend to
them entirely through apprentice-
#
BANKERS'
120
"
•
'
'
■
«
CONVENTION.
-
ship and then you turned tiie whole job over to the schools,
and, of course, we couldn't do it.
And
going
are
we
now
back again and saying we can both do it together,
we can
tive the theoretic aspects best, and you can give the practical aspects best, and if they run together there will be a con-
Our
stantly vitalized mutual interpretation of each other.
first
obligation, therefore, is to get back of the great cenof
tres
little
business training.
cation, largely
cause
man
business edu-
in
which I
best kind
of
told you
laboratory in the world be-
changing with conditions.
you are
so
have come up without that training;
you
have the
we
University
our
the'prejudice
because of
about, as most of
but
We found in
the interest of the business
was
stance, six years ago that there
We found, for in-
just sixteen boys ma-
were
joring in the courses in business, but one-fourth of our men
going into business
were
out
proceeded to reconstruct
we
places where
1G
students,
our
This is due
the business
and
courses
our
was
to the
terms
And to-day, instead of
went.
young men
result of that
The
have 1,200 to 1,400 majors in business ad-
we
ministration.
going untrained, with-
every year,
knowledge of economics.
any
in
man
the
chiefly to the renewed interest of
sound
education, economic educa-
tion of his apprentices.
But after all
most serious
culties
in
lived
our'current
in
the presence
ing to
understand
down
specialized, and
the
so
the
blindness
stand
the
England
of
of
of
village
where
we
begins early in the morn-
us
alley of workmanship, highly
him, doesn't
either to the left
see
And out of that difficult situation, due
of
specialization,
one
problems.
other fellow's
understand
and I
You know
And that
is
tions, and those two institutions
school.
ing of juvenility.
The
the capitalist and
the
laboring
man
The
manager.
science, possessing the foundation of all technology,
home
and
the
They were not devised, these two wonderyou
out into a great
world and make you fight its battles and
great complicated conditions.
understand its
Your mother started
you
to
school, and she said, "Go straight to school and take no
side looks at the world as you go."
And when school
was
and you were ready to start for home, the teacher
over,
told you the same thing, "Go straight home, and don't stop
and look at anything on the way."
And most of
our teach-
have gone straight that way, from grammar school into
ers
high school and the university, with only a few side glances
at the real world.
Of course,
we
had the theory of it, but it
had never been hammered out on the anvil of actual condi-
And, of course, when we proceed to teach economics,
tions.
teach the everlasting truths of economic science.
we
know
you
But
don't always know how to give concrete illus-
we
trations so that it will catch hold of the individual mind,
practical world we find ourselves unskilled in draw-
a
ing illustrations, and then we are not always sure which
Now, we are getting over
principles are most important.
that disease, because we are beginning to require the schoolmasters be trained in economics, that they shall be trained
And I am going
in social science and in political science.
to give you an illustration of the sort of thing going on in
profession, because it suggests an important job for you.
my
The illustration I am going to give is a very simple one.
It is from the field of spelling, and I know you will appreYou know, when we looked over ten text-books in
ciate it.
spelling most widely used in this country,
words, with
an
of about 9.000.
average
found the
we
G,000
children were taught all the way from
to
14,000
The average child
at jthe seventh or eighth grade only had use for about 2,000
Well, the first thing we did was to cut down the
to 3,000.
The
the
are
fully attractive institutions, to chuck
number
have in American business.
we
have been
we
Both institutions are for the production and train-
of the
one
going to explain why.
1
largely reared, we schoolmasters, in just two institu¬
very
under-
cannot
man
farmer does not understand the banker.
man
fact
somebody else—but what have
narrow
largest irritations that
does not
the
to
intense is modern business that he keeps
the right of him.
to
New
one
his eyes right in front of
or
due
responsibilities, and nobody had
same
Why, each
run
is
kind of work, everybody lived in
same
of the
strain to
One of the largest diffi-
civilization
little
the
everybody does the
to
The
Away back in the 17tli century, when you
perhaps
done now?
problem.
problem is the economic education of all those
specialization.
one
am
•
thing she cannot do,
under-paid school teacher there is
From
that is not the most serious
who do not go into business.
men
|.
■
.
we
taught him, and the second thing we did was to
thousands and thou-
take business letters, correspondence,
sands of compositions and study the most frequently used
words, and the most frequently mis-used words.
we are
And to-day
economizing by teaching 3,000 words instead of 9,000,
is not comprehended and appreciated
by the great industrial
and the 3,000 we teach are the most frequently used and the
leaders.
most frequently abused.
eialize
in
I
want to say
human
that it is absolutely unsafe to
workmanship unless
place of the
jobp left behind.
leave appreciation
you
And the most important
problem in economic education is to educate the
not
are
to
as
primarily in business and who
be
in
course
most
educated
by
economics
its
to
man
Nothing—below
the
out any
reflection upon
as
am
earned the title of the dismal science.
bit of artificial logic.
to
understand it.
real
world
I
wants
didn't
to
what
ready to
have
say with-
Tt
was
abstract, like
really
and
until
guess
the
I
supplying of human
through with the
We need
the
a survey
backbone
of
a
of current economic fallacies to become
course
economic
in
teaching, and the
schoolmasters cannot move until we have a survey of cur-
on
why
courses
of
instruction
him too hard.
you
I
am
a
say
economics.
Now,
schoolmaster and I
ought not to do it.
me
in
can
The schoolmaster and
this, because
you
may
in
And I object to the constant sneer of
the busi-
toward
teacher.
business, could
than I
job
the
the
can
to
any
in teaching.
take
business
care
man
of
fails
I
time
in
twice
the last
as
half
what
to
the
do
in
jobs
other reason why you should do it.
less idealistic.
more or
any
would
not
be any good.
will spring out of you.
more or
family neglects and
we are not
built to do.
wonderful qualities of the modern
playground at school,
You have got
to have more
into the rough-and-tumble of life than
dozen
education,
If they were not, they would not be
and better ethics than you used on the
she
And there is an-
The schools are always
If your mother didn't teach you better morals
good.
ideals when you go
economic
us
tant subject matter for economic teaching.
much *
But somebody has got to stay
But you must not expect us to do
And with all the modern
make
can
to tell
what those current fallacies
of this Bankers' Association than to provide the impor-
man
the
time and my education and would have been more practical,
1 part
better
was
Now, the schoolmaster is
forget it—is the best citizen in America, next to the mothers
what
in the book, but if I had been asked the twelve or
that you are going to loan on, says your
committee,
•of families.
on
was
and there could be no more important work upon the
was}too abstract.
schoolmistress—and let
money
there
fourteen most important principles, it would have saved my
social opinion
tell you
years,
dis-
turbing economic life. Well, they taught me all the economics
rent
don't lean
ness
tion to help the schoolmaster to find out which are the most
current economic fallacies troubling public opinion and
I went through it trying earnestly
wants
a
are;
get
the
And
we
But that it had anything to do with the.
human
for
a
It
courses.
person
or
I have been inter-
ested in this question of sound teaching of economics
sionally staffed and continuous bureau of economic educa-
What have
under-graduate completely
an
policy in the form of committee action.
good many years, and I think you ought to have a profes-
instructors that the vast amount
my
of economics which I took
a
located
This American Bankers' Associa-
tion should not depend upon its business.men to work out a
good citizen is the
a
Well, I
who
men
so
How does that apply to economic
Very simple..
teaching?
A
universities.
done in the universities?
not
day to day.
important job in economic training.
done?
we
a
are
from
pressures
make
spe-
And the school, like the church, is
less idealistic.
And your
second
great difficulty,
to the danger of the course being
which must be added
abstract and not properly
selected, is that you cannot trust the teaching of
to
the
average
teacher
unless
that
teacher
economics
is thoroughly
'
BANKING
realities
well trained in the
be
of economic life.
Economics to
wisely taught must be taught under the influence and
the constant criticism of the business
the two difficulties that I call to your
Now, just
ness
few words
a
intelligence in public opinion.
leaders, and
1896.
have
you
* grade
You
solemn obligation,
a
The most wonderful political school
people of America have gone, was that educa-
tion in economics upon the silver question
chiefly?
The bankers.
especially responsible?
And
in 1896.
why
And who
the bankers
are
Because the banking institution is
and centre of modern industry, agriculture and comWe cannot do business without you.
uierce.
depositors;
simple, concrete facts and truths bearing^
up,
economic questions.
If you don't do anything
upon
to a
more
bankers
as
can put another little simple
principle alongside of that and tell the
that
average man
how much you get is always limited by the price of produc-
tion,
accomplished another great thing.
have
you
Now,
not always get it, but what you can aspire to get
you may
is absolutely limited by the cost of production, and if you
hold back production, what you get is reduced, and if you
better still, the very brain, of the
or
well
for yourself.
If you can put that second simple principle
alongside of the first, in the fifth grade, and do nothing
have succeeded in starting the whole
you
the direction
of thrift.
for the public.
as
of economic education
But that
is
good for
with
the
around—good for the
Now, I am not trying to suggest a course of study, but 1
education
that
has
been
the problem
merely putting
am
You didn't educate the people
you
are
When did the
the idea
of
complete and con-
merely upon counter-propaganda
not depending
into the dangers of 1896.
a
The careful training of economic teach*
structive program.
ers,
against
up
to you with
and arousing you to
you
is that it has been what I
men
call trouble-period education.
much before you got
about half of our difficulties in efficiency in business
will disappear.
stimulating
economic
given thus far by business
more,
And I want you to think
the other way
public, also good for bankers.
trouble
And if you
American people.
increase production you have got a larger fighting ground
Now, of course,
in
do that one
can
touch the borrowers; you touch them all.
you
Ypu will be the heart,
country
you
thing alone, you will reconstruct the whole attitude of the
You touch the
economic system.
The
more important than that task is to put
pends upon wants and supplies—if
economic
You proved it in
the top
But
into the mind of every American citizen, from the fourth
to
to which the
it
economic leadership of business in colleges of business administration.
child in the fourth grade than to teach him that price de¬
the natural
did
1
attention,
It is apparent that the busi-
more.
121
of this country are reversing their attitude with
men
reference
are
Those, then, are
man.
SECTION.
trouble-propaganda
the
when
against
you,
which has been the chief method of education employed by
business men, particularly bankers, begin to advertise, which
business
is
perfectly simple. Propaganda is telling the truth favorable to
good method of educating the adult man?
a
the
understandings of banking became
did the business
the
public?
wanted
to
begin to give
man
When
there
was
know that in the last analysis public
When
We have had
crisis.
a
If I am
his
fighting with
truths about both yourself and the other fellow, and telling
they
him what
in
man
red-blooded way, and all
a
passions are aroused, it is bard to get my cold idea into
hot
head.
time
The
head is not when he is
best education
I urge upon
sity for
a
to
get a
idea into
cool
man's
a
fighting, but when he is cool.
The
is preventive and not corrective.
the American Bankers? Association the
of
the
American
chiefly voice
our
our
American democratic civilization we
aspirations in spiritual terms, in terms of
people, because
you
civilization at bottom is
a
economic realities,
tion.
an
economic fact; and to educate
spiritually without giving him
man
The
is to build
standard
of life
neees-
never
are
America,
unhampered and
leadership
powerful
through the Government
irritated
when
to
operate
That education shall strengthen
Mr, President and Gentlemen:
piiment of
being given
a
thank you for the comyour
time
as
a
As the hour encroaches upon
lunch time, I will not attempt to deal at length with
the details of the
American
moral
economic
live to economic prosperity.
a
the business—con-
detriment that is destrue-
•
Prosperity U
Wm^Sproule, President, Southern Pacific Company.
few minutes of
railroad man among bankers.
your
I
and
makes government aid
Public Opinion can Restore Railroad Credit and Public
By
every
nomic Intelligence and appreciation which, acting through
structive in business instead of
tend
glimpse upon the
a
house without a founda-
only operate when the masses have that eco-
can
public opinion,
always
a
spiritually of
opinion.
will
spiritual fact, depend-
a
ent upon science and religion and sound morals, that same
going to be able to operate outside the influence of public
It
But this must be remem-
bered, that if civilization at top is
citizen is dependent upon our economic prosperity; and in
great constructive policy calling for the economic
edueation
going to do about it.
you are
My friends, in
individual, of political morality.
you,
That is not the time to educate the-
a
And education is telling both the agreeable and disagreeable
they
American people ; that is the hardest time to educate them,
my
yourself and the truth unfavorable to the other fellow,
you
opinion wins the fight
to
And the difference is
education.
real
when
by strengthening the opinions on your side and lessening the
support of those who are opposed
but
men,
because
strike,
great
a
deep.
more
lesson in economics to.
side before the people,
their
put
a
Only when
subject of how public opinion
can
restore
I have heard doubts expressed about the public being fair,
and yet I have
an
people the basic
abiding faith that if we can get before the
business, its principles and
facts of our
practice, they will endeavor to do the wise thing, and they
apt to do the direct and wholesome thing.
are very
railroad credit and public prosperity, but with your per mis-
can
sion will tduch upon
If we
will help us.
to the
a
few of the high points that pertain
subject.
To begin
The
with I believe public opinion will do
either railroad
men
or
bankers
can
do
more
than
^o bring about that
improvement in conditions which is the need of the time.
The
may
problem is how to reach the people
be correctly
enlightened,
informed and
move
in
the
-
may
being.
that the public
so
that public
direction
of
opinion, thus
■ *
By the public I mean the
street.
but get the public to
national
well
average
man,
our
the
man
in the
business, but he is
accustomed to deal in easy and familiar terms, and unless
the facts are
presented to him in that form which attracts
his attention,
and which he
mental effort
on
understand without serious
his part, our efforts to inform him fail.
public need to understand the banking business bet-
than
they
do.
Hence
the
banks
have gone into
railroads better than they do,
and we need the help of the
bankers to put the case of the railroads before the
something important to
With
this
a
every
you,
a»
object in view I would invite your attention
few factors in the railroad situation that must
situation
country
people
financial institution,
be of interest tq everybody who
the
the
The people need to understand the
business of publicity.
afresh to
He desires to know about
can
ter
understand our difficulties they
in
finds
which
itself.
the
That
desires an understanding of
largest single
interest,
interest in this
it is needless to tell
is the railroad.
First,
the
Funding Bill
public
now
should
understand that
the
Railroad
before Congress Should pass. But the force
BANKERS'
122
The railroads
passed. The
public opinion behind it is needed to have it
of
CONVENTION.
taxed to build these highway and are
were
public have the notion that it is some kind of a
railroads, a
ways
In the meantime the high¬
being taxed to maintain them.
gift to the
gift of $500,000,000, instead of which there is
It does not propose to give the railroads
gift about it.
no
The fact is that during the time of war the
single dollar.
a
The Govern¬
Government had the railroads and ran them.
made
ment
the
capital
large
which to
with
money
improvements
for
expenditures
railroads nor
companies had neither the
the railroad
and
The
the improvements.
make
Government lias since returned the railroads to their owners,
for these improvements.
and still there is no money to pay
simply asking that the debts be funded
The railroads are
as
other public debt would se, so that the payment
any
debts
the
When
basis.
interest
the
tures the amounts were
these
that
intention
standard
of
be extended over a period of time upon an
may
return
made
Government
the expendi¬
charged up to the railroads, with the
guaranteed
the
deducted, from
be
should
sums
the railroads for the
to
war
Built as highways of easy
being broken down.
are
communication for all the people, they have been perverted
into highways of
fact free
in
transportation for hire and have become
highways for the carriers of freight and pas¬
while the strain railroads must still stick to their
sengers,
right-of-way and
own
doing business
heavy taxes for the privilege of
pay
road-beds
over
Now that the highways are
the
of their
pounding of these ponderous vehicles the great body of
people who desire to enjoy these highways are beginning to
sit
and inquire where they get off;
up
people have their say who do their business over these roads
hire, they will build a road that will cause the people of
for
load of taxes under which they will
this country to carry a
pay
build
For most of the railroads, including most
than that.
able to
collect
for
ment
any
the
of the
of the
due them from the Govern¬
money
They will first have to
of the Federal period
the railroad companies got out
Ail
is, first,
load of debt because of capital expenditures in¬
a
left with
a
partly borne, is causing keen criticism from the people
those freights and fares.
pay
Very
in
print by well-informed
trouble
with
began
of affairs
men
the
that
That is only partly true.
trouble is with the Adamspu Act.
Act,
the Adamson
which foisted
eight-hour-day theory upon the railroads and the con¬
tagion of
the
But
it has since spread
Adamson
Act
into most
did increase
the
other industries.
bill
railroad labor
by some $271,000,000 in 11)17 over the year previous.
The
1917, to more than eight times $271,000,000, or
not
152% increase in railroad operating expenses for
sents
to
To gain not quite 8%
gain what?
At
the
time the railroads
same
more
for .wages
or
alone
a sum
it
money
this,
an
important part of the
gathered in taxes from the railroads has been turned
into channels of
competition with the railroads.
The trans-continental roads
are
in the
1920
were
submit
I
to you
com¬
more
and
the
acts
of
by reductions in rates.
tional
the
a
railroads have
were
place and are
at
taxed to
now
been
taxed.
help build the ships in the first
These high costs of shipping
railroad difficulties and
the
are
part of the in¬
creased freights and fares the people have to bear.
Nor
is
the
competition by ship all
railroads have to face.
few
past
years
smooth surface
Along
many
two
these
as
and
designed
built
the
railroads had
railroads never agreed and
voice whatever.
no
the
The cities and counties have in the
highways
of
hard
foundation
and
largely paid for by taxation of the railroads.
highways ply motor buses
often
holding
as
forty people, and motor trucks ply in trains of
three
cars
big
as
railroad freight
to entry several tons.
cars
and
The "Na¬
will
tell
cumulative results,
public be fully informed public opinion
and happily if the
bring about the remedy that is necessary.
the statute book, but let me
on
that the Adamson Act has been superseded for all
you
purposes
The
by the Transportation Act of 1920.
"National Agreements"
adjustments and so-called
all
Superseded by the authority granted under the Trans¬
portation Act of 1920 to the United States Railroad Labor
Board.
the National Government to all in¬
That Board is to-day
tents and purposes
employers
competition
Adminis¬
General to the Federal Managers.
are
being taxed to continue their operation
loss in the second place.
enter into
States Railroad
United
Agreements" were war mandates from the Ijirector-
rate
The roads
the
which
practical
the
The fact is we
bearings, including the so-called "Na¬
their
all
in
tration
business between the ports of this country at a loss and for
losses
than their total gross
face to face with the cumulative effect of the Adamson
peting with United States Shipping Board vessels which do
those
fuel
(insurance—
that with the railroads in this fix it is
idle to talk of remedy
The Adamson Act is still
hopeless fix of
no
taxes,
no
earnings from operations in 1916.*
We have to address ourselves to these
While contending with all
no
paid in 1920 nothing whatever but wages, the wages
thus paid in
tional Agreements" to which the
upon the railroads
claims and
material or supplies, paid no
in
possible to increase taxation
1920 paid
rentals, no interest and no dividends—paid for
Act
has been done.
1920
earnings from operations in
In other words, if the railroads in
these difficulties the burden of taxation has also grown, and
has been
railroads
greater than all the money they took
their treasuries as gross
into
1916.
hours of service.
In every way in which it
what has
I repeat, that the railroads of the
in the increases of taxes you can all
railroads have not been spared.
see
The roads were turned back to their owners in
of the railroads in 1916.
are
depend upon it that the
us
country, familiarly known as "Class One," paid out in
wages,
weighted down with
are
Now let
1916.
the last year of Government control of
was
country exceeded in amount the total gross earnings
in this
This vast increase in payrolls does
represent increase in public service. No, indeed; it repre¬
Act in
question.
Congress were scared
In that calendar year the wages paid by the
1920.
if they
$2,230,000,000 in 1920.
1920
happened.
they
in
Adamson
the
into
1920 and the United States Railroad Administration during
increase
to another aspect of the labor
Allow me to turn
the brief period of four years raised wages from
$271,000,000,
Think
return
in the business; four and one-half times as
You will recall that the President and
no
period, however, carried the railroads along into
war
money
against
taxes
for taxes.
much
operations.
I have seen it
few realize what those burdens are.
$02,000,000.
$62,000,000 in
railroads amounted in that year to only
huge labor bill, so huge as to be to
burden upon transportation that is only
partly borne by increases in freights and fares, and although
the
000,000, whereas the return on the capital invested in the
the
thirdly,
the railroads amounted to $279.-
alone against
on
were
The
taxes
until in
which also the railroads are taxed,
highway for
it—$279,000,000 in
the present day a
stated
combined against the railroad, war-time
of
filled and the railroads are without the money; and
who
are
war-time taxes and increased competition by ship and
return, which promise in large part remains unful¬
anteed
but
there
Thus
wages,
Government; secondly, the promise of a guar¬
curred by the
they
taxpayer who can carry the load.
a
1920
Guaranty Period.
The
slogan is "Build the road to carry the load," and if these
new
stagger and fret for many a day.
great railroad systems of the country, have not so far been
and the answer is
taxes, both for the people and for the railroads.
more
periOjd.
But not only are the railroads not in position to
these amounts at this tipie, but the situation is worse
construction.
own
being smashed to pieces under
and
conditions.
in dealing with disputes between railroad
employees
regarding
wages
and
working
.
To-day the Adamson Act is in effect, the acts of the United
States
Railroad
Administration
and working conditions
States Railroad
are
in
effect
as
Labor Board elects to keep them
by their own rulings.
to
wages
only to the extent that the United
in effect
So long as they retain them in effect
each
•Their
gross
earnings
in
1916
paid in 1920 were $3,698,216,351,
were
an
$3,596,865,766.
excess
The
of $101,350,585.
wages
they
BANKING
SECTION.
foy their rulings, the burden will be borne by the railroads
and by the
public, and to whatever extent the Board releases
■the railroads from these
lief
be
been
forthcoming.
burdens, to tliat extent only will
The relief
far
so
obtained
has
re-
only
fractional, and the Board still has the subject under
•consideration.
going
are
if the Labor Board decisions
as
ditions
terested,
their
to be thrown
or
But
purposes.
of the public.
and taxing us for the losses;
against
as
invested
is not
window
the
if unsuited to
When
the
taxes and
disposed of in the way the Secretary of the Treasury recoin-
United
the
Board
speaks in
the voice
as
Three
mem-
the pernicious surtaxes
has to
in any
concur
get to
we
Board
of the public three
one
decision handed down; and the
sooner
knowledge of the fact that the Railroad Labor
a
is
nine, but at least
The
the
voice
of
the
where
it
takes
the
of the public to let the Labor
support
will
but
and
that, its wage decisions affect
realize
that
Labor
the
Board
directly, but indirectly the rates of
public will
take
and
the
The
is
war
shouting"
not
are
interest
more
in
If the public
careful
them
represents
not only the
wages
railroads
the
everywhere,
pend'ng
upon
but the "thunder of the captains
over,
still heard, and if the general public
are
the Labor Board
mistake those noises
may
tor the voice of the people.
restoration of such normal conditions
a
to restore
the
railroads
There
finances
the
of
the
nation,
has been prosperity
never
The railroads
prostrate.
were
integral part of the national life.
in
serve
railroad credit, and this restoration will go far to
restore public prosperity.
when
will
as
They
and
large
are so
in
the
are
factor
a
incomes
an
of
the
people, and in the insurance and savings of the people, that
is
it
impossible for the Nation
railroads
are
to
be prosperous when
subjects make it their business to inform the public
the
in the street,
man
information
these
on
for
it
and
nation
the
and the
that
so
too, will have sound
woman
Igrave questions, the present uncertain-
ties may continue.
Los
I
bid
Coast,
more
particularly for
State
our
The flavor of the old Spanish hospitality lives with
welcome.
you
yet, and we say to you, in the sonorous and comprehensive language they
"Agradecimos";
used,
monos," together
If there
the
after
attended
may
any
grateful
are
for your
presence,
in
have
and
San
about twenty-six
Francisco
ocean
years
the
we
islands just
ago,
that it
you we say
city, this olne of our Lady of the Queen of the Angels, for it is made
of your relatives, your business associates and friends, who have
from
us
your
side;
this
on
who
or
hope that they
New England has sent us
versed in thrift; New York hers with visions of possible world
to
"Felicita-
meeting be pleasant and profitable.
our
present who explored our city and the
meeting of the Association here in 1910,
brought pleasant recollection.- with them. To all of
is your
up
are
meeting
we
the
respective
great
homes.
Central
West
fields; and the South men tempered
its
energy
and
come
her
men
commerce
experience
in
new
by the adversities of the period fol¬
Civil War and exhibiting heretofore uncredited disposition to
They have brought us also that intangible something which they
the
lowing
work.
inherited
from
their fathfers of
rid of
the
Old
South.
Blending together in
friend.
for every
room
constructive genius of such men as have in the past decades
done
much for the progress of this great country,
so
The hysteria of the war served its purpose,
is
Let us now as
over.
Let
war
take measures to revive the enthuiasm of the men of
us
that
Without
business.
Let
but the
Nation return to sound principles,
a
enthusiasm
little
done,
be
can
make room for more of the play of individual initia¬
us
Let
us
Let all know that we
ambition in young and old.
rekindle
are
not in
new-found world, but back in the same old world, with
any
the same old duties and the same old incentives for doing
Let
them.
founded
help, too, in forming
us
on
sound public opinion,
a
and diffused information,
correct
relying upon
well-informed public opinion to aid in bringing about those
conditions
improved
will
which
advance
every
public in-
terest, and of those interests the railroads are an inevitable
part.
To conclude,
in
public matters public opinion is the only
great moral force in this country, and if we will do our part
the
as.
public
opinion,
expect
in forming that public
do,
to
us
will
remedy
result
will
all
and
prosper
to-
•;
has been
tory
walks
life; with all classes of business; with all sections of the
Their trials
their desks
the
over
risked
great
are
arms
our
Their prosperity/ is our
trials.
in 1917
our
hurried from their colleges or
sons
under the ground, in the air, and on or under the water,
on or
lost
often
common
While
all parts of the world.
and, alongside of the sons of the laborers in lowly fields, went
top,
and
unity of interest with men
the growing recognition of our
of
and lastly with
their
lives
together,
evidenced
we
the fact of our
humanity.
doubtless
knew that no great pros¬
perity could come to their institutions unless the country also prospered,
there were some who felt that hard times could be utilized by the banks to
exact
excessive
Under
such
interest
bilities
also
has
of
But, of late
to
large
a
technical
of interest and
fields.
the
of
situation.
the
years,
the broader view of banking responsi¬
proportion
of
of
the
public.
and has
This great, American
notable service along this line,
It has made us feel more
as
well
as
clearly the community
necessity of co-operation.
Again the willingness
are
advantage
permeated the whole fraternity and the business field
spread
more
take
banking ethics, is it a wonder that the public
Bankers' Association has been
in
ago
years
otherwise
and
views
narrow
suspicious?
was
bankers fifty
many
of
bankers
all
over
the country,
wherever they
able, to join in the formation of pools for the assistance of some par¬
ticular industry is but an evidence of
I
the wider view of things that we have
We also feel that the man we must assist is the pro¬
especially wish to bring to your attention for study the co¬
operative marketing associations which have developed
in this part of the
country to a greater extent than elsewhere.
have thought that,
having viewed the banking business at close
period of fifty-five years, I may be able to call
of the contrasts in the system
we
now
work under,
as
outstanding
development
during that
range
We
some
country
attention to
compared with that
fifty years ago, in a way that may prove of interest and use.
the
our
of talent, and supremely is there rooih for the
gradation
present time.
that
Above
opportunity to
and
me
prejudices.
an
ducer,
a
be
basic ques-
as a
In this young nation there is
forward.
go
at the
over
to
punish success, and again give every man
our
I
is
stop trying to
various ideas, abilities and qualities, you have here built up a
community in which you will feel as welcome as in the house of a well-
midst your
loved
nation
us
prosperity.
California, and especially for the City of Los Angeles and for its Banks,
us
the
Let
country,
Angeles.
Pacific
whole
if
Let's get rid of the confusion and the wastes.
When at the call to
the
of
flow
There is nothing wrong with the nation
tion.
in all
Board of Directors of The First National Bank of
behalf
free
have
must
until the way has
move
business is the life-blood of the
for
Officers' Reports-Banking Section
and
Address of Welcome by J. M. Elliott, Chairman of the
On
it,
get her.
Committee
of
Business cannot
healthy.
But unless those concerned in these
prostrate.
a
of business expansion and indus-
career
tive and allow success the reward of merit.
Hence the view that it is public opinion which will
bring
about
cleared
been
being properly informed,
adequately informing the Labor Board
questions.
new
a
011
all let us get
Board know when it does
speak for the public.
and in
to
stand.
we
But
as
on
sell to them; only then will this country be in a position
can
Government, and represents the
public at large, the less misunderstanding will there be
fixed
are
are
basis under which foreign nations can buy from us and we
trial development.
selected to represent the public.
personal incomes
on
mends; when our import and export tariffs
ployees and three
all
hundreds of tkou-
their money in good faith
of
status
It is composed of three parts.
names
of the
money
sands of citizens who have put
to start
President
when the absurdity becomes
manifest of building highways for competing carriers to use
bers represent the carriers, three represent the railroad emare
work done;
when the absurdity is abandoned of running ships at a loss
into the railroads; when the Government pays the railroads
wages
working conditions, it speaks
wages or
made in the
in good faith the money it owes them; when the excess profit
States Railroad Labor Board.
deciding
are
and working con-
on
out of the
that
in the public prints
on
adjustments
wages paid only for
necessary
w<prld, including
at the whim of the parties in-
to be respected
were
Finally, when the
railroad
free
Meanwhile, discussions
123
period
of
It
seems
banking
to
his¬
might
claim
prospers
have
increased,
rate,
and
Think
the realization
that we can only prosper as the
has broadened our views, and that while our opportunities
the responsibilities, we realize,
that not
that
that
to-day,
only
for
for our
own
all practical
country,
purposes,
have increased at a greater
but for the whole world.
the world is smaller than
the
Such is the inter-relation of
to conquer Gaul.
out
set
Caesar
when
CONVENTION.
BANKERS'
124
the responsibility.
In welcoming you to Southern California, I feel it but due to you that I
should give you collectively the caution which I have given individually to
many in the past forty years.
It is that, if you remain with us more than
a
breathing space i of time, you run the risk of becoming one of us.
My
wish is that when you do come, I shall have the pleasure of greeting you
nations that
different
cannot, if we would, avoid
we
plans.
1921—The Executive Council of the American Bankers As¬
a resolution providing for a Committee of Five to con¬
the Fderal Reserve Board.
A delay of 30 days was obtained from
10th,
May
adopted
sociation
fer with
the Federal
Response to Address of Welcome by J. H. Puelicher,
President Marshall & Ilsley Bank, Milwaukee, Wis.
Mr.
be
welcome
the
Gentlemen.—What a wonderful privilege is
of this wonderful city—the City of the
and
Ladies
President,
ours—to
guests
\ngels.
Mr.
most.sin¬
brother bankers and myself, I thank you
for my
Elliott,
enthusiastically hospitable welcome.
Man can pay man
him to be his guest and we are coming
spirit of friendship in which has come to us your
splendid invitation.
We are coming from all over this broad land, bring¬
ing with us our problems and our hopes, praying that we may wisely solve
them for the good of our country—for the good of mankind.
The banker's part in the trying days of the post-war period has been
an
important one.
It has been for him to choose either the broad, gener¬
ous
course
in solving the tangled financial and business affairs which
daily came to him or to insist upon the advantage which technically might
have been his.
The return to prosperity, which we are to-day enjoying,
is in a large measure due to the unselfish, liberal treatment with which
the banker met our people's financial and business difficulties.
We are come to California to get further inspiration from the bigness
which exists here—from your big mountains, from your big enterprises,
from your big men, from the bigness and the geniality of your hospitality,
from the privilege of being guests in your beautiful and hospitable homes,
presided over by women, direct descendants of those, I am sure, who gave
your city the beautiful name—the City of the Angels.
Here where the air is permeated with a sane and sound opitimism, are
we
going to endeavor to chart the year's course for financial America.
The
influence of your belief in your State, added to our desire to serve
well the country of our affection, ought to make those solutions big and
cerely
for your
no
you
broad
the
in
and
same
generous.
Fellow Bankers, as well as for myself,
you,
through him
bankers of Los Angeles
the
you.
Report of Committee of Five
the
President and
The
Committee
change
Five
Act
have
to
question, begs
appointed
leave
to say
attempt
to
solution
a
.
prepared, but introduction delayed to give chance to test the law.
order of Postmaster General requiring postmasters to collect checks
was
The
recalled.
was
June
1916,
10,
of
ciations
mittee
billions
dollars
of
ex¬
of the Controversy.
it is called
in
items
influence
lieu
of
changes
handling permeates
The
Federal
and
Act
universal
Extending
this
conditions.
the
whereby
all
banks
member
however,
the Federal
determined
and
remit
must
.State
of
and
at
par.
under
Banks,
further
it went
clear¬
a
plan
a
upon
cer¬
considered
Reserve
System required that methods be
employed to force unwilling State Banks.
When we stop to think there are 32,000 banks in this country, and out
that
of
not
policy
should
and
quite
may
harmony
National
8,000
and
be somewhat dangerous.
be
must
considered.
the balance
The wishes
State,
this
such
of
the most representative gathering of country bank¬
City, protested against the
Federal Reserve System and authorized the con¬
tinuance of the efforts to secure relief through legislation and in event
of failure to then ask the courts for an interpretation as to the constitu¬
held
ever
America assembled at Kansas
in
number
Fortunately, for the most part, complete
has always prevailed between the two systems, and this is as it
and he who would seek to disturb this amicable relation would
doing the community
usefulness
under
better
There
The
first
benefit
the
it
was
The second
/
could
possibly be the case
It might be well to bear the ills we have than
of.
not
all
banks,
performance
both
of
State
and
by whatever
and
valuable
that
service
Association
the Federal
to
passed
Reserve
September
assembled
1916, the American Bankers Association in convention
City, adopted the resolution providing for a Com¬
28,
principle involves the
power
and right of
any
Court
Federal Agency
means,
It
the second
to
there
can
was
so-called
On
tion
the
1916, that
par
1916,
can
be
no
serious doubt,
as
to the first
debate.
May 1,
universal
May 8,
of
principle there
be endless
on
the Federal
Reserve Board announced
Bankers
Association
adopted
the
its
House Sec¬
following
resolu¬
tions:
Postponement of the
2nd.
Limiting the
those
to
payable
in
items
its
to
own
any
Federal Reserve
District
a
fair
charge for items cleared by them
May 9,
Council
of
1916, the above resolutions
the
American
Bankers
were
Association,
referred to
and
the
referred
Executive
to
a
men
Banks" be added.
they understood that these words
would not affect banks charging, that this applied only to Government
checks, and checks belonging to the Federal Reserve—to the very Federal
Reserve Board, the meaning of those words are not clear, they are twisted
to
told
are
Federal
which
only
then the charge of
forbids the
and
Committee
that they
counsel
eminent
exchange does not violate the
Federal Reserve, meaning
Reserve.
It is clear to your
charge against the
pockets of the Federal
the
of
out
banks
depositing
their
A certainly absurd and inconsistent po-it.ion. If they
merely the dgents,
coming
all
notwithstanding that
exchange,
allow
to
notify
Banks
Reserve
merely act as agents.
are
them
forbids
this
that
mean
the
that
Congressmen
by
the
that
interpretation
present
this
of
illogical and illegal.
During the years 1917, 1918 and 1919 we find very little activity on the
part of the bankers, due to patriotic causes.
Unfortunately, however, we
do not find the same spirit on the part of the Federal Reserve who all
the while were attempting to perfect their machinery to par, which they
felt, and admit, was likely opposed by over 20,000 banks or more than
by the Federal Reserve is clearly inconsistent,
clause
two-thirds.
The
Committee
the
to
successor
which
tlement,
defeated
the
if
ful
a
a
has
instead
Bankers
American
The
Twenty-five.
of
Twenty-five
Association
just
came
is
the
equitable
set¬
obtaining,
was
and
near
however,
the predictions of the sponsors of
building up the system, this
to
harmonizing and
of
damaged it almost beyond power to estimate.
solution of
satisfactory
which
the
of
extraordinary piece of legislative manoeuvring and
very
Contrary,
legislation,
amendment
of
Five
Committee
the
through
manipulation.
of
Committee
cured
problem
this
healed, until such
or
When
approach
Banks
became
it
time
as
It is doubt¬
be arrived at,
can
or
the
those responsible for meth¬
national scandal shall have
a
would
clearance"
been retired to private
became
apparent in the fall of 1919 that the Federal Reserve
joint
their
abandon
would
and
persuasive
inaugurate
a
tactics to establish
campaign
of
"Universal par
and
force
coercion,
it
situation, until such
time as the best experts and best minds would have decided upon some
plan to recommend to. our National legislators.
\ want to assure you, and I hope you will do me the justice to believe
me.
that as Chairman I have tried by every conceivable means to avmd
the
publicity
or
litigation
to th» law makers.
and
you
Mr.
This is not the
moreover
is
only
have
witnessed.
The Federal lb
"legislative body," go
especially
which any set of bankers should
Mr.
Harding not only
influenced the legislation, but admits in
in the Atlanta suit, that in a letter
Glass he used the words.:
"This I think would give you
testimony,
Carter
answer
technically correct;
deny that he deliberately
sworn
ring
which
meeting the
Board at all times have answered, we are not a
receive
to
adopt methods of
to
necessary
that
to
July
you
the
that the country was
etc.
On
This would have become the law, being sub¬
House and the Senate, if not for the influence
P. G. Harding and Carter Glass, as a quasiasked that the words "But no charge shall be
W.
against the Federal Reserve
the opportunity
District.
That members be allowed
3rd.
handled by
These
measure.
We
his
inauguration of the plan.
be
It' represented at that time the overwhelming senti¬
charge.
a
Woodrow Wilson,
Mr.
cannot
1st.
of
favor
stantially favored by the
,
the Executive Committee of the Clearing
American
in
serv«*
clearance system.
of
life.
accomplish this end.
As
Kansas
at
Twenty-five—composed of fifteen country banks and ten reserve
city banks—charging this Committee with the re pmiribilitv of working
out a clearing and collection plan which will be fair and equitable to the
banks and the general public, and to co-operate with the Legislative Com¬
mittee to secure the necessary amendment to Section 16.
We
now
come
to
the time, May, 1917, when the famous Hardwiek
Amendment was before Congrss.
This amendment being the consumma¬
tion of the work of the bankers of the United States to have specific legal
mittee
the
(The United States
funds represented by such items at the Federal
Bank.
Reserve
tl»«»
statute included, to dictate the internal policy of State
Chartered.Institutions; to say nothing of methods and unfair competition
to
their checks the words "Collectible at par through
Bank" until such time as the member banks are able
immediate use of
get
ods
is
for
service.)
a
American Bank¬
discontinue the
1916—The National Bank Section of the
a
resolution asking all banks to
September 27,
wounds be
this subject.
National,
and
necessary
a
others wholly without compensation.
of
decided
systems have their fields of
separately than
great fundamental principles involved in
involves
of
Both
disservice.
a
served
know
we
two
are
question
be
to
unified system.
any
fly to others
the
of
feature
tionality of the law.
ers
announced
vast
a
should be,
be
D. C., and appointed a
September 26, 1916,
collection
law
non-member
to
feature
Unfortunately,
interest of
these
issue, payment of
the Board to put into effect
the entire country,
clearing
tain
that
performed
handling of
the
expressed the belief that the Federal Reserve
thereto required
clearance,
par
used in commercial
are
line of business.
every
covering
functions
which
vital principles as to their
Reserve Board
amendments
ing system
important
and because
money,
handling an¬
and economically
of
of, and the business of 32,000 banks, and the
the
in
efficient
say
and
of checks,
use
actual
of
relations
the
affects
Administrative
the
1916,
11,
City.
ers
made
to deal with the problem of
upon
We
fundamental
by commercial banks in the
transactions
checks.
of
the
of
one
business interests.
etc., and appointed a Com¬
Committee of said conference of
sub-Committee, directed
that Committee to consult eminent counsel and if advisable to file suit
to test the constitutionality of Section 16, and to enjoin the Federal Re¬
serve
from forcing banks to remit at par.
Suit was delayed until dis¬
cussion of the whole question at a general meeting to be held in Kansas
July
Bankers met in Washington,
of
evolving the most efficient and economically sound plan
because
to the general
Calling for the repeal of Section 16,
of one from each State.
2nd.
war
nually
held at St, Louis and adopted the following:
proposed Clearing System to be unnecessary, eco¬
was
the
Declaring
1st.
representing the Bankers Asso¬
conference of bankers
a
States
18
nomically unwound and prejudicial
ment
the
of
follows:
as
Cavse and Beginning
Your Committee feels that
sound
an
authority to charge.
Bankers Association:
the American
Members of
of
Par Check Collections
on
B. Claiborne, Chairman.
by Charles
To
Bank Sections call on the Legislative
amendment to Section 16 of the Federal Reserve
eliminating the provision for par collections.
Tentative amendment
Committee
.
Thank
Committee
House and National
the Clearing
of
of the American Bankers Association
of Five and the Executive Committee
Committee
the
that
practice of having on
I thank Mr, Elliott,
and their wives, the civic
bodies of the community and the citizens of Los Angeles for the splendid
privilege of being their guests.
But with, privilege goes responsibility and responsibility implies duty
and I am going to assure the citizens of Los Angeles that we mean here,
in their genial midst, to do to the best of our ability, that duty which
this nation has a right to expect from its bankers.
For
and
Reserve.
Administration
The
recommended
greater compliment than to ask
to
violent
in a system of years of commercial practice—and
urged delay and for the American Bankers Association Committee to study
contemplated
changes
welcoming you personally.
and
Council
1916, the Joint Committee reported to the Executive
existed substantial cause for concern, because of the
10,
there
that
Section.
Bank
National
May
Committee of the Clearing House Section and
of the Executive
meeting
22,
1921,
desire to handle the matter in conferenc," refer¬
Hardwiek
amendment.
Some
of
yuu
will
recall
shocked and dismayed by the accounts of the methods
employed by Agents of the Federal Reserve under the
cial connection with the said Reserve Bank.
cloak of their offi¬
BANKING
the authority, or did not
did not have
Five
Committee of
former
The
and coercion
with legal action to enjoin such methods.
Hence the individual banks had
to reply upon their own resources and meet the situation as best they could.
December 23, 1919, somewhat after Shakespeare's Macbeth, "What need
we
fear who knows, when none call our power to account," the Federal
Reserve Bank of Atlanta sent out a letter to the banks of the Sixth Dis¬
trict, stating the time had come when the Atlanta Banks would have to
put par clearance into effect.
Asking the banks to acquiesce to avoid them
the necessity of using methods that would prove "embarrassing, annoying
and expensive to the non-consenting banks."
Mr. L. R. Adams, Secretary
of the Country Banks of Georgia, called Executive Council for December
21st in Atlanta.
On January 15, 1920, a bill was filed in the Supreme
responsibility of meeting force with force,
wish to assume the
to
Court
On
the Federal
enjoin
February 6,
1920,
Reserve.
the Louisiana Bankers Associa¬
President of
as
extraordinary convention of that Association to consider
what action the Louisiana Bankers should take in view of the situation.
called
tion, I
an
to all banks in the Atlanta Dis¬
made nation-wide upon request of Nebraska and
At this meeting a National organization was af¬
Upon request this meeting was extended
and
trict,
other
later
"National
of
eral
Mr.
and
Myself
attempt a solution of the matter.
to
se¬
been known as the
the said Association has
militant medium
and
Chairman
had
State
and
since that time
And
lected.
active
In
the
the country might co-operate, and
Bankers Protective Association" was
through which the banks of
name
as
States.
Western
fected
was
Secretary.
Adams,
National and State Bankers Protective Association
a meeting in Washington, D.
C.
A conference was held with the Fed¬
Rserve Board, as well as certain testimony furnished to the Banking
1920,
May,
the
substantial was accomplished, how¬
ever, exdept the admission by Mr. Harding that the Clearing House feature
was
not essential to the success of the Federal Reserve Banks, and again
and
Nothing
Committee.
Currency
body, and ask¬
result of the activities of the said National
stating that the Federal Reserve Board was not a legislative
ing Congress to legislate.
McFadden
and
As a
Pennsylvania, the present Chairman of the Banking and
of
charge.
the American
Bankers Association the Legislative Committee reported that these bills
be left in charge of the Committee of Five, who were working with the
Currency Committee, introduced two bills allowing the banks to
National
Five
and
The
temptation is often to close
stubborn
are
obtained
is
that time.
deferred until
be
to unwelcome facts, but facts
eyes
our
From principles we derive probability, but certainty
things.
only
the fact that
Case that all
the Atlanta
upon
pass
of
Committee
The
Committee that in view of
shortly
would
Court
Association.
Protective
the Executive
to
Supreme
action
Bankers
State
reported
the
Meeting of the Executive Committee of
Pinehurst
the
At
.In order to know the sentiment of the bankers of the country, we caused
this
subject to be
instance,
-every
1920 and 1921, and I can state that in nearly
Banks
laws
State
Convention
overwhelmingly rejected.
was
National
the
of
Association
asking to
unanimously passed resolutions
allow
to
as
collection
par
Annual
The
State
of discussion at a large number of the bankers
source
a
meetings during the years
charges.
exchange
demanded
were
charge,
service
a
In
and
the
to
the
Is
banks,
check
satisfactory to you?
National
than
position
In
75
cent, answered "No."
per
concerned showed
were
the question:
was| 70
percentage
five
alone
In
1920
same
To
less
this
and
Strange to say, after four or
test has been made—we find prac¬
a
Bankers Protective Association
question¬
to question No.
answer
tucky the Grand
Bank.
In
the
taken
being
California
2, 72
the
Certain
has
Districts.
being taken
are
enjoined.
District
Francisco
steps
been
the
by
is about
be
to
filed, having obtained
a
meaning of the words,
Reserve."
is
"Necesse
June,
Atlanta
this
of
sort
multos -timeat,
ut
must be
In
Ken¬
quem
and
Oregon
sufficient
the
the
United
States
decision
did
declared,
intend
not
legitimate
upon
Reserve
importance of
Rex
he
in
no
do
This
bank,
the merchants.
or
de
"we
do
materially the three units just mentioned, and indirectly affecting the con¬
,
opinion, theoretically advanced, and having as its principal recom¬
Mere
tendencies,
socialistic
mendation,
jure
even
going
to
so
the
of
as
States,"
and
unsound and
contemptuously
far
as
potest,"—"The
King
can
de¬
illegal.
to publish that this
do
nothing
further study
That
2nd.
of
and development of
pas
but
meeting
a
that
felt
perhaps
great number
a
to hear all
3rd.
in
having all the facts
sentiment
will
What
the
of
the
and
be
Federal
Atlanta
In
understand
done
in
order
the
future
and
which
closing this report,
comes
your
up
will
what
one
here be
uneasy
as
Chairman.
That
we
might better know
the
depend
largely
the Supreme
upon
the attitude
Court will decide in
that is, that under
or
fully
unfair,
no
conditions need
economically
recommended by this
realize
and the
bankers,
city
Men's
Credit
the
Chamber
Association
and
That
conclusions.
be
it
the
this
of
sense
and not
business matter
that
meeting
legal problem, that while
a
collections is
par
recourse
a
to the Courts
might ultimately destroy the present par collection plan, or perhaps estab¬
lish
the said
Either alternative would only continue what we
system.
are
that is, the di; satisfaction of a compulsory plan, without
the technical evidence to justify the conclusion.
4th.
That the American Bankers Association, considering the vital im¬
;
portance' of this supbject, and the fact that the Federal Reserve Board has
asked for legislation, and the further fact that the Board admits that the
present
entire
call
ambiguous,
quite
is
act
this
sider
upon
subject matter, and after
City
and
"Let
forever—and
unfold
time
Congress to immediately con¬
full and complete hearing of
business
Bankers, Country Bankers and
once
a
pass
men,
what
plaited
upon
this matter
cunning hides."—
Report of the Executive
By G. E. Bowerman.
Drum's
President
economic survey,
prepared in April,
was an unusually
valuable and timely contri¬
it presented to the public in a clear and
interesting feature of the year's work, and
current
to
understandable
and
thought,
as
the actual
way
agricultural conditions
The
general public
unusual amount of
the
to
came
taken
interest
in
commercial,
industrial
throughout the country.
the
survey
was
by the
evidenced
publicity given, and the large number of requests which
office for
educational
copies.
by
inaugurater
campaign,
the
Committee
Public
on
Puelicher is chairman, has attracted al¬
Education, of which Mr. John II.
universal
a
of financial,
status
they existed
as
Manager,
attention.
The
principal educational
out
usefulness
rect
banking,
of
banks
of
channels of
It
is,
and
make
to
banking,
thinking,
fact, to be
in
of the campaign is to take the "mys¬
purpose
and
clear
and
to
the
functions,
and
into
cor¬
far as the subject matter is concerned.
so
plain tale of just what
a
necessities
•
direct public thought
a
bank is, what part it
plays in the economic and community life of the country, the general plan
of
things commercial, and to show how
necessary
and useful it is to the in¬
dividual.
it is
is
not
only great need for educational work of this character, but
duty that
a
the people in the -interest of better citizenship.
we owe
Educators everywhere to whom the plan has
agreed that there is
this
character
a
than
decided need for
has
before
ever
All
Divisions
busy
year,
which
they
Sections
and
and
been
and
Divisions
the
of
represent.
been submitted, unanimously
comprehensive instruction of
given.
Sections.
have
Association
much
accomplished
more
for the
different
hey are working together in a spirit of harmony
fulness, which has contributed to the success of each.
detail of their work for the past twelve
several
annual
an
of
unusually
banking
•
1
A
had
classes
reports, which are in printed
and
mutual
help¬
months will be found in their
form and ready for distribu¬
tion.
Financial.
financial
transactions
in the report of
each
for
appropriation
Association
the
the Treasurer, and
an
appears
year
are
given
in
detail
itemized account of the expenditures
in
printed
form,
accompanying this
report.
Few
As
Schedule
of Dues.
whether public or private, the
maintenance and operation,
Rents, supplies, salaries,
printing and all items of general expense have unavoidably-kept step with
the trend of the times.
As our aptivities multiplied and the field of our
in
all
other
business
organizations,
past few years have shown an increased cost of
discussion.
again.
that anything
hastily conceived will be approved
myself
they
Committee wishes to impress most forcibly
before the Convention this fact, and
any
that
subject under
Board
Reserve
case,
in
the
States
or
plans
to-day, not familiar with this fight since the beginning, might be inter¬
ested
purpose
sides, and to produce the necessary facts and evidence to justify
respective
against
bankers here
of the
bankers,
country
of
the United
of
Commerce
what
l'echafaud"
guilt, not the scaffold which constitutes the shame."
Committee
for the
plan for handling of checks fof\ col¬
a
representatives of the Federal Reserve Board be held at some central point
The
non
Government like
a
lection.
minimize
But bear in mind the words, "Nihil potest
"C'est le crime qui fait la honte et
to
Considering the above, your Committee suggests that:
1st.
A Committee of Five on Exchange be continued
of
need aid
by that Statute to sanction
creations
attempted
not belong
do
ours.
There
testing the
not
the country
or
This is a nation-wide economic problem affecting
.
suming public.
by law."
is the
Y'our
has
this decision,
Corneille says:
—"It
Board
affect them.
way
quod
quam
can
A
the Statute under which the Reserve Banks exist to
warfare
Federal
would
pledged to perform its duty.
is* not a question of how it affects the city bank,
mittee
num¬
multi timeut"—"He that
nouncing other fallacious principles of tlxat Board
The
sound, well established economic policies, should be considered by a Com¬
are
in fear of many."
unanimous
a
debates upon
that
assume
opinion, unless supported by facts and figures, and along the lines of
No
charge shall be made against the Federal
no
Liberty Bonds.
these, however, are arguments why we should have par collections.
None of
1921, the Supreme Court of the United States passed upon the
suit, and in
the
from
"but
est
feared by many,
In
of
charges that might be made against Government checks, for
tery"
Steps
ber of banks, who at last dared to allow their names to be used,
Hard¬
Mr.
and the calling the attention of the Committee by Governor Strong,
the Federal Reserve Bank of New York, to the fact of the possible
ing,
un¬
in the Minneapolis Dis¬
the consent of*
the Committee, the letter of
Woodrow Wilson to
Mr.
of
letter
Federal
the
collection.
par
a-d other
bank
that
San
wants
of
trict, and certain relief has also been obtained in the Omaha Branch.
suit
respectively, were
most
of the Agents of the Federal Reserve
one
District,
enjoin
Banks.
every body
the Cleveland
indicted
Jury
Atlanta
to
in
publication
the
from
led to believe
pending
are
Yret
1921.
22,
Chairman of the Banking Committee of the Senate
Glass,
The
In
cent. "No."
per
opposition.
more
Injunctions
That both Senator Owen and Mr. Carter
and the House,
ardent advocates of the par clearance of checks.
The
ori July
Harding,
result:
Board you are
Reserve
only reason that we have been able to find thus far for the "Par
Plan of the Federal Reserve," is the testimony of Mr. W. P. G.
The
Clearance
as
cent, more op¬
"Yes."
State
impossible, but that the present plan forced
provisions of the very
and
by the Federal Reserve Banks violates several plain
under which this plan is supposedly legalized.
Act
answers.
question No. 1, 83
perhaps
unsound
economically
per¬
cent answered "Yes," showing practically no change of sentiment,
per
from
dence
evi¬
any
the result of the opinion
was
the contrary, the overwhelming testimony and evi¬
those competent to speak, is that not only are Par Collections
On
experts.
bution
cent.
per
the National
furnished
naire
This
"Should the clearing feature be eliminated,"
years' time—in other words, after
tically the
best
of
Collection
that the present plan of Par
dence
ques¬
a
compilation
76 per
best minds on this subject.
the inevitable verdict of the
to
position is simply this—What ought to be, is going to be.
Your Committee, however, has been unable to find anywhere
the Federal Re¬
by
operated
now
pride, or glory, or self-interest
(King Lear.)
the State Banks.
to
answer
the
Banks
short
the
or
Our
Annual
collection
centage applied to National and State Banks together—the
as
yield
abiding and
personal opinion,
That
States.
asking—
clearing and
Banks
serve
far
sentiment,
in
1916,
tionnaire
of
amend the Act
test the
further
order to
In
allowing
Supervisors
of
so
of 15 months nine States have passed the exchange law.
the American Bankers Association Committee mailed
space
must
the most law
of
composed
United
seeking to avoid
facts.
from
and
enviable name,
conservative element of the
Bankers Association, an Association with an
American
the
Congressmen Stegall of Alabama,
Protective Association,
State Bankers
and
125
SECTION.
that this is
a
unsound,
or
Committee
or
Committee of
and
work
cost
this Association
broadened,
increased.
through which
against banks.
of
607
criminal
is
no
exception to the rule.
total amount of our annual
our
Protective Department,
in Investigating crimes
This has resulted in the arrest since September 1, 1920,
operators against banks.
in
like
This
we
is
proportion was the
especially
true
of
spent this year over $110,000
The
CONVENT!ON.
HANKERS*
120
time stands
report at the present
Total
cases
Total
arrests
disposed
not
since
prior
of
Sept.
Report
follows:
a6
Sept.
to
101
1920
1,
The
768
—
——
in
Convicted
Released,
died
escaped,
Awaiting
and
Executive
by
Council
John
S.
512
169
trial
insane..
general condition of
printed reports that
The
Association
our
is good,
being submitted to
are
Administrative-
President.
is shown
as
in detail)
you.
adoption
of the new Constitution last year prepared the way for
by the Association and made it possible to work out definite
broader work
256
and
Drum,
007
1920
1,
Total
of
Committee,
policies that could be
is something unprecedented in the criminal
history of this country, and it seems as though the professionally criminal
Association could
operations against banks is also something without precedent in our past
largely to
one
but
more
less continuous from
or
to year.
year
a
The
history.
We
with
confronted
were
situation,
a
the
required
which
of
necessity
adjustment in the direction of increasing our income, as our only alterna¬
tive is to discontinue some activity of the Association which, in my opinion,
be
should
not
should
intensify
seriously considered,
I believe quite to the contrary,
as
we
efforts to give greater and better service to our mem¬
our
bers.
For
the Association has taken the high moral stand that criminal
years
perpetrator
punished
involved,
or
do
To
Ws
the cost to the Association.
'd.
woo
now
without regard to
whenever possible,
wherever and
the amount
in
be
opinion,
rny
acknowledgment of defeat,
an
criminal
lowering of our standard of service, offer encouragement to the
destroy, the confidence of the members in our ability
class and lessen, if not
useful
be
to
them.
to
that
confronted
crime
us
that
to
such
circumstances,
of
we
with,
should re-double
^
in
increase
the
as
desire
our
Protective De¬
our
other reasons which justify the increase.
For the
past seventeen years the dues of members, having a capital and surplus of
less than $100,000, have not been increased, but our services to members
have been materially improved by the addition of many valuable features.
In fact, some of those of greatest consequence or most beneficial to our
Journal
Department,
and
funds
dues
of
Cipher
our
Legal
Code,
Institute of
Banking,
Division,
Agricultural
Commis¬
Bank
year,
to
the work of the different
of which is specializing in some particular
one
carry
on
During the past
largely to
the
and
for
organization
the
after
it will comprise 38 members in the oneclass, 45 in the two-year class, 38 in the three-year class, 5 at largv
24 ex-officio members, making 150 members, or an increase of 1 over
of
owing to the increased membership in Missouri, the
goal' of
1,100
reached in that State.
Analyzing the increase in membership by States, Missouri is first with
132 new members, a total of 1,104; Pennsylvania is second with 68 new
members, a total of 1,230 ; Texas is third with 63 new members, a total
having been
is
with
41
members,
total
total
a
Illinois
of
It is
in
the
with
with
1,219;
total of
Ohio
each
with
1,250
total of
a
then
increase
firth
with
Oklahoma
1,015;
Vir¬
29 new
of
the Association
;
third
Texas
1,104;
eighth
Nebraska
with
with
the
with
1,230 ;
with
sixth
Minne¬
996;
eleventh with
823 ;
802.
Arizona
in
in
a
996 ;
comes
and Michigan with
;
Pennsylvania
;
Ohio tenth with 864
with
and
1,250 ;
sixth
Delaware
and
membership
the
of
two
a
scope,
Association
one
non-
each.
Mr.
the
Mrs.
Lemon,
officials of
C.
E.
Association
in
1921
(10 and over)
is
with the assistance of
Missouri..
be
T.
J.
Hartman,
H.
J.
W.
B.
Mr.
G.
A.
Bank
Mr.
Division,
C.
from
S.
Chairman
California
Orthman,
to
Committee
to
Asso¬
greater
a
have
extent
been
up
governed
that of foreign trade
was
the vital
need
at home, and
that
production
of
foreign
long
as
ago
financial
the
mar¬
as
the
ability of
nearing the point
Commerce and Marine Commission began to study the
our
excess
was
meet
me
the pre¬
as
in creating and
maintaining
Marine
in
purpose of deciding whether or not steps
corporation along the lines recommended by
a
held
was
attendance.
Association
business
in
Chicago early last December.
I
explained
only
was
place
to
from
men
that
the country and to
of
men
this
Commission,
representative bankers and business
were
in
president to ask representatives of finance
as
the
for
organize
Bankers
arid
to assist
production.
excess
unanimously approved the principles enunciated
and
hundred
country
the
the
all
parts cf
of
the
before
the
purpose
matter
ask them
to decide what
they desired to take; that the Association stood ready to be helpful
way, but of course could not actively participate in the organization
the
of
corporation,
American
The
which,
in
the nature of
things, must be accomplished
I
Bankers
■
Association
plan
explained by Mr. John Mcchairman of the Commerce and Marine Commission, and afteT a
discussion along general lines by other persons I turned the
meeting over to
was
Hugh,
the
the
in
men
The
assembly.
conference
in Chicago unanimously voted to form a
$100,000,000
along the lines suggested by our Association, and for that
appointed thirty men as a committee on organization and sub¬
corporation
purpose
scribed
$100,000
worked
was
zation
of
out
the
such help
for organization
corporation
A
expenses.
by this committee and
very
preliminary operating plan
afterward actual organi¬
soon
began.
time officers of the Association
were
called
upon
and gave
they could, consistent with the resolution adopted at the con¬
vention last Fall and with the authority granted
by the convention.
This
work was largely of an educational character and in no sense tied in with
as
the actual organization of the corporation.
The Executive Council at its
meeting in Pinehurst last Spring reaffirmed the approval of the Association
of the principles underlying the proposal to form the
corporation.
'
The
work
committee
of
to
has
organization
organization
on
matter
the
entire
is
been
not
completed,
continuing its
committee
for
efforts
final
but
and
action
the
executive
hopes to
within
the
present
few
next
on
Membership,
the
Much
tion
of
has
and
lation
The
is
it
by
during
the
one
in others which
as
it has
year,
year
of
have been undertaken
course
been
realized
that
in
your
educational
an
been
working in
10
Wisconsin
of
many cases is impossible.
The policy
president and two vice-presidents has been to make
work progressive and continuous from
year to year.
11
for
sale
regard to Federal legislation regu¬
corporate securities has been both intensive
In this matter,
Association
worked out
the
National
issue and
cooperative.
complete achievement in
as
14
activity of the Association with
lating the
20
—
Vice-President
Wash¬
the
of foreign
policy.
progress
our
by private effort.
20
Oklahoma
Executive Council from Pennsylvania
Drake, Jr., Vice-President for North Carolina
Kennedy,
to
became apparent
meeting thus authorized
in any
21
Haas, member
Mr.
Mr.
it
consume
taken to
American
by
103
Kentucky
members Executive Council
Mr.
essential
for
convention
The
Vice-President for
Hearin,
in
seemed
weeks.
Vice-President for Missouri,
the
it
whereby the position of the United States
means
industry
and
Y.
it
common
subjects to be taken
report and directed
through the efforts
efforts, for the fiscal year ending August 31,
H.
a
Commerce
the
follows:
as
a
when
our
markets
The
and
known to have been received through
of various officials mentioned below,
convention
which
the subject
at
as
world
100 per cent, mem¬
non-members
of
submitted preliminary reports at the convention of
subsequent meetings of the Executive Council, and finally in
Washington last October presented its final report recommending the for¬
mation, under the Edge Law, of a $100,000,000 corporation, national in
and
1919
is
members,
new
the District of Columbia and Nevada there is only
In
member
The
33
of 362 ;
gratifying to report that in Oklahoma there is
bership.
their
with
total
membership
Missouri
seventh
twelfth
California
a
802 ;
members,
new
a
total of 380
second
Kansas
of
number
a
Commission
From time to
first
stands
1918,
exhaustion,
This
636.
ninth with 933 ;
sota
eighth
is
members,
a
total
a
Wisconsin is seventh with 34 new
;
Kentucky
new
York
fourth
Iowa
1,048;
31
members,
new
again
New
1,325 ;
of 625;
with
total of
a
total of 864
a
members,
new
members,
new
Oklahoma is ninth with 33
tenth
ginia with 30
members,
47
members,
333 ;
of
with
firth
new
Colorado is
is fourth with 51
York
New
over
problem.
action
1,048;
by
year
foreign markets to
year
California
within
groups
last
an
Several
convenes
the
at
to
first,
were;
Our Association had recognized
the
Cotincil
extending
suggested
Three matters
element
as
bankers
of
effort
financing.
Autumn
adjournment of this Convention,
last year
followed.
The first of these three
should
Executive
our
a few matters of first importance.
The presidents of the divi¬
sections agreed with this view, and consequently the Association
larger
during the
in the
same
that
second,
;
sions and
in the
the
of
view
the presidents of each of the divisions and sections,
outlining the broad,,
general policy of the Association and suggesting that best results might be
accomplished if the divisions and sections likewise confined their efforts-
published
notice
and
the
expressed
tradethe question of Federal legislation regulating the issue
and sale of corporate securities; and third, the
subject of Federal taxation.
Shortly after the beginning of this administration I addressed a letter to
The
new
the policy
year
might well address itself
the
the
been
has
final
Membership.
When
continuous
ington
number.
August
for
ciation
of the Association, and again published
adopted,
was
May issue of the Journal
plan
a
eminent creditor nation could be used
needed
Executive Council, held in May this year, the new
the meeting of the
At
as
American
the benefit of the members of the Association.
of banking for
schedule
such
1904,
National
also
are
Sections, each
Divisions and
feature
since
the Association,
Division.
Bank
State
Additional
of
Section,
Secretaries
State
sion
added
been
have
members
I
years.
kets
of the American Bankers Asso¬
name
intensify the work of
to
there were
partment,
this administration
make the best
use of its possibilities if it confined itself
few matters of primary importance, and if the presidents and
the two vice-presidents acted together in
determining, not a program for
efforts not only to
our
evil-doers.
to
terror
a
addition
In
stress
members, but make the
our
reassure
ciation
«
the
in
believe
I
and
beginning of
financing
operations of any character against banks should be investigated, and the
a
the
At
present wave of crime
character
will
the
prevent
the
investment
Bankers Association,
efforts will result in
our
issue
with Blue Sky legisla¬
the officers of the Association
connection
year,
those of
hoped that before long
that
in
accomplished during the
cooperation with
of
fraudulent
national
securities.
The
legis¬
purpose
approved by the Economic Policy Commission in its report to the Exe¬
cutive Council last Spring and is made the
subject of a special report which
greatest Individual achievement among the officials assisting in the
membership campaign for the year belongs to Mr. H. V. Lemon, Vice-
was
President
the
for
Missouri.
Mr.
Lemon
manifested
a
real
interest
in
the
up¬
Commission
of
State
have
this year
to
additional
an
August
*
31,
Erased
a
representation
summary
1920
from
on
the
Executive
Council.
of the membership gains for the
through failure,
22,672
liquidation, consolidation and
withdrawal
*Regained
21,236
1921,
new
members
members joined during the year__
from the above)
(secured
2,396
Treasury and
to make the
was
made
other
net
A
net
A
net
increase
for
the
loss for the year
loss
for
the
fiscal
23,632
year
in failures, consolidations, etc
year
in
delinquents
960
233
new
members-—
to
As
be the most injurious of
soon
as
it became apparent
experts
in
the
Trea ury
unite
the
unnecessary
of
this
the Secretary of
and
might
of
January 1, 1921,
of
as
banking strength
retention
Department
the
country
universally
in
harmful
an
an
tax
refuse
attempt
effort
for
to
an¬
the
sent
There
402
1,362
in effect.
repeal of the tax effective
to
the
forth the
cles
Making the actual gain in
still
approval of the Administrative Committee circulars setting
principal arguments against the tax were prepared, and, with the
of the Secretaries of the State Bankers Associations, a copy
cooperation
was
169
are
year.
With
August 31, 1921, membership
A
given their united attention to the subject of taxation.
that Congress might not take the advice of the
President,
prove
1,362
1,034
at this convention.
profits tax is commonly known
excess
the war-time taxes that
the
1,436
Membership
August 31,
The
year;
;
the roll
present to you
considering the subject of foreign trade financing and the ques¬
Federal regulation of securities, the members of the Association
tion
Following is
will
Besides
building of the membership in Missouri, spending much time in reaching
the desired goal of 1,100 members by August 31,
thereby entitling his
of
to
to
was
every
bank in the country.
urged
upon
the bankers the importance of removing the obsta¬
excess profits tax created by its confiscation
readjustment that the
working capital,
by
its influence
of
maintaining the price of
finished
BANKING
goods
at
therefore
to
level
a
relatively
higher
than
by serving to keep down
the
prices of
the purchasing
materials,
raw
of
power
and
and
farmers
prevent the full employment of labor.
Every bank in the country
strongly
bankers
artificially
united
the
continue
in
the
injury the
return
of
protesting to
for
tax
asked to impress
was
it could, the great
as
structing
another
Congress
before
to
make "the
approval
the
of
against
of
that would
action
any
as
year.
the protest against the
of Congress.
campaign
excess
profits
Congressman
Because of lack of time
equally
but
extensive,
after
it
was
receiving
Administrative
Committee I telegraphed to a large
the country and asked them to urge upon
number of bankers in all parts of
their
senators,
does by ob¬
Thousands
effort to obtain the enactment of railway relief legisla¬
an
the adjournment
impossible
the
in
used
were
tion
conditions.
the
necessity
of
immediate
financial
settlement
with
the railways.
The
this
in
already passed the
to
instance
equally widespread.
The House has
legislation and it now remains for the Senate
necessary
has
been
which
touched
The
survey.
the
the
in
upon
greatest
first
factor
and
second
report
the
in
economic
surveys
covering the results
accomplishment
of
the
of
both
made
were
second
efforts
was
for
time of peace.
a
nection
proper
The
deal
of
others
uniformly prompt,
was
trouble
both
whom
to
Council members
of
response
cooperation
in
the
State
and
Secretaries
to
requests
these
and
gentlemen went to
information themselves and in
supplying
questionnaires
sent
were
to
provide
for
great
a
Your
tions.
it
With
have
year
made
Association
our
the exception
impossible,
nearly
past
this
between
officers
of
of
few
a
the
the
have
Bankers
attended
State
to
organizations
of
create
and
the
banking thought and
they have
could
been
gone
fail
not
to
come
addressed
during the
to
between
cordial
receptions, and they
impressed with the strength of the State as¬
in any common effort of our banks.
away
to create
power
work
that
lies
sociations
Last
in
Spring,
mittee,
of
receiving
cent
The
piece.
taken
of
connection
which
matters
in
of
the
Such matters
action
will
in
of
attendance
Pinehurst
in
early last
president.
not
that
large
was
May and considered
had
arisen
and
the
all
its
been
an
members
of
members
and
has
good,
been
and
in
committees,
kindness
the
the
or
conven¬
and
of
committees,
the officers
of
the
has
prepared
re¬
a
will present it to you.
the
the
Executive
Council,
Secretaries
divisions
and
of
the
State
the
have
we
is
year
made
short period, but I want to
a
in
progress
laying the
the hope that
express
foundation for
a
by
the
leadership
banks
the
of
and economic
Report
of
country
their
of
economic
ing of this
so
report,
report submitted to the Executive Council at its May meet¬
to
and
Legislation.
inflation
be
will
nomic laws
The Commission
eradicated
allowed
are
fering from
more
free
play.
resultant
causes
feels
quickly
strongly that most of
and
cured
our
thoroughly if
more
trou¬
eco¬
This country is, to a large extent, suf¬
the War, the effects of which are felt
from
more
permanent evils.
to the Federal Reserve Act
to
Banks,
banks,
which
be derived
the
as
so
should
in 1907.
The
tration
in
be
left
private
may
amendments
proposed
the bene¬
many
Reserve
intended
are
business
System.
as
a
be enabled to avert
approves
so
far
with
policy
as
possible,
and
of
in
resort
so
possible
the
from
for
the
local
any recurrence of conditions
long
successfully
as
least
the
undertakings,
the
The Federal Reserve
final
The Commission believes that
function
refraining,
the
of
undesirable and calculated to lessen
Federal
able to continue its work
to
Commission
in
as
the
implies,
name
Reserve System is
it
from
that the latter
arose
especially
regards
as
as
form
the Federal
level
which
The
effect
all
as
run
and
pro¬
would
other citizens
be
to
prove
the
detri¬
Commission
endorses
international conference
an
System.
'
to finance the Government.
the
needs
reaction.
the
The
increase
check
a
The end of every
rapid decline in prices,
The longer artificial continued,
a
to
expansion of credit
of
wealth
credit
and
expansion
can¬
productive
never
occurs
Such
a period of reaction ends only as the
readjust wages and prices until a
equiblibrium is established, on the basis
of goods
and
services
can
be
resumed.
industry and trade
normal
and
an
exchange
feels
that
the
at
present time
a
deadlock
exists
because
cost of
the
depression.
of
reached
is
Commission
transportation and of manufactured goods is too high as com¬
pared with the prices of primary products.
It is not desirable, in view of
creased
Such
be
of
in
governmental
that the public
economy,
to carry on
order
construction for
should be
debt
in¬
of emergency relief.
purposes
as might be provided by public expenditures would
by the lasting effects of the waste of capital.
The
temporary relief
than
more
Commission
the
offset
the
doubts
Government
into
desirability of refunding the floating indebtedness
long time government securities at the present
time.
It
that the Government is
notes
having little difficulty in renewing its
floating indebtedness but is not able to sell
tions.
The
latter
can
enable them
to
as
however,
further
to
would
has
The
for
readily its long time obliga¬
easily only if the net rate of interest is such
be sold
successfully with other securities,
compete
the return is abnormally high.
increase the expenditures
of
should wait
again
reached
Commission
does
with
its
which
on
A high rate of interest,
the Government
and
thereby
The Commission believes that
complicate its fiscal arrangements.
market
refunding operations until the
money
stable condition.
a
believe
not
the
that
is
present
favorable time
a
any attempts to sell to the public bonds based upon the indebtedness
foreign governments to the United States Government.
It is not advis¬
of
able
that
state
of
the debtor
should be pressed to make interest
governments
foreign exchange rates and
foreign trade
pay¬
in their present
are
depression.
Foreign Trade Relations,
Commission
The
turn
to
it
stable
is
notes with
commercial
satisfaction
and
numerous
industrial
signs indicating
conditions
subject for congratulation that
a
in
peace
all
the world
unless
ous
various
all
plans
peace
in
Europe.
It
a
re¬
feels
is about to be formally
It
adminis¬
economies
in
is the belief of
It
interdependent, and that the world
its
component
proposed
by
parts
which
the
prospering.
are
United
States
in
conditions
not be prosper¬
welcomes the
able to serve
It
will
be
Europe,
and
endorses
it
to mobilize the credit
ordinary credit facilities
are
the
resources
principles
the
of
ter
of countries in which
inadequate to meet the present situation.
hopes that suitable corporations organized under the Edge Act will
established
may
of
The
has
to
their
other
country
a
lieves and
be
been
in
such
a
manner
that
capital
in
this
be
country
countries.
calls
is
in
such
of
a
critical
the
to
closely,
month,
on
a
as
situation
of
such
action
that
have
we
the
our
been
conditions
the agriculturists
are
fundamentally
This is
varying
a
to
part
foreign
unable
to
all depends
are
able to sell
matter which must
some
upon
extent
from
the rehabilita¬
Europe.
Commission
urges
Thrift Campaign.
upon
hankers
in
every
part
of
the
in
educational
work
to
increase
the
wages
country
re¬
number of savings
The period
and prices had the effect of depreciating the value of money
activity
depositors and to inculcate the lessons of thrift and economy.
war
on
surplus crops.
our
satisfactory'basis.
the
though
need
owing to the fact that
prosperity in this country until
A
newed
to
The Commission be¬
the fact that there can be no complete re¬
proportion of
desires to emphasize
surplus abroad
month
attention
indicated above,
as
sufficient
watched
tion
function
Commission
this
turn
and
be used to assist in rebuilding the industrial and commercial organi¬
zation
of
Commission
this
can
by rendering all possible help in the re-establishment of
Meulen plan designed
the
of the world.
parts
Is
of
interests
own
The
governmental participation
seeking to
Credit
check, and
a
it has begun,
national
in proposing
long period
very
business
a
common
interference.
present
as
for the reduction of military and naval ex¬
one of the heaviest financial burdens borne
the ultimate
was
a
branches
various
of
for
without
without
market
Commission
coming economies,
Harding
still
serious
capacity
trade
temporary ills at the risk of producing greater and
was
ought not
program
credit necessary
outrun
designed to
fits
of
more
of
cure
such
confusion
well
as
the long
regardless of the banking policy adopted.
throughout the world, and which cannot be changed by action on the part
of our government.
It believes that most of the proposals put forth are
The
common
a
which
the
normal
Commission
legislative action.
that
endless
great war has been followed sooner or later by
its
again points to the dangerous attempts which are made
frequently at preseqt to undertake to cure all existing economic evils by
bles
therefore in
of
The
real
eupple-
year.
Government
The
following
during the War
and
A bonus bill such
great rise of prices during and immediately after the War was due
the extraordinary demand for labor and commodities, and to the
large
that
the
feels
re-established between the United States and the Republic of Germany, and
it is hoped that the formal peace signed between Germany and our late
associates in arms will be succeeded soon by a return of good will and
of the Economic Policy Commission,
by Paul M. Warburg, Chairman.
offers
into
give
It
nations.
all
that
education.
The^ Economic Policy Commission
mental to the
student
continuing policy
responsibilities
nation
The
that will lead to greater accomplishment as time goes on and to an assump¬
tion
the
recompense,
the public finances
President
of
ments while
a
which would be needed to
sums
rendered
men
all.
earnest
consider
by
the
sections for
govern¬
stable conditions.
regardless of their present condition.
our
and would
country,
to
an
the Government
this occasion to thank the
the year.
all
which
which would involve the ex-soldiers
the> action
to
with the large
ex-soldiers,
at the present time,
divi¬
our
they have shown and the cooperation they have given throughout
After
the
As
intervals
in close touch with
each
as
on
the members
commissions
Associations and
active.
very
the activities of
cover
indeed, if I neglected
Association,
the
of
Bankers
ever
for final
promtply by the Administrative Committee.
commissions
the
the
with
character that could not be held
emergency
attempted in this report to
sections,
of
mental
of
Committee
has
meetings
Matters of
should be remiss,
since
energy
meetings,the Council has
port of its activities during the last year and
I
No action
at the proper time.
Administrative
tion have been disposed of
sions,
Com¬
matters of policy and of Association adminis¬
the most successful
the
at
in Washington.
the Council has referred to the convention
as
year
presented
Attendance
be brought up
the
have
as¬
useful purpose, and these and other
no
were
abeyance pending the meeting of the Executive Council
I
their
Administrative
between meetings members of the Committee have been
your
and
doing the
so
and
serious handicap to the recovery of the nation from the effects of
the
up
all
given except in cases of actual disability.
not
affecting the Association
took
one
held.
surve
met
Washington.
tration made this
The
individuals
bill.
Council
the members
During
as
approval
the
measure
the
on
Executive
number
a
country
appeared before a Congressional committee and
bill designed to provide for the coinage of a two and
It was felt that the proposed coin would disorganize
a
arguments against the
been
through educational
president
your
accounting systems and would
has
the
public opinion
over-emphasized.
after
urged the defeat of
one-half
banks
the
be
cannot
enlightened
an
1921, and in
one
given for the sake of financial
to be
association^ and to build up a
throughout the country.
Wherever
sociations and their desire to cooperate
The
not
to
the service
national
action
The
desirability of repealing the Excess Pro¬
believes firmly that the national government
possible to relieve the soldiers who are suffering from
nation
the
burden
bonus
penditures,
'
feeling of closer affiliation
a
have met with
officers
your
and
held
as
disability incurred in the service, but it does not consider that it is desirable
would throw
close
fitting
more
type
a
Commission
The
aside.
should do everything
a
a
such
of the primary needs of the present
that the Soldiers' Bonus Bill will be definitely
time, the Commission hopes
prove
Associa¬
the
of
in government is
posed
Bankers
of
redeem its promise to help restore normal
urging
maintain
Associations
.
has
purpose
union
to
state
year.
The
its
Since economy
in which conflicting dates made
cases
State
efforts
various
Association
your
all the conventions of
special
and
taxes
has proved so burdensome to business and
industry.
More¬
firm conviction that this repeal of the Excess Profits Tax
should be made retroactive for the year
the War,
officers
contact
those
emergency
the proper
convinced
is
information
the
requested.
attempt is being made to substi¬
an
by the War
far as possible to bring about their gradual elimination.
as
it is
over,
that
Council.
the
will
development of industry, and in this con¬
hoped that there will be no more tax exemptions and that
measures will be taken to prevent the increase of tax-exempt securi¬
Commission
members
Executive
therefore,
is
it
ties, and
a
the
welcomes,
It is desirable to have
with
least
fits Tax which
the cooperation of the Secretaries of the State Bankers Associations and the
of
It
being undertaken seriously, and that
set
in
manner
possible.
tute for the measures necessitated
was
act.
The
wherever
inaugura¬
tion
of a budget system designed to bring about more coordination of
governmental departments and a closer supervision over expenditures.
The
Commission is glad to see that a revision of our present tax
system is
ment will
response
127
administration
interfere
Methods similar to those adopted in
tax
its
upon
profits tax
excess
normal
SECTION.
BANKERS'
128
of
and
its opposition to any changes
active competitor with the
regular banking institutions performing complete banking function, which
postal savings system making it a more
the
in
The fundamental weakness
deposits.
lending as well as receiving
includes
is that it is not qualified to make use of the funds
localities where they belong.
The plans necessarily look to a
of the funds for investment by some central authority, a system
the postal system
of
the
in
transfer
the communities that are largely dependent upon
the savings bank for the funds used in house-building and other local in¬
vestments.
The theory that great sums may be attracted from idle hoards
chief argument when the postal
disproved.
postal banks was the
the
to
system was
Association
continue
Over Security Issues.
Supervision
Attorney
the
making for recovery, and there is every reason to believe that when wages
have
been
and
fine of $10,000 or a maximum imprisonment of ten
both fine and imprisonment.
The Act does not repeal, but is
supplementary to, State blue sky laws.
The Commission feels that an Act of this nature, which is similar in
or
to legislation recently adopted by some of the
York, Maryland, and New Jersey, would offer ample
principle
New
States, notably
proportion of the funds in question are
government securities.
banks are at the present time the fiscal agents in
especially true because so large a
at
invested in
present
Federal
The
Rosen e
the Government in the distribution of both
government securities. It is a notorious fact that the
original holders of these securities are being constantly solicited by dealers
in fraudulent issues to exchange their sound securities for worthless ones.
This has helped to depreciate the market value of government securities and
thereby has added another difficulty to the proper and rational financing
their
districts of
respective
long and short term
therefore,
Reserve banks have,
CHARLES
that
immediately made to pass legislation so stringent and so extreme
are
its effect will be to
injure legitimate business even more than it will check
is intended to prevent.
introduced in Congress proposes that
Bill
The Denison
as
corpora¬
every
stock, and every borrower issuing bonds, as well as all offerers
securities, must secure in advance the approval of such issues in each
tion issuing
of
blue sky laws where the offering is to be made
periodicals of country-wide circulation,
or
through the mail, telephone or telegraph.
If this Bill becomes a law,
the long established methods of the inter-state sale of securities that have
been built up through the business experience of sound banks and invest¬
ment banking houses would either have to be entirely changed or each one
and
State having
every
banks and
these
that
mean
fered
for
in
advance
Stales
in
before
practically
federal
a
thirty-eight
commerce,
every
ciation
to
to
know
at
not the
in
the
burden
upon
attempt
centage of fraudulent
the
of
rules
time
of
of
offering
any
particular
Bill has tended to
an
tion
in
over
a
sale of
the
To
of
the
comparatively small
se¬
per¬
Railroad Situation.
purposes
of the Federal Administra¬
refunding of the railroad debt to the Government
a
years.
This debt
was
created by the Government
upon
its
While
as
the
to
as
industrial
circumstances
life of
interrelated, and
pend
upon a
lic, but
unless
it
is
one
the
will
permit,
yet
prosper
their earnings
years
and
are
should
sufficient
invested.
bankers the
urging upon
importance
the
urging
banks of
the
States
United
stand by
to
The invariable testimony of farm journals, State colleges
along the line.
of
and
agriculture
other
had
which
agencies,
opportunity
best
the
to
judge, is that the banks were the good and firm friend of the farmer during
his
Questionnaires sent out by farm journals in many of the agri¬
brought evidence to this effect from the farmers them¬
plight.
cultural
States
selves.
Dakota
South
and
Iowa
were
among
the
where
States
committees
on
agriculture arranged meetings with farmers in various parts of the State
to discuss the situation and seek the best way out.
There is no question
in
minds
the
before,
that
banker
understanding of
better
a
and
each
farmer
other's
closer to¬
are
problems than
result of these conditions.
a
as
Commission
the
of
have
and
gether
ever
Marketing.
Commission
The
for
has
time
some
pointed out the necessity for better
the importance of a careful study of farm
marketing problems by bankers.
This year has seen the forming of ambi¬
tious marketing plans by the farmers of the country.
That the bankers
for agriculture and
marketing
might make
intelligent study of these plans, various articles have ap¬
an
Bankers have been urged to inform them¬
We are
glad to report the bankers' State a sociations such a
l.li vis's realize the
necessity for banker knowledge along these lines.
The Illinois association
urging a careful study, recently sent to every member bank copies of the
in The Banker-Farmer.
peared
various
The
Iowa
they might be able to discuss the marketing program.
organization plans of the farmers.
organization of a five million dollar farm credit corporation by
bankers in conjunction with farmers has for one of its objects more
orderly marketing of farm products.
A
year
could
the chairman of this Commission
ago
the
various
In
do
marketing projects
farmers
great service.
had
has
Commission
The
the
valuable
Bureau
some
in
25
the
sale
article by the chief of the
could obtain "marketgram"
Tenancy.
of course, ill-fitted for a continuance on broad lines
Commission's campaign to decrease farm tenancy and encourage the
of
farm
of
lands
1920
to
farmers.
young
convincing
are
as
to
The
preliminary
the necessity for a
statistics of the
careful considera¬
though there is one encouraging feature
in the report, that although there are more tenants than ever before in
this country, the rate of increase as compared with previous decades has
decreased.
Bankers' State committees are urged to study the tenancy sta¬
the tenancy
of
tistics
stance,
problem,
ascertain
and
encouraging
the
to
the
note
even,
facts regarding
that
the
the situation
bankers
of
the
in their States.
country,
on
a
railroads
are
de¬
the part of the investing pub¬
available for
to enable them to
Obviously,
The
return of six
pay
per
the
railroads
proper
cent
returns
in
good
in
Similar
It
harassed and
For in¬
did not lose sight of the tenancy question.
Kansas Bankers Association adopted this resolution:
they
as
interest
that
Bureau
past year was,
fects the growth
fact
S.
banks asked for them.
Farm
of
the U.
from
It is interesting to record that within a few days from
The Banker-Farmer of an
Markets, advising banks that they
of
reports,
cooperation
number of timely articles for publication
The need for better dissemination of market intel¬
Banker-Farmer.
publication
The
declared that the banker
the essential which the
needs—a knowledge of business organization and methods.
cooperative enterprises which are being formed the banker
chiefly
can
the
supply to
farmer
the
return in bad years will not attract private capital.
banker
effected.
be readjusted
it recognizes
without the other.
impossible to make such capital
the capital
rates
country and the development of its railroads
cannot
every
were,
"Resolved, The evil of the growing menace of farm tenantry
that railroad
continued supply of capital
upon
no
and without having an unfavorable effect upon
situation.
Commission believes
the
rapidly
the public
business
Almost
halted.
agriculture in its crisis, is proud to report that there was no weakening
hurried
general
the financial
quickly plunged.
concerned, the work
was
was
large way, some of the means by which this cooperation
a
Commission,
The
be
the
also
was
constantly
education,
and
be
could
is
during the period of governmental operation, and it cannot
to operating revenues without embarrasing the companies in
their service
program
genuine, wjhole-hearted banker-farmer co-operation and when possible,
a
suggesting in
own' initiative
charged
Commission
Agricultural
its
much of
agricultural community was kept busy battling with the situation.
the best of its ability the Commission continued its program of in¬
census
fully supports the
bringing about
period of
the extension of
spiration
throw
securities,
The
Commission
difficulty into
as
the
in
tion
The
increase their efforts for a
resolved to
ago
which our basic industry
and
far
the regulations of any State
Experience has shown that the
legitimate borrowers and sellers of their
stop
to
Chairman.
Many of their plans, however, were soon deferred because of
stress
As
or
them.
the Denison
by
all
the blue sky commissions
physical impossibility for the
a
the
laws
law
by
time
It would be almost
type of legislation represented
great a
year
a
ligence is realized.
time
or
STALEY,
NEWCOMER.
and country life.
The
had been changed since he last knew
too
Washington
better agriculture
of the thirty-eight States of the United
one
from
W.
of
conference
in
security for sale whether
curities
at
successful
a
Markets which has furnished a
securities
in
by
would also adopt as Federal
made
TRAYLOR,
JOHN
WALDO
in force.
This proposed legislation would be
adopting the blue sky laws now in force in the
under these State laws.
honest dealer
A.
of
law
States, and
regulations
far
It would
country-wide reputation could be of¬
they would have to be approved in
of
securities
any
having blue sky laws
effect
and
become involuntary criminals.
dealers would
interstate
in
sale
M.
IIINSCH,
A.
State leaders of banker-farmer
activities and by a remarkable address by E. T. Meredith, then Secretary
of Agriculture, bankers left the convention of the American Bankers Asso¬
through the public press, through
of
HECIIT,
by Joseph Hirsch,
Inspired
selves that
which it
practices
fraudulent
AIKEN,
S.
Report of the Agricultural Commission,
its
of H.R. 7215, known as the Denison Bill.
The
Denison Bill is a fair representative of that class • of remedial legislation
which the Commission condemns.
Because a certain evil develops, attempts
the
WOOLLEN,
L.
R.
ADAMS,
E.
A.
EVANS
A.
HEAD,
W.
ROBINSON,
M.
H.
Chairman.
ROBERTS,
E.
in
disapproval
complete
WARBURG,
M.
PAUL
definite
a
protecting government obligations.
endorsing H.R. 7808, wishes to express
while
Commission,
The
duty
and
interest
direct
and
The Federal
Government.
the
of
nations,
GEORGE
machinery for
dealer, without at the same time unduly burdening
legitimate business.
The Economic Policy Commision believes that H.R.
7SG8 would not throw upon the Federal Reserve System duties not related
to it; because the fundamental object of ithe Federal Reserve System is to
insure the solvency of the banks of the country and to prevent a needless
dissipation of the liquid funds available.
Any measures which aim to
protect the banks by assuring them that the investment resources of the
country are not wasted by being used for the purchase of fraudulent se¬
curities must be of great concern to the Federal Reserve banks.
This is
curbing the fraudulent
>
and* normal balance is re-established between indus¬
our country will enter upon a new career of
readjusted
between
WALTER
ject to a minimum
years,
it appears that the country has borne
Natural recuperative forces are now
to be over, and
seems
period of stress remarkably well.
the
the At¬
discovered, the Committee shall report to
General may issue an order requiring the
cessation of fraudulent practices.
This order, which is like an injunction,
is subject to review by a Federal District Court, and there may be an ap¬
peal from the court decision made upon such a review.
Disobedience of
the order constitutes a crime under a Bill and renders the offender sub¬
Bill
the
recognizes with satisfaction that the worst of the credit
Commission
The
stringency
prosperity and advancement.
General who may make an investigation.
The Attorney General
also proceed upon complaint from sources other than the Committee.
Under
result of such
a
along paths of safe and sound economic thought.
torney
may
If definite conclusions are reached, as
regards controversial matters, and thereby assist in leading the country
principles embodied in H. R. 7808, known
as the Federal Fraud
Act, which was introduced in Congress in July as a
result of the joint activities of the Economic Policy Commission and the
Investment Bankers' Association.
The Bill provides for the appointment of
a Securities Committee
by each of the Federal Reserve Banks.
Each Com¬
mittee is to keep informed as to securities sold or offered for sale within
its district.
If it is found that in the sale or offer of securities involving
the use of the mails or other interstate or foreign commerce agencies,
fraudulent practices are
if it will
country
our
investigations, the Association will do well to take a definite stand, even
as
Commission endorses the
The
the greatest service to
perform
can
investigate questions important for the industrial and financial
to
life of the country.
tries
been
has
and
established,
Policy Commission of this year does not wish to conclude
without giving expression to its belief that the American Bank¬
its report
ers
injurious to
inevitably
Economic
The
overcome
connection the Commission reaffirms
this
In
Conclusion.
in estimation of the public.
That demoralizing influence
before a recovery to sound conditions is accomplished.
savings
be
must
CONVENTION.
a
vitally af¬
and prosperity of Kansas and we express a sympathy and
that will help to place actual owners on the farms."
solution
pronouncements
in other States demonstrate that many bankers
that in more normal
problem.
Every means that can be safely and sanely used should be extended to
the young farmer of industry and character whose ambition is to own his
own
farm and the Commission believes that bankers in many agricultural
counties often can be of assistance.
It has urged that bankers take a
are
keenly alive to the condition and embolden belief
times it will be
possible to marshal them for an attack upon the
BANKING
broad
perspective in viewing
the republic.
of
this question, looking
There
is
tural
Education.
no
problem
have appeared from time to
information to assist in
this
time.
steps which spelled improvement in
rural
education
in
their
and
V.
with
Commission
the
U.
Wallace,
S.
nizes the
Department
continued
to
of
winter,
than
close
The
and
other
importance of the banker
as
an
friendly relations
the
financial
in
and
The
Commission
has
qrged
Congress with which
additional
copies of
to
the
carry
the edition
of sufficient appropriations
the work of the Department.
Many
The
Banker-Farmer
which
carried
issued
agricultural
special
a
activities
circular
in
pointing out how important
Michigan
funds.
port.
activities
of
the
have been
for
of
authorities.
The
those which plan
urge
lished
their
successful
abandoned
State
the
agriculture
between
and
these
Conferences
between
bankers
at
and
in
increasing in number and Influence,
State
The
because
associations
Texas
association,
State
of
which
leaders
to
for banker-farmer
out programs
map
Bank
Countless
all
The
United
States
give the
Commission
for their
inspiration.
which
have
engaged
and
its
and
many
The
Banker-Farmer, the
activity has been
the engagement by
Boys' and Girls'
of bank agricultural
de¬
its
E.
club
been
committee.
members
asked
to
on
boys' and girls' club
estimates
and that all
year
amount
of
The chairman of the
represent the American Bankers Association
committee
The
last
the
estimate
to
agents.
women
Meredith, formerly Secretary of Agriculture, as chairman,
has
Commission
the
national committee
a
money
of it
that
was
$900,000
repaid.
lent
was
There
to
is no way
which has been lent by banks for this
distress
of
agriculture,
many
been
have
Prizes
committees
activities of
these activities at random,
of
Jersey and
work
committee
eral
upon
with
a
the
lines suggested by
each
county.
the Commission—a
Chairman
One
addressed
and
meeting
group
by
a
The
business
cooperation
and
men
for
other
in
a
small
agricultural
community
The association sold 13,000
has just indorsed a far-reaching plan for a
agricultural work between farmers, bankers,
agencies,
the plan,
developed by
Chairman
Cren¬
shaw, appearing in the October "Banker-Farmer."
•
The
Illinois association's committee,
cooperating with the State Agricul¬
tural
Association,
wool
industry of the State might have the advantage of better marketing
worked out
a
plan to finance wool shipments that the
facilities.
The Michigan
true
during
which
gan
was
committee held a meeting at the State College of Agrlcul-
"Farmers'
published in
Week"
a
which
program
was
urging cooperation ip
conference,
cooperated
farm
a
$54,760
of
successful
a
to
a
campaign
poster for
for
finance pig,
cow
and
B.
F.
and
use
clubs.'
calf
still curtails many helpful
Death of B.
issue
an
bank
book.
account
example of Arkansas which
Mr.
in
active
raised
,
activities
special
a
-
v,
F. Harris.
was
Harris,
chairman
of
the
Commission
a
length his
labors for agriculture.
great
V
;
the
has
banks,
field
carried
on
its
two-fold
banker-farmer
of
and
S.
Department of Agriculture and the State colleges of agricul¬
appeared.
The single purpose of the publication is to arouse
strengthen the interest of the bankers of America in agriculture and
life.
During the 12 months from September, 1920, to August, 1921, 211,125
copies were published of which 120,361 were distributed to banks through
State
associations.
obtained
the
It
Of
banker
is
the
remainder,
by banks for dsitribution
the
do
to
belief
a
his
of
90,764,
among
the greater portion was
their farmer customers, believing
better understanding on their part of the ambition
part for agriculture.
the
Commission that, conceding how much has been
accomplished in banker-farmer co-operation, nevertheless the potenial force
of the bankers of the
country for the betterment of agriculture has hardly
been realized. To-day, more than ever, the American farmer needs as his
first friend the banker.
safe,
the
profitable
system
The welfare of the republic demands a permanent,
of, agriculture
be far
to this goal will
the
officers
to
of
the countless
Commission
wishes
and
contented
a
Bankers
The
Association and State associa¬
individual bankers who
to
country life.
faster if every banker lends a hand.
the American
express
have cooperated with it,
its gratitude.
Report of General Counsel, by Thomas B.
of necessity,
and formulated a
program
of
impracticable to give in any degree of detail the variety of work done
results accomplished for the Association, its Divisions, Sections, Com¬
missions, Committees and Members.
Federal Legislation.
Taking
belief
organized a committee which proposed to engage actively in coopera¬
tive marketing, rural education and other subjects.
In cooperation with
the North Dakota committee a sweet clover growers' exchange has ac¬
has
first the important subject of Federal legislation, all bills in¬
Congress affecting banks are received at the office of the Gen¬
Counsel, examined and digested and, from time to time, such digests
published for the information and use of the committees of the Asso¬
ciation
having to do with Federal legislation.
Particular bills
are
brought
the attention of the appropriate officers or committees and
the Association
being determined by referendum vote, or at a
to
the policy of
general meet¬
ing, they are favored or opposed, as the case may be, through our ommittee on Federal
Legislation, Federal Legislative Council and allied co-opera¬
tive committees.
The report of the Committee on Federal Legislation will
show in detail/the bills favored or
opposed by the Association and the gen¬
eral progress of Federal
legislation affecting banks.
Certain matters of
Federal legislation, however, in which the General Counsel participated,
will be briefly referred to.
Tax
on
Bank
Deposits.
On Dec.
a
a
up
troduced in
eral
are
co-operation
Michi¬
peculiar conditions in the State were an unsurmountable obstacle,
Paton.
be general in its nature, for it would be
and
booklet and sent to every member bank.
is organized on the county plan.
Dakota, where banker-farmer work has been hampered by
North
that the
death
1916,
Banker-Farmer
country
re¬
banks for distribution among farmers.
Kentucky Association
State-wide
held
number of county agents.
account books to
farm
was
in
bonds, preparing
The
gen¬
Yeasting
ported that banks in 23 counties last year lent $125,200 to finance club
work.
a
retained.
' ' '
financial support
comprehensive plan of State organization for
in
bank
banker-farmer
cooperated
lent
This report must,
chairman
a
farming
member
were
To
named
have
and
agriculture of bankers' State
general nature.
To select some
other associations.
committee evolved
banker-farmer
safe
a
danger of
agriculture
on
a
boys' and girls' club work were given by associations in New
Carolina, Georgia, Virginia, New
many
to
at
the U.
ture
without prejudice to other committees which
York, Vermont, Maryland, Kansas, South
Ohio's
-teem
in
similarly active,—
for
on
Tennessee.
lines.
copies of
banks
untimely
tions and
Activities.
Despite the necessity to concentrate upon plans to relieve the financial
associations pursued various
committee
was
in
program of chronicling
activity, by associations and
by publishing such articles of a general nature as
likely to be helpful and inspiring. Authoritative messages from leaders
To
Association
there
employed
agricultural work is again recommended for emulation.
1913
progress
work, but it has been large.
State
funds,
agents
each
annual
other
that this would create
to "sell" the club idea to business men.
purpose
on
T.
to
dollars road
1,252
individual
of
been organized
has
with
banks of
Clubs..
.
There
work
and
developments in
credit
workers.
Another
discontinue
Honor to his memory was done in an issue of The
Banker-Farmer which
being carried on by banks
have been kind enough to
but has urged caution in defining the limits of the activity of the bankagriculturist that there may be no conflict with county agents and other
official
a
The Banker-Farmer.
The Commission has paid much attention to this development,
partments.
second
committee
college
increase in the number of banks
an
its
activities.
take charge
to
men
State
with
to
The
them
of
publication,
There has been
trained
their
inaugurated
books.
corporation
grievous loss not only to the banking fraternity
agriculture, but to the entire nation.
His great service to the
banker-farmer movement require no extended comment in this
report
and
Activities.
individual agricultural activities are
the
over
for
from
it^ second conference.
State committees held conferences with
letter
a
State associations.
reviewed
othier
account
credit
county and the county agents
The
its committee.
with
Many
to
county
Tennessee
the
are
The Michiga
Bankers Association committee on agriculture met at the State College of
Agriculture during Farmers' Week.
Leaders of Tennessee's college recently
met
farm
a
an
committee worked out
million
Oklahoma
fund
colleges
in
the
each
with
held
sixty
were
held
Alabama
distributed
temporarily abandoned by several
conditions affecting the farming industry.
however,
in
Lack of sufficient
State
of
situation,
Missouri's
of
are
Colleges.
at
dollars
of farm
use
organized
threatened
cent,
per
this
marketing
institutions.
farmers
State
campaign for diversification.
by
Conferences
financially by the Milwaukee banks,
farmers
million
counties
fifty
Texas
programs
bankers
the
the
State wide campaign for the reduction of
cotton acreage, and was
a
college of agricul¬
on
and
farmers.
broadcast
sent
all bankers the importance
upon
State committees
State farm bureau
Bank
many
backed
and
banker-chairman
in consultation with their State colleges.
encouraging to note the closer relations which are being estab¬
is most
It
most
Iowa
The
obtaining the counsel of the United States and
ture
the
Reserve
its
influence the greater
five
sup¬
by the lack of sufficient funds.
to
of
combat
in the Department of Agriculture have continued to
recognize
potential influence of the bankers of the country and to use the Com¬
mission as an avenue by which to use it.
"Various members of the De¬
partment have contributed special articles to The Banker-Farmer.
continued
also,
Because
insufficient
Leaders
has
especial topic.
leaders of
Federal
effort to make
possible an orderly
marketing of farm products and supplement
existing farm credit agencies
the
The Commission
the
during the
The meetings
itself
bankers
capital
losing
Department
co-opera¬
conferences
contributed
movement to
government
the bankers of the country to continue this
urges
Many valuable
curtailed
or
of
also
association
Iowa
-
■
.
The Commission
curtailed because
were
the
the
as
with
college,
continued
Wisconsin,
a
the
Washington address of Secretary Meredith were distributed by State asso¬
ciations, clearing house associations and banks.
This work was taken up
by several State associations such as Michigan whose committee on agri¬
culture
situation
connection
State
farmer-banker
to the fund which made
the journey possible.
contributed $1,250 to the
expenses of the trip.
Wisconsin's activities included its
"banker-farmer exchange" which is
gradually increasing its service to the farmers and banks
of the State.
importance
on
of
of
department.
bankers
The
with which to reach the
farmer.
by
opportunity for banker-farmer
campaign for > diversification in which so much
has been accomplished for the State.
Many bankers participated in a
visit by farmers to other State
colleges of agriculture which was made to
inspire better agricultural educational facilities in Arkansas
and
new
agency
and the
series
a
out
banking
committees.
held
with
federation,
secretary, Henry C.
predecessor, Mr. Meredith, shows that he recog¬
his
a
worked
were
Agriculture.
sustain
Department of Agriculture.
less
no
S.
has
agriculture of the Montana association has
begun the
small monthly bulletin
dealing with the especial agricul¬
Dakota
Arkansas
The
on
problems of the State
South
Many bankers have
bringing about consolidation
129
committee
tion.
divergence of opinion on the general question of rural edu¬
necessity tor better facilities for education in the country is
by all.
Through The Banker-Farmer various articles bearing
this
used
The
The
conceded
upon
to the future welfare
publication of
Rural
cation.
SECTION.
17, 1920, Representative Treadway, of Massachusetts, introduced
bill (H.R. 15,188) 66th Congress, providing a tax of one-quarter of one
cent
per
This
urged
on
bill
and
bank
caused
deposits,
to
considerable
be charged by
alarm,
the House Ways and
as
the bank to the depositor.
it was apparently being seriously
Means Committee set Wednesday, Jan. 6,
for a hearing upon the measure.
There was prompt communication with
the members of the Committee on Federal Legislation and the various clear¬
complished a fine piece of work in marketing and distributing its products.
The association now considers the idea of a banker-farmer exchange as
ing houses of the country,
established
of
by
Wisconsin.
and a protest was filed by the Committee on
Federal Legislation in the name of the Association and also a large number
clearing houses
independently
wired, stating their objections.
At the
BANKERS'
CONVENTION.
opposed by your General Counsel and also
Burke,,representing the Pittsburgh Clearing House, and
by Mr. F. W. Treadway, Counsel of the Cleveland Clearing House Associa¬
tion.
An argument in its favor was made by Mr. Henry B. Sawyer, of
Boston.
At the conclusion of the hearing it was quite evident that the
members of the Ways and Means Committee intended to table the measure,
hearing on
Jan. 5 the bill was
by ex-Congressman
subsequently proved to be the case.
which
and
Walson
0.
of President H. H.
Committee on Jan. 21, upon Senator Calder's
bill, S. 4721, providing for the establishment of savings departments of
national banks and the segregation and special investment of capital and
assets.
Many objectionable features of the bill were pointed out. and it
was shown
that Senator Calder's underlying purpose, which was to relieve
the housing shortage,
could be more readily accomplished by a simple
amendment to Section 24 of the Federal Re,serve Act, enlarging the powers
of national banks to loan on real estate.
The bill was not reported in the
66th Congress, but a similar bill has been introduced in the present Con¬
gress (S. 1836 ; II.R. 176) and is resting in the files of the respective Com¬
mittees on Banking and Currency in both Houses.
Revenue Lavj Amendments.
General Counsel,
Mountjoy, Washington representa¬
participated in a hearing before
Treasury Department experts on July 7 at Washington, granted to repre¬
sentatives of bank and trust company interests, at which certain changes in
the
While
bill was in course of framing,
revenue
new
through the co-operation of Mr. Edgar E.
tive of the Association, arranged for and
the law
from taxation of interest on bank deposits
This exemption is contained in the bill (II.R. 8245)
aliens.
of non-resident
20, 1921.
the House of Representatives Aug.
by
passed
as
The subjects presented were:
advocated.
were
Advocacy of an exemption
1.
(It has just
Washington that the Senate Finance Committee has
agreed to this amendment.)
2. Deduction of taxes paid by banks which are assessed against share¬
been
from
reported
Cady of Kansas City.
This
amendment was not included in the Revenue bill and efforts therefor are
being continued.
(As this report is being printed, advice has been re¬
ceived from Washington that the Senate Finance Committee has added an
amendment which permits banks to deduct taxes imposed on shares of stock¬
holders but prohibits stockholders from taking these deductions also.)
3. Deduction as losses of shrinkage in value of securities charged off by
holders.
Theodore S.
Subject presented by General Counsel. Not contained
covered by new provision allow¬
departmental order.
except in so far as may be
Revenue bill
in
by
Subject presented
It is the purpose of this
soon
as
the offering of a
as
that the legal
offering of
securities, but to punish the offender if he continues to offer them.
bill does not interfere with any State Blue Sky law, but will supple¬
The
be set in motion, not only to stop the further
may
ment such
laws.
partial write-off of worthless debts.
Subjeot presented by Mr. Morris F.
Frey, Assistant Treasurer of the Guaranty Trust Company, New York.
This
has been included in the new Revenue bill.
5.
Exemption
income tax of community chests
from
and deduction of
corporation or other
trustees for charitable purposes.
Subject presented by Mr. jWilliam Greenough, Counsel for New York Community Trust.
This is contained in the
new Revenue bill, except that it is not made clear that a gift to a
trustee
for charitable purposes where the trustee is not a charitable organization
contributions
gifts to charitable corporations or to
or
de¬
City of
U. S. Re¬
Statutes, which prohibits the States from taxing national bank shares
greater rate than is assessed upon other moneyed capital in the hands
the
in
cision
"at
a
other
and
which
others
the Longworth bill (II.R. 215),
proposed to be included in the new Revenue bill, providing the .basis for
ascertaining gain or loss in the case of property acquired by gift, under
which the cost to the donor of every gift would have to be determined by
the donee when he disposed of it.
It was urged that these provisions would
kill the business of voluntary trusts.
The provisions of the present Revenue
law as to the disposition of goods were favored.
Subject presented by J. N.
Babcock, Vice-President, and Franklin Carter, Jr., Attorney for Equitable
Trust Company, New York, and by M. R.
Dickey, Tax Consultant, The
Cleveland Trust Company, Cleveland, Ohio.
The objectionable provisions
Opposition to certain provisions of
6.
in the
are
Revenue bill.
new
laibility of fiduciaries under Income and Estates
Limitation of time of
7.
guard against possible liability of an executor after an estate is
settled and distributed and an amended return called for, an amendment was
To
Tax.
income received during life¬
time of a person who dies before final determination of his liability there¬
on, shall be determined and assessed by the commissioner within one year
after request in writing.
Subject presented by Raymond H. Trott, Assis¬
tant Trust Officer,
Rhode Island Hospital Trust Company, Providence.
This provision is included in the new Revenue bill; also a further recom¬
mendation relieving an executor from personal liability
for estates tax
one
year after application for determination of the amount of tax.
requested that the amount of tax upon
8.
Judicial
of
settlement
Estates Tax
5361).
McFadden bill, re¬
quiring executor to file return within one year after qualification and with¬
in
ninety days thereafter commissioner must either
evidences
delay in fixing valuation and also to protect estate
bill is aimed to prevent
unjust values where amount involved not large
enough to appeal to ordinary procedure of courts.
Subject presented by
Mr. C.
T.
Durant, Attorney Hartford-Connecticut Trust Company.
Not
arbitrary
against
contained in
The
and
Revenue bill.
new
bill
Revenue
new
as
passed by the House contains
$500 of income of building and loan
the
be
Savings Bank Division
opposed.
as
associations.
an
exemption of
This is objected to by
discriminatory against savings banks and will
(The latest advice from Washington is that this exemption
has been stricken from
the
taxed at
are
that
fact
the bill by
Our
Association
operating with
is
Regulation
the Senate Committee
vitally
of
Fraudulent
on
Finance.)
interested
the Investment
Bankers'
in
this
Securities.
subject
and
been
States tax ordinary intangibles
House
provide that the taxation "shall not be at a greater rate than is assessed
upon other moneyed capital used in banking."
In other words, the bill
aims to confine the anti-discrimination provision to other moneyed capital
in
"used
Nelson
Doubtless
banking."
reached
be
will
every
through periodicals of country-wide circulation, or through
telegraph or telephone going into those States which have Blue
J)
present Convention some decision
Association with regard to the
the
the
of
present State tax systems, rather than per¬
interpreted, to operate, which would force
mit the national statute, as now
Association
Our
law.
change their tax systems to square with the national
the States to
of
some
is
already
on,
record as favoring an amendment of
be at
the hands of individual
citizens, "whether competing or not," and it is a serious question whether
the protective barriers of the national statute should be let down so as to
allow the States to tax national banks at any rate they please, provided
Section
5219,
that State taxation of national bank shares shall not
so
greater rate than upon other moneyed capital in
a
only State banks are put in the same boat.
Equality of Rediscount Privileges.
The State Bank Division at its meeting
urge
change in the law to
a
inequality by which State bank members were deprived of the
the
correct
in Washington recommended that
Reserve Board be petitioned to
Federal
the
by national banks of rediscounting paper of customers
than 10%.
The present law provides (Sec. 9, F. R.
Act) "that no Federal Reserve bank shall be permitted to discount for any
State bank or trust company notes ...
for any one borrower who is
liable for borrowed money to such State bank or trust company in an
amount greater than 10% of the capital and surplus of such State bank or
trust company.
."
This has been construed to mean that if the regular
line of credit of the borrower from a member State bank is more than 10%,
the Federal Reserve bank cannot rediscount any of that line of credit.
privilege enjoyed
who
may
more
owe
.
Correspondence was had with the Federal Reserve Board and bills were
Congress, with the approval of
introduced in Senate and House in the 66th
the same footing as national
The desired legislation was
Congress, but it has been reintroduced in the pres¬
ent Congress.
Senator McLean's bill (S. 831) to correct the paragraph of
Section 9 referred to has already passed the Senate (June 27) and is now
the
to place State bank members on
Board,
members with
bank
the
have
Committee
House
Bills
in
also been
and by
242)
(II.R.
reference
to
rediscounts.
the 66th
not secured in
on
Banking and Currency.
introduced by Mr.
Christopherson of South Dakota
Senator Ransdell of Louisiana
(S. 1463), in different
phraseology, but having the same end in view.
'
Robbery of Federal Reserve
and Member Banks.
close of the 66th Congress to secure
of the Gore bill (S. 2903), which made robbery of a Federal
Special efforts were made before the
the
passage
bank
Reserve
member bank a felony.
or
This bill was favorably reported
the Committee on Judiciary.
General
Counsel sought to enlist the co-operation of the Secret Service Department
of the Government and also to have the bill given a preferred place on the
to
in
Senate
the
May,
1920,
from
The bill, however,
died with the close of the 66th Con¬
Senate
calendar.
gress.
The time is not propitious for the successful
the
in
urging of this measure
1 when the proper
but efforts will be continued
Congress;
present
arrives.
time
Through Export Bills of Lading.
participated in a hearing on Nov. 14, 15 and 16 before
General Counsel
Commission at Wash¬
rail and ocean carriers, the general
purpose being to reach an agreement upon the form of through export Bill
of Lading to be prescribed by the Inter-State Commerce Commission for
issuance by railroad carriers in connection with common carriers by water
in foreign commerce whose vessels are registered under the laws of the
United States.
The main object of participation in behalf of the banking
interests was to urge that a separate form be provided for order Bills of
Lading, as distinguished from straight Bills of Lading, so that the nego¬
tiable quality of these important documents be preserved.
General agree¬
Commissioner
Woolley of the Inter-State Commerce
ington, attended by representatives of
that
reached
was
there
should
Call
be
an
order
as
well
as
a
straight
tem
for Publication of Bank Salaries.
first time in the 58 years'
For the
the Comptroller of the Currency,
history of the National Banking Sys¬
on
Feb. 24, shortly before his retire¬
call for reports of condition of national banks,
which included in the blank form of statement for report and publication,
from
ment
ployees.
mail,
at
attitude
of which is to modify the national law so as to
purpose
bring it into conformity with
items
The Denison bill
corporation issuing stock and every borrower issuing
bonds, as well as all offerers of securities to secure the advance approval of
such issues in each and every State where the offering is made through the
the
the
to
as
bill, the
Association in the procuring of
Counsel has been employed in circulating propaganda op¬
press,
by the introductio*
2200 ; also companion bill in
by Mr. Volstead, H.R. 8015), amending Section 5219 so as to
Congress of a bill by Senator Nelson (S.
the
would
public
at a
Supreme Court has been followed
The decision of the
in
posing the Denison bill and favoring the Volstead biU.
compel
greater rate than national bank shares.
a
many
co¬
legislation which will adequately regulate the subject.
office of General
or
through export Bill of Lading.
has
Two bills
are
now pending in
Congress which provide different methods of regula¬
tion, the Denison bill (H.R. 7215) and the Volstead bill (H.R. 7868).
The
Federal
bonds,
of individuals
the hands
in
States.
ment
Federal
indebtedness
of
into competition with national banks in the loan
come
may
notify of approval or of
objections and amendments and if the parties cannot agree the matter of
valuation to be submitted to the district court for final adjustment.
The
vs.
In view of
lower rate than
bank shares, the effect of the decision will "be to cause a readjustment of
many State tax systems and questions will also arise in States which have
income tax laws as to how the decision will affect the tax systems in such
market
any
(II.R.
Richmond
citizens of such State," is violated where investments in
of individual
notes
Merchants National Bank of
of
case
holding in effect that the provision of Section 5219
Richmond,
vised
Supreme Court of the United States handed down a
the
6
.
be deducted.
can
Taxation of National Banks.
State
June
On
partial charge-off of, bad debts.
provision for deduction of worthless debts to include
Extension -of
fraudulent security comes to their atten¬
they will inform the Federal Department of Justice so
tion
ing addition to a reserve for, or
4.
curb
to
agencies of special committees in each Federal Reserve bank
bill to have these committees so organized
through the
that
Banking and Currency
Senate
intended
is
district.
such
McKee of the National Bank Division,
represented the Association in conjunction with .Mr. George
Mr. McKee of Washington, D. C., at a hearing before the
General Counsel
vored,
machinery
Departments of National Hanks.
Savings
the request
At
The Volstead bill, on the other hand, which is fa¬
the sale and offering | of fraudulent securities
legitimate business.
to
harmful
Tins would be absolutely impracticable and prove very
Sky laws.
this
the
showing the
a
aggregate amount
of salaries paid to officers and em¬
objection was immediately voiced to the publication of
information, and President McKee of the National Bank Division offi-.
ciallv
for
office, issued
an
General
protested
opinion
to
as
Counsel
to force
An opinion
the Comptroller and also called upon General
to the power of the Comptroller of the Currency
reporting bantys to publish
this confidential information..
BANKING
was
promptly rendered
ment
of salaries
in
which
paid did not
the
conclusion
within the spirit
come
reached
was
that
state¬
meaning of the law,
or
not being a statement of
the banks' resources
or
liabilities and that
Comptroller had exceeded his
authority in making the requirement that
banks
should
publish this
1921, p. 076).
of
national
since been
confidential
SECTION.
Legal Opinions.
The
the
ing,
the
did
(see "Journal," April,
was given wide
publicity and a large number
publish the information.
The matter has not
not
opinion
This is
work
bers have
of
pressed by the Comptroller's
office.
case
with
emphasize the
the
motion
in
the
channels,
tion.
of
The
legislatures of
legislation
enactments
of
legislatures
this
will contain
over
recommended
The
year.
forty States, through State Association
by the American Bankers' Associa¬
issued
was
measures
report
full information
of
this
on
in
have
due
Use of
by
State
Legislation
form of
a
making
or
Supplementing what
is contained
this
on
statute
re¬
General
Counsel on Feb. 25,
1921, attended a meeting of the Com¬
Commercial Law of Commissioners on
Uniform State Laws at the
New York Bar
Association, at which was given an
all-day consideration to
a
vdraft of "fiduciary's act" prepared by Professor
Austin Wakeman Scott
of Harvard, who had been
retained by the Commissioners for
This
the
draft
not
covers
only
the
personal
of
use
corporate securities by fiduciaries
and
aims
to
be
a
their
nature
and
abled
in
have
Council
from
year
heretofore been
bound
are
permanent
in
character.
A
book
which
Counsel
the
the
1912,
both
embodied
is
filed
Executive
in
of
in
the
a
permanent
time
felt
convinced that its service-
now
of
1e»
en-
others, and has his questions answeretH
as
and
In view of this Gen¬
to
the best
form
of
Council
since
as
to the inclusion
of
a
Digest of State Banking Statutes.
work
has
consisted
in
has
going
through the
already been done
it
as
statutes
of
has
thus
different
far
States
in 18
States, from Alabama
with the latest session laws and
working back to and
compiled statutes in each State and
taking out and
listing all those subjects which affect
bankers,
Michigan—beginning
through the revised
or
directly
preliminary work is completed, there will
banking subjects of statutory enactment
or
be in hand
of all
indirectly.
a
When
year to year, it will
prove of immeasurable value to all those
who desire information as
to what
States have, and what have
not, statutes on any particular
banking subject,
and the detailed
provisions of such statutes where
they differ.
In each
Decisions.
issue of
the "Journal" are
published the recent decisions of the
Supreme Court of the United States and of the
highest State courts which
are
of especial interest to banks.
All decisions of the
courts on all sub¬
jects are reported in weekly advance
sheets, which are examined, and those
affecting banks, either directly or indirectly,
averaging about sixty per
month, are digested, and from these selection is made
of those
deemed of the
in
which
greatest importance and
digest form.
current
judicial
and
to
the
"Journal"
avoid
have
many
was
This
interest to banks.
digest enables the banker
to
These
are
are
pub¬
keep abreast of
law on banking subjects, as
developed by the courts,
legal pitfalls.
Since July, 1920, when this
adjunct to
instituted by Assistant General Counsel
Paton,
appeared
Legal Department to
Jr.,
166
so
recent
conduct
decisions,
this
work
and
it
that
is
no
the
ambition
of
the
important decision
is
overlooked.
General
Counsel
assistance
to
matters
of
of
the
which
is
constantly
Insurance
Protective
in
rendering
Committees
of
the
advice
and
Association
branch of the work, the giving of
legal advice
and methods of procedure.
of
the
Committee
matters
Council
have
has
was
been
related
initiated
as
to
with
all possible
promptness
it for the Association, hut
providing of adequate financial
bandied by
to
the
of
the
Association
and
of
and
approval of the
Association itself,
the
veloped the plan
for the formation, by the
co-operation of commerce, fi¬
industry and producers and investors
generally, of a foreign trarte
financing corporation under the Edge Law Amendment to the
Federal Reserve Act.
In the
development of this plan by the Commerce and Marine
Committee, the greatest care was exercised not to
exceed, in any purtleivlar, any authority given by the Executive Council of the
Association, or by
the
nance,
Association itself.
Pursuant
to
the resolution
adopted at the last annual convention ot the
Association, this foreign trade financing plan took
definite shape, in steps
to bring about the
organization of the Foreign Trade
Financing Corpora¬
tion.
The
resolution authorized
and empowered the President of the
Asso¬
adequate number of representative bankers and busi¬
meet, and, if it should appear advisable and
practicable to
them, to appoint from their number a committee to take
steps, in accordance
with the plan
developed by the Commerce and Marine
Committee, to form
a
foreign trade financing organization, with
adequate capital and a respon¬
sible and
thoroughly efficient personnel.
ciation
ness
to
request
In
an
to
men
the report made
by the Chairman of the Commerce and Marine Com¬
Executive Council of the Association in
May, 1921, there
resume of the events
following the adoption of this reaolntion, including the assembling of the
nationally representative Chicago
Conference, called by the President of the American Bankers'
mission
was
to
the
presented
a
Association;
the initiation
by this Conference of the formation of the
contemplated
corporation through the appointment of a Committee on
Organization, and
the work up to the first of
May, 1921, of that committee.
In the report to
the Executive Council
emphasis was placed on the fact that, while it was
clearly brought out at the Chicago Conference that the American Bankers'
Association simply presented the
foreign trade financing plan for consideration, the development of the plan is,
necessarily, of the greatest interest
members of the Association.
the
upon
have
our
the
same
the United
should
the
of
report
Council, at the
legal
constantly coming up, embracing, in the insurance
the work, the interpretation of
policies and the consideration of
amended forms and riders, to be
approved by the Committee;
statutes
of the American Bankers' Associativa.
past
important
Executive
In
Work.
are
the protective
criminal
and
engaged
the
Commission, by
for America's
foreign trade.
The reports of the Committee
Commission, all of which have met with the unanimous
to
Insurance and Protective
work
most
complete index
in all the
States, which will
be susceptible of
classification, comparison and amplification in
digest form.
Such work will
necessarily take much time and involve considerable
labor,
but when completed and
kept up by annotations from
Recent
.Verniers
facilities
suggestion made at Pinehurst, work has been
started under
the supervision of the
General Counsel of
making a complete digest of State
banking statutes, classified as to
subject.
The
progressed
of
Many important
a
alphabetically— and this
events
The
resolutions adopted
by the
1912.
and
and Marine
McHugh„ Chairman.
three years have
signally demonstrated the
rectness of the
judgment of the American Bankers' Association
when, at its
Annual Convention held in
1918, two months before the
signing c* the
World War
Armistice, it went on record as to the
absolute necessity tit
acquiring foreign markets for our
greatly increased national production.
At that time a resolution was
adopted, pledging the Association "tn
"pro¬
vide, as rapidly as possible,
adequate facilities for financing
export opera¬
tions sufficient to meet
every reasonable demand that
may arise."
Pursuant to the adoption of this
resolution and in
conformity with its
spirit, the Association authorized the
appointment of Its Commerce aud
Marine Committee, which last
year became the Commerce and Marine Coinmission of the Association.
temporary nature,
form, chronologically, in a
typewritten
Secretary's office.
has had
Pursuant to
in
gain by the experience
President
The
the
drafts
some
thousand-fold by a publication such as
this.
rendering legal advice to the individual, each reader is
a
Gentlemen:
resolutions
completeness) and further
branch
increased
advance.
The
inception* of the Association in 1875 down to
reached
and
is
John
digest of such resolutions, whether it should
be classified as to
subject or
as well as to reach a
determination as to just what matter
is obsolete and should
be eliminated
(or possibly listed as such for sake of
in
men
Report of the., Commerce
chronological,
there
to
business
Department has for
com¬
prepared, under his supervision, an outline or
resume
adopted at the annual sessions of the
Convention 19131920 inclusive,
and, as no meeting of the committee has
yet been held, it is
deemed desirable, before
any further work is
undertaken, that there be a
meeting of the committee on this
subject, at which the data in hand
may
be given full
consideration and decision
the
It is
worthy of note that over 2,000*
from present
indications, there will'
and
American Institute of
Banking:
Profits.—Fifteen thousand copies of the new
1921 Complete Edition hav®
been printed and in process of
delivery at this writing, returns for which
are
just beginning to come in.
Each is sold at $5.
It is estimated that
thi3 price will permit a
$2 profit per copy.
Based on our experience of Jtest
year, in which the sale of the book at
$2.50 gave us a profit of
$11,696.94,
there is every indication that a
net profit of $30,000 will be
realized on the
present issue.
Another reprint of 15,000
additional copies is
contemplated.
Dated Sept. 14, 1921.
temporary in
keeping those that
including the
lished
Legal
com¬
appointed to collaborate with hte General
Counsel to this end.
appears that all resolutions of the
General Convention and of the
It
this
fast
second letter.
a
was
Executive
to
prepared by Assistant Counsel
every opinion of importance since
unpublished in the "Journal/'
or
the
mittee
of
has been
contains
whether published
thousand
addition to
provide
and
the subscribers' liEt
on
to members
also
Digest of A. B. A. Resolutions.
eral
several
The
meeting of the Executive Council held last
May it was suggested
that it would be well to have a
digest made of the resolutions heretofore
adopted by the Association, striking out the ones
that are
and
1908,
book which
a
pages,
up as a result of
Clerks
prehensive regulation of the entire
subject. At this meeting certain amend¬
ments were suggested and the
draft was recommended to the
Committee
for presentation at the annual
conference of the Commissioners in
August.
It has been the earnest
hope that the conference would
approve the draft,
but at the annual
conference in St.
Louis, recently held, the proposed
"fiduciary's act" was gone over, section by
section, and then recommitted
to the Committee on
Commercial Law to be redrafted
by Professor Scott,
and it will come
up again next year.
At
This is
lawyers have already subscribed, and,
purpose.
fiduciary checks but
head
are
piling
on
transfers of
the
ness men, will be certain
of
receiving a copy for his library.
As this re¬
port goes to press, 12,000 orders have been
received.
Of this
number, 9,000
have been the result of the first
solicitation by circular and orders
be
annual
subject in the last
other branches
the
Assistant
pay¬
subject with the
of
all
Counsel Paton, Jr., who has
taken the initiative in all of this
work, has given all of his enthusiasm in
giving to this publication, as "weU
as to the American
Bankers' Association, widest
publicity among banker*,,
lawyers and business men, and is now
working on a plan whereby every
banker in the United
States, as well as a large number of
lawyers and busi¬
statute which
deposit and
Commissioners on Uniform State
Laws, and that a form
drafted which will have the
approval of the Commissioners.
port,
that
the year
indorsed by officers of
corporations or other fidu¬
ciaries to their
personal order or for their
personal uses.
It is the desire
of the American Bankers'
Association to co-operate on this
mittee
state
substituted.
Fiduciary Checks.
Progress is slow towards the recommendation of
adequately protect banks in receiving on
It is believed that
of legal service to
members, it is a pleasure
book, the "Digest of
Legal Opinions," is becoming in¬
creasingly popular.
The earlier 1919-1920 editions
(16,000 of which were
printed) having been exhausted—the new 1921
Complete Edition has been
separate
important subject.
would
of checks drawn
35
newly enacted
Committee on State
the
year over one thousand individual mem¬
Digest of Legal Opinions.
„
Service.—Under
to
Paton, Jr., of 760
Personal
ment
and
season
been
is constantly increas¬
distinctively for the indi¬
the pro¬
recommended
literature
necessary
in
Association
time of General
Counsel and his assistants than
legal activity in the General Counsel's office.
of
the
active
the
is performed
a larger
proportion
and to their advantage, than is
other single agency in the
Association, and it is desiTed
fact that this
opinion work absorbs a larger
proportion
any
to
Working under the auspices of the Committee on
State Legislation and
State Legislative
Council, General Counsel has been
which
during the last
individually,
of
State Legislation.
members of
been served in this
way.
are
thus served
members
the
for
class of work
a
vidual member, and
information
This opinion
banks
*
331
a
Economic
meeting,
States
in
world
machinery set
plan proposed
in
the
Policy
reference
up
Commission
was
made
organization,
and
and in readiness,
to
the
Executive
to
the
part
devolving
it
was
said
that
and
it
"we
is agreed that
Foreign Trade Financing Corporation, organised
Association, is of the character
Nobody has proposed anything better or
under the auspices of the American Bankers'
that must be used for the
purpose.
anything
effort."
different,
and
it
afford*
the
most
feasible
means
of
oomWaes)
'
BANKERS' CONYENTION.
132?
ject to such conditions as it may prescribe, may,
the applying corporation to become a stockholder
bank.
-
Finance Corporation, with the voting to
authority for a distinctly limited period, to extend
agricultural exports, serves to emphasize the necessity
of providing, through private enterprise, with such effective Governmental
supervision and co-operation as may seem advisable, permanent financial
machinery for financing foreign trade.
If such financial machinery be not
'developed and made ready to function, in accordance with the dictates of
business-like vision and prudence, it may be expected that insistent demand
will recur for Governmental handling of such matters, with unavoidable ap¬
peal to class interests and accompanying expense to the general taxpayer.
Up to this time, the policy of Governmental help in this direction has been
based upon the recognition of an admitted emergency and the necessity, as
understood, of meeting this emergency by the quickest method possible;
namely, an appeal to the public funds.
The danger of this policy be¬
re-establishment of the War
The
Congress, of
credits to facilitate
it,
machlhery.
adopted by the Executive'Council, at the end of its
included the following: ' T
"
'
'
for bringing into operation, at the earliest
sible' moriient, financial machinery adequate for the extension of
credits, looking to the restoration and expansion of our foreign
a
solution to this problem the Foreign Trade Financing Corporation
Ttfe resolutions
ses-
sionfPlast May,
"flie
is apparent
need
pos¬
long-time
trade. As
was
the endorsement and
sponsorship of the American Bankers' Association. The Executive Council
of'this--Association reaffirms its faith and support in this agency for trade
rehabilitation, and urges in the strongest ahd most unqualified manner the
whole-hearted co-operation of the banking and -business interests of the
country,''that it may speedily begin to function for the benefit of America
inaugurated and is in process
and
of organization, with
:i
the-world."
1
" "
" •'
of the
putting this
tiofh"
Foreign Trade
_
*
of foreign trade financing, however, has necessarily con¬
The prosperity of the country is so importantly de¬
the maintenance and reasonable expansion of foreign trade
markets for our surplus products, that effective means to hold and increase
such markets cannot be disregarded.
It has recently been estimated by com¬
The
Financing Corporation into opera'
of the
creation of
natioridl and international organisations ■ for 'export credits be actively
undertaken by private enterprise, with support1 of governments."
It' 38 due' to the'American Bankers" Association that report should be
ma'de to it qf every'step toward the'realization of financial machinery, the
of which Jong ago was foreseen by the Association, and the principle
which the Association has sponsored. ' The: Association should be inforxh'ed that the Committee on Organization of the Corporation, of which
need
of
Conference' made: the
Chairman' of your' Commerce
labored long and earnestly, and at
to bring about the desired result.
Unforeseen difficulties have been encountered, ascribable both to national
and 'international conditions'; but it is' felt that the progress made has been
and
no
Commission Chairman, has
sjriall'sacrifice of time and effort,
Marine
under the circumstances!, as evidenced 'Concretely by the very
considerable' amount, running into ''many" millions, of subscriptions re¬
ceived,'and the. development and maintenance of' practical interest through¬
remarkable,
require¬
legal't;echriicalities have been overcome. 'The legislatures of some of the
remaining. States do not meet until 1922 or 1923. In each of the remaining
States', the matter of enacting enabling legislation or overcoming legal
technicalities, so that State-chartered institutions may enjoy the same
privileges as those accorded by Federal law to national banks in the matter
of investing in Edge Law corporations, has been presented with resultant
progress in the education of public sentiment.
or
been' taken in the amending of the Federal
of payment on subscriptions to the
capital stock of Edge Law corporations, such as the Foreign Trade Finan¬
cing. Corporation.
When the Edge Law section of the Federal Reserve Act
was? put on the statute books, the provision was made that, after | the
initial payment of twenty-five per cent on subscriptions to the capital
stock qf Edge Law corporations, such payment being required at the time of
the commencement of business, payments should be in installments of at
least ten per cent of the total amount, at sixty-day periods.
The amend¬
ment ' to this section, which was passed by Congress and signed by the
President last summer, provides, in effect, that after the initial payment, as
required, payments shall be at the call of the boards of directors of such
corporations, with the consent of the Federal Reserve Board.
This legis¬
lation gives added assurance that funds will be called only as required and
as they may be safely and profitably employed in maintaining our foreign
A very
constructive step has
Act so
as
to liberalize terms
trade.,
There
the,.
recently has been
introduced in Congress another amendment to
Reserve Act, permitting Edge Law corporations to become
of the. Federal Reserve system.
This proposed amendment would
Federal
members
application to the Federal Reserve Board,
under rules and regulations prescribed by the Board, to subscribe to stock
of thq ..Federal Reserve bank of the district within which the applying cor¬
poration is located in an amount equal to 6% of the paid-up capital and
surplus of the applying corporation, and the Federal Reserve Board, sub¬
permit such
paramount.
pendent upon
productive capacity is. 25% in excess
authority that our
petent
of our
consumption. While in August our exports showed some¬
the total being larger than for any month since last
March, the August exports were $200,000,000 less in value than in August,
for
capacity
thing of an increase,
1920, the decline
being approximately 35%.
For the first seven months of
the United States were in value approximately
exports of
total
the
1921
this connection it
of the Canadian
the ensuing two
43% less than in the corresponding period of 1920.
In
is of interest to note the quoted prediction of the President
Bankers'
Association that Canadian exports
months will
to Europe for
be larger than for many years.
surplus, together with the liquidation of at
owed us abroad, cannot be accomplished with¬
import of approved foreign securities, under the plan contemplated by
the Foreign Trade Financing Corporation ; and it is apparent that no more
effective way exists of buttressing American trade abroad than by the ex¬
tension of American investment, properly safeguarded, in other countries.
The Chairman of your Commission repeatedly has pointed out that this can
be no
rapid or ill-considered process.
It must be secure; it must be
weighed and considered, with the care/ul employment of only such funds
as required.
To delay overlong in the setting up of necessary foreign trade
financing machinery to function in such parts of the world as may be
deemed safe will be to miss opportunity, and America's foreign trade will
thereby be at a marked disadvantage.- This advantage will be empha¬
sized as other nations occupy markets abroad.
The facts in the case long have been before the bankers, business men,
least part
of
export
needed
The
our
of the debts now
out
and general investors of the country.
Adequate financial ma¬
provide, on a sound basis, long-term credits to enhance per¬
manently our foreign trade can be established when a sufficient number
of bankers, business men, producers and investors appreciate these facts to
producers
to
chinery
the
point
of acting practically on them,
public come to a full realization
and when and only when the
of the very important and help¬
ful influence on our domestic conditions and values which proper invest¬
ment
in foreign securities will bring to bear.
Certain it is that such
permanent financial machinery is essential if the United States is to take
its proper place in international finance and trade.
American
JOHN McHUGH, Chairman.
,,
September 23, 1921.
York,
New
undertaking.
and, indeed, throughout the world, in the
When the.campaign for the formation of the Corporation began after the
Chicago. Conference, it was necessary to Satisfy "Blue-Sky" Law
ments.in twenty-one States.
These requirements'Have been met in every
State; 'with the exception of one. It' was found that in'twenty-nine States
the banking laws did not permit State-chartered institutions to invest in
stock of corporations such as the Foreign Trade Financing Corporation.
In the' majority of these States enabling legislation now has been passed,
out tli£"country
Reserve
subject
tinued
adopted at' the fitfst1 annual meeting in London
Chamber of Commerce'-declared: '"That the
Committee the Chicago
has been carried on in
tions.
TW' resolutions
Int&nltioiml
particular, pains¬
connection with the extension of the
principle of arbitration in international commercial disputes, the work
having been initiated at the instance of the Secretary of Commerce and
prosecuted with representatives of national trade and commercial organiza¬
taking work
businesses
necessity of
prompt attention, and, in
received
have
it
to
trusted
credits to
commend efforts to
debentures
this
vital inter¬
component of domes¬
the forma¬
possible
his final
made to the Convention delegates, said that the Corporation "as a
of fact, should have been completed by this time;" continuing: "We
addresses at the first session concerning the necessity of it, fre¬
references have been made to it during our meeting, and again to¬
and when we go to our homes, I hope we will take up at once in our
and with our bankers and manufacturers in our respective comthis very important matter1.
We must" impress upon them the
munitits
has co¬
the Asso¬
to
had some
night ;
during the past year
operated, as seemed feasible and possible, with the authority of
ciation, in keeping the Association in touch with developments relating
the activities naturally devolving upon the Commission.
All matters en¬
address
quent
is obvious.
and Marine Commission
Commerce
Your
Corporation.
Organization
and
Con¬
matter
by
coming permanent
\
necessity of providing adequate credit facilities to
maintain ftnd properly to develop our foreign trade'has been widespread,
«n<5 -very significant results have come from the-'educational campaign
•emphasizing this need.
In this campaign well-informed bankers, business
imen
and producers have taken a
leading part,, and world-wide attentioh'has been attracted to the stand of the American Bankers' Association
in the matter, as well as to the effort comprehensively carried on by the
Organization,. Committee of the Foreign Trade Financing
Various State bankers' associations have pledged their support to the move¬
ment and have appointed committees to co-operate with the
Committee of the Corporation, and approval given by manufacturing
■icommercial bodies throughout the country has been noteworthy.
In the "Final Declaration" of the Eighth National Foreign Trade
vention, held at Cleveland, in May, 1921, it was stated:
"We Urge
the immediate creation of financial institutions unqer the
Edge Law, whose machinery will facilitate extensioh of long-term
promote "free exchange of exports and imports.
We
acquaint our investing public with the necessity of purchasing
issued by such institutions against approved foreign securities for
purbpsfe, so that eventually every community will serve its own
est ip: furthering our foreign commerce as a necessary
tic prosperity."
:
.
• ..
'
At this' convention numerous speakers of- prominence urged
tion'of the Foreign Trade Financing Corporation at the earliest
date,'and the Chairman of the National Foreign Trade Council, in
Recognition
in its discretion, permit
of such Federal Reserve
corporations to make
of
Report
on
Federal Legislation—By
McNider, Ch airman.
Committee
Chas.
H.
in
Passed
Hills
66th
Congress.
Association in October our report
included the various bills affecting banks which had become law during the
66th Congress down to that time and it will be unnecessary to repeat that
the
At
last
information
annual convention of our
report.
in this
Since the making
of that report
the following bills affecting
banks became
Congress:
A
Revised Statutes by enlarging the resi¬
dence qualifications of a director of a national bank to include a radius of
fifty miles of the location of the bank.
This bill was approved March 1,
prior to the close of the 66th
bill amending Section. 5146
law
1921.
(passed Jan. 1, 1921, over the President's veto) di¬
of the War Finance Corporation.
(m) of the Federal Reserve Act extending
the time in which Federal Reserve banks may rediscount paper secured by
war obligations in
excess of the 10% limit from Dec. 31, 1920, to Oct.31,
1921, but only where the borrower shall in good faith prior to Jan. 1,
1921, have paid or agreed to pay not less than the full face amount thereof.
A
joint resolution
recting revival of the activities
A bill amending Section 11
Approved Feb. 27, 1921.
A bill amending the Edge Act by
of the
Treasury to use any
the Panama
and
Canal Zone or
providing the right of the
Secretary
Edge corporation as depositary in Panama and
in the Philippines and other insulai[ possessions
dependencies.
Approved Feb. 27, 1921.
bill amending
Section 20 of the
changing the
and retire Land
their issue" by
substituting the option to pay and retire "at any time after the minimum
period specified in the bonds, which shall not be longer than ten years from
A
Federal Farm Loan Act
provision which gives the Land Bank the option to pay
Bank bonds at any time after "five years from the date of
the date of
A
their issue."
bill to amend
Approved March 4, 1921.
Section 4 of the
'
Federal Farm Loan Act
extending the
to Porto Rico. Approved Feb. 27, 1921.
Joint resolutions declaring that certain Acts of Congress, joint
tions and proclamations shall be construed as if the war had ended
provisions of the Act
date
the resolution
becomes
eff&tive.
Approved March 3, 1921.
resolu¬
on the
BANKING
,133
SECTION.
T
•
bill
A
authorize
to
hundredth
one
coinage of 50c.
pieces
anniversary of the admission
Approved March 4,
Also
the
in
commemoration of the
Missouri
of
into
the
1921.
Approved Feb.
diameter
Union.
'
15836.
1921.
26,
the
^
Bills
,
Our
Committee
robbery of
messengers or others
of
the
We
.
also
We
•H.
found
it
amendment
an
impossible to
had
we
secure
to
R.
companies
of
favorable
A
of
report
this
to
measure
the
House
action
R.
embezzlement of
clean
bills
These
currency.
urged the McFadden bill
not
were
reported
of
out
rediscount
favorable
Three
successful
10403)
empting
tion
(H.
State
R.
15303)
and
to
national
(H.
losses
R.
such
of
provide for
to
the
bank
from
charged
by
also
not sold.
sections
of
advocated
bills
non-resident
taxation;
off but
amend certain
also
were
Calder-McFadden
deposits
deposits
securities
13259)
of
but
"Y'^V'
namely,
encourage
on
members,,
(8.- 3543;
aliens
to
Also the
the
by
permit
estates
State
and
national
and
is
bank
in
now
the
; .V
House
has
•
Bills
,
Opposed
Committee
•
in
the
passed
y.'V,
rency.
v
members
on
•
■
Senate
in
At the;
this
last December
(H.
R.
15188)
provide
to
tional
the
both of these
upon
General Counsel of
of the
National
mittee.
the
to
form
Both
which
the Association
bill
allowed
were
has
introduced.
was
which
at
measures
it
Hearings
also
by Mr. George O. Walson, of
die
to
been
introduced
Bills
in
in
committee.
in
the
67th
banks,
our
the 67th Congress
be
introduced.
auspices
These
of
bills
have
General
our
the
67th
Congress.
all
been
Counsel.
examined
the
At
and
digested,
meeting of
under
Committee
our
May
this
the
year,
following bills
considered
were
and
recommendations made
that they be approved, the report
containing such
being adopted by the Executive Council:
86, amending the Edge Act to provide that in case of corporations
its
recommendations
S.
having
subscribed
larger
a
capital
than
$2,000,000,
that
whenever
H.
tional
H.
4905,
R.
4826, to
two
a
$2,-
of
not
the
be
State
banks
with
in
Board
be
to
substantial
an
connected
competition,
by
not
more
extending
meeting- of
Opposed in
67th
Committee
on
Congress.
the Executive Council:
S.
658
amending Rev.
H.
176.
R.
To
of
S.
Ri
member
5435.
banks
All
these
from
by collateral and payable
Banks.
Res.
Reserve
ducts
26
Bank
bills
on
charging
limit
call
or
more
banks with
the
than
less than 30
rate
6%
of
on
days.
or
creating
of
1921
and
1922,
purchasing
be allotted
paper
to
secured by
the Fed¬
special live stock loan fund
farm'
pro¬
(H.
in the Federal Reserve
$500,000 of the net earnings for 1920.
of
irregation
Y.v -.:. .'
;:/•'
•-
/
..j
..
justification
5338)
introduced
and member banks to
I";
•.
#
.•/.
"...
pur¬
27
by Mr. Appleby of New
Y;.
' .
v.V
■
..• •
'Y.'
!.J;Y
'."5.V»-..' •
Public Education—By J.'H.
Puelicher, Chairman.
•
>
»
••• /
and
for the existence of any
decay...
(
;
'
•;
,
.
justify the profession qf which we
representatives.
Is. the banking business a useful business?; Does-it
make for the happiness and prosperity of the many?
Do its ideals con¬
tribute to that thrift on which rests the home and all that the word home
in its best sense implies,..which after all is the backbone of any nation? •
I leave the answer to .this query to you.
I do not believe that you, 1^1
know you, would be engaged in the banking business, did you nqt definitely
feel that you were contributing to the Welfare of your community-and to
the welfare of the State.
That being so, why is there the misunderstanding
in the minds of the multitude in regard to banks and bankers? • Wby'doe»
every
demagogue politician, when desiring election, seek votes .with., a
promised onslaught on the profession we love?
...
'• Y
I shall answer that question.
Because we, the bankers of America, Wave
so poorly
made known to the many the usefulness of our business to ,the
,
individual, to the community, to.the State.
debated with
never
.
■
::
Committee on Public. Educa¬
mysejf for some time, what course, to pursue.
There
a concerted effort at educating the; general public, in
accepted. the. Chairmanship of the
I
been made
.
.
J
begin with .this education and how to carry it forward was,the
problem that needed solution,
The thought finally came that although the
Where to
of
might not bring! present results, the proper place to begin education
kind, was xyithi the young, the impressionable, who had not yet
this
prejudiced by Jack of success.
Success
cess
April
will of the
By these standards, let us endeavor to
are
been
districts.
R.
•
tion, I
1920,
and pledges
business rests on its ability to
benefit man.
That which does not serve, ultimately disappears.,
Were
that not so, there qould be no progress; there would be either stagnate or
effort
a
its charge.
the matters committed to
regard to the usefulness of banks.
providing that $100,000,000 of Federal
empowering Federal Reserve banks
bonds
bill
earnings for
."
■.
49,
live stock.
755,
chase
Res.
upon
'
had
J.
.
Federal Legislation and the Federal Legislative, Coun¬
National depositors guarantee fund in each
District.
and H.
.
t,
Report of Committee on
When
a
.
..
Revenue bill,, so that, the
has been, or may hereafter be, determined upon,
the future, as in the past, to carry out the
as
•'
..
,
Banks for the purpose of
1094,
Bank out
A
and
238
2l74r-te-provide for
eral Land
<#>
R.
H.
Reserve
S. J.
S.
provisions.
553, establishing uniform maximum rates of interest and discount for
Federal
V
relative to the qualification of
undesirable
225, regulating the rate of interest chargeable by national banks.
National
S.
5146,
has
provide for savings departments of national
prohibiting
secured
H. R.
H.
Sec.
bill
chargeable by Federal Reserve banks to member banks to 5%.
510,
loans
S.
and
836
interest
Stat.
The
capital.
allocation
S.
directors.
favor
subject,
deterioration
Federal
following bills were considered and recommendations made that they
opposed, the report containing such recommendations being adopted by
national bank
•
amendment to the pending
best efforts for
The
Legislation in conjunc¬
Legislative Council at Pinehurst in May of this year,
our
in
tion
such
lessening of competition will result."
or
,r
na¬
officer with
with
i
on
its
'.!
Clayton Act, which permits
Reserve
u,
with,the machinery to carry out the policy of, the,Associa¬
of, orYfn opposition to, Federal legislation upon any particu¬
lar
I
banking credit
tion with the Federal
the
consolidation of
where "in the judgment of the Federal Reserve Board
case
Bills
At
the
for
the
Federal
banks
other
restriction
amend
the
of
permission to
no
provide
,-YYYV''
is organized
Association
banking associations.
the consent
than
to
an
meeting Oct. 3.
cil
since become law.
R.
JoWl
Commission.
Our Committee
000,000 is paid in, the unpaid remainder may, with the consent of the
Federal Reserve Board, be paid upon call from the board of directors.
This
bill has
•,
income tax rate on corporations to (15%' apply
only to those corporations with a net income of 10% or more, retaining
the present tax ratp of .10% on the corporations with net inc.om^ of less
than 10%.
This recommendation was offered by the Executive Courtcil at
on
of
in
' Yv-'Y^.-vJ-V
increasing the
provision
in conjunction with the Federal Legislative Council at
Pinehurst
sub-committee.prepared*"and" .sub¬
following resolution :
banks are making larger prof its * tlipLri". was
other, interests: .of . the
recommend
We
the
Federal Legislation
Executive .Council the
and
nomic Policy
large number of bills affecting banks have been
a
'**••'
-'
country are endeavoring to have. t^ese
channels other than banking interests,
Therefore Be if Repolved, That Congress be petitioned to amend .the, Fed¬
eral Reserve Act ip, such, a manner as to provide for the payment .of in¬
terest to the member panks on! their required reserves—the' rate pVthis in¬
terest to be fixed by the. Federal Reserve Board, based on the prpfi'fs arising
from the operation of' the banks, as contemplated by the Act, without .enter¬
ing into competition with the said member banks.
v
The above resolution was referred by the Executive Council, to Ythe Eco¬
opposed.
In
\
conteqipiated,,andhY.
.Y, •, '•}
.
profits are-being.made on the reserves of the member
Whereas,
Com¬
and will
and' Federal
profits diverted to
Legislation similar
Congress
.*
Whereas, th? sai.d■
had
were
accordant.therewith the
In
originally
Committee was represented
by
by Mr. H. H. McKee, President
our
and
Bank Division, and
bills
Calder
in
.
.1(
May meeting the
Whereas, the F.ederftl. Reserve
also a bill introduced by Senator Calder in
4721) to provide for savings departments of national banks,
of capital and the segregation and special investment of
assets.
This latter bill was particularly objectionable to the na¬
in
>:•>»
.
turnings pf''Federal Reserve Banks. '
ing banks.
(S.
banks
■■■
by Senator Nelson. (S. 22Q0.;
and urgeci in due season.
wih be
mitted to the,
one
the apportionment
savings
...
....
subject of the large earnings of the federal Re¬
serve banks was disq\if-/3ed ftnd
.a)(pu!bi-committee was appointed'to ^qbrnit to
the Executive C<).u^c^..^ecqmprien(ilation8 of a. plan with' refWenAe'$>. the
disposition of such; .earnings por^jsteh^ with the interests of the 'stockhold¬
cent upon bank deposits;
per
December
,.
')Perpelnai National Bank Charters.
■.
meefing.of .the !ppi£mi.ttee on Federal legislation
May
subject
At the
•••'•
tax of one-quarter of
a
.
v"
Y
During the last session of the 66th Congress two measures were success¬
fully opposed by our Committee, namely, a bill introduced by Mr. Treadway
»..,.••,!!!• J.
>».
recomjtne.ndation was made that, legislation Yb'e .^h'aCted
nfLtipij^i'.bar}^ pWrter# perpetual'in character, AM'this
recommendation ;w$s .approved by ,the. Executive Council.' Y A liiu 'co'vl.ring
the
'''
•/
;
...
now'pend¬
which would render
Banking and Cur¬
'• Y
,
Legislative Council, a.
Congress.
66th
•
State. Taxation of. National Banks..,
■'
•
.Y
an
67th 'Congress
lii'i ,1 j
|
i
»
'
to
as
*'•
' ••••
s
given our consideration;*"' w-ui <>•?:*'.«
ex¬
inexpensive court hearing in event of dispute.
All these subjects will be
prosecuted in the present Congress.
Favor¬
able progress has
already been made with the proposed measure .exempt1
ing interest on deposits of non-resident aliens, which is contained in the
new
Revenue bill; also a bill to secure
equality of rediscount privileges
between
•'
•
.
deduc¬
so
U
4
given due attention to the new Revenue bill
bill has been* introduced'
A
McFadden
law
i j
beeta advanced;
"not
vised
com-
equality
secure
bank
secured.
result,
to
interest
as
bill
between
not
was
subjects of amendment of the Revenue laws
without
R.
privileges
action
•'
and> Other Legislation. A
arid'Mr.
Drunl
by Mr. Volstead,. H.R'fi801*5),.which
8118)
,:V.\Yv;'
also
"before
Measures "at; Which
and
President'
companion. bill
would amend Section 5219.jlLlSi-Re¬
Statutes, by-.-providing as--the measure'of equality of.-taxation of
national bank shares*Mother moneyed capital used in banking,'.','instead of
the present provision/'"other moneyed- capital in the .<hands of individual
citizens of the State."
This follows the decision of the Suprefne...Court- of
the United States liri "the Merchants National Bank of Richmond-,-cafe," in
which Section 6219 was! held'violated where, a lower,.rate of taxation was
imposed upon intangibles-in-, the" hands of individual , citizens' .than > upon
the holders of national 'bank shares.
We recommend that, this .sujjj.qob- be
secured.
(H.
increasing the penalty for
national bank funds and the Brand bill (H. R.
7589) to
mittee.
"V
de¬
as
v
funds.
urged the Phelan bill
provide *a
Secretary
;
trust
or
by
number of detailed'amendments.-..These
are specified in the report of'the General Counsel and need not be repeated
here.
We are especially gratified that'-the proposition to permit bhnkB»to
deduct taxes paid on 'shate^1 which' has been sponsored by a comihitt£e' of
the State Secretaries'.'Sefction, arid-urged by Mr; T. S. Gad:y of Kansas-City,
in conjunction With bur' General1 Counsel, has been included in ^the'tponding
Revenue bill by the 'Senate Finance Committee.
••
•
the extent
also
the
to authorize
Weights,
was' voiced
complicating'"whole
this bill! oh Jdne"?'4
on
ing in Congress arid has'urged'a
but
follows:
as
11918)
hearing
a
Coinage','
Revenue
Our Committee has
assaults
cover
was
on;
This
from the bank;
or
without : seriously
our
McKee.
to
'YY *' '
of certain other bills and
passage
been advocating,
Treasury to select State bank members
We
H.
,
Association
The
bill'has
of
bill
Gore
member bank.
or
transporting property to
positaries of Government
We
VY;-Y
the
of
passage
Federal Reserve
a
urged the McFadden bill (H.
the
was
the
procure any further headway for this bill prior to the
Congress.
Our efforts will be renewed in the present
Y: >';Y Y';Yv■[Y
!','•;.!.% Y)
66th
amendments which
H.
Congress. Y- .Yr.
secure
opposition
impossible to
was
close
Congress.
of
to
favorably reported to the Senate with
upon
it
hard
Committee
-
(S. 2903) to punish'
was
Urged in 66th
worked
Inhere
machinery.
House
banks, necessitating changing the
was' felt that some / other ttehlbrial to
and
If
devised
be
could
financial
companies
lachines.
machines.
coin
of
Roosevelt
V
bill providing for partial payments to the
railroads, H.<R.
a
traction
to
expense
so
is
the
would be
much
It occurred to me that inasmuch as
goal which is. most striven for,
that the Economics pf Suc¬
earnestly and diligently sought, and that the banker, because
is achieved, through the medium of his business, ;wg's : the
success
subject of a referendum
logical teacher of it» principles.
This led to discussions of the thought,
with bankers, with economists and with educators and the desirability of
and
its
authorize the issue of 2%-cent Roosevelt coins was made the
vote of our Administrative Committee last June,
opposition developed because such coins would cause tremendous
Jersey
to
i
accomplishment
was
admitted.
Then came the
to
instructor of
large,
at the
bej willing to take the reward of
debating, I said
Would he be satisfied to become an
might not
which is to mean
happiness for the many and stability for his country."
Then
so
arranged
there
rid Educators,
lectures
At
to make it possible for the banker to become the
as
agreed
were
the
Pinehurst,
report
Committee
the
of
I
At Washington, in the Department of Edu¬
further the project.
The Division of
Secretaries whole-heartedly offered their aid, with the result that 41 States
and the District of Columbia have appointed Committees on Public Edu¬
cation.
The plan has been submitted to the Superintendent of Public In¬
We therefore should make ourselves known.
theirs.
I am calling upon you, Fellow Bankers, to help make
of the deceived and unsuccessful and discontented and
calling upon you to contribute to the welfare of the
that vast army
disheartened.
I
am
by showing to them that in America honest endeavor and intelligent
many,
cation; and in the office of the National Education Association, the project
saving and investing, lead to certain success.
I am asking you to become
teachers of the Economics of Success because of your love of your country
approved and commended and support was pledged.
was.;
than
calling upon you, Fellow Bankers, to become teachers of the Eco¬
am
less
heartily accepted, practically every banker present pledging himself to go
home and
but
Think of the thousands that are
leaving them to think that our welfare is based on a differ¬
are,
nomics of Success.
Education was
Public
on
really
we
ent foundation
the bank and its functions and usefulnesses.
on
is a
are
by the demagogue into believing that we are people different than
misled
and prepared, a series of ten simple
upon
There
one.
think of the thousands who do not know.
instruc¬
tor *ii the principles of the Economics of Success?
This required further
thought and consultation, with the result that with the aid of Economists
be
There is a fine human presentation, but it
wanted.
be
Yes, to his clientele, to those who come to him daily,'those who know,
Could the subject and the circumstances
the next question.
came
little contribution to the success of the country
hundreds of thousands of Americans afraid to
go into the bank.
That must not remain so, Brother Bankers.
It is your
task and mine to change that
The banks, the banker, must be so well
known that no one will be afraid to come to him.
Is he known to-day?
public-spirited citizen, always ready to do, and he
generous,
wijl. find pleasure in the performance of this new duty
of our monster banking institutions, looking
the rush of busy men and women, but too timid to
seeing
fearful that her
mighty true
"The banker, as I know him,
to myself:
big pillars,
in,
go
youth in the elements of his calling?
After much
n
he
for effort of the present?
the future
is
Would
kind?
this child, standing before one
Would the banker1 pleasure up
question of its feasibility.
of this
situation
a
CONVENTION.
BANKERS'
134
will rest
which
institutions,
its
and
safely on
more
citizenry which is
a
.
struction of all of
States, and
our
*
on
have had letters and promises of sup¬
we
the American Institute of Banking it was my
Education,
received insures the
a
the undertaking in
of
success
As
enthusiasm with which the report was
the
and
ment of the project, many
The text-book
failure,
the
but to their en¬
themselves,
to
not
let
we
as
pointing the way of the many to the requisites of
teachers,
become
us
all for the glory of the land we love.
success,
of them carrying each month one of the lectures.
^
love the men and women of America, as we
in the institutions which have made America the hope of the world,
love America,
we
believe
city where exists
every
attributing
always
vironment.
The financial magazines have been most liberal in their treat¬
Chapter.
citizenry which is successful, because failure will not reverence and
a
ful
privi¬
Commit¬
lege to present the program of the American Bankers' Association
tee. on Public
of its many advantages, on a citizenry which is industrious,
use
uphold the institutions under which that failure is possible, the unsuccess¬
port from practically all.
At'the oonvention of
making full
publishing companies, realizing the significance of the under¬
taking, and under the inspiration and encouragement of the former Chairof this Committee,
n
their books
in
And numbers
encouragingly
some
of them
the
teachers'
have commented favorably
journals
and
the plan, tendering the support of the teaching profession.
TITe big.newspapers of
made it the subject of editorial
the country have
Orr.the way to Los Angeles it was my privilege to be the neighbor of Sir
Drummond
Ij&dy
cfflec
experience
understood.
Fraser.
they
had
He
B.
The
•
chief
State
I
asked
had found
just
some
Sir
Drummond
method
whether
in their
making bankers better
of
answer—"Education, sir,
education."
in
recommended
been
done
mended
in
partments.
better
understanding of that
on
which stability of
kind
any
can
lectures
which
decided
were
because there
upon—ten
ten
are
months in the school year, to be delivered at each of the schools In America
by the banker nearest the school, thus bringing his bank to the school, and
after a lecture or two inviting the school to the bank to visualize that
which, he has been speaking about, have been distributed by the State
Bankers' Association to thousands of bankers, many of whom have delivered
the
September lecture and
are
preparing to deliver
now
the
one
Considerable
become
by
educator whether I thought the banker qualified to
an
teacher.
a
with another
As
an
question.
I
teach.! banking?
As
American
said:
know
I
usually does, E answered his question
"Do you think
the
teacher,
the
teacher
his
in
success
qualifed
profession
And he said:
fort.
Let
fice* you
evidence
to
us
are
"What
is your
join hands.
solution?"
I
"A
said:;
combination
of
a
The
mam
banker
has
cause,
of lack of Ruccess,
being misled.
are
You help us
to teach the sub¬
ject of banking by making
us teachers."
I said:
"Of course, I appreciate
that it is going to be difficult for
many of us to go into the school-room
and reduce to the
simplicity of the child in the seventh and eighth grades
the language of economics.
of
Nevertheless, it is necessary."
delighted to hear that experienced and eloquent educator say
"Begin in the fourth grade and instill one principle; then
other in the fifth grade."
yes¬
I know you
will pardon this personal allusion.
£ had served
on
false
statements
measure
a
effort,
courageous
because most
of
the
educators
had
said
begin below the high school."
I went back and said:
"The
Why, we will miss 75% of the people we ought to reach.
The children of the people we want to reach never
get to the high school.
We. must reach them in the common schools; we must reach them
in the
seventh and eighth grades of the
grammar school if we want to make them
hi&h school 1
Illinois.
early
little
passed this year in four additional States,
country banker—what
a
country school,
month
a
twenty-five
or
an
opportunity!
Just think 1
thirty families represented.
Once
A
a
community centre meeting, with the children contributing in the
shape of exercises
bring them there!
of
some
And
kind.
then
With
fifteen
what
of
interest
the
parents
would
Think what it will
country,
mean
to have
ten
to
our
lectures
profession; think what it will
a
year
delivered
in
the
mean
to
approximately
100,000
schools of America dealing with the Economics of Success, and
having the children in the upper grades of the grammar schools, of the
high schools, the colleges and universities, visiting the bank, learning to
know the banker, learning to know the functions of the
bank, learning to be
successful, made disciples of those who are looking upward and taken from
the army of the dissatisfied and the discontented and the
dangerous.
saw an
editorial in
few days ago.
Sow
to
The
of the papers commenting
who wrote that editorial had
one
man
on
present than most of us have of the fact that
a
this subject just
we are
just bankers.
He started his editorial with the story of a woman with a child
and with
a
purse
on
her arm,
in her hand, endeavoring to provide for the education
a
better appreciation
of
the standing
to
-
In the two last-named States
as
of banking institutions.
liability of the bank for
limiting the
measure
the laws
punishing offenders who circulate
non¬
has been passed this year in three addi¬
error
bill
this
passed
authorizing
banks
collecting
forward
to
items
without being amenable to the charge of negligence has
in
year
Our Committee
three
the
States
of
Arkansas,
and
Idaho
regards this law as most important, and urges its
in all States where not yet enacted.
recommended bill
limiting the liability of a
bill
recommended
Our
false
covering
ban|c for the payment
statements
*
passed this year in Oregon.
bill
recommended
Our
has been passed
noon
New Mexico.
bank
validating
this
year
credit
for
transactions
on
Saturday
Our bill
New
of the Negotiable Instruments Act, and the phrase¬
V
defining and punishing burglary with explosives has been passed
Mexico.
bill
Our
.
regulating tlie payment of deposits in trust has been passed this
in Illinois.
year
bill
Our
after¬
in the three States of Illinois, Missouri and
of Section 87
Missouri it has been passed as an amendment
In
(the maturity section)
in
been
has
■
ology is somewhat different.
.
•
making bank notaries competent to take acknowledgments and
ownership
protest, notwithstanding stock
in the bank to whom
an
acknowledged instrument runs, or for whom protest has been m&de, has been
passed this
in Idaho and New Mexico.
year
Transfer
Uniform
Stock
State
The
Oklahoma
has
Act
been
passed
this year
in
South
Dakota.
The
Association
of
the Federal Reserve Act,
by
has
also
passed
the bill
recommended
by
our
authorizing State banks to become members of Federal Reserve
vesting in such banks all powers conferred upon member banks by
banks,
subject to the restrictions and limitations imposed
under that Act, and providing as to reserve requirements and exami¬
or
nations.
to
addition, the measure recommended by our Association to enable banks
North
in
stock
take
kansas,
Edge Law Corporations has been passed this year
Indiana,
California,
Carolina,
Ohio,
Kansas,
Iowa,
Missouri,
Tennessee.
Oregon and
Also
in Ar¬
Nevada, New York,
in Florida, with a
capital limit of $50,000,
or
twenty minutes by the banker,
telling them something of America and her opportunities, of the possi¬
bility and certainty of success I
Oh, what a wonderful opportunity!
effective in
forged and raised checks has been passed this year by the Legislatures
Illinois and Tennessee, with a time limit in each State of one year.
In
were
such
co-opera¬
namely Arkansas, Illinois and Tennessee.
passage
Our
of
De¬
and
year
the
changed in certain respects, but
was
check through
to the payor
been
also
as
recommended
Our
successful."
Oh, if I
a
tional States,
to
"Don't
me:
draft
recommended
Our
payment of
make
school
a
knowledge in regard to schools
and. their needs.
And when we planned this course of
lectures, I designed
them lo begin in the seventh and
eighth grades, thinking that that was in a
Banking
Bankers' Associations.
passed will nevertheless be
an¬
board for many years, and felt I had a bit of
of
Committee has entailed considerable correspondence.
has followed the efforts of your Committee,
recommended
our
was
terday:
heads
sessions this
State
given
following evidence of his love of his country.
There is a need at
enlightening multitudes of rneri and women, who, be¬
the
have held
success
Our Bank Slander Bill has been
ef¬
You love America; you prove it by the sacri¬
willing to make to educate
the. present time of
of
and
Associations
State Legislatures
tion
has
usually been marked with sacrifices in the interest of his time, but seldom
with, the dollar sign."
"Well," he said, "I think that is a fair question."
I
Bankers'
40
having been attained largely through local effort and
direct
f. was asked
our
Over
success
Oc¬
for
tober.
f
by the American Bankers' Association.
This work has
A Program of Recom¬
State
of
the work of your
and must
on
co-operation with local committees.
namely Arizona, Idaho, Indiana and Illinois.
1'He ten
the Committee
of
State
December
yesterday those of you who were fortunate enough to be at the session and
hail the -pleasure of hearing the wonderfully eloquent address of the presi¬
dent of the University of Washington, listened to an endorsement! of what
wetiope to do.
A combination between the teacher, the educator, and the
intelligent business man who loves his country, so that the many may have
rest..
Chairman.
engaged the attention
Legislation for 1921 was issued from the office of the General Coun¬
to our State Legislative Council chairmen and also to
in
secretaries
a
the
and
been
sel
has
Legislative Council during the year has
urging the promotion in 1921 State Legislatures of the various
Legislation
And
one
State Legislation—-By Craig
on
Hazlewood,
which
work
bills
comment and approval.
arid.
Report of Committee
have had and are having
dealing solely with the subject of banking.
of
on
have enlarged the chapters on banks and banking
economics, and
on
written text-books
the
In
aggregate, thirty-seven separate enactments of A. B.
have been placed upon the statute
A
A. measures
books this year.
great variety of banking legislation, other than Association measures,
and of
more
or
less
general interest, has beerf passed this year in the differ¬
This report will not
ent States.
be extended by refernce to all such meas¬
but they are referred to in an appendix.
ures,
which will be of general interest
is
a
Among such measures, one
law passed by the Florida Legislature,
permitting all State banks to avail themselves of the rediscount facilities
Federal
Reserve bank,
of any other hank, without limit, subject
of
the
to
the discretion of the State Comptroller.
We
note
or
that the State of North
Dakota has repealed
Section 87 of the
which provides that "Where the instrument
bank it is equivalent to an order to the bank to pay
the account of the principal debtor thereon."
A few other
Negotiable Instruments Act,
is made
the
payable at
same
States
section,
for
have
also
a
either
under which
a
originally
note or
omitted
or
subsequently
repealed
this
trade acceptance made payable at a bank
BANKING
raises
obligation
an
its customer's
back
the
to
tiable
the part of the bank to pay, the
on
check, without
old
conflict
Instruments
Act.
any
this
on
Our
Committee
Legislative Council disapprove of this
in
enactment
At
been
occasion
the
of
the
was
Executive
Legislation
and
to
recommend
General
been
Council
that
one
the
year
time
made
make
therein.
Our
sufficient
a
Counsel
Committee
appropriation
carry
B.
No.
56).
An
Act to
amend
Sec.
loan
Par.
3283 of
the Rev.
Stats,
Act
to
Act
to
amend
banks
(No.
Act
-v.
An
to
three A.
$1.13
profits. '
..
Chapter
certain
$1.45
to
$100
per
"''YY.Yy
..
An
103,
and
be
Y
'
;■
of
capital, surplus
YY-y.
YfYy-.y
.
and
Chapter 104.
doing
to
of
business,
business,
having capital stock.
Chapter 105.
prior
capital
stock,
YjyY^'y-yy
of
An
■
An
Act providing for
the
and
companies,
building and
shall
be
casualty,
companies, may
assurance,
loan
accepted as security for public
Yyy
/YYYyy
•
YYy
testamentary
as
holiday (II. B. 26).
a
Y; y
trust
Montana,
Y Y
Y
Y
relating to the
requirements
reserve
requirements
reserve
15%
from
Montana
for
State banks,
not acting
for banks
Act
authorizing State banks in Montana to accept drafts and deal
acceptances
An
Act
(Chapter 217).
taxing direct and
collateral
New
(Chapter
inheritances
Act adding Armistice Day to the list of legal
An
14).
Jersey.
of
savings banks and
'YYY;
y,;:Yy/y:
Blue
A
Y
New Mexico.
holidays.
Sky Law.
■
:'\'Yyy' y'Yy ,Yy'Yy.Y' Y'y'; Y
.
y;y
•
.'V-Yy -'Yy
An Act
Chapter 41
director,
of
the
of
credit
indirectly,
to
any
firm
Act
trust company of
or
corporation;
or
felony, and providing
a
loan
any
or
extension
penalty therefor; and de¬
An
An Act to prevent corporation stock watering
practices and to regulate the securities and capitalization of
stock corporations by
providing for the issue of shares of stock having no
in
face value.
•
An
amending Section 7 of the law regulating the administration of
trusts by trust companies, relating to
deposit of bonds and mortgages.
An Act amending certain sections of the Illinois
Securities Law.
Act
An
making
amending Section 6 of the law in relation to husband and wife,
read:
"Contracts may be made and liabilities incurred
by a
the same enforced against
her, to the same extent and in the
and
same
manner
Act
An
if
as
she
unmarried."
were
making Armistice Day
Act
amending the law
trust
and
safe-deposit
panies.
,Y-.-..... ■
An Act providing for the taxation of Joint Stock Land
ated under the Federal Farm
Act
An
Act
An
in
Examiners.
and
Section
1
'
-
Y-
of
also
the
Banking
y
■
Y
"
Law
amending
"
as
a
the
incorpor¬
the
Bank
law as to
Y Y'YYy
An
tendent
An
of
Banking
days
and
providing
information
amending
(Chapter
An Act
lawfully
penalty
for not furnishing
required (Chapter 69).
the law relating to the
70).
Act
Act
Act
An
of
An
relation
in
to
of
powers
YYY' Y'.yy
bank*
yYYY y
Banking Law, in relation to the illegal conduct of
the
amend
to
amend
advertisements
Act
■
in relation to
Banking Law,
y y
the transmission of
to
in relation to change of location of
(Chapter 352).
Penal
the
in relation to untrue and misleading
Law,
(Chapter 520).
amend
the
General
Business Law,, in relation to fraudulent
practices in respect of stocks, bonds and other securities
An
Act
number of directors
An
Superin¬
to
him
/
of
to
the
amend
check,
draft
Penal
or
Law,
in
relation
order,, (Chapter
to
314).
(Chapter 649).
obtaining
money
by
yy
■
as to
the investment of funds of savings banks
amending the law
providing
amending the
An Act
aminer
as
to
inheritance
taxes
(Chapter 164).
a
(Chapter
penalty
for wrongful
banks
or
mis¬
A(ct relating to real estate holdings by banks (Chapter 72).
amending the Bank Depositors' Guaranty Fund (Chapters 73 and
Acts
74).
to
the Guaranty of
Bank
Deposit*
by
the
providing for the supervision of liquidation of insolvent bank*
Depositors'
Guaranty
Commission,
Fund
the
appointment of a
be paid
Supervisor of Receivers and compensation and expenses thereof to
of
An
the Depositors'
Act
human
statements by
relative
relating to the Department of the State Ex¬
(Chapter 22).
general
71).
law
amending the law
Act
An
out
amending the Blue Sky Law (Chapter 189).
funds
Act
(Chapter 21).
State
Kansas.
use
Law,
YYY/• Y-Y,-
savings and loan associations
>
amending the law
further Act
A
(Chap¬
private banker (Chapter 350).
to
fraudulent
(Chapter 161).
An
savings and loan association
North Dakota.
to the taxation of inheritances
(Chapter 38).
amending the law relating to call of statement to the
ten
Act
banks
■
relative
Act
Act
within
:
in relation to the pensioning of any
by private bankers (Chapter 351).
money
Bank
to
un¬
(Chapter 177).
Banking
Iowa.
An
any
An Act to amend the Banking Law,
Banks
relative
the
Chapter 76.
for transmission
amend
to
to
association belonging to the estate
yy_-' i
Yyy''" ' Y;'Y.y -v;'
Banking Law, in relation to power of savings hank*
to amend the
Act
An
Act
an
the
242).
An Act
An
Deputy;
money
Act
(Chapter
Indiana.
amending
Commissioner
/"
y
,
to receive
Loan Act.
regulating the admission of foreign corporations not for profit
do business
to
com-
thereof.
Chapter 75.
withdrawal of
association.
relating
Law,
loan
amend the Banking Law,
An Act to amend
An
Banking
savings and
a
employee retiring from
or
An
savings and loan
a
the
deceased member
business
loan, and
to
as
shares in
78).
Banking Law, in relation to the manner of declaring
shares of
amend
to
An Act to
officer
•
holiday.
a
Chapter 49.
to amend the
upon
Act
pledged
the
amend
companies.
An
Indiana.
An
Chapter 38.
Y-'YYy
yy'
Banking Law, in relation to the powers of inveat-
Act to
An Act
same
wife
Banking Law, in relation to national banks acting
dividends
ter
in relation to national bank becom¬
20.
the
ment
a
Chapter
fiduciary capacity.
a
Y:;'Y: YYYY.y. YY;y
Act
New York.
Act to amend
An
of
Illinois.
YYy
executors and administrator*.
regulation of insolvent banks.
ing State bank.
An
Chapter 205 (S. B. 193).
the
for
as
providing for the consolidation of the Insurance with the Banking
Act to amend the Banking Law,
An
and fraudulent
or
Act
Act
qualification of banks
Department.
Y Y
y y y Yy.
emergency.
Chapter 147 (H.
211).
An Act amending Section 5207 of the Com¬
piled Statutes of Idaho, relating to banks and trust companies.
Disclosing
information regarding, by Banking
Department, except in certain specified cases.
YYYYv
■ yy-Y
7 Y>Y YY
Y Y'yYY
Y Yy'
par
prohibiting the unlawful selling of mortgaged property.
An
making the violation of the
a
relative to
An Act
Y/Y Y-y
An Act making it unlawful for any officer,
or trust company to demand or receive,
commission or other consideration, on account
any
person,
provision of this
an
v.yy\YiYYy'"' 'y;Y'.
(S. B. No. 121).
making by the said bank
claring
\
employee of any bank
or
or
re¬
as
agents, and 25% for banks acting as reserve agents, to 10% and 15%,
An
companies
savings societies not having capital stock.
directly
Y
K;;-■-Y. Y\..
y
respectively.
in
y
y
trustee!
(S. B. 371).
'Y;-
taxation
Y-.\YvyY'Y Y'Y'Y;y :y,1 Idaho.
YYY.yy
by the State Treas¬
deposited
certain corporations acting
in Missouri
making Nov. 11
Act
serve,
repealing laws taxing banks and trust companies
1, 1919, except as to taxes accrued prior to the
Jan.
of shares of stock in
; Y.-
.
relating to
lowering the
prescribing
yyXYV:.•:y;
adoption of this Act.
Chapter 106.
and
'Y'Yyy/-,y_^-:Y'--Y
partnerships (Chapter 487).
insurance
companies,
Act
An
to
having
-
y.
y
the law of
relating to the security of funds
Act
Act
An
An Act providing for the assessment and taxation of the
stock of banks, banking associations, and corporations
banking
Y Y:
Y"Yy-. Yyy'Y
and
the
in
:Y-Yy v;y '
(S. B. 311).
An
undivided
savings societies, and trust
their
.
moneyed capital of State banks and mortgage loan
(S. B. 540).
..
banks,
the conduct
prevent fraud
yyYYy-,-'
YYYy.Y-y Yy
the
banks, trust
of property
upon
the capital
a
enacted
in relation
Act
regulating
to
providing the funds held by trustees, guardians, curators, banks,
Act
An
taxation
Act
yY.;\Y>vy;- y.Yy--;
Minnesota.
and guaranty companies,
invested in certain bonds and
deposits
•••
of
of
(260).
Missouri.
and duties for the State Bank Commissioner.
powers
shares of
JYYyY- Y
make uniform
Delaware.
companies,
Y' Y
fidelity
increasing the rate
passed,
was
the
of
404).
(Chapter 445).
to
Act
An
was
,Y; California.
Objectionable tax bill
from
sections
certain
(No.
banks and
An Act
amended in several particulars.
In addi¬
A. measures, referred to in the main
report, an amend¬
B.
40).
estate holdings
yY'
providing for the assessment and taxation
companies
1913, Civil
urer
'banks
Y Y'
(No.
directors
relative to
office of the Bank Commissioner
of
Chapter 426).
national
passed protecting banks in paying checks of fiduciaries.
was
in
deposits
joint
of
Banking Law relative to real
term
amend
to
Act
savings
tion
limit
amending the Act to prevent fraud in the sale of securities (Chapter
and
372
Banking Law
the
the
securities
Acts
Arkansas.
Banking Law
the
41).
Act to fix
y'yy:; yYyv.
legal
the
amend
An
Sum¬
Chapter IV,
of Arizona,
increasing
(3)
authorizing savings banks
Michigan.
(S. B. No. 170).
An Act authorizing foreign corporations
within the State of Arizona.
money
The General
ment
boxes,
of the word "bank" or
use
(2)
persons,
"Holidays."
Chapter 154
to
amend
safe-deposit
sale of
a
prohibiting the
(4) authorizing savings banks and savings departments of trust com¬
panies to invest in bonds secured by first mortgages on real estate.
'Yy
relating to chattel
declaring Armistice Day
entitled
rent
(1)
banks,
yrY'Y-
4130,
Title
holiday, and to
to
passed
like by unauthorized
An
:-y
appointed by the Governor to make a general re¬
j
the
or
An
y;C ''[.a,
'Arizona.
■'
been
been
have
No. 9).
35, Revised Stats, of Arizona, 1913, Civil
Code,
mortgages and the recording of satisfactions thereof.
Chapter 92 (S. B. No. 24).
An Act
Code,
has
Banking Laws.
An
Partial
■'
v ' y
trust
this
An Act relating to dealers in securities
and providing for
issuing permits thereto by the Arizona Corporation Com¬
mission, and providing punishment for violations of this Act.
(S.
the
of
"trust"
,
Legislation, 1921, other than A. B. A. Measures.
Only ; Many Session Laws Not Yet Received.)
Chapter 40
committee
Lawk
that
on
'Y;
■
for the State taxation of
Massachusetts,
in
substantial
recommend
to
(State
?/'
\Y
; YyYy
Chapter 33 (Senate Bill
national banks and
at
limit
APPENDIX.
y
A
vision
to six months.
and
Maine.
.
companies at 1%% of their value after
deducting the value of real estate locally taxed.
State
Digest of State Statutes governing banking
Counsel, classified as to subject.
This work
work.
mary
in
a
the General
Y
ncjw tax law has been passed (Chapter 197)
shares
of the universal
approve
spring meeting of the Executive Council
adopted
under the auspices of
has already
progress
the
by
started
by the Nego¬
of the provisions of Section 87.
Committee in conjunction with the State
Legislative
our
also recommended that
prepared
has
Y' ■y,..
A
States
resolution
a
State
on
conflict and
135
it would
as
This is getting
removed
was
forged and raised check bill be changed from
was
be
the
on
Pinehurst
the
the
meeting of
a
Council
It
all
same
orders from him.
express
subject, which
SECTION.
making it
banking
a
Guaranty Fund
(Chapter 23).
felony for any person to enter any room wherein
is carried on, in which there is at the time
business
being, with intent to commit
a
felony by
means
of threats, force
a
a
or
violence, and prescribing the punishment therefor (Chapter 24).
An
Act
making State and national banks and the Bank of North Dakota
public depositories and regulating the subject (Chapter 56).
An Act
relative
repealing Section 6972, Compiled Statutes (Section 87, N. I. Act),
to
negotiable instruments made payable at
a
bank
(Chapter 90).
■'
BANKERS'
136
before
under penalty for non-compliance,
requiring,
sale
the
stock of
capital
of
securities
districts.
renewal note
the note renewed unless stamped "renewal note."
certain tax exemptions and limiting the amount of tax
returning
without
making
Act
An
Armistice Day a legal holiday (No. 1).
amend Section 2854 of the General Laws, relating
to the pay¬
death of the maker
(No. 76).',"■ v;
'
An Act to amend Section 5363 of the General Laws, relating to investments of banks in the stock of national banks and banking associations or
Act to
An
check
An
Act
An
Act to
companies (No.
'
provide for the discovery of assets belonging to an estate for
or
(No. 152).
Canada
Act amending
An
deposit of county moneys.
depositary after the
a
151).
banks to deposit
funds in the chartered
banks of
-/(.U; .:U
.
unclaimed deposits in savings
the law relating to
bank*
153).
(No.
Oklahoma.
or
permitting
Act
An
trustee has been appointed.
Act to amend hte General T£ode so as to enlarge the limitation placed
guardian
a
by
draft
of
trust
Ohio.
Act to amend the law
An
,
^ ^
Vermont.
in relation to the names of consolidated banks.
authorizing special policemen for banks.
An
upon
^
ment
a
^
of system of taxation
Commission on the revision
a
Act making
An
levies.
which
sale of
prevention of fraud in the
it illegal for a bank or person to take a
Act making
An
creating
(Chapter 133).
relating to interest on bonds of common school
Act
An
(Chapter 89).
(Chapter 131).
Act
An
holder*
every
partnership Act
amending the law relating to
Act
An
corporations,"
foreign
uniform
A
,
instruments "given
to be so stamped
being taken, and making them subject to defenses in the hands of
Act
An
for
CONVENTION,
Washington.
Act
An
the
providing for
interest
(Chapter 449).
disposition of
posits paid to the State Treasurer
authorizing
Act
An
business
of
executors
deceased
a
An
Act relating to
An
Act
to
administrators
or
daily bank de¬
upon
f-V
going
the
conduct
to
the taxation of banks (Chapter 94).
prevent the desecration of the American
-
in
in writing,
renewed
which renewal shall be in effect not
than ninety
more
All stop
1921)
payment orders existing at time of taking effect of this Act (Feb. 10,
limited to ninety days
Act
An
(Chapter 41).
false
Act
An
Act
An
relating
6207,
bank loans
upon
amend
to
Section
1920,
limits
relating to
Laws, relating
Chapter VI of Oregon
banking fund (Chapter 183).
relating to superintendent
(Chapter 186).
Oregon Laws, relating to reserves of trust
(Chapter 187).
companies
Act
An
of
Treasurers
by
(Chapter 182).
Act to amend Section 6248,
An
goods by
or
Section
amend
to
Laws, relating to bank reserves
6209, Oregon
(Chapter 188).
Act
An
branch
of
trust
Act
An
loans
amend
in
securities
.
amend
Act
intestate
Section
authoiize
to
of
persons
to
regulation
dialers
of
and securities
(Chapter 137).
Laws, relating to limits upon
State banks
6840
6196
6843,
Oregon
Laws, re¬
339).
Oregon Laws, relating
and
contracts,
notes,
of
(Chapter
and
the'buying
in
engaged
debentures,
of every
of Section
(f)
of
sale
of
stock
stocks,
certificates
membership
kind and character, and defining the
(Chapter
same
is
who
taries
from
on
Act
relating to
An
Act
submitting to
no¬
(Chapter 31).
payment of interest
a
Prohibiting
checks and drafts.
protesting unpaid items, etc.
An
on
vote of the people
(Chapter 32).
deposits
a measure
declaring the pur¬
of the State to engage in the banking business under the name of the
pose
Bank of
An
South
Act
Dakota
(Chapter 142).
relating to
entering
bank
a
with
intent
to
commit
felony.
a
(Chapter 133).
An Act
Acts
amending the Depositors' Guaranty Fund Law (Chapter 134).
relating
Commission
An
Act
Superintendent of
making Armistice Day
Insurance
ter
the
Banks
and
Fund
the Guaranty
(Chapters 135 and 136).
Act relating
An
of
to
a
to bank burglary insurance and giving the Commissioner
authority to regulate the premium for such insurance
(Chap¬
legal
Passed
over
Governor's
rate
of
interest
from
6%
to
8%.
veto.
contract
Act
An
Act
declaring Nov.
legal holiday and designating
An
An
of
"Vic¬
v
(Chapter 48).
compulsory instead of discretionary with State Bank Board
crease
same as
regulating the increase of capital of State banks and making it
Act
capital
Act
Act
to demand in¬
account of excessive ratio of deposits to capital.
on
amending the law relative to State Bank Examiners (Chapter 65).
amending the Act requiring
a
garnishee in all
cases
to file an¬
(Chapter 105).
swer
An Act
An
and
relating to the suspension and liquidation of banks
Act amending
the
(Chapter 23).
directors, examinations; dividends
surplus; unauthorized banking; reports! and liquidation of loan, trust
of capital
stock;
unlawful methods, unsafe conditions, deception,
and
guaranty associations;
and
liquidations of building and loan associations; exercise of trust powers
by banks, capital stock as security; officers' oath, effect of; assessment of
stock; removal of officers; slander of banks
An
ter
Act
(Chapter 24).
making uniform the law relating to limited partnerships (Chap¬
88).
contract
the enlarged 6cope of our
beginning
B.
A.
A.
news
items were sent were inadequate
This revision has been
vision.
of addresses to
and in need of re¬
effected and the Association is now
securing
modernized and corrected lists.
In addition to the regular news items originated within the Association
and sent to selected lists of magazines and newspapers, a special bulletin
of using the
the benefits
publications and
lected
benefits
This goes to the banking
of
the
magazines and other se¬
its increased use proves its value.
intensified publicity campaign have
dull period of the year.
been plainly
From July 15 to August 15-
published by newspapers and magazines
to the two clipping bureaus whose
clippings and
the lineage record was undoubtedly more than that.
Since August 15 it has
steadily increased.
This constantly increasing acceptance and use of A. B.
A. news matter is the best evidence of its recognized value and increasing
influence.
Both its educational and commercial value can be easily estab¬
lished and an intelligent study of the field will produce constantly better
lines of reading matter were
service the
the
country,
iccording
The bureaus do not secure all
Commission buys.
results.
.
tobut
there is no department of the Association where increased expenditure will
bring such far-reaching and important results.1
Your Commission urges
strongly that the members should get behind the campaign and give it
full support.
The A. B. A. furnishes a vast field for intelligent publicity
continue
increase
the Banking Law, relating to the duties of Bank Com¬
the limit
which it
up
the Public Relations Commission,
of the new regime the various lists
of
Secretary
To
Utah.
missioner;
gratified by the-
growth in "Journal" income
publicity,
throughout
An
and we have been
received from advertising.
activities has perhaps been
apparent in the newspapers and magazines.
For the first seven months of
the year news items were distributed through the "Journal" office and the
results obtained were good.
The lineage secured for the material printed at
the spring meeting of the Executive Council alone totaled more than 35,000
agate lines, in round numbers—a good showing.
The Public Relations Commission, after the assurances of support given
at the Pinehurst meeting, decided to intensify these publicity activities, and
secured Mr. George B. Walker, a trained newspaper and publicity man, who
tiegan service June 1.
He was appointed to succeed Mr. Lingard Loud as
steady
a
for
many
Texas.
tory Day"
the "Journal" has held
demonstrated in the
allowing banks to charge exchange on checks.
a
of his appointment, was
well. The record of advertising
receipts this year is particularly gratifying in view of the general retrench¬
ment practiced by advertisers.
The total receipts from advertising in the
twelve months ended Aug. 31, i921, the close of the Association's fiscal
year, were $39,006.66 as compared with $32,658.26 in the preceding year.
We have paid particular attention during the year to the development of
new
advertising for the "Journal," and are pleased to report a gain in
new
contracts.
As general business conditions improve there is nothing to
The
An
11
operations of the magazine,
service has been started.
Tennessee.
the
Act. raising
standing.
outlined to him at the time
the "Journal" has made within the limitations under
necessarily has been compelled to labor.
In the face of an advertising slump and a general avalanche of
which
relating to the deposit of public funds (Chapters 335 and 368).
An
Commission last year
remembered that the last
the
up
Clark and the
At
legal holiday (Chapter 253).
259).
Acts
Chairman.
"Journal" both as to editorial and advertising content.
In addition, he was entrusted with the issuance of American Bankers' Asso¬
ciation news to the magazine and newspaper press of the country.
The Public Relations Commission has kept in constant touch with Mr.
build
to
As
exchange fees
by
Relations Commission,
Sisson,
trained journalist of high
a
hinder
'
South Dakota.
Act relating to
H.
progress
400).
An
(Chapter 123).
covered two dis¬
convention of the Associa¬
tion responsibility for general supervision over the "Journal of the Ameri¬
can
Bankers' Association" was vested in the Public Relations Commission.
As a result, the labors of the Commission centred during the first half of
the year in the "Journal" and its office was used as a clearing house for
the gathering and distribution of our views and news.
At the first meeting of the Commission, held in New lork City, Jan. 17,
1921, a new editor was selected to replace Mr. George Lewis, who had re¬
signed to enter the field of commercial printing.
The Commission and the
Association were fortunate to secure the present editor, Mr. James E. Clark,
cancellations,
6838,
Sections
bonds,
certificates,
by specifying additional
not exceeding $200, upon affidavit of said heirs
sums
amend
to
Laws,
be invested
may
of Oregon
payment by banks and trust companies to heirs of
requirement
capital
Act
An
stock
relating to capital
Laws,
Oregon
6220,
6245
(Chapter 330).
An Act to amend Sub-Section
lating to
which certain moneys
(Chapter 126)..
Public Relations
It will be
tinct fields.
The editor's task, as
(Chapter 294).
companies (Chapter 318).
of trust
An
Section
salvings deposits
which
to
relating to
Laws,
Oregon
6212,
(Chapter 314).
companies
to
and
6211
banks and the amount of capital
Section 6229, Oregon
amending
Act
An
Sections
amending
banks, foreign
Act
An
Law
Report of the Public
The work of the
Laws,
Act to amend Section 6183 of Oregon Laws,
examiners of baiks
and
the manner in
he drawn out of the State Treasury (Chapter 43).
Act amending the law relating to the sale of securities
Inheritance Tax
of bank¬
legal holidays
of
deposit
the
to
Oregon
6241 of
to fees to be collected, for State
An
list
(Chapter 145).
in depositories
conditions
and
An
Francis
Igw
amending Section
Act
may
An
the
to
11,
relation to obtaining money
law in
the
amending
county funds
ing associations (Chapter 30).
An Act limiting and prescribing
(Chapter 54).
pretenses
An
■'' '
limitations on investments
.
amending the
Act
An
Nov.
Day,
law relating to
Act amending the
An
thereafter (Chapter 37).
Armistice
adding
the law relative to
.
Wyoming.
days from service, hut renewals may be made from time to time.
are
act amending
(Chapter 156).
providing that no stop payment of a check by a depositor shall
effect more than ninety days after service on the bank, unless
Act
An
rt 4 \
,
(Chapter 94).
97).
investment of mutual savings banks
of trust companies
the Guaranty of Deposit Law (Chapter
Act amending
An
.
flag (Chapter 111).
Bank Examiners (Chap¬
relating to the fees for
the corporate powers
Act amending
An
(Chapter 54).
person
amending the law
73).
An
Oregon.
remain
An Act
ter
which
be
the
we
this
budget
gratifying
for the
gain
in publicity
it will be
necessary
Public Relations Commission next year,
should develop as a public duty, to say
nothing of the benefits to
enjoyed by banking and business interests generally as a result.
have heard through the reports so far submitted a discussion
You
of
people as ft
whole; which should be presented to business organizations and business,
men
throughout the country.
Within the scope of the A. B. A. there lies
broad public
problems which should be given to the American
BANKING
the
of
some
have
we
valuable
most
already
educational
material
the
in
world.
Some
of
it
in distributing and the reception accorded it
This information should reach the American public and
reach the public only through systematic effort carried over 365
dajrs
can
succeeded
its value.
proves
in the year,
the
be
suggested that
comprehensive advertising campaign, dealing
banking and emphasizing the mutual dependence
fundamentals of
bands
the
of
most
and
a
labor and
desirable,
as
industry, be carried
offset
an
turn their batteries
ways
which show that while demand deposits in national banks decreased
reney,
$1,400,000,000 from Jun 30, 1920, to June 30, 1921,
loans
amounting to $1,200,000,000, time
to
radical
augurate such
campaign.
a
in
on
teachings
which
of
$3,700,000,000,
whose advocates
The
al¬
of
work
Bankers' Association to in¬
We speak with the utmost conviction in urging
State
the
than
In the last analysis a true
it remains in
of
that
which
that
is
imposed
from every
National
Bank
to
their
and
practices
is
desirable
most
the
other, offers
Guiding
field for the A. B. A.
a
great
as
as any
before it.
now
democracy such as the United States along safe, conservative
largely a matter of intelligent publicity.
It can be aided
greatly by scientifically establishing, gathering and disseminating A. B. A.
a
and proper lines is
literature and
•our
our
thought that this representative American Bankers' Association
cide upon a
render
value
it
has
made
work, but it
have
you
real
faces
fair start
a
cannot
can
responsibility
in
this
to
appeal too strongly for
It
feels
important
continuation of the support
a
approval of activities which
your
the American public
these vitally important
on
the
of that
has
ered
line
a
President, Ladies and Gentlemen:
during the past
Serving not only
our
year
The work
be summarized
may
the
Federal
division
and
Government
the
of
Bank
are
follows:
as
in
Washington.
reporting thereupon to officers of
Association.
Co-operating with
aims and
the other divisions
sections
made
branch
a
Administrative
tive
Committee
sion
Association
and also by
acting in
and
the
of
the
work
of policies adopted by the Execu¬
pursuance
that
adjunct, but
new
a
and
their relations with
Internal
behalf
a
time
considered
and
expense
valuable information
In
all
with
on
•displayed
to
of
our
the Nation's
a
all
to
ciation
of
them
shows
Division, acting
divisions and
us,
considerable
representative in close
in
contact.
and they
Public
officials
seems
cour¬
have
to appreciate, as we
seem
As service has been rendered in
sections, it
some
meas¬
that the entire Asso¬
proper
should
during
The
the
the past
1
year.
special Treasury Department service,
destruction
of
mutilated
■Comptrollers' calls,
is not paid for
currency
is growing.
connection
in
and
sending
with
telegraphic
witnessing
notices
of
While
by the Association
this service is self-supporting, and
the Division, the cost to each member
or
subscribing is about one-half of that which it paid to former agents.
Our
plan of personal service in Washington is limited only by the needs of our
the last annual
Banks have
Convention of the Association
been
introduced
in
Congress.
adversely affecting National
Banks has been
Federal
every
Legislation
from the
-occasions
time
our
watches
officers have
have been
Congress affecting
that
in
their
efforts
to
no
Our
legislation
express
our
Division
a
Committee
law.
their opinions
upon
and
On
learn
the
true
on
several
of the
The
pending
com¬
us
import of proposed
can
to
measures.
point out
measures
In
by offering them opportunities to fave part of their earnings and re¬
thereby increasing the volume of credit available for
ceive interest thereon,
of the instrumentalities of production and distribution, our
u^ged and encouraged its members to open savings depart¬
The growth
the light of
and
helpful
banking a
of
that
feels
of these departments in national banks is apparent in
information contained in reports to
mak¬
factor
has
it
during the past
accomplished great good
before the Governmental Depart¬
Congress is without cost its expenditures have been kept
the
fact that its work
reasonable bounds.
very
of their duties, our Division officers have come into close
the Association, and have received from all of
pursuance
these
the officers of
courtesies and much help.
It is a pleasure to
debt of gratitude to these officers, and to thank them
gentlemen
acknowledge
many
our
their valued help and the keen in¬
Respectfully submitted,
publicly for their unfailing courtesy,
they have taken in our work.
H. McKEE,
H.
Report of the Insurance Committee, by L. E. Sands,
Chairman.
trie
twelve months, September 1,
During the period covered by this report,
1921, the Insurance Committee has been very active.
to August 31,
1920,
through its secretary, has written 1,128 letters and opinions
The committee,
relation
received
and
work
its
to
759
letters.
has been burglarized or held up has been written
to regarding its loss with a suggestion that the policy covering same be
sent by registered mail to the secretary of the committee for
inspection
so
that the committee can advise the member as to the liability of the
that
Every member
insurance
number
A
company.
satisfactory
of
settlements
have
been
the companies and the banks through the efforts
of the committee, and there has not been
oi^e case where the companies
have not agreed to settle as outlined by the committee, arid in a great
brought about
form
between
instances the companies have construed the
many
the
at
number
of
them
rendered
Committee in connection with
Insurance
the
1918 form as the 1920
The committee has received a
appreciating the service that has been
committee.
banks
the
from
by
the
of
request
letters
their in¬
quiries and claims.
During this period there have been
laries
and
successful
(166
97
The
of
secretary
pointing out
advice
number
these
of
There
of
25
have
to
banks
have
be
those
that
the
t
attacks and losses on members ex¬
This is due to the fact that there are
amount of
non-members.
the
|
burglaries (54 successful
loss of $48,658.00 and 39 hold-ups with a loss
non-members.
on
noted
of
joined the As. ociation.
burglaries and attempted
79
unsuccessful) with, a
will
ceeds
over
as
been
$280,462.62
It
the committee lias likewise written to all non-member
to them the advantages they will enjoy by becoming
Bankers Association, and advising them of the
committee may perform for them in the adjustment of
to policies.
Through the efforts of the committee a
that your
claims and
and
loss of $656,290.21 on members.
a
American
the
of
240 burglaries and attempted burg¬
with a loss of $239,087.95,
unsuccessful),
74
and
hold-ups with
services
non-members only amount
23,000 banks in the Association, while the
9,000.
Fire
be given thereon
Realizing the necessity for promoting habits of thrift among our country¬
has
Division
contact with
Comptroller of the Cur-
Insurance
Because
fire
division
business
Con¬
Savings Departments of National Banks and Thrift Campaign.
development
united front in giving public
shall present a
Association
our
and due to the
within
Associa¬
in connection with legisla¬
the business of banking leads
gressional committees appreciate the information that
by practical men.
;
ments.
with
banking and related subjects.
business of banking,
becomes
bejen granted hearing before Congressional
requested to
in
bills affecting
many
enacted.
or
The experience of our officers and committees
tion
men
that
They have tried to harmonize the interests of the
that of the other divisions and sections,' to
thereto.
Division
Bank
members
However,
bill affecting the
ijt is introduced until it fails
mittees, and at other times the officers of
tion
the Arssociation and the relation of the members
and purposes of
the
banks
Federal Legislation and Related Subjebts.
Since
end
year,
members.
National
,
members of the Executive Council
as
have endeavored to perform their duties
in the work that is being
done toward bringing our country back to a reasonable and orderly state of
economic existence and educating the public in the fundamental truths of
in
a
,
come
desire to be helpful to
the
that
acknowledge its obligation to public officials in Washington
the friendly, helpful spirit they have displayed and for their
many cour¬
tesies
the
Capital
representative has visited frequently nearly
whom he has
de¬
Trust departments of national
expression to its conception of sound and desirable economic policies,
trivial and unim¬
seem
all
members and
our
gathered by having
do, the value of co-operation.
for
may
the aggregate
activities.
this work
with
trust
the Currency,
System, the administration of
cases
have been saved
has been
of
has enabled the committee to out:
Division
great departments of the Government, and has been received
teously by all
ure
Reserve
individual
singly,
Governmental
carrying
the
While
the work
Washington.
Banks by the Comptroller of
Federal
of
President, National Bank Division, A.B.A.
large field for personal service at
very
bankers.
of
when
portant
the
and the
year,
committee devoting its energies
a
standardization
placed beyond the point of controversy, their expansion cannot
jRevenue Laws and the activities of the Department of Com¬
offer
touch
Divi¬
in¬
this
their right of operation has been so clearly
as
good results have been accomplished.
the
much
the
is
measure
unnecessary.
action for future guidance.
of
Division
our
terest
along smoothly during the
Personal Service at
in
representatives of
as
moved
supervision of National
merce
the
of
standing committees and offi¬
by the officers acting
of
aim
ments
action
a
report upon
representative capacity, having in mind always the large and construc¬
a
Division, which
by
proper,
has
feel
officers
The
Bank
the Administrative Committee.
on
The
office
Committee,
the Division,
of
cers
carrying out the
by the Deputy Manager of the Association
on
charge of the Washington office of the National
was
in
of the American Bankers' Association.
purposes
This work has been carried
in
and
the
and
the Administrative Committee,
ing
Forming and putting into effect plans for the extension, development and
improvement of the business of National Banks. *
A
in the Association, and in
agency
seems
taxing
State
discussed,
doubted, and is really now a matter of course.
National
in connection with their relations
Watching legislaiton in Congress and
the
National
members, but the members of the other divi¬
own
sions and sections of the Association,
with
the
of
it here
the possibilities and
disclosed
defined and
tive
Division
which
widely
in national banks.
course
banks
in
Division.
so
This committee has .partially surveyed this
field, and, while its work is still in its initial stages, the information gath¬
and
Report of the National Bank
calls attention
and
Departments of National Banks.
advancement
the
case
belief,
State taxation.
other
some
discussion of
The officers of our
Mr.
the matter of
Trust
be
fundamental matters.
bill,
in the National Bank Division
There is
toward
Nelson
tax
indi¬
of the Merchants
hands of
intended by Congress to pro¬
was
discrimination
very
The
higher rate of
a
protection of the Federal Government in
banks in
a
corrects that
which
the
from
likely will' be made by
view
Va.,
practiced.
remove
im¬
to be an
seems
in the
capital
ago,
years
de¬
practical
situation.
great and
a
banks
national
from
less effort, and fail to
or
during 1921 towards
generously extended and for
so
tended
There
Supreme Court in the
Richmond,
many
have
partments
the proper education of
mean
and
less vision,
nation.
Commission
Your
courage,
educational and constructive service which has such
the
to
that
policy of smaller
real
a
national
tect
authorities
bill
information.
public institutions have" spent large sums in their attempts
adequately to distribute material of the kind mentioned, and it is far from
Many of
of
enacted
law
a
has
Banks
National
of
possible unjust discrimination by
moneyed
upon
■one
the banks
Taxation
as
deal in the evidences of wealth a very large
as profits.
It is only a short step from
The decision of the
understanding of
State
far
as
to the belief that banks should pay
impression
deposits.
savings
or
their hands
viduals.
point of view.
Breaking down ignorance and-prejudice on the
hand, and the dissemination of constructive and intelligent information
time
were
taxing authorities against our members.
share
on
decrease of
a
including bank
deposits,
of National Banks.
on
preventing
pression that because banks
support and co-operation for it, as well as for the regular publicity
campaign for next year.
It is far from altruistic to urge this.
Rather it is
part of selfishness—intelligent selfishness.
Taxation
Committee
our
been directed toward
your
241/£%,
or
State
This would
1922.
the banks.
on
We believe it is indeed time for the American
public
with
savings deposits increased $210,-
or
On June 30,. 1921, national banks held
000,000.
deposits, demand deposits and time deposits, amounting to $15,140,000,000,
It has been
with
137
SECTION.
of
insurance
panies
the
variation
matters
operating
in
Which
Commodities
on
and
the
in
the
the
laws
very
several
large
States
Are
the
the
of
Collateral
different
number of
and
the
fire
seeming
to
States
Loans.
governing
insurance com¬
impossibility of
bringing these companies together for any purpose of attaining uniformity
in
the
mittee
form
of
operations
the
and
the
policies
to
provisions of policies issued by them, the Insurance Com¬
Bankers Association has in the past confined it8\
American
an
attempt,
issued by
which
has been
very
successful, to standardize
the bonding and surety companies covering fidelity,
robbery and other such forms of bond ensuring the fidelity of employees,
etc.
CONVENTION.
BANKERS'
138
the
together with in¬
with loss payable
policies covering the borrower in his own name,
under the clause reading as follows:
Bank,
Boss, if
The Blank Corporation.
"Assured:
opinion
becomes insolvent and a loss occurs after he has
the property, the entire insurance is
been indorsed on the policy prior to the loss.
"If the named assured
Another
follows:
as
Loss, if
■ r
'
may appear.
;
this form
writers
there
without
poration,
insurance
entire
is
fecting the
have to give notice of cancellation
the bank.
to
Blank Cor¬
received for the
a
of
.
Under
this
Blank
Corporation,
business
indorsement
no
of
is
in
necessary
the
of
failure
of
case
named
not
are
as
certain
States
it
conditions.
entire
by agreement indorsed
unless otherwise provided
policy,
policy be assigned before
has
It
the
forms,
third
been
"Assured: The Blank Bank for account of whom it may concern.
if any, to be adjusted with the Blank Corporation and payable to the
Bank, for
account of whom it may
and
committee
your
the
opinion
the
use
In
that
distinct
a
either
of
understands
the
of
plain English,
Committee
surance
hazard
former
it would
which
that
banks
many
they
long since
now
warehouse
by
canceled
without
the
There
fact.
member of the American
a
with
been
causes
the
of
having
similar
other
cases
might
merchandise
for
the insured,
bank
lending
are
receipts
notice to
for
or
■
any
knowledge what¬
any
which
might
lead
the
report your
Insurance
comprehensive
but
possible
danger
carefully
finds
the
it
impossible
remedy the defects which
loss
it
duty
a
accruing
point
tp
them
to
paragraphs
opening
to
their
lack
this
by
any
herein,
banks
member
to
through
attempt,
pointed out
are
out
of
of
the
will
fully protect the interests of
time
member banks
policies held
Insurance
the
as
above, and
if
very
the
the lending bank,
the
contingencies
of the
In
your
and
any
is
mentioned
lending bank
making
the
committee
assumes
no
statement
from
The
claim
so
for any
secure
other
the
interest
from possible loss.
suggestions
experts
reason,
relative
fire
on
to
fire
insurance
insurance
its
it
reliable.
have
received
Premiums
Your
and
no
Losses
committee,
mittee
of
ceeded
in
formation
the
after
per
the
the
Burglauy
a
suggestions of
number
underwriters
following
13-21
Park
changes to be made.
of
conferences
Underwriters
furnish
the
with
the
Association,
committee
Bank
Com¬
have
with
this
suc¬
in¬
letter:
Insurance
W.
any
Burglary and Bank Robbery Business.
Insurance
II.
or
Bank
on
Burglary
having
as
.criticisms
Underwriters
Association
Cluff,1 Secretary
Row,
New
York
every
movement which will promote the
of
introduction
assure
thrift and
considerable sums of money.
The result
into the banking business and
the use of their savings funds for
government
development.
seventy-five per cent, or more of the national reven¬
we
reasons,
the
consider
to
in preparation for future
taxation, as well as« for
heartily endorse the Conference which has been
limitation of
armaments.
Situation.
country has been passing through a most serious business depression,
the credit situation has been a cause of grave concern.
We
The
which
believe
that,
has
which
as
adjustment is far
between
result
a
already
and
the
completed.
from
wholesale
of
liquidation
place, the worst is
taken
retail
and readjustment in prices
but the process of re¬
over,
The great disparity which continues
prices seriously
hinders the
readjustment of
levels and thereby delays the reestablishment of
between prices and wages.
In this connection we wish to
to lower economic
wages
relations
normal
the skillful management of the Federal
that system to our financial
We deplore the continued
attempts by legislation to divert the Federal Reserve System from its
true function of supplying reserves in time of need and to make of it an
hearty
approval
of
express
our
Reserve
System and the tremendous value of
and
business welfare
instrumentality
We
1921.
character
communities
local
to
Credit
City
September 14,
restrictive legislation of such
spent either in payment for past wars or
In order to lessen our great burden of
wars.
called
to
hiding any
of
out
the
own
are
ues
in
copyright form of bank burglary and robbery policy has been
1, 1920, and we find that it is workable, very clear
and has met, you might say, with universal approval, as
needed to
people, we are nevertheless opposed to the proposed ex¬
savings system on the ground that it will not and
It is estimated that
or otherwise, for the accuracy of
The information which it has secured
report.
deems
For our
postal
responsibility^ legal
which
disability.
result of the war, we urge the fullest com-
the marketing of sound securities.
with
matters
construction
we
draw
cannot
their
our
the
humanitarian
in force since August
in
of
of
be
not worded
a
as
opposed
are
we
sympathy with
tension
not
are
disabled
interfere
industry
will
be
to
would
In
will
or
and
report
not
made in
sources
1920
above
but
channels,
as
to
be at all times
may
does
above,
Federal
at
loss-payable clauses
provide compensation without regard to
are
protect the people against unscrupulous promoters, who are yearly robbing
them
of millions of
dollars, which might be directed into productive
and
clearly to define the interest of the lending bank, that immediate steps
taken to have the policies so issued that in the event of
any one of
be
which
and care on the part of the Government.
supervision over the issue of securities is urgently
pensation
recommends
strongly
very
municipalities or
government demands the elimination of all unnecessary
would further increase our national debt or the bur¬
We are therefore opposed to the Soldiers' Bonus bill,
in
who
careful examination of fire insurance
Committee
that they make a
(
States,
by the
or
corporations.
would
soldiers
in
care
the policies which they hold covering commodity
by them, and insisting that these policies shall be issued in a
which
same
as
Committee
to
deems
of
in
stated
are
examining
loans made
form
plan,
nevertheless
it
the
which
reasons
further tax exempt securities should be
no
taxation.
of
which
to
and
Government
Federal
the
Economy
den
be authorized
public
expenditure
one
voiding of insurance, of which the borrower from a bank might have
knowledge of notice, but of which the bank would have none.
by
No further tax exemp¬
the initiative of investors.
lessen
to
should
issued
Bankers Association
the
For
and
dustry
quasi
along
transferred
several
have, in their commodity loans,
may
may
loss
and
soever
forms.
information' furnished the In¬
tions
issued to
of
referred-to
A
be invalid because of the form
insurance policy
have
country will be better
issued, and the stipulation as to the method by which
is to be made.
It is also conceivable that a fire
are
the
of
payment
above
the
from
prosperity of the
be sooner established and the
will
advanced without such legislation.
question of great importance in the economic and financial life of
our country
has arisen through the continued creation of new tax exemp¬
tions and tax exempt securities, which tend to remove capital
from in¬
expressed
banks in permitting
by the
taken
of
have
attorneys
must be carried out and we approve the budget
bringing more business into government.
We
as
conditions
normal
run
qualified
is
two
appear
policies of fire insurance which
in
Loss,
Blank
concern."
that
operation
in
now
to inject further government
many of the remedies pro¬
posed in Congress and designed to meet the present situation, will do more
harm than good through a disturbance of the normal operation of economic
law.
While appreciating the hardships endured by various sections of our
population through the processes of deflation, we believe that in the long
suggested to your committee that of the aforementioned
best adapted to the purpose of most banks would be the
one
additional uncertainty'
administration required, as well as the
injects into business.
Economy in government
law
reading:
one,
sales tax
that may
to the principle of American
bill, because of the radical
disapprove of all legislative proposals tending
activities into business, alnd we believe .that
loss."
a
as
it
which
"If any change, other than by the death of an insured, take place in the
interest, title or possession of the subject of insurance (except change of
occupants without increase of hazard), whether by legal process of judg¬
ment or by voluntary act of the insured, or otherwise, or
"If this
stabilization of
for the support of
Realizing that enormous revenues
We are further strongly opposed
contained in the present tariff
required.
changes of
»mr«"<•%»
added hereto, shall be void.
or
the excess pro¬
government activities must be raised, we approve a well-devised
the most satisfactory method of raising the additional revenue
be
valuation
"This
hereon
year
as
the clause first above
mentioned, the standard form of fire insurance policy has a clause reading:
that with respect to
appears
effitfive for the
business
themselves.
In
where certainty
fits tax,
an
We believe a repeal of
1921, is essential to an early
is desired.
business
assured.
Their being
adjust the loss would not affect the validity of the policy and
put in to relieve the bank of the necessity of making these adjustments
they
as
Legislation now pending is of vital importance to the welfare of
we urge the early
enactment of equitable laws affecting our system
taxation and revenue.
Delay only increases the unsettled conditions of
and
to
form
of
Legislation
i "Assured:
The Blank Bank, for account of whom it may concern.
IjOss,
Blank Corporation and payable to the Blank
Bank, for account of whom it may concern."
is
solution
views:
its
If any, to be adjusted with the
named
assembled, realizing the
resting upon the bankers to give their best efforts toward a
the problems confronting the country, makes the following statement
reads:
form
in convention
duty
changes af¬
or
Bankers Association
The American
Resolutions.
the Committee on
of
Report
being indorsed to that effect, would void the
policy.
Under this form, however, the insur¬
the
L.
opinion among the leading under¬
of
appointment of
policies
under
insurance
Another
division
a
the
companies would
ance
FRANK
the Blank Bank, as interest
GEORGE S. MURPHEY.
L. W. GAMMON, Secretary.
FOREMAN.
HILTON.
G.
LATTA.
J. A.
Chairman.
SANDS,
E
L
payable to, the Blank Bank, as interest may
W).
any,
whether
to
as
Respectfully submitted,
INSURANCE COMMITTEE.
x
insured
are
OSCAR
The Blank Corporation and, or
"Assured:
collateral
commodity
on
added to the loss ratio.
be
should
cent
■/
■■
information
in connection
expenses
•
appear.
Under
loans
which
under
form
vv
■
underwriters do not furnish the
that the
noted
be
CLUFF,
Secretary.
with the business.
Your committee is
reliably informed, but not officially, that these expenses would approxi¬
mately amount to 50 per cent, of-the earned premiums and this 50 per
The sole right of the named'payee is to
clause, would be payable to the named
provided in the policy.
W.
II.
a
the
to
as
"As the party named in the loss payable clause is not an assured, the
insurance company might give no notice of cancellation of insurance and
the entire insurance may be voided by acts or omissions of the named
receive money which, without.this
assured."
'
;
will
It
printing,
salaries
truly,
(Signed)
^y
been divested of title or possession to
as
very
are
void unless the new interest has
is
necessary
Yours
the objections to this clause
advisers
qualified
of
Federal, State
licenses;
for
expenses
the usual overhead expense of rent,
underwriting, accounting and claim
requisite to handle the business.
postage,
interest may appear."
as
the
assured
include
not
taxes; commissions;
statistical,
follows:
as
does
ratio
loss
This
55.9%
* 1,337,562
—J
—
and local
payable to the Blank
any,
W*'1
J
_
Loss Ratio.
55%
Losses.
$662,927
Earned Premiums.
$1,203,646
*
Writings—
I-III-IIII'irilllllll—>2,392,490"2
1918
1919
banks
the
In
Year's
,1017.'
believed
is
burglary and
bureau as of
lT 1921:
1919
■
it
received
in
pleasure
January
warehoused commodities for some
on
larger industrial corporations are held by banks,
surance
to
loans
of
has
committee
your
dollars
million
several
the
of
which
information
From
that
^
V;' '-r
noting below the experience on bank
robbery business which has just been compiled by the
take
bank
loans
against which
warehouses,) etc.,
in
made.
been
have
commodities
insuring
policies
U;--?'''
City.
York
New
Street,
Nassau
■
Association,
Bankers
Sir:
Dear
the
depositors, and your committee takes this means of drawing
attention of members to certain possible defects which may occur in
their
'5
;
:
Committee,
Insurance
American
I
>.
Gammon,
Secretary,
and policies of the hundreds of fire insurance
companies into any successful effort to standardize the fire insurance
policy.
Your committee, nevertheless, believes that there are certain mat¬
ters
vitally affecting the security held by the member banks of the
American Bankers Association as against loans which members have made
to
W,
L.
Mr.
is impracticable to bring to¬
that it
feel
to
continues
committee
Your
gether the divergent opinions
to
believe
fund
its
it
for
is
present
during this trying period.
advancing the
a
sound
large
interests of
economic
policy
floating debt
at
any
class.
for the Federal
the
Government
earliest possible
moment,
BANKING
but
we
out
this
do
not
believe
that
the
is
present
SECTION.
First:
opportune time for carrying
an
policy.
Foreign
Trade.
-c,
depends
country
own
between
re-establishment
the
upon
of
nations, and that the cooperation therein of the United States is
desirable
and
for the
necessary
re-establishment
conditions
normal
of
the
of
means
a
mobilizing the assets of the
essential
sociation
imports.
is
recommending the best
this Association
We
Commerce and
in
of
eridorse
the
not
only of
interested
in
nations
other
the
to
encouragement and
the members of this Association,
the
.
the
the part
on
of
Mr.
best
methods
the
of
for
extending
but
business
our
with
relations
the
will give to e3eJ»
of
means
simply the abfffty
social, financial, and ecanmnto
and
destroyed in the
war,
United
States
the
find
must
products
excess
that the normal
ex¬
of
stability abroad shall"Jtove
in
stabilized
those
her farms and
foreign
her forests,
factories.
administration
Association
the
of
so
one
for
her
and
Drum's
his year
and
restoration
a
has been
and
solution of the tremendous
sup¬
those
all
also of
relationship
as
other,
When economic, financial, and social
markets
mines
behalf
International Chamber of
of the
purposes
Commerce, and believe that it is entitled
port
cooperation
the
on
country with those of another—the normal jtotwrrelation—may he resumed.
restored,
countries
her
harmonious
a
product is naturally entitled.
wasted
was
trade
Third:
been
As¬
investigations for the
necessary
means
of the
carrying out the principle of the ter Meulen Plan.
and
approve
Commission
Marine
hereby directed to make* the
of
purpose
The
that
national
responsible international supervision, and of issuing bonds based on these
assets, thereby enabling them to secure long term credits for the payment
of
its
change of products of
stricken countries under
war
services
such
prices of natural products on $na
stability in the nations of the old world that were disrupted by
They must reconstruct their productive machinery and restonTAho
war.
wealth
plan
offers
goodB and
There must be
order and
in
and between
of producers the purchasing power—which
Second:
American business life, we
approve the principles of the plan for an Inter¬
national Credit
Organization, known as the ter Meulen Plan.
This
reestablished
costs,
finished
trade—to which
to
balance
proper
a
be
must
prices and
and
group
Believing that the restoration of normal conditions in the world and in
our
There
between
hand
139
by
characterized
intelligent
effort
by tireless service in
directed toward jfebn
problems confronting the United States. Dnrisg
of office the Association has extended its influence and usefulness
strengthened
its
position
bankers
the
among
business men of
and
America.
world.
Quest*.
.
.
Labor.
when
justment.
life cannot proceed in
labor and prices of commodities
of
wages
Labor's
interest
in
a
adjustment
proper
that of the producer or manufacturer.
orderly fashion
an
seriously
are
is
just
ment
of
vived,
and
wages
labor must
failure
of
suffer
to
The
number
and
calling
efficiency.
total
or
in
wages
purchasing
industry
Until
long
so
labor
of
Crissinger,
a
been
has
of
unemployed in the country is
question of
a
grave
ap¬
will
the Continuation of the conference and earnestly hope that valuable
prove
constructive
under
recommendations will
of
made
Governmental supervision,
proper
cycles
be
which
from
lessening in the
a
will
there
severity of the
materially
scale
is
they
be
to
longer
the
needed
extend
arid
substantial, aid
handicap
the
in
we
its
labor
building
this
their
construction
problem.
Home
the members
upon
sympathetic
solution.
in
costs
where
of
urge
and
contribute to the
can
delayed
carrying out
to
that the
in
The
building
this
of
consideration
should
It
be
settlement
of
funding of
ment
do
to
to
system
still
are
of
far
too
problem
of
that
high, and that labor
wages
the
the debt of the
we
railroads
railroads
has
urge
against the
prompt
a
Government and
An
dollars
early
scale, equipment which
believe
that
and
the
shop
work
period must be revised,
toward
way
eventual
an
the
cost
of
Such
agreements
entered
into
during
the
war
will
pave
the
business activity, increased earnings of
lowering of freight rates and in consequence,
living.
greater
the
a
railroads,
lowering of
We desire to express our belief in the value of a
comprehensive trans¬
portation system which will include not only the railroads, but the canals
and
highways,
Great
Lakes,
particularly
the
Ohio
Great Lakes and the
continue
of
its
St.
the
plan
the
Mississippi,
and
Lawrence.
for
barge
canal
connecting
and
a
canal
connecting the
a
the
We also believe the Government should
policy of extending its aid to the States
the construction
in
highways.
recognize
mental
to
that
the
welfare
prosperity
our
and
of
our
agricultural
that during
the past
interests
is
in¬
the distressing situation of these interests and have
appreciated
aid
the
to
of
the continued support of
to
We
the
desire
to
Department
our
The
the
renew
of
our
expression
Agriculture
to
of
approval of
promote
Bankers Association for
the
the
efforts made
agricultural
problems of the farmer
to
lend
their aid
are
to
interests
by
of
Commission of
many
of
his products.
It
is
the
PUELJCHER:
in
which
to
PRESIDENT:
THE
his
products
on
a
flooded
the
speculator flourishes, and that the public shall not be com¬
exorbitant prices by the unreasonable withholding of these
products from the market.
pelled
to
It
the
a
continuation by the Federal Government of the general
reclamation
of
American
Bankers
Association
in
convention
S.
resolution ?
the
of
which he has made.
of stability,
as
set forth
unless a member desire*
Reeves,
of the report, to vote upon the
put. i: All in favor of the adoption
aye ; contrary, no.
The Sjjes
question will be
<«
I
President:
is
hereby
instructed
also
to
served
have
of
I
time
an
expression
whom we do not have
The five gentlemen whom I shall mention
have been loyal to the Association in their
Council,
the original organizer of the
was
Mr.
President, to
American Bankers Asso¬
Mr. Drake of Omaha;
Mr. Hardwick,
Mr. Wexler, of New York;
Mike Darling, of Minnesota—loyal men of the Association—and I
our executive manager can
convey to their families an expression
Mr.
sure
Fred Collins, of Tennessee;
Mr.
sympathy at
(The motion
our
was
loss,
as
well
of
seconded that proper resolutions of
the families of the gentlemen
named.
Are you
AH in favor of the motion please say aye; con¬
so
ordered.
I
:
Report
theirs.
It is moved and
It is unanimously
no.
as
duly seconded.)
THE PRESIDENT:
trary,
suitable testimonial
record of.
a
the
on
one
refer,
Georgia;
and
of
in
other members of the Association
any
at the present
ciation.
convey
families of the following distinguished members of Uw
passed away during the past year,
Bankers Association Who have
American
and
to
resolution.
'Bo lt
American Bankers Association
deBire to offer a
Resolved, that the executive manager of the
sympathy to the
the resolutions of Jim
coming year.
Mr.
HAWES:
and it is adopted as
ordered,
so
the
for
it.
presented will please say
as
it, and it is
MR.
favor of
If not, the
report
Protective
Committee
and
Protective
Department.
During the twelve months (Sept. 1, 1920, to August 31, 1921) which if
covered
assembled,
desires
to
its great appreciation of the service of its retiring President, John
Drum, and in particular, its appreciation of the remarkably able eco¬
requisites
Mr.
The report as a
being in
as
policy
express
nomic surveys
President, is it necessary to vote
whole is such a fine report, but .there
and I do not care to vote on it awl
That part of it is with reference to
being against the issuance of any securities by States or any political
subdivision, tax exempt securities.
I think that is an unsound recom¬
mendation, and I do not want to go down in favor of recommending tk.
If the report is to be voted on as a whole, I would vote in favor of the
report, rather than vote against it, because that is a small part of it, ."but
I just want to go on record as being opposed to that recommendation.
THE PRESIDENT:
Does any other member desire to speak to 'toe
down
go
irrigable arid lands.
Retiring President.
-The
usual,
is
motion.
Mr.
part in there I cannot agree to,
one
pay
We favor
of
the
whole?
a
whole.
a
as
REEVES:
MR.
duty
market
publicity
the'adoption of the resolutions
move
himself to some particular part
address
is
the
dump
second
I
ready for the question?
credit,
for the generous amount of
I
(New Orleans.)
forced,
of
To ihe
gentlemen.
two
sympathy be conveyed to
lack
pleasant memory of this meeting.
a
Chairman,
Mr.
the
by
financing of the production and the
orderly marketing of farm products in order that the farmer shall not be
from
as
proceedings and
our
REEVES:
am
and intricate, involving not alone
following resolution, which wasj&N
cordial thanks for their uniform courteous treatment
our
in
IIINSCH:
efforts, and
its excellent work.
production, but also the marketing,
bankers
to
the farmers and stock raisers.
country and to commend the work of the Agricultural
the American
come
their
ability, and we urge upon the members
that they give their most careful and patient attention
the Association
of
of
extent
Modesty forbade the Chairman of Jthat
to the ladies', committee,
the committee's report as
to
funda¬
agriculture,
year
remain
ever
extend
Association
cluding the live stock industry, has suffered severely because of the mal¬
adjustment of the prices of agricultural products to those of labor and
manufactured goods.
We believe that the bankers of America have fully
their
amount
Clearing House Association,
particularly
MR.
on
have
Agriculture.
We
will
we
interest
resolutions
readjustment and revision
President:
Angeles
and
MR.
due them will
of railroad employees must be
wages
Los
presented
as
they have long needed;
high
present
and
Mr.
Committee presenting the
the
MR.
the
pay¬
the Government, will be able to pay much present indebtedness,
releasing credit of manufacturers long tied up, and to buy on an ex¬
We
and for the generous
proceedings,
our
given to the proceedings of the General Convention as well as to the various
sections and divisions."
I desire to append that, Mr. President.
recognized
Congress
the Government.
to
be
to
come
upon
the railroads of the hundreds of millions of
readjusted
in
appending it to the report which he has already read:
press
paid by
thus
pleasant memory of this meeting.
a
extend our cordial thanks for their uniformly courteous
to the various local
we desire to im¬
press our
deep appreciation for the highly efficient and delightful a*rangements which have been made for the handling of the Convention
and
the entertainment
of the delegates.
The welcome which we Imva
toward stimulating industry and
lessening unemployment than
other action that the Government can take.
The railroads, if promptly
tensive
we
sections.,
HAWES:
committees,
serious
is the fact
program
several
"To
and
more
any
to the
unanimously adopted by your Committee, and I desire to ask the privilege
and
country
our
prosperity and
claims of
the
Association,
Ladies' Committee,
the
received
our
as
we
interest
and
House
to the
publicity given to the proceedings of the general Convention as wall as
MIL
large
a
the most
that
noted
on
lessening of unemployment by readjustment of
transportation
Clearing
particularly
appreciation
Press,
Resolutions
contribute
Association
this
to
extensive home building
an
construction
will
trades.
fundamental
which
of
Transportation.
as
the other distingi^hed
have contriRted
to
to
solution
deep
a
and
remain
ever
treatment
unemployment.
not
and
addresses
Convention.
the
of
success
Angeles
our
To the
result,
The
construction
of
highways whenever possible without unduly in¬
creasing the tax burden should be carried out.
The construction of neces¬
sary public works, delayed by reason of war conditions and high prices,
should
Los
instructive
and
various local
desire to ex¬
deep
for the highly efficient and delightful ar¬
rangements whieh have been made for the handling of the Convention joid
the entertainment of the delegates.
The welcome which we have received
con¬
We
desires .to
great personal
at
Currency,
the
of
able
the
to
committees,
press
devise plans for lessening unemployment,
to
their
the
To
to the general reduction in price levels.
conference
much
so
re¬
Comptroller
for
guests
business, labor
line of
any
power
to
We also
is re¬
there is
as
Drummond Fraser, who,
the
extend
assembled,
inconvenience, J^aVo
long journey from London to Los Angeles, and we herewith
them our thanks and our sincerest appreciation of their vML
take this occasion to express our thanks to the Honorable 3>. "JBL
Lady
made
re-adjust¬
a
heartily endorse the action of the present administration in
we
a
its
unemployment and
prices
The
suffer.
in
as
in those industries in which wages have not experienced a re¬
even
duction comparable
cern
from
readjustment of
continues
duced,
increase
an
keen
as
and
convention
in
of the visit of Sir Drummond Drummond Fraser,
its appreciation
express
ad¬
The country is to be congratulated
the extent to which labor has realized the necessity of
upon
out of
Bankers Association
American
The
The processes of our economic
We desire to emphasize the three
in his address:
pre¬
by
this
active owing
a
report,
your
Committee and
Department have been very
to the increase in crime and from all indications we look for
of this crime wave this coming winter.
Your Committee
continuance
feels
that
continue
come.
they have been able to cope with the situation so far and will
their
vigorous policy
and eventually this epidemic will be
over¬
CONVENTION.
BANKERS'
•140
Arrests.
Total
since
arrests
September
1920
1,
with the Burns Agency, the protective work or
decreased in efficiency, but will be continued
as established by the agency now conducted by Mr.
Burns's two sons, Ray¬
mond J. Burns, president, and W. Sherman Burns, secretary and treasurer.
:v
his
severing
died
escaped,
Released,
insane_____._C_169
and
i;
.■■■;
■
.
been
crimes
on
New
California
2
Georgia
3
9
Florida
4
■
Mexico,,
1
York,,,
No.
■''m'm''
6
2
18
Indiana
3
1
Iewa-.'—
8.-
4
Kansas.
9
2:
:
1
Kentucky
5
5
1
.
Tennessee
Texas.
6
.
Marylamd'
Michigan^.;..
Minnesota
3,
-
•
«.
25-
Montana
8;
2
Virginia
PROTECTIVE
THE
By
COMMITTEE,
WILLIAM
G.
FITZWILSON,
13
,
JL-
5
w.
; l
'
4
•
•
Secretary.
/
3
6
;
-'
Wisconsin
•
submitted,
Respectfully
GAMMON,
Dept.
Protective
Manager
:
J"
V'
.
&
Nebraska......
West
-
'
•
'
'
"
!28
*
9 "
Mississippi
MissoUn.
Virginia
—,,
Washington,.
m
■.
3
•
3
-;v
'
10
v
_•
2
1
2
.
statements.
financial
2
"3
.
'
'
'
■
l
5
■■
been
Committee have made a
■
'
8':
Louisiana.
2
.
to which he has
Administration.
detailed statement to the Finance
Committee covering the disbursements during the period covered by this re¬
port and a general statement will be found in the pamphlet containing
1
7
Carolina,
So.
\
,
The
of crime rather than merely detection of
of crimes is the principal factor in Mr.
reorganization of the office
the
for
the
The Protective
1
8
■.
plans
by
commission
the
Financial.'
1
38
Oregon
Pennsylvania
and the suppression
after
1
\2
4
Oklahoma
of crime
'
1
Ohio
19
available
'
5
No. Dakota.,
...
Illinois
..
Carolina!'
3
Idaho
Burns's
called
1
New
1
■41
...
Colorado
Jersey, „:i
New
2
and
and
The coordination of government efforts
information for all engaged in the prevention
should add to the protection of the banking class.
government operators.
offenders
Members. Non-Mem'rs
Members. Non-Mem'rs
making
prevention
burglaries and
Arkansas
of
detection
1920, up to and including August 31, 1921, there
attempted burglaries'on members, and similar
non-roembers, as follows:
Since September 1,
have
world
use
612
256
Burglaries and Attempted Burglaries.
'
/
.
bank¬
because he will organize immediately a central bureau of in¬
vestigation where the records of all dangerous criminals will be assembled
for the information of the police forces of the country, as well as for the
ing
343
trial
Awaiting
•
____1—,1—i
——___.
special significance to the
appointment of Mr. Burns, Sr., has a
The
768
the
Convicted
connection
\this Association will not be
607
i\
i
-vv /
necessitated
the Investigation Bureau
Though his appointment as head of
CV."'-
.
September 1, 1920, up to and including August 31,
1921, we beg to report as to the operations against criminals, as follows.:
Total cases not disposed of, arrested prior to September 1, 1920
161
the period from
For
~2
.79
;
240
Dakota,
Vermont,
•
Wyoming.
attacks
the
Of
successful
burglaries.
166
54 were successful burglaries and .25 un¬
burglaries was $239,nop-members amounted to $48,658.60.
The. following figures are given for your information of reported burglar¬
ies an.il attempted burglaries, on banks, since the inauguration of the Pro¬
tective Features, such as are known: 1
;
; • :•
'•* i
the loss sustained by
'*
"•
'
Members
...1051
:
—
•
-
'
Los8,,_r.,..ax-..-.$3,811,312.88
Loss
737,846.77
—1969
Non-members
will question.
1920 was 2,240,
September 1,
on
millions.
105
increase of
an
of the trust companies,
well I think no one
as
Division
this
of
by members in connection with
The loss sustained
087.95, while
but upon the welfare of
The total membership
and on September 1,
1921, 2,420, being an increase of 180 in the past year.
The latest-figures
compiled by the United States Mortgage k Trust Co., of New York, show
that on June 130th of
this year trust companies of the United States
showed total fkources of $12,323 million, 128 millions less than on Ju-e
30, 1920.
It is interesting to note that while the country as a whole
showed a shrinkage in resources of 128 millions, the Pacific Coast showed
the'public
1
successful burglaries.
only upon the welfare
not
.
-.
Df the attacks on non-members,
this
at
that it is healthy and vigorous and hard at work.
It was the first group to organize as a separate section of the American
Bankers
Association, and that this segregation has had a profound effect
to report
happy
am
74 un¬
burglaries and
successful
were
celebrating
is
Division
Respectfully submitted,
E.
'
Difference
$3,073,466.11
918
-l....
D. Hulbert.
Convention: The Trust Companies
Convention its 25th anniversary, .and I
and Gentlemen of the
President
Mr.
\
;
•
,
members,
on
Company Division, by E.
Report of Trust
burglaries have been,
committed:
Alabama, Arizona,. Connecticut, Delaware,. District of Colum-.
bih,. Maine, Massachusetts, Nevada, New Hampshire* Rhode Island, South
in;.the following States no burglaries or attempted
D.
:
HULBERT,
'
5
.
President.
Hold-ups.
"•
Members.
Non-Mem'rs
Members.
•
Non-Mem'r
Arkansas
.■
Minnesota
Mississippi,..
3 /'C
4
....
Missouri j,.,..
3.
Montana
Colorado
l
1
2
Dlst, of Col..
York
-
New
1
No. Dakota,
•
■
-
-
i
'
''
r
■'
!'
1
Ohio
1
Oklahoma
3
2
Pennsylvania
Illinois
4
Indiaha
2
2
Tennessee
'
■■
"3
Banks Division
may
Iowa
'
Texas
1
....
Kansas
3
8
Louisiana
1
Maryland
■'V
-
—
Massachusetts
i
1
Michigan....
5
8
Wyoming....
sey,.
Connecticut,
New Jer¬
South Carolina,
Nebraska, Neyada, New, Hampshire,
,New Mexico,..North Carolina, Oregon,. Rhode Island,
Verpiont, Virginia, West Virginia.
'
$280,462.62.
Our'members,
as
sustained; while,
of = these
attacks
do not obtain a record of some
we
losses.
or
!
hold-ups
on
members than
by burglary, attempted
non-members during the past
on
year, but it must be taken into consideration that the Association
members
and
there
are.
only 9,611
non-members.
has 23,632
During the twelve months covered by this report, September 1, 1920, to
August
Burfis
of
31,
have
1921, we
referred to
Detective
International
Agency,
dptecttye. agents, The Wm. J.
our..
fpr investigation,
Inc.,
1,650 cases
'burglary, attempted burglaries, hold-ups, forgeries, etc., with the follow¬
ing: results:
Cases
'
.
closed
through arrest by Burns or
'ftiem
:
,
:—.
.,.....
•'■
information
on
furnished by
405
_
C^ses closed through arrest by local and through Other sources—
241
Operator located by Burns or no criminal action having been
81
132
738
Cases closed
through Burns by restitution' having been made
still
Cases
pending
held
up
awaiting
Cases
*
further
53
taken—
—.
development-.^
.1650
Total
During the
Protective
tions
from
Department has received
and
do
include
not
detective
our
letters
to August 21, 1921, the
agents.
telegrams, written 2,749
circular letters
34,546
reports and
other communica¬
1,757
The Department has also received
These figures
letters and telegrams.
and similar
communications.
Offices of
William
Burns
J.
Our Detective Agents.
International
Detective
Agency,
•
Inc.,
now
has
80' offices and special representatives in this country, three in Canada and
otte
'
ih England.
William
J.
years
1
Burns, who
of Investigation
,
has recently
•'
taken office as head of the Bureau
of the Department of Justice at Washington, has for twelve
performed, through the William J. Burns International Detective
Inc., the protective work of the American Bankers Association.
Agency,
service, for which
great value to our
Clubs
the first of several studies appeared
accompanied with elaborate tables
in the
in the
for August.
the fourth
Under
tion
Christmas
on
Journal
heading,
distinct
to the opera¬
second general
division, that of savings bank
activities
to the
As
much attention has been given
bureaus.
the better business
of
various
investments,
be grouped.
may
list of legal investments be pruned and ex¬
tended to meet the changing conditions of a progressive age, but the eco¬
nomic function of savings banking must be protected against- unsound in¬
vasion, savers must be assured of the best possible balance between safety
and economic service, and the mutual interests of savings bank depositors
must
be
protected against dangers which range from mere protection
against jugglery to socialistic confiscation.
Time precludes even a general discussion of our work on the following
topics, with which every banker is more or less acquainted:
1.
The establishment of a national institution, whereby the money pro¬
duct of local thrift and saving will be withdrawn from the community for
the use of the nation, thus
retarding communtiy development and re¬
Thus,
not only
must the
ducing its tax paying ability.
The
Land
new
credit
plans
systems
which
engaged
thrift
on
in
promoting an
the
part
of
into savings collection systems.
proposed usually include a scheme for
Even the Federal loan systepi is now actively
effort to present their bonds as an object of
industrial worker in the city, the cooperative
have
reaching the small saver.
an
develop
may
been
marketable bond, and
provide the savings which might
probably be expected to sustain this special class of loans.
3.
The pending revenue bill as adopted by the House of Representatives
includes a provision which we regard as an open attempt to shift savings
from banking institutions into the building and loan associations.
Baukers
and clearing house associations have rallied to our support in our attempt
to indicate to Congressmen that any slight benefit which might thereby
accrue to home owners would inevitably reduce the service now being ren¬
dered to the real estate interests by the banking interests.
The loan asso-
credit
the
'The
Our
trust
heading,
third
the
Under
,
past year from September 1* 1920,
the
and
members.
2.
Correspondence.
of banking practice have received
pamphlets on "The Savings Department" in
companies is still being furnished to banks.
second heading, considerable progress has been made in the
daily.
banks
questions
heading,
first
almost
Under
2.
»•
..
the
investors.
preparation of material for an advertising information
there is much inquiry, and which we expect to be of
article
It will be noted that there have been more attacks,
burglary and
non-members
on
(...
the other hand, non-members rarely, report attacks on
on
them, or. the loss, with the result that
Advice to
Third:
Under
publicity and advertising;
Savings bank
Seeond:
commercial
report all attacks on/them, also the exact loss
rule,
a
...
Committee on Facilities and Service as follows:
and handling the details of savings bank-
.
attention
,.
r
with, a;loss of $656,290.21.
been 39 hold-ups
there have
«D.ufing . the same period
with.A'.loss .of
f,..
„>
Tliere.have been 97 hold-ups on members
distributed,
the printed
Methods of organizing
First:
hold-ups have been committed:
no
Maine,
a
39
in&;
'Jn.-the following States
on
and service, the Divi¬
classified, and, from time to time
wide variety of subjects which are divided in
and
collected
—
—
97
Delaware, Kentucky,
deposits.
thrift and saving.
the first heading, relating to facilities
savings
report of our Division's
1
.
Under
material
3
___
habits of
sion-has
"3
6
of
Individual
1.
,4
2
,
Wisconsin
3
...
..
Utah-
Washington..
'■
Protection
3.
2
3
-v
Facilities and
2.
1
4
:
___
1.
~3
4
Dakota,.
So.
\
15
1921.
Association through its Savings
be classified under a few distinct headings:
service in savings banking.
■
Georgia
4,
the American Bankers
activities of
The
:
California.
Angeles,
October
.
8
-
Idaho
."m
f
Los
4
:■'
1
,
_
I
—
Bank Division.
1
California
Florida,.—
of the Savings
Report
1
1
l
l
Alabama
AFizona
feature
of the law having
failed to produce a
agricultural regions having failed to
SECTION.
BANKING
ciation exemption would constitute a most unusual
of
of
type
one
workers
against
as
the
discrimination
be
can
the
lenders
which
have
generally recognized to be the
now
an
We therefore
securities,
emphasize
which
contend
we
banking
been approved
ing
is
Spring meeting of the present
laws.
fraudulent
lative
_
has been this fight at various stages,
as
left
wide
open,
as
rapidly
as
the private securities which
Under
3.
habits of
the
have
to
report
in
the
There
prospectuses
should
the
first
our
relating
to
directly
are
related,
the
we
sound.
as
earner
the
as
affairs, and the child
the
advanced
point where
the
attained
has
work
has
educators
and
bankers
bank
the interest
this
able
install
to
tion.
and
operate
second
Our
annual
for
pupil in
every
statistical
school in its jurisdic¬
every
report
the
covers
school
of
for
year
of
for
Journal.
our
An
comparative study
important
the
work
economics
Home
by banks is still in
experimental
an
of
plan
Massachusetts and other States,
reported from
are
interests
financial
that
render
will
important
service
and
Conclusion.
activities
during
ment
not
are
this
In
lated
the
I
touched
upon
by
in
the
of
us
properly
preparation
of
defined
importance
unquestioned
nately, it will be several
statistics
savings
ajl
to
the number,
on
deposits.
workers
Such
economic
on
comparable
by
National
Federation
of
National
Conference
National
Educat'on
National
Conference
American
had many
have
and
Mutual
of
A.
Bank
Division.
State
Bank
Program
of
efforts
The
year.
This makes
the
of
take
independent
The
committee
•
1921V'Was
Division also
the
year
has
the
of
State
Bank
Division
cooperating with the committee of five of the American
ciation
ciation
for
in harmony
in
the
an
Association's
the
Convention
State
The
checks.
subject
same
The
no
oc¬
right
on
Exchange
and
both
Bankers
tutions,
.
committees
similar to the
statistics
on
Exchange,
be
to
presented
committee
The
for
some
time
the
"has arranged to include in his periodical, reports
State
Bank
Division
discussed at the Division meeting on
that
tricts
there
may
should
be
ways
and
and
the
topic
whereby banks
It
in
seems
with
announce
success.
glad
are
On
account
':
of
.•
*
.
the:absence-of
of presenting
pleasant duty
"
me.
is activity, have
a.
^report
'
•*
to. assist
endeavored
movement sponsored ;by
permit' banks ;to
this
such
manner
as
'.■■■•
hold down rates,
to
.
■
Forms has been persistently
We'hope to be able, in
membership that our efforts have been
Tax
Income
Our
to. our
;
:
th'e
;
the.
per¬
•
-,
...
j
Committee of the 'Senate
our
abiendment * which will
taxes paid • for their share¬
has not deducted said tax
return.
Associations
State
will
be
regarding the'dates
glad
to adopt
the suggestion
of Mr.
Association.
v
.'.
.:.
for holding our State
' '•
■
Respectfully submitted,
ANDREW
"
FRANK
State Secretaries
Section.
Committee—Election of Officers.
Mr.
HOUSTON:
K.
SMITH,
President,
The-nom¬
President and gentlemen:
;
PRESIDENT:
B.
McAdams,
'
,
Vice
President of the
'
Merchants National Bank,
'
Virginia.
Richmond,
the
the
'' "
"
FOR
FIRST
VICE
PRESIDENT:
John H. Puelicher, of the Marshall &
FOR
.
SECOND
Ilsley Bank, .Milwaukee, Wisconsin.
VICE PRESIDENT:
of the Omaha National Bank, Omaha, Nebraska.
unanimously elected together with the following!
Walter W. Head, President
con¬
The
above
Treasurer,
dis¬
the Federal
returns,
shareholder
individual
J
Y
y
Finance
the
income tax bill
new
deduct* frtomi their
provided
his
Manager,
were
Bank, Fargo, N. D.; Executive
General Counsel, Thomas B. Paton; and
Assistant Treasurer, Wm. G. Fitzwilson.
' /
Fred A.
Guy
•
some
."
laboring diligently
announce)'that
to
incorporated in
Thomas
desirable
agricultural
is
Simplified
on
future, to
crowned
FOR
fully and freely
was
Monday afternoon.
means
rediscount farm mortgages in
am
t<^ give
Clark
published by the Comptroller of the Cur¬
subject of country banks and farm finance has been under the
if
in the past
as
and J
inating committee met on Tuesday, October 4, 1921, at 4:30 P.M., in
Hotel, and unanimously nominated the following officers for
American Bankers Association for the ensuing association year:
been
to
sideration
the
constructive
Insurance
Report of Nominating
trust
the
that of
program,:
results.
splendid
on
to
National banks, similar statistics pertaining to State banks,
companies and savings institutions, thus showing frequently and fully
totai banking power of the United States.
taining
basis, than
with the
future
agree
upon
:
Wt- are pleased to announce that Comp¬
in cooperation with bank superintendents of the various
States of the Union,
other
any
■
plan purport¬
any
Secretaries Section;
devolves
are
regarding National banks.
rency,
troller Cressinge'*.
are:
'We are carrying this thrift and better knowledge
county in the United States through our^tate organi¬
:
endeavoring to pro¬
the publication of statistics regarding State-Chartered banking insti¬
cure
was
employers and employees;
possible, have'those now; in effect, reduced.
near
MR.
has
upon
Gentlemen:
every
Asso¬
subject' will be fully covered in the
Committee
Division
which
conventions whereever
it is practicable to do so, in fact it is a joy and a pleasure for u&
to cooperate with and help carry forward every policy inaugurated for the
good of banking in the "United States by our great American Bankers
later.
Bank
the
of
•'
Kloss,; the
L.
Section
wjth the National
of
of
unalterably opposed to
whose "watchword
and State Bank Protective Asso¬
endeavor to obtain Congressional action authorizing charges
collection
of
report
the
consider the
appointed to
working
students
resolution
of that resolution
cooperation
welfare
and
forward
carry
Bowerman
Legislative
,yy y.yv
(7)
1):
Mr.
Secretaries
Committee
pur
from
State Bank Division
supporting the
to
Division to avail itself of its constitutional
seven
important
very
will continue in
Ladies
secretaries,
holders,
an
total membership of 13,019.
a
action.
of
a
spots
the
we are
'
is
mem¬
are
to the Institute in their obtaining of new members.
banking to every
and predict
has
American
Bankers Association, there having been
the American
casion for the State "Bank
to
during
become
to
officers
be of the
can
association—notably ..the campaign of the Educational Committee,
.We
Division
Federal Legislative Committee of the
their
work
and
the
Bank Division.
during the
membership of 1,348.
State and
confined
gentlemen,
you
our
knocking at the doors of the Treasury Department.
-'0
':
"
:
The
has
President,
The
and if
.
Savings
Association, at the close of the fiscal year, August 31,
associate
'
of
SADD,
Y/..
the
480
high
material
sations
-
;
being
of
of
you
in
members
our
Chairman,
Our
11,191,
gain
that
intend
we
45,000 members
our
with,
:
• ;
Bankers
a
of
opposed to all attempts to limit production;...,
,
opposed to all attempts to limit individual initiative;
our
full support
the
for
.
•
V
■'■■■-'■
of
In other words,
many
Banking,
Report of State
;
membership
Cornell.
and
headed by Mr. Peulicher.
Report of State
voting
Princeton
great
President,
The
of
Banking.
the
are
improve
Mr.
'
^
;
Savings Banks,
W.
of
unadulterated Americanism.
DRUMj
We heartily
that
our
Association,
YYY
as
benefits from
reap
Institute
finally, that
can
definition.
intimate contacts with other organizations.
Respectfully submitted,
y':-.\
it
administration of the Insti¬
;:•••
Association,
Economics
Home
Yale,
new
in that connection
is
of
are
we
And
to
their
Housing,
on
Harvard,
■
sure
be both complete and
Industries,
of
of
are
conventions of the following organizations:
in¬
1920
of inducing as many of our members who
PRESIDENT
have been officially represented by and taken
we
the annual
in
part
uniformity of
of
reason
During the past year
active
it
believe
we
Unfortu¬
before all jurisdictions and all bankers
years
persuaded to compile and report data which will
of
program
advise
we
That
ing
of
amount and
statistics'
subjects.
had"1
In
44,903.
possible, to become such.
not—but
That
That
pure
important branches
more
Los
to
familiar.
have
4th.
-
accomplish¬
of
over
and
speaking for themselves.
results
have only
we
details
The
a
as
to
quick
a
come
Of this group
24,000 of them are students
it has
nothing, but the
mean
Institute
2nd.
*
omitting, for example, the great advance which has been stimu¬
distribution
be
administration.
present
necessary,
report
the work,
•'
■
considerable degree of pride that we make this report of our
a
universities
and
wish
are
1st.
future.
is with
It
President,
our
Hulbert for
able to
24:,000 students and graduates exceed the number
The
American
3rd.
the
in
not
was
membership.
membership was 24,000.
our
At the present time
the
in
the
also
but
this
y.
line
Beckley
in
Institutions, and who
you
we
along
complimentary words of
Mr.
It' was first adopted in 1918, and was reiterated in
a
most enthusiastic manlier at our recent convention in
Minneapolis;
The
high spots of that resolution—I wish I had time to read it in its. entirety,
experience of the past year has been extensive and should have taught
practical
Mr.
be
.adopted at the New Orleans: Convention of the Institute, with which most
important lessons for the future.
We have formed an'important contact
with! the American Home Economic Association, developments toward a
expect
that
to bring into the student class
in
I
but
stage,
1919
numbers
American
Savings.
on
thfe
>
President, and Ladies and Gentlemen of
very
approximately 45,000,
possible;
bers
the various systems
of
of
students,
your
the report of the Division's Committee
in
appears
compilation
new
greatest service to us—that is, to induce your young men who
1920-1921, the preliminary tabulation having been presented in the August
issue
of
year
is
as
here
President,
cannot
introducing the
report of his stewardship, but I will call attention in
a
committed to
not
are
those
sorry
32,000.
men
tute is
.
even
very
close
to
Of course,
further.
Experience with
the larger cities are now
of
Mr.
place to the increase
students
of
LOCKE:
After
banking subjects.
conditions had been
cent, and
per
even
am
the
At
savings banking systems have made great strides, the number
has been increased by close to 100
systems
such
I
creased
savings banking systems have made scine^advancement during
But school
McDOUGAL,
proceed to attempt to break the record of Mr.
first
source
normal.
more
O.
retiring President, unfortunately
D.
Angeles and give
in the school.
although much less than if industrial
state¬
false
Locke, who will give the report of the Institute.
Convention:
report.
Having established this point,
wage
the
I have the privilege
ROBERT
shall
I
the unit for practical
as
D.
MR.
of banks, to which vari¬
use
heading
Beckley,
Robert
important accomplishments.
most
generally accepted
past year,
by
under
naturally divides into attention to the
Industrial
of
saving through the wider
our
Mr.
morning, but
activities,
forbid
corporations that ask
of
Report of American Institute of Banking*.
of the securities which
Division's
our
more
that
laws
ELLIOTT
family income, the housewife in her management of the home and
family
the
of
be
other announcements
and
shall prohibit the
corporations
or less specu¬
crippling
though of
'
essential to prosperity.
are
least
at
without
even
Respectfully submitted,
available, and easily underbid
are
securities
public to purchase their stocks and bonds.
it will be in vain if the door
billions
that the family should be treated
thrift has been
the work
funds
as
division
considered
Our position
of
third
thrift and
matters
ous
additional
for
'"ow,
into the market
pour
State Bank Division is supporting the efforts
worthless
or
character.
ments
and the
customs
Banks
State
of
improve banking
'
engaged in business that is legitimate,
within
Difficult and discourag-
year.
Supervisors
of
Bank Supervisors to secure legislation that
State
of
sale
by the U. S, Chamber of Commerce, the Investment Bankers
its
duly consider this important
cooperating in efforts to
are
Association, the National Tax Association, and other organizations, to
which list the Executive Council of the American Bankers Association was
added at
of
A special committee
paper.
appreciates the friendly relation¬
particularly
Association
other things the
Among
of tax exempt
menace
has
Division
the National
and
*of the
lags and employment fails.
commerce
campaign against the
our
the principle for
the past year
when
prosper
Bank
State
of
organizations
a
secondary interest in the
Savings banks cannot
commercial
Division will be appointed to
two
menace
officially declared them to be two years ago.
Savings
primary interest in real estate mortgage securities.
They
securities of- our public utilities.
They
important interest in the underlying securities of commerce.
have
a
are
first
we
bankers
have
The
ship
exempt securities
rediscount
now
State Bank
matter.
devised.
Tax
4.
banks
Reserve
behalf
on
individual
and
corporate
which handle the great bulk of mortgage loans on bases of cost and
term,
which are more favorable in general than
any other which has been or
141
Secretary and
E.
Irish,
First National
Bowerman;
Association
American Bankers'
Sixth Annual Meeting,
Responsibilities, Hon. D. R. Crissinger
Knoles
fsibor and Radicalism, Tully Cleon
of the West, H. C. Carr
Che Spirit
and Free Zones for the
*ree Ports
Robinson
*
.....
...
.....Page 142
Page 146
— .....Page 149
...
....Page 151
thinkers has there
sciences than there
confidence in these as exact
looseness of think¬
Everywhere there is a great
is today.
toer that when the war
*014 most of
these vital affairs. We all rememstarted in Europe at the middle of
and most of the best
us,
theoretic thinkers,
such a' gigantic scale
fwould necessarily be of short duration because ''economic
exhaustion" would supervene and compel a return to peace.
that
believed
confidently
war
Election of Officers
that
anguished world cast upon them; you
an
of parts
interdependence
in our modern economic
impossible for the social machine
long to go on functioning, for people to be fed, and clothed
and housed, in a time when so vast a proportion of men's
would make it
f^ystem,
from production and
energies were withdrawn
devoted to
accumulated
have risen almost
Where is the banker among you
who would have
dared,
that the financial and
convention and declare
credit fabric could stand the strain
that it has borne since
that day?
ago
It is my
reputation by
tlis
telling us that the
risked
industrial structure
Remands that have been imposed
it?
Point out to me the master
then-have told us that the
its merchant marine,
of transportation who would
transport system of the world—
its inland waterways, its
rail and other
having so much taken
Where is the sociologist
highways—could have survived after
•ut of it and so little put
live through so long
so
little
I
into it.
would have believe that our
who
social institutions could
and fearful a stress, and come
forth
to you
from the Office of the
Comptroller of the
of assurance regarding the tried
instruments of banking finance.
They have
Cturrency, with a message
and seasoned
aot only
weathered the storm, but they
have come forth
firmly held in wise bounds, than
gentlemen may have been too busy to
stronger, sounder, more
ever
before.
You
stop and realize it, so
I am going to tell you that
American
made progress in the last decade
nobody would have dared believe pos-
banking and finance have
that
—and
less—
elble.
I do not mean
of assets and
ger, more
in
the
merely progress toward larger totals
responsibility, but progress to the wider,
big¬
social appreciation of and relation to their place
We have passed beyond the time of
community.
business to know, and I sit up
nights in order to
work that I am able only
it, and in this presence to express my
to marvel at
At
our
end of the line—on the side
supervision—we
acknow¬
be distributed
should
times
these
of administration and
them as times when only the
We have sought to
should be sustained by the com¬
resources.
mon
been painfully aware of cases
We have at times
dangerous
There
others
forced
thus
corpulence
bankers
are
to
his
that
reserve
sole
or
an
the
maintain a preposterous
unbroken succession of fat dividends, is
not, in our view, the best
who think
and that we are not
Tto banker who conceive!
responsibility is to
earn
banker.
Rather, we want bankers
equally of their community,
life-blood of credit,
safe,
for encouragement. There is a
confident thus far on
business and normal
At Washington we
the road, to restored
conditions.
have been seeking to make credit more
crease
The bank that gets advances at a low
the Federal Reserve System,
its profit by reason
were
and only seeks to in¬
of that privilege is not doing its
part. The Federal Reserve System was
purposes.
business, money sup¬
There has been general, but not universal, sup¬
port in this effort.
rate from
gratifying
they have brought us
available, interest rates a less tax on
plies easier.
of industry needing
of labor requiring employment, of
preponderance of such bankers; and
sound,
of
is not very
harm for me to say that we hare
disposed in their favor.
much
side of the sheet.
safe and
I am glad to say,
these over-cautious ones,
on
eye
the asset
bear more than their fair share
great; but it will do no
our
on
who have played more than
Their number,
loads.
of bank
hoarding, of over-fed reserves,
profiteering; of unjustified
the
We have
too unfairly.
Our aim has been to in¬
cooperation.
that the common weal
the burden of
fullest co-operation could
adequately serve the common interest.
enlist that complete
helpful,
sought to be appreciative,
We have not been willing that
constructive.
seen
have
business crying out
changed?
come
but because I know.
ledgment and appreciation.
of
of industry who would have
would have sustained the
upon
I tell yo*
questions.
not to tickle your vaniety,
You have done so huge a
know.
today, to face this
Where is the captain
of a disjointed social system;
overnight from the parochial to the
cosmopolitan attitude toward these
sure
destruction.
seven years
liabilities
the
you
these things,
burdens
have carried
on
and we almost universally believed,
complexities, the artificialities, the closely articu-
that Hie
Page 1ST
........
You have bent your backs to the
provincialism.
Wp had been taught,
•Ikted
Page 194
Qther Resolutions
C omptroller pf the Currency.
since the principles of econom¬
anil finance began to be formulated by
ing and of theory about
Division on Branch Banking and
New
Responsibilities
By Hon. D. It. Cbissinger,
toeen less
...Page 114
Report of the Executive Committee...
Action of National Bank
United States, Henry M.
•
Probably in no generation
PROCEEDINGS
NATIONAL BANK
Our
ies
Oct. 5 and 6, 1921.
Held at Los Angeles, Calif.,
INDEX TO
Oar New
DIVISION
BANK
NATIONAL
not intended for such
Its advantages in easier, more liquid money
intended to
be passed on to the business
Just in the measure that we are
supplies
community.
able to make credits easier
i
NATIONAL
and
rediscounts
cheaper,
shall expect bankers to trans-
we
fer those benefits to the business of the land.
pected to understand that banks
facility
business—not
to
that
are
You
are
ex-
convenience and
a
is
business
the
a
ever-ready
support of high and yet higher banking profits.
Let
the
give
me
report of
with
particular
you a
day's applications for rediscount of paper
a
of the Federal Reserve
one
hundred and eleven notes
offered
I
71A>%, 5 at 7%, 2 at 6%%, and 2 at 6%.
Now 52
That is what
by bank profiteering, and so long as it goes on it
mean
will
They were
10%, 21 at 9%, 2 at 8^%, 14 at 8%,
at
were
One
West.
the
portfolio.
security for advances of money at 6%.
as
of these notes
13 at
banks in
in the
were
be pretty
nearly useless for banks to protest against
the issuance of charters for
in their territory.
institutions
and competing
new
It shows the barometer of banking con-
give
me
national
bank
already
in
charter
national and
a
An
another.
you
application
small
a
and
credits too long .standing,
of
For
of
classes,
to
proved
have
and responsibilities aggregating
of the world.
yet at the end,
seas ;
war,
Truth has
possible.
fiction,
World-
have swept continents
structure comes forth
is, it seems to me, that if we will be fair
the institutions that have served us thus
well,
we
they are stronger, sounder, more
to admit that
ourselves believed
institutions,
hearing
the
logical than
which for generations we had
preachments
of
Utopianism,
more
are
For
strongly established today than when the war began.
the
has
test
ultra-radical
from
on
generous
do
well
vast
pretty sound lines.
the
attempt
expedients,
no
sudden
in
departures
we
have
to dare experiments,
charitable view
to recognize that
imagination are part of the equipment of true
t
thing to be avoided, in this era
of war,
is
a
following the tense-
too great reaction toward
institutions.
ment of making our
more
structural
all the parts were
statesmanship.
movable
is
the advantage of knowing
weak, and how they can be strengthened,
but
strong,
vision and
ness
hypothesis,
Its factor of safety was more
experience has taught us to take a more
One
in a
how far those theories yet
than even its builders had calculated; and we will
which were
now
Russia's trial of
scale has shown us,
reduction to anything like a working
to
equally
of
a
We have found, it is true, that not
plans.
Our
on
bridge that has brought us this far over, I think,
The
built
they really were, what
while on the other side,
theories
that all must understand,
way
are
shown us how strong
could do;
they
with
will have
I undertake to say that
them to be.
against
We have found
fixed and im-
that in the experi-
institutions more plastic, more elastic,
adaptable, we have not necessarily
We
saw
ourselves growing
more
and
more
efficient at both production and demolition; and the lesson
was
so
impressive that few of us dare to guess how much
longer we might have gone on.
We saw non-essentials rigorously cut out from our regiin order that there might be greater production of the
men,
We were beginning to un¬
broadest way the unity in which nations, peoples, conti-
reliance of each upon all.
inspiring
nents, are held; the common
And then came the end of the great, feverish,
strain—the reaction toward excesses of
speculations and excesses—and
the renewal of luxuries and
before
we
had
individualism; the
of the old easy ways of living;
fairly realized the full implication of the
our
discipline and self-denial, and left ourselves only the
burden of debt and grief and disillusion,
We imagined that victory was
the end, when in fact it
beginning. Those to whom
those who tasted the dregs of defeat,
only the pause for a new
were
perhaps in some ways fortunate to have
forced upon
for them there was nothing but
to begin anew, to gird themselves for another struggle to
re-establish themselves. And because of this, we nowadays
them the realization that
find ourselves not infrequently
the victor or the vanquished
wondering whether at last
will prove the greater suf-
ferer.
struggle with its relachanged. Greatest of creditor States, we realize both the demands that are pressed
upon us and the obligation to meet them.
We have come to
understand that we cannot thrive alone. We cannot be exceedingly prosperous with all our riches while all Europe is
hopelessly impecunious and destitute.
We want to help,
but we are determined not to be imposed upon. We recognize the superiority of our economic and financial situation, but we are coming to see that no existing mechanism
is fully adapted to distribute the strain and enable us to
Our own country emerged from the
tion to the world fundamentally
greater and stronger than ever.
The truth
a
high enough speed to furnish materials for the machine of
victory did not come,
despite some scars and discom-
financial and industrial
the
the war machine;
of produciton working at
it keep the mechanism
made
financial struc-
most fascinating
than the
universal
could have made it keep the eco-
we
machine in operation alongside
nomic
was
justification of our economic theories,
the
conflagration,
been
necessity persisted,
of the supreme
expand, strengthen in a measure far be-
stronger
seen
went far
We
inaugurated.
actually
was
of
the very tests that we had most feared.
through
these
that
of
Our banks, of all
wields.
yond anything we would have believed
we
any
enough toward this mobilization to convince us that, had the
victory's hour, well-nigh thrown away the best benefits
trial for our whole social scheme—seen this
forts,
yond
revolution we were starting, we had, in the recklessness
the last few years—the years
ture of ours grow,
and
into effect an industrial and economic mobilization far be-
I have come
than all the. rest of the banking resources
wide
country, in another year of war, would have3 put
realization of the
impressive
nation
this
resources
possess
agency
banking system.
and
new
a
power
We have in
We
own
resumption, all too soon,
supervising the
financial
again
judged, is
the official head
time
that
more
current
for
Government's
fabric of our national
vast
of
than in many months.
Federal
We know that
the programs of socialism and communism.
our
nize the true significance of co-operation; to realize in the
whatever standard
by
outlook,
to en-
force economies and efficiencies that were borrowed1 from
The
few months I happen to have been
a
the
in
The
now
We saw the methods of rigorous autocracy
applied to great democratic communities, in order
derstand what thrift and economy really meant; to recog-
accommodation
for
available
cash
business.
better
have been much further progress in this reorganization and
of vast improve-
word
persistent increase in the
a
We know
for another year there would
gone on
necessities of war and of living.
been marked by a steady liquidation of
last half year has
volume
call profiteering banks
general business and financial situation.
in the
ment
bring you
pleasure to
my
were
I looked them up,
of just that sort of thing will persist.
the danger
is
there
a
So long as profiteering goes
—and chartered the new one.
it
for
came
where
town
State bank.
a
learned that they were of the class I
on
that if the war had
destruction.
science.
Let
We have learned that in order to bear the extreme strains
they required some remodeling and adaptation.
readaptation.
The other day I saw
case.
143
DIVISION.
BANK
weakened them,
bear
this responsibility.
In short we find ourselves com
have the necesfear we lack training in
fronting a task for which we are sure we
sary
strength, but for which we
particular skill, in technical
experience,
role of leadis the key to our whole
We cannot effectively
The circumstances demand that we assume a
ership.
The rehabilitation of Europe
economic and industrial situation.
merely doling out aid withOur part of leadership must be
influence to induce Europe to help her-
help to rehabilitate Europe by
out system or foresight.
played by using our
self.
a few months ago an
American publicist, who had parstudy the war and its devel-
ticularly good opportunities to
opments, both in this country
and abroad, published what
statesmanly plan by which American
leadership could be made most helpful. I refer to an article
by Mr. Judson C. Welliver, on "Europe's Debt to America,"
has seemed to me a
and how this debt might be
vice to Europe.
made the means of a great ser-
That article was published
in the Ameri-
reading and
public man,
this country and
thoughtful consideration of every
and financier in
statesman
economist,
back
Europe
been wrenched
Europe had
economic scheme of
apart by the war, and
put to¬
of
adjusted to certain
gard for the effect on
the
In
this
the
either
The
map
new
the politicians in
warnings and protestations
of money,
resulted inevitably a chaos
could imagine our
have
of speculation in
barrier at the Mis¬
meat out of New. England!
both Alabama and New Hampshire, if there were
sugges¬
of cotton from the
New England's mills!
Yet the foregoing
the
throughout
tution would be able to maintain the gold
stream; conceive the Missouri as
of that
the dividing line
Mississippi
Valley turned into a 'corridor to the Gulf' for the perfectly
frank purpose of keeing these rivals from either quarreling
or consolidating—and we have a little stronger suggestion
of what European conditions would
mean
if applied to
bitterly hostile communities; picture the
America.
of
the domestic
currency
tinkers
depreciated currency into the established unit
Divorce them by decree of the tariff
Silesian coal presents another phase
problem."
'
of joint.
lessly
out
of the
same
enumerating
many
like examples, showing the eco¬
nomic confusion which Europe now presents,
Mr. Welliver
proceeds to suggest possible remedies that might be applied
will be
entitled to expect that if we extend credits we
are
helping
a
solvent Europe; and a Europe restored to
It will be altogether within the proprieties for the
American
all
in
the
Government
trade,
States
States lead
trade.
them
economic arrangements
and
with
among
view to protect American in¬
a
to erect among
America has
that will
further
Powers.
If it did,
itself.
as
themselves injure Ameri¬
much right to insist on policies
its interests
it would
as
have
others of
be serving Europe
the
as
Allied
well
as
It would be pursuing a policy calculated to produce
mutual confidence and concord
among European people, to
strengthen the argument against war, to break down the'old
animosities, to extinguish the flame of ancient hatreds, and
at last to bring Europe into a condition of real, recognized
interdependence among its parts.
"The most effective present use for our huge investment
in
Europe is,
policy
furnish the
one
of
in short, as
of commercial
a
lever to lift Europe toward
enlightenment based
money
the
banking interests would be able
would be the natural' meeting point for the
bills of exchange,
obligations, and the like, into an accepted money
and exchange unit.
this
*
proposal was first
widely discussed, and
forward, it has been
put
by proposing conferences in the different
into
the
on
the
realization
countries this fall
I shall not here go
currencies and exchanges.
argument for such an institution
have been set
Mr.
the Secretary of the Treasury,
Mellon, has recently taken a long step toward its
to consider
Located in
with branches in the different
conversion of all media of credit, such as
Since
re-estab¬
For the greater part,
capital for such an institution.
great capitals,
it
countries,
system.
of' international
utilities.
These
forth by others better qualifed, including some
of the greatest
economic authorities of all time.
It has been said and it is true
hanks came at last to a
that some of these exchange
bad end.
In at least one case such
interest
All the obstacles which rivalries among European
terests.
can
financial
of Europe,
manifest the most lively
to
sound
a
and thus would be provided
instrumentality for the early
entirely, private
perhaps
industrial activity, productivity and peace will be best able
to p^y.
and
exchange, or the exposition of its possible
Again I quote:
through American influence.
"We
incentive
lishment of
map-makers, and the industrial balance is hope¬
or
After
both
exactly that in the Middle
Each country would trans¬
Ages, and would do so again.
to
basis in the trans¬
systems of the various countries.
Such institutions accomplished
tor Meulen
dustrial complements.
by
branch of commerce to a level of its own, independent
lar
in Westphalia are natural in¬
"Iron in Lorraine and coal
provided
It would raise that particu¬
actions of international trade.
late its own
consumed with fear of everything west
its capital
With
continent.
with branches
syndicates of bankers throughout the world, such an insti¬
of this international institution,
east of the Hudson
and
in the commercial cities of both northern
Europe, might be set up, perhaps
South's fields to
suggestjons of the picture that disjointed,
competing, struggling Europe presents.
Imagine everything
bank of
the lines of the medieval banks
tion of interference with the movement
only colorless
transaction of
recent addresses I have ventured that a
some
of exchange
Chicago !
keep Chi¬
Think of the wail from
cago
These uncertainties
exchange.
.
international exchange, on
that would I prevent Iowa hogs going to
Or another tariff wall at the Hudson, that would
sissippi
little.
Exchanges are demoralized, and commerce is largely
matter
trade.
which we possess as
for us to have
inflation, and the others have paper infla¬
gold
vitally affect all forms of credit and every
forty-eight States struggling in
compared with Europe.
"Imagine a proposal to erect a tariff
between
Europe's gold,
continues to flow to us until, tardily, we
much gold than for other countries to have too
In
is
of maintaining
dwindling.
inadequate and
are
standard
coming to recognize that it is only worse
southern
pretty fair idea of the advantages
are
the gold
fast fading and highly insubstantial
world's gold,
a
everlasting competition, with tariff "walls around them all,
and industrial jealousies everywhere—then we would gain
a
continent
the
Even where there is still pretense
reserves
tion.
of the
Welliver's article:
we
of
or a
too
political con¬
ditions, that made it impossible for Europe to employ the
old machinery of service to itself that had grown up through
the long centuries.
Let me quote a few sentences from
"If
and industrial condi¬
in its currency systems.
are
and on the other side
transportation, and tariff, and
and credit, and
Mr.
definite policy of
a
the
immemorially constituted
of Europe was drawn by
of the
There
economists.
of
We
of necessary supplies,
populations that hacjl
disregard
utter
memory
a
shadow.
their markets.
"•!
If it is to be
to us.
its chaos of economic
most
Throughout
cut off on one side from
'
the
appeals for our
earnest
most
tions, Europe is afflicted by a chaos
it
ap¬
sort.
Along with
the peoples on both sides.
Transportation systems were torn to pieces, the free move¬
ment of commodities was interfered with in every direction.
source
The
extended, it should be in pursuance
intensified nationalism,
something
trade with the
convinced that this is no counsel of
am
financial assistance constantly come
operation absolutely necessary to
their
I
idealism.
impossible
establish
and
such as we have here in
restrictions,
United States.
inspired by ra¬
cial and war prejudices were raised along a hundred lines
where they could only serve to prevent exchanges and co¬
from,
commerce,
continent-wide privilege of
the
possible
least
governmental regulations
Qities and industrial areas were
and
industry
proaching
commercial and industrial conditions.
of the new era of
excesses
tariff barriers and
barriers to easy operation
that Europe sweep away the
urge
long-established political
relationships and national boundaries.
In the redistribu¬
tion of territories and sovereignties these economic circum¬
stances and interdependences were lost sight of.
Inter¬
national boundary lines were moved about with utter disre¬
mies had been
Government should
continuing economic aid to Europe, our
The old econo¬
utterly unrelated lines.
gether on new and
neither
proposal is, then, that as a condition precedent to
This
pointed out that the old
Europe
gain,
would
Both
policy.
this
help
to
way
to pay us is to induce
would lose."
Europe.
Mr. Welliver
adopt
to
surest
the capacity
and
solvency
to
The
trade.
free
continental
wish it might have the
of Reviews/' and I
"Review
can
CONVENTION.
BANKERS'
144
idea
a
bank was drained of its resources,
the
most
that
modern fashion,
had chartered it.
But this only proves that the
possessed exceptional power; it long
legitimate obligations and the
managed municipality.
have
these
been
broken-down credit of a mis¬
for protection of the pub¬
modernly thrown about banks, it would
perfectly safe and sound.
medieval exchange banks came
any means
to prove that their
well condemn
To say that some of
to disaster is not by
basic idea was valueless.
As
the whole system of issue and deposit banks
a
of
bank'
sustained |both its own
With the examinations, periodic re¬
ports and in general all measures
lic interests that are
indeed fairly looted in
by the city' fathers of the town
because there have
been hank failures!
NATIONAL
The fact is that
to
revert to
must
we
have
we
come
this old plan of banks of
recognize
that
at
time when
upon a
the
exchange.
outset
such
need
we
Of
BANK
course
plan would
a
immediately confront the
need for American
support, back-
ing, and—gold.
have the gold.
are
Well,
getting
more
of
wonder
what
we
financial
in
of it
some
institution
change
until
shall
I
as
or
we
are
as
among
It
our
in
reform
tions with its
tions,
such
substantial
is
It
and
to
answer
experimental.
been
never
tried
such
international
would of
tariffs,
In
be
course
done
view the par-
my
on
rela-
would
as
represent
demoralized
as
the
have
the
backing
scious forces
of
organized,
ex-
and they did not
understanding,
con-
be arrayed in their
support;
now
yet
they became the financial founders of modern times.
As to the
is
our
willingness of Europe to accept American
there
be
can
Serious doubts.
no
right of making suggestions recognized, but
be met.
in
pate
Better
thousand times for
a
putting Europe
than to
way,
go
Not only
finan-
our
its
on
feet
in
to
us
Beginning about the middle
on
of
last
pro-
Europe's bankers and capitalists advanced
build our
create
railroads, develop
our
Europe
grand scale the role of capitalist for America,
a
our
municipal utilities.
the
industries,
Is there
mines,
open our
man
a
among
you
young that he cannot remember when the
daily paper
brought its daily story of the European syndicate that was
transportation
system?
We
know, now,
that such
stories
only the journalistic trimmings to the announcement
were
that
great American industry, or facility, or
some
more
here.
and
We
more
know
European capital
that
the
partnership
being
was
between
enlisted
our
oppor-
tunities and Europe's capital was
good for both Europe and
us. We know,
now, that European financiers had the
visions,
the
daring, the imagination, to
see
these opportunities in
land to which the population had not
yet come.
to
provide funds for railroads for
yet people to
ways
them.
use
And because
in all the
made
new
finance
wealth
made
the
are
We
now
must,
if
the
lever
area
so
buyers in sight.
bankers
to
lift
of
creation;
mankind
to
the
became well-nigh the ruler of the world,
Europe needs what
were
called
we
so poor
upon
will
to
would
now
that
we
were
borrow.
our
future
have,
Where
glad of her loans,
invest abroad.
protect
we
Will
interest
we
in
do
it?
world
trade.
When
several decades
ago,
to invest
tensively and systematically in the United States, it did
not
the
us
the
for the altruistic purpose of
helping
primary purpose of getting the profit
underlying object
was
trade.
Y
That
has
us;
on
ex-
so,
not even with
its money.
always
But
but asks
us,
us
EuNow
to take
no
security of the oldest society of
to
back, hesitate to
pay
world.
back
pay
we are certain
so
Will
debt
our
to
further to strengthen
and enrich ourselves?
Europe
and
power-house
will
not
the
of
United
the
survive
line"
States,
of
separately.
Will
be
For God's sake, let us have the
courage
Let
us
bending vision of
get to
our
people
our
new
They
sus-
will pull both down in its
or
the situation in the face and dare the
deal with it.
"the
civilization.
That civilization
tained by their joint
efforts,
collapse.
jointly, constitute
occidental
measures
an
to look
needed
to
accurate, compre-
place and responsibilities in the
We all understand that
wealth and credit.
must continue
vancing from
We
Shall
so.
is the greatest
ours
the
are
be
we
hoarded store
our
been
Its
thel
reservoir
of
great creditor nation, aiur
mere
money-lenders,
the
on
ad-
deposited valuables
of impecunious customers and
issuing pawn-checks that will
them
we
Shall
be the
we
Shall
everlastingly
the
assume
pawn-brokers,
insist
we
with
on
interest in
no
share
in
the
duty
hate
to
or the
bankers, to the world?
the management?
we are
Or
us?
of financiers?
part of the management stock,
a
me perfectly clear that
a
of their
big, constructive role
It
be
or
seems
to
entitled to, and must demand,
management.
As the custodian of far
the .world's gold,
we
than
more
our
apportionment of
must accept that we
are
tees for the financial world in holding it.
merely trus-
We must make
the world understand that when its gold flows here it is not
lost in the Great American
Desert, or sunk in the Atlantic,
The gold stock must be recognized
as
a
symbol.
It
is
to
the financial fabric of the world what the
statutory reserve
of a bank is to that institution—not a treasure of
Dives to
be
hoarded,
need, to
but
ease
pneumatic
a
For generations Britain
world,
the
metal.
assured
one
cushion
was
free
the gold
market
repute
miser,
a
worth
was
held herself
as
time
of
a
mere hoarder.
standardizing
She knew
too
was
that
a
good
She
on
behalf of the commercial world,
carne to her.
She let
She made hers the
come.
the
Because she
than tons of the yellow stuff.
more
trustee,
for all the gold that
headquarters of the
for
Why did she hold that place?
wise to be
against/the
down to normal levels again,
us
it.go
as
freely
universal free
one
as
mar-
ket for gold; and in doing so she made herself the financial
capital of all creation.
Now,
is
our turn
j
come
to do that
and all the rest of the world.
same
Are
we
thing for ourselves
big and wise enough
to do it?
Let
we
me
now
into
our
But if
teeth,
we
nations
can
make myself perfectly clear.
is
possess
would
we
spare
struction
or
will
ours
rise to
our
it to help all
Europe;
and
plug it
may
we
like.
potential place in the society of
enough of it to buy us
of
We
it yonder in the Pacific if
sink
use
The huge gold store
in law and fact.
a
the world
together.
partnership in the
incidentally,
Europe the service that she needs far
Europe began,
a new coun-
peopled.
world; of great, skilled, thrifty populations; of
hesitate
she let it
greatly that the least of the
Where she formerly loaned she
formerly
no
institutions.' Did Europe lose by its enter-
Now things have changed.
we
They ventured to open
were
themselves
Bather, it profited
we
to build tram-
they thus splendidly dared, not only here but
level of modern
continents in
They dared
continents of the world, the masters of Euro-
European finance
prise?
there
a
country that had not
courage
for cities yet to be populated.
mines for whose
pean
a
They had
It offers
the eastern
to
means
so
"taking over"
such risks.
remind
century,
in
wras
sparsely
Europe asks financial help from
content
the
investing here, it
speculative,
took the chances, for the sake of the business.
rope
shall
doling out charity wherever the latest
on
undeveloped,
healthy
normal,
a
of permanent rehabilitation.
assumed
When Europe began
try,
partici-
and most intense distress is
presented, with no defined
gram
other.
coun-
clal and economic power is such that all
possible conditions
would
everywhere—the industrial
world.
sel, to comply with American conditions by
removing obstacles to commerce,
same
we
exchange conditions
to-day;
the
was
for
demand
situations have been
money and
such
could
as
capital.
her, when by doing
money
those of
as
equipment of
cars,
the country that provided
half the property and public resources of
the
The exchange banks of the middle
to cope with
furnished by
the
before; and it happens that banks of
tried, and have worked,
quite
It
We must not reject
everything that has
change to deal with disjointed
centuries had
were
ex-
proposal to say it is visionary
a
that railroad
railroad in the Argentine, you
a
rails, locomotives,
the
beginning of compliance with
no
the
right hand and the financial left hand
helping to wash each
free and liberal trade relations.
more
that
sure
of
neighbors, such removal of economic restricin
be
may
of
method
a
finances, such readjustment of its
concessions
British capital financed
or
When German
there not enough
country should be conditioned largely
its
continents, in
new
order to control sales of materials to them.
devise
contribution to capitalizing such
our
European investors bought
stocks and bonds in the railroads of the
Is
co-operation with other countries.
ticipation of
constantly
145
first aim of foreign investment.
to
us
group of institutions of
have suggested?
such
We
growing wise enough to
do with it.
statesmanship
utilizing
an
it,
we
DIVISION.
we
more
will
be
We
recon-
doing
than she needs
charity,
We have the gold, the wealth, the producing
capacity, the
ered't.
Have
ward
plan
a
we
the courage and
that will
insure to
the genius to bring fpr-
us
and
to
all
the
the full advantage of this reservoir of resources?
I
nations
believe
1
BANKERS'
146
will, when they understand the
statesmen and people
and
tion
how
I submit, as the outline of that plan,
scheme of stabilizing exchange,
ticipation, through a
begin at home, and even more
should
continent in
that God made.
It spreads before us a
invitation to enterprise, adventure, indus¬
We have here the richest
business methods.
natural
Charity
should good, sound
would be the last to forget that. '
people; I
own
resources
boundless field of
for its commerce, factories for
for its people.
We must provide vast
houses
its industry,
it would absorb all our energies
world to us,
the
a
cannot live Ithus to ourselves
we
responsibilities
responsibilities
We will best discharge these
duties
wide our eyes
duty to the whole of hu¬
people and nation, if we will open
to our own
vision of our
and admit the full
In short, the world must be our
manity.
We are part
alone.
have other and unescapable
of mankind.
to the rest
of action, if we are to make the
of visions,
unit of thought,
most of the op¬
passed the era of that old-time
have
statesmanship
do we care for abroad?"
which demanded, "What
We have
than half
We kept out of the war till more
to care for it.
The Conference on
saved?
Limitation of Armaments repre¬
effort of society
to make its budget—fiscal and
sents
the
social
as
well—come to a balance.
conference,
this
From
pregnant with possibilities of
so
is hopeful augury for splendid re¬
good to mankind, there
set our feet in the right path.
There is promise to
sults.
if the effort for limitation of armaments
But, even
the way to peace and
the
with
deal
of
eration
enormous
be done only though the
that can
aimlessly and hesitatingly, and invite the
meanly,
contempt of the world?
big,
masterful, understanding manner of business
Shall we go on dissipating our
entf, by which all
getting into it at all, still
demanding, "What do we care for
and now we know that
accustomed; it is the one we
to get in,
had
can
may
travel in
That is the way to which we are
security and confidence?
we
ourselves to hew a path
boldly lay down a course, and set
through to the
energies, wan¬
guide or compass; or shall we
dering in the jungle, without
straight
dealings
win the love and admiration
business problem, and
a
hatred
Or shall we extend it in the
and
with
give,
Shall we give it grudgingly,
it.
whether we like or dislike
of us protested to the last against
Rut
whole-hearted co-op¬
That co-operation we must
country.
our
shall
restoration, we will still have to
task of economic readjustment;
its course was run; some
abroad?"
relied upon for sup¬
be expected to realize
make its budget balance if it is to be
that civilization must
and
surely the
that the balance sheet
is
earliest lesson
Who so well as the banker can
port.
of mankind?
portunities before us.
We
whose
present a precise balance, can be
must
open
Along with these,
world-wide system.
ouf own, we
for cen¬
richly repay our efforts.
turies to come and
But
If it was all
irrigation here, of drainage yonder.
works of
restoring the balance to govern¬
moderating taxes,
budgets. I In the effort to accomplish that
ment
We must
to consider means of controlling arma¬
ing as our guests,
ments,
We must build railways
try.
world's task of rehabilitation.
A few weeks hence, the nations are com¬
great part.
a
>
that our first responsibilities are to our
of delay.
So it is as to the
play
premium
delayed too long in getting in we paid a
because we
for every day
bankers,
is quite true
It
unify¬
to
and removing the artificial barriers
commerce.
easy
to
American par¬
of rehabilitating Europe, with
program
ing trade mediums,
in
welfare, unite in sup¬
it involves their own
porting such a plan.
the
financiers,
situa¬
American
I am confident) that
and
have,
we
CONVENTION.
will adopt, for it is the Ameri¬
way.
Labor and Radicalism
This
is
a
subject of utmost importance to citizens
pnited States in general and business men in
It is not necessary to
of
in
unrest
the country
much
of
unrest
is not due
world war.
always follow a
particular.
today, political, social, and
unrest; nor is it necessary
this
to
the conditions
which
With these we are ready to
lines; but very
disquietude of the present time is due to a
much
of
the
culmination of
a
long series of events having their
brain of Karl
in
the
to
face
of
property and
with
normal
Marx.
those in
initiative
In other words, we are face
results of the destruction of billions
the killing of millions of men; and this
occasion has been seized upon to
bring before the minds of
consequent distress the theories which have been
gradually growing in their control of the minds
contented
since
of the dis¬
the Communist Manifesto
the issuance of
Very few men, particularly those engrossed in the
of 1848.
strenuous life
ern
eco¬
for me to tell you that
vice.
of business,
have taken time either to read
writings of Karl Marx, utterances fundamental to mod¬
radicalism,
and the groups
Marx
was a
or
to (note
the method of their teachings
in which the teachings have been received.
German Jew who came under the influence of
History has a necessary
Hegel of the University of Berlin.
unfolding similar to the unfolding of the mind of the indi¬
Hegel believed that there is a
vidual.
which
through
passes
the
mind
of
his
book
"The
able mind of
the
the various
individual passes.
Philosophy
Marx
was
of
mind of humanity
states
through
which
He is best known by
History."
The
impression¬
influenced by this theory and his
In
the
evolution
of
following the breaking
the
up
mind
of humanity immediately
of the Roman Empire to
save
society from anarchy the feudal system was devised.
This
system carried to its logical conclusion called for a
state
of society
based upon land tenure wherein the holder could
There
very
was
little
use
for money until the
be¬
The
appreciation of private property was at a very low point.
However, each feudality was a state in solution, and fol¬
of the crusades each feudal over-lord
period
the
lowing
of the feludal system.
of the disintegration
ginning
claimed, and many exercised, the right
stage of society succeeding
The next
they ruled the people and in this new system
the land
society
of
there was the necessity for the private
viewing this development in a large perspective,
drew the inference that the age
of capitalism was succeed¬
made the prophecy that
ing the age of feudalism, and then
capitalism was not to be the final age but that
the age of
succeeded by the era of the control of human
to be
was
affairs by the hand
Frederick
there
the Communist Manifesto in
issued
was
By 1848. in conjunction with
workers.
he had so formulated his theories that
Engels,
clearly set forth the results of these theories
phecy that, as political powers
then as the result of the
the
eighteenth
century
political powers had been still
and from aristocracies and placed
within the hands of the upper
when
capitalism hand
middle class, the bourgeoisie;
in hand with
fhis new political
in the
shall have exploited Labor until Labor is again
power
condition
of
serfdom and
slogan
"Workmen
The
the hand workers will
slavery,
country of the world and overthrow the ex¬
isting order and substitute
The
owning aristocracies, and
Industrial Revolution at the close
further taken from kings
so
which was
and the pro¬
had been wrested from the
kings by the nobles and the land
of
of
ownership
The mind
and the increased use of capital.
property
of Marx,
it
of coinage.
feudalism was that
When kings no longer ruled
of the dominance of the.state.
unite in every
primary reasoning was as follows:
products of the soil or military ser¬
to the over-lord
render
for they follow certain well defined
cope
the
of the
tell you that there is a great amount
nomic
Cal.
President, College of the Pacific, San Jose,
By Tully Cleon Knoles,
of
for it the rule of the proletariat.
Communist
the
of all countries,
followers
and
that this new theory
Manifesto
of
1848
was
unite."
friends
of
Marx
were
determined
should in course of time dominate the
NATIONAL
thought of the
period of
workmen.
the
expectation
of simple
It
is
development of
was that
the
evolutionary
new
evident
very
the
Marxian
would
era
the
in
the
df
the
Second
was
only necessary to put into the minds of the people of the
world
the
fundamentals of the system
control of
new
to
bring about the
Hence, correspondence
initiated with sympathetic leaders in the various for-
was
ward
looking
established
ideas
bring
of
the
world.
already
groups
would
be
Periodicals
embued
with
permeated with the.new theory.
publishing of the Manifesto
about
class
countries
and
were
the
as
industry and of life.
the
control
to
necessary
conscious
of
Marx
society
by
were
Socialistic
Even
early
as
believed
that
to
proletariat
the
it
develop what he believed to
struggle
in
which
aristocracies
be
and
a
the
bourgeoisie element, already conscious of themselves, would
be
opposed
and
vanquished
by
the
class
conscious
prole-
tariat.
attract
Internationale, called in London in 1864. began
the
attention
of
the
radicals
but it is interesting to note that
even
the
in
response
the
not
was
same
of
at
all
•tance, the English Trade Unionist
all
countries,
Latin
readily,
Marx
for
countries;
the
were
anarchists
leaders
being
usually
bitter against
very
for
most
issue
between
with
The
-countries
of
Marx.
Lasalle,
various
Europe and
Bebel
radical
and
of Bismarck
who
in-
sympa-
Bakunin
in
to
in
by
addition
there
has
retarded
to
the
always
Union
ship
of
the
radicals in
England
wrath
repressive
the Ovils of
cure
the
was
development
1887
It is
in
of radicalism.
in
intelligent
has
the
,
England
Socialists,
of
Labor
no
in
anarchists
of
the
Social-
The
of
Latin
political
So in France
Proudhon
type and
we
con-
were
Trade
completely under
Unionism
being only
has
about
influence
been
strong
600,000 members
Socialists
country.
never
the
usually
are
in
since
and
1871
all
in
of
found,
France
was
so
much
in
the
Labor
In
about
political
the
not
Marx
with
York
until
the
name
did
not
Second
in
had
the
there
of
however,
real
a
limited
the
occa-
test
of
not
was
voters
and
the National
first
the
Labor
Union
oras
Five.
dissolved
same
First Internationale.
there
was
carried
on
How-
in
New
1876, under the leadership of German societies,
and
put
propaganda.
an
end
to
Internationale
Brussells
in.
the
was
The
death
of
propaganda
called
Marx
and
together
in
in
in
the
to
that
as
international in char-
was
situations.
Its
destruction
its
The
ensue.
outbreak
was
sympa-
due
to
believed by
was
of
the
results
found
war
far
were
otherwise
Belgian, English, and
Conferees.
It is true,
I political, or
has been demonstrated
as
that national
and
over
again,
over
patriotism is stronger than religious,
social,
economic interest, and many believed that
even
the Marxian
movement
had
received its death blow up to
1917, but the few internationalists who refused to submit
to
national
At
that
patriotism
this time,
the
on
selves
make
perhaps, it will be well to explain
right
are
upon the extreme left
wing
the positions
occupy
conservative.
very
position,
their conserva-
or
As
you
rect their
on
are
the
from
move
the extreme toward the centre, you find those who
more
to you
their members to seat them-
expressing by their choice their liberalism
and
of
use
revolution,
the right or on the leftof the
speaker's
on
extreme
to
proletarian
Continent of Europe representative assemblies
in the habit of allowing
are
determined
were
opportunity to further the
every
are more
to conviction, and to them the extremes di-
open
eloquence and their persuasive powers.
In Germany the leaders of the left wing were Liebknecht
and
Rosa
Luxenbourg, whom
will recognize
you
wing by Scheidemann.
mind you
in
the right
By keeping the relative position of
will always know the progress of radl-
Germany during the
and
war
well
velopment of the Bolsheviki Government
In
Sparti-
as
The centre group was led by Kautsky and
cans.
into
of
the de-
Russia,
France the radical position has been under the lead-
ership of Loriet, while the centre has been led by Longuet
and
Faure,
while
preceding
formation
the
of
Internationale, from the fact of their selection
we
consider
may
leaders of the
In
wing
In
Millerand,
Viviani,
and
who
America
the
we
Socialist
the
there
ership of
the
while the
right
Marxian.
was
have
thought
with
group,
spokesmen for the
With
as
under the leadership of Ferri and the moderates
of
Eugene
Berger, Meyer London, and Morris Hillquit,
of
Third
Premiers
Briand
Italy Labriola led the extreme left,
was
the
as
right wing.
under Turrati,
more
downfall
Haywood and
radical I. W.
of
the
Prince
Lvov,
Victor
the leaders
Moyer
as
the
W.'s.
Romanoff
autocracy
the provisional government
came
Debs,
as
which in its turn
in
Rus-
under the leadwas
substituted
by the Kerensky government; and then in November, 1917,
the Coup d' Etat of the Bolsheviki under the leadership of
Nicolai
the
Lenin
and
Bolshevist
that
group
hope that the
lized.
ale
1883
1889
the
had
Paris.
It
Karl
Leon
control
Trotsky.
of
Russia
in 1918 and
age
1919
In
and
the
the
there
development of
seeming
was
the
dreamed of by Marx would
success
exuberant
now
be
rea-
Hence, the First Congress of the Third Internation-
wras
and
1891, Zurich in 1893, London in 1896,
many
deepen the convic-
radical among its number that there were
enough
more
German
of
the
name
believed
general War
sia
First Interna-
as
French internationalists side by side fighting against their
democracy
Coalition.
the Germans and
to
hence, while it
than inten-
draw
to
propa-
interna-
in the various nations of Europe to make it
impossible for
a
that
in
Cabinet, and
only effect of the
among
accepted in
Union Number
1872
France,
Unions
economic in its form, for membership
as
was
was
ever,
not
manifested
party
ganiiation
has
Marxianism.
This is due to the fact that
her cabinets have been
America
tionale
met
the Premiership.
in
the
•Chamber of Deputies, frequently in the
sionaliy in
of
than
the
could
internationalists in allegiance to the Second Internationale
Unionism.
great
the field
in the direction of anarchism.
find
to
particularly
more
rather
adjustments to political
enemies
calism
the leader-
the
mdre extensively
to
it
specific
more
represented
decided
leaders
evolution,
this spirit of compromise, for instance, it
gpirators following Blanqui, while the working class agitators
local
tlietic
it
the
although
certain degree it recognized national patriotism
a
these in
has originated in the Latin mind.
gone
action and
expect
and
under
were
growth
words,
that,
by
and
It
movement
other
tions of the few;
acter, to
The political pro-
extremely interesting to note that
istic theory
mind
tremendous
a
education.
possible into alignment
of
of'Jo^n Burns and Tom Mann, culminating in 1886
and
In
come
definite
more
proletarian
sively.
Internationale
believed
ultra-radical, while those who
movement
of
group
by
wider
tisin; hence, those who sit
the
Socialists; but after
in
the growth
a
thought
First
extremely active in
"I will
and
Trade
been
the
the
drawing
usually members of the Fabian Society.
grams
the
anar-
in
met
convinced that his method
was
inocculation,"
Socialism
In
full
in
Russian
it that the most bitter
and he coined the phrase,
error
Socialism
State
Bismarck
years
longed
not
was
the
Germany,
laws possible were passed against the
twenty
class,
and
parties
were
most
middle
rule expressed
a
the
and
tional
theory and the
Hence, he
Liebknecht
saw
the
democratic
as
propaganda
of
his ultimate
and
social
responded
State socialism
theory of capitalism.
sympathy
ehist.
the
the
clear cut
ultimate
of
countries
the
was
a
increased
ganda
thi$ Jarly period
thetic, in Germany the Socialists, while in France and all
other
be
of
Internationale
of the proletarian would
age
and
The First
to
147
experience
the
the result
that it
was
DIVISION.
first
that
come, as
The belief
process.
in
idea
BANK
the
as
called to
Second
convene
at
Congress
at
Moscow March 2 to 9, 1919,
Moscow,
July
15,
1920.
It
its object to complete and incorporate the ideals
of
Marx and
to
realize in
practice the eternal aims of
Socialism and the Labor movement.
It
entered into all of
Paris in 1900, Amsterdam in 1904, Stuttgart in 1907,
Copen-
the benefits and advantages of the First and Second Inter-
hagen in 1910, Basel in 1912, ceasing to exist at the
nationales, 4>ut utterly repudiated their methods.
break
of
the
World
War.
Through
the
out-
lessons learned
had
now
come
for
The time
cataclystic revolution in every country
BANKERS' CONVENTION.
148
that
propaganda.
spirit in the call of the
the Executive Committee as elected
Lenin was the moving
Internationale,
Third
at
reached by the radical
could possibly be
A1 though
thk August Congress
made up of Zinoviev,
was
Buk-
named by the Itussian
Communist Party; Paul Levy of Germany, Harry
Quelch of England, C. Rosmer of France, Signor Serrati
of Italy, Herr Steinhardt of Austria, M. Frika of Scandinavia, M. Chaklin of Bulgaria, M. Milkich of Jugoslavia,
M. Radnyansky of Hungary, Sultan Cada of the Near East,
M. Pek of the Far East, David Wynkoop of Holland, M.
Manxer of Finland, and John Reed of the United States,
who died in Moscow since the naming of this Committee.
The delegates at this Congress issued the Manifesto, adherence to whose provisions were necessary for the admission of delegates from any Socialist group in the world.
The conditions for admission of new parties and duties
Tomski, and Kobozky, all
harin, Radek,
17. Parties must change names. Communist Internationale has declared war upon entire old bourgeois world
and on old Yellow Social Democratic parties,
18. Duty'of all leading press organs to print all important official documents of Committee of Communist Internationale.
19. Parties applying for admission should call conven-
tion to examine conditions within four months after Second
Congress.
20. Two-thirds of members of party executive and all
important central bodies must declare clearly and publicly
in favor of entrance into Third Internationale before its
Second Congress. Exceptions allowed upon approval of
Executive Committee. Also made of Centrists adherents
named in condition seven.
21. Parties who reject conditions will be expelled.
Immediately the Socialists of the world were divided by
thi8 Manifesto. At first it seemed as if the Third Internationale had overstepped itself in the extreme radical
munist character and agree with program
conditions, and many students thought that the reaction
Third Internationale.
Party press must be edited by rewould be against the propaganda. However, Lenin's obsponsible devoted Communists.
Propaganda for dictator- ject was to weed out all nationalists and patriots and weakship of proletariat should be such that its necessity would
kneed Communists. A brief survey of the reception of
be obvious to each worker, soldier and peasant, and reguthese provisions is now necessary.
Jarly noted in press.
All opponents must be systematically
The French Socialist Party having sixty deputies in the
branded in all possible ways.
Chamber and 180,000 dues paying members was split into
•2.
Reformists and Centrists should be removed from allv two factions on December 30th, 1919.
responsible posts in organizations desiring to affiliate with
In Italy, where the expectation was that the Socialists
the Communist Internationale.
•
almost in a body would adhere to the Communist program,
3.
In countries where work cannot be carried on legally,
there was great disappointment for the industrial depresboth legal and illegal activities should be combined.
There sion did not have the effect anticipated. The elections of
is class struggle in nearly every country in Europe and
May 15th, 1921, were immediately disappointing to the
America entering upon phase of civil war, and under such
Communists, although the reaction has been somewhat in
conditions the Communists cannot rely on bourgeois legality,
their favor.
' '
4.
Systematic and vigorous propaganda should be carThe small Communist Party of Poland believes that it
ried
in army.
A Communist nuclei is to be formed in
will grow rapidly as the result of political developments of
every military unit.
the past year. The German Communists weeded out the
5.
Same carrying of campaign in country districts.
majority Socialists and the Scheidemann group.
0.
All parties desiring to belong must denounce avowed
In England after months of discussion and political
patriotism, dishonest and hypocritical pacifism.
Without jockeying the British Communist Party came into being
revolution
overthrowing capitalism no organization
of July 31, 1920, after the Moscow Executive Committee had
League of Nations can preserve mankind from imperialistic
attacked the Center of the Second Internationale, reprev sented in England by Ramsey Macdonald and Philip Snow7.
Must recognize necessity of complete and final break
den, in France by Jean Longuet, in Germany by Kautsky
with Reformist and Centrist policies and preach it.
Break and Ilasse, in Italy by Modigliani, Turrati and Traves, in
must
within very short time.
Russia by Axel rod and Martov, and in the United States
8.
Duty bound to support movement for emancipation
by. Ilillquit. All of these were accused of playing the part
of colonies and demand expulsion of imperialists from coloof Pontius Pilate during the war. Arthur McManus was
nies.
Nourish fraternal feeling for workers and carry on
Chairman of the convention which consisted of about two
pertaining thereto are as
follows:
Comand decisions of
agitation must have clear
Daily propaganda and
I.
on
wars.
come
propaganda among troops.
Propaganda
9.
other mass
at
trade
and
Win Unions to Com-
unions, cooperatives,
organizations of workers.
and
expose
treason
Fight
yellow
Trade
munism
10.
within
Amsterdam.
Aid
of social patriots.
Union International
international
union
of
organized
Red
Trade
hundred delegates.
The Executive Committee of this new party consists of
six members in addition to the provisional committee com¬
posed of W. Paul, Arthur McManus, and T. Bell. This party
was committed to
1. Establishment of soviet form of government by means
of revolution.
2. Establishment of proletariat dictatorship.
ment.
3. Participation in Parliament under mandate-from
12.
Parties should be organized on principles of demoCommunist Party only.
cratic centralization.
/
4. Affiliation with Labor Party, with objects ex13.
House cleaning of party organizations to rid them
pressed.
of petite bourgeois and special interest elements.
It is very interesting to note that while Reinstein and
14. 'Unqualified support to all soviet republics.
Should John Reed were both on the Executive Committee of the
pledge refusal to transport munitions or supplies to enemies
Third Internationale, Reed's death in Russia left, America
of soviet republics.
Propaganda against troops sent out
without any outstanding leadership. According to Morris
against soviet republics.
"
Ilillquit, the recognized leader of the American Socialists,
15.
Work out new program in spirit of decisions of Comthe Social Party of France under Longuet, the Independent
munist Internationale
attached to special conditions of
Labor Party of England and the Independent Social Party
country.
Programs of parties belonging to Communist Inof Germany come very close to the position of the Socialists
ternationale to be confirmed by Congress of Communist
of America. The Executive Committee of the Third InterInternationale or by Executive Committee.
If not sanenationale speaks of Morris Ilillquit, Victor Berger, and
tioned by Executive Committee party may appeal to ConMeyer London as one hundred per cent. American, and
gress.
hence disqualified for membership in the Third Interna-
Unions affiliated with
II.
Revise
16.
parliamentary groups,
Decisions of Congress and
affiliation
eration
Communist Internationale.
with
Internationale.
conditions
of
different
expel unreliable ele-
Committee binding upon
Should take into considcountries.
tionale.
;
•
conclude that the program of
instead of showing any evidence
In general terms then we
the Third Internationale,
I
NATIONAL
of
immediate establishment,
point of
the
rather to
be
rallying
the
struggle to foment class struggle in every
a new
nation of
is
BANK
world.
stood
the leader
as
indicate the reasons for
within
that
His last election to the Presidency
the. various reactions to this program in the different coun¬
tive group
Federation
of
Labor
has
Federation
of
Labor
we
field
for
the
development of radicalism which would
un¬
doubtedly have led to the overthrow of the House of Hohen-
there
zollern and existing order If it had not been for the wisdom
groups
of
sons
Bismarck
in
mind responds
organizing State Socialism.
and expects the
tical
activity
Socialist
triumph of radicalism much
than by
more
economic evolution.
have
groups
French
The
been
unusually
In
by poli¬
Italy
politics
in
strong
the
since the formation of the Kingdom, but have not yet
is
is still in control.
immediate
no
this:
for
conscious
of
group
laborers,
of
survey
Second.
ers
have taken every advantage
action.
1832
In
one
right to vote; in 1867
right; in 1885
of
out of
person
possible political
every
twenty-four had
the
out of twelve received the
one person
out of seven; in 1918 one out of three.
one
Labor leaders have been quick
to take advantage of this
increasing power in the hands of the average citizen.
The
that between 1906 and 1911 more Socialist
legis¬
result
was
lation
To bring this about the legislative
of
power
the
Lords
of
House
War
The results of the World
such as to give to the women the
were
their
completely destroyed
was
except for the suspensive veto.
militancy
suffrage which
to acquire for
not able
was
them
before.
the
two
rea¬
There are
for
the
America
is
out
way
class
a
always
Class distinctions
do
not
reflect
themselves in
rule in Europe they are horizontal.
as a
long as only delegates from the I. W. W.'s the Inde¬
pendent Workers of America, the Debs Wing of the Social¬
ist
Party, and the
mitted to
is
Third
Internationale, the danger to America
At
present,
Internationale,
then,
the
the revived
have
we
Communistic
revolutionary
Internationale, and the so-called Two and One-Half
Internationale
ond
Communist Party of America, are ad¬
Third
the
imminent.
not
Second
and
not
striving to
so
far
us
go
little farther than the Sec¬
a
the Third.
as
In conclusion let
passed in Great Britain than in any previous
was
period of fifty years.
within
radicalism
political parties for the lines of political cleavage are
So
radicalism in England that the methods have been experi¬
mental rather than theoretical, and that the Socialist lead¬
World
present
at
present.
gained
perpendicular while
cursory
of
leaders there has not yet been developed in
in general.
a
danger
the
that
see
*
the
from
from
expelled
clearly
can
With all of the systematic attempts of the radical
sufficient strength to gain adherence with the Communists
It is very evident
Inasmuch as the American
been
of American organized labor.
First.
quickly to Anarchy and Syndicalism
more
of the
American Federation of Labor indicates that the Conserva¬
tries of the world.
German labor offered the best possible
organization of those who
receive justice for Labor through Trade Union
expect to
methods alone.
A few words will be necessary to
149
DIVISION.
get the vision of
indoctrinated with the Marxian
vanced country of the world.
the great mass
of radicals
Absolutely opposed to these,
of middle classes and the wealthy, including
of course those
engaged in commerce and trade and larger
these two opposed groups there is the
Between
industry.
mass
a
theory living in every ad¬
trade's
people
It is very evident that with one person out of three voting
great
Labor
plexed by industrial and financial depression, not knowing
control
can
Macdonald,
Ramsey
thinker
there
as
even now
who
outlining
the
English
method whereby
a
a
and
England,
considered
be
may
within
is
election in
general
any
clear
as
radical
group,
a
is
Labor Government
This
offers
where
in
extent
great
complete contrast to the situation in
a
States
United
Labor
has
never
field.
the political
of
workingmen
in which direction
is the great
functioned
Samuel
to
the
any
Gompers has
The Spirit
and
of Karl Marx
to go for a -way
per¬
How to win them
out.
If the principles
group.
right the radical
are
group
will win.
If the
not right they must be opposed by
are
rather than by force,
reason
small
problem before each
principles of Marx
be organized in the next election.
may
body
by persuasion rather than by
repression, by methods of intelligent education and by a
still further extension
of industrial righteousness.
of the West
By H. C. Cars, Vice-President, First National Bank, Porterville, Cal.
Mr.
me
in preference
term
to "gentlemen."
I like
to face men.
Russell Fall
being men."
He didn't say, "Quit you like gentlemen," but
said, "Quit you like men by
once
well, as I look into the faces of some of
who have come from the East and Middle West, that
you
think—even
you
nia,
going to tell
the
on
we
enjoy (which
we
or
have
without
the
I
the West.
suppose you
of the wonderful climate in
do), and the fact that
we
this State
in
we
(which
we
irrigation
can
raise
United States (which we
the most glorious
beautiful
green
grow
fields
You
grow
women
may
I
going
and
we
(which
perpetual
do),
and
we
have), and the
sunshine, and ever¬
where the strong men
stronger, and the old men grow older,
women
here,
flowers
(which
climate
fairer
you
out
and
throw
away
your
powder-puffs.
that I have no such intention.
to say anything about
mentioned.
wondered
any
and,
of course,
he
ex¬
I do believe,
courtesy,
got through he said, "Well, that
for
he had
if
but
climate,
New
read
ever
York
Mark
for
is all right;
company."
Twain's
I
saying.
Now, iny friends, it is not of this genial, hospitable spirit
sunny
is
so
evident, of which I am going to
It Is not the breezy way of the Westerner, or the
speak.
skies, or the beautiful flowers, that
under the title "The Spirit of the
the West."
to
It
something
Ever
is not of these that
t wish to touch
West," or "The Voice of
I
shall
speak; but it is
else.
since
the
yellow
Asia, ever since the wise
man
men
crowded out of
Chin^i into
left Caldea and followed the
Star of Bethlehem, of the Man of Sorrow, ever since those
people of Eastern
Europe came on
ward and crowded the Nordic race
the north and west, ever
on
ern
shores of
for
one
westward and north¬
to the shores of Europe
since those people on the west¬
Europe and the British Isles came to America,
reason
or
another of which I shall speak
later, and
the people of the Colonies journeyed into the Ohio
Valley and the Mississippi
Valley, and they in turn went
westward.
As I
I am not
of those things I have
York;
with great patience and
I
of Los Angeles, that
later on,
who live in California, or who expect to come
take
assure
and the fair
(which they do).
New
in
banker
to say something about my home of adoption, and
California
cannot) ;
mountains and more perpetual
highest
that we have the biggest ocean and the wettest water,
;
most
But
you
here than any place in the
snow
and
or
Pacific Coast and
anything with
that
Voice of
Spirit
am
I
California that
here
particularly and naturally of Califor¬
the
as
think
me
after
and
going to express myself and try
am
patience and endurance by speaking in glowing terms
of the Pacific Coast,
do)
Chairman has fallen for
Honorable
the
the disillusion—that I
your
hospitable
pected
said, "Heaven for climate, but hell for
once
A few years ago I was entertained by a most
company."
he listened
"Quit you like men."
And I know very
Mark Twain
I hope that you will permit
Chairman, Ladies, Men:
to use that
very
it
remember, in
my
boyhood days
(and it was not
so
long ago), as I lived on the old State road of Illinois,
was
one
of my pastimes to sit on my grandmother's porch
watch
and
moving wagons, as
the
with their canopy
out across the sea or else turn our faces backward, becauae
called them, go by
we
the call of the West is just as strong in the heart of the
"Kan-
tops of muslin, painted on the sides,
Kansas and
to the plains of
On their way
bust."
or
sas
CONVENTION.
BANKERS'
150
that
only
was
of a
Now, then, here is one of our little problems, and I wish
those people in
to Say to you men that I think the gem of the speech of
the Sierras to
this morning that was delivered by the President of the
since the first tide of movement
of
say ever
University of Washington was the thought he gave us
when he said that there are only two ways to lead men:
westward,
started
man
the Spirit
is
what
the voice of the soil;
And I want to say to you that if brevity is the soul of
wit, my speech right now is going to be the funniest thing
they
another, and raise something from the ground, where they
liar
fact, and
of these men in their western pilgrimages was there
thought—the first ones, I mean—except
any
thought I had just begun.
Now, then, what are we doing today with these
in the hearts or minds
that not
true,
very
intent to till the
young
these men of vigor and energy and hope and patience,
men,
How are we going to take care of
who have come here?
desire and
a
heard, because I am almost through, and you
ever
you
And so it is a pecu-
might be a part of creation, as it were.
of any
fact, I have only to give
a
few ideas.
you a
might join hands with one
place where
some
go
of the land,—the urge
cry
And so, taking that as
inside.
My friends, it is
of the West?
it is the
is by the application of a club to the outside of his
one
head, and the other by the introduction of the idea to the
the hearts of men ever since the world began,
already in
to
spirit of the
the voice of the
the Star of Empire takes it way.
Chairman has said,
And
over
on
in the hearts of men—always westward, as
West has rung
the
desolate plain;
a
States traveled
inter-mountain
this country—I
Is it not true?
beautiful val-
leys of Utah, where they have made a paradise out
the
where he is it is always to the West that he turns his eye*.
people from Illinois, those people from Navoo, the
Mormons, who went across the plains to the
country
today, of the East, of the Middle West, and
the inter-mountain States, as it ever was, and no matter
Nebraska to settle there.
Those
man
young
them, and where are they going?
soil, to farm, to settle the unoccupied land,
ideas of
Now, I wish to address you, or to address my remark*
building railroads or building factories, or starting manu-
particularly to a condition of California that is prophetic
of these countries had
The first settlers of all
factories of any kind.
obsessed
that
the
Their sole idea
and
them
controlled
was
of
cause
that,
contributed the
country,
had
who had courage, were
all
of California
It is not
that the first problem is our land problem, or, rather, the
last problem is our first problem, because just as the tide
today represent the highest type of develop-
accomplishment.
with
the
it
the
All honor to you people of the
most energy.
weakling that
And
great western country.
the Colonial
possessions,
clear through.
not
so
the
you
of
011
I11
life,
It
we
call it,
the result of
Francisco,
they
run
up
in
first
that
overflow
in
that
them
life
with
of middle age,
men
San Joaquin Valley,
the
temples,
there is
a
where X
was
picture emblazened
graced the exposition grounds in San Fran-
that
picture of
nose
to
bowed.
I have
maybe
When I
I
the
to
ground,
his
the shoulders bent and his head
that picture,
that Ex-
prayer,
ther
we
largely
talking
am
remarks
end of
we
might
to
country
just
be
problem
biggest
bankers,
appropriate
as
have
we
the
trail
of
the
men
wonderful story
who
dry-shod.
We
now
rest
come
responded
To
to
to
race
my
city
the
face
to-
It
And if the Caucasian
be done, and it must be done.
can
is to dominate in this nation, if it is to cast the vote*
that shall control the destinies and policies of this nation,
we
must raise Caucasians to do it with, we must make those
men
powerful, and we must make it possible for them to
Do you know that there are
exist happily and profitably.
localities in California today that only a few years ago—
indeed, only six years ago—I passed through in my travel*
Committee
Bankers'
California
the
Today there is not
people.
try.
of
use
a
Far-
either to look
that
a
Now, picture that! Not
a
white man in the whole coun-
one!
They cannot stay there.
I know that people in the East who are not acquainted
with these conditions may view this proposition with com-
placency.
brown
But I tell you, my friends, that those people, the
and yellow races, can drive out
Those
man
utterly
that
He will not exist there; he will not stay
men
can,
operate
can
because
different,
whose
the competition
Now,
then,
the white man; he
him; he cannot exist in the locality
cannot compete with
to
com-
Association,
beautifully improved and operated entirely by white
were
they
lands
it is
a
is
a
cheaper
than
How can you expect
requirements
people that live so
are
so
much
well-established fact that
You might prevent that by legislation
know
some
of you
less,
joke?
eventually
the man who farms the land is the man who owns the
I
the
They
live more cheaply.
to compete with a race of people or a
a
believe
I
although
day is how to keep the boy and the man on the farm.
hardly live like human beings at all.
was
The big prob-
to-day—and
face
to
stand and guess and wonder, and al-
have arrived at the jumping-off place.
cannot go
have
because there
the call of the West, the spirit of the West.
monplace,
I
bankers
white
a
the
that
lem
that thing, that creation of the artist's dream,
saw
impressed
So you men who have come here at this time have
to
That, to my mind, is one of the most serious threats of
where he lives.
It
And that is the rolling back
to-day to the American agricultural people.
there.
or
strand of shrubbery going
of these nations just across the Pacific into our country,
me.
reason
a
fence^ we are now coming to a place where
face another situation.
we
that statute, will remember
one
in that. The title, you remember, was the End of the Trail,
near
through the
another.
saw
for
offer
his head
the crevices as it passed on, as it has been building up and
lapping over each other, like
It is
wind blowing his mane, and
the
doubt that anyone who visited
110
could not help but
most
with
rider with
a
position and
it,
horse
a
the water's edge,
has flowed westward, as the congestion came and filled up
about the States then as the Chairman of the Agricultural
against those fellows.
Cisco, as the time of the Panama-Pacific Exposition.
his back
or
contribution
a
by the people of the East,
ago
great pleasure to
a
to
San
or
.
banker—the
as
and those fellows have
County,
that one time
on.
al-
was
wonderful grove of the native oaks, which
of God's
one
this fellow,
long
It is
In
a
Austin,
or
They are exuberant;
Tulare
in
Lake,
was
energy.
live,
pioneer.
a
I will
whether you have encountered him, as
breeziness;
naturally.
later
to
did, and much to your joy and pleasure, at
Salt
made
was
the
and
I am not
in the present breeziness,
see
you
or
wherever—it
had
the
that is true clear from
It has always been the best of them.
Westerner,
Denver,
that
most vigor and
the best of them that came westward.
Arid
many
West;
go
the original Thirteen Colonies,
or
"of us," because
say
ways
of
let leave the roof-tree^and
the most courage that you contributed
hope and
this
the sick boy or
never
was
always your son that had the
was
most
you
It
westward way, that now that it has practically ended
a
by the white race on this shore—I say, it is quite natural
indeed, that the people
the ones who went West.
East who have given us the best of your families, the young
men
in
The men who
best of its kind.
it is quite natural
strange,
ment and
that the first immigration started from just across the seas
the men who had energy and vigor, the men
vision,
It is quite natural, on account of the fact
condition.
you a
those people left that
when
country,
every
I am not howling calamity; I am submitting to
stopped.
Very naturally, be-
imrt of it.
condition that will assail you people, no matter what
a
part of the United States you live in, eventually, if it is not
the longing,
burning desire, to get near to nature.
And that is the beautiful
at
of
and the thing
was,
them,
110
Southerners
say
land,
through the nation,
that
is not
true in
NATIONAL
the South, because the
told me,
once
hardly
who farms the land, Joe Hirseh
niau
ever
of you know Joe Hirseh.
the land.
owns
thers here and
their
generation
I
some
who have
burden
a
should have, with reference to the next
or
that
suppose
speaking to bro¬
am
fathers, and fellow-men
hearts,
I
But that is true in this country—
perhaps not today, but eventually.
on
BANK
after
comes
There
us.
are
many
gray
heads and many bald heads here who have
passed through
the fire of experience,
who know that the welfare of their
is the chief burden of their hearts
now, and the chief
sons
burden
of
their
wive's
hearts.
destinies of the generation
And
I
so
is to
that
occupation of the soil by white people.
to
California
we
kind-hearted—I
bankers.
think
Do
this
deceived
tionist—do
not
be
humane and
more
and
yellow
and
replace
tion
of
So I
plore
think
you
was
to come in here and encroach
our
white boys and white girls in
charge
to
with just
you
that
thing,
one
locality,
your
friends:
my
I im¬
California,
now
but
places in the country, shall be kept white.
bending
every effort to teach the
improvement of the breed of stock; but what
to
are
going
we
perpetuate the white race, to make them finer, to
make them
better and
capable?
more
You know you must
raise the good men of this country on the farm.
It cannot
be
and
in
done
for
the
cities—you will admit that.
big bankers in
of
men
the
thing:
come
to
this
come
in
the
have come
past,
here
"this
to
else.
The
he
learned
to
Is it not true?
the
and
given
us
no
are the
in
Minnesota.
helped
North
here
work
to
language
the
they
after
He
the
so
it;
he
are
they
awhile,
will
and
agree
country.
Who
does not?
They
phets you follow after
is
I
true
If you
a
don't, but
skirt;
come
110
one
the factories
since
ever
landed
came
is
a
farmed.
same
Of
follow
they
now,
come
friends, just
my
from
the
north,
bear that
whether
in
come
intention to
come«
farm, to till the
good citizen.
a
I have
he
The
man
Further, he should not be permitted
'
the
011
portion
a
of the
the
are
most
Coast attending the Convention,
powerful class of
they
with
the
if they will
to
want
anything
say,
that is just and
him
replaced
by
the white
be
yellow
a
be
or
brown,
a
other
any
away;
except
a
of
man
your
tribute that any of you bankers
paid is by the mothers of this country to have
kept
who
is
that
he
boy
my
into
bank and say,
your
the farm."
011
"Mr.
a
Banker,
And all honor to the banker
putting his shoulder to the wheel and offering all
has in
right way to keep the white boy
a
farm, because there is where the good
is where
there
today.
And I
bankers.
the
real
red-bloodedness
I
speaking
am
New
in
the
the
nation
city
our
largely to the
now
rule.
any
the spirit of the soil and the voice
you,
land, the spirit of the West—it
be
of
There are always exceptions to
implore
011
coming from,
men are
that with all due respect to
say
Understand,
I
so
may
the farm
on
father; talk to him; take him into
The greatest
mother walk
of the
to
charge you
don't let him be
or
race,
dt
is
If he is inclined to go, talk him out of it.
Don't talk to the
can
I
bank; don't let him get
replaced by
race.
confidence.
good
And
to¬
can
cooperate—that
right.
that
America
responsibility, first, to keep the boy
in the community where you
is
in
men
and
I do,
as
The group that these bankers represent here
anything
you
bankers
not be here; it
may
England; it may be only just
across
the
county line from where you live in West Chester County,
Pennsylvania.
I
don't know
where
is, but I have heard about it.
West
Chester
County
If that boy wants to go over
who delivered the address
just
now
I
here
people
course,
one
welcome
having
West
derful
the
his
that
little kid
the
him
for
say
the grave.
to
realizing
avocado
Just
one
of
the
He
ranch.
i»
The spirit of the
is getting
he
now
And isn't it
a
won¬
man's heart
The first inclination of the
out and get his hands in the soil, much
disgust.
.v:
'
to you, wherever you be, the spirit of the West
die.
never
a
an
years.
It
is
to
up
and foster and nurture the
ing, in
has
tie
spirit of the West lives in
is to get
to his mother's
I
life,
earth, getting back to the land.
from the cradle
So
is
of the best times in his life.
called
has
Even the patriarch of banking in
go.
yesterday,
of
one
down to
will
from
farm, let him
a
ambitions
skirt
mind—whether
they
where
man
this
pretty faithfully all the time, and that is about all.
But
before.
grew
matter
of
to
follow after something.
I
the
one
no
011
don't follow after false pro¬
you
where
California, that grand old
everybody
as
good agri¬
here.
man
Those
the
Italy, and come
Take
good citizens.
me;
people do.
some
us,
vigorously hardly
there
with
they followed after false prophets, the
does.
It
in
and
trouble
us
country
into
go
among
the unwelcome citizens.
are
the
Dakota
develop
have
people who
intentions,
that his given
populated
from
here
are
and
trouble, the people whom
neighbors,
comes
speak
lived
tlie
people who
citizenship and live
agricultural
man
anybody else would
hunt
and who
now
of
fully appreciate the fact, knowing bankers
And
as
And
coming
the
blue-eyed, fair-haired Scandinavians who
country
I
country banker.
who
man
that
with
the
and down this coast and make
up
grow
with
south
friends, I face
my
emigrants, the desirable citizens who
with
and mines is the
who
then,
taken
as
and
country
mind,
are
Go
and hunt for
go
where they started.
see
in
country, who
glad to have
are
country;
bear this
the people who have
we
the
accomplishment, and
Another
Now,
don't let
see
very soon other
do
the occupa¬
land.
Our universities today are
to
be
land
our
to find
the
soil, to raise something, and be
they
to
from
with anyone,
comes
from
come
who comes to this country with any other intention should
day.
on
find
to
from, if he
as
Christian if you permit these brown
more
blades of grass
fault
110
fault
no
come
California, and farm
two
construc¬
a
going
are
men
the
you
deceived-to
who
man
have
they
to come here at all.
that
ably and aptly, when he spoke of the propagandist
very
to
I
who
whether
or
fault to find with the good agri¬
no
not be welcomed here.
those
morning the speaker said
compared with the other type of
culturalists/
culturalists
near
by
peninsulas,
Italy, I have
the
upon
This is very
be
not
stand
Scandinavian
south of
151
the
to you
say
come
DIVISION.
us
and develop
to encourage
thing that, to
my way
of think¬
man's heart is divinely placed.
Ports and Free Zones for the United States
Free
By Henby M. Robinson, President, The First National Bank of Los
Angeles, and the Los Angeles Trust & Savings Bank.
The surge of the trading nations of the world to re-estab¬
lish their
foreign
commerce
brings again to the fore
a
pro¬
posal which has frequently been discussed in this country—
a
proposal for the establishment
"free zones in
or
of
so-called
"free
ports"
ports" in the United States.
Bearing
the
chant
States
fact
marine
At
the
present,
the
to this country
the project has been
the
subject
than at
is
any
of
much
have
on
the
greater import¬
time in the ten years that
under consideration—first, because of
maintenance
of
the
foreign
whose
ficial potentialities
bearing which the inauguration of such
up
the
a
policy must
trade
which
the
during the war;
United
States
now
profitable operation,
secondly,
has
a
because
large mer¬
if not actual
ex¬
istence, is dependent on making the best use of our ports
juncture.
ance
built
that
and trading facilities.
Foreign Trade.
on
United
of
Let
us
ire
Many proposals of tremendous bene¬
lost because not made at the proper
hope that this time the proposal is better
synchronized.
There
ing
free
which
are,
have
What is
unfortunately, many misconceptions concern¬
ports
and
the advantages
of their establishment
developed during discussions in
really meant by
a
free port is
a
recent years.
free
zone
within.
■
BANKEES'
152
a
bited, broken
ships either stored, exhi¬
unloaded from
he
can
Another
segregated district where imported mer¬
port of entry—a
chandise
CONVENTION.
i
may
which
Originally, the propaganda for foreign trade pones contem¬
plated their establishment in about three ports on the At¬
and
merchandise
However, if
United States.
before
free
after
or
into
zone
paid.
manipulated,
otherwise
being manipulated should
domestic
a
from
move
the customs duty
market,
This is
must
great stride in the right direction, for if all of the
a
Senator
in his
Jones,
the
expression
These
tional
these
from
and
to
burden
the Pacific, the congestion
would place an addi¬
ports
terminals
rail
on
would result in
proposed, would be of limited area
zones, as
traffic
of
better describes
and uses, and much better defines the pro¬
purposes,
posal.
has adopted
bill,
which term much
the East coast,
and New Orleans on
Philadelphia
York,
and in only one or two ports on
"foreign trade zones/'
the ports of New
foreign trans-shipment were to be done in
Trade Zones Defined.
Foreign
of for¬
eign trade zones in each of our important ports of entry.
the
\. ■>'
.
The present
Pacific.
discussion, however, provides for the establishment
part of such merchandise
any
coast, and one or two on the
lantic
by the Customs authorities of the1
ference or charge made
the
the
proposal.
be exported in its changed or new form without inter¬
domestic
be
would have
This is not the case under the present
interior.
refined, and graded, or cleaned and mixed with foreign or
that those
been
has
advantage over the rest of the country, especially
some
repacked, assembled, distributed, sorted,
up,
misconception
widespread
ports where free zones were to be established
and
overloaded,
already
uneconomic transportation into the back
an
for domestic consumption.
country of merchandise intended
ranging from a few acres to possibly several hundred acres.
would
They
their
have
front,
water
own
wharves
fact,
in
knowledge
or
Customs officials need
our
merchandise
the
that
concern
it could be kept within
have
exists;
pared with the rest of the country, it is only necessary to
and
repeat that there is no such thing as "free ports" in the
the foreign trade zone indefinitely
opposition
the
to
establishment
centre
that it meant some attack
the
on
under
two
countries
such
in
although
ports,
of foreign
two
heads; first,
principles involved in
a
the
has
London
free
tion and her regular ports
thereby acquire
ports and
other
over
would
also
It
.A; ..v.";.;....
I.;...
•
\
..
...
\
.
'
,,
.' r
•
would appear that the fear of the protectionists that
the establishment of foreign trade zones would negative to
degree
some
protective tariff policy cannot fairly be
a
tained because, In practice, all
a
foreign trade
free
zones
consignment trans¬
greatest
have had all the privileges that
setting up of foreign trade zones.
Germany, with a protective tariff before the war, developed
>
Tariff Policy Not Affected.
V-:.
are
foreign trade zones, as she is a free trade na¬
zones nor
would be imparted by the
interior.
the
over
advantage
an
be established,
to
were
there
difference between these
shipment market in the world ; but England needs neither
where
zones
no
things.
Of course
protective tariff policy, and secondly, that some few ports,
fofeign trade
In
country where a protective tariff exists are there,any free
within ports, and there is a vast
has seemed to
zones
production.
domestic
with
competition
'
;
Heretofore,
trade
of
sense
would hot be within the Customs boundaries of the United
States.
would place the interior at a disadvantage com¬
the plan
no
since, within the meaning of the tariff law, technically it
people of the interior who have felt that
As regards the
loaded without the regulations or delays of Custom House
Inspection;
Differ.
Free Ports and Zones
and
The goods entering these zones would be un¬
warehouses.
zone
sus¬
merchandise coming through
into the Customs territory of this coun¬
try will pay the customs duty as at present ; and only such
several ports where the
extensively carried
tained
has
main¬
abroad
could
Hamburg
1882
From
where
district
a
principle of foreign trade zones was
on.
from
merchandise
in and be handled and manipulated, and even manu¬
come
This re¬
the payment of customs duty.
factured, without
sulted in the creation of world trade with Hamburg as the
One
centre.
German
other
two
or
also
ports
maintained
foreign trade zones.
merchandise imported into a foreign trade zone as is trans¬
shipped will
As
escape
matter
a
chandise
of
retained
for
shipped should not
the principle
pay
bond
the
across
the customs duty is already recog¬
Under certain provisions
chandise
by water,
country for trans-shipment
trans-shipped
bond
in
abroad.
in
connection
shipped abroad
domestic
with
become entitled
to
paid
products,
refund
a
Although the port of London does not maintain
ment business has been built up
and
which
world
may
and
of the
tare
worked into the domestic commodity is, at time of ship¬
ment
abroad,
susceptible
While the principle
a
foreign
under
trade
these
zone,
statutes
owing to the cost
loss
of
time
technical
and
of
the
has
carrying
in
on
large
of
been
in carrying charges and
in
the
foreign
a
way
trade
failure,
a
the
operation
The
American
other
it is ineffective, and relatively
inopera¬
The foreign trade zone is the practical and economic
basis for operation under the principle now on
our
statute
books and already accepted.
is
It must be
recognized that if
as
continue
our
of rubber,
American, Australian
coffee
and
a
hundred
prices and
affect
the
sale
in other coun¬
the shipper is credited with, say, 80 per
present value, and merchandise held and mar¬
This creates
stabilized.
a
centre where prices' are deter¬
This, of course, is advantageous not
only to the British trade, but to British industries as well.
There is every
itself
of
in
a
come
reason
position
from
why the United States should put
to obtain the marked advantages that
such
a
consignment market, in the inter¬
and last, but not
industry, in the interest of trade,
in
the interest
fleet and
are
of maintaining
Provisions
to
a
The
so-called
Jones
duced by Senator
need for
up
order¬
a
merchant fleet.
to engage in foreign
merchant
protective tariff, the foreign trade zone is
foreign trade zone.
sugar,
world
govern
necessity, and the higher the protective tariff, the greater
a
an
possible, and the balance accounted for when sale
mined and
would
we are
hemp,
wool,
In practice,
of the
least,
trade, if we are to maintain a
merchants receive consignments
prices
completed.
est
Relation to Merchant Marine.
These commodities
large percentage of their
value of the product of the smaller producer
tries.
greatly that,
a
commodities, and for nearly all of these commodities
London's
cent,
so
shipments of commodities from all over the
be made on consignment.
general
keted
of trans-shipment
measures.
tremendous market has developed
American and Egyptian cotton, South
financing, and
underlying principle, but have
a
manner.
of meeting the
way
does except for war
still
result,
held in London, financed to
and
the proper use of
regulatory provisions.
broadly speaking,
tive.
a
inconvenience
We have acknowledged the
burdened
identification.
is identical with
foreign
owing to the fact that all
value/and then marketed throughout the world in
ly
duties paid, provided the imported merchandise so attached
or
and
regulations,
At London, as a,
under
be
a
tremendous foreign trade trans-ship¬
merchandise has moved in and out free from customs duties
or
may
Detailed.
London Operations
of
trade zone, as such, a
mer¬
Furthermore,
which the customs duty has been
on
manufactured
when
trans¬
be impounded in bonded warehouses, shipped in
may
even
mer¬
statutes, merchandise falling under this classifica¬
our
tion
Imported
that
trans-shipment and actually
nized by law in the United States.
of
Port
the customs duty.
fact,
for
open
Bill
of Jones Bill.
j(Senate Bill No. 2391), intro¬
Jones of Washington, and shortly to come
discussion,
provides
for
the
establishment,
NATIONAL
operation
and
maintenance
"foreign
of
ports of entry in the United States.
ized
in
But
zone
be
may
authorized
is
authorized,
corporations
the
privilege
to
public
to
grant
such
State,
a
zones.
legal sub¬
a
division thereof, or a municipality, or a lawfully author¬
ized public agency of a State or municipality.)
domestic
cept such
as
and
zone
of
merchandise
description—ex¬
every
is prohilbited by law—may be brought into this
there
stored, exhibited, repacked, assembled, dis¬
tributed, sorted, refined and otherwise manipulated without
being subject to the Customs laws of the United States, ex¬
cept
otherwise provided
as
merchandise may pass
the Act;
in
such foreign
and
the boundary of such zone into the
Customs territory in the original package, or after manipu¬
lation, only
until
zone
part or all of it moves out of such
some
for domestic consumption,
at which time it will pass
through the Custom House and be subject to
the regular
If it be
Or,
to
limited
nated by the
knd
at
from
it another
state
in
districts
the
Such
Protected.
WTe
way:
nations, because of higher wages and higher living stand¬
Secretary of Commerce, be
time
same
protect
within certain
may,
our
free trade nation
a
domestic
own
markets
competition with cheaply produced foreign merchan-
dise.
to
who
men
foreign
a
that
this
trade
is
shipping business
not1 of
that it
importance
the
with¬
was
resulting
delays
laws
within
the
from
province
is
It
partments.
of
The question of
States acquires
ship operation depends on keeping the ship at sea
cessful
for which
work
the
at
with cargo.
•
tion
a
—would
permit
the
has been
shipment
Since
Shipping
American
that
benefit from
merchant
the
naturally have
men
Their posi¬
zones.
ships would derive
ability to bring in full car¬
of which might
bulk
the
bottoms
beginning,
merce
has
one
or
that
for
intended
was
through
Custom
the
furnish additional
it is
either
more
believe
necessity
in
whether
the
of
recognized that ships other than those
to
in
on
in
free
a
trade
international
basis
free ports or zones.
that
be
war
only
fleet
a
of
of
military
too
American
ships.
tion
our
as
on
a
competitors in the making of the so-called tri¬
voyages,
As
clearly
merchant
a
com¬
main¬
has
or
result of the
ships is
the nation
or
The problem
and
in
economic;
when
we
a
vital
of
time
war,
this
and
entered
the
was
war.
of
a
fleet
merchant
is
obviously
It is therefore evident
world trade.
that
a
pre¬
high
fleet
with
the
commercial
accompaniments of
such
operations
nations shows conclusively that a modification of this
are
inconsistent.
The experience of Euro¬
inconsistency can be brought about without definite injury
the
principle involved in
trade zones,
established.
In
our
our
be intended
country.
of Jones
other
until
protective
recently
practices
that
expense.
This,
free
that
we
should
in world trade and maintain a merchant fleet as a
corollary,
the
high
modified,
protective
unless
tariffs
some
result
too,
Should
the Jones
ciples
will
gage
in
foreign
will,
in
the
cation
of
be
must,
of
method is de¬
without
made
true in Germany
was
trans-shipment
regulatory
any
without our customs
and
delays
in
bill
become
conserved;
because of the
of
law, our protection prin¬
a
because
in
trade
course
the
any
large
result in a
time,
way,
we
en¬
pressure
marked modifi¬
present protective tariff laws,
or
if
otherwise,
all of which
obviated, if we could main¬
oven
foreign trade and our merchant fleet through the
our
i^edium of foreign trade zones.
Without
It is to be
Injury to Established Principles.
recognized that the two groups who should be
most interested
in the establishment of foreign
free from customs duties and regulations are
tectionists and those engaged in
tic
trade
and
operators.
the
trade zones
the high pro¬
foreign trade, including the
It
is
views of these
to
be
recognized,
two groups are
too,
widely
Nevertheless, the whole country and its domes¬
divergent.
•
consignment for
under
port zones long since established.
generally
be greatly
coal for foreign countries and
trans-shipment
and
that
necessary
their unoccupied space in their
with
(and this condition is again returning), re¬
often all
very
only,
free from customs duties and regulations, are
necessity,
bound
bunkerihg
owners
grow
On the
have been
Free Trade people,
a
to fill
able
ships outward
for
shipment, only too often
for the ships to return in ballast.
hand, the English,
ship
-
Bill.
of the American ships has been that while
is necessary
tariff if foreign
a
fact, if the feeling continues to
engage
in
might be unnecessary
pean
to
the movement of cargoes to
in
part of such cargo would
merchandise for export
have
we
it
tariff and wcirld trade and the maintenance of
merchant
operation of our merchant
would be in the same posi¬
marine ships would be that we
angular
least, there would
of the operation of
factor for improvement in the cost
a
tain
maintenance
protective
given period of time, than the ships
a
turning with cargoes of commodities from foreign countries,
Free Zones and World Trade.
dicated
ships under our flag touch more
that
assume
under other flags; and to that extent, at
be
move
well as
as
cargo.
often at our ports,
and
success
the protection
demonstrated
The
destination,
its
to
could
consumption
domestic
House
flag will have the same advantage in our ports,
our
fair
within
of the cargo
partly for home consumption and partly for trans-shipment,
War, most of the people of the United States have
to
it does, serious delays
as
unloading of the ship
trans¬
nation that has engaged with
any
degree
been
tained
come
limiting,
prompt
along with
be for
other ports
to
of domestic merchandise.
the
appreciable
Great
marine.
in American
shipments
-
.
the boundaries of the zone and later such part
con¬
to be gained therefrom by the
at least greater cargoes than are permitted under
or
built, and filled adequately
was
in ports of the United
been strongly in favor of such
present conditions,
any
zones
its highest importance when viewed in
merchant
substantial
goes
it
-
,
Effects
foreign trade
nection with the advantage
for years
de¬
of port
elimination
that the
domestic manufacturers.
our
American
appreciable
any
governmental
different
many
complex
unfortunately lie
delays would be of great economic advantage and that suc¬
for consumption
would work
it
of
administration
the
recognized
had
right been given,
without adequate car¬
voyage
regulations—regulations which
and
ports where only a
this
are,
and loss of time in ports, and especially that loss due
originally thought to be; although it is not probable that,
injury to
method must be de¬
some
The two great economic wastes
Another great advantage in the
been demonstrated
it has
since
zone,
privilege
to sea,
go
to balance that loss.
the
goes
:
The Jones Bill does not contemplate manufacturing
in
for the
ard
vised
under
entry as may be desig¬
ports of
of our merchant
the cost of operation
that
true
While it is to be
are
trans¬
ships is to be greater than that of the important competing
duty.
Domestic Markets
methods for
present
our
1
A foreign trade zone,
merchandise delivered from ship to wharf within a foreign
trade
under
,
Would Limit Serious Delays.
payment of the customs duty.
upon
Under the terms of this Act, no duty is to be applied to
zone
shipment. *'
in
When such privilege is granted and the zone set up, for¬
eign and
important ports of entry, without the delays and
attendant
expense
merchandise in and
will permit a world trade in
that
out of our
the territory
establishing
of
defined as
are
vised
Secretary of Com¬
The
in his discretion,
('"Public corporations"
State, when
one
State in
each
in
comprised in such port of entry.
merce
in
is author¬
port of entry, except when the port of entry
any
is located within the confines of more than
a
zones"
trade
one zone
153
DIVISION.
BANK
and
community
industry and
have
an
the financial
indirect interest in
of such machinery, without
element
in each
the establishment
injury to any of our established
principles, and actually for the benefit of all.
CONVENTION.
BANKERS'
154
Division
Committee / Officers' Reports-National Bank
Report
the
of
Executive
io
carry
the
Washington convention,
the work of the Committee
on
respondence and avoid the
tual
meetings.
bills then
der
as,
pending carefully discussed and lines laid down for the policy to
during the rest of the year.
members
The
The
appeared to
to be drawn
us
meet the
The
itself
bill,
authorizing
banks.
The
principle of
this bill
dangerous and likely to com¬
us
plicate the application of the provision restricting loans to one borrower to
10% of capital and surplus.
For this and other reasons, the bill was
opposed by
and
us
Nelson
The
not reported out of the committee.
was
bill
raises
a
very interesting question.
The National Bank
provides that national banks shall not be taxed at a higher rate than
Act
other
moneyed capital.
by various courts to
the shares
years
rate
same
vidual
those
as
The phrase, "Moneyed Capital," has been construed
"Other Capital Employed in Banking," and for
mean,
of
of
State
his moneyed
on
Supreme
Court
banks
national
in
been
assessed
taxed
and
The recent decision
of
case
Merchants
of
National
United
the
Bank
be
not
taxed
viduals.
fixed
to
of
Nelson
the
bill
former
this
see
banks
could
higher rate than other securities in the hands of indi¬
a
Now the
application
prefer
at
States
Richmond
of
changed this construction and decided that stock of national
indi¬
bill
attempts to amend the law and
rulings.
it
if
fail
Of
all
course,
would
leave
by the Supreme Court and result in
the
the taxes paid
paying only
our
would
in the position
question
A
in
in
leave
the
different
States,
the Federal
in
harm
to
it
as
but the
other
interests.
readily
may
whole
number of
a
We are not assuming to
have
has
matter
past and at
years
a
different
very
had
the
effect
in
attention
careful
Association,
and
will
doubtless
be
con¬
vention.
By
Secretary Mellon
nates
secured
their
face
Secretary called
your
expiration
June
on
30 of
might
former
issued
be
accepted
call
a
to
limit,
December 31.?
to
Comptroller
as
without
for
of
the
the
that
statements
demand
the retirement of
Fortified
ultra
was
by
vires,
and
during which
Mellon
Secretary
in
shorlty before
which
he
asked
salaries, etc., which the members
Comptroller.
the
time
.
Currency,
lish, although the majority had no objection
to
the
the attention of
by Government obligations to the extent of at least 105% of
value
information
the
to
extended the time
office,
the
were
of
detailed
unwilling to pub¬
to furnishing the information
opinion
General
of
Committee
your
going out
certain
for
Comptroller Williams the demand
Counsel
opposed
was
not
it,
and
Paton
Your
Association
Chairman
many
has
kept
in
touch
with
It is active in reporting
banks
in
commissions
numerous
various
pressed by the
the
and
destruction
favors
Government departments,
of
all
of
the
Washington
kinds
office,
proposed legislation,
on
mutilated
to
take
appropriation
for
report that after
lias
been
of
Your
thrift
for
member
the
a
last year was
year
accomplished,
we
$15,000, and
of activity,
are
able
to
in which
turn
it
feel
we
back
is
the
to
most
that
gratifying
good
work
Association
the
"Whereas,
branches, but
work
have
been
most
cordial
Action of National Bank Division
Branch
Banking
SANDS.
is
Chairman
Mr.
composed
Minnesota,
of
so
of the country. ••
the
and
speaker,
Gentlemen:
Mr.
The
Committee
50 years
banks
"Whereas,
be
reasonably meet the competi¬
to
opinion
the
the members
of
the National
of
within
reasonable
a
States, but it
the people of the United
of all
radius
and
banks to manage
the head office:
practicable and safe for national
entirely
Be
""Therefore,
It
Bankers'
American
that
Resolved,
Association
from
and
are
branches within
operate
bank
national
such
authorized
in
have
to
a
States
branch
each
were
prescribed radius from the head office of
which State bank chartered institutions
the
other restrictions and
such
careful
the
provided,
branches;
and
head
limitations
minimum capital
required
office
as
be found expedient after a
may
Gentlemen,
NEWCOMER:
Section
Bank
It
moved
is
I
the
its
adoption.
American
true
have to
and
have heard the resolution as offered.
you
move
has
It
take
and
looks
it
be
Bank
serious
have
of
I
now.
that
State
every
a
City,
I
Chairman,
Missouri.
resolution
am
may
State
hank
of
fairness,
understand the actual stiuathe
that
not mistaken,
bank
a
the Park
there could be
standpoint
the
Any
.
President of
am
do not think
I
from
national banker should
national
permits
Mr.
the
to
think, if I
law
that
Kansas
objection
think
do
WAGNER:
the
birth¬
adopted.
.
B.
JOHN
like
give away their
or
the resolution
that
seconded
ring,
stand
some
discussion?
I
of the
under the National Bank
institutions, and with
separate
study of the situation by the banking committees of Congress."
MR.
any
the
of
of the United Statea
Congress
permit national banks to. maintain
in
parent bank shall be not less than that
Act
Division
Bank
National
the
requests the
to so amend the National Bank Act as to
Federal Reserve Act
establish branches in any State that
to exercise that right.
I think we
right under the national banking law now.
No, no.
MR.
WAGNER:
MR.
SANDS:
and
initiative
and
management;
and,
is meeting the needs of the people by providing a
for those not familiar with the banking methods of this
•country;
further
branches
you will see it pretty well covers the different sec¬
The action of the Committee has been unanimous in
California
legislation has been proposed to enlarge the functions of the
Department in handling postal'savings deposits; and,
"Whereas, it is the opinion of this Division that the Postal Savings Sys¬
conducted
and
institutions; and,
SANDS:
of
"Whereas,
now
is
it
MR.
individual
of deposits
business
of
the best interests
Mr.
Whipple
Postoffice
as
needs
1
tion
presentation of the several resolutions proposed.
First:
Whereas, the National Bank Division deprecates the tendency to
enlarge Government activities in handling business which should be con¬
tem
meet the
the State chartered
Bank Division that branch banking as practiced in certain foreign countries
the
under
fully justified its existence, and that it is the duty of Congress to
time to time as will enable national
to
of
tion
the
Reso¬
institutions;
amend the National Bank Act from
so
provides
on
there i«
Reserve System,
the Federal
in
and,
"Whereas, it is the opinion of the members of the National Bank Divi¬
sion of the A. B. A. that the national banking system has for more than
but
■
membership
the State chartered
National
on
Opposed to Enlarging Functions of Postal Savings Division.
place
the matter of develop¬
establishmeht of branches and by the
the
by
right.
Report of the Committee jpn Resolutions, by Mr. Sands.
of
by
through
danger that the national banking system will be disrupted or super¬
National
and Other Resolutions.
ducted
and,
seded
MR.
tions
the establishment of
in
grave
CHAIRMAN:
Chairman, Executive Committee.
MR.
offered
facilities
co-operation and
WALDO NEWCOMER,
;
lutions
resulted
has
classes,
business
their
of
ment
gratifying and
helpful.
Respectfully submitted,
in order
demands of commerce and to encourage
conversion, operate them as branches;
CHAIRMAN:
Secretary has been most efficient, and his
adopted,)
branches
and.
national banks are not permitted to establish or originate
may acquire banks with branches already established and, by
amongst all
maintain
banks with
the matter
by the State chartered institutions in many sections of the country;
approximately $2,600.
faithful
Latta
or
to Branch Banking.
With Regard
the ever-increasing
of
care
would
relationship established between the American Bankers' Association
the authorities in Washington.
sum
change
any
"Whereas, the banking business of this country,
SANDS:
MR.
cordial
Our
of
Action
to
other
of the American Bankers'
amendments at this time to
Division
Bank
(Upon motion duly made and seconded the resolution was
repre¬
and through frequent conferences of your
that some
the State's action, to the extent of
upon
National
S. It. S., in relation to tl^ powers of States in
of the shares of the national banking associations."
taxation
of
which
executing
currency,
Secretary with the various Government officials and with Congressmen, a
great deal of friction and misunderstanding has been a,voided and a more
and
limit
the
disapproves
is not for
functioning well.
senting
that
Section 5219, U.
upon
Department.
is
it put a
as
"Whereas, the advantage the State banks have in
direction of your Committee
The
of the National Tax Asso¬
adjourned at Breton Woods, asking
capital.
"Resolved,
of
fully aired at this
illegally collected."
has been taken upon the part
action
at the meeting just
far
so
money
increase in rates, which would
an
htey have been for
much
Legislative Committee and of the General Counsel of the Ameri¬
Bankers'
can
where
time do
this question,
on
pass
States, and result in
many
the banks
same
Bank
change be made in that statute, by which the State would have full control
of the taxation of the shares of national banks, nullifying the Section 5219
Unfortunately, there is grave danger that in that case the
might be the repeal of the special rate on intangible securities now
effect
Supreme Court of the United States
of Richmond, Virginia, vs
City
the
National
recent
ciation,
nullify, through
made to
decision of
the recovery of taxes
by individuals.
result
it probably would
a
being
are
the
Merchants
restore the
banks
national
Gentlemen, before the next resolution,
read
to
Congressional action, the effect
in the case of
of Richmond.
The Supreme Court decision
declares that Section W19 of the Revised
Statutes, which forbids States to tax money capital invested in national
banks at a higher rate than money in the hands of individuals is taxed,
means
just what it states.
Under the decision of the Supreme Court, many
national banks have a right of action against States and municipalities for
forts
of
the
at
banks, regardless of the rate paid by an
capital.
the
have
adopted.)
Increased Power in
paragraph from the President's message:
"The Committee on State Taxation of National Banks reports that ef¬
be well
capital and surplus to the various departments of the
practically separate banks, appeared to
in similar lines of business."
v
bank, the provision even being made that the various departments were to
be
enactments on the part of any
unhampered competition between State
against the
protest
we
institutions engaged
SANDS:
MR.
approved, but the bill
was
of some
with
dis¬
part
chartered institutions:
Disapproval of Proposed Legislation Giving States
Taxing Bank Shares.
departments
savings
of
the
(Upon motion duly made and seconded, the resolution was
national banks
complicated and its provisions for segregation of funds and the alloca¬
tion of proportions of
that
State, of legislation which prevents
national
upon
States have been placed at a
by the National Bank Division of the American Bankers'
"Be It Resolved
and
attempts
national banks have appeared,
banks in those
national
that
noticeable
activities of
trust
advantage in competition with State
consequently approved.
was
the establishment
the
curb
to
result
the
reasonable lines not likely to lead
on
competition of State banks and
Calder
national
This
permit State banks to have branches.
as
.
Function*
of National Banks.
"Whereas,
SANDS:
MR.
States
Association,
special attention:
our
in such States
over
adopted.)
Protest Against State Legislation to Prevent the Exercise of Trust
laws affecting banking.
Federal
abuse of power and as affording a fair opportunity for
an
in
the Federal
being under the control of
all. proposed
in
authorizing the establishment of branches in cities of 100,000 popu¬
or
measure
to
Division,
interested
following have had
Bill
lation
to
this
of
are
Department un¬
Savings Act."
(Upon motion duly made and seconded, the resolution was
10 1921.
Chairman has en¬
far as possible by cor¬
be followed
Government
Postal
the
your
held at Pinehurst in May, and various
were
Bank Division
National
That the
Resolved,
It
calling the members together for ac¬
expense of
Two meetings
Be
Therefore,
opposed to any broadening of the powers of the Postoffice
Bankers' Association.
Baltimore, Md., Sept.
Since
(jeu tU men:
deavored
"Now.
Bank
National
Committee,
Section, American
CHAIRMAN:
that
in
a
branch.
a
slang
That
I
I
Of
will
have
have
the
course
way—that
Act
is
so
to
Act
we
under
drastic
convinced.
be
here.
realize
You
that
the
that
you
payroll, for fear it will be construed
MR.
that
WAGNER:
it
hands
is
of
I
think
those with
branch
to
see
banks
a
in
the larger capital,
resolution
any
State bank
asking the
State in
as
that
this
1915
cannot
a
look at it.
Missouri—and
of
branchi bank
absolutely un-American,
whether it is exercised by a
prefer
a
may
in
Act
send
I
do not
say
bank can open
no
an
a
automobile for
bank.
Act
it places
is
an
fundamentally
wrong,
unjust power
in the
and I am absolutely opposed to it,
or
a
national bank.
repeal
Union.
of
I
I would much
£ll legislation permitting
know the
effect of
branch
NATIONAL
banks.
with
I
the
meat
of
that
was
get
a
it
young
contact
of
started
man
think
banks,
if
to
be
in
the
American
the bonds
of
Personally I
tinue
to
do
exist
in
given amount.
I
do
has
received
our
that
sold
were
majority
a
in
believe that
our
we
the
private,
the
to
small
time
unless
the
there
be
will
legislation such
they
organized.
are
And
fraught with
danger
the
to
question of branch banks.
audience
had
to
come
appeal
to.
when
we
up
small
come
bank,
in the
up
to the
individual
We have not got a very large
It would
have
been much
could have had
real
expression
cannot
name
would
suggest
of opinion.
this
Personally,
I
that
place
we
that
in
other
some
Mr.
form,
That
is
what
MR,
That
is
exactly what the resolution
the
SANDS:
general
the
branch
practice of
resolution
says,
banking at all.
I
as
It
the
I
it
the national
save
national
tlemen.
with
the
I
bank that has
a
few
next
across
the
bank,
with
and take
17
months
have
to
six
can
here
And
who
is
branches.
any
here
out
go
example,
an
hours
State of California,
more.
have
cannot
capital,
Cleveland is
in the last few
man
branches in the
which
corner
less
a
and
take
is
say
know, for
fault
institutions, and
^ace.
MR.
with it,
and said
bank
the
State
State
some
bank
heard
of
it,
have
1 gave
SANDS:
MR.
and
had
MR.
SANDS:
MR.
That
WAGNER:
of
part
Every national bank
is up against
is
just
what
wish you
I
the
it.
resolution
would read
that
been
careful
it.
Resolution
The
Committee
has
very
the
MR.
SANDS:
The
business
it
be
won't
to
tain
and
such
of
A
national
it
and
States
in
that
that
capital,
has
the street lias
MR.
That
I
States
institutions
but
under
shall
we
capital of the parent bank shall
years
a
Bank
Act
each
were
million dollars'
a
worth
and
have slipped
in
national
a
certainly
be
great
a
advantage
to
capital.
neighbor
your
I
my
bank
own
a
in
like
in
and
to
this
there
California,
is
and
the
State
any
is
MR.
SANDS;
am
do
we
f
California.
from
in
not
I
am
State
want
not
do say our
actually in
neighbor
favor of those banks.
competition
from
the
old
with
the
State
conservative
banks.
of
I
am
Virginia,
banks, and
across
we
do not want branch banks, but
the street cannot have them unless we have
right to have them.
MR.
MR.
SANDS:
MR.
A.
my
J.
are
FRAME:
you
As
keep
going
more
or
him
to
from
do
less
having it.
r-
it?
of
you
know,
I
have
been
upon
for a long time discussing this very important question.
To
mind, there is not a question, of all the questions that are before the
my
make
it
that
begins
to
compare with
this subject under discussion.
branch banking law in the United States, you
practically universal.
You are going to open the door to what
mind, if
undoubtedly is
a
you
pass
a
calamity to this nation.
It will
to
discuss
Branch. Bank
only 25
and
ago,
I
that I
people here
30
or
Menace."
not present
was
only regret
waa
now.
If
what
the result would be.
Mr.
the Committee over there, is
of
and
he made the comment that he
95%
the
of
serious
bankers
the
in
United
I want to give you
form.
any
if you will allow
menace,
me
I
may
this:
say
Of
but the real issue
resolution
a
us
young
is not the banking of
banks.
national
hardly give
all of
course,
here
to the discrimination in favor
as
be given
If you
will be kind
will make progress,
we
five minutes.
the whole matter in five minutes,
you
permit branches,
Such
largely
by
degrees.
slow
the cities, but
limited to
growth is
cancerous
a
to eat out
sure
Chafing under
re-
States,
few
a
great national
that
is
sound
a
for grafting the
reason
the system is good,
branch banking in toto?
Wisconsin
banking system?
of ftie States prohibit
some
the life of the independent
If
18 years ago, leaving 10 branches then in existence, and
permitting it.
as
Illinois, in passing
a
good law
few
a
law
it
to eat
years
Legislature
an
Indiana, at its last session, passed
laws.
over
effort
subject
penalties.
At
to
permitting branch banking.
ago
the
up
passed
was
State
misdemeanor and
a
some
little
again
made
to
Jersey
the big
a
re-
At the late session of
the veto of the Governor.
was
New
once
became aroused, and
Bankers
ones.
another bill permitting
pass
Let
monopolize
our
us
like to
would
also
him
have
that question
take
under
repeal the back-door methods lately resorted to,
beneficent
national
their fructifying influences for
banking
the promotion
and thus
system,
preserve
of the greatest good to the
ence
are
also
are
branch
our
May the banking journals of the country, whose existimperiled, continue to pursue their usefulness.
General
banking would eliminate
State
Bankers'
in
the
It
Bank
State
would
eliminate
and
mil-
our
But those
country.
the wonderful uplift of the nation at large
30,000
breathed
independent banks, whose
fructifying
influences
have
breath of economic life throughout the rural communities,
the
the hamlets and cities of
the
offices
Comptroller
practically
independent banks of the
minor matters compared to
through
our
Associations.
stockholders
cream
from
the
our
farms
nation.
and
If
the
we
upbuild the farms and hamlets,
hamlets,
and
sure
the
to follow.
Skim
palsying effects
are
inevitable.
platform
Aaaociation,
To
How
let's
he
and
prosperity of the great cities and nation at large is
Then
WAGNER.:
Senate
few days
doubt
a
to
"The
call
a
are
was
me
and
offered
time.
Chairman
increasing.
in
making
a
lions' of
State
a
greatest number.
.
It
you
over
on
come
correct,
He
States
resolutions.
your
against the
can
few moments ago—I
to
ex-
do not understand, and I do not believe they are
going to live very
longer, because of the liberality of the State banking law, and also
WAGNER:
the
a
them
safety of it.
was
little while longer?
a
and
practically
Blow poison that is eating out
quoted
began
the
banking
of
is
United
I
independent banks
a
consideration.
mighty little
as
bag
my
who
branch banking, but it was signally defeated.. These facts should inspire
the States permitting branch banking in any form to expunge the inequitable special legislation from their statutes.
The gentleman that spoke
across
inquire why the
why
are
to cut out her mushroom banks, incorporated a provision against
ago,
law
fish
of
State.
admirable
very
opinion,
exist
to
would
over
over
pay
that
bosses 15
he
the platform,
on
gentleman
a
command.
at any
which
any
Frame,
States
the
upon
she is
passed
?
ought to have it if
slip that legislation
They
in California,
for
dollars'
tliey
practically,
pigeon-holed, and he said to
made
his
at
why this is
branch banking under her
a
where $200,000 is
town
from
before the
It is just
are
it is
prohibited it
now
National
small amount
around and
goes
have been
I
have
there
in this,
I
the
of
why do most
our
That is conservatism.
please.
the
a
Canada
in
over
that practically none of those banks in
suggest the gentleman
other
If
peal bill
would
I
branches
vitals
the
institutions."
separate
I
strictions, the advocates of monopoly are quietly working to open the door
are
keep
what
banks
FRAME:
some
these
banks to main-
chartered
I
haven't
I
Mr.
banking system
State
a
it
as
is concerned, and they practi-
man
practically
was
power
article,
an
interested
wide.
again,
certainly do,
them
MR.
a
the
it?
let
SANDS:
system
we
the United
become
same
the United States.
character,
any
letters
necessary
was
reasons
which
in
admit you
You
WAGNER:
MR.
and
Congress of
just the
The honeyed reasons for these bills in the United States are that New York
and
of
eventually
They might put
practically
One
now
to appear
May I have
State
MR.
afraid
Division
permit national
would have to have
you
million
a
SANDS:
Californiums
not
Bank
will
thirty thousand branch banks
or
against branch banking in
were
VOICE:
cancer
required
office
the
national
much
.
MR.
I
to
the
see
very
changed.
are
if you had five institutions in
WAGNER:
MR.
much
the
to
is
but
two
but'it
but
prescribed radius from the head office
a
provision
capital.
the
as
it
to provide not only that,
on
the head
minimum
exist
Act
like
but
National
the
"Provided the minimum
other words,
euse
that
requests
Bank
Read. that
than
less
branch
bank
would
to-day,
branches."
goes
SANDS:
be
In
is
in proportion to the extent of the business.
MR.
the
bank
have
to
VOICE:
not
Resolved,
Association
the National
then
capital
It
operate branches within
authorized
And
Be
Bankers'
amend
so
Committee
it
as
much longer, unless the laws
very
"Therefore,
American
Resolution
Under a
well say, because
in New York, Boston, Philadel-
Canada
as
to farmers.
of Buffalo, who is
doubt
are
A
conducted
certain
a
enjoy.
as
nation,
enough to confine your argument to that, I think
preparation of the resolution.
banking
the
us
officials of
no
statement
more,
CHAIRMAN:
of
in
of
one
far
as
Pasadena
the United States.
'
CHAIRMAN:
twenty-five
Association passed
were
no
men
that
or
the
men
this before the State Association
the time.
says.
again,
at
few of my
a
resolution
few
a
institutions,
prepared
.States who
I do think we should ask that we be permitted to
rights and privileges in States that permit branch banks.
same
which
of
Chairman of the State Bank Section,
WAGNER:
the
have
people
greatest prosperity in
money
single
your
there
That is possibly what you are up against in California.
MR.
States,
not here, and I only regret there
\
WAGNER:
all
They take the deposits from those localities, and I want
question if it
I
location
had not, any right to take deposits at any
we
other
some
the
We have
the United States
McDougal,
found
question of simply giving to
a
is
it with all the
the
other
that
appointed
every
when
different
is
consequence
progress
it with just
United States,
that
National banks must refrain from receiving a deposit at
any other placet than headquarters.
Our banks sometimes go through our
Christmas savings ; men went around and collected Christmas
savings from
in
throughout the
long time, arguing that question, and I have in
a
hotel
the
the
deposits.
clerks
United
to you right here and
upholds
and hopes in
chartered
indi-'
simply
are
by Canada to investigate this question as to the
benefit of branch banks as against an independent banking system, as in
gen-
national
a
A
The
in New York, you might
of the institutions.
commission
connected
convenient
a
in
progress
locality, and all the
distributed
are
the
see
They have
20 of them.
at
as
banking system—at present, as you all know, the
on the wane.
The great interests are consoli-
just talked to
located
are
individual
up
Take it
Canada loan any
banking system is
dating and going under the State system.
to
see
those
in
taxes.
or
it.
oppose
human
nation that has made progress
no
that
taxes—those branches don't.
no
at the head
conducted, in foreign countries, but in order to meet the competition and in
order to
pay
to
we
It is
as
the
of
great cities.
no
not approving—
says,
deadened
Canada.
want
of capital
Chairman—
understand
says'
in
done
cally
^
the Union.
CHAIRMAN:
of
United
fellows in the country, who have
been building up an institution for the last 60 years, as I have—they will
simply skim the cream from those localities for the benefit of the fellows in
condemning branch banking, but requiring, if it be permitted,
and requesting that the nationals be put on an equal
footing;:Jn every State
of
lack
the
of
the most wonderful system that
that
privileges
in the United States, and every
resolution
a
people
and
York have those privileges, that it is nothing but a
is eating out the life of the State, then we will inoculate
phia and Chicago.
absolutely opposed, and I
am
in
situated.
are
same
which will eat
What I
all the
country banker but what who is opposed, to branch banks.
a
has
could have had
we
There is
the banks
whole.
a
as
the
do not want to
question
expression of opinion of
an
they
the whole system
the
as
the
without my
their
and
in New
which
cancer
representative
if
have
made by those institutions
people
of
cancer
so
years
banker,
or
better
representatives of the banks in the United States, when
a
last 25
they
have got
we
owned
are
State banking system, such
then what becomes of the little suburban bank?
question that has
no
which
in
those banks
minute, which provides that a bank with a million
dollars' capital may establish at least twelve branches in the country where
Gentlemen, there is
by
banks
central
and
is because
are
class
that pending in Congress now,
as
Canada,
It
ours.
build this nation
can
watch every
we
of
the United States
locality
only the entering wedge,
short
Canada,
that is made in those localities is distributed, and it*fructifies and
upbuilds those localities, the hamlets and the smaller cities.
And when
you upbuild the smaller cities and hamlets of the United States, you up-
live.
right to
bank,
and you know,
in
over
enjoyed
as
17
are
the face of God's footstool.
on
Canada,
are
money
long conState that permits branch, banking, because this is
gentlemen; it is just the entering wedge.
In a
any
any
such
there
in
over
there
they have over 4,000
Those 17 central banks do nothing but simply skim the cream
profits that
Eighty-six
over
prosperity,
vidual banks, and they
the counters of what is
over
entitled
are
is
troubles
Canada
In
equal to
advantages that the
great war were sold
sold
were
think
I
is
war.
believe
not
banking institutions.
banks.
not
during the
the disadvantage of branch
that, where they will send an
what
whole
Canada.
thousand miles to headquarters if
a
certain
a
world
place
the
from
or
see
that
banks, and
suburban
as
over
or
taken
received from
people have
cent of
counters
known
loan five hundred
a
nation
a
Canada to
go to
happens
is
having
want to see the advantage
you
application for
loan
consolidations
only have to
we
there
the
In
branches.
the
now,
it,
and
States.
155
similar to what
affairs
progress
be-
in business
DIVISION.
repeating
utterly impossible to
was
impossibility, not only during the war, but before the war,
advantages and the backing of a branch bank.
There
thirteen banks in England before the war, and there are six or seven
were
per
in
came
reasonably large things, and the state-
me
to
or
and
war,
BANK
the
banks -there
the
England during the
done and do
enterprise,
new
securing'
I
in
invariably made to
a
of
cause
had
who
men
they
finance
stationed
was
bring about
a
condition
I
want
to
independent
industries,
kesha
illustrate.
banks.
largely
County
America,
Some
$50,000
taxes,
would
of
be
2,500
upbuilt
blossoms
largely
Waukesha
Some
as
encouraged
has
through
the
by
a
people
the
greatest
the
population
are
of
employed
efforts
of
bank
pure-bred
officials of
20
12,500
in
and
officials.
cattle
three
manufacturing
Wau¬
country
of
banks in the county.
profits at 6% pn capital employed, and say $25,000 in
lost to our city under the Canadian cream skimming
CONVENTION.
BANKERS'
156
$75,000
process.
makes $1,500,000 in
to Waukesha
saved
year
per
20
191(5 1 addressed the State Bankers' Association of Colorado at
Denver, and made a like comparison, which then would skim from Denver
In
years.
$1,250,000
illustrations' to-the hamlets and small cities of the nation;
apply them to Atlanta, New Orleans, Los Angeles, Seattle, St. Paul, Min¬
neapolis, Milwaukee, Detroit, Buffalo and other cities of that character,
and may we not well ponder whether it is not better to retain our proved
wonderful democratic system, which broadens our whole nation, or to
permit 50 to 100 great central banks to skim the cream from the country,
perilizing general prosperity.
thus
perhaps overstepping the lines where
I consistently ought to speak now.
Under the original Bank Act of 1863
—and I have been in the banking business all my life, for 60 years—
there were four or five banks that were allowed branches.
One in Cali¬
fornia was allowed three or four, and there was a great discussion at that
Perhaps I fetter close, because I am
time
It
it should continue or not, whether to grant any more.
to whether
as
denied,
was
t think
and
single
every
Comptrollers of the
of the
one
Williams—all
that time up to the time of John gkelton
from
Currency,
have denied the right to grant charters to national
banks, charters for branches.
Mr. Williams has allowed about 60 of them
of
the, Comptrollers
in
ten
and there has been
States,
lately.
organized
of them that have been
more
but what it is purely
to continue, I have no question
that is
If
will eat up the independent bank¬
ing system of the United States, and it will turn the tide of progress
entering wedge, which, if continued,
an
backward.
And
far
as
concerned,
is
Bank
National
Waukesha
the
as
want to
I
do not like to make a comment of this char¬
acter, but I will say that any bank where we have got our deposits that
continues to do business and begins to run the branch banking proposition,
it loses our account immediately.
I do not feel that we can feed the hand
that smites us.
If you want to retain the most magnificent prosperity of
to you right here—now, I
say
thejpeople of the United States,,you will maintain your independent hank¬
ing system, and you will keep your profits at home, instead of sending
them in to four or five cities of the United States.
Gentlemen, I thank
for your attention.
you
FRAME:
MR.
LATTA
MR.
Being
I would like to
CHAIRMAN:
and
banking,
CHAIRMAN:
said,
who has just spoken is one of the leaders in Ameri¬
we always have the highest respect.
for whom
one
We
in
about
fact,
words of what he
he permitted to say so, they were
100
out of
99
all subscribe to ; but, if I may
we
him.
always glad to hear from
are
Arid
LATTA:
MR.
thought which led to this reso¬
regards the basis of
As
The gentleman
lution.
can
right ahead.
Go
LATTA:
MR.
branch
in
European
understood—branch banking as conducted
generally
is
hanking
as
All that I ask is that the national
countries or in Canada.
hanks are permitted to have branches
banker in cities in States where State
able
he
do business
to
terms with
equal
on
them.
fifteen
are
twenty
or
in number from perhaps four
Now, what are those branches?
or more.
five to
or
Those branches
buf an evidence of service for local convenience for the purpose of
depositing
down
since
where
bank,
is available,
I
management
communication
constant
unless the system
and where,
about it,
knew
general
the
checking,
and
town
senger
of which is
by telephone
the
in
or
mes¬
has changed materially
all of the important matters
thought
The
there ?
down
national
one
of
the
handled.
are
and
have
and
there
of
sort
some
of
the
the
banks
that
largest bank
the
the
in
Middle
State
in the
Now
a
bank, in
savings
a
the
in
affect
State
Bank
and
of
so
far
have
as
we
are
this
concerned,
are
There
the facilities
branches.
some
no
or
the
other.
branch banks
They
are
only individual banks.
does
the
in
But what have
We have got a law to permit a State bank
brother,
my
control
that
through
banks.
Mr.
Now
bank.
sound
we
to he organized in
not
provided
branches,
to
of
I
and
banks
branches
out
of
get
to handle
part
are
safe
of
the
a
this
conservative,
seeing
thing to
the
the
to
the
the
city?
get
to
sound
We have
any
take
of
move
they
over
the
suburban
banks
50
when
And
sound,
careful management for
Chairman
the
of
this
we
Committee
thought if
you
the
the
could
confine
national
thank
I
lines.
of
GRIFFING
MR.
branch
banks
to
Are
were
banking.
in
be
further
ready
Therefore I
for
discussion
all
than
the
we
am
does
not
permit
not speaking for the interests of national
seems
to me
this is
banks
by
have had here.
a
banks
committee of the Association know
that
that reason, gentlemen, that this National Bank
Division came into being, arid I had something to do with that, and it was
in recognition of -that fact.
Now, if the national bankers of this country,
the only organization it has, that is, the National Bank Division of the
American Bankers' Association', are
not going to speak for the national
banks of this country, are we going to align ourselves with the interests1 of
our
competitors?
We might just follow in the wake of some of these
other large national banks, and we will have to do it, and go into a State
bank under the trust company system.
Gentlemen, it is a question of life
or death,
I believe, for the national hanking system, unless Congress gives
the national banks some rights and privileges that will enable them to
.
meet these questions where they are a live issue.
They are live issues in
California,'in Virginia, and in other States, where the State banks are
establishing branches.
They are surrounding us; they are putting in
store and corner grocery store.
Gentlemen, Mr.
does not apply or amount to anything,
this country.
I have just traveled through Canada,
and if it has been killed by the banking system it is a funny looking corpse
to me ; and it is funny if Detroit has been killed by the Michigan banking
system, or Los Angeles, or these cities where they have it, because I say
they are unusual looking corpses.
in
offices
if
will
you
drug
every
arguments about prosperity
Frame's
over
go
Cal) : Mr. Chairman, from the people
Californian, and from a na¬
the branch hanking should be confined to the
corporate limits of the city, and I think a great many of our national
bankers agree with that point.
Now there is some way we can get this
into this resolution.
Why not have it done exactly as we feel, regardless
of the laws that have been passed allowing the State banks to cover up
all this territory?
Why not put in an amendment to this resolution, some¬
thing of this kind, that, this National Bank Section of the American Bank¬
ers' Association is opposed to branch hanks, except where the branches are
located within the corporate limits of the city?
LOWSLEY: (Santa Barbara,
bank, it seems to me
It
CHAIRMAN;
says
I
CHAIRMAN:
that now.
Just for
LOWSLEY:
MR.
sorry
am
your
information
-
Mr. McDougal, who is Chairman
of the State
In a meeting of the Administrative Committee,
Chicago the latter part of June, Mr. McKee, the President of our
Section, is not here.
Bank
in
held
it seems to me, being a
talked with,
have
tional
Association, called my attention to some
correspondence, that is, some one¬
correspondence.
He wrote some letters to Mr. McDougal, to try to
get him to carry out an agreement that was made previously at the Execu¬
tive Council, which reads:
"It is resolved that the Administrative Com¬
mittee recommend to the Executive Council, for recommendation at the
convention, that national banks in cities of
a
pretty serious question
party
of
25,
without
any
100,000 or over, have, the same
branches in the same city that are possessed by State
Well, for some reason Mr. McDougal did not answer this corre¬
to establish
rights
banks."
spondence, and when I met with him in Chicago I said:
Kee that absence from the city had prevented you from
"I told Mr. Mc¬
answering, but on
agreement, I am
national banks, unless we can come to some
of the
behalf
He told me his absence from the city
to this.
And at a meeting,
represented by all the sections, including the State banks, trust depart¬
ments, and all of the Legislative Council, in June, this resolution wa»
passed unanimously, and Mr. McDougal, President of the State hanks,
voted for it.
The issue is not all as to branch banks in this country; it is
ready to go to the mat with
you."
prevented it, but that he would agree
had
of
Now, when bankers get into
equalization.
trouble on taxation, the
before a lawyer, is to get before some
board of equalization.
Now, this resolution is intended to form a board
of equalization;
that is, they do not want to be discriminated against.
At the meeting of the Administrative Council here in Los Angeles Monday
night, the minutes were read of this meeting of June, and this same reso¬
lution was re-read and the minutes were adopted unanimously.
Mr. Mc¬
thing they are looking for, even
first
It seems, though, in some of
with the idea that national
they could be discriminated against, should be.
But this ques¬
tion has simply reached a stage where we are fighting for our life.
Our
back is against the wall, and it is our birthright that we have to pre¬
serve.
Now when the matter was referred to the Executive Council, it wa»
passed there by a large vote, although after politics got to running right,
and some threatened to leave the fold of the American Bankers' Associa¬
tion, who were not candidates, men up in line, for the sake of peace and
harmony, they went off into the realms of the Constitution and said each
section had its own right to do as it pleased, and therefore the national
hanks could do what they pleased.
And there is a motion here before u*
now, and it is just a question of, do we want to give away our birthright,
or do
we want them to take it away from us?
As far as the branch hanks
are
concerned, I think a hanker does well to stay in one city, and stay
there
permanently.
As
I
told
you.
the
laws
in our
State are
very
drastic
against
it.
But it is a question of discrimination,
so the
State banks want to take advantage of the national banks.
Now, I
Dougal
if
told
by
I
a
certain
am
Reserve
and
banks;
that
was
some
talking about
was
national
up
MR.
you
Bank
Section was strong
enough
"No, we don't want any extra advantage over
bring in
let's
limiting membership
the National
banks,
say:
done.
the
banks and let them all come in."
the State banks, they
and that is why we are discussing that this
the State
And yet, in the deliberations of
advantage over us,
-
FRAME:
know
driubt he can correct me
FedeVal Reserve Commission, when
in the Federal
of the same age as Mc Frame—no
Senator
to
stand
other
men
wrong—at the beginning of this
if
to
representing the State bankers.
was
deliberations, that this question broke out,
their
hanks,
afternoon.
Connecticut
national
Connecticut, but it
decided
for the question ?
Conn.):
(Danbury,
well know, gentlemen of the national
very
It was for
well.
And
^
you.
you
You
been acting on the
who have
us
very
want
CHAIRMAN:
'
that the small State hanks dominate the action of what¬
ever occurs on the
convention floor of the American Bankers' Association.
The influence of the. small State banks is overwhelmingly great.
Those
na¬
other
point where it was necessary to have these branches to
banks to do business, hut make those national banks
a
I understand it, of
this country,
am
all
and
put up $200,000 as additional capital for every branch organized, we
safe
of
have
of
care
those
to-day
a
to have the
where
city to
requirements
not
cannot
management
Minneapolis
point
is
We
large number of them have only $25,000
No one is more desirous
gentlemen were fixing up this resolution,
enable
and
the City of
that
limit.
hard time always
around
and
that
another considerable number fifty.
banks.
tional
in
State
the
people
that
a
concerns
better
far
City of Minneapolis, and
capital,
than
be
establish
the
communities
the
been able to raise
Legislature which
it
will admit
else,
anyone
or
We have
Legislature.
that
Would
savings
Frame,
have not
we
privilege,
on
the
City of Minneapolis, of over 400,000 population, with $25,000 capital.
Now,
in
of
State
Michigan,
of
State
order to take advantage of
Minnesota,
of
way
Minnesota.
of
got there?
the
State
one
us
the
in
banks, in order to get around trie thing,
show to do business, are acquiring control here
by having that savings hank, which itself can
not
State
is the
West,
as
•
sir.
Yes,
LATTA:
MR.
of
Now to
banks do
national
The national
of Detroit.
City
and
banks
been
what did
much mistaken, far exceed in total resources
very
am
banks,
largest
moment,
one
has
result
Michigan, unless I
the
for
'
CHAIRMAN:
more
that
continue
speak as to the attitude,
I
Committee?
way
illustration, the most
of my hanking experience as a young man was in the State of Michigan.
In Michigan the law is absolutely silent, or was at that time, in regard
to branch banks.
They were not mentioned in any way, shape or man¬
ner.
However, they started in to establish branches, but no branch hanks
were
started, and none permitted outside of the corporate limits in which
was located the parent bank.
To-day, in the City of Detroit, I don't know
how many branch banks there are, but we do know there are a number
of very large and strong, well conducted, ably managed financial institu¬
Now, to bring this down to a little more concrete
tions which have branches running
the motion.
May
LATTA:
MR.
it seems to me, that we are talking about.
So far as
concerned, I never want to see branch banking in the United States,
am
just a minute,
me
rejection of the resolution.
the
move
Second
VOICE:
that
along the line,
not
I
Chairmah,
A
I
of the men on this committee,
one
will pardon
you
Bankers"
hanking,
and good judgment, they withdrew the resolution.
up
came
showing discretion
Mr.
MR.
the resolution?
on
resolution.
spoke to the
absolutely
I
:
further discussion
any
just a few words.
say
I
...
there
Is
CHAIRMAN:
if
in the General Committee of the American
Association, and they have passed a resolution in favor of branch
question
and,
and $25,000,000 in 20 years.
per annum
Apply these
Chairman,
Mr.
WAGNER:
MR.
this
You
are
speaking
about
the
State
Bank Section.
Do
the resolution they passed yesterday?
No, sir; I never heard of it.
CHAIRMAN:'
MR.
banking
FRAME:
in
any
They
form,
unanimously
passed
a
resolution
against branch
unequivocally, using even stronger language
than 1
NATIONAL
have used.
1
present when it
was
banks
Mr.
I
THE VOICE:
that
Division
issue
right
should think that
It
to me,
seems
could
work
not
right
was
CHAIRMAN:
What
that is true, I don't see why
long
as
this
as
with
Division,
and
we
CHAIRMAN:
the
was
suggestion
made
you
of
thisi resolu¬
to
as
confined
Mr. Chairman, the suggestion I made was
the corporate
to
limits of the
Now, if that is changed
MR.
SANDS:
there will be
so
that this be
It
"within
savs,
the
from
LOWSLEY: In this city to-day
the
there is
ized
discussion going on, here
a
bank
shall
Then they
MR.
certain
a
CHAIRMAN:
That
That
MR.
LOWSLEY:
MR.
GEORGE
is
might be
That
R.
perfectly agreeable
is
to,me.
1
vague.
cutting
the national
into
banks,
the. deposits.
double
with
MR.
LOWSLEY:
amendment
this
be
Can't this
fixed
resolution
the
to
be
I
extent?
I
that
to
SANDS:
LOWSLEY:
MR.
it
want
The
confined
within
the
corporate limits of the city
MR.
In
LOWSLEY:
State will take
this
State
have
we
MR.
SANDS
correct
MR.
SANDS:
as
ought to
we
will
Well,
so.
the
them
just what we feel Is the
say
We
to
MR.
for
not
are
safeguard it in
all that:
this
assembly
this
in
100,000,
over
one
way
That is
Mr.
sort of omnibus
a
to
Congress,
but
omnibus
Sands's
agreeing
not
are
the other.
or
CHAIRMAN:
MR.
Chairman,
I
State which has
a
a
We
WAGNER:
can't
We
this is just merely an
if
regulate
saving
able
clause
to
mean
the
entering wedge, and
banks.
I
would
able and
of
this
get that, and
think
I
will read
we
will
we
have
the
resolution
corrected
it, and
if
see
cannot blend
we
in
our
Bank Division
of
the
Now
resolution
the
of the American
States
United
to
Bankers'
amend
so
is:
the
"Resolved,
Association
National
that
National
requests the Congress
Bank
Act
as
to
permit
banks
to maintain and operate branches within. the corporate
city in which the head office of such national bank is located, to be confined, however, to States in which State chartered institu¬
national
limits
tions
of
are
MR.
lation
authorized
I
MR.
SANDS:
MR.
WAGNER:
That is
MR.
SANDS:
do
that
cannot
we
am
I
branch
they
right beside
you
if
you
will
whether
in that
MR.
think
way we
the
bills
we
can
you
can
before
are
give
one
Gentlemen,
Are you
Mr.
MR.
LOWSLEY
MR.
NEWCOMER:
CHAIRMAN:
in
order
to
100,000
at
get
an
:
Those
national
bank
right
a
It would not be
just the
big
a
same
as
a
motion
you
ha"e
get
an
of
If
informal
vote
just the corporate limits,
as
and
*
awhile
ago
the
resolution
I desire they vote
heard the motion
that
on
be
that.
the
resolu¬
ready for the question?
I
the
gives
bankers will
his
he holds,
his
of
belief,
administration
as
Carr,
Hon.
H.
M.
Robinson
ever
messages
a
they
Dr.
brought.
that their services this week
assurance
be
and
its hearty thanks
expresses
source
of
to
happy recollection.
a
as
Mr. McKee's worth to the Division is
and the constant and
knowledge,
he
service
has
a
mat¬
untiring efforts he has
the splendid results his
given."
Gentlemen,
allowed,
be
may
while
are
we
have
you
heard
the resolution
as
presented.
would
out here
I
on
business and
but the whole Association.
Section,
if
it goes
will
partly
to
see
While
junketing trip—-he is in the
a
not only of this National Bank
a
tribute like
this
in the United States mail it will be too slow.
wiring it to him to-night, it will be
duly
motion
(Upon
was
and
made
seconded
the
is
deserved,
If the Committee
in order.
more
resolution
last
presented
adopted.)
Election
HOVEY;
Mr.
Chairman, I
lowing nominations:
National
Bank
of
to—it
proposed
chair.
Mr.
MR.
of
Officers.
Nominations.
on
have the pleasure of presenting the fol¬
For President, Mr. John G. Lonsdale, President of the
Commerce,
in
St.
Louis,
Missouri.
Gentlemen, I
is
so
Sands,
HOVEY:
National
will have to be like the girl that has been
sudden.
I will have to ask some one to take the
will you
the
trict,
take the chair?
Bank,
favor of tabling
the
resloution,
say
aye;
those
a
rising vote, and lets' count
noses.
C.
of
the
Fort
District,
C.
be
of
Reserve
Bank,
Wall,
of
the
Fourth
Fanners
Reserve
National
member
Percy J.
York;
President
Newcomer,
for
District,
New
Federal
Dearborn
J.
Waldo
Baltimore;
President
Seventh
District,
Bank,
of
the
President
of
the
of
the
Executive
Johnston, President
Federal
&
Reserve
Merchants
John
Chicago;
Capitol
Dis¬
National
Fletcher, ViceTwelfth Federal
National
Bank
of
Washington.
Mr. Chairman,
tary
Federal
National
Wilkinson,
Charlotte;
President
Vice-President,
Bank,
Second
Chemical
W.
Reserve
A point of order there.
For
Exchange
Committee,
Olympia,
That is not debatable.
Well, let's call for
II. C.
and the enlightening
shadow of the capital, protecting interests,
of
that
I suppose, gentlemen, you concede the'"noes" have it, unless
call for a rising vote.
;-
MR. WAGNER:
commend
to
make this suggestion, that Mr. McKee's
service to this Division continues to be of value.
He is working to-day,
everybody,
opposed, no.
you
Division
the
common
MR.
Chairman
in
Also his declaration
confirmation
policy.
speakers, Mr.
Division
faithful
and
Congress now?
expression
will
we
or
seconded, Mr. Chairman.
was
tabled.
made
in
(Mr. Sands took the chair.)
get an expression.
I
Division
Report of the Committee
to get out of there,
the informality of it,
WAGNER:
given
the
His
reflects
•
in towns of 100,000, they will stick
and tell
Gentlemen,
excuse
•CHAIRMAN:
be
are
it be safeguarded
tabled, and it
tion
you
has
of
States.
abroad,
given to the Association and the Division, and
cheerful work has produced, are monuments to the constructive, intelligent
doing in Los Angeles.
CHAIRMAN:
to
sound
other
CHAIRMAN:
If
he
Bank
to say "in cities of 100,000 popu¬
that in there?
give them all under similar circumstances.
WAGNER:
are
of
ter
constitutional.
MIL
National
national
that is class legislation.
what
not
evidences
it be well
afraid
and
branches."
have
to
Wouldn't
Don't you want
over"?
exposition
United
home
at
of the administration of the high office which
important business matters.
the
WAGNER:
or
both
.
the members
whole, and its members individually, express their
regret that the President, Henry H. McKee, is detained at his home on other
and
Are you
the
banker in the
every
conditions,
pleasing, the helpful
"The
.
SANDS:
them
the
little
minds
keep these State banks from taking away >our birthright from us.
ready, Mr. Chairman ?
MR.
the
To
kind,
a
forceful
•
opportunity to
an
and
thought he has given to this subject.
CHAIRMAN:
Just give the Chairman
all get it.
can
we
clear
Knoles, all of California, the Division
for
;
resolution
a
and
the
Tully C.
legislature.
his
effective, and to pledge its support to him in the continuation of
safe
a
city of
I take the position
will have to fight eternally
offer
the
Comptroller of the Currency,
for
actuate
financial
tangible
prompt
action.
we
the
indebted
should
of
,
Crissinger,
are
which
"To
I am in a
legislature.
own
Division
analysis
and
ment.
CHAIRMAN:
data and helped to put the
necessary
Francis for the warmth of the spirit of his
grateful for his service.
,
profoundly
R.
his conception
of
omnibus
an
is
D.
the character of
safe¬
absolutely opposed to the principle of branch banking, but
in those States where the legislature has foolishly given permission to the
State banks, then we demand the same right for the national banks, until
such time as the State legislation is repealed.
I put that as an amend¬
while, where
other resolution to be presented,
one
debate upon.
no
acknowledges with deep appreciation the benefits of the
the privilege of its members to hear.
It
and
Hon.
principles
want
we
are
we
Chair¬
shape.
Division
the
of
think the point is
I
object to that.
regulate our
can
branch
to
consent
we
stating
by the
put
was
I want to thank you, gentlemen, for the patience of those
tribute to Dr. James A.
"To
careful study of the situation by
a
who
several
are
Mr.
Are
of Thanks.
there is
helped to contribute the
in
invocation,
well made—that we should confine it to the limits of the city in which
the parent bank is located.
WAGNER:
by the Chairman of the Resolutions Committee.
bankers
pays
phrase
one
very
MR.
sys¬
SANDS:
"The
"Such other restrictions and limi¬
President,
be taken
may
bank
it has been
as
masterly addresses it has been
it?
vote on
can
possible way.
every
there
branch
tained.
the Reso¬
on
be all right for working it out, but it is quite apparent
may
which
clause
we
so
plan presented
any
Mr.
NEWCOMER:
guarding it
gentlemen
the gentleman's attention to
call
covers
be found expedient after
may
the
condemn
"Upon the members of the National Bank Division, the
just closing has created a distinctly pleasing impression.
To
and the City of Los Anegeles, and to the California Bankers'
Association, the Division tenders its heartfelt thanks for the untiring
efforts they so generously gave to make possible the gratifying results ob¬
400 miles each
bank has that permission;
can you
blend that,
way
banking committes of Congress."
clause.
in
I
some
resolution, which
tations
the
I think
Yes, I believe
:
lutions Committee in
of the
have
MR.
thing, regardless of that.
CHAIRMAN
to
have heard the resolution
convention
That is true, but if the State
:
LOWSLEY: No,
useless
you
there will be
sure
am
matter
ought not the national bank to have it?
MR.
be
privilege of having it.
Gentlemen,
CHAIRMAN:
in which parent bank
bank
read
SANDS:
which I
city?
branch
a
would
It
Gentlemen,
Vote
from the main office.
way
author¬
are
are
of that.
care
institutions
the changes.
and declared carried.)
who
The
RODGERS:
of
to permit national
as
branch banks are not for the best inter¬
I am willing to accept that.
say
accepted ?
located.
MR.
are
ready for the question?
(The question on the adoption of the resolution
am
we
Bank
Congress
you
MR.
You
Why not
SANDS:
corrected arid
agreeable to that.
MR.
Those
and then ask for the
man,
think
the
What does it say there about being opposed to branch
:
CHAIRMAN:
quite surprised at the attitude he has taken at the convention.
Will
WAGNER
MR.
tem
I
happen to be from Buffalo.
I would
like to know why Mr. McDougal does not practice what he preaches.
They have at least seven branches on Main Street, in a radius of four miles,
CHAIRMAN:
National
the
requests
and operate branches within the corporate limits of the
ests, and leave out the rest of it?
>
perfectly agreeable to me.
RODGERS:
That
Resolved,
Association
amend the National Bank Act
so
have branches."
to
MR.
might ask what size city?
LOWSLEY:
States to
It
Bankers'
banks, at the start of it?
MR. SANDS:
''That branch banking as practiced in certain foreign coun¬
tries is not for the best interests of all the people of the United States."
line, and others stay south.
They are discussing that to-day.
Now, let us confine it to the city limits.
CHAIRMAN :
You would amend, leaving out the wording about 100,000.
north of
stay
Be
"Therefore,
American
the
of
MR. WAGNER:
City of Los Angeles, between the bankers of California, whether a
certain
Chairman.
however, to States in which State chartered
fined,
.y.'yy:
MR.
Mr.
city in which the head office of such national bank is located, to be con¬
of¬
head
conclusive,
will go back and vote on the original motion;
we
when I say the original motion, it has been changed, so I will
read it so we will all have it before us.
to maintain
banks
radius
is
That
Now,
SANDS:
the United
question about it, to the
no
reasonable
a
fice."
is
him to
Division
the resolution says a
Now
city.
the city, it maybe effective.
corporate limits of
all
course,
MR.
standing.
vote by
tabling it,
that disposes of that point.
suppose
WAGNER:
MR.
the
meet
can
I
CHAIRMAN:
ask
MR. LOWSLEY:
and
by
vote
delegates arose.)
(Fourteen
.
before it gets started.
now
opposed to
CHAIRMAN:. Those
branches.
to
tion ?
in
will
resolution
the
table
to
(Five delegates arose.)
Chairman, I believe in this State the majority of the
opposed
are
CHAIRMAN:
zone.
want
standing.
VOICE:
A
State
who
Those
CHAIRMAN:
done, and I had a part in the dis¬
was
cussion.
157
DIVISION.
BANK
I
instructed
the adoption of the report, and ask that the Secre¬
cast the unanimous ballot of the Division for the
move
to
gentlemen named.
(The
motion
was
duly
seconded,
Chairman, and unanimously carried.)
was
put
by
Mr.
Sands,
acting
as
DIVISION
BANK
STATE
American Bankers' Association
Held in Los Angeles, Calif., Oct. 3 and 5, 1921.
Fifth Annual Meeting,
TO
INDEX
.Page 161
Farm Finance, Guy Huston..
Country Banks and
Presidentl Elliott C. McDougal
Address of
___-___Page 164
Page 165
Exchange.
By L. E. Thomas. Examiner
Members of the State Hank
Mr. President unci
to you my sincere
I desire to express
thanks for the honor
the represen¬
Association of Bank, Supervisors of
the National
It was my pleasure to
the United States.
address that As¬
Philadelphia in August last, somewhat upon a
sociation at
present topic, and I shall in a great meas¬
similar line as the
attention was directed in that
follow the points to which
feel
thankful
to
Mr. Allen, the Deputy
address.
I
Manager,
for his kindly warning conveyed in
very
Secretary of our Association, in
I certainly
consideration for
his thoughtfulness and kind
gentlemen, because I am sure he did not want you to
It was held at
This
were
boy sat on one of these puncheon seats while the good
preacher discoursed for about an hour and
doctrines
was
out and still
A good old brother
and he occupied about
thirty minutes with this part of the services.
another
address
his
to
lead
in
prayer
the Lord for the
congregation, while this boy was worn out
At the close of his prayer the old man
air of
exclaimed
with
we
all
go
up
and sermons never end."
and
as
an
At the close of my
The
almost
"Oh, Lord, may
address I sincerely hope that none of you
give forth
of
a
efficient
supervision
self-evident proposition,
that
is not
efficient
is
of
a
bank
is
but you will note that I
worse
than
none
the reason that it leads the bank officials to
and causes the
I
at all.
for
neglect of duty
public to think they have full protection by
of supervision when they have none. The main pur¬
of' all supervision is to secure obedience to the laws
reason
pose
enacted for the protection of the public and to prevent bank
failures or keep banks from closing up.
who
-Page 168
had
never
the
occasion he
to be in the situation of the Irish¬
to this country
came
out in
was
from old Erin and who had
of seeing
privilege
persimmon.
a
On
one
field with Mike and he came upon
a
persimmon tree—it was during the month of September,
a
the fruit
when
were
and
Pat asked Mike what these
ripening.
was
said
he
they
red apples,
beautiful
were
so
Pat
suggested to Mike to climb the tree and shake some down,
which he did.
beautiful pink
Pat picked up one that was a
color but only about half ripe, and after biting into it he ex¬
claimed
hear
"Oh, Mike, come down quick, if you ever want to
:
talk any more,
me
We do not want to
that reason the
because I
see
various
any
of
am
of
our
State Governments, as well as the
Supervise
banking institutions to prevent just
the business
such catastro¬
do not wish to pose as an expert on bank super¬
I
outline
to
closing up."
banks close up and for
our
National Government, undertake to
to
you
my
views
a
great deal of pleasure
concerning this all-important
work.
Some people who are conducting
banks do not want any
supervision and consider themselves better bankers than the
Others do not
Commissioner.
do
a
speculative nature and
things that they know the Commissioner would not ap¬
because they violate the law and endanger the safety
prove
of the bank.
if
because they prefer
want it
investments and loans, of
to make
bank
a
its
Supervision is essentially necessary, because,
was
confined in its operations to its own
earnings would be very small indeed.
capital,
The fact that the
public at large deposit their funds in our banks is the very
reason
why they are entitled to have a suitable official su¬
pervise the bank and
for
their
protection
see
are
that the laws
which are enacted
duly observed.
The position of Supervisor is a very difficult one
and
he
Unless
has
we
many
can
To
secure
troubles confronting
secure
and directors of
similar exclamation.
placed the emphasis on the word "efficient" because super¬
vision
We do not wish them
This boy darted out the door,
through he exclaimed. "To hell for me."
importance
a
pious unction:
to the place where congregations ne'er break
he passed
bankers will
upon
and he spent fifteen minutes beseeching
beyond endurance.
soon
At the close
old brother was called
good
etc.
this boy was pretty well
the meeting went on.
called upon to exhort for a while,
of
__'
i*
of Slate Banks, State of Louisiana.
old
thirty minutes
of predestination, foreordination,
At the close of his lengthy sermon
worn
___Page 167
Adopted against Branch Banking
Election of Officers
vision, but assure you it affords me
bored in them for the legs and with no backs thereto.
the
Frame—Resolution
Mr.
phes.
holes
upon
of
country church and the only
a
those made of logs'with
occupied
be
to
Address
Following
boy who attended the Hard¬
he in the same situation as the
shell meeting.
seats
Discussion
which he suggested that I
careful and not speak too long.
would he very
appreciate
his compli¬
myself in his letter to Mr. Sims, the
mentary references to
you,
Page 167
Report of the Conference Committee
man
conferred in the invitation to speak to you as
ure
________._.Page 167
Report of Public Relations Committee
Division of
Association:
Banker«'
American
tative of
-Page 167
_
Importance of Efficient Bank Supervision and How to Secure It
The
the
..Page 147
Report of the State Legislative Committee.
_____________--------Page 165
Report of the Membership Committee
Report of the Committee on
Report of the Federal Legislative Committee.
^--.Page 158
L. £■ TKomag......
Secure It*
PROCEEDINGS
BANK
Supervision and How to
Importance of Efficient Bank
The
STATE
a
him
the active co-operation
bank,
all
'at
the
best,
time.
of the officers
supervision is especially difficult.
good results it is essentially necessary that the.
Supervisor should at all times take the officers and board of
directors into his full confidence.
of encouragement to
He should
get out
a
letter
them occasionally and emphasize
the
responsibility of their position and the duty they owe to the
public.
Bringing this duty home to them
phasized too often.
If
we can secure
tion the burden will be much
to
be
sion.
one
of
the
lighter,
first essentials
in
cannot
be em¬
their earnest co-opera¬
so
that I consider that
efficient bank
supervi¬
STATE
During the past two
they
the Examiner to disbelieve
made to him by the officers
to
some
organization covering that period of time.
of
State the directors
our
affairs twice
oath.
I
a
of
the dangers I
were threatened during the process of re-
are
year and
make
have had provided
Under the laws
required to examine the bank's
full report thereon
a
under
special blanks for them to
use
covering this examination
because
too
done only in a
manner,
and at the close of the
examination
condition
In
of
perfunctory
the
directors knew very
the
the next
institution
often
the,
same
is
Bank Commissioner should
carefully review each examination made by his subordinates and
address
president of the bank examined, giving
impartial criticism of
a
letter
a
the
to
careful review and
the condition of the bank. This should
be done
impartially and without any captiousness, but with
spirit of frankness and cordial good-will that will show the
a
officers that the official only desires to be of
help to them
and not
hindrance.
a
letter
it
to
the
I have made it
cashier
a
president of the bank, otherwise
in
the
that
letter
such
files
and
the
cashier
of
has
been
but
manner,
if I
sent
directors
write
know
never
most
the
to
place it
may
received.
letters, of course, should be written in the
all
is
same
the
board
communication
a
rule that
a
of the
copy
All
such
courteous
firm stand should be taken against
any and
a
violations of the banking laws.
Growling and snarling
provokes ill-feeling and gets the Commissioner in bad with
the
banks
should
under his
be made
to
supervision.
make
An
effort
at
the officials feel and
all
the Commissioner has no other interest at
stake except the
general welfare of the bank and the protection of the
public,
It is expected,
attention
to
of course, that the Commissioner will call
all
things that should be remedied,
which may not entail
an
in
actual violation of the
of
many
law, but at
tlie same time will be
regard
to
his
the
large amount of past due paper that is being
carried and not properly renewed.
cersf notice
back of the note,
was
and that many notes
by simply accepting
same,
whereas
stance
•
He might direct the offi-
to the fact that collateral
impossible.
a
of
payment
a
be
the
on
and
taken
in
extending
in-
every
He might direct the attention of
tlu^of-
ficers to the heavy expense account carried
by the bank, as
well
as
and
the
interest
it is
paying
deposits if excessive,
on
likewise refer to the lack of cleanliness and
of the books of the
bank,
as well as the bank premises.
of these matters will show that the
tcrested
In
in
neatness
All
truth, the
bank" system
ends the general condition of
every
bank in the State that is
of
notice
and
should
to
fail
I
worry over its condition the same
under
my
direct
own
banking insti-
a
sympathize with its officers and
control
as
and
though the hank
hand where you find
the
instructions
own
a
cashier not
disposed to comply with
given, but who considers the bank
property and
desires
to
run
it
as
he
instances of
their
sary
this
inexperience
kind, which
or a
are
swelled head.
at all times to insist
on
a
his
Such
There
are
a
generally caused by
Of course it is
strict
as
pleases.
cashiers have to be notified where to head in.
few
iron
an
neces-
compliance with the
my supervision have
they make their semi-annual
or
as
to value.
and do
true
the
banks
should
co-operate
with
this
department
of
Supervisor
or
their
from
confidence when the
institutions.
Hiding things from
the Examiner completely
same
is
destroys
discovered, and likewise
causes
both
all
as
to
as
the
investments,
correctness
of
bank.
in
order
to
promote efficiency in" supervision
the
Bank
Commissioner should likewise visit the banks under
his
pervision
with
in
person
occasionally
and
not
content
su-
himself
sitting in his office and reviewing examinations and
criticising by correspondence.
missioner
will
show
him
A personal visit by the corn-
the
general management of the
bank and the amount of
personality there is in its administration.
lie
will
stability
enable
likewise look
can
to
as
thereby
of the
the
be in
commissioner
position
'Such
to
books and
form
a
efficiency and correctness,
better
a
institution.
the
over
their neatness,
with the officers and
is
to
visit
a
become
judge of the
would
personally
likewise
acquainted
employees and make them feel that he
their friend and only desires their
success,
The position of Commissioner of Banks
is not
sinecure in any sense, but it is
a
political
office that requires inde-
an
° fatigable labor, constant attention, delicate
tact and
sound
business judgment.
the job all
Applying these qualities and staying on
time will bring good results and
when the
the
banks realize that
a
is that kind of
man
supervisor they will respect his views
selves try to conform
In order to
has at
secure
thereto
as
should
hold
the honor of
hanks for
some
a
corps of
examiners, and the actual
in
the
serving
standard which it is desired
opinion of the public.
as
an
is
crooks and
doing.
sent
This is
out
idea that the bank examiner
an
by
the
mistaken
a
Government
as
carefully
as
is criminal
entrusted
to
enough
his
care
to steal
has
no
correctness
manifested
If
a
on
his
more
bank
than
catch
of
the
wrong-",
the duties
of
a
possible and occasionally
the
However, the cashier
of the people
money
hesitancy
in
falsifying his
and committing perjury as to
statement.
one
This
I
have
seen
occasion,
cashier receives deposits and issues time
certificates
therefor from
or
of
to
guilty of
incidentally the examiner
locates shortages and embezzlements.
that
are
conception
It is true that
checks the books
discharging
supervisor, having sev-
employees in banks who
bank examiner.
have
State
the road.
public at large have
detective
a
on
I
actual .examiner of
years, whereas at present I am
examiners
or
and will tliem-
they should,
the functions of commissioner
and
oral
commissioner
bank is the most important work in hold-
a
ing the bank up to the high
it
a
more
efficient supervision every eomniission-
his service
examination of
everything possible to assist them in
establishing the
condition
ex¬
previous
wise have their individual
the
the
without
The said directors should like-
books, concealing the records
of
done
well
as
carefully examined,
well
as
be
employees, at which time all
therefor,
represented through
eers
on
A supervisor should insist
should
Iawp made for the protection of the public.
The public is
the banking department and the offi-
resulted
being given to the bank by
accounts of any size
duly veritied, and especially is this applicable to the small
country
4The
Sometimes, of course, it is necessary to rule with
,
was
management.
it
officers
collateral
lie
amount
when
themselves
the
to
loans
had
tution is about
that officers and directors
of attention
portance, and that
of them,
l
lack
a
animation
with its officers just the same
were one
must go and
The very fact that this has not been done has
the other officials and directors.
that
if lie
coin-
that the directors meet
regularly as provided in the by-laws,
and that they pass upon and
approve all loans of any inl¬
and advise
as
being
time he should be reasonable in
same
place in banks under
account
under his supervision, and be
ready to counsel
know from personal experience that when
his instructions
on
The
edge because I believe that many of the
shortages that have
taken
or
Commissioner should have at his fingers'
like
a
led to most of the bank failures of which I
have any knowb
Supervisor is vitally in-
the institution and knows its
condition.
required by
with the Supervisor from Missouri that the "one
agree
must direct.
being renewed
were
interest
should
note
new
not listed
reserve
requirements.
I
and
to
be
loans, paying out dividends when
Supervisor must be insistent
cials and employees were not sufficient to
protect the bank
tion
the
on
vitally affect the welfare of the bank.
plied with, but at the
better idea
He might direct atten-
excessive
character that
helpful to the bank. For example, the
Supervisor might mention the fact that bonds of the offi-
considering its volume of business.
might
there is much past due paper and other matters of
times
realize that
that
employee!
The Supervisor should insist
man
place I consider it very important that the
statement
any
or
law being well maintained and that the laws be not violated
little about the real
itself.
159
i
six special letters addressed to
or
calling their attention
with which
DIVISION.
yeafs I think there have been issued
by my office at least five
the banks,
BANK
a
pad that-is not in
if he receives deposits
on
use
at all
by the bank,
checking accounts and
the leaves out of his individual
ledger
steals
showing such deposits
f
BANKERS' CONVENTION.
160
account, it is impossible for
ledger or control
eral
find the same.
aminer to locate or
I them
to be located unless the
for such shortages
placed in the hands of a
be
receiver, in which event all of
of a banking department seldom has
The supervisor
time himself to
the
personally visit and examine the banks un-
control and is therefore compelled to
der his
impossible
bank happens to
will be readily disclosed.
the shortages
rely on the in-
The first requisite to effi-
vestigation of his examiners.
examination of a bank, and which is a heces-
ciency in the
supervision, is to get a good exeasy undertaking.
Many
corollary to efficient
sary
and does not credit
anywhere on the books, it is
the note or
on
the ex-
Also, if he receives pay-
that are due to the bank
ments on notes
with his gen-
his individual ledger balance
In order to make
This is not always an
aminer.
qualtities of an examiner from a clerical
good men possess
judgment in the matcommonly call
it is essentially necessary that he
standpoint, but are possessed of poor
ter of credits
and the exercise of what we
Of course
"horse sense."
did not change
I
and
a
Commission-
single examiner in the
department
employed by my predecessor, because
that was
I recognized
and efficient; and did not
believe it to
them as competent
good policy for the service to
be
reliable and be selected
When I became
politics.
without reference to
er
moral
thoroughly
be
should
essential pre-
stability of character are
and
Competency
make any such changes,
requisites of the good examiner.
State Banks is not an auditor,
The Examiner of
within the limited time at
he
thorough work
the
do
can
his disposal it Is
cannot
take off
trail balance of the
a
the same conforms to
stated
the
individual ledger falsified
when he goes into
that
individual ledger and
the
for
had
the same
account to see that no false
extended thereon. One of my examiners,
balances have been
having
The
except to
individual ledger and see that
the control account, while at
time he looks carefully at each
after
required by an audit.
verify the individual accounts
examiner
because
impossible that
a
on
him,
bank these days he calls
then seals
up
all the notes
I might say
parenthetically that no examfher should permit the Individual ledger to be posted in any way whatsoever after he goes
securities and proceeds to count the cash.
and
into the bank for liis
examination, because if things are not
right in that bank the individual ledger
leaves
will be doped or the
pulled before he can take off his trial balance.
The
individual ledger can
accomplished by the board of directors when they
complete work of verification of the
be better
make their semi-annual examination.
idea of calling in
the
to
customers for verification, but
individual
that with
a
At one time I had an
passbooks or having statements sent out
country bank such a course of
I decided
procedure might
have
an
injurious effect and the customers become fright-
ened
as
to
the
real
condition,
so
that
the idea was aban-
doned.
My judgment is that a compulsory vacation
for the employees
of two weeks
of small country banks will have]a good
effect in minimizing embezzlements.
If the bank will take
a|good-sized Fidelity Bond and then let the employee know
going to be required to take a vacation without
that he is
previous notice, and during which time he will not be permitted to
come
into the bank or handle its business, it will
certainly minimize the losses caused
of
bank
Of
by the embezzlement
when
an
examination is made
it would
be
totally inefficient unless there was an actual count of the
cash
on
hand,
a
reconcilement of the correspondent apcounts,
including the transit department, a verification of all ledgers,
certificates of deposit, cashier's checks, loans and dis-
counts with the collateral
bonds
list
and
other
therefor, together with the stocks,
investments.
I
require the
examiners to
hll past due notes that are over thirty days past due,
together with the collateral therefor, as well as to make a
complete list of all overdrafts that have been running for
more
than
thirty days,
giving the date of the last entry
such accounts and a notation
were
chronic
or
such matters up
make a full and complete report to
incidental.
as
on
to whether the overdrafts
I then require them to take all
with the head officials of the bank and to
the banking department
concerning all such delinquent loans and overdrafts. It is
absolutely necessary to verify all assets and liabilities, and
many of them should be re-checked and reconciled in the
head office of the Commissioner, and especially is this true
as to bills payable and collateral therefor as well as rediscounts and collection and transit letters,
In the examination of the Transit Department of the
large city banks I have adopted the rule of taking off a cornplete detailed list of all such items and delivering the same
to one of the officers of the bank other than the employee
who has charge of the Transit Department. We then keep
a copy of this transit account, and the officer with whom
«the list is left is required to notify our office daily of all
collections on these outstanding items until they are entirely
eliminated by the department. These larger banks handle
millions of dollars of this class of business, and a large
part of it is composed of B/L drafts covering agricultural
products and other commodities being shipped to foreign
ports, so that it is essentially necessary to have these items
duly verified. If this'class of items has been outstanding
for a long time we send tracer letters to the foreign bank
holding the same and ask for a special report thereon, because through this channel thousands of dollars have been
lost to our banks who engage in the exportation of products
to foreign ports through moratoriums, depreciation in value
of the product and from other causes.
We all recognize the fact Jthat the loans and investments
of every bank constitute its very heart and vitals, and it is
essentially necessary that they should be checked thoroughly
and as a general proposition it is a good idea to get one or
two directors to go over all these items with the examiner
and to verify their correctness and value. I know of one
bank in Mississippi that had many thousands of dollars of
forged notes placed in the portfolio by the cashier to cover
up a shortage and these notes had even been rediscounted at
the Federal Reserve bank.,
The examiner should not spend too much
time on small
technical items in the bank, but give his attention to the
important and weighty matters that affect its solvency and
stability. I-Ie should be well assured when he leaves the
bank that it is solvent, its capital unimpaired and that it is
a safe place In which the public can deposit their money,
Whenever there are any bonds borrowed he should require
proof of the authority to use such bonds, because they are
frequently only left for safe-keeping, and yet some banks
will borrow money on them.
The authority of the officials to borrow money
for the
the minute book so as
to see that these officials are always within the limit prescribed by law and by the board of directors. If the officers
of their firms have borrowed any money then a close investigation should be made to see that the same lias been
bank should be investigated through
properly approved by the board of directors
and that the
limit fixed has not been exceeded.
The examiner as well as the
supervisor should be cour-
teous at all times; at the same time he should not hesitate
to require the production of any and all records that he finds
necessary to make his investigation thorough and complete,
In reviewing examinations he
should write to the coinmis-
indulging in carping criticism,
frank and open statement of the conditions
sioner fully his views without
but should give a
funds.
course,
.
commissioner can send to the
will himself be in a better
position to judge of the remedy necessary to be applied,
Bank examiners should always be Upon a salary basis full
and adequate so that they do not have to rely upon the'fees
collected, which causes them to be inclined to rush their
work for fear that their pay may be shortened,
In the foregoing I have undertaken to give you some of
the methods by which efficiency in bank supervision can be
secured, and I feel that it is unnecessary to say more con-
as
he finds them, so that the
bank a copy of this report and
cerhing the importance of this work in its relation to the
general welfare of the public at largp and to the banks
which are under the direct supervision of the comrnissioner.
.
STATE
.
'•
w
F.
•-
I
upon
affecting the welfare
that
act
BANK
■
■
of
some
these
of these great
important
161
'
To them
we
are
responsible for
financial stability and
banking institu-
the earth.
storehouses for the wealth of the
public,
as
DIVISION.
■
;
for the privilege and opportunity of
you
having made this address
tions
'-V
Vf '
certainly thank
matters
:
and
our
national greatness, our
our
importance among the nations of
May this supervision continue to
keep them safe
sound.
Country Banks and Farm Finance
By Guy Huston, President of the First Joint Stock Land Bank
of Chicago and Huston
Banking Co., Blandinsville,
Illinois.
•
.
The subject of farm finance is
a
very broad one and has
many ramifications and it would be
impossible to
subject in
one
lectures
articles.
or
ucts after
speech
01; anything
less
The problem of
than
series
a
vails
$5,000
that has
one
age
subject worthy of the deepest consideration
by the bank-
and
of
ers
America, and while it will have
great effect upon
a
the conditions of the small
rural community, yet that is a
problem to be handled by the city banks and is not
within
the realm of
country
grain
banking, for their interest
livestock is loaded
or
on
the
ends
when
and draft drawn for
cars
proceeds.
banker
or
to
owner
carries
Go with
to
me
Ohio,
Iowa,
there
are
as
the young
well
a
Bank
Main Street.
on
typical small town bank.
Texas
15,000
California.
or
incorporated
villages of 2,000 population
the same and
It
makes
110
In
banks
the
United
having
States
$300,,000
of
less and located
or
less.
or
capital
a
Their problems
anything that gives relief to
own
his livestock
and
money,
the
typical small town bank of the
the
corn
belt
banker
and
their
corn
belt,
as
it is with
business that I
most
am
•familiar.
when it
Picture the one-story brick
building
Street.
of retired
and
is
its
coiilmiunity.
village has
in
farmers.
deposits,
say
water
no
or
sewer
lined with the comfort-
are
The,capital of the bank is
$®000.
The
stock
of
the
of
the
75%
of
the
stock
of
ail
the
Iowa
banks
and
implements clear
Brown is
the leading
citizen
of
the community,
daily contact with every member of ins
comrnua-
From his Savings Department he sends
greetings and
pass hook upon the arrival of
every new member of
the
family of his clients
of
wills
clients
and
and he is consulted as to
administration
literally from
moulder
of
the
of
estates,
cradle
the
to
the drawing
thus
serving
He
grave.
IPs
is
a
thought and character through his interest in
churches, the schools and the co-operative societies of his
community.
He gives of his time and efforts without stint,
His bank is the financial home of the
neighborhood and is
considered
is
can
activities.
a
public
as
conscientiously
but he
institution
an
striving
to
only do that if he
An
the
as
serve
his
post office.
community
fully finance it in
can
He
well,
all
its
inadequately financed community is always
His maximum legal loan is
only
authorities,
that
recognizing that
$3,000.
debt.
He
save
sav-
the
011 same
terms be can meet.
Tbe big farmer and feeder is
*s absolutely essential to the
met
by
there
are
legitimate
have
laid
down
the
maximum
rules
under
authorized
which
he
loan
can
of
borrow-
are
the
in
no
bank,
greatly exceed
that.
are
no
more
community if they
legitimate
Farmer
are
than
all
seasonable
banker loans the farm
as
on
a
Borrower.
enough
funds
of
the
hand who has saved
the
to finance
farmers.
a
in
This
few hundred
dollars the money to buy his first farm
equipment, he pre-
to borrow the balance
on
a heavy borrower, and it
the
bank
that
it
Economic Unit of Land.
Hi the
corn belt an
economic unit of
land, with the implements, necessary tools and livestock for
profitable opera tion is worth at
least $50,000.
Indeed, the average
value of all the farms for
and
we
is low
farms and land that
in
investment is in
average
the two States of Illinois and
when
eliminate
small
very
of
excess
productivity, the
$50,000.
Now, it is a
more or less precarious undertaking for
to finance several hundred
the
value and
a
bank to attempt
such units in each of
which the
investment is larger
than^the capital stock of the bank,
an(l yet three-fourths in number of the State banks of
the
United States and almost one-third of the national
banks
nre operating under these conditions,
Federal Reserve Hanks.
this
farmer
capital, then his
wonW l)e
and
yet
capital,
was
note
banking
for
with
hank
a
$50,000, which
is
of
$.">00,000
perfectly good,
readily re-discounted by the Federal Keserve
bank,
banking with a bank of only $50,000
since he is
the
bank
cannot
re-discount
the
note
should
his
aggregate loans amount to $3,500, for the Federal
Keserve
i,ank
will
,-ower
not
owes
accept for re-discount notes where the
the
bank
Limiting loans
bank's
to
capital is,
more:
an
10% of
individual
of course,
to the country banker it is
bank
than
good
to
a
its
bor-
capital,
percentage of the
sound
finance, and yet
strange that the Federal Keserve
would accept this man's note for
re-discount from
larger bank when
it will not accept it from him.
there must be rules laid down
under proper guarantee
giv-
}ng this much-needed relief to the rural
eral Reserve
System is to be of
a
Certainly
any real
bank
if
the
Fed-
help to these small
not
ruling is the
into
come
the
reason
small
more
State
banks
have
System, and it also explains why in
a
period of the greatest stringency ever known in
the rural
districts, the Federal Reserve System, with its six billion
of assets, held less than 4% of its assets in
agricultural and
livestock
paper.
Now, it is said that 54%
these
of
small
the
total
rural
de-
banks.
On that basis
they should be entitled to at least one-half the
surplus
deposit in the bank
needs
savings and profits of his
success of
posits of the country originate in
The
the
Within
parson.
have his busincss-
This
$3,000, and yet the State
community whose seasonable needs
wise
There
of
banks.
^
Loans Limited to
in
aver-
and how to make and
^ears °* lal)or» but he must be able
poor one.
ers
man-
an
living economically and
to
comes
farm, paying down
If
tty.
a
good
a
have accumulated surplus funds and
wants to buy a
farm,
it is
economically right that he should be able to
is
farmers.
Ilanker
is
entire equipment
by tlie banker and leading farmers
owned
owned by
of Main
corner
a
investment of less than $5,000. The
The elm-shaded streets
$30,000
He
an
unpaved and the
able homes
bank
011
The building and fixtures and
probably represents
system.
is
another period of five to ten
years this tenant farmer will
Iowa is $37,000
is
tenant
ing money he is only equaled by the
country
are
will give
one
relief to all, but in
drawing this picture I will have in mind
street
of
season,
period of five years be able to
pay off his bank loans
has learned to work for himself
a
village in New York State,
a
less and deposits of
or
|
piece
a
crop
his arms, he will in
as
.
in
man
the
buy
State
difference if you have in mind
all
the
through
and
The Farmers'
$50,000
rent
him
real economic unit it will
take at least
a
$6,000, and if
ager, uses his head
been given much attention
during the past few years and is
a
land
some
This
and if the farm is
of
financing farm prod-
they have left the farmers' hands is
upon
land.
the
cover
•
loanable funds of the Federal Reserve
System,
billion instead of the 230 million of livestock
tural paper held by Federal Reserve banks
and, based
on
or
three
an^ agricul-
on
July 31, 1921,
proportionate part of wealth of the
Nation,
they would be entitled
to over
two
billion
of credit.
*
BANKERS'
102
The
Corporation.
Finance
War
izing loans to country
possibilities of
banks, has wonderful
in the directors appointed that
will know and understand the needs of the small town
make
.
they
country bank, and not
promised aid unavailable to him. as has
this
Federal
done in the
"been largely
Unserve System.
having
tor
Annual Sale
hundred miles distant, and no knowledge
purchase of lands.
of
than sufficient to take
business who need credit the year
starting in
of the -hank's resources by tying
round, and any depletion
them up in real estate
loans, lessens by just that
Must
Hare Strong
It is absolutely necessary
lie knows his own
history,
family
his
and character, knows
shortcomings
lie is building a community
of each of his clients.
able to
outside sources,
all his
weaknesses and the
the
and yet
for even one farm loan may
inability to find a market
worthy young men, or force
fifty worthy borrowers.
He has no
prevent his financing a dozen
him to deny credit
to
with outside capital,
clients to the mortgage lender at
acquaintanceship, no direct connection
and he can only
send his
seat.
the county
Business Unregulated.
Now, the farm mortgage
lized country on
compared with the total. As a
from two to six hands
Each of these men must
they reach the investor.
deals
his commissions and fees, not
direct with the farmer bases
the money market, but only upon
the necessities of the
Abuses in Mortgage
It
this
is
inevitable that in an
unregulated business such as
tie up farms that
dled only through
gages
By
him, and- often the initial series of mort¬
will be made on a very fair rate of
Very often these men
are
If
a
You
has an assured income for the rest of his
and I know of
other tricks of the trade,
many
good or better than those mentioned, but we don't dis¬
cuss
them
even
among
Old-Style
The old
ourselves.
Mortgage
Unsatisfactory.
style of farm mortgage was unsatisfactory both
to the borrower and the
to
the receipt of the mortgage
local lender can get a hundred farms tied up
that way he
life.
as
form that the borrower
hundreds of dollars to him in principal and in¬
terest, accepting, of course, only
in
With all these disadvantages,
Farm
lender.
The farmer was compelled
sign an obligation he knew he could not meet at matur¬
ity and whose conditions did not
suit his needs.
a
period of
resulting in enormous
mortgage dealers.
although based on the most
the farm mortgage
entitled in the
the place to Which it was
the world.
markets of
financial
over
practiced on the investing
in the world,
security
and best
Mortgage Not a Sign of
Poverty.
Theyfarm mortgage is no longer a sign of poverty on
the part of the borrower, but rather it points him out as
enterprising, ambitious individual who,
aggressive,
an
his labor and thrift, has
he
uses
by
of money which
guarantee
He is the man who is
rural
the
building
and
world
the
feeding
a sum
margin in the purchase of land to
a
as
accumulated
repayment of his obligation.
the
com¬
munities.
Probably 75% of the loans
land,
them the
mortgage dealer is
and
foreclosure,
unable or unwilling to renew the
farmer is faced with threatened
a
possibility of a loss
bank with
the
through the farmer's equity
course,
there
being wiped out.
that are
communities
are
strong, legitimate mortgage
there it will
served by
companies, where there is small
be renewed on fair terns, and
danger but that the loan can
yet
for security
of the borrower in
and both he and the farmer have hanging over
dread of maturity of these mortgage loans, for if
mortgage at maturity, the
Of
made by Banker Brown are
of individual and all he has
personal property and the equity
is the
often take a
full year's earnings on a
renewal commission on a $20,000
loan, while conditions are often very bad in the more re$50,000 farm to pay the
mote
communities.
to renew his loan, or is
If the farmer is unable
excessive commissions, he will turn to
to pay
and friends and borrow
a
from them, and the money is with¬
entire deposits, and,
communities, the mortgage loans will run
ten times the total assets
of the bank.
borrowing between neighbors
ties that the last
five to
To such an extent is
carried on in some communi¬
place a good, solvent borrower goes
is to the local bank.
money
required
his neighbors
Thus one loan will sometimes cause
the bank.
withdrawal of one-tenth of the bank's
in many
ties are only hangers-on on
neither the banks nor the
entirely at his mercy.
not financially responsible, yet
mortgages are drawn in such
dealer.
interest and com¬
when those mortgages be¬
gin to mature the borrower will be
must pay
system of over¬
renewals and payments can be han¬
mission, for he well knows that
the
a
for a mortgage lender to
lapping mortgages it is possible
so
Business.
abuses would grow up.
many
invariably discloses that
there has been gross fraud
drawn from
borrower. s
brings again to our mind
of these companies or indi¬
X>ublic and on the borrowing farmers,
fee, and the local agent who
have his commission and
upon
matter of fact,
prominent farm
of the most
losses, to the detriment of legitimate
the
State could be easily
farm mortgages pass through
many
before
years
rural credit law.
evaded by
mortgage lenders through commissions, abstracting and
other charges, and you will agree with me that the local
mortgage lenders are not of the highest type of business
men, although, of course, there are many honorable men
and strong financial institutions engaged in the business,
but the percentage of farm mortgages that they handle di¬
rect is small as
almost
viduals
his
earth that did not have a
Usury laws of the various
some
the failure of one
the fact that
business lias never been a regu¬
the only civi¬
Until 1016 the United States was
one.
of
failures
Itecent
mortgage dealers in the country
made to this type
Farm Mortgage
lated
*
could not occupy
He has lived there
community.
best judge of credit
He is the
the
that Banker Brown be
for the farmer from
obtain mortgage money
through whom he bought the mortgage.
stable
Financial Connections.
but must de¬
integrity of the mortgage banker
pend entirely upon the
much the
community.
banker's ability to serve his
life.
to carry
seasonable needs of his clients and
the
just
those
renewals of
unable to finance
As I have said before, the loanable
funds of the community are no more
care
of about 4c/o
he financed, as well as
Banker Brown, of course, is
mortgages.
ability and solvency of the borrower,
of the
about twenty-
that there is an annual turnover
five years, so
of the farms that must
the
of Farms.
which
the property,
of appraising
means
no
°
period of ownership of land averages
the next interest paying
rule of appraisals, the inves¬
There was no accepted
might be several
The
farm mortgage had no assurance that
would stand past
his investment
date.
The peculiar conditions
requires that he be permitted to
principal on interest paying dates, so
payments on
that the investor in a
layj down such rules as will render
made were not often in
as
the investor.
the fanner's business
of
good in it, and 1 have faith
themselves
mortgages
units as suited
such
author-
amendment to the War Finance Act,
The remit
CONVENTION.
Bankers
to get
The bankers in these communi¬
the fringe of financial life and
communities prosper.
Lose Half
Their Deposits.
practically all of the country
greatly from withdrawals of funds
During the past two years
have
banks
loaned
to
suffered
farmers
not be renewed.
to
pay
maturing mortgages that could
Many banks have had
their time deposits
past six months.
These banks were
reduced one-half in* the
hundreds of them have been
placed in a precarious condition, and had it not been that
great leniency was shown by State auditors and national
bank examiners, and the wonderful service given by city
correspondents, many of them would have been forced to
close their doors, although every loan they had in their
already well loaned up and
note-case
acute
was
absolutely good.
and
is growing more
daily, and the moving of one crop or
half a dozen crops
And
this
condition
still
prevails
STATE
will
in
not
correct
large supply
To
nie
cite
the
situation:
occurrence:
by "phone and asked
him
immediately.
community had
mortgage money
Recently
to negotiate a
me
He stated that
been
$50,000 loan for
loan,
although
clear of
and
His
able to
of
acres
relatives, all
was
of
which
good bank with
a
of
had
$200,000,
of
out
come
States
his
substantial payment on same.
a
each of his heaviest borrowers to
pay him
it
on
A Republican President
that finally
Commission
rural
of
study
a
by
President who signed the bill.
He asked
and
politics
sat in
$1,000, which they
it
happened
so
sitting in the White
was
rural
a
It
It
to
and
credit
was
system
Republican
a
creating the
credits.
this commission
of
system of
new
majority of both houses
a
passed the law
on
accident
an
the creation
the business of this
Congress that made appropriations
was
not
was
finally and definitely launched.
Congress
gej: the money, and urged him to collect immediately
enough to make
and
platforms declared for
Congress when the agitation for
was
the money of their
good record and I
a
these
House and the Republicans had
mortgage
land worth
incumbrance, and had borrowed
friends
bank.
they had 800
a
of
financing.
of his clients for
two
$44,000: that they have been unable to obtain
163
corporations to carry
quarter of land in his
a
purchased by
that each
banker called
a
DIVISION.
peculiar needs of agriculture,
give any permanent relief.
can
actual
an
only farm
BANK
was
defray the
it
was
United
Republican
a
expenses
Republican
a
But in the whirligig of time
that
Democratic
a
the White House when the bill was
President
finally presented
did, but raised the money by selling immature farm stock to
for the President's signature.
neighbors and borrowing from friends, which meant
only
a
shifting of credit in the bank and did not bring in any
311 voting aye and 12
voting no, and it passed the Senate
outside money.
He said that
happened to him this
one-half, rendering him not only unable to finance the
fuse many
community but had forced him
worthy borrowers credit.
He
owes
is
sea¬
doubtful
devoted
is
list of
a
tion
Not
get
can
essential
to
that
farm
the
the
can
a
he will
community.
to need
and
would
and
join with
outside
the
be
little
life
things that make life worth
bearable,
into
thrifty,
a
meet
dozen
a
Land
had
their
Banks.
at
This
in domestic
ter
maturity,
his farm,
sons a
science,
organized
their
the work
and
make
former generations.
A farmer
men
for
the
the bank for his
banker
will
have
short-time
retained
in
bank
a course
A
The old-style short-term. farm
was
necessary
loan
business.
fhat
in
a
in order that the
vestor
at
they could
was
and
pe.r vision;
It
was
be marketed
and
a
the
such
control
profits in
no
can
put
on
a
citizens
of
every
State
be
taken
purchase his
with
same
a
the
institutions
one
that
It was not
can,
an
a
returned
are
may
he
profit unduly, that
of
a
cannot exceed
of
part
representative
a
1%,
no matter
to
the stock,
the
then
of
the
United
States
the farm
by
a
Political
Accident.
system of finance
to
meet
were
complied
they made many
loans
then all net profits from the transaction
to him.
in
unwilling
in
his
or
own
his banker is urged
mort¬
to
accident that the platforms of the
Republi¬
for the creation
of the term.
And
every
borrower of this bank is
urged to take his proportionate part of the stock, but often
money
Progressive and Democratic parties of 1912 each
clared
sense
by the bank for taxes, operating
proportionate
their
It
nominal amount.
Not
was
of bonds to carry the
loan, and if the borrower himself fur¬
unable to do
that
preferring to
the
use
or
to take the stock.
that
the organization or
permitted
so.
business, in which case his neighbor
is not permitted
used in
Loan Art
that
denomina¬
then it takes $1,000 of capital and $15,000
nishes the capital
not
Farm
and
Treasury, which they sold.
su-
with large
regulation
forego the ordinary profits of farm
a
ordinary
received, when all conditions
of that amount,
banking and submit to rules and regulations laid down
limiting the profit to
years
Ratio of Capital.
<
gage
the
Say the loan is for $16,000 and
they loan be certified by the Federal Gov¬
no
terms
on
bond printed by the United States Bureau of Print¬
United States
questioned, that the value of every
ernment, and ire order that
centres
period of
ing and Engraving, countersigned by a representative of the
it
farm
which
bond issued under Gov¬
a
a
what rate of interest the loan is made.
with,
high plane
never
on
Through this
able to make their farm
were
profit, and the fee
examiner and
It
securities could
be
commun¬
Bank, associating
fixed fee between the borrower and in¬
every State of the Union
and
they
money
certain
that
posited
as an instrument
that institutions be organized
under
borrowing
Land
Treasury, together with certificate value of
State supervision is not and cannot be sufficient.
necessary
capital
to
Stock
the bank made the loan, endorsed and
guaranteed same, de¬
deposits which
that the whole system be under Federal
necessary
Joint
experienced in the farm loan business and
could purchase the securities without
question and in order
that
organization of Joint Stock
They permitted the borrower to submit his loan
code of ethics be brought to the farm
investing public in
money.
Federal appraiser and certificate of title
by a Federal title
mortgage
be
Association
an
the investor.
expense and
bank,
something must take its place.
The business must
a
happier and
Code of Ethics.
of credit has passed and
join
the amortization plan, permanently financing
on
are
There is
be used for the ordinary business of the
community.
may
to
too
are
opportunity Banker Brown
supervision running for
There
seasonable loans,
his
need
course
bank balance, meet his local bills
promptly, be a good credit
risk
not
He immediately took up the matter
Land Bank
marketable
financed will carry a good
so
the
clients, converted them into
ernment
so that the next generation will be bet¬
on
do
interested in the welfare of
agriculture.
mortgages
contented farm homes than have been the
present and
more
to
and
Joint Stock
raise good
Agricultural School and his daughters
prepared to carry
was
family the thousand
Ford, give his
a
I
borrowing
other country bankers located in
tions to suit
conveniences, buy
in the State
was
but the framers of
me,
neighbors in
been looking for.
with them
stock, rotate his crops, build a comfortable farm home with
all modern
discussion by
ities
living and make farm
up
them
with
scientifically financed, ■self-
respecting citizen who will build
many
that
Joint Stock LanH Banks.
men
cannot
deliberation
provided for the organiza¬
Of
unwilling or! unable
individual
having obligations he knows he
Act
Banks.
This law also provided for the
loans for his farmers without
compensation, for by doing so
he wil 1 change the borrower from a debt-ridden
who over-crops his farm and denies his
for
com¬
He will gladly negotiate amortization
(
Loan
Land
be able to double the
soon
and
And it
peace.
books
Their merits and the good they have done
well known
re-finance with outside money
year
study
the
on
the Act knew that thousands of farmers were
individualists
deposits of his bank, rendering him able to give real service
his
Farm
prosperity of his bank and his community
real estate loans
the
put
Federal Farm Loan Act.
Federal
the commis¬
mortgage loans be placed
munity and if he
to
the
He realizes that it is
real estate loan.
on a
of
speak.
Commissions.,
in ten such bankers is interested in
one
sion he
Interested in
has been
had
Federal
than two hundreds bankers that
more
tell, with but slight variations, this same
story.
Xot
to
bill—it had received
Federal Land Banks.
The
through farm mortgage money in large supply.
We have
has
was not a war
during normal times of
law
a
than
$100,000 to his city correspondents and the only possible
relief
if
that
years
to re¬
more
And this
mature deliberation
and had reduced his deposits by
year,
sonable needs of his
unanimously.
thai
the fourth time that
was
It had passed the House with
the
a
cent
of promotion expense be
operation of these banks.
farmer
pay
a
commission
or
It is
a
fee
the bank.
Now, the name, Joint Stock Land Bank,
was
unhapppily
de¬
chosen. It does not bring to the mind of the American
public
the
the character of these institutionsand
even
their enemies
who.
CONVENTION.
BANKERS'
164
in trying to
put these banks out of business cannot now correctly re¬
peat the name, and yet it is easily explained. Joint Stock
is the old English term for an institution where the inter¬
and large amounts of money
have spoilt years
of shares of stock.
the tax control
unless
Chance.
a
It is
a
that
neither
States
Federal Government has in various
"For sixty years the
encouraged business and commerce. There have been
tariffs for the manufacturers.
There have been land grants
ways
the
They have even been given
the railroads.
cities have been built
certain form of special privileges—the issu¬
right of eminent domain, and our
by employing a
ing of tax-exempt bonds.
I
United States has become the greatest and
industrial nation in the world.
But in the do¬
the
wealthiest
ing
result of this
It was necessary, and as a
do these things.
policy
It has paid to
Complain of this public policy.
do not
neglected agriculture.
things have been done at the expense
of these great things we have
Indeed, some of these
State
general policy
for discontinuing this
reason
no
see
can
to
events any tendency
encouraging general business
I have not detected in current
enterprises, and I am convinced that
the present condition
welfare war¬
rants that the same general policy of encouragement shall
apply to agriculture, that broad and generous policy of en¬
couragement that has done so much for other industries
and its relation to the general
of agriculture
I
enterprises.
other
and
organize
business for the nation, I
encouragement it has been
from agriculture the little
away
do
to take
interest of the general welfare
Federal Farm Loan Act. And
little in comparison to- what the
received.
other industries have
Only recently we
33 1-3% in order that the
5%
0%
to
railroads could pay their owners
operation.
their investment above costs of
on
The farmer is not asking that
he be guaranteed fair wages
his investment.
lie only asks that lie be
able to obtain long-time credit on
just and equitable terms.
to 6%
and 5%
on
demanding that his Repre¬
And the farmer is warranted in
sentatives in Congress shall
have defended the special privileges
extended
been
defend the Federal Farm Loan
all the logic and all the vigor with
Act tax exemption with
which they
manufacturers,
to
with
with
of
it
banks
these
which have
to transportation and to
from
limitations
Taxation.
and
restrictions placed
would have been impossible
upon
to induce men
for
ble
Bank
Marine
& Trust
A duction
the
To
I
work.
■ink
other
to
present
necessary,
reduction
The
That
Association
subject
On
its
I
leave
On the same day that the
is
subscribed,
and
proper
follows
is
could
ignorantly
be
That,
or
as
a
of
matter
wilfully blind.
its
own
of
Do not for¬
more
than
a
small mi¬
what the nation knows and wants is incon¬
for political or other Reasons a majority of Congress wil¬
ignorant of
the best
might
Republican
interests
of
the natiop,
ia
expenditures
satisfy that pledge.
and
Government taxation.
Let
no
about the injustice of the join
for
two
tax
of
voice was raised against It.
hundreds of
bankers' meetings and elsewhere have
speakers at
raved
stock banks
exempt bonds.
years
The amortization
competition with the tax-free
has
anyone
a
it salable
bonds of the municipali¬
better plan, if there is any
other
that can be done, I have never heard
outlined,' and until
it
other workable plan is conceived
some
tax exempt.
bonds must remain
these
and it must be issued in
such conditions as will, make
such form and under
If
The
farm mortgage has come to stay.
farm loan bond has come to stay,
was
not
the
futile.
future.
members surely knew
that
camouflage.
sacred
pledge of
Unless Congress acts at once
would work will be idle this winter.
Women
Unemployment conferences will be
Until taxation be fixed no good business man dare plan for pthe
Even when fixed, no banker who is fit to be trusted with other
Congress delays
people's
business perishes.
who otherwise
men
will be
children
and
its
Reduction is not real.
Both the Senate Bill and
Both Senate and House know that neither
the Republican platform.
prompt.
Bill contain
While
many
convened,
immediate action towards prompt and real reduction
expenditure and Government taxation.
We have had neither.
expected
fulfills
bill
Congress
when
spring,
nation
that
money
taxed
cold and hungry.
dare risk that money by lending it to business men so
they cannot prosper.
If business men cannot borrow
that
they cannot pay wages, and must
the very
close their shops and warehouses, or, at
and pay them lower
best, do less business and employ fewer men,
wages.
specious excuse for delay is that
One
of
Govern¬
No half-way measure will
member of Congress think that the nation is
not fully aware that many of his colleagues are hoping by delay and camou¬
flage to obscure the main issue, deliberately to evade fulfillment.
ment
offered to the public
of newspaper space,
of dollars
millions
But
was
advertisements or usual channels
bonds, and not a
marketing
unfortunately
sacredly is pledged to real reduction of
Party
the public, the City of
dockage
bonds were immediately over¬
single bond
a
through, the newspaper
heavily
course.
That
not
of Government
Government Ex¬
prompt solution by Con¬
"Reduction
last general offering of 15 mil¬
million of bonds for wharf and
New York
The
purposes.
House
of
payable to the
his own city and laugh
joint stock bonds was made to
lion
1
discussion
to take notes
at the tax assessors.
Action
Imperative.
the <?ommercial life and health of the nation.
taxation
of
mortgage dealer
the
commercial banks and levy
It must be made impossi¬
sell them to a resident of
bearer,
subject compared to which all other domestic problems
a
sacrifice
highly conceivable.
fully
Buffalo, N. Y.—Re-
these two redutions the more important, and the one absolutely
is reduction of Government expenditures.
That accomplished,
Congress
ceivable.
this
Taxation."
and
depend
get that of
nority
of
insignificance.
penditures
gress
officers
Co.,
of Taxation
account.
on every
Reports-State Bank Division
McDougal, President
Elliott C.
intangible, to submit to taxes.
be so strengthened that the asses¬
walk into your and my
may
assessment
Last
President
of
with tax exemption I want every
when we do away
The State tax laws must
sors
fighting tax ex¬
competition of the farmers' and
piece of property, tangible or
an
dealer, the
criminal evasion
land banks.,
country bankers' mutual
method by which
Committee and Officers'
Address
spending money and
taxes, who began
ties.
Five nipt
the
assisting his clients in
emption when he felt the
And
You cannot blame
the sincerity of the mortgage
who lives by
mining.
all
with clean hands.
come
me
begin and
that those who
I demand
farmers' banks.
the
for questioning
in
With
My interest in the subject did not
brought about.
work
organizations look¬
tax-exempt securities, but upon
subject do not believe it will ever be
study of the
mature
approved for the railroads an average
approximately
instrumentality
elimination of all
to
end
the support of
been active in
have
I
New York offered GO
and passenger rates of
in freight
increase
tax, neither can the mu¬
United States.
of the Government of the
ing
which the
municipality and issue bonds on
a
nicipalities or the State levy a tax on any
given in the provisions of the
agriculture is asking so
each
nothing tax
be necessary or possible to ex¬
Federal Government cannot levy a
■
think it is good
not
do
not think it in the
States
most
In
and
which our country has grown so
depart from this policy of
that there should be
so
taxation. But it was a condition
that confronted the framers of this Act.
ten or more citizens may band together
and not a theory
man
great.
amended
empt these securities from
me
of encouraging business by
Of course,
Government and
of the Federal
exempt, then it would not
of the farms of America.
I
Government nor the
Central
the
instrumentalities of the other.
tax
was
Association
fundamental condition of an
business.
if the Constitution
-
v
legislate them out of
Otherwise, any State could
ment.
State may
Giving the Farmer
been im¬
securities in the volume necessary
was vested in the Federal Govern¬
of
represented by the issuance
ests of the several owners are
&nd subsidies for
In them and it would have
invest their money
to
possible to have sold the
so
until
long as domestic trade and
practically
will
the
the tariff bill should have the right
fact, intelligent leaders in Congress must know
manufactures are in a state of flux, and
they become stabilized, to say nothing of foreign trade, it will be
As a matter of
way.
that
not
one
impossible
be
sane
out
of
course
for
date
is to
human wisdom
soop
after it
do nothing.
to frame any tariff law that
Under such eondition*
is printed.
STATE BANK DIVISION.
Even
were
that
trade
foreign
on
not
the
we
60,
never
principle
expect
can
that
will
we
build
to
sell
and
up
not
The
ties.
less
the
balance
of
each
other agrees,
Even
as
it
were
up
it
years
against either of
or
hope to
pay
securi¬
ers'
Division.
rations
sion
or
two
even
the
even
interest
it possible,
were
the basis that
on
Europe
owes us,
will
we
For
in cash, but might be able
to pay in goods.
If we shut out these goods by a high tariff we lose
$500,000,000 per annum in interest, and risk a loss of the entire
$10,000,000,000 of principal.
Nations must live on production and trade,,
If they do not produce and trade,
they will- become bankrupt.
If they
become bankrupt, they cannot
pay us.
The
loss of all
out
a
imports,
and
reduce
Government
A high
tariff
rather
revenue,
would shut
now
than
increase
it.
be
will
will
In
the West
less
ern
States
large
as
the
States
that the
State
banks
down
that
to
domestic taxes.
our
Cutting
In
in
of
one
banks
the
have
far
been
any country naturally also would cut down exports to
Our exporters would lose profits, their employees would lose
Government would lose revenue, and the consumer in this
the
country
would
creased
domestic
such
would
goods
be
not only the
pay
the
protected
such
on
equivalent of
the
protected made in this country.
so
the
also
but
taxes,
increased tariff
manufacturer
increased
tariff
on
but
Granting for the sake of argument that in spite of all the«e facts
could afford to ignore them and pass a tariff
law, the subject is
we
now
there's
will
a
For
there's
way."
a
for
concerns
We
is
West¬
some
organized by the
na¬
States we find that
many of the small State
by large mert&^Asle companies, which are not
banking facilities furnished by these large
the
happy
are
to
benefit
These
of
their
customers,
looked
not
are
report,
not
only for the benefit of the Association but
IVhen the
interested
State
looked
would
add
of
and
the
of
forward
greatly
with
the
to
Division
Department
interest
in
we
look forward
the Association
All
'
of
of
to
are
may
extremely active, working
thq division as well.
for
organized many of the partiw
this Division,
thinking that it
the
Association
the Association
the
of
and
would
smaller
they could make their
We feel that the State Bankers'
and
they
real
as
be
the
State
banks,
and
desires
wants
;
com¬
cess,
was
interest
strength
through which
means
.
Bankers'
Bankers'
creating
the
State
that
so.
banks, and
percentage of membership.
however, that in the large majority of case*
upon
our
officers
known.
so
plicated that months would be required to perfect one.
A tax bill is com¬
paratively simple.
One could have been drawn and passed long before this
had Congress really intended to reduce Government
expenditures.
"Where
made in
are
were
simply
checking facilities.
means
and merchant.
cases
the
imports, plus in¬
The only ones to profit
percentage of membership
Reports
many
w«
Divi¬
our
Western
organized
banks
reality
have
imports from
country.
wages,
all
added
understanding, which
duties.
the
it.
of
Deputy Manager of
a savings bank department, trust com¬
or other departments; that the stock in these banks is all
by the national banks.
They do business in the same" building with
the national banks, with the same
officers, and they seem to think that
one membership held by the parent institution is
sufficient.
consequently this cuts down
be
must
manner
The
department
mercantile
this
Divi¬
owned
would
in
lack
a
that
see
in
Bankers'
responsibilities and
tional banks, who desired to put in
pany
That is so plainly the A. B. C. of tariff
principles, invariably confirmed
by actual experience, that it needs no argument.
What the Government
lose
find
we
would like to
we
State
Regret to state that in the far East
future.
Vice-Presidents of their
Western
some
in
the
of
duties and
interest, due to
remedied
advise the
as
the Vice-Presidents
thoroughly realized
be
to
seems
in the past lack of understanding of the dutie*
the part of the Vice-Presidents of the State Bank¬
on
active in their work.
very
not
part of $10,000,000,000 principal and $500,000,000 of
or
would not be the only loss.
year
sion
$10,-
say
in goods.
or
about
interest
been
think
In
have
to
seem
have
there
tariff bill,
It cannot pay the principal, either in cash
cannot
responsibilities
-
proper
that be done to-day?
can
and
nearly the value of goods that they ship
a
permanent foreign trade
a
sell, but not buy, how
000,000,000.
for
the better for both.
possible to draft
rule, to build
a
trade
more
to have been
seems
must
We
exchange goods for goods, the balance only to be settled in cash
trading with each other, the
There
permanent
a
buy.
165
to
an
Department has been
greater
even
of
the
is
unqualifed
an
«ue-
membership and interest in
respectfully submitted.
which
smaller
State banks.
close
reasoning, full detials and systematic presentation, which are
impossible in this short address, I refer you to the address of
your Presi¬
dent before the
convention
sent
to
at
all
of
real
no
Association of
Pa.,
members
our
the statement
be
National
Philadelphia,
that under
revival
of
the
Supervisors of State Banks, at their
1921, copies of which have been
Aug.
and
4,
all
to
members
of
Congress.
I
present staggering ioad of taxation there
business,
unemployment conferences
the
to
Rteport
of
the Committee on Exchange, by Charlea
Claiborne, Director Whitney Central Trust
De B.
reiterate
can
& Savings Bank, New Orleans.
contrary
*
notwithstanding.
It would
his
in
alone,
it
his
say
are
taxation,
defeat
can
Cabinet.
when
it,
pression,
time
much
and
The
has
nation
initiative.
has
complete
By deadly inertia
confidence
it,
when
Every
month's
a
business
revive
cannot
month's
prolongation
delay
means
business
of
de¬
additional
and entirely unnecessary business failures.
taxation will cost the nation several dollars in
loss of business to merchants and*
manufacturers, and in loss of wages to
employees.
■
many
Every dollar of
The
and
our
present
profits taxes is that in
excess
manufacturers make
enormous
profits,
to
war
the
times
some
greater
which
In
they are not entitled.
That greater part the Government
November, next, the war will have been ended three full
years.
matter
of
strict
abolished.
other
justice
They
As
profits
excess
taxes
matter of
part
takes.
As
a
should
should be abolished at
now
question.
long ago have been
without regard to any
once,
few businesses are having, or will
Notwithstanding that, Congress says to
corporations, "we will abolish the excess profits tax and in lieu thereof in¬
crease the
percentage of straight tax on net income."
In other words, "we
will deduct nothing, and in lieu thereof will add
something." This is pure
have, any
a
profits
excess
fact,
This
reduce
taxation, it is actually increasing it.
Congress little cares what happens to business,
it
as
avoid
can
members
needed
We
any
or
real reduction of Government
keep all their friends
can
the
on
is
not
merely refusing
Judged by its
the
to
nation,
expenses,
Government
own
so
so
long
payroll,
acts
long
its
as
whether
not.
or
the richest nation.
are
ing fifty years of
A minimum
of
Government
interference
dur¬
have
done
do, and better.
With
chief
our
competitors crippled,
or
terribly handicapped, we stand on the threshold of a prosperity, the Sober
of which, after
being subjected to the most conservative scrutiny,
are
beyond the wildest dreams of our past.
realities
With
caps
all
econ¬
omically sound plan of handling annually billions of dollars of checks.
We
efficient and economically sound because
these
advantages,
when
we
ask
Congress to
remove
our
handi¬
of war-time taxes, war-time bureaucratic interference with the natural
of business, and to restore to us our
peace-time freedom and initia¬
which
their
tive,
and
to
say
opportunity.
us
To
see
chief
our
"Go!",
we
are
told
that
Congress playing the
competitors,
by
we
game
holding
us
.
must
wait
and
of Great Britain
shackled
while
lose
our
and Ger¬
they
recover
their strength,
is heartbreaking.
Fervently hoping that still it is not too late to put new life into business
enterprise, to furnish employment to hundreds of thousands whose families
otherwise
will
nestly suggest
Cabinet
relief
in
from
a
suffer
to
hardship
this
Congress that
sincere
and
winter,
it
effort
most
we
co-operate
adequate
to
with
respectfully
the
give
us
President
real
and
but
and
transactions in lieu of actual money, and
handling of these items affects the relations of, and the busines#
and the influence of changes in the vital principles as to
issue, payment
or
handling permeates
lino of business.
every
expressed the belief that the Federal Reserve
Act and amendments thereto compelled the Board to
put into effect a clear¬
ing system
covering
the entire
universal par clearance,
and determine
country,
whereby all member banks
upon
a
plan
remit at
must
of
par.
Extending this clearing feature to non-member State Banks, under certain
conditions.
Unfortunately, however, went further and considered that the
interest of the Federal Reserve System required that methods be
employed
to force
unwilling State banks.
When
out
we
stop to think that there
of that number only
nounced
policy
are
32,000 banks in this country, and
8,000 National and the balance State.
be somewhat dangerous.
may
This
The wishes of such
an¬
vast
a
number should and must be considered.
Fortunately, for the most part,
complete harmony has always prevailed between the two systems, and thia
is
it
as
s ho did
be, and he would would seek
would be doing the community a
under any unified system.
.There
we
disturb this amicable relation
Both systems have their fiekla
than could possibly be the
It might be well to bear the ills
we
case
have than
know not of.
two fundamental
are
a
disservice.
of usefulness better to be served separately
principles involved in this subject.
The first involves all banks, both State and National, and it is the question
of the
performance of
a
necessary and valuable service for the benefit of
others wholly without compensation.
It
was a
by
(The United States Court decided
service.)
The second
whatever
principle involves the
State chartered
included,
statute
means,
institutions; to
and right of
power
say
to
dictate
Federal
any
the
internal
agency
policy of
nothing of methods and unfair
com¬
petition to accomplish this end.
As to the second principle there
there
can
can
be
no
serious doubt;
as to
the first
be endless debate.
It was on
May 1, 1916, that th'o Federal Reserve Board announced its
so-called universal
clearance system.
par
On May 8,1916, the Execut ive Committee of the Clearing House Section
of the American Bankers' Association
1st.
2d.
Postponement of the
adopted the following resolutions:
inauguration
Limiting the items to be handled by
of the
any
plan.
Federal Reserve District to
those payable in its own District.
ear¬
3d.
his
On
immediate
of checki,
use
used in commercial
are
because the
of 32.000 banks,
course
many,
of the fundamental and
one
important functions performed by commercial banks is the
peace,
can
we
solution of the exchange
Controversy. Your Committee feels that it is
called upon to deal with the matter of evolving the most efficient and
fly to others
hardly broken by the Spanish-American War, in¬
dividual initiative, enterprise and
courage, have enabled us to outstrip the
government-ridden nations'of Europe.
We have all our old initiative, en¬
terprise and courage, with more good and better trained men.
What we
a
follows:
say as
Cause and Beginning of the
tax.
to
camouflage, and of the most shameless kind.
to
appointed to attempt
The Federal Reserve Board
theory of
merchants
of
unnecessary
v'
seven
question, begs leave to
say
taxation.
than
more,
bear
to
of the Slate Bank Division of the American
Bankers Association:
Your committee of
him
in
the President and Members
in
Constitution,
they tell us we believe.
Whatever taxes they
cheerfully will pay,, but not a dollar more.
able
reduce
to
the
our
we
least
are
the
perhaps
more,
him.
necessary
we
is
Congress
Whatever
absolutely
Now,
under
of
President
our
intention
matters
and
to the nation that Congress is against
to cut expenses and taxes.
Under
appear
sincere
To
That members be allowed
a
fair charge for items cleared by them, etc.
May 9, 1916, the above resolutions
Council
taxation.
were
referred to the Executive
jof the American Bankers' Association,
and referred to
a
joint
meeting of the Executive Committee of the Clearing House Section and
National Bank Section.
May 10, 1916, the Joint Committee reported to the Executive Council
Report
of
the
by George
Chairman
Your
our
Division.
ciation
are
Your
More than
Chairman
in the large
with
W.
has
to
half
our
majority of
written
cases
extremely
urged
the
condition
of
substantial
cause
for
concern,
because of the violent
delay
and
for
the
American
Bankers'
Association
Committee
to
May 10, 1921, the Executive Council of the American Bankers' Associa¬
Bankers' Asso¬
tion adopted a resolution providing for a Committee of Five to confer with
■
the Federal Reserve Board.
Vice-President
the past
summer,
and
the Vice-President is
Association
of
in
the
is glad
very
State
Bankers'
to report that
actively co-operat¬
increasing not only the
particular Division, but all membership in the American
members
existed
in
prosperous
the members of the American
Division.
State during
Bankers'
there
changes contemplated in a system of years of commercial practice—and
Rogers, Chairman.
report an
the other officers' of the
this
Committee,
study plans.
glad
members of
Division of each
ing
is
that
Membership
Association.
Federal
The
A delay of thirty days was obtained from the
Reserve.
Administration
Committee of the American
Bankers'
Association
recommended that the Committee of Five and the Executive Committee
of the
Clearing House and National Bank Sections call
Committee to have
an
amendment to
Section
on
16 of the
Act eliminating the provisions for par collections.
the Legislative
Federal
Reserve
Tentative amendment
prepared, but introduction delayed to
was
CONVENTION.
BANKERS'
160
Federal Reserve Board, as well as certain testimony furnished to the
Banking and Currency Committee. Nothing substantial was accomplished
however, except the admission by Mr. Harding that the Clearing Houso
feature was not essential to the success of the Federal Reserve banks, and
again stating that the Federal Reserve Board was not a legislative body,
and asking Congress to legislate. As a result of the activities of the said
National and State Bankers' Protective Association, Congressman Stegall.
of Alabama, and McFadden. of Pennsylvania, the present Chairman of the
Banking and Currency Committee, introduced two bills allowing the banks
give the opportunity to test the
jaW,
I'ostmaster-General requiring postmasters to collect checks
The order of
'
recalled.
was
associaadopted the following:
1st. Declaring the proposed Clearing System to be unnecessary, economicaliy unscund and prejudicial to the general business interests.
2d. -Calling for the repeal of Section lb, etc., and appointed a Committee
1910.
10,
June
conference of banks representing the bankers'
a
States was held at St. Louis and
tions of eighteen
191b the Administrative Committee
July 11
to charge.
\
each St ate.
of one from
of said conference of bankers
appointed a sub-coftimittee, directed that
committee to consult eminent counsel and if advisable to file suit to test
the constitutionality of Section 16, and to enjoin the Federal Reserve from
met in
Washington. D. C., and
fore ng
banks to remit at par.
whole question at a
held in America
ever
Federal Reserve System and authorized the continu-
lection feature of the
of the efforts to secure
ance
to
"
1916, the most representative gathering of country bankers
assembled at Kansas City, protested against the col-
26,
Sept.
Suit was delayed until discussion of the
general meeting to be held in Kansas City.
relief through legislation and in event of failure
interpretation
then ask the courts for an
as to
the constitutionality of
the law.
the American Bankers'
Association passed a resolution asking all banks to discontinue the practice
of having on their checks the words "Collectible at par through the Federal
Reserve Bank" until such time as the member banks are able to get immediateuseof funds represented by such items at the Federal Reserve Bank.
Sept. 28, 1910. the American Bankers' Association in convention assembled at Kansas City, adopted the resolution providing for a committee of
twonty-fivo—composed of fifteen country banks and ten reserve city banks
—-charging this committee with the responsibility of working out a clearing
aod collection plan which will bo fair and equitable to the banks and the
general public, and to co-operate with the Legislative Committee to secure
1916, the National Bank Section of
Sept. 27,
amendment to Section 16.
to tho time, May,
1917.
the necessary
We
come
now
when
the famous
Hardwick
This amendment being the eonsumma-
amendment was before Congress.
of the United States to have specific legal
tlon of the work of the bankers
It represented at that time the overwhelming senticharge.
This would have become the law, being sub-
authority to charge.
in favor of a
ment
stantlally favored by the House
Woodrow Wilson, W. P. Q.
Mr.
against the Federal Reserve
We
banks charging, that this applied only
affect
not
Banks" be added,
understood that these words
by Congressmen that they
told
are
would
and the Senate, if not for the influence of
Harding and Carter Glass as a quasi-war
"But no charge shall be made
These men asked that the words
measure.
to Government
At the Pinehurst Meeting of the Executive Committee of the American
Bankers' Association the Legislative Committee reported that these bills
be left in charge-oLthe Committee of Seven, who were working with the
National and State Bankers' Protective Association.
The Committee of
Seven reported to the Executive Committee that in view of the fact that the
Supreme Court would shortly pass upon the Atlanta case that all action
be deferred until that time,
The temptation is often to close our eyes to unwelcome facts, but facts
are stubborn things.
From principles we derive probability, but certainty
is obtained omy from facts.
Tn order to know the sentiment of the bankers of the country, we caused
this subject to be a source of discussion at a large number of the bankers'
meeting during the years 1920 and 1921, and I can state that in nearly
every instance, par collection was overwhelmingly rejected,
The Annual Convention of the National Association of Supervisors of
State banks unanimously passed resolutions asking to so amend the Act
as to allow exchange charges.
In order to further test the sentiment.
State laws were demanded allowing a service charge, and in the short space
of fitteen months nine States have passed the exchange law.
in 1916 the American Bankers' Association Committee mailed a questionnaire to the banks, asking—
is the clearing and check collection now operated by the Federal Reserve
banks satisfactory to you?
Seventy-five per cent answered "No." This
percentage applied to national and State banks together—the compilation
as far as national banks alone were concerned showed 76%. more opposition
than the State banks.
jn answer to the question,
"Should the clearing feature be eliminated?"
the percentage was 70% "Yes."
Strange to say, after four or five years
time—in other words, after a test has been made—we find practically the
xame answers.
Protective Association question -
In 1920 the National and State Bankers
nuire furnished t his result:
To question No. 1, 83 per cent
In answer to question No. 2.
"No."
72 per cent, answered "Yes," showing practically no change of sentiment
unless perhaps more opposition.
Yet from the publication of the Federal
the Federal Reserve—to the very Federal | -Reserve Board you are led to believe everybody wants par collection.
twisted
Injunctions are pending in the Cleveland and other districts.
In Kenthis forbids them to allow exchange, notwithstanding that the
tucky the Grand Jury indicted one of the Agents of the Federal Reserve
checks, and checks belonging to
meaning of those words are not clear, they are
Reserve Board, the
to mean that
their depositing banks that they merely
Federal Reserve banks notify all
act
inconsistent position.
A ce tainly absurd and
agents.
as
If they are
charge of exchange does not violate the law,
only forbids the charge against the Federal Reserve, meaning coming
merely tho agents, then the
which
It is clear to your committee
interpretation of this clause by the
During the years
little activity on the part of the bankers,
pockets of tho Federal Reserve.
out of the
and eminent counsel that the present
Federal
It<«erve
inconsistent, illogical and illegal.
is
1917, 1918 and 1919 we find very
patriotic causes.
due to
of
Committee
The
Fi ve of
the Committee of
to
successor
the American
Twenty-five.
which the Committee of
tloment,
Bankers Associat ion is the
The just and equitable set-
Twenty-five came near obtaining, was
extraordinary piece of legislative manoeuvering and manipu-
defeated
a very
lation.
Contrary, however, to the predictions of the sponsors of the
legis-
and.buiiding up the system, this amendment
has damaged it almost beyond power to estimate.
When it became apparent in the fall of 1919 that the Federal Reserve
banks would abandon their persuasive tactics to establish "Universal par
lation, instead of harmonizing
clearance" and would inaugurate a campaign
came necessary
as
to adopt methods of
the best experts and best
of force and coercion, it be-
meeting the situation, until such time
minds would have decided upon some plan to
that
I hope you will do me the justice to believe me,
I have tried by every conceivable means to avoid
Chairman
as
the
publicity or litigation which you have witnessed.
The Federal Reserve
Board at all times have answered, we are not a "legislative body," go to the
law
the answer
This is not
makers.
which any set of bankers honestly
solution should receive.
If the present plan is not sound, then
Federal Reserve should join to make the necessary changes—and if
seeking for
the
a
sound, then defend their actions and not hide
and
moreover
that
deny
he
deliberately influenced
the legislation, but admits in his
Atlanta suit, that in a letter to Mr.
"This I think would give you the opportu-
Carter Glass he used the words:
nity that you desire to handle the matter
in conference, referring especially
Some of you will recall that the country was
to the Hardwick amendment.
shocked and dismayed by the accounts
of the Federal Reserve under the
said Reserve Bank.
behind the skirts of the law—
Mr. Harding not only cannot
is|only technically correct.
testimony, July 22 1921, in the
sworn
of the methods employed by agents
cldak of their official connection with the
responsibility of meeting force with force, and coercion with
Hence the individual banks had to
legal action to enjoin such methods.
depend
upon
their own resources and meet the situation as best they could,
1919, somewhat after Shakespeare's Macbeth, "What need we
Dec. 23
perhaps
a
great number of the bankers here
to-day, not familiar with this fight since the
jn having all the facts in
beginning, might be interested
order that they might better know the sentiment
and understand the subject under discussion.
What will be done in the future will depend largely upon the attitude o
what the Supreme Court will decide in the
the Federal Reserve Board and
Atlanta case, which comes up
again.
ln closing this report, your
before
the
Committee wishes to impress most forcibly.
and that is. that under no conditions
Convention this fact,
need any one here be uneasy that anything unfair,
Cr
economically unsound,
hastily conceived will be approvedor recommended
by this Committee
Chairman.
That we fully realize that this is a Committee of
the American Bankers Association, an Association with an enviable name,
or
myself
as
and composed of the most law abiding
United States.
motto is
simply this—What ought to be,
the contrary,
Our
inevitable verdict of the best minds on this subject
present plan of par
On
and conservative element of the
pride, or glory, or self-interest
That personal opinion, or
must yield to the
Your Committee has been unable to
■
f°rmer Committee of Five did not have the authority, or did not wish
to assume the
the shame."
Your Committee felt that
recommend to our national legislators.
I want to assure you, and
In the Atlanta District, that bank has been enjoined.
Steps nave
been taken to enjoin the San Francisco District by the Oregon and California Banks.
Certain steps are being taken in the Minneapolis District,
anci certain relief has also been obtained in the Omaha Branch.
A suit is
about to be filed, having obtained the consent of a sufficient number of banks
who at last dared to allow their names to be used, testing the meaning of
the words v"but no charge shall be made against the Federal Reserve."
ir, june 1921, the Supreme Court of the United States passed upon the
Atlanta suit, and in a unanimous decision declared, "we do not need aid from
the debates upon the statute under which the Reserve Banks exist to assume
that the United States did not intend by that statute to sanction this sort
of warfare upon legitimate creations of the States," and denouncing other
fallacious principles of that Board as unsound and illegal,
The Federal Reserve Board has attempted to contemptuously minimize
the importance of this decision, even going so far as to publish that this
would in no way affect them.
But that Board should beware of maxim
of law, "Nihil potest Rex quam quod de jure potest,"—"The King can
do nothing but what he can do by law,"
And likewise the words of Corneille: "C'est le crime qui fait la honte et
non pas l'echafaud"—"It is the guilt, not the scaffold which constitutes
Bank.
is going to be.
find anywhere any evidence that the
collection was the result of the opinion of best experts,
the overwhelming testimony and evidence from
competent to speak is that not
and impossible, but that the present plan
banks violates several
those
only is par collection economically unsound
forced by the Federal Reserve
plain provisions of the very Act under which
this
fear who knows, when none
call our powei to account," the Federal Reserve
plan is supposedly legalized.
Bank of Atlanta sent out
letter to the banks of the Sixth District, stating
find thus far for the "par
clearance plan of the Federal Reserve," is the testimony of Mr. W. P. G .
Harding, on July 22, 1921.
That both Senator Owen and Mr. Carter
Glass, Chairman of the Banking Committee of the Senate and House, respectively, were ardent advocates of the par clearance of checks.
The
letter of Mr. Woodrow Wilson to the Committee, the letter of Mr. Harding.
and the calling the attention of the Committee by Governor Strong, of the
Federal Reserve Bank of New York, to the fact of the possible charges that
a
the time had come when the Atlanta
into effect.
banks would have to put
using methods that would prove "embarrassing,
to the
non-consenting banks."
Banks of Georgia, called
15 1920,
On
a
bill
Feb.
called
an
par
clearance
Asking the banks to acquiesce to avoid them the necessity of
6
annoying and expensive
Mr. L. R. Adams, Secretary of the Country
Executive Council for Dec. 31 in Atlanta.
1920,
as
President of the Louisiana
Bankers Association, I
extraordinary convention of that Association
to consider what
action the Louisiana bankers should take in view of the situation.
request this meeting was extended to
later
was
States.
On Jan.
filed in the District Court to enjoin the Federal Reserve,
was
Upon
all banks in the Atlanta district, and
made nation-wide upon request of Nebraska and other Western
At
this
meeting
a
National organization
was
effected
through
which the banks of the country might co-operate, and the name of "National
and State Bankers Protective
In
had
Association"
was
selected.
May, 1920, the National and State Bankers' Protective Association
a
meeting in
Washington,
D. C.
A conference was held with the
The
only reason that we have been able to
Liberty Bonds,
None of
why we should have par collections.
No
and long the lines of sound,
well-established economic policies, should be considerdd by a Committee
might be made against Government checks, for
these, however, are arguments
opinion, unless supported by facts and figures,
pledged to perform its duty.
'
This is not a question of how it affects the city bank, or the country
bank,
or
the merchants.
materially
This is a nationwide economic problem affecting
the three units just mentioned,
consuming public,
and indirectly affecting the
STATE
BANK
Mere opinion,
theoretically advanced, and having as its principal recom¬
mendation, socialistic tendencies, do not belong to a Government like ours.
Considering the above,
1st.
your
A Committee of Seven
further study and
2nd. That
Commerce
United
States
and
the
Men's Association
Credit
representatives of the Federal Reserve Board be held at
to hear all
3rd.
That it be the
some
central point
matter and
not
a
destroy the
par
collection,
collections is
a
perhaps establish the said system.
Either
alternative would only continue what we are seeking to avoid; that is, the
dissatisfaction
of
a
compulsory
without the technical evidence to
plan,
justify the conclusion.
4th.
to the
asked for legislation, and the further fact that the Board admits that the
and after
full and complete hearing of city
a
bankers, country bankers and business
and forever—and
in
words
the
of
men,
King
pass
this matter once
upon
Lear, "Let time unfold
Trust
of Federal
no matters
during the last
year
State legislation presented
or
by either the Trust Company, Sav-
State Bank Divisions, which would be of particular concern
or
State chartered institutions and
possibly affect their interests more
no
meetings have been
action has been taken.
no
Division that hereafter the Conference Committee consist of the President
of each of the three Divisions representing the State
chartered institutions,
that is, the membership to consist of the President of the Trust Company,
Savings Bank and State Bank Divisions.
Secretary Allen: I also have
special report.
a
As I understood it, the proposition that that
Chairman:
committee has
recommended, by the Chairman in his report, is not for this meeting to take
action
present act is quite ambiguous, call upon Congress to immediately consider
this entire subject-matter,
Union
It is recommended by the members of the Conference Committee of this
That the American Bankers' Association, considering the vital im¬
portance of this subject, and the fact that the Federal Reserve Board has
Vice-President
primarily than those of the National Bank Division,
business
legal question, that while the courts might ultimately
or
having been
Bank
held and
of this meeting that par
sense
There
to this Conference
mgs
conclusions.
or
Chairman,
Co., Chicago.
and
sides, and to produce the necessary facts and evidence to justify
respective plans
wood,
Exchange be continued for the purpose of
on
development of a plan for handling of checks for colleci ion.
the
167
Report of the Conference Committee, by C. B. Hazle-
Committee suggests that:
meeting of country bankers, city bankers, the Chamber of
a
of
DIVISION.
on
Secretary Allen: It is to require
the other divisions.
what
Chairman:
plaited cunning hides."
some
action
or
mutual agreement among
It is to confer where there is something of
terest to the State chartered
My opinion, Mr. Secretary, is that by the new constitution
to put this into operation
free, providing all the divisions co-operate,
we are
general in¬
banking interests.
without any further formality.
Secretary Allen: Oh,
Report
the
of
The Committee
co-operated with the
Federal
Committee.
Legislative
Committee
Federal
on
legislation
action upon this
the report
Phillips (Green Valley, 111.): Mr. President, I move you that
be received, and the recommendations therein be concurred in,
providing this meets with the approval of the other divisions.
The motion was unanimously carried.
between State
Reserve System,
Favorable
bill could not be secured during the 66th Congress but in
the present Congress a bill to provide such equality
Senate and is
the Associa¬
of
tion in urging a bill to secure equality of discount privileges
and National Bank members of the Federal
Mr. J. D.
Bank Division has
Federal legislation of the State
on
yes.
has already passed the
pending in the House.
now
There has also been
Discussion
•
lation of the Association in the
Address
Following
lution
Frame—Reso¬
Mr.
of
Adopted Against Branch Banking.
co-operation with the Committee on Federal Legis¬
promotion of Federal legislation aimed to
ADDRESS
OF
MR. WILLIAMS.
prevent the issue of fraudulent securities, which will supplement the State
Blue Sky
Laws.
It is the
Williams of California:
Mr.
opinion'of the Chairman of this Committee that
service could be rendered, not only to the State Bank
Parent Association, as well, by a more
a
much greater
Division, but to the
active interest in and co-operation
with the officers and Committees of the American Bankers Association, in
the affairs that are of vital interest to the
in
you
which I
possessed.
am
I grant that
we
the
by
Committee
The
State
have thirty thousand odd banks in
detract in
any
But I, at the same time, am
when they are most
Legislation have confined their work during/
than they have been
able to
•
the last year to
the closest possible co-operation with the American Bankers'
of the constitutional
year to
necessitate our taking advantage
provision of the Association giving divisions the right
conflict with the interests of another division, or with the interests of the
Association
as
We have
of future
a
definite suggestion to make at this time as to the matter
legislation, at least
we
have
than that
we
have
different
course
no
working out
some
suggestion that would prescribe
namely,
pursued during the year,
involving legislation pertaining to the exchange problem has
All matters
Five of the American Bankers'
Association, and the special Committee of Seven of the State Bank
These two committees
tional and
State Bankers'
Division.
co-operating with each other and with the Na¬
are
Protective Association, and Mr. C. de B. Clai¬
borne. Chairman of this Committee, will submit a separate and very
in¬
a cancerous
Or attacking
Public
by H. A.
To recount the
Relations
We
cannot compare
the effectiveness or the lack of it of the
We don't admit that Canada is
Committee,
the past year will not consume much time or space.
been limited both from
Not having an appropriation
necessity and desire.
of funds extensive work could not be undertaken, and due to the
splendid
work of the General Public Relations Committee of the American
Bankers'
Association
Bank
State
we
have not thought
Committee,
where
it expedient to project the work of the
intervention
or
assistance might not
be
desired.
It would not be
the efforts of
our
appropriate, however, for us to pass without mentioning
former chairman, Mr. McDougal,
Allen, which have brought such good results.
committee the Comptroller's Office at
of National
banks and drawing
could
not
combat
our
secretary Mr.
Washington was publising
reports
comparisons, which were unfair and dis¬
State banks did not enjoy the
courteous to State banks.
and
and
Previous to the work of this
without
great
expense
such
franking privilege
propaganda.
Our
president and secretary have succeeded in getting the Comptroller's office
to
publish State Bank as well as National Bank statistics.
been made to have all State bankings
uniformly at stated
periods
so
superintendents
that the facilities and resources of State
banks could be shown to the best advantage.
have been only
tant, as
a
So far efforts in that
have
seen
direction
banks in this country
Your Committee suggests that there may
fit to denationalize.
good and sufficient reasons for these changes that the public should
be such
that State Bank facilities
are
coming to be recognized as superior
Your Committee suggests
should
that to avoid confusion the work of this com¬
be intensified
and
outlined
more
clearly,
combined with that of some other working committee.
there is much
that should
and
or
its activities
We recognize that
must be done for State Bank members,
especially those tvhich have not the advantages of representation
may
and who
to carry
out any work
assist the Secretary
recommended, that an appropriation be made for the
There is great need
Public Relations Commictee if it is to be continued.
of concentrating upon some
lar work of our committee.
are
definite program with reference to the particu¬
profits of branch
communities. Those
premises assumed by what may be the condition in some place, but
not necessarily an accompaniment of branch banking.
We may have
all
those
that
mean
are
business of branch
necessary
of control, but it does not
accompaniments of the conduct of
the
banking.
i't that only about IS States In the United,
States permit branch banking?
Why, it Is a wonder, in the face of the
opposition that there has been to branch banking, and as expressed in such
gatherings as this, that even those IS are still permitting branch banking.
The fact is that the well conducted, the properly created, branch bank,
can serve the communities and thus serve the
communities where their
branches are located, equally as well in all cases, and in many cases much
The
speaker also stated, why is
We all know that the individual small
better.
additional funds, must go some place and
bank, when it needs to have
discount its paper or it must go
The properly conducted,
funds for distribution,
for movement, as crop movements call for funds or as the various seasonal
demands are developed;
and the properly organized bank would have
some
the
place and borrow or it must shut its doors.
properly equipped bank operating branches, has
those funds except in times of extreme
but if any institution can have the
stress, when no one
funds
economic financial condition, certainly a
Banks
at
as
,
that time in
deposit.
speaker also referred to the difficulty
That is
accompaniment.
an
loans of $500 or $500,000
But it does
of making loans.
If you lay down those conditions, yes.
nothing in the world to prevent a branch manager from making
not'necessarily
mean
if the capital and the
al3o that when the
of $500.000 he has
to to
times of the year,
than they are having at
operating branches in many instances, many
various points, will be loaning far more money
The
would have them;
the result of the then existing
bank operating branches can have
1
such funds.
institution is big enough.
branch manager comes to make a loan
places from which he can get
information, places to appeal
himself could not have if he attempted to get it;
from some other outside institution.
He would
get information that he
he would have to get it
have
feel that their welfare is overlooked.
Your Committee further suggests that in order to
banks that
Canada.
Again, the previous speaker stated that the
But there is
advantages.
mittee
banks in
There is a
supervised and banks that are not
They have had some large failures of
matter of fact.
They have had no supervision of banks in
various conditions of business, various methods
partially successful.
During the past year some of the largest National
know
An effort has
compile their work
of
capacities and activities.
contributing elements there that are just as important, and far more impor¬
are
Our activities have
Canadian
in the United States.
equal to the United States in any other
We don't admit, those of us who are in favor
of branch banking, that branch banking has held Canada back and placed
Canada at such a disadvantage with the United States.
There are other
her
are
accomplishments of the Public Relations Committee for
locality?
and the
Which is it doing?
financial and economic life of those coummnities?
banking operations are not distributed thioughout the
Chairman.
McCauley,
in the banking business in some
the community interests, the commercial activities,
vast difference between
of
lights on the
would like to—
The
Cancerous attacking what?
growth.
individual who happens to be
supervised.
Report
before
matter
previous speaker stated—I have to touch the high
The
thing, because I cannot go into the thing in detail as I
Canada.
teresting report to the Convention.
in favor of
possible for me, because he brought
system with that of the effectiveness of the system
of the more important problems now before them.
been in charge of the special Committee of
to the present time.
of contrast.
co-operation with the legislative committees of the Association as a whole
in
up
Huston gave you a far better argument
certain concrete facts which I would not care to refer to as a
stated that this is
whole.
a
no very
think that Mr.
I
you
independent action in matters where the interests of such a division
to take
of larger institutions, which could place at their disposal at
branch banking than would be
Association in furthering its general plan of legislative action.
Nothing has occurred during the
quite
in cooperation with
times
needed, could render far better service, far more help,
and part
Chairman.
S. Hecht,
R.
State
on
communities well.
fashion from the splendid service
convinced that the same activities, by the same men
Committee,
Legislative
least some of the ideas of
which have served their respective
United States
I would be the last person to
of
of
Nevertheless, I feel that I owe it to myself
will not agree with me.
and to my own convictions to transimt to you at
that has been rendered by those banks.
Report
realize
Gentlemen; I
stating before this gathering, that as the Chairman has stated, 95%
the
County bankers.
Chairman and
Mr.
no
machinery
at all
at his own
command that would place at his
The credit information of a community
individual, large borrowers in those communities, is of tremendous
disposal any such information.
and of
an
importance.
Mr
\
Speaker, I don't want to overstep the time.
meeting. Mr. Williams.
Chairman: It lies with the rest of the
BMHSERS'
168
CONVENTION.
into and cover concrete cases would not serve any
Mr. Williams: To get
particular purpose; but the concrete fact, the broad fact, is
are In existence to serve the community,
to serve the public.
purpose, any
that banks
a means
having branch
being, with its
business properly in the broadest and fullest, sense without
tbe
Federal
Reserve
System
into
came
separate and distinct banks tied together through the
Reserve Board,
Federal
medium of the
heveriheless, at the present time there are neees-
Bank to
sarily In operation 23 branch banks to help the Feclearl Reserve
properly perform Its functions,
I could cover a great deal more
I won't take any more time.
I could go Into the subject a little more
something upwards of 400
that
banks
ground,
We have in this country
definitely.
operating branches, operating
are
altogether, I think, within the United States, something over 1000 branches,
I think the experience of those banks would be very interesting,
have served their respective
As I say, the
subject is
how they
communities.
broad that-I would not attempt to go in, any
so
taken by
than repeat—reference was made to the action heretofore
more
the A. B. A. on the previous convention—to repeat
the prophecy of the then
President of the Association, Mr. Lynch, that the time would come
branch banking would be—these are not his exact words, but
banking would be looked upon with a great deal more favor in
than it is at the present
I thank you for
Mr. Wagoner;
when
when branch
this country
time.
the time.
Mr. Chairman, I want to nmke a motion, that this body,
representative of the State Bankers of America, go on record as
that is
being absolutely opposed to branch banking.
(There were calls for the question),
Mr. Wagoner:
through the greatest crisis that this world has ever seen, that kept
try
us
credit in the history of the world, that has
with the most solid financial institutions of any nation in the
of the world, is
on
*
I believe that the financial system that carried this coun-
American credit the best of any
left
good enough;
and I do not believe that it can be
history
improved
by the adoption of a system of branch banks, under which England's
system went down to wreck and ruin 48 hours after the war was
It
was
my
declared,
privilege to wear the uniform of my country during the late
war—not becausel had to go,
but because I wanted to.
because I had passed that
And for three months and
a
age many years,
half of that time I
stationed in England, and I learned something of the branch
was
system of England.
to me that the
initiative
And
one
of the greatest manufacturer* of England said
the young
They
are
break of the
war
of the war there
the line of
war.
thing
a new
financial enterprise of any
Mr. Frame said that there were about
all in the old line.
forty hanks In England.
I want to correct the gentleman.
At the out-
there were thirteen real banks In England, and at the close
were
six.
And I
banking business
never saw as
as we were
poor
accommodations along
And, gentlemen,
I want to say to you
that while it may be
apparent at the start that branch banks are charitable Institutions run for
the good of
all the-people, I think
you
will find out in
it is anything but a charitable Institution,
benefit of the stockholders.
I
am
that; has
an
American
name.
my
Mr. Morgan or the National City
me
the
you
few years that
and that they are run for the
'
'3 '
gentlemen and say I represent a bank
1 represent a
that has been built up through
bank, to take from
a very
-
mighty glad to stand before
energy,
Bank,
power to
with honesty to what it has been
the other?
side shall live up to them, and not
one
That is the trouble with the union miners,—that is,
th*
leaders.
The good, hard-working, honest miners are all right,
So I say, brothers, for Heaven's sake don't allow the octopus to wrap hi*
arms and wings and legs around you.
'
Chairman: You have beard the question, which was that we* flatly go
on record as opposed to branch banking of any kind.
Those in favor of
the motion say aye; those opposed, no.
(The motion was carried).
Chairman: The motion is carried by a large majority,
or
_
,
President.
_
„
„
„
S,
,
.
'
.'
'
.
„
R. S. Hecht, President Hibernia Bank & Trust Co., New
Orleans, La.
Vice-President.—M.
A.
McCauley,
President
Sapulpa
State
Bank,
Sapulpa, Okla.
bank, small though it may be.
and I don't propose to permit
Marine Trust Co., Buffalo, N. Y.; K. J. Bowman, President Daly Bank <&
the Bank of Italy, or any other
Trust Co., Anaconda, Mont.; W. C. Gordon, President Farmers Saving*
make the
earning.
Officers of State Banking Division for Ensuing Year,
Executive Committee. J. D. Phillips, Chairman, Vice-President and ([lashier Green Valley Bank, Green Valley, 111.; E. C. McDougal, President
money
that I have built up
*
Chairman: I must ask the speaker not to refer to any individual institu-
tlonal
have contracts, but is it all right that
There is no such a
individual initiative in business, orquick decision as to the making
of loans.
others that I could state if I had the time,
rendered by those banks during the
They do refer all their great loans to London.
as
all
He said to me that it is
in England.
men
utterly impossible to get backing to back
kind.
banking
branch bank system is the one thing that has destroyed
among
many
of everything
Are you going to let the octopus get it* tentacles around you
on the State banks?
Let u* take for instance, a string of drug stores in a
community.
There may be a little drug store there, and he is able to get
his goods at a certain price.
But along comes ibis great syndicate, with it* ability to take the entire
output of various factories, and jobbers, and ruins him. Why?
Because
they have got together, over seven thousand of them in the syndicate,
scattered throughout the United States.
They go to work and take the
whole jobbers' output, and string It out over through all their store*, and
sell the stuff cheaper than the small man can even but it. They will do the
same thing with the bankers.
For instance, I have been in the banking
business for forty-eight years; I got my button thirty-two years ago in
Missouri.
Way back in 1889.
I have got it with me now.
Some of ui
are apt to forget that.
Now, for instance, in a little community in Kansas,
Nebraska. Missouri, or any place, there is a little bank there doing all that
J* necessary for that community. It has $25,000 capital, say. Some
of those farmers and merchants are running it straight and honest. Now,
that has all the capital that community need*.
Now, for instance, *ay
a National bank, or any other bank, goe* to work and says, "Here, you keep
your account in my bank, or I will start up a bank in your town."
What
is that poor little fellow going to do? Sell out?
He is forced to sell out
and start another bank, and it isn't *o easy to start one now.
There i* too
much expense In handling those thing*.' You have got to keep up a certain
amount of paraphernalia, clerks, stationery, and everything else.
Now
take a County like our County down there: we have thirty-one banks.
My County is in the great coal fields, where we have so many strikes and
so much trouble.
Alexander Howat lives there, the fellow that get* up
strikes, and strikes all the time. They sent him to jail the other day, and
we are doggoned glad of it—he cannot call any more strikes for a while,
He was in Indianapolis the other day, addressing the Mine Worker* of th*
World, and they called two more strikes before he left. They have been
turned down good and hard back there.
They tell them, "If you call so
many strikes there is nobody will make a contract with the United Mint
Workers, because it will be nothing but a scrap of paper."
It is ail right to
National Government itself has recognised the fact that it cannot
Wbile
for
Mr. Oscar Shafer of Kan**a: We have string* of grocery stores; we hav*
string* of department ttores; we have string* of drug stores; land string*
provide
particular reason
play, and at the present time are playing a very large part in
ve
reason* and
conduct its
same
for existence does not apply to State banks, of course, but they are
banks.
For these
I am absolutely opposed to branch banking In
expected
That
for the issuance and control of the currency.
twel
Regardless of what we think the outcome
that very
by being members of the Federal Reserve Bank.
The
National banks exist for only one Constitutional reason;:—to
self same purpose,
you.
any shape or form.
I am
opposed to it because it is undemocratic, opposed to it because it Is unrepublican, and opposed to it because it Is un-American; and for that reason
I propose the adoption of this resolution.
business.
They are not In the business simply to give an opportunity to be in
to
Mr. Wagoner: Thank
will be, we know the outcome will be annihilation of all small banks,
Bank, Marshall, Mo.; Geo. W. Rogers, Vice-President
Commerce,
Little-Rock,
Ark.; Geo. A.
Holderness,
American'Bank of
Chairman of Board
Farmers Banking & Trust Co., Tarboro, N. C.; Grant McPherrin,President
Central State Bank, Des Moines, Iowa.
SECTION
HOUSE
CLEARING
American Bankers'Association
Angeles, Calif., Oct. 4 and 6, 1921.
Fifteenth Annual Meeting, Held in Los
The
:
.
N"-
:■
To-Day, Alex Dunbar.
Slogan of
American Business and
CLEARING
TO
INDEX
-.v.-.
■-
V
—
....Pa5e 170
Acceptances, Fred I. Kent
-
Shall
the
Abolish
We
r
.
.
.....
Publication', of
r,
.
,
n
Clearmgs?
Bank
Annual Address of A. A. Crane
——---Page 176
Report of Executive Committee,
Clearing House Section, — Page 177
The Slogan
Clearing House Examination, ...
House Examinations and
It is
delightful pleasure to bring to this Convention a
a
of practical optimism from the .City of Pittsburgh
business
The
not
brighter view, based—
The improve¬
and will no doubt continue on
but steady,"
is "slow
substantial
a
presents a
theory—but upon actual figures.
upon
ment
outlook
gradual
but
"upward"
for
basis
the
next
until everyone who is wliling to "give an
twelve
months,
honest
day's work for an honest day's pay" will enjoy full
Carnegie always said that the "real" barometer
Andrew
be
mills of
ion, the Pittsburgh
increase
substantial
in
burgh
September,
22% for September.
In similar fash¬
Bank Clearings for September show a
over
Building "permits"
August.
construction
covering
work
in
(not including dwellings or apartment houses)
the substantial sum
I
In August an
20% in the amount of payrolls was noted, with
further increase of
sued
the tide of payrolls in the steel
Pittsburgh was in July of this year.
Increase of
a
in
ebb
The low
true.
have just
of
is¬
optimist
a
of Pittsburgh, National Association.
substantial
satisfactory and give the
and
Pessimism- is the
frome
selfish
one's
pessimism destroys.
awake,"
borer,
red-blooded
a
square"
Amerian,
resulting
Optimism constructs,
while
whether he be banker,
la¬
prefers to belong to
strangle .selfishness and play the game "fair and
on a
broad-gauge basis of "thinking in terms of the
,
alike
to
world affairs.
It
sin of the age.
is
destruc¬
dealings and
individual
The International Peace Conference did not
to be the success the world hoped
for-psimply because
representatives of the various countries approached the
conference in a wrong state of mind.
sider
it
a
"matching of wits,"
rather than
hearts," and the results savored
"Hats off'
ment
to President Harding
Conference
to
be
held
They seemed to con¬
in
a
"meeting of
too much of selfishness.
for calling the Disarma¬
Washington
at
an
early
satisfactory settlement.
to bring about a
part
wish the Conference greatest
meeting in
and are hope¬
sucess,
but, unless the delegates approach this
"heart" attitude, making the first "or¬
a proper
der" of business the "disarmament of selfishness," we shall
disappointed over the results as we were in
connetion with the Peace Conference.
What is true of the affairs of nations is
individuals.
organizations and
.business
equally true of
Business
organi¬
(similar to nations) are merely the sum-total of the
zations
individuals
Take for example this splen¬
composing them.
organization, the Clearing House Section of the Ameri¬
did
Bankers'
can
can
Association.
In
activities of the Ameri¬
all
Bankers' Association I know of
than
its
the
local
Clearing
in
units
all
no
greater constructive
Being organized
Section.
House
of every
sections
State
in
the
Union, and having all community questions of a financial
character submitted to it, one could hardly
potential
and
for public
power
imagine
a more
community advancement.
Clearing House organizations enjoy tliei absolute confidence
the
public
matters discussed
all
in
dered.
careful
to decide
all
and decisions ren¬
should make us
This, fellow bankers,
questions
on
exceedingly
broad-gauge unselfish
a
basis.
My great admiration
for and appreciation
Which I hold many of your members
ored to enjoy a
I
the Clearing House
which
about its proper
mechanism
and continued* functioning, makes
and
to
the brains
nated the mechanism.
Let
which
us
appreciation of the nice
smoothness
and
accuracy
conceived and co-ordi¬
examine the principles which
the activities of a Clearing House and see
underly
cannot
such
makes
which
find therein
some
conceded
What is the magie
In the first place, its very existence is the
necessity
Clearing House,
if we
cardinal principles which can be
applied to other phases of our business.
of its success?
The
put in it—our utter lack of
we
too often indifferent to a suitable
possible,
activities are
regarded in the same light as a fine watch.
absolute dependence
us
with whom I am hon¬
personal acquaintanceship.
think sometimes that
too much
pf the mag¬
is second only to the esteem in
nificent work you are doing
worry
•
,
business operations,
his
do
ful of the outcome,
We are confident that every "wide¬
Selfishness is the greatest
prove
of one's
Gang" rather than the "Wrecking Crew,"
other fellow."
the
will
"full-fledged" member of the construction gang, we
must first
tive
discouragement
merchant or industrial leader,
the "Construction
To be
practices.
upstanding, red-blooded American,
big, unselfish heart, and we are confident that he
a
We all
of
Optimism, as we all know, is the keeping alive
expectations.
with
admira¬
of not only America, but of the world.
tion of every citizen,
with
real practical basis for his happiness.
------Page 183
;
——
He deserves the highest praise and greatest
date.
total
building construction, are not large—nothing to get excited
about—-yet are
Bank
of To-day
force
The increases
nin^ million dollars.
180
.--Page 183
Nominations and Elections- — — — —
Pitts¬
quoted, concerning payrolls, bank clearings and
Page 179
......
...Page
Abolition of Clearing
Clearings
This statement continues to
of business is iron and steel.
.
Resolution in Favor of the Abolishment of Returns of
be just as much
employment for at least five years.
' ■ 1
.-Page 177
Page 180
President Harding is an
and the State of Pennsylvania.
•'
■
,
....
Bank Returns..
By Alex Dunbab, Vice-President and Cashier of the Bank
message
'
„
Clearing House Examiner System......
Clearing
House
Action by Cleveland Chamber --—Page 174
Raymond F. McNally
'
■■■:■ :■
House, Robert B. Locke............Page 173
The Institute Clearing
HOUSE PROCEEDINGS
■■■"..
--..Page 169
Report of Acceptance Committee
1
'
we
of co-operation.
Wherever we find a
find all of its many contributing units
This is the
helping each other in a broad community sense.
alio
be
not this lesson
applied to the entire banking struc¬
The war has guided the
I think so.
larger sense?
ture in a
the front doors of
footsteps of millions of people through
of
these
its architecture.
of
accident of
a
the
of
think
people,
marble
would have thought
never
venture a great majority—of
The majority—I
bank.
a
otherwise
banks who
American
in
bank
of
terms
faces
now
The
These
themselves.
is
answer
people
the
in
the
bankers
initial gesture.
made the
have
by their act of coming to the banker, labeled
They have,
themselves
icy should guide the banker in the handling of this impor¬
situation.
tant
of
In
judgment
my
how this new crop
upon
depositors is handled will determine in 110 small
bank
future
the
measure
of
status
economic
America's
struc¬
America, broadly speaking, is
ditions
lesson
it
for
banks
can
is
The
teaching millions more
are
that
Now
thrift.
in
time.
the first
Here
spendthrift nation.
a
literally pushed into our Ameri¬
have millions of people
we
we
present
industrial con¬
stern but much-needed
a
"rounding the corner,"
are
clearly the problem of the American banker to deter¬
mine the best method
to
to hold these hosts on the
pursue
right road of systematic saving.
it, arpl
Advertising, Service, etc.,
but, to probe
etc.,
essential and the
that
bankers
such
as
deeply and gd»t down to the first
more
keynote of the situation, we are confident
establish
must
more
friendship
busi¬
in
I
maintain, with all
the earnestness of
a
profound con¬
viction, that there is not enough of the "human touch" in
our
everyday contact with patrons.
We bankers are on a
pedestal to the average man and woman of the community.
Incorrectly, these people assume that
ment are
intellect and judg¬
This mental attitude creates
superior to theirs.
false and
our
a
frosty atmosphere which will kill the growth of
confidence.
Tt is
our
immediate duty, therefore, to have the
There
ples
011.
the earth centuries old,
living-in
filth
the
convince
are
doing their
part
the civilization of the world.
the life and intelligence
whose peo¬
ize
the up-building
of
when in their home lands, and many of their children are
ble to their
There
reasons
physical conditions, but
lies in
the
manner
incomprehensi¬
for this difference in mental and
of the most important causes
one
development of American business.
First exist¬
ence,
and then manner of livelihood and education, depend
upon
business.
generally
other
If business is carried on in
dishonest manner, life
hand,' when business is
on
will
a
be
a
squalid and
squalid.
On
mankind passes from
high general plane of in¬
one
where the development
becomes
The
the
to
of science, art and government
The
fads
of
business
men.
representing
of
mei
of
smile, the exchange of
It is simply the affable
convention.
confidences, the assumption of equality, the cordial
which breeds confidence,
of atmosphere
sort
that
knowledge
"sell"
can
strictly
or
most
humble
employee
bank
than
masterly
a
strictly
institution
your
American
The
ability.
on
by impressions, and the pleasant
moved
are
you
is
and the
Do not make the fatal mistake of
only kind which does.
thinking
hand¬
the outward expression of warm hearts—that
shake and
smile of the
friends for the
will develop more
mind by cold
on
masses
heart
of the highest
officer.
In
up"
"summing
I
may
that the rehabilitation of
say
world business and world affairs rests
of
practice
old-fashioned
the
four-square upon the
doctrine,
ever-beautiful
but
would have others do unto you." Hu¬
"Do unto others as you
manity has tried every other device of its own making to
a
problems and has failed dismally.
Golden
scheme
the
then from
if not from love,
Rule,
Let
necessity.
sheer force of
therefore emphasize once more that any
me
attempting the permanent
and happiness of
peace
world will fail utterly unless its taproots are
in this first fundamental of human
you
entwined
happiness, which, in my
judgment is the slogan of to-day—"Do unto others
humble
as
We are now at
We must follow the
point where there is no alternative.
would have others do unto you."
Acceptances
Attention
lies in art.
force
strongest
serves to
helps
such fads
to
broaden the lives of all
Quick means of transportation, electric light, telephones,
tions
has
time-saving and comfort-giving inven¬
of the other
all
and
the direct
are
played
its
products of business.
but
part,
without
the
Science, of course,
encouragement
of
business, science would never had either the time or incen¬
tive for accomplishment.
It is unfortunate that many men
portunity to make
of talent, whose sole op
of their talents—whatever they may
use
their fad outside.of their business that of
ness
of
whose
other
own
science
and
those
whose
Then
men.
fads
make
particular talents.
decaying the busi¬
they sneer at the business man
possible
development
the
of
their
While it is natural that such men, not
understanding business, should often become the catspaws
the
that
dishonest
does
allow
things
not
about
The
to
agitator against business,
from
indulge
they
are
being
bad
citizens
in I unintelligent
know
they may think
nothing,
or
if
yet
they
criticism
where
they possess has
of
such
been gath¬
sources.
fraility of
man's
the
them
which
false
individuals
of
as
of
and
save
themselves
knowledge
their
interests outside of their business, are exercised to
encouragement
to-day
been demonstrating the
is simple—you have
answer
ered from
possible.
so-called
greatest
life of mere existence
a
needs
"solution" in the corridors and lobbies of the hotels at this
the
tegrity and so developed as to result in savings to the com¬
munity,
banking
what
be—depends entirely upon successful business, should make
foreign grandparents.
are many
is
that
than any other thing.
more
workers, in every field.
The great general average of
a
for the
In short, what must we do to popular¬
banking—because
There
towards
living in
What must we do to
(much in the same manner and with as little ceremony as a
department store).
make business better and
of the foreign people of the United
are
but
know
by them freely in everyday affairs
of being used
purpose
whose
States is far higher than was true with these same people
finely educated and
doesn't
great masses that banks are created
and
ignorance,
such nations who are educated, living cleanly lives,
who
the public
"good-will" is what we want?
that of animals.
and
that
Vice-President, Bankers Trust Company of New York.
in the United States of America, men and women from
many
and
nations
are
of existence is little above
manner
are,
are
to-day
is
situation
IIow are we going to demonstrate to them that
people?
American Business and
By Fred I. Kent.
It would
banker in this
a
the burden of proof is strictly on us.
solve its
ness.
of us here to pick
one
But, how are we going to "sell" ourselves to the Ameri¬
We might submit, several
constructive suggestions,
any
unfortunate
the
the
ture.
for
whole convention who is not a good democratic fellow,
No short-sighted pol¬
potentially desirable.
as
hard
be
their
of
hands
That's what we need,
siring to serve their best interests.
can
record of American business as assets or
into the permanent
liabilities?
in terms of friendly individuals, de¬
gentlemen, less of the frosty icing on our cake.
The question
Are they going to be written
going to stay 'put'?"
tomers
banks, not as coldly imper¬
think of our
sonal corporations, but
by the
bankers is, "are these embryonic cus¬
us
American people
protection of
banking institution in their daily activities.
which
cold
the
They have discovered,
great catastrophe, the need and
a
Can¬
co-ordination.
of its success—co-operation and
secret
CONVENTION.
BANKERS'
170
man
enters every walk of life, and
going to abuse opportunities in
activity,
but
the
greatest
good
every
some
sphere
for the greatest
ft
CLEARING
number
requires
covered
in
The
of
of Russia
business, simply
to-day.
carried
dishonest
ble
and
into
on
Before the
it
as
should
such,
as
dating.
conditions which
been,
then
but
Russia
prevailed,
life
those
by killing
who
pretended
business.
That
wisft
to
cently,
requirement.
rying
on
immense
an
late
world for centuries.
by Federal Reserve banks in
Russia
Not
live
until business is brought back to
again.
Further
business
Government, but for the people under
is
United
the
States business is frequently
In
Congress to-day
undertake
protect
certain
of other classes.
expense
whose
to
classes
These
When
of
blocs
our
bloc,
people at
formed
are
interests
of
other
intentions they may have to be fair to all.
any
the most detrimental effect of such
tain failure
of such
gether to serve,
blocs
to
aid
they
because they blind themselves to
the future,
issue
more
their
own
officers
aI1(I Ibe public be educated
themselves
when
be
to
bound
if not blocked
pity
by., such
by their
to
real
see
cheap
political
All
of
success
our
President,
liis
up
as to
°f tIle Inderal
their Uses and also their
ed.
with
would
Congress,
form
new
the development of American
the
inception
of
of
financial
the
Federal
instrument
Reserve
foreign trade,
man
business,
Reserve
for
for
great,
so
called
an
a
Federal
the right to
that
3n^' ail(* there is no way that it
taken
never
Reserve
Act
enabled
Two forms of acceptance
to
create
our
acceptances which,
We will
only consider the banker's acceptance at present.
A bank-
ec's
acceptance
should
lie confined,
tion, to three primary legitimate
the purpose of
all of which
furthering trade, and which
are
Safety in the
p° a,
sGler against the guaran-
be
run
ma
lie to bin).
should not
The period of time
cover
the
an
vanced
a
bank-
acceptance for this purpose is primarily to enable the
creation of foreign exchange, for sale to
importers vrho may
require such exchange at a season of the year when exports
not going forward.
with
the expectancy
Acceptances
that thc.v will
so
drawn
mature at
are
on
drawer
a
therefore,
or
in
the
carry
goods in
warehouse
ally been sold for future delivery.
I acceptance is that it should be a
Otherwise,
paper.
to
huv
the
which
have
actu-
What,
things.in
self-liquidating piece of
honorably be asked
public cannot
as
-p
of
as
to
u
the
eligibilitv for purchase by Federal Reserve banks
»
i
bankers'
well
as
A
acceptances,
the
.,
are
,
aimed
to
protect
Federal Reserve banks themselves,
mn„i.nf
the market.
from
the
one
granting
ire
so
of acceptances,
is
linrelv used in foreign
therefore,
the
is credit?
character
of
Credit is based
which
men
.
.
upon
those
differentiate
them
•
.
,
living.
progress
Such characteristics include three
'
principal forces:
7,.
,
■
rm
.
,
.
,
...
,.
„
' p°wer to cal culate, w uc j coy
\
.
.....
s t e ability
mderstand proportion
a
both
Thevregulations of the Federal Reserve Board, declaring,
the
The most important tiling
nere annmi^s» an(l that enable them to make
The whole theory of the
it '
•
accept-
an
guarantor is exactly as
or
not.
aceentmces
towards rational
To
.
.
preponderance of exports will furnish exchange to meet
Third:
the
n, as acceptances are so largely used in rore
l^'ade. international credit must be studied also.
created
them.
than
,
,
a
other
It does not require the same eonsidera:
use of surplus funds, as when money is ad-
.
.
time when
a-
ex¬
an acceptance enables
sources
promissory notes, but at maturity of
consider,
]jt
ers
are
As giving
funds from
r•»<»«——«"
money front
to
of
his
for whom he has accepted
.
use
credit,
upon
regardless, of whether he receives his
acceptance has
The
obtain
the goodness of
anee,
carrying of goods in stock for
To create foreign exchange.
:
^nd
<
„
indefinite sale.
Second
to
tl(m as to the
an acceptance should
given should closely follow the time necessary to cover
the period of transportation and
delivery of goods from the
be
to
The Acceptance Bulle-
accepting banker.
tee to the accepting banker, of a
buyer to pay the acceptance
at maturity.
The time for which such
to
acceptances
of outstanding
total of .$799,001,237.42,
a
use of acceptances depends
a11 af'eeptance business.
client
a
fl!rnis!1 fl.in^s
carries with
af^Lr as is true .when dealing in promissory notes. This fact
calm°t be too strongly impressed upon bankers who would
for
follows:
are as
effectively,
on April 1, 3921, $604,092,113.79.
almost without excep-
uses,
as compiled for
showed on April 1, 1920,
business-
the banker's acceptance and the trade
acceptance.
Council
published
can be done more
bunted States is shown in the figures
311
the
own
to further
used
the
is
with the American Acceptance Council, which
T*ie Acceptance Bulletin."
Some little idea as to the growth of bankers
our
purchased,
we
their acceptances until
us
are
the
01\ w*th less expense and trouble, than through association
The
especially to further
however,
use
the United
monthly. It is to the interest of bankers generally that they
beep constantly in touch with the acceptance phase of bank-
acceptance,
commission, from foreign banks,
particularly those of
a
Great Britain,
the
studying
Such information is issued to members of
through "The Acceptance Bulletin," which
add-
we
System,
the business of the United States,
was
and
This Council is
constantly
are
member
them,
upon
formed.
was
the passage
authorized
abroad, for the purpose of bettering procedure wherever
possible, and to keep those who may be interested fully informed of all matters pertaining to the issue of acceptances.
destroy these
every
parts of the world, for a long period, yet it had
need for this instrument of credit,
after
once
which
Act,
States, whose representatives
While the acceptance had been in use in Europe and other
its proper place in
of the
pfotected.
recognized at
was
made up of bankers and merchants throughout
much
country, to the best of his ability.
To aid in
acceptances to the
development of the acceptance business in this country and
who
our
of
is essential that bankers
Again it is necessary'that the development
This situation
better help those who need their aid.
pernicious blocs and line
reconsideration
interests of all concerned be
to-
allow
so
the
cer-
methods,
blocs, they could
own
As
has always been to
USG °* slK'b instruments be carefully watched, and that the
the fact
men
examiners.
their
to
American Acceptance Council
a
regulations
special cases
on
proper time,
perity of all
is
regu-
purchase
might be for the
pass
The importance of bankers' and trade
abuses.
for
in every legitimate way, we
forward
banks to accept time drafts drawn
It
re-
car-
promissory
general
special
or
that tjie prosperity of one class is
dependent upon the pros-
classes.
under
acceptances,
business community is such that it
in
bound
are
en-
But
prejudice lies in the
those
to
tiie present regulations at the
men
classes,
Board
confidently look
(,an
the
by
re-
however, the
though the best way to
bankers'
foster the issue of acceptances
pur-
which
law-makers join special blocs
they preju-
our
themselves against the
spite of
so-called
duty it is to protect "every class of American
sworn
citizen.
dice
have
we
seem as
of
attitude of the Federal Reserve Board
endan-
gered by Governmental attack, developed for political
It would
eligibility
Reserve
through
Even in
trade
and allow Federal Reserve banks to
proper governmental
regulation.
poses.
the
Federal
for
not
of
amount
acceptances.
will
until
notes which could legitimately and beneficially be done by
business is true, but in doing so they
brought on their peo-
life
armistice,
At present,
pie suffering and starvation that will be the horror of the
•
the
suited in the issuance of regulations which necessitate
correct condi-
to
since
acceptances where promissory notes should be used has
came
succeeded in killing
they
and
war,
tirely proper desire of the Board to prevent the creation of
the
possi-
was
there
the
the regulations of the Federal Reserve Board have
answered every
was
under
even
self-liqui-
not
are
'
Throughout
lies in the condition
business in
war
have
171
flotation of bankers' acceptances whicb
phase of living.
any
living comfortable to millions. > Then
power
tions
of a few in
greatest example in all history of the falsity df the
criticism
not
deeper knowledge before criticism than is
mistakes
the
SECTION.
HOUSE
in its application to mathematics
Physical conditions as they apply to men's welfare,
present and future, and that is represented
sire for saving and conservation,
Second:
The
ability
to
produce
material
means to enable other producers of material
kpt (])om
whk.h
,)0un(, „p
in{inlateIy
calculation, and
in the de-
things,
things to
the
or
a
mar-
power
of
/
CONVENTION.
BANKERS'
172
without which the
dangerous as
Integrity of purpose,
nature become
Third:
more
man's
in
forces
themselves, make their appeal to the
other
their
When individuals deal with other indiattributes must be properly developed
in the person of both buyer and seller, to enable safety m
exchange of goods.
When, however, dealings have—on one
side or both—organizations embodying numbers of indi¬
viduals, the powers of calculation, production and distri¬
bution may be devided among them and strengthen credit,
always provided integrity of purpose exists among all those
concerned who have any power or force in management.
increase.
powers
viduals, these three
appeal to the jiassions in such a way
under an
domestic business with safety,
ability and reliability, re¬
of the power, efficiency and
quires only the consideration
When, however, one
integrity of the domestic Government.
qualifications
in foreign Governments must be considered in so far as they
apply to those with whom trade is being carried on.
In
proportion, therefore, as the men of any nation are con¬
engaged in international trade, these same
trolled
"selfishness," as exercised
rights of others, does the extension of
be summarized in the word
may
of the
at the expense
order that men
world is carried on in
The trade of the
In science
live and that humanity may make progress
may.
the resultant increase in the value
and art, with
for mankind that all
is necessary
with
barriers which interfere
be removed as rapidly as
development of trade,
the
This being true, it
happiness of living.
the comfort and
of life and
of
the
difficulties in carrying on foreign
principal
in some countries, through
is the imposition,
trade
of the
will
the
where
inefficient
the
In every
that of men of vision, ability and integrity.
nation
and
is exercised
masses
dishonest,
Govern-"
dishonest and self-seeking
ment, of the will of the ignorant,
upon
who
control
or
through
curtail the
development of trade through unwise regulation or Govern¬
Whether
otherwise,
is
Government
a
The real difference in Govern¬
control.
There
are
only two methods under which
individuals who execute the powers of
the
selected.
be
the
and
through
One,
other
through
the
the exercise
admitted
the
general
of physical force,
The world, long ago,
inefficiency and
undesirability from
standpoint of progress of humanity, of the selection of
the heads of
Governments by means of brute force.
such means are still in effect does not
they
ual
Government can
influence of mental power, as
applied through appeal to the masses.
the
or
largely represented in the method of selection of
is
those in
Socialistic,
Democratic,
constantly changing succession of individuals
a
going to be in control.
ments
is
wrong.
are
forces
minds
of
of
men,
That
change the fact that
The other means for selection of individ¬
Government—that
must
also
be
professors run
the bottom of the
false
impractical, that many of our teach¬
for their information, which is at
teaching being received by the grow¬
of our schools and universities.
force of unmatured
ing minds of youth in many
the impetuosity of the feeling of
by
multiplied
thought,
accumulating
have an
therefore
youthful discovery that is used by
ends
until
through appeal to the
is,
made
understanding.
and growing
The other forms of
appeal to the mentality of men, that
through their intelligence, is most
is,
It necessitates the development
that are always
clearly shows
that
the measure of success of con¬
structive minds is greater than that
In
one
of
two
ways:
same
men
does not require
ability and understanding that is true when appeal
world, at the moment, is going through
The
beings have been, and are now involved in
as
a
Further,
success
quire honest
in
appeal to
intention
nor
the passions
integrity
in
does not
presentation.
re¬
We
will be overcome and that ra¬
of the propagandist,
centres
said, with equal force, that the
have
that
their combinations in the business world
stronger and stronger in
forces, the extension of
and safer,
require
to
men,
the
coming of such
who would destroy
and
a
will
more
once
rational
From
the
Again
ness
of
multitudes
for
be a
life, for
a
moment
of
pleasure for
integrity
we
real force in the development of
may
be proud of our great institu¬
the
purpose
making possi¬
"
savings of American
and
willingly destroy the happi¬
people
American business will then
living.
result greater
would
that we
for evil which has grown to be a menace,
surpassed its pre-war record for ability and
therefore find that the vicious politician, and all those men
who
condition and defeat those
all that is best in the desires of mankind.
clearly foretold in the triumphs of our
every power
civilization.
ble
But it will
the part of every right-
be our effort, no man can doubt, and
That such will
will succeed is
world, with
of his every force for good if we would
thinking citizen,
over
will be re-established.
the constant exercise, on
further
to respond to such
international credit will grow safer
the international trade of the
and
benefits
all its
intelligence and integrity,
of nations begin
Government
the
world.
and are now growing throughout the
As individuals and
and
and present events
tide has turned and
intelligence have been born of passion
integrity and
and dishonesty,
become
terrible suffering,
fostered by the seething
the earth,
has swept
which
cord
of
weak character
just such a
History has told us that the wave of dis¬
consequence.
tions and the wonderful part they will play in
intelligence.
of great
period, and the lives of millions upon millions of human
have
of
mind of the world
degeneration.
since the birth of our nation.
Is made to the
of the destructive ones,
though the latter fill the eye and
even
of the
spoken word, but the continued progress
or
telligence.
the
to carry the inter¬
one's audience, either through the
est of those who make up
written
It takes a higher
appeal to the passions.
development and understanding
mental
world
difficult of success.
of problems of construction
harder than those of destruction, which are
through appeal to the passions or through appeal to the in¬
Successful appeal to the passions
the vicious for their own
through practical experience
has been offset
it
tionalism will return to the lives of men,
operation, progress is delayed.
ment
and
periodically, during which there are often times
education of the masses makes possible.
One
It is to this library, with its
of vicious teaching.
wordy attraction to the
We
resulted in a tremendous li¬
promises, which have
false
brary
readers
development of argument based
books with the
used by those who
such nations become dangerous.
credit in
in
instincts, which
by brute
be controlled
to
apt
or
ability to carry the thought of
than average
have filled
on
world, men of letters of
great detriment of the
the
To
more
ers
a
that a further number
carried away by false
doctrines.
danger.
is
individuals of fine intention are
of
interwoven with
so-called "idealism"
find
therefore
We
and
wills of the vicious and self-seeking.
acceptance of the
the
circumstances, can be safely advanced,
provided one other element exists, namely, the ability of
individuals, or combination of individuals, in organizations
to carry out their own wills.
Such ability is dependent upon
Government.
If, through dishonest desi>otism or weak Gov¬
ernment the operations of men of integrity or ability are
curtailed or prevented, or the proceeds of their activities
are taken
through excess or confiscation, the extension of
credit to individuals or organizations controlled by such
Government, or lack of Government, is attended with great
Carrying on
nullified through the association
it is not
world when
Credit, under such
extension of credits to those of
passions of men. Dm
fortunately, such persons are able to attract the impractical> wll0 nve 0ff tjje proceeds of successful business, possiwithout realizing it, and who, in many cases, have abil^^
^ ^ ^ ^ ^ tremen(J(ms yalue t0 the
business there will also
development in art, science and Government,
whole
world
will
and our industry.
be
enriched by' our strength
of
CLEARING
HOUSE
The Institute
1
■
'
'
:
i;
'
.
'
"
'
"
to
the
me
subject
suppose he knows what
will
have
what
to
admit
"Institute
that
now
I
don't have any
However, I
because
it
was
gives
idea
opportunity to
an
do
about
please with it, and I have been just aching for
a
what
what
I
not
am
the
going to bore
Institute is.
Most of
don't know what it is
you
indeed
are
to a
group of bank officials
tend to in
a
in the
few moments.
very
have
have
been
been
officer
officer
I
have
the
seen
subject
of
the
What is
is
living
a
if
minds
clave
two dozen
this
on
and
I
was
city
strong,
to talk upon
Fur-
six
or
dozen
of
the
the American
a
most
globe and put them together in
dozen
or
profound
solemn
a
officers,
tion
con
charged them with the responsibility in coming
think of the
Institute
of
Banking
and
is
tell
just
that
you
the
American
the
American
Institute
of
Banking.
For
long time past the bank officials have been
a
try
have
j union.
what
themselves
never
that
organized
effect might
sitting
And
back
the
and
unions
doing
labor
Middle
they got
their
the
States
so
far
city.
membership
con-
coun-
clerk's
They
were
have
have
not
of
or-
been
recognized
bank clerk's union, not alone to
not
What
bank
a
meantime
nothing.
a
long
was
a
and in
within
ago,
organize
to grant
as
this
clerk's union
organizations of this country,
Western
union of that
of
in
into
of
they have thought
bank
a
they did attempt to
years,
clerks
themselves
be if
what strength there Is in
and
bank
They have grumbled when
the
ganized.
the
the
bank
a
of
one
the
our
last
clerk's
two
union
charter to the bank clerks'
the result?
campaign
When the smoke
cleared
it
away
showed
they had 55 members in the union and of the 55 members
all
but
known
16
of
as
a
this'union,
them
employed
were
non-Institute
every
single
non-Institute bank.
in
one
bank, and all
of
bank
that
of them, was employed
one
in
of
the
That only goes to show what the Insti-
tute means in that bank.
Now,
I
have
be if there
American
a
assume
bank
ment
up
clerks'
that
and
union.
I
by stating that
I
ganization.
I
believe that
there
half
the
of
battle
a
tive manager, Mr.
told
erman
its benefits to
like
follow
to
of
that
if
other labor
all
the
between
of
an
ideal
a
few
Banking
state-
labor
or-
organiza-
by the principles under
Banking is governed that
capital
and
labor
would
be
wiped away.
bank
to
officials—and
It has been the custom of
I hope no one
see
in
some
this room—to regard
of
to New York and to talk to
Bowerman, to
get
of
the
real
a
Institute
every
Banking,
It re-
answer.
our
answer
execu-
to
Mr.
man.
that
Bow-
just returned from the
Institute
in
Minneapolis—the
thing about the Institute
of
Banking
urge and
was
others reap the same benefits,
see
successful
a
man
any more
willing to
loyal
to point
to
out
the
reach
through
way
success?
And
which
that
unselfish
or
out of the way
go
point out to young men, young fellows who
for othem
is
are
it
one
is
coming
possible
of the out-
standing features of the Institute, the loyalty of its
hers
who
have
reaped
its
benefits,
to
the
Take, for instance, such men as Mr. Kent,
just started up, Vice-President at
Chicago;
of
the
Federal
There
men.
another
become
Mr.
man,
President
of
who has
man
a
take Mr.
Puelicher,
the
mem-
organization,
Reserve Bank,—both of them
is
another year
old
Wills
Institute
who
American
will
in
Bankers*
Association—and by the way, that is the
day of days when
the Institute men are looking forward to
something, the
day when the real Institute man will become
President of
the American Bankers' Association.
And
I
think
the
time
will come, gentlemen, when the American Bankers'
Association will be known as the American Bankers'
Association
Section of the American Institute of
Banking,
But
that
it
takes
It does
take
day
of
support
It
the
necessary
common
is
not
to
way
urge you
that
it
needs
more
the
preacher
talks about
to run
money
jtban it is possible for
on
money,
the
In-
the boys
for
the
And
in
money
banks
it,
therefore,
other
to
be-
and
the
ways
contribute
money,
gentlemen here to-day to get behind the
your
that in urging that
gay
like
he
properly.
raise
is
feel
possible to charge sufficient dues
chapters
Institute chapters in
any
It takes
money.
contribute.
I
days when
Institute chapter,
an
to
comes
Now
money.
wondreful
stitute,
particular
barm to point out
city financially.
we
have
no
urging,
some
kick
but
And I
I
and
perhaps
want
to
don't know
it
won't do
of the ways in which
that
can
be done.
As I stated, it is not possible for the
membership
at large to contribute money enough to run these
chapters,
It takes
a
great
deal
of money.
appropriation has its place in
In
There is another point:
Institute
satisfactory
a
imagine anything
can you
most
Institute
American
give
tried t&
I
that enthusiastic, unselfish desire of those who had
reaped
I want to
the
the
question.
for
run
why I wanted to become
that to him—we had
me
most wonderful
bankVAerks'
is
that
answer
to
National Convention
union
is
American Institute
the
is
rather strange
believe It
tions in this country were governed
which
a
Now, if I may for
American
would
I
possibilities might
believe that that
Banking.
the
the
want to make
I believe that
Institute of
moments
is
that
this country
in
I
what
loss
a
me to go
to
about
union.
were a
statement now,
union
spoken
officials of the American
as
Well, when I consented to
question, which applies to
was
officers
the
Perhaps
these bank
are
qualified to sit in this Conven-
you,
answer, tried to think
at
was
along,
gratulating
every
or
you are, why do these fellows retain their
the Vice-President of
And I
than to
back
as
Well, I could not really
is,
come
national organ!-
our
interest in the American Institute of
Banking in sufficient
Now,
would
attem
your
bank officials.
are
degree to warrant their services
back to give you a decision on what the American
Institute
they
call
officer of the American
into your mind, why
pop
just like
men
much
as
mained for
don't believe there
believe if you took
want to
every
speaking of
now
to
want
Vice-President of the American Institute of Banking one of
my friends asked me, "What do you want to do that for?''"
Candidly, I don't know what the
Banking is.
am
I
Banking,
kindergarten propose
I
clearing house.
a
of
a
Institute of Banking?
Banking.
that knows exactly what
person
of
took
you
of
manager
Institute
I
a
very
way
of
Institute of Banking is and I
Institute
officer in
a
Institute
Banking,
that
mean
become
qualified in
am
American
Institute?
an
bank
a
Institute
thermore, I have also been
American
By that I
of
and
Institute
city where the Institute
a
have been
Therefore, I feel that I
the
it.
the
kindergar-
a
Institute
of 02 city chapters—every officer
up
the question will
bank clerk
a
American
of Banking, twelve in number,
in-
I
rather
as
member of the Executive Council of the American Institute
If
bank clerk with it.
a
without
with
bank officer in
a
strong and I
very
where
bank
a
have been
not
bank
a
that
manner
Banking
American
To support my statement I
zation, made
.
unread
very
I have been
without the Institute and I have been
I
a
of
the
is very far from being
Institute— and I
lohg time
know what it is.
you
you
the
you,
tion.
long history of
a
that
tion to the fact that to-day
I suppose also perhaps I should justify my right to
•person.
talk
with
you
true
But
men.
I
to get a good chance to take a crack at a bunch of bank of-
fieials.
It is
assure
glad to accept that obscure subject
very
me
'
■
Bank of
that its principal function is to deal with the younger bank
institute clearing house is.
gn
'•
Federal Reserv
.
ten.
1
*
■
•
Branch,
the American Institute
as-
House."
institute clearing house is, but I
an
right
Clearing
'
•
Detroit
Chicago.
,
1 don't know what the Chairman had in mind when he
signed
Manager
''
■
•
•
By Robert B. Lq-cke, President, American Institute of Banking,
•■.V'-..'.
173
Clearing House
.1
'
SECTION,
every
officials
city
for
where
the
most
there
part
And
every
is
an
realize
chapter to the banks themselves.
I
believe
an
ample
clearing house budget,
Institute
the
chapter
bank
advantage of
the
The Institute is conducted
BANKERS'
174
things: one, and not
for
two
for
what
CONVENTION.
necessarily the first, but one
banks,
perhaps
what it will do in service for the banks, and
it
will
do
in the matter of
service for the
of course, depends proportionately on what
they
have
to
first,
what
for
clearing
of
is
with
do
the
dent
will do for its members; second, or
it
poses
what
it is customary
ask the presiwill need.
And it
cities
committee
local chapter
the
good training to
most
In
it.
house
he
to
what pu**-
make him point out for just
he needs your money,
just what they are going to
do
individual
banks shall agree to give a chapter what money they want,
all the money that they ask for.
I believe it should be
required and obliged to give a proper budget of what they
want and point out why they want it, and then I believe
I do not
with it.
it
if
reasonable
seems
house, to the
and
advocate that clearing house or
to
the
"Yes, you can have the
say,
members of
individual banks, you should get
the clearing
behind them
They
amount of money."
If there are any genabout the money, what
amount of money the Institute should have, I urge you to
consider the great advantage which this work is to your
individual banks, even to the extent of keeping out the
so-called union, because if we .have a union there is no
are
doing that all over
tlemen
here
what might happen,—a
knowing
of
charter
the country.-
that have hesitated
union organized under a
of Labor, for in-
Federation
American
the
stance.
Institute
The
wonderful
tion
it is to-day and as
in 1918—and you
when the bank
that, had
was
as
resolution adopted at the
will remember that was
clerk or bank laborer,
the most cause to
receiving,
at a
expressed in that
Nevy Orleans Conven-
in a period
if you could call him
object to the compensation he
high and the
time when prices were
i
Shall We Abolish the
By Raymond F.
Mr.
President, and Ladies
McNally, Vice-President
confess
on
record against all attempts to limit
production. Thirdly,
it was opposed to all attempts to limit individual initiative,
And that is one reason why the Institute will have nothing
to do with unions. The members of the Institute are opposed to all attempts looking toward limiting individual
initiative. They are not going to accept any standard
wage scale. They want the opportunity to go along and
receive just compensation for the labor performed. If
they are capable and able to do more than the other fellow,
why, they want to be paid for it and they want no standard
wage scale. And third, and most imporant of all, the resolution was completed by the statement, "We are opposed
to all plans purporting to promote our material welfare
upon any other basis than that of pure unadulterated
Americanism." I thank you.
and Cashier, National Bank of Commerce
arid Gentlemen:
I didn't pick the
subject of a thing as
was the first point. The second point: "We are opposed
to all attempts to limit production." That may have meant
more then than now, because there is not much of an attempt now at limiting production. But.it meant a great
deal more then, limiting production. The Institute went
Publication of Bank Clearings?
subject because 1 admit I
don't like the wording of it, it is such a destructive tone,
"Shall we abolish?"
Of course, it is not possible to have the
I
bank clerk's salary was not keeping up, when it was the
hardest thing for him to make both ends meet—why, they
met in New Orleans and adopted a resolution which—well,
I wish I had a copy of it and I ought to know it by heart,
but unfortunately I don't. But the high points of it, as I
stated this morning at the Convention, the high points of
that resolution were the belief in the equitable co-operation
of employer and employee. And right there I want to say
here that I hope the men in the banks that you are in,
work with you, not for you. When you have them working
with you you have a real bank; when they are working
for you there is some question about it. "We believe in the
equitable co-operation of employer and employees"—that
complete as it might be, but I
in St. Louis, Mo.
and yet, instead of having 35 banks at the present time we
only have 14. T am only mentioning that for the purpose
of illustration, because I think practically every large city
can show a similar trend to consolidation on the part of
would banks,
thereby having fewer banks instead of a greater num-
ber. Well, now, if as a result of consolidation, two, or, as in
substitute
some cases, three and often four banks get together, doesn't
bank transactions."
it naturally follow that the clearings from those four banks
Now, a start has to be made somewhere in a movement of
would be greater than the clearings from the one bank would
this nature, and the St. Louis Clearing House Association
be, because where bank A in the consolidation formerly
took it upon itself in the past year to write the various
used to get checks on bank C and bank-D, now when they
clearing houses all over the country asking their views on are all consolidated in bank D or bank E, why, naturally,
this subject.
I have a formidable array of replies and the those checks that had to go through the clearing house stay
general tenor of the replies was that it was admitted the in the one bank, thereby reducing the clearings.
Of course,
publication of the clearings did not entirely set forth the facts the natural comment would be that this is a very nice theory,
to the business activity of the respective cities in which
But how does it work out in actual experience? How do the
the clearings were published.
There were a few cities in- clearing house managers in St. Louis go over the clearings
different, one or two cities frankly opposed to any change in
for the three branch banks that were consolidated and make
method.
the First National Bank of St. Louis, and the 'two banks
Now, I will state also at the outset that I invite any com- .that were consolidated in the Liberty Central Trust Co. of
mentsfrom the floor during the course of my remarks.
This St. Louis? Now, it is interesting to note that the total
is not
set address, more in the nature of a debate, and I
clearings in the First National Bank show a decrease for the
would like to have anybody who has questions to ask, any
corresponding period after the consolidation of 39.4%. In
with remarks to make in connection with this, I want
the Liberty Central Trust Co. the decrease is 47%. In
you to feel free to do so either at the close of what I have to
other words, these banks, the Liberty Central Trust Co., for
say or during the course of my remarks, because a resolution
example, their clearings are almost one-half of what the
is going to be reported from the Resolutions Committee,
clearings of the two constituent banks used to be. Thereby
and
might as well discuss it now as later.
proving, if proof were necessary, that when you have conNow, why are clearings published, in the first place?
solidations your clearings are reduced. But I don't think
Because it was about the only commercial method we really
anybody for a moment would state that that means any
had of learning just about how business conditions were in
decrease in business activity in that city or that there are
cities, because the inference is if people have money to spend any less number of checks being given or that the customers
they give checks, and, consequently,the more checks the are not as prone as they were before to issue those checks,
money to spend and the more business done in those
Now, a rule to be effective has to be universal; it ought to
cities.
Away back in 1868 the St. Louis Clearing House apply everywhere with equal force.
Take another illusAssociation was organized.
There were 35 banks in the tration: the City of Birmingham, Alabama, has 200,000
Clearing House Association.
At the present time we have inhabitants. For some strange reason or other there are
four banks in St. Louis, in any one of which the deposits are
only/five banks in that city—a rather fortunate condition
greater than the total deposits of those 35 banks in 1868, for such a large city.
One of those banks has about 50%
think J was talking on the subject of "Shall
for bank clearings the publication of daily
like to have you
we
as
a
one
we
more
CLEARING HOUSE
of the
deposits, another bank has approximately 30%, and
the other three banks have the
remaining 20% of deposits.
Now, I don't'think that any
of
one
Birmingham, I don't think
the
city, if
we are
through
never
perhaps
illustration
as
you
one
can
transacted in
one
as
although there is
that there
To show that we are
entirely unselfish in the matter, I
noticed by comparing the clearings and total transactions,
as
bank and, naturally,
striking illustration,
get,
counts.
are
would
striking
no
make
down
a couple of places in the list.
It
changes because there are some cities
go
some
where the clearings
things would find
are
daily transactions.
doubt
perhaps similar
city would
our
to the clearing house at
go
in my mind but what the student of such
that all over the
country,
against the individual accounts, and savings banks, for that
all checks except those against bank ac-
matter—in fact,
that half of
going to take deposits
the measure, are transacted
So that is
way to do it is to follow the
Federal Reserve System in its efforts to take the checks
wanted to get
reason
175
heart of things, and the best
would pay any attention to
we
half of that business would
all.
we
was
that
clearings of that city for the simple
the business of the
an
if
us,
idea of the ainount of business
an
SECTION.
There
the
con-
transaction pass
same
than
Now, the objection has been raised that it is impossible
on the same day the total daily transactions.
The
advantage of clearings is that after the clearings have been
the individual account.
to get
struck the totals
what,
can
be
given forth and
you can
that day, what the clearings of that particular day
Well, I think it is not a matter of imperative necessity
on
are.
that the total transaction should be
day.
It would be just
when the
as
clearing house clerks
given for that particular
and I think
easy,
to the cleairng house, they
go
and
they
close of
can
day previous
be given out for that particular day
business of the day previous,
simply
getting it to-day, and it would not make
a
as
of the
matter of
banking
any more
than it would before.
are
you
going to do with the smaller banks, the outlying banks, for
who clear through the larger banks?
Now, in
example,
of
Louis those banks either clear through member banks
through the Federal Reserve Bank.
A member bank could
in
the checks for
the total of
make the
a
prerequisite for clearing that when they send
clearing they send in a memorandum of
a
the
full and
day before, and the member banks could
requirement, and therefore,
same
would have
you
complete set of figures.
publication of total transactions is
Reserve Board, in
that
getting out their figures—I
all familiar with the
the
Federal
assume you are
have before
ending Saturday night.
It also shows what
they
were
It is given out
on
Sunday,
the week previous and what they
were
the
very
interesting comparisons.
same
as
to the condition of business
we
would much rather
the bulletin that is gotten up by the Federal
Reserve Board, rather than reading what the commercial
us
agencies give forth
It is
the total clearings,
as
interesting to
what the commercial agencies think
They admit that the total daily transactions
about this.
see
the direct barometer.
are
They
They
be
interesting
figures in addition.
have
to
Well,
you
willing to concede that,
are
however, that for the
say,
would
purpose
the
of comparing it
total
Clearing House
might give them for a while,
going to take the total daily transactions as
might as well begin and do it right in
the first place, and if you have one there is no need of having
the other, there by making confusion.
the true
measure, you
Now,
House
on
Sept. 28th the St. Paul, Minnesota, Clearing
adopted a resolution declaring for the
Association
giving of the daily transactions, and that they would begin
the publication on and after Jan. 1, 1922—that after that
date
they would
other banks
week the year before,
thereby furnishing
These figures
are
some
given, first,
that system, and they asked that the
use
join.
confident that
A start has to be made, and if the idea is
once
is
year
good time to start.
a
the movement
was
And I
am
started there would
be no particular objection over the United States to
recognizing the daily transactions instead of the clearings,
Weekly Bulletin that is gotten out by
the Federal Reserve Board—show the total transactions for
the week
more
to think
we come
And these figures, I think, that
any
the country—I think
over
good, the first of the
Now, perhaps the most serious objection that is raised to
the
time when
same
that,
for
reason
be that checks for
through the Clearing House
But at the
who aim to keepjnformed
us
activity
St.
easily make it
some
may
but if you are
Now, the objection also has been raised, What
or
time.
It
about it, the absolute rule that obtains is the check
against
effective if
as
take with them the total transactions of the
can
know just
one
proportion to the total
be
may
There may be undue activity.
ditions existing in cities like Birmingham.
-
out of all
I suppose you are all familiar with the lotteries that have
been
started
over
the
given to clearings.
country by
We had
reason
the publicity
of
in St. Louis, and in spite
of the efforts of the police there were thousands of tickets
one
sold every day, and they used
of the
clearings.
And when
as a
one
basis the last five figures
of the principal
men
of this
by Federal Reserve Districts, and then by each individual
lottery went to
city in each district, not only where there
could arrange in some way to have the figures come out as
he wanted them on a certain day, we thought it was time
but cities large
enough to have
clearings would
now
able
be given.
a
are
branch banks,
clearing house where the
This information is obtain-
weekly, and what is proposed is that it be made
affair instead of
a
a
daily
weekly affair.
'
However, when the Federal Reserve Board first began
getting out the figures, they had the total checks against
individual accounts and against bank accounts.
They did
away
with .the bank accounts, however, giving
that the bank accounts,
counts,
are
practically
vidual accounts.
a
as
a reason
the checks paid against bank
ac-
duplication of checks against indi-
When you come to think about it, that
is very true.
Let
us
city.
take
a
large wholesale house in
a
city.
on
It makes
a
out-of-town
It deposits those checks with its depository in the
The city bank collects them and gives the wholesale
house credit for the checks.
house buys
pay
In other words, the wholesale
credit with out-of-town items.
The.city bank
sends those out-of-town items either through the Federal
Bank or direct, and gets a draft back in payment.
The
a
zeros.
So there
lottery when they knew what the
zeros were
Now,
we
as
included the drafts, which the city bank might get
back, which go through the clearing house, you would have
a
duplication of the
same
Federal Reserve system
to
after
all, the business
business that
comes
depends entirely
ness
that
all do.
do with
to us, and
ness
we
we
upon
are
the
primary accounts is the
measure
of the bank busi-
<
in the American
money
by
given and paid by the banks,
with the old style and let us adopt newer
let
us
do away
If there is
States have been
one
are
thing the bankers of the United
distinguished for, it is for their ability to
adapt themselves to different conditions.
been possible
to have
advent of the Federal
have
It would not have
those daily transactions before
the
Reserve, because lots of banks would
thought it would be telling too much to give out the
However, we are all disposed to give publicity
information.
to the
facts, and for this movement, if
we
have it,
persuade the Clearing House associations
over
we want to
the country
follow the example of the St. Paul Association, and it
a
movement for
Bankers' Association and
the betterment of the American
one
in which the
Clearing House
Association could take deserved pride,
I
Note
seems desirable to point out that
the suspension of the publication of figures of bank
clearings
of different cities is
opposed by a committee of the Cleveof
Editor.—It
land Chamber of Commerce recently appointed to report
the recommendation of the St. Louis body.
The
on
report of
objection, the fact that bank
eliminated, because
from, because,
the question of individual busi-
So I think that is no great
drafts
our
away
lot of
fun in
going to be.
we are
the number of checks that
items, which is exactly what the
is trying to get
a
did not
no
that this movement is quite in line with the
general edueational movement.
If the true barometer is determined
to
if jmu
spending
we
was
trying to educate the people
just what the banking business is, apd it seems to me
would be
completed chain, whereas,
are
Bankers'Association, and
wholesale house checks against that credit they have bought,
your
and offered him $.5,000 if he
attention to the matter, and after that
and thereby you
have got"
manager
jiublish anything except the
methods.
deposit composed for the most part of checks
points.
to
our
we
are
trying to get at the
the
Cleveland Chamber points out that "these data have
been regularly compiled for more than sixty years and
are
time than any other data
longer period of
These data have
cities and sections of the country oyer
available for different
a
CONVENTION.
BANKERS'
176
showing fluc¬
the volume of business
Committee of the Cleveland
clearing house data reports as
communication has been received from
are
period over which these
held to be of large
The figures
records are available the country
1919.
since
individual accounts have been
They possess
regularly
characteristics of undoubted
increasingly useful as their records accumulate.
Owing
recent origin little is as yet known about their seasonal variations,
movements in periods of transition from depression to prosperity
value and are
their
their
has
depressions and the movements
been most carefully studied and
significance.
showing debits to
only
tabulated
to
or
or
the reverse.
It
seems
they offer a superior means for comparing
transacted in one city with that carried on in another
nearly certain that
the volume of business
and they are
rightly being
increasingly used for this purpose.
It should be
that such comparisons constitute only one of the use»
to which such figures are put, and perhaps not the most important use.
Your committee has sought the advice of three authorities who should
pointed out, however,
with regard to the
Parker Willis, the
director of the division of analysis and research of the Federal Reserve
Board, who was one of the pioneer advocates of the system of reporting
debits to Individual accounts, and largely responsible for its introduction.
The second is Professor Warren M. Persons, Editor of the "Harvard
Review of Economic Statistics," who has mad# some of the most searching
studies of the data for bank clearings in connection with his researches deal¬
ing with business cycles.
The third is Dr. W. Randolph Burges^, Statis¬
tical Editor of the Federal Reserve Bank of New York, who compiles each
month one of the most complete of the current reviews of business conditions.
be
peculiarly wed qualified to render valuable opinions
discussion.
The first of these is Dr. H.
matter under
All three of these
of
gentlemen express
themselves as being vigorously op¬
which advocates suspending the publication of the
figures for bank clearings.
They point out that these data are regularly
used by practically all students of business conditions.
They all agree
that fluctuations in the figures for bank clearings are of significant impor¬
posed to any movement
Cleveland Chamber of Commerce to
that the figures for
argues
noted and
statistical
these
utilized In the study of business
conditions.
passed through some eight serious business
of bank clearings during these periods have
follows:
the Chamber of Commerce
bank clearings are untrustworthy
indicators of the amounts of business transacted in different cities, and that
the figures showing the amounts of debits to individual accounts are more
reliable and should be substituted for the clearing data.
Your committee believes that the publication of figures showing the
amounts of bank clearings for different cities should not be suspended.
It does not concur in the recommendation made by the St. Louis Chamber
Chamber
During the
1921,
join in a move¬
ment seeking to suspend the publication of figures showing the amounts
of bank clearings weekly, monthly and at other periods.
The St. Louis
Louis asking the
St.
and financial
Commerce-.
Your committee on
A
business cycles
seasonal variations normally occurring in these
these findings important variations from
the basis of
On
normal fluctuations are at once
Oct. 18 follows:
Cleveland, Ohio, Oct. 17
To the Chamber of
by students of
clusion as to the
series.
Chamber, and the report as
presented by him to the latter on
fluctuations in the volume
to extensive analysis
who have derived from them important con¬
period of time than are any other data showing
of business transactions.
They have been subjected
transactions." In its
inquiry into the subject the committee of the Cleveland
Chamber sought the advice of Dr. II. Parker Willis, Director
of the Division of Analysis and Research of the Federal
Reserve Board; Prof. Warren M. Persons, editor of the Har¬
vard Review of Economic Statistics, and Dr. W. Iiandoli)h
Burgess, Statistical Editor of the Federal Reserve Bank of
New York.
In stating that "all three of these gentlemen
express themselves as being vigorously opposed to any
movement which advocates suspending the publication of
the figures of bank clearings," the report adds, "they all
agree that fluctuations in the figures for bank clearings are
of significant importance.
They call attention to the ad¬
visability of using the figures for debits in making inter-city
comparisons, but agree on the importance of continuing
records for bank clearings which make possible the study of
increases and decreases, locally, sectionally and nationally,
over extended periods of time."
Leonard P. Ayres, VicePresident of the Cleveland Trust Co., was Chairman of the
in
tuations
compiled for more than 60 years and ar®
and sections of the country over a longer
been regularly
different cities
for
available
'
They call
tance.
attention to the
advisability of using the figures for
debit®
but agree on the importance of continu¬
ing records for bank clearings which make possible the study of increase®
and decreases, locally, sectionally and nationally, over extended periods
of time.
YTour committee concurs in these views.
Respectfully submitted,
in making
inter-city comparisons,
LEONARD P.
AYRESChairman.
'
of Commerce.
Committee/Officers'Reports-ClearingsHouseDivision
in the country,
Annual
Address of
National
A. A. Crane.
Bank, Minneapolis, Minn.
This organization since its
its fifteenth vear of service
inception contemplated active
progressive growth and development, and the service which it
that time has been exceptional.
The
and
rendered to its members since
clearing house in America was
organized in New York in
1853.
has
first
Others
succession.
The date of organization in each case merely
time when the banks began to meet at a common place and ex¬
followed in rapid
marks t he
change checks.
are
organized,
ciations, there
put-pose for which clearing houses
and if that were the only function exercized by these asso¬
would be no occasion for such an organization as the Clearing
That is the fundamental
House Section, but
In
such is not the case.
country such
a
as
this—with
a
great banking system
composed of
be some cohesive power that unites them
into groups, capable of performing proper public service, and strong enough
to withstand shocks that would seriously threaten the existence of the
independent units—there must
with one another.
associations.
For fifty years or more, the clearing houses of this country have been the
leaders of banking thought.
"W ith leadership has come responsibility. It has
been the aim of thi® Section during the fifteen years of its existence to keep
before the clearing houses which comprise its membership high standards
of development and a realization of the importance that the policies which
we have been advocating have been conservative, sound and constructive,
based upon actual knowledge and experience, and not upon untried t heories
or doubtful expediency.
We have striven at all times for the betterment
Inividual
banks if tbey did not
This has been
of all
A
make common cause
brought about through the clearing house
banking practice and for the
great many
conversation of our banking resources.
bankers were under the impression that when
the Federal
House would either be done
away with or be absorbed by the Federal Reserve banks
Such was not the
case, for the Clearing House Association is based upon the proposition that
the combined judgment ot several bankers Is much less liable to error than
the independent judgment of one individual.
As most of you know, the Clearing House Section had its origin in a
resolution adopted by the Michigan Bankers Association Convention at
Port Huron, July 14 1899.
Since its inception several years later, the mem¬
bership of this section has grown consistently with the trend of the times.
At the Washington Convention last year we reported a membership of 255
clearing houses.
To-day we are pleased to report that we have increased
the membership to 274, a gain of 19.
This membership represents approxi¬
mately 3,800 banks of all classes, and includes practically 75% of the bank¬
ing capital of the country.
While much has been accomplished by this
section during the past fifteen years, much still remains to be done, and
Reserve
System became operative the Clearing
especially along those lines which any strong
and
and
organization should encourage
develop.
It is
our
purpose at
this time to bring to your attention sotne of the needs
possibilities of our organization:
time that there should be more uniform methods and
We have f*,J- for some
policies adopted by the associations
to carry
out this idea.
reouert in the form
of
a
individually.
asking for information
service of each association.
which, when compiled, will he at tb help to bring about more
We believe this will
and regulations of each clearing house association.
There is no line of work to which our Section is more definitely committed
than that which pertains to the Clearing House Bank Examiner System.
A discussion of this subject is provided for In our program for Thursday
afternoon, and we hope chat all of you will be present at this meeting,
Four Executive Committee has been keenly alert to the fact that the clear¬
uniformity in the rules
Section has just completed
The Clearing House
to its members.
Vice-President, First
We have endeavored
During the past few months the Secretary sent a
questionnaire to the manager or every clearing house
ing house system of
greatest
examination and supervision is one
safeguard possible for
that provides the
banking opera¬
conservative and legitimate
tions.
nineteen clearing house associations
During the past year four cities have been
added to this list: Hutchinson, Kansas; Indianapolis, Ind.; Montgomery.
Ala., and Ogden, Utah. We have definite promises from the associations of
two other cities that an examiner will be installed before the first of the year.
There is absolutely no question but that this system of examination is in a
measure indispensable.
Letters which the Secretary has received from the
leading bankers in every city having such a system bear out the fact that
under no consideration would they ever think of giving it up.
We all appreciate the immense benefits that are realized from the super¬
vision and examination by the Federal examiners.
We know that the
State examination departments have been improving continually and each
one now is on a high plane.
The real service of any system of bank exam¬
ination can never be fully appreciated or understood by the general public,
whether it be Federal. Slate or clearing house.
The clearing house exam¬
ination system is not only applicable to the larger cities, but the smaller
as well, for in a number of instances it has proved successful in the smaller
cities.
For instance, if I may be permitted to mention Hutchinson. Kansas,
again, from the reports we have receive.i. from the bankers of that city,
they are more than pleased with the results so far obtained.
The officers
of this section recommend that ycu bankers who are here to-day from the
smaller cities as well as the larger cities, look into the methods of operation
ot his system cf examination, and read the letters of commendation and
endorsement that have been received from the bankers in the cities where it
is being successfully operated.
We ask you not to close your eyes on some¬
thing that would not only be of benefit to your banks, but to your com¬
At
the beginning
had this system
of the fiscal year
of examination.
munity at large.
draft and check
of this Section
has been working in conjunction with the Committae on Forms of the
State Secretaries Section in an endeavor to bring about a uniform draft and
chock.
After several meetings which were attended by our Secretary and
the members of our Executive Committee a standardized form of check
and draft was finally adopted.
These sixes have been recommended to
the banks by the clearing house associations and the State Secretaries Sec¬
tion.
Both Sections hope to receive the cooperation of every banker in
this country in this movement of standardization.
We have been aided in
our effort® by practically all the large bank note companies, as well as the
Eastern and Western Association of Manufacturing Bank and Commercial
Stationers, which represent the majority of bank note and lithographing
companies in the country.
With the cooperation they are giving u® we
believe that within the next twa or three years the standardized check and
For
has
a
the need of a standardized form of
During the past year the Secretary
great many years
been
discussed.
draft form as
recommended will be in
universal use.
CLEARING HOUSE
The
question
of
satisfactory uniform financial statement
a
jccupied the attention of bankers throughout the country for
Various forms, several of which
been evolved and
adopted for
use,
but
particular form appears to have
no
met with the universal approval and adoption of the
until
a
committee
bring about such
This
a
committee
approval of
meet
was
appointed by the Clearing House Section in 1918 to
statement
a
by tbe American
proved
these
forms
from
shown has been
with the
which met
After its revision it
Institute of Accountants,
Association of Credit Men.
in every clearing house
torm
This year it was slightly revised to
changed business conditions.
but by the National
Copies of this form were forwarded to the banks
in
section
every
various
the
careful attention
during the past year.
phases of clearing house methods
Your Committee feels that it Is desirable that the clearing houses through¬
should be brought in closer touch with the Section and that
out the country
phases of clearing house activities, which are found to work successfully
new
the
in
sections
various
that they may
ideas
The interest
of the country.
as
of the
through the
should,
country,
Section,
be
this
have an opportunity to take advantage of such of these
be of value to them.
may
With
not only ap¬
was
city and the Secretary has received requests for
banks
to
brought to the attention of the other clearing houses at regular intervals so
great many bankers.
a
banking community
uniform statement,.
recommended
The members of your Executive Committee have given
form has
jnany years.
excellent in detail construction, have
are
i77
SECTION.
thought in mind the Secretary has been issuing a monthly
bulletin which has done much to cement and bring about a close uniformity
in
the rule6
given
the
and
Section
well
as
The following
beyond the expectation of the committee.
Much thought was
regulations of the clearing housee.
just what line of activities would be of the greatest benefit to
as to
its members.
as
suggestions
were
.
regarded
as
;
being the most important:
convention of
of. the
a.
Extension of the Clearing House Examination System.
b.
New
House
c.
Country clearing houses and county clearing houses.
appointed Secretary of the Acceptance
as a Section, we have been giving the
d.
Endeavor to bring the inactive clearing houses into the Section.
c.
Total
closest attention and at every opportunity are
f.
Monthly
spreading the propaganda through the various channels that are open to us
g.
Condensed Financial
h.
The
In
the
accordance
the
with
Bankers'
American
American Bankers'
Section, and
your
Committee.
Whenever
Secretary
In
now
was
possible,
matter of acceptances our
making
made effective at
plan
Association,
Association
the last
Acceptance
the
Committee
functions through the Clearing
effort to help develop the acceptance idea in this country.
every
we
section
as a
g'ving,
are
a
to
accurately disclose the volume of business transactions, for the reason, as
can
be
readily understood, that frequently included items
represent actual
business transactions,
that* did not
and that never included the vast
represented by checks and drafts that do not pass through the
amount
At that time
clearing houses.
houses report
we
conceived
a
reporting
to us weekly total of "Debits against Individual, Savings and all other
Accounts."
As 95% or more of the business of the country is transacted
we
able to report that many of our clearing houses are now
are
and settled
through the use of checks and drafts, it will be agreed I am sure
that when this plan becomes nation-wide, as we plan
be
barometer
a
compiling the
and
of business
"Total
that
cannot
it will, it will prove to
We are
possibly be improved.
that are reported by our members
Transactions"
publishing them quarterly in the "Journal,"
togethe7
with the total
the
These figures will prove to be of very great value to
"Clearings."
clearing house associations and their members, and the business interests
It
was
through the efforts of the Clearing House Section that the
of operation to the banks of America, was evolved and
the handling of checks,
of
a
labor and time
it. As
immediately notified of this plan
and practically every bank in the United States is now using
saver,
new
drafts and other items in the various departments
It has proved its worth, for it is certainly a great
bank.
institutions
are
organized, they
are
Since the inauguration of the "No-protest" symbol plan
we as
a
popular
bank may
as
Clearing
will only
several years ago,
the uni versal numerical system and we hope that every
which the
House Section has developed and evolved, since its inception, but
mention a few.
As most of you know, it was largely through the
laborate upon the many constructive ideas
influence and the efforts of this section that the "Gold Settlement
of the Federal Reserve
System
was
to the entire satisfaction of every
interest in the United States.
You are
of
1907, and the stressful months following the outbreak of the recent war in
1914, when by the well directed use of the equipment and machinery of the
clearing houses of the country untold financial losses were averted.
It is
a
well-known fact that the experiences gained through Clearing House
all familiar with what took place
in the times of stress such as the panic
Association activities during the panics and other trying
periods of the past
proved very helpful when the bill authorizing the present
was
of the accomplishments of this
For a full detailed report of the year's work
I would ask that you read the secretary's
report which will appear in the
At the annual meeting of the
with regret,
section last year, A. T. Matthew, who was
Trust Company of
the field of applicants for a successor to
In looking over
Mr. Matthew, your committee selected D. A, Mullen,
onial Trust Company of Pittsburgh, Pa., who
ity since January of this year.
This
^
formerly of the Col¬
has been acting In that capac¬
A special
without
At this time I wish to take the
Examiner
System
System
and
to
be
and unsafe tendencies not only on
banks
of
great
safeguard.
Through this
lines of business seeking credit
the part of the patrons of the bank but
To my mind there is not any
themselves can be checked.
upon the banks
This
of examination.
system
a
a
subject of greater importance before the clearing houses of this country
than that of placing a
wherein is located
ination
a
clearing house examiner in every city or community
sufficient number of banks, the supervision and exam¬
would
of which
require the time of one or more men.
At the
meeting of the section several years ago, Mr. J. W. Wilson, the
annual
statement to the effect that up
dollar
until that time no depositor had lost a single
of the failure of any
because
bank under clearing house examiner
supervision.
just issued a booklet on this system of examination
The Secretary has
outlining itsl
plan and possibilities, together with letters of com¬
purpose,
mendation from the leading bankers in the
ination iB in force.
After you read
cities where this system of exam¬
this booklet I believe you will agree with
the officers of this section that there could not be a greater
commendation
argument than this for the adoption of the clearing house
stronger
a
examiner plan.
Your Secretary has been
endeavor
an
concentrating
on two or
three States at a time in
towns that are without a
interest the smaller cities and
to
successful
so
He has been very
A special effort has also been made to organist
far this year.
County clearing houses In those counties where such an association
work to the benefit of not
which
should
the
would
only the banks but the communities as well.
Another feature of importance that I would
belletin
Secretary issues
house association in
clearing
like to mention is the monthly
and sends to the managers of every
the country.
I believe that this bulletin
to be an indispensable letter of useful Information to
prove
ths
association.
manager of every
Whajt we need most to advance the usefulness of the Clearing House
Section is closer co-operation
bers.
with the Section by the clearing house mem¬
bring this about, your Secretary, a short time ^?o, sent a que*-'
house in the United States asking
To
tionnaire to the manager of every clearing
for information which, when
compiled will be of very great value to clearing
Your Committee feels that the Section is a place in which
house members.
clearing houses should be recorded and from It lnforma-
the activities of all
t on relative to new
ideas and methods should
be disseminated.
If every
clearing house official will send to the Secretary of the Section a report of all
changes in various systems and methods in their
they
are
respective organizations
brought about, the information acquired can be made of
much value.
We want you as
members of this Section to feel perfectly free to communi¬
cate with the Secretary at any and all times
are
regarding any Information you
If not, we will be
If it is in his office, he will furnish it.
in need of.
Through the hearty co-operation of the
glad to procure it for you.
very
clearing houses with the Secretary a great deal of good can be accomplished
a
development of the clearing house Idea can be brought about.
further
Respectfully submitted,
JAMES
given me by the officers and members of the
section,
the State representatives,
and the
RINGOLD,
Chairman.
Report of Acceptance Committee, by Jerome Thralls,
Secretary and Treasurer of the Discount Cor¬
poration of New York.
To the Clearing
convention in Washington last year, the Executive
meetings, one immediately following
the annual meeting, the other at the spring meeting at Pinehurst during
the month of May.
Following the annual meeting of the Section in
Washington, your Executive Committee met and proceeded to organize
by the election of a Chairman.
At this time the resignation of Mr. A. T.
Matthew, Secretary of the Section, was tendered and accepted with ri uch
regret.
In looking about for a Secretary, the name of Donald A. Mullen,
of the Colonial Trust Co. of Pittsburgh, was proposed with several others,
Mr. Mullen was finally appointed Secretary of the Section and assumed
his duties the middle of January of this year.
Since Mr. Mullen assumed his
duties he has been devoting his energies to the tentative program which
was outlined by President Crane and the officers of the Section at the first
Following the annual
Committee of your Section held two
hundreds
banking fraternity can be obtained
careful scrutiny can be kept on all
more
by
opportunity of expressing my appreciation
of Executive Committee Clearing House Sec¬
tion, James Ringold, Chairman.
meeting of the Executive
accepted
in such
proved
has
sytem the composite judgment of the
the section give proof and the
members of the official staff.
Report
of these scheduled
the last word in a financial statement form.
as
committee made no mistake in their selection
for the hearty co-operation
most
effort has been made to interest the clearing houses that are
the
Examiner
and
"
Mr- Mullen is a live wire as the activities of
Executive Committee of this
along
year
been
has
form
statement
throughout the country
resignation which was accepted,
to accept a position with the Mercantile
Francisco.
Men.
when
proceedings of this section.
then secretary of the section, tendered his
San
Federal Reserve
pending in Congress.
I have endeavored to outline to you some
section since its organization.
annual
this
done
been
American Institute of Accountants and the National Association of Credit
Fund"
This is one of the functions
established.
that has been operating since its beginning
of the Federal Reserve System
System
has
A
clearing house association, to form such an organization.
eventually become interested in its use.
I might go on and
work
special effort has been made to interest the bankers in the
condensed financial statement form which has the endorsement of the
We find that it is becoming
Section have been advocating its use.
as
Plan for the Analysis of Accounts of Individuals, Firm»
a
Corporations.
Aiding in standardizing sizes of checks and draft forms.
Much
activities.
or
and it is being readily adopted by all.
almost
Developing
Its use facilitates
This is adaptable to banks of every size.
developed.
universal
which has unquestionably saved hundreds of thousands
of dollars in expense
Uniform Charges for Collecting Acceptances.
efficient examiner of the Los Angeles Clearing House Association, made a
of the communities they serve.
numerical system,
of the proper application of the Universal
System.
and standardization of the No-protest Symbol Plan.
use
and
plan of having the clearing
so-called "Total Bank Transactions," and after much effort
Statement Form.
use
i.
the officers of this section became thoroughly con¬
it
possible
The
J.
be made
widest
k.
uniformity in the methods and operations of all associations.
A number of years ago
Bulletin.
i.
is sent out
vinced that the weekly "Clearing Figures" did not and could not
Transactions.
Bank
Numerical
bulletin
monthly from the Secretary's office, giving information which is
of use to the managers and secretaries of the Clearing House Associations,
bringing to their attention anything that might be of interest in helping to
further develop the clearing house idea in this country and bring about a
keeping with the service that
Clearing Houses.
by the Administrative Committee of the Associtaion, to
the Clearing House Section.
chiefly of
It
has
other
f
an
bring about
so
far
and
as
to
sound
a
and financial organizations in the effort to
possible, the abuses that have crept into this system of financing,
encourage
its further
development along permanent, proper and
Committee has sought
from the system
their
closely with the American Acceptance Council and
clearer understanding of the acceptance method, to eliminate
lines.
Your
own
function through
The Committee has regarded its duties to be
informative and educational character.
cooperated
important commercial
merits.
worth
American
Committer
Home Section:
your Committee, created by authority of the American Bankers Associa¬
Washington, D. C., October last, was directed
tion given in convention at
Both
here.
foreign
to have all artificial supports withdrawn
and to have the acceptance method progressed upon
Bankers
Through
and
and
their
domestic
its
Trade Acceptances have demonstrated
use
powerful
commerce.
aid
Their
has
use
been
given
to
has enabled the
BANKERS'
178
American goods and products to foreign
materials that have
the comfort, happiness and welfare of the American people,
of vast quantities of
movement
and the bringing to our doors of goods and
markets,
added much to
Trade
1916 the known
In
CONVENTION.
Acceptances.
of Trade Acceptances in America numbered
users
list exceeded 20.000.
The number has grown
steadily since and now includes practically every line of business that makes
Roles on the time basis.
Where the Trade Acceptance has been properly
In October 1920. the
186.
It has
legitimately used, the results hav< been em in en tly satisfactory.
and
made collections more certain; it has
shortened the credit peiiod;. it has
enabled
eliminated many
has
service; it
troublesome claims and disputes; it has reduced the
equal amount of capital to do a greater amount of
an
of operation both for the buyer and seller; It has stabilized
and has produced a character of strictly liquid paper.
expense
the
business involved
1921 Bulletin says in
American Acceptance Council in its August
The
and are
prescribed regulations—the prominent concerns
special inducements in order to secure signed acceptances from
of Trade Acceptances are hewing closely to the line
part: "Users
proceeding according to
that grant
negligiole.
their customers are
Business
receiving a large measure
men are
of bankers in handling and collecting of
Trade Acceptances.
This indicates gratifying progress in recent months
and shows splendid learn work on the part of banks and business concerns,
cooperation from a majority
of
only in collecting of out of town acceptances, but in
not
the discounting
satisfactory terms."
of the paper on
there
Although Trade Acceptances are superior to single name paper,
checking the
should never be any let up In
The same acid test that
names.
applied to other credit risks snould be applied with
is
equal severity to
Up to this time, Trade
offered for discount.
Acceptances when
Trade
originating outside of the large financial centres have not
into the open discount market.
They are usually held in
Acceptances
found their way
the makers and put through as collections or
the receivables of
There is, however,
banks.
at the local
Trade Acceptances
for
a
bearing approved bank endorsements.
readily In the open discount market at rates ranging from
move
below the rates on prime
single
World conditions since 1914 have afforded to America the
nation—an opportunity to make the
dollar
a
gold,
wond's
greatest oppor-
presented to any
world currency and to secure
With over 50%
permanent trade foothold in every quarter of the globe.
the
with the highest productive ability,
the streongest
nation of all time at
fallen short of this wonderful opportunity and
banking system, and the greatest resources of any
command, why have we
our
yet the time and courage to avail of it?
have we
We have fallen short of this opportunity because of
inexperience
machinery,
in
It is not too late;
of vision and courage.
exhibit of over 5,000,000
yet devise
we can
The
unemployed, hundreds of thousands of idle freight
millions
upon millions of dollars tied up, motionless here in our harbors, and the
great surpluses of foodstuffs, raw materials and other products stored in
every section of the United States without a market, while hundreds of
millions of people abroad, sorely in need of these surpluses, are idle and
suffering, should cause every thinking American to turn his eyes across the
waters and to open them to the great markets and opportunities that await
hundreds of great ocean-going vessels constructed at a cost of
cars,
•
incomplete financial
finance, and lack \
and develop
trade and
machinery—experience will come only through action.
the necessary
,
international
there.
us
We
were
effective
or
have
we
told that because of lack of experience at war, we
could not
proved more
Then must we say
Yet was there an army in that terrible struggle that
fight.
efficient than ours?
more
for
talents
the
not
No; not one.
international
trade
and
finance?
Never.
Quite tho contrary; our future progress and welfare demand that we turn
attention more and more to international business.
We must establish
our
dollar credits
as
world currency means we
diture
have got to
pay the
price in the way of the expen-
brains, energy and capital.
of courage,
Our open
To do this and to make the dollar a
the peer of sterling.
discount market and the means for caring for long term
national trade credits are the two vital features of our
that
inter-
financial machinery
Much has been aceom-
need further and immediate development.
plished with both these features during the past year.
Hundreds of banks,
individuals, firms and corporations have been converted during that period
to the idea of
inventing temporarily available funds in bankers' acceptances,
Prime bankers' acceptances are now regarded everywhere as a
The Federal
reserve.
Reserve Bank of New York, while an
dependable
ardent sup-
market rates to a
point above the dealers' selling rates, thus tending to place the market
porter of tho open discount market, has advanced its open
on
its
own resources
and to
cause a
and other investors.
banks
wider distribution of acceptances among
The Federal
Reserve Board
has ruled that
bankers' acceptances, having not more than six months to run,
and covering
import or export transactions, are eligible for rediscount or purchase by
the Federal Reserve banks.
The limit heretofore
was
ninety days.
A number of Edge Law foreign trade financing corporations have
with
organized
acceptance
powers.
Their
bills
have
appeared
The War Finance Corporation was by recent legislature
market.
ized to purchase the acceptances of such institutions
transactions and having not more than three years
in
been
the
author-
based upon export
to run.
Many commercial banks have qualified for the utilization of their full
acceptance powers.
loaned
stocks,
on
New and substantial acceptance houses have been
Flans have been perfected under which funds are now being
organized.
call
or
demand against acceptances as collateral in preference to
Such loans are repayable
bonds and other long-term securities.
the use of acceptances. The decrease in the volume of bills issued was
largely due to the price recession, the slump in foreign trade and the tightentag up on the regulations governing eligibility. A temporary setback was
registered against dollar acceptances when the terrific break in international
exchange took place. The slump in prices and attending unsettled conditions throughout the world caused traders and merchants to rush to
cover. Contracts were repudiated. Orders were canceled. Every opportunity to default upon credits existed. American banks that had issued
confirmed letters of credit were appealed to by customers in whom they had
implicit confidence to refuse to accept bills against such letters of credit,
Some banks yielded, but the courts promptly set them right. These banks
learned that an irrevocable letter of credit is a sacred contract and Its terms
are binding, irrespective of losses that may have been inflicted because of
price recessions, defective goods or conditions not covered in the letters of
credit.
This situation resulted in the creation of the Bankers Commercial Credit
Conference. That body is endeavoring to devise uniform credit letter
forms and other standardized credit instruments, and to develop plans
and policies that will forever forestall the repetition of the ill advised act
of these few American banks in declining to accept bills against confirmed
letters of credit.
The rapid appreciation of the United States dollar due largely to the
unsettled international exchanges made it extremely difficult for our
debtors in foreign countries to obtain the necessary dollar remittances to
cover their obligations.
This situation was greatly alleviated during the
past half year with certain countries by the opening of credits with American
banks and acceptance houses against which drafts were drawn to create
dollar exchange. The resulting dollar acceptances found ready sale here
in the open discount market while at the same time, the market was given
valuable support through the investment of a very substantial volume of
funds coming to New York from other foreign countries in American Bankers
Acceptances.
tunity for service, profit and progress that has ever been
of
Such bills
V% of 1 %
(commercial) paper.
name
Bankers'
a
discounted
growing demand among investors
The volume of bills purchased by discount houses and dealers from drawis constantly increasing—showing that the banks and
other acceptors are actually selling their credit and not making loans through
ers and endorsers
Acceptances.
The movement of cotton, wheat and other American products to foreign
markets on short term credits is now being financed largely through the
Acceptance Syndicate plan. Under this plan a number of American banks
maY participate in a certain credit, each being responsible for a limited
amount and all being adequately protected through the hypothecation of
collateral or guarantees under the control of the syndicate managers,
Through this plan wide co-operation of the banks, the buyers and the sellers
*s made possible, and many banks are given opportunity through the use
of their acceptance powers to aid in financing trade and to realize profit
therefrom, where if left to act independently, their limited resources and
facilities would not permit them to so do.
The practice of swapping acceptances for the purpose of obtaining and
giving accommodation endorsements has been practically eliminated during
t*16 year. An amendment to Section 5202 of the National Bank Act has
been introduced and is in the hands of the Finance Committee of the
Senate. It provides for the exemption from the limitations of that section
"Liabilities created by the endorsement of accepted bills of exchange actually
owned by the endorsing bank and discounted at home or abroad.
The
exemption now provided by law applies only to such bills discounted abroad.,
Effort is also being made to get the laws amended in the various States
s° a8 to give Savings banks and trustees greater latitude in their investments in Bankers Acceptances; also to enable life insurance companies to
invest in such bills,
The discount houses and acceptance
dealers in New York City carry
large stocks of bankers bill. Their combined portfolios likely exceed
$75,000,000 at this time. Investors can, therefore, obtain suitable names,
maturities and denominations.
Prime bankers acceptances can be sold in
Funds may, therefore, be invested in them for
number of days. No fees or commissions are charged by the dealers,
They discount the bills outright and take a chance on their ability to resell
them—which they usually are able to do at a rate affording a gross profit
of about Y%% per annum on prime member names and about H% Per
annum on the so-called non-member acceptances.
*
'
In 30 months one house has discounted and resold to investors throughout the country an aggregate of S3,555,696.664 of bankers acceptances,
Every acceptance in this vast volume was paid promptly at maturity. This
house discounted and resold in the first eight months of 1921 an aggregate
of SI .204,406,400 of acceptances.
The total turnover of this class of paper
in the New York market alone for the current year will exceed $4,000,000,000.
In addition to this a substantial volume was handled by dealers
in other important centres, notably Boston and Chicago,
Arrangements have been made under which Bankers Acceptances payable
in any Federal Reserve or Branch Federal Reserve City are collectable at par
the open market any day.
any
through the Federal Reserve Collection System, and the proceeds are made
available on the day of maturity through the gold settlement fund. Bills
payable in Kansas City, Chicago, St.| Louis, San Francisco, and the other
Federal Reserve and Branch Federal Reserve cities can thus be converted
into actual cash at maturity, in New York,
Through the purchase and
sale of bankers bills, the shipment of gold from one Federal Reserve centre
to another may be obviated and it is hoped that in the same manner when
the system is further developed the shipment of gold from country to
country may be minimized and in many instances obviated,
While believing the acceptance method to be firmly established and
regarding the year as strictly one of progress, your Committee sees much
important work ahead.
The proposed legislation, State and National
should be followed up.
Every effort should be made to broaden and further
past year the portfolios of the large commercial banks were practically
market. Facts about the acceptance method,
Bankers Acceptances, and the benefits to be
driven home to every banker in every city
included In the membership of the Clearing House Section.
The rulings
and regulations governing eligibility of acceptances are most confusing to
our friends abroad and cause many to turn to sterling credits, who would
much prefer to use dollar credits.
Effort should, therefore be made, to
get these rulings and regulations simplified and minimized,
Your Committee recommends the appointment of a Committee of not
less than three, nor more than five, to carry on this important work for the
bare of bills and the holdings of the Federal Reserve banks of bills purchased
ensuing year,
upon
telephone, telegraph, or written order, and are usually made at a rate
develop the open discount
of loans
particularly about the use of
against, and investment in, acceptances, funds heretofore idle and practi-
derived therefrom should be
below the stock exchange call loan rate.
of
Through the
use
cally useless, are being mobilized and made to serve commerce and industry ,
discount
market
terms, so well known abroad, are rapidly finding their way into our
business
Overnight
money,
spot
and
forward
rates,
and
other
and financial vocabulary.
The increasing
ability of the open discount market to absorb a great
volume) of bankers'
acceptances is evidenced
by the fact that during the
in the open market were on Thursday, Sept. 22 1921. $33,514,000, whereas
their holdings one year ago were
$307,627,000.
While it is true that the
volume of American bankers' acceptances issued in the year 1921 to
as
date
compared with the same period of 1920 measured in dollars, is about
18% less, yet the open discount market has absorbed a much larger volume,
having taken over a great volume heretofore sold to the Federal Reserve
banks;
also
a
large volume heretofore held
member banks.
in the portfolios of the large
Respectfully submitted:
JOHN
W.
WADDEN,-President,
The Sioux Falls National
Bank,
Sioux Falls, S. D.
PERCY
H.
JOHNSTON, President, Chemical
National Bank. New
York City.
Secretary-Treasurer, Discount CorYork, New York City
JEROME THRALLS, Chairman,
poration of New
Los Angeles. California.
October, 1921.
Clearing House Examiner System, by Charles H. Meyer,
Chief
Examiner
Chicago Clearing Asso¬
Chicago,
ciation,
Gentlemen:
that I have here before
papers
for
following:
you
"A drinking party;
a
Here it is:
will have to pass on to the next
we
so
"Any convivial gathering, especially
by free interchange of ideas and general conversation."
of
We still have this
discussions,
or
more
a
or
Now,
all know, gentlemen, the clearing house system of bank in¬
as you
had
I
to
the
Walsh
so-called
faction,
a
Away back in 1905, when
condition
presented itself which
nothing short of appalling, and that is why wre started it.
While
going to apologize for one thing.
am
a
symposium starts in
general discussion of details, and one thing and another, I am rather
a
inclined to think you would not be so much
be
"A series
says,
interchange of views forming a
less formal
spection had its birth in the City of Chicago.
was
marked
one
That does not hit
Then it
drinking party in it.
topic."
common
wre
on me
Well, I think the 18th Amendment
feast."
has somewhat interfered with that,
the mark.
might call
In the first place, I thought I would look up
what the word "symposium" really meant, and I find the
see
definition.
by the large package of
but I thought that
me,
something, and I have it.
Webster to
Illinois.
I don't want you to be frightened
dry except
Examiners
interested in that, and that it will
the Examiners, and I am sorry to say that few of the
as to
much that
Mr. Coates is not here, and I regret very
here.
are
unfortunately Mr. Wilson, I believe, the Los Angeles Examiner, is not here.
Chairman:
Mr.
was
He is here.
Meyer: I
not
am
good, but I
glad to see you, Mr. Wilson.
am
They told
me
his health
However, by special request I am going to acquaint you with what has
happened in Chicago, and I think it will be of great interest while we are
discussing the advisability of clearing house examinations.
Now, gentlemen,
on
the 25th of July there appeared an editorial in the
Chicago "Journal of Commerce," which followed, I think,
after the failure of the Michigan Avenue Trust Company, of
was
a
week or so
a
Chicago, which
deplorable affair, but it was not a clearing house bank; and the
very
editorial
inspired by the fact that that bank was not a clearing house
was
bank. I will first read the editorial.
The failure of the Michigan Avenue Trust Co., with the threat of the
loss
of 51,000,000 of
sound
depositors' money, raises a serious question as to whether
neighborhood banks in Chicago are doing what they should to protect
themselves and whether the Clearing House Association is doing ail
that it
might to safeguard bank depositors."
It
that statement that made me decide that I would enter it, becauset
was
to use
a
"Banks that
slang American expression, they began bawling us out.
are as
sound
as any
Clearing House bank are joining because
it is easier to affiliate than to explain why they do not need this
additional
protection and for the further and better reason that the Clearing House,
with its system of examinations, is an institution which every bank should
support if it is to meet its full obligation to the community.
Banks whose
Joans are in such shape that their depositors have immediate and urgent
need of Clearing House protection are putting their affairs in shape and
planning to affiliate.
"A banker who heads a number of splendid neighborhood banks, one
who has been most bitter in his opposition to the Clearing House system
and for years has led community bankers in spurning Clearing House
protection, has brought all his banks into the institution and now wonders
why he didn't join years ago.
He was impelled to affiliate by the persistent
inquiries of his depositors since July 2,5th.
'Printed on another page is a letter received yesterday from Charles II.
Meyer, Examiner of the Chicago Clearing House Association, which
prompts this comment.
Mr. Meyer writes to complain of the editorial
and.to chastise the writer for having temporized with his subject.
It is
commended to the attention of every banker and every bank depositor.
A careful reading of it, however, seems to suggest that Mr. Meyer's com¬
plaint really is that the writer of the editorial conceded any circumstance
which might justify a bank remaining out of the Clearing House Association.
It may be that the editorial could be so construed, but it was not intended
that this should be possible.
"If some set of circumstances might have arisen ten years ago to impel
Mr. Meyer or his predecessor to break the rule of being conservative and
tolerate silence and write such a letter of complaint as he has written now
and it had been given adequate publicity there would be no bank in Chicago
outside of the Association circle to-day."
Of course,
that is his own observation.
I know nothing about that.
"Lorimer's bank would not have failed if. indeed, it had ever been or¬
ganized. and Mr. Spurgin would not be eluding the police with the cries of
his victims ringing in his ears.
"It might be assumed that the Michigan Avenue Trust Company failure
alone
glad to see him here.
179
SECTION.
CLEARING HOUSE
was
responsible for this sudden growth in clearing bouse memberships,
which was a greater collapse, impelled no such
yet the Lorimer failure,
movement.
'
"The civic pride of many bankers, whose institutions are sound beyond
question, and who have no need of clearing house examinations to keep
their
portfolios clean, has been awakened by the sudden interest of the public
in this
question and they will give their support to a work which, if given
close to guaranteeing Chicago bank accounts
business organization."
fill effectiveness, would come as
as is possible under our present
Now, this is the
article that 1 published in the
paper:
"Editor Chicago Journal of Commerce: Sir—In your issue of July 25 there
appeared an editorial under the caption of 'Small Banks and the Clearing
Ilouse,' the first paragraph of which reads as follows:"
Then I set out the first
Michigan
paragraph of the article as to the failure of the
Trust Company.
"Further
in your
editorial after expressing your opinion that 'examina¬
tion by the State Bank Examiner is obviously inadequate,' and that 'exam¬
ination by the Clearing House Association has proved itself to be adequate,'
you further make this significant statement:
'The lesson is easy.
It a ppears to be the duty of the neighborhood bank,
first, to provide itself with clearing house examination, as the great majority
of them now do. and then to proclaim to the world that its.depositors are
so protected.
The duty of the Clearing House Association seems to en¬
courage the banks outside its protection to affiliate and to educate the
public to an understanding of the value of Clearing House Association super¬
vision as a safeguard against failure.
'Not one depositor in twenty knows what the clearing house is, nor
what surety its examinations afford.
They should be told so convincingly
and so repeatedly that the first question they would ask on opening a new
account would be whether the bank .soliciting their business has affiliation
on
"
"Examination
by the State Bank Examiner is obviously inadequate.
by the Clearing House examiners has proven itself to be
adequate.
State examinations do not prevent bank failures.
Clearing
house examination has prevented failures.
The lesson is easy.
It appears
to be the duty of the neighborhood bank first to pro-vide themselves with
Clearing House examination, as the great majority of them now do."
Examination
"
He is wrong in
that; the great majority do not, in Chicago.
"Aqd then to explain to the world that its depositors are so protected.
The duty of the Chicago Clearing House Association seems to encourage
the banks outside its protection to affiliate and to educate the public to an
mean
with the Clearing House Association.'
"Your observations, as above quoted, are to my mind more or less
paradozieal when squared with the position taken by your editorial writer
furl her on in his article, when he says
'the question of examinations is
really secondary,'
and then he proceeds to justify this latter statement
through calling attention to the personnel and high financial standing of
certain outlying bank interests, which, to his mind, is the most important
consideration, and t hat such banks do not need clearing house supervision.
"It is difficult, for me to understand how you can justify the latter obser¬
vation after so forcibly and sweepingly advocating clearing house examina¬
tions in the first part of your edit orial.
There is absolutely no question as
to the sincerity of your stand, and the fact that not one dollar has been lost
to a clearing house bank depositor in Chicago in the fifteen years the system
has been in force seems sufficient grounds for your views as expressed
the first part of your editorial.
"However, it is evident from the foregoing that your writer is woefully
out of touch with the situation existing in regard to such banks as do not
depositor."
of clearing
understanding of the value of Clearing House Association supervision as a
safeguard against failure.
"Not one depositor in twenty knows what the Clearing House is nor
what surety its examinations afford.
They should be told so convincingly
and so repeatedly that the first question they would ask on opening a new
account would be whether the bank
with the Clearing
"There
soliciting their business has affiliation
House Association.
principal considerations bearing on the question of the
soundness of the bank.
The question off examination is really secondary.
The most important is that of personnel.
Who are the officers ?
Who
are the directors, and what
attention do they give to their banks?
The
majority of neighborhood institutions are as sound as the best bank in the
Loop, and the public should be informed to. that effect.
This does not
mean that a neighborhood bank must be under clearing house supervision
two
are
and must have blue bankers identified with it to be sound.
What it does
is that banks which have these safeguards should do their utmost to
educate the public to an understanding of their value, and that the small
bank not so favored should be studied most carefully by a prospective
Now, the first part of that editorial was all right, from my viewpoint;
but
he
around
turns
in
the
second
part and destroys
his argument by
saying that it is not necessary to belong to the Clearing House Association.
I
tb
want
demands
answer
read
were
it.
that bank
to that.
answer
"No,
come
come
I
we
have
a
I would
that is their business."
in,
Why don't you force them in?"
seemed to be coming to the point
chastising
us
I
thought it
was
say,
"No, it
was
over to
my
I didn't know he
it.
This
paper,
was
and
on
not."
in the Clearing House."
were
They would say, "Don't you
have such
a
big system
as
this?
That started another argument, and it
that the public
for performing our duty.
was
taking the bit in its
In calling up the Financial
Editor of that paper, he told me that I had written that article.
"Come
best to
volunteer organization, and if a bank don't
think you fellows are falling flat when you
teeth and
waited until Sept. 21, and
in, and they would say, "I thought
"We thought all banks
say,
I would say,
to
my
insistent from individuals that
in the Clearing House."
was
They would
want
you
so
Telephone calls would
I said,
office, and I will give you an article which I have written."
was
going to make side comments on it when he published
in the afternoon, and it was
the first page was
a
published in the next morning
big heading.
He starts out as follows:
"Clearing House obtains many new members.
Bankers realize worth
of Chicago Association.
Rapid growth results.
Public shows interest.
Record applications due to editorial published in Journal of Commerce.
Depositors make inquiry.
Persons who place valuables in financial instititution wish all protection.
"The Chicago Clearing House Association in January, 1906, initiated the
plan of examining the l>ooks and vaults of its mem Iters as a safeguard against
disastrous failures.
Since that day not a dollar of.depositors' money has
been lost through the failure of bank; affiliated with the Clearing House."
That is a fact
.
contribute their support to this protection by refusing to join the Clearing
House Association.
You destroy the whole force of your argument in favor
house supervision.
There are over one hundred incorporated
so-cailed neighborhood banks in Chicago who are not clearing house mem¬
bers.
A large number of 1 hem are owned and controlled by men whose
integrity and personal standing exae'ly fits into your analysis.
They use
exactly the same arguments advanced by you and advertise themselves
through the various advertising channels to this effect.
"To my mind, any bank using the above arguments to justify its refusal
to contribute its moral support to a system that has proven itself so farreaching as regards the protection of t he bank depositors* interests has a
range of vision so narrow as to make it no wonder that the press and the
public is beginning to
'take the bit in its teeth,' and to demand that
banks seeking their patronage owe it to them to avail themselves of proven
safeguards and that they intend to discriminate between those that do and
do not,
"Past history records that some of the
greatest tragedies have been enac¬
ted in banks wit h just such
supposed protection,
would have protected the depositor.
and that proper supervision
"My refusal to help a drowning man just, because I felt 1 was safe would
be just as logical.
"My reason for answering your editorial almost two months after its
publication is because your query, 'Whether the Chicago Clearing House
Association is doing all that it might to safeguard bank deopsitors,' expresses
the same attitude taken by the public at large as evidenced by constant and
persistent inquiries coming to the Clearing House examiner, since the
Michigan Avenue Trust Co. fiasco, asking why the Clearing House Associa¬
tion does not force banks to come in and that we owe it to the public to see
to if
that they ioin.
"They go still further and Insist that it is our duty to in some manner
especial attention to such banks as refuse to join, as they believe any
bank that refuses to contribute its moral support to a system that has
proven such a great protection to depositors does not deserve public patron¬
age and that they do not want anything to do with a bank that is not under
Clearing House supervision.
.
"If further proor is needed as to the agitation on this subject by interests
entirely outside of the Clearing House Association, I herewith quote an
article appearing in the "National Underwriter ' of July 28 last, under the
caption Need a Rate Differential:'
'Chicago surety men feel that a difference should be made m the rates
of depository bonds for banks that are under the jurisdiction of the Clearthe clearing house connections.
The plight of the Michigan Avenue Trust
Company, in which the shortage may reach $1,000,000 emphasizes the
point that has been made in the past.
This company did not have a clearing
house association.
The clearing house examiners are very thorough in
itheir investigations of outlying banks that clear through members.
The
clearing house feels a sense of responsibility for all the banks over which it
has jurisdiction.
The clearing house banks are, therefore, much better
call
.
"From the
eighty
beginning of the Association's history to July 25, 1921, only
banks, now existant, had been enrolled and submitted to clearing
house examination.
"Since July 25,
1921. a period less than two months, eight banks have
house members, fifteen have filed applications
been accepted as clearing
many others are making preliminary inquiries.
"The date is significant since it was on July 25. 1921, that the
for
membership and
Chicago
"Journal of Commerce" printed the editorial 'Small Banks and the Clearing
House,' which set in motion a great revival for the Clearing House Associa¬
tion and promises that after fifteen years of great potential power and
restricted utility the Clearing House Association is about to come into its
full strength as a civic institution.
"Practically all of the new affiliations and inquiries are a direct result of an
editorial which started thousands of bank depositors asking for the first
time what is this Clearing House Associat ion w hose examinations have saved
its members from losses to depositors over a period of fifteen years and is
somehow akin to a guarantee of bank deposits?
Is my bank a member?
Why not ?
fortified and
better risks than
those that have no
.
clearing house connec¬
tions.'
"While in the past it has at all times been the policy of
committee, under which the department of examination
sider it a bamt's own business as to why it does or does
the clearing house
functions to con¬
not belong to the
clearing house, the attitude of the p ess and of the public as above evidenced
seems to warrant a frank statement from this department, which statement,
I wish it understood,
is in the naiure of a defense covering the implied
accusation that we are derelict in our duty.
CONVENTION.
BANKERS'
180
"In December, 1905, the
than
failure of a national bank and two State banks,
of one man, who was president of the three,
that surprised and appalled the other Chicago
under the direct management
disclosed a condit ion of affairs
s«
.
the city has been closed up between
of the Chicago Clearing House, we
a
Chairman:
,
„
,
,
,
„
doubt
but
it
takes
1912.
of Cleveland, is exceedingly fortunate, and I
feel I
to
men
after
want
that
perfectly sincere when I say they make
has
organize
a
others that
I
paper.
few words
about Mr.
I
published our total transactions
lished
getting
theirs,
our
and
we
also
figures in.
before the Federal Reserve Bank pub¬
published them daily.
We have no trouble
We hare to have them in the clearing houae each
day before 11 o'clock, and it is very, very rarely that
any
bank is later
tjiat I
But when you
more annual
examina¬
among the
bank*.
going to state here, and
am
lome
opposed to the whole scheme of clearing house examiners on general
am
Any scheme that even squints at relieving responsible director*
and executive officials from their
this
shift
to
burden
responsibilities, and which permit* them
other shoulders,
to
is
Stockholders and depositors have a perfect
directors personally
mistake,
a
in my judgment.
right to hold bank officer* and
responsible: and when they have been duly Impressed
responsibility, they should be permitted to conduct their institu¬
with this
interruption from outside agencies.
tions with the least possible
Honest, experienced and capable business men can be trusted to manage
having theoretical bank examiners con¬
the banks of this country without
Having spent ten of the best years of my life
tinually checking them up.
examining banks, and having left behind me a record which I am willing
alongside of that of any other examiner, living or dead, I
have laid
to
feel
I
that
The
know
is
country
something about the limitations of bank examinations.
up" on theoretical
"fed
well
pretty
banking.
A large
proportion of the bank exaimners, and some of the comptrollers and State
supervisors
never
of the time I
was
had any practical banking experience.
During a part
in the Government service we had the greatest Comp¬
troller of the Currency the
that
for
proposition,
spending
a term
just how
arose
There was
world ever saw.
admitted
frankly
he
It.
no
need to prove
(Laughter.)
after
But
of years telling the old, experienced bankers of the country
they'should conduct their business, he got down and tried it
himself,, and
a
receiver gathered him in in less than a year.
in his place a
mightier than he.
try. "My predecessor
chastised
you
Then ther*
He said to the bankers of the coun¬
with whips, but I will chastise you with
scorpions," and how he has passed off the stage of action and is trying to
run
a
bank.
Just
now
Let
us
hope that his experience will be beneficial.
the national banks are
not anxious to make any more
to
enjoying
a
little respite and they are
trouble for themselves.
During the stren¬
that are just behind us the bankers of the country were
years
distraction,
truth is told
the
but when
world
a
the record is finally made up
will know that they were
driven
and the
the most faithful,
the
patriotic class of people in the United State*.
nightmare that we recall some of those experiences, after
struggling from early morning until late at night in trying to take care of
the local situation, straining every nerve to
help finance the Government,
forcing ourselves to look pleasant and cheerful when we were greatly
couraged, and
we open our
through all of
our
stuff and prepare
the
and useless task.
a
lot of facts and figures to be used in
And then tired auditors are recalled, weary
compiling worthless statistics.
their desks ahd proceed with the unneces¬
They frequently found themselves repeating with
Apostle, "For we wrestle with the world, the flesh and the
now
>
dis¬
evening mail and find an enormous blank from
supervising authority, a peremptory demand to proceed at once to go
the
banker
There is no question but what it is the right thing and the only
I hare advocated that for a long time.
In Cleveland we
three
telling you about it as I am going to be.
principles.
As
thing to do.
or
not mention, but they may not be quite as frank in
may
And it is like
McNally's
install two
much enthusiasm from
They will have all the objections
most efficient and the most
Clearing House Association.
want to say a
mistake in
clearing house, if you have no stronger talking point
tions, you will not get so very
we
to stay
are
just
devil."
But
getting away from that sort of thing and some of us propose
as
far away from it as it is possible.
Everything in the coiintry
already is being examined at least twice a year, either by the
or
I
a
It should have been held in
established leave it to their judgment whether they
been
than the fact that you are going to
sary
Cleveland
If you
Again I don't want
clearing house examiner or whether they don't.
a
start out to
Clearing House Examinations and Abolition of Clearing
Kelsey: Now,
am
from those cities.
appreciative of the importance of this branch
not
am
officials settle back resignedly at
Mr.
of commendation
words
get
that you pick up on every street corner.
organized all over the country In any towrn of any consequence, and
be
a
Manager
am
abeyance until the clearing houses are organized, and I think they should
willing to dispense with the system.
House Bank Returns, by Geo. A. Kelsey,
'And I
encomiums to the good fortune of the City
my
you
men
of the work, hut I am
have 11
a
that
not
are
and
have had them, examiner*
they have been fortunate.
stressing this particular feature of the work.
Peterson,
haven't
that in this controversy
me
gbing out and pick up a clearing house examiner you don't know just
these
It has worked out, I think, to
we
or
surprised
are
subject to clearing house supervision.
perfect satisfaction and I feel perfectly safe in saying
in New Orleans that would be
And if one of these outlying bank*
exactly what kind of a man you are going to get.
Mr. Chairman, Ladies and Gentlemen —I think the gentlemen preceding
The system was installed there in
in
all of them in the district, 137 in
develop an examiner who is really efficient
Coates
But these
Examiner New Orleans Clearing House Association.
are
says
over
city that can command the services of a man like Meyer
a
almost
all of which
If they
in
come
are not
He
in regard to this matter of clearing house examiner*
to add
Chicago,
uous
we
They all
it does seem to
so
most efficient and
Chicago, for
not
spirit in which I criticize their attitude of indifference to this big
Whatever their reasons may be
for not coming in, and if they think them real, why do not these same
reasons apply to the 83 members now carrying on this good work?
"It is a great responsibility our Committee, through this department,
assumes, but it is one they feel they cannot in any manner side step.
On
the contrary, it feels that in view of the importance attached to it by the
public, nothing must be left undone to expand with the needs created by
the large number of new members who have already joined since the Michi¬
gan Avenue failure.
"Chicago can justly be proud of the fact that, her bankers are the origi¬
nators of this plan.
In a broad sense it is sound, wholesome government.
It should and will endure, for like all good systems of government, its just
powrers are derived from the consent of the governed."
say
splendid
a
certain amount of responsibility because they
a
And
to
of
constructive system of bank supervision.
Clearing House, I want tb
has
able to protect
will give them some good pointers.
Some of the cities of this country
pleased, indeed,
ciate the
banks in that system,
say
years
who have been
quarrel with the men controlling non-Clearing House banks
have about covered the subject of clearing house examiner system.
are
friend, Mr. Meyer, had with the newspaper, that the newspaper
our
capable.
individuals.
My acquaintance extends into every bank not a member,
and I count them among the best friends I have, but 1 ask them to appre¬
Examiner'of the New Orleans
doubt,
no
the clearing house of the district would not feel that it wa«
fail,
Now, I want to
that
as
H.
not
had rather the best of it.
practical results are obtained through a department secure from all political
influence, operating through local men such as our Clearing House Com¬
mittee is composed of, and which department is not controlled by laws
'through legislative enactment.
"When occasion requires, it can act in minutes Instead of days, and the
J.
try
when it comes to the outlying banks I
Pit tsburgh and suburbs .
totally without blame.
which
will
with their good, strong banks, still they
we
do feel
we
I
But before I begin I want
represented either directly or indirectly, all the banks in the Pitts¬
all
should
"I see no valid reason why we should not do this, and it is up to our
members, both regular and affiliated, to realize the big asset their member¬
ship is to them to to legitimately advertise this fact on their windows and
through the various advertising channels.
Through this process of elimina¬
tion all Clearing House members will be definitely known to the public.
"In the expression of my views hi the foregoing, I may be accused of
exaggerating the value of the accomplishments of this department.
To
this, I can only say that while we ar.e not endowed with occult powers,
years of experience in this work has demonstrated that the best and most
by
Gentlemen:
Chicago,
burgh District, little, old and young,
House members.
me
Pittsburgh
all in the city of
well.
Examinations,
and
Mr. Meyer frankly admits, they
as
of
intelligently and in
Ladies
While
Chicago.
beat
Pittsburgh, and
are
a
No
and
Pittsburgh didn't win the baseball pennant
two.
or
they can't get the outlying banks to come in.
"They know better than I can point out what It means to their banks
a failure takes place.
I don't care how self-satisfied they may feel
as to their strength, the fact remains that whenever there is a failure all
banks suffer from the distrust and suspicion rampant at such times.
"Look at the name of men controlling the affairs of our large Loop banks,
all of which are Clearing House members.
Why don't they use this narrow,
selfish argument?
This applies as well to our outlying affiliated members.
"I have just this to say to such banks as take this narrow view.
If
you are not self-satisfied and indifferent as to your obligations to this
system it behooves you to wake up to the fact that the public is beginning
to realize I what this supervision means in a broad, collective sense.
The
public is already discriminating as between Clearing House members and
non-members.
They are demanding that we feature the names of Clearing
House
did
will come to
when
Clearing
remark
a
she
have heard
examination.
the subject.
upon
Chairman,
will try to keep you awake.
able to, they are impotent
emphatically believe their interests and duty to the public demand that
they contribute their moral support to a system that indirectly protects
no
remarks
few
their depositors there also
"Personally I feel so strongly as to what this system means to the banks
of our city, to say nothing of the public at large, that I have nothing but
the keenest regret at the'indifference displayed by the officers and directors
of such banks as refuse to lend their moral support to a plan that has proven
to be the nearest approach to guaranteeing bank deposits ever devised.
"I have no right in any manner to assume that the high-standing and
financial responsibility of men associated with certain outlying banks does
not place their institutions on a plane that protects their depositors to an
extent even more than our supervision of their affairs may, but I most
"I have
make
house bank
we
particularly to call on Mr. Kendall of Pittsburgh, who is here,
a
clearing house,
nection with the clearing house.
be, can be controlled
'
that
say
who have divergent views upon this subject,
some
are
to be tedious and
to
favor of the clearing
in
now
Kendall: Mr.
Mr.
outlines the immediate events leading up to the inaugu¬
of bank supervision that Chicago originated and which
has proven so effective in fifteen years of practice that the clearing house
in all large cities and in numerous smaller towns have adopted it.
In that
time, as above stated, not one dollar has been lost by a depositor in a Chi¬
cago clearing house bank, in every instance failures and losses to depositors
have been through banks that were not clearing house members.
Can you
blame the public for the attitue it now takes?
"While in the,foregoing I have called attention to the fact that our clear¬
ing house committee studiously refrained from questioning the motives
governing such banks as refused to contribute their support to this system,
? believe the time has come when simply as a defense from the implication
made as to our neglect of duty we should frankly acquaint the public with
the real facts governing membership in this Association.
"In the first place this is simply a voluntary organization which has been
In existence over fifty years; its primary function being the exchange of
checks between banks each morning and which were taken on deposit in
the various banks the preceding day, the examination system, as above
pointed out, being an afterthought.
"There is no special charge for examinations, each bank paying an annual
assessment based on the needs as developed at each annual meeting when the
budget for the coming year is considered.
"All the large Loop banks are so-called regular members, only a few of
the smaller ones being so-called affiliated members, which clears some
regular member, but are subject to all rules and supervision of the clearing
house.
There are but three of the smaller banks in the Loop which do not
belong to the Association at all.
"In the so-called outlying districts there are fifty-eight affiliated mem¬
bers, leaving approximately 115 State and national banks having no con¬
ration of a system
situation, whatever it may
most constructive manner.
make
to
Kelsey to
May I interrupt Mr.
there
would like
„
°P"Thisnbri(fly
as
deal
great
for some plan of examination of the clearing
and I am going to ask for a roll call in order that we may know
how the members stand.'
'
"The vote was unanimous and the following June saw the plan in full
ago.
years
say about that ques¬
will begin to ask questions, state their problem*
Now, if the men
and their ideas, I think it would be a good plan,
house banks,
„
member
associate
or
the active member banks.
perhaps, that is all I have to
I don't know; I think,
banks
committee to arrange
banks
as
as
that the thing shall be effective, the same as they did
way
tion.
have a right to know whether the
transacting business through this clearing house are fit to be here
not, and I am going to offer a resolution asking for the appointment
of
the same
I say, published.
I think it might
already arranged for, that the committee be appointed
be well, if it is not
^
or
non-member
by the section to take up that question and have it settled in some such
As members
Saturday and Sunday.
the
Further,
their reports just
figures are compiled and,
■
the
the
them
in
send
These
annual meeting of the Chicago Clearing House Association,
following January, the Vice-President of one of our large Loop
banks, in offering a resolution to establish the departments of examination;
made the following statement:
"
'This is the second time in ten years that one of the largest banks in
"At
in
time.
that
banks
the State authorities.
Government
will
If your bank is any size, this examination
require at least two weeks, and as matters now stand you are even now
permitted to run your bank only eleven months in the year,
advent of the clearing house
I would not have you
bank examiner.
He is simply
to do under the system.
I represent
and with the
examiner you can only run it but ten months.
think I
And
am
finding any fault with the work of the
endeavoring to-do what is necessary for him
as to
the personnel of the examiner, the city
has been exceedingly fortunate.
Up until recently we had on*
'
of
the
most
capable
and
conscientious
examiners
that
carried
ever
181
HOUSE? SECTION.
CLEARING
assembled and ready for the different bank examiners when they come,
a
commission, and when his sudden death in the city of Chicago was an-
Then if they do not correct the
oounced
serious importance, it would be
short time ago, his old associates in the service, all the bankers
a
who knew him well, found their
this digression in order to pay
associate, Silas Cooper.
or
So
suddenly .becoming,moist.
eyes
tribute of respect to
a
clearing house, which I object to, but it is the system.
Interrupts the normal workings of
tionable.
charge of all of
private files
bank is to
a
examiner is to make
an
he is least expected
when
take
If
Customers
they may not.
In
if they
any case
as
to
them
the situation
becomes
much
that I
in the Government service the
was
tions
alternately. Now, here
with
instructions to
of course,
tJo confer and
examina-
believe that there is
the danger which
always
if
that
is
department visit
have
two
what
happened
bank
a
examiners
when
readily
you can
The city of
to
•
Pittsburgh, which I have the honor to represent, never had a
Clearing House examiner.
Now, don't all speak at once and say, "Perhaps
would be better off to-day if
you
forbidden
and
powers,
.4.5^'...:
co-operate.
share of unfortunate
consolidations and
We have had our full
had one."
you
We have had liquidations, we have had
advertising.
Doubtless you have all read
temporary suspensions.
the sensational headlines,
but perhaps you have not read the concluding
paragraphs.
ago
Some
years
during
period when gilt-edged securities
one
of
tons
of 15%
banking institutions
our
to
hurriedly liquidated with a resultant
in
a penny
bank that belonged to
a
Pittsburgh Clearing House for
banks in
In the
But with that exception no
portion of the depositors.
a
depositor has lost
In the
selling with little reference to value,
were
was
Pittsburgh and its suburbs
represented
or was
And all of the
than 15 years.
more
represented, directly or indirectly,
are
Clearing House, 137 banks in all.
Now, let the other cities which have had able Clearing House examiners
forward
come
learned
a
are
truth.
our
If I
a
desire inside
firm
ten minutes I have
than
on
Mr.
I
secret.
co-operating and helping
now
confidence and tell each other
information
concerning a
Pittsburgh man,
corporation, why, I call up my neighbors and in
or a
information about the fellow I want to get a
more
could get from a Clearing
line
House examiner in ten months.
Chairman, I have nothing more to
Mr. Meyer:
Pittsburgh has at last
the table.
on
We
individual,
an
lay their cards
valuable
We take each other into
each other.
the
and
more
-
compliment
in which
Mr. Kendall paid when he named a certain number of examiners,
my name was included.
But I absolutely cannot f illow him when he draws
the line
impression that the good examiners are limited,
and creates
the
That, to my mind, is absolutely beyond all consideration.
Mr.
Kendall:
the
about
They seemed to be limited
examiners
with
Federal
the
while
a
Reserve
ago
Banks,
when he talked
they were
that
•ending in here; they seemed to be entirely unsatisfactory.
Mr. Meyer: Now, I don't desire to get into any controversy
who expresses his views and
I
glad that
am
with any one
have candidly
you
expressed
them—
Mr. Kendall:
Mr.
Meyer:
Thank you, sir,
I will
say
It is the first time I have
that I am astonished at the views he
ever
heard
Mr. Kendall:
Mr.
Meyer:
behalf of the
all of
to
our
think that
I
clearing'house)examiner system,
put in his evidence
we
and
found the trouble Mr.
never
him
that I
in
agree
the
.
I think we have,presented
it and allow Mr, Kendall
the jury.
We have four million and a
with him in
there for
are
a
three years.
burden
to
We
But we have
However, I wish to
I agree with
the banks.
I was
a
and I know that a great many banks
have found it very inconvenient that the bank
under the rules of the
half of capital,
great many things he has said.
five years
some
some
Kendall has suggested.
a
I come
word.
and forty-eight million.in deposits.
fact that examinations
bank examiner for
go to
Mr. Chairman, I would like to say a
half of surplus,
a
have had the examiner system
•ay
-
will stand pat on
ho has and let it
as
P. Farmer:
million
examiner
not very many more.
presented here this afternoon on
the case
from the little town of Tulsa.
a
are
I have been frank with you.
evidence and I think
Mr. T.
entertains,
take the slant on bank
a man
supervision that he has, and I hope there
examiner is there, because,
and it is
of
have,
that have very little duplicate borrowing.
But in the oil country and a
growing country as we are there are a great many capital loans, or a teu¬
dency to make a great many capital loans, and the bankers have found that
of great benefit to them.
And I believe as time goes on they will find it of
more benefit.
I can say, however, there has never been in Tulsa, Oklahoma, before or since the clearing house was organized, any depositor that
lost a cent.
And I believe that has been.also true of the State of Oklahoma.
as our State banks have guaranteed deposits and there has never been but
borrowers in
some
places is not needed.
some towns,
There are some classes
maybe a great deal larger than the city we
one national bank—that was
in the last year, I believe it was—one
bank closed, I believe, and I don't know whether the depositors
anything
or
upon the lack of having any more
man who stresses the
analysis of the assets of the bank.
we had the question of a cleating house examiner up
a number of years, and we had various men who were suggested for the position.
But they were all men who were expert as auditors,
who would tell us whether our ledgers were footed right and tell us whether
the books were up to date and the best adapted to the business which we
were conducting.
But that wqs not the type of man that we were looking
for, not the man that we wanted.
We wanted a man who had had practical
in Spokane
sideration for
banking experience and who placed the technical side secondary. Emphasis
upon the technical side of banking was quite forcibly brought to my attention under this last Comptroller of beloved memory.
Following the ideas
of his chief, an examiner came into our institution at one time, and it seems
instructions had gone forth from Washington that the by-laws and rules
and regulations of the bank should be examined and a report should be made
if they were carefully complied with as written.
Now, the by-laws of our
bank provide that our bank should open at 10 o'clock and should close at 3.
The first thing the examiner did was to instruct the doorkeeper to see that
the door was locked at 10 o'clock—up until 10 o'clock.
Well, we are very
liberal in our country, and if the bank has business to do, whether it be
after banking hours or not, we are always very glad to see a customer,
I saw the door was locked and a crowd accumulating in the lobby outside
of the door, and I stepped out and I said, "What is the matter?" to the
janitor, and he said, "Why the examiner told me to keep the door locked
until 10 o'clock."
"Well," I said, "I am still in charge here, and you can
unlock the door and I will take the responsibility. One of the first men
that came in came right over to my desk and he said, "Why, what is the
matter?"
I said. "Nothing."
"Why," he said, "I asked the janitor to
get in and the said, 'The bank is in charge of the
bank examiner.'
as
thoroughly familiar with
credit conditions in our
was
experience with him as an
factory, and the plan has the highest endorsement of all the
City of Spokane,
We lost our bank examiner through his
placed in charg^ of the Federal Reserve bank of that city, and
tions carried on under his direction, subject to the Clearing
mittee, were then carried on by the Federal Reserve bank.
believe that under the system of clearing
to
house examinations it is necessary
In fact, in the City of Tulsa I don't
put them to that inconvenience.
believe the banks know when I examined them.
there
are
only
seven
We get around each day—
banks—and of course, there we don't have the problem
that you do in the larger cities.
Bub when the State Examiner comes, or
the National Examiner comes, there,-we cooperate
llst
three
times
a
year
of all the duplicate
difficulty about that, and that is
because in
our
business
bank in the city,
another in the
name
we
man
of the
But there is one
readily go over to another
that he may want to know about,
have any number of
may owe one
with him, we make up a
borrowing.
you cannot very
bank and find out about another
every
But I don't
borrowers who may owe
bank in the name of an individual,
corporation and another through a partnership,
but sometimes in all these different banks there will be one man directly or
indirectly obligated and in
some
way
impossibility for them to get that
clearing house.
each day.
it will affect his credit, and it is an
information other than through the
Now, under the clearing house I don't take off the notes
I should think in
a
large city it would be necessary to
report each day on notes of certain size.
the banks and take off
at
all
in
one
a
bank and
a
a
But about every quarter I go to
I have access
list of the borrowers over $1,000.
times to their credit files,
statement
could easily catch it.
have
and if
in another
a
man
should have a statement
bank that didn't correspond,
I
But the main thing is to have all the information
"
I say, in Spokane we waited until we found a man who had had
twenty years of practical experience as a banker.
He was Cashier of one
But
community.
normal business again.
rather
Now,
for con-
technical and theoretical sides of banking, but
of the larger banks and
a
his comment
technical or theoretical authorities to
examiner is not a
But my idea of a clearing house
supervise the banks.
department, they have to
is there with an
carry on
small
will lose
not.
Mr. Coman: Mr. Chairman, I agree with Mr. Kendall in
weeks before they can get
back their securities and
would
of opposition, and I believe justly so, because it is a large expense
Insufficient force, then it is days and sometimes
any state
anything
if that was
endangering the bank, so that it should be either under the rules of the
association, if they required it to be corrected, or else the member would
be barred from membership in the clearing house.
Now, as for the organization of clearing houses over the country, I agree
with Mr. Kendall that if this Association attempts to go out and merely
stress the point that examination is the main thing, the main purpose of
a clearing house in all cities, why, you are going to meet with a great deal
seal up the assets of the bank, and if the bank examiner
Comptroller and
But I really
to the object of the clearing house
either dangerous practice or there was anything in any
was
a man who goes into a thorough
say.
Mr. Chairman, i simply want to appreciate the
as
tending to impair the capital, it would be his duty then, if they
something that in
depression, a
of financial
period
a
idea
not correct it, to bring it before the clearing house association
same
what might happen when you
see
different
representing
way
examiners from the
two
would require special training.
All I would understand that he would be able to do would be
there which
•cheme led only to confusion and was very soon abandoned.
Now,
wrong
to examine the bank and find out its condition and if there was
So the
with divided responsibility.
comes
pass on
a
whatever to tell the bankers what they should charge off and what they
should do.
remedies, in addition to the differences in their judgments, and then there
was
And I know that for the first two years I was not
I don't think the clearing house examiner has any authority
examiner.
But,
notes.
compare
and
I realize this, that I have learned something
in examining banks, and also in the city banks probably the class of securi-
have different opinions, different
men
be sometimes
A great many of
day that I have examined banks and I believe that I would learn some-
ties he would have to
Comptroller tried the experiment
representatives of the same authority,
were two
co-operate and
know that different
you
may
would have been necessary for the man to have had quite a lot of experience
During the time
of putting two examiners in a district and having them make the
He
State examiners were entirely efficient.
thing now every day.
complicated when you have two,
more
I agree, however, also
In my experi-
hard to obtain.
efficient and a good many people may say I wans't efficient at the time I
quit, I don't know.
But to get an examiner in a large city I believe it
get your files back in shape.
but
are
bank examiner I don't believe that 10% of either
in the service for the purpose of getting a job with some bank
were
every
Now, this is what happens, gentlemen, when you have only one examiner;
for in the very nature of things they cannot co-operate.
or
as
extending their acquaintance.
perhaps weeks after the examiner is gone
or
five years
National
have the usual
you
The matters of correction
efficient after he has been in the service for several years.
usual they may believe you
Then if
But, so far, we have
whole.
have always been able to obtain the
And I believe it has been always satisfactory.
ence of
try to
you
we
with Mr. Kendall that bank examiners
told too often that the bank
are
examiner is in the bank they grow suspicious.
experience it will require days
in, and when
come
as a
had to bring anybody up for discipline.
far have always been worked out;
Correction through the examiner in charge, either the national or the State.
Anything that
greater or less degree objec-
a
securities, investments, collateral and even your
your
explain to them why they cannot be served
and
so
and take complete charge of your institution,
in his hands.
are
never
real examination he must come in
a
duty to lay that before the Clearing
House Committee or the clearing house
I make
old friend and
my
it is not the examiner, either national
you see
that we think are already of any
errors
our
And
our
examiner was most satis-
banks of the
having been
the examinaHouse Com*
We did not
final authority to pass on hi»
Executive Committee and I am
thoroughly familiar with the examinations under that plan.
The examina-
find that
as
satisfactory as where we were the
I served as a member of the
examinations.
tions of the banks in Spokane are at present conducted under the Federal
Reserve Bank Examiner, but from expressions on the part of managers of
banks there I am satisfied Spokane would be glad to have an independent
examiner whose business it is to devote his attention to an analysis of the
assets of the bank, rather than paying very much attention to the technical
side of matters.
Why, you can get auditors for 5150 or $200 a month, but
we want a man whose judgment we believe is sufficient to warrant his being
and a man upon whose analyses
rely.
Such a kind of examiner I think you will
beneficial and tends to stabilize the banking business of any
put at the head of one of the institutions
and suggestions
we can
agree is very
community.
.
I am very glad to hear that Seattle is beginning to take up the
of clearing house examiners.
A movement was on foot a number
question
of times
there and always fell through from the violent opposition of one certain
institution, and that institution has now been gathered tp its fathers and that
opposition has ceased.
There
also another opposition that was voiced by some
was
complete credit files, ffome of them have been in existence for a
and
assembled at one
clearing house examiner and we have all of our credit files
and then these mushroom banks
all of the banks will be just as safe as ours
have sprung
that
bank,
where they can be subjected to inquiry from any
place,
common
number of
this
of the bankers are able men, and they say, "If we have
some
in recent years will have all of the benefits of our
up
and
forty years of experience;
But, gentlemen, they are
object to it."
we
coming around to a different viewpoint,
I
They
happy to say.
very
am
is worth
institution.
clearing house examiner in Seattle, I ^m sure
begin to realize that the safety of the banking business as a whole
than any x>articu!ar advantage which may accrue to one
more
And
when they
establish
a
bankers
they will rest easy and feel that their responsibilities to brother
will be very much
A
lightened by such a course.
I
Delegate from Louisiana:
which
thought
had
was
Kendall had
Mr.
much interested in the line of
very
Pittsburg
from
experience along these lines, and
some
mind, which
the clearing house
and
on
I used to be one of the State examiners in Louisiana
bank examiner.
of his statements I have in
one
and
the trouble the examiners put the bank officials to
was
the employees as
well, when they make
It has been our
examination.
an
experience with the State examiners—-we are a State bank—that they come
working for them when they hit the bank,
in with the idea that everybody is
they immediately give out a lot of orders to get out this and to
and
in with an entirely different attitude,
iners work for the bank, and they come
It has been our
They come in with the idea of doing the work themselves.
Idea that
the clearing
have the minimum amount of annoyance when
we
house examiners
there.
are
the
Now, about the Inefficiency of the State examiner, as he says some of
national
examiners
Cooper—they
I
that
known—and
have
the
by
I
way,
National Act and Comptroller of the Currency
and the various rules that
the trouble with the whole business is that in the State
but I think
and
They go in there, as
they don't pay them enough to get a good man.
Naturally they haven't got the
gentleman stated, to get experience.
one
depart men ts-espec-
picked out not from the standpoint of efficiency and capacity
are
work, but many times they are sent there from political pull,
to do the
then
Mr,
knew
all very efficient men and, naturally, working under the
are
they have put into effect, they have to be technical, naturally;
Sally they
do
The clearing house exam-
that, and they keep everybody working nights.
experience and the judgment to come in and tell you what to charge off and
what not to charge off,
most in their
strikes
aries to attract
good
Why, it is a voluntary proposition on the part of the banks in organizing
them. We simply call their attention to it. They are not forced to
organize; they are not forced to join it. We tried to make that clear by
our system in Chicago.
This gentlemen here made a statement that he
agreed with Mr. Kendall on that point.
I don't follow that at all. because
we simply suggested that if it is worth anything to them let them take it.
Chairman: Ladies and gentlemen* we are fortunate in having with us
this afternoon Mr. John H. Puelicher, Vice-President of the American
Bankers' Association, and I would like to call on him for just a few wo-ds.
M r. Puelicher:. I come to pay the respects of the officers of the Association and to compliment you on being so actively at work on a beautiful
afternoon as we are having here to-day.
I got into an argument just when
the query was made, "Where are you going to find these efficient men"?
Let me suggest that those of you who may be looking for examiners may
find some in the A. I. B. , I am sure that Mr. Allen will be able to find some
men for you that fill the jobs you want.
I want to say just a word or two along another line if you will permit it.
As Chairman of the Committee on Public Education, I am very much
interested in detailing the Committee's program.
Now, the clearing
houses are usually in the large cities.
And in the large cities is the large
foreign element of this country.
That element does not understand our
Institutions, does not know how to use our banks, is easily misled by the
misleader into the belief that the banker is not a proper person to deal
with.
And I want to appeal to you, as members of this clearing house
section, to get back of the program of the Committee on Public Education,
Let us teach the children of these foreigners who settle in our large cornmunities, beginning as the gentleman from Washington said yesterdayand he went me three or four grades better, for I didn't have the nerve to
suggest the fifth grade—but here comes a practical educator and Says you
cannot begin teaching the children principles of economics too soon; but
let us get into the seventh and the eighth grades of our schools, at least,
and into the high schools and the colleges, and let us endeavor to make the
people of America really acquainted with the banker and his function; let
us make it impossible for the agitator to cry us down; let tu educate the
hundreds and thousands of people who will be benefited by using our bank
so that they will become familiar with the functions of the banker, that
both he and they will be benefited.
Mr. George T. McCandless (Kansas):
but they naturally follow the things that are upper-
So that it
minds, and that is keeping the ledgers in balance.
that where
me
trying to organize clearing house associations just for the purpose of
examination, that you won't go very far you gentlemen seem to think
that we are going to do this and that and just force it down their throats,
of the bankers
Some of them have very
much merit.
which seemed to me to have not very
years,
CONVENTION.
BANKERS'
182
clearing houses in large cities
it strikes
men,
are
able to pay the sal-
that you should not have any more
me
trouble in getting a good man in a bank.
are
that the
me
Now,
the officers of a
making their livings out of the depositors' money, and even though
might think that a.clearing house examination might put him to a little
work and that it might not
more
reasonable
and
chance,
further safeguards
the duty
any
he
am
did, because 1
was
Clearing
have that
to
have had.
we
is not
repair
are
It is the system
coming in
of banks in
might just
you
efficiency of
men?
our
bank.
a
a
We elect
plenty of
men
if
we
President of the United States every
a
district,
men
northern
of them
are
you
Mr.
three days to find
a
paying those
When
make
my
ever
a
heard of.
all
over
Kendall, that
on
of the bankers told me just two or three
I got through with him that, so far as the public knew
1
work.
would be pracof the discount tellers in each of the banks sends me a list of all paid and all made
loans for the preceding week, and then I go through and check out all the
cards, take out the cards that I have—I have cards now for every borrower
in the city.
If the loan is paid In full I simply remove that card; if the loan
is increased, why, I make another card and add it to the one already there;
tical for
large city—but every Monday morning every one
every
loan is made I make out an
a new
or
That is how you came to get your job as
experience that
you
arranged,
there
are
man
plenty of other
who makes
a
capable?
men
the money.
owes
of
whether we
Clearing House
a
duplicator, every duplicate loan,
the bank to
One of the bankers told me shortly after we
feel this
guess-work,
are
A Delegate:
on
way
about it, that he was lending money,
absolute
information.
Now,
I
don't know
going too strong on that or not—publishing the names of the
tell me that is well worth the cost of the system.
I would like to ask Mr. Kelsey how the
credit file system in
Cleveland operates.
have had.
It is just
on every
put this thing in, the lending officer, the president of the bank, and he said
instead
Meyer: I will admit that, but what has that got to do with the fact
other
And then along
typewritten
entirely new card.
the 20th of the month I give to each bank a
it simply made him
the
part of the country, Wisconsin and Minnesota,
account of the wide
examiner would have all
this for Mr.
weeks ago when
and so far as they
in the bank they would never have known we were there,
was taken up as it came without interfering with the bank's
one
banks he owes—but they
Kendall:
in,down there we decided we would not
charge for examination at all; that the
any
the time he wanted—he was welcome there—and I will say
whom he
I don't blame you
comprising
$25 per day per man.
showing not only the name of the man but the amount and
national bank examiner for the
territory
men
report, alphabetically
And to bring up arguments here
I have been
of them took
And we we're
difference of $25 in the Cashier's checks.
put that clearing house
we
about the 15th
not.
cannot
in the United States fitted to examine
thing that I
State examiner,
some
industry in the world that
I—
Mr.
examiner,
that
that
an
that will function it.
for kicking at examinations.
any
,
going to limit the
are
bank, and then they
around and I don't know that I recognized any two of them
men
but I do remember that there were two
and if
only about five
are
man
a
they want.
man
a
experience before he is efficient
he
there running around for about three days in our little
shifted the
Now, with regard to these reports—I don't know that this
Now, take the managers,
kind of
lot of
Commissioner of
there previously,
because the work
we—
banks is the most ridiculous
and
at
year.
About two years ago the Bank
There were twelve of them.
They looked like a swarm of locusts coming in.
And they came in unexpectedly, as they were expected to do, and they were
knew themselves
New Orleans, when they select
or
He will have to have
Meyer; And there is not
State and
agree
Perhaps Mr. Peterson can answer you on that,
Chairman:
I can say this, on my trip to
Mr. Peterson:
question like
Cleveland in May I inves-
tlgated the system thoroughly and found out how it works, and Mr. Coates
specialty of anything, he becomes efficient,
But I don't followr your arguments at all about the trouble of examinations,
told
This gentleman here made the point exactly, and that is that from time to
important than the actual examination of the banks themselves,
time
we
have
a
Clearing House examination because, in the first place, the
K
Clearing House examiner is selected for his efficiency and he is in turn
allowed to select his
own
men
for this work.
first and I say, "I want this man."
absolutely qualified.
were
8
or
on
there
I go to the officer of
And in that way we have
My two head assistants have been
when
Mr.
McDougal
was
on
men
a
who
a man on
examiner and have been
the force year in and year out.
there
You ought to pay them
salaries that they will not be looking for a new job.
Mr. Kendall:
pay our
we pay
quite
head assistant
a
number of
$7,000,
men
and
expense
pay
$3,600.
the second assistant
The Clearing House
is no object.
if
you
.
new
and it is
information,
bureau of credits,
choose to call it that, that
we
are
going out and
more
they have
a
Once
a
week the banks furnish a list of all
You
borrowers.
matter of
keeping it
see,
up
the names of
the system now, the bureau is complete
from week to week.
Information that he
gets once a week he gets from each
banjk, the list of the new borrowers.
banks
duplication appears in his credit file he asks each
When he finds duplicate borrowing occurs he notifies the different
Immediately that
a
mediately knows that
loans, and on
a
bank imin
duplication has appeared and that the party
question is borrowing elsewhere.
The Delegate:
sense
Another point I cannot follow; you are creating an impression here that
this propaganda,
this credit
Do the different banks furnish the information
receipt of such requests from the clearing house examiner the
Committee is very liberal in that, claiming it is the best insurance in the
world,
considered
bank that is interested to furnish him with detail of those
What do you have to pay them?
Mr.Meyer: We
$6,000, and
he
Mr. Peterson:
all the
are
that force.
me
A Delegate:
in the files, everything to the clearing house?
bank
10 years, and we pay them salaries so that they don't want to quit.
We have
I
in the
down there
Oklahoma made a ruling that no Oklahoma bank should keep any money in
Kansas unless that bank was under clearing house supervision.
Wichita
was the town most interested in that, and proceeded forthwith to put in
the clearing house organization.
Our town was much smaller and had
quite a number of Oklahoma accounts, and so we took up the matter at
that time of perfecting a clearing house, without any thought further
than to have—that is, as to examination, except to get a firm of public
accountants to take care of it.
And I remember very distinctly the first
day that those public accountants came in to give us the examination,
there are
Mr. Kendall: Yes, and some of them are efficient and
Chicago
I don't
bringing out, that is., the strength of
How in the world could
four years and
find
well have
Yes.
Mr. McCandless:
the
of
within the
Chairman: Admitted
It is these very points
establish.
you
are
Pittsburgh, Chicago
Meyer:
that there
as
not efficient men in the country;
that
that job they are going to know what
Mr.
10%
That is why the Clearing House
hod-carriers to examine
as
Mr. Kendall:
Mr.
only
that
We haven't any jockeying to do with a lot of political aspirants,
system.
men
stating
watch, for that matter.
your
gentlemen yourselves
you
had in his life if he gets in that
ever
are
Of course, if we have political appointments
all with the idea that there
lots of them.
You
equipped for the job, why,
blacksmith try to
that
What
Kendall has got the
I. think Mr.
all of that.
and
instituted.
were
man
a
himself
express
going to say something on the same lines.
examination.
good,
are
examiners
gentlemen
Kendall from these gentlemen who have spoken why, they
House
examiners
I
/
greatest treat in store for him that he
and
throw
to
the clearing house examination I have
on
glad
very
the biggest boosters
for
time if he has a
same
experience,
than anything else is that all the argument 1 have heard
me more
here since Mr.
our
good, at the
around the depositors' money, why, it strikes me it is
this is the first slant
Meyer: I
gratifies
are
do
view of other people's
heard along these lints.
Mr.
as
in
of the bank official to establish the clearing house situation.
must say
ever
a
safety of the depositors is much
the officer's convenience.
important than
more
bank
he
it strikes
And
to.
from Hutchinson, Kansas, a little town
am
of 25,000 or 30,000 people,
The biggest argument we had
against the clearing house examination was the trouble that it puts the
officers
I
United States.
Mr. Chairman, I just want to
I suppose I am the baby clearing house
make one remark here.
What I was trying to get at was the credit files, in
of the information about the credit standing
of the borrower.
Mr. Peterson:
Oh, you mean the financial statement,
The Delegate:
Yes.
the
and so forth?
CLEARING
Mr.
He
Peterson:
Hartman
Mr.
that
gets all
I
of the various banks.
He
that information while making
depends
(Oklahoma):
on
Mr.
the round
the banks entirely for his credit files,
Chairman, there
15 banks
only
are
under the clearing house system examination, and
are
HOUSE
I
will want to do in this
you
is
receive there absolutely won't be
have
we
I
think
keep
matter—has usually been that
a
the clearing house examiner proposition is
will adopt it in Pittsburgh
Mr.
Kendall:
There
I believe, Mr. Kendall,
each other and getting in
in
are
all
of New
good shape as
as
L.
Humes:
C.
"Whereas, at
(Informal discussion.)
the
for New York, but I haven't heard anyone else
experience
there.
have
we
I
But
heard
speak
Mr.
qualified to speak
New York and the
on
Kendall's
argument and
the
L-
Abolishment
its)
annu al convent ion held at Los Angeles, Califor-
the total volume of business transacted,
"Whereas, It
furnished
the
to
the
was
be
sense
be puolished; and,
and
the
New
York
can
it, with
see
Clearing House,
some
consider
we
years
discontinued, but that the information should be
managers
of the Clearing House, not only by member
banks, but by non-clearing institutions:
Be
it
Bankers
Resolved:
That
the
Clearing House Section of the
Association
heartily endorse the stand taken by the
gt. Paul (Minnesota) Clearing House Association which on
Sept. 28, 1921,
the following resolution:
adopted
I
in New York
the examintion by
the
clearing house examiners in cities of major size absolutely necessary.
speak from the angle that perhaps
take in not only the
to go
a
job to get around from
But I have found in
they have made that
have to have men
we
" 'Resolved
main offices to the
our
mind the height of folly not to avail
yourselves of every opportunity you have to get a new angle on what you
doing.
are
Mr.
that, beginning January 1, 1922,
we
I
It Is difficult for him to
it advisedly, there never has been
say
come
of those visits but what the
information received has been worth the cost of the examination several
times
over.
I have listened with great interest to the arguments pro
examiners.
House
The
unanimously about four months
Clearing House examiner, but
find the
but he
a
he had to go
I
We did have
man.
was
a
a
Clearing
House
have not been able to
we
was
bank in trouble and
a
he had to resign.
so
our
city
get
a
a
good
while
ago
Clearing House examiner.
we
could get somebody
man
and pay him
that
never
good salary.
a
would have occurred
It all happened by making loans
The stockholders lost the moneys,
and
We didn't want it
if they would put up about $200,000 out of their own pockets,
the depositors.
That
done,
was
and
we
Clearing House examiner had been employed, I
we
would
but if the
made it good,
it would not have
am sure
occurred.
1
Chairman:
afternoon.
I
I think
we
more
of using
nearly represent the volume of
in this city.'
House Association adopt
been
now
resolution of similar
given to daily clearings,
The report of the Acceptance
House Section, presented by Mr.
has
a
1922, the publication of total daily trans-
given the publicity
Committee
of the
Clearing
Houston in the absence of Mr. Thralls,
accepted,
"Therefore
Committee
be it
for
Resolved, That
their
a
vote of thanks be
untiring efforts during the
extended to
this
in serving in
year
this
capacity, and it is the sense of this Committee that this work should be
I should add my own limited observation.
feel that
the national and State examiners
technical than those of the
the
"And
Clearing
Clearing House examiners.
House examiners
are
able to
Be
It
Resolved,
that
the
same
Committee
I feel
are
It
much
seems
continued
be
for
a
further period of one year.
"It is further resolved, that this meeting extend its very
sincere thanks and
appreciation to all those who by their interest and efforts
Section, have contributed
"Be it further resolved,
tatives of Cloaring
so
largely to the
success of this
on
behalf of the
meeting,
that this Section extend to the State represen-
House Sections its hearty thanks and appreciation for its
year.
"And be it further resolved, that its special thanks be extended to Mr
a.
A.
Crane,
work has been
"And
its President, under whose direction
so
much constructive
accomplished during his tenure of office.
be it further resolved, that this meeting extend to Mr.
John R.
Washburn, Vice President, and to Mr. Raymond F. McNally, its hearty
appreciation for the very capable and conscientious
have conducted our meetings in the
manner
in which they
absence of its President,
"And be it further resolved, that the special thanks and
the Section be extended to Mr. D. A. Mullen, its Secretary,
appreciation ol
through whose
intelligent interest, conscientious efforts and hard work the objects of our
Section have been carried forward with the result that the Section closes its
work for the fiscal year
have cleared up on the examiner proposition this
that the examinations made by
that
the part of this Association,
on
cooperation which it has given the Section during the
had to make it up—more than the capital and surplus.
me
transacted
actions shall be
come,
said that anybody had lost money in a bank in our city, and we told them
more
the total of their individual debits of the
purport so that after January 1,
voted
would employ some one as
Our banks voted that if
that should not have been made.
pay-
may
"And Be It Further Resolved, That the Clearing House Section recom-
wise thing for a town with only six banks to employ a
failure in
had had
we
our
we
engaged who said that he would
one
and pay him a salary, we would
if
that
to this time
national bank examiner and there
Clearing House examiner.
one
in
banks
ago
up
and take charge of it,
think it is
We had
as
publications hereafter, in lieu of clearing figures,
mend that every Clearing
and
and I know that it has strengthened my belief that it is well to have
Clearing
business
such earlier date
continued.
Mr. Willen:
con,
with the view
being the belief that total debits
around under 18 months.
come
one
day at time of clearing,
such individual debits in
it
or
Association, and such other
clear through a member bank, be required to report to the manager
"Whereas,
record, the
on
have of the examiner in St. Louis is that he does not
there often enough.
as
preceding day.
,j
:
Raymond F. McNally, St. Louis, Mo.: Just to put it
only criticism
each
observing the work and the reports
examination is complete, that their suggestions
every
constructive and that it is to my
are
I
haven't got, because we
you
whole clearing house system but
around and it is quite
various bankers.
of
some
V
of the meeting that tne publication of such
banks
I
as
on
question of the abolishment of the publication of bank clearings, and
said just this,
far
Returns
Your
be generally agreed upon, the members of this
so
of
pi
tSank Clearings.
have heard the other arguments here, and if I can add to what has been
that
25 in all from
some
m neu thereof that total debits, which it is believed
represents more clearly
American
am
are
Committee on Resolutions report as follows:
meeting of the Clearing House Section of the American
Bankers' Association at
"Therefore,
Mr. Chairman, I don't know that I
There
nja, it was the sense of the meeting that it should take definite action
elsewhere.
Mr. Hilton:
a
information should
your way.
clearing house examiner in
a
there, I presume,
up
And
cannot
you
Mr.
of
R
°*
won't be worried to much foy the boys
you
over
is not
England and their finances
that
one
Favor
in
f
As
the proper number of examinations.
up
coming in there and falling all
Resolution
what
as to
Banking Board of the State of Oklahoma I know where
possibly get along without, especially in the cities.
if you
question
You cannot have too much supervision.
bank that goes to the bad it is
a
haven't been able to
we
of this pamphlet, if you have not read it.
representative banks throughout the country, and I hope you will read the
contents of these letters either before or after you leave this convention,
The clearing house examiner proposition
case.
certainly the right thing.
member of the State
a
any
183
Jiave a list
of them here, a list of-the cities where this is in effect, and if you gentlemen
would just write to each of those banks and draw your conclusions from the
letters that you
SECTION.
ever
with
a
record of still greater accomplishment than
I
i)efore in its history."
j ask the
adoption of these resolutions,
(The motion carried unanimously.)
to
give their time and
Nominations
and
Elections,
attention to the matters of major importance and to spend less time on the
subjects of minor importance.
and
out
of
combines
come
our
institution and there is very little difficulty.
frequently
with
there together.
disturb
us
very
Our experience has been that they move in
the
Forty
little.
or
Federal
fifty
Reserve
men
My belief is that
examiner.
will walk in at
any
money
Mr. Meyer
Their
once,
that
and they
spent for Clearing
House bank examination is money well spent, and I feel that one
is
forces
impression
have should be corrected, namely: that this Clearing House Section
we
endeavoring, first of all, to establish Clearing Houses to
secure
the
co-
Secondly,
we are
endeavoring to
secure now
examination and assistance
We
are not
endeavor-
ing to bring about Clearing House bank examination the moment
becomes
for the
sufficiently large to warrant it
me
to
in establishing
a
a
city
Clearing House
devoted
refer again to the
(the Committee
on
Nominations)
begs
For President—Mr.
John
It.
to
submit the following
I
Washburn,
Continental National
Bank,
Chicago:
For Vice President—Mr. James Ringold, Vice President of the United
States National Bank at Denver;
For Members of the Executive Council, whose term is to expire in 1924
,
Mr. Alexander Dunbar of the Bank of Pittsburgh, Pittsburgh, Pa.
To fill the vacancy occasioned by Mr.
Ringold's abandonment of the.
Vice-Presidency, term to expire 1923, Mr. Francis Coates, Jr., of Cleveland
A Delegate:
1
move that
the report of the Committee be adopted, anil
the Secretary be instructed to cast the ballot of this Section for tne gentle-
exchange of checks.
Our Secretary has
mittee
nominations for the ensuing year:
Mr. T. J. Hartman of Tulsa, Oklahoma;
operation of banks and bankers in cities of all sizes.
In cities graduated from the medium to the larger size.
Mr. Crandall, Chicago, 111.: Mr. President, and gentlemen: Your Com-
a great
deal of time to this subject
number of letters that
are
,
and permit
contained in the back
men
named,
(The motion was carried unanimously.),
BANK
SAVINGS
A"
;
7-
A
"•
\
■"
?$&k-
Page
iP^ge
Savings Bank Resources, Samuel H. Beach. .Page
Business Building, \y, R. Morehouse
—Page
A. C. Robinson
Raymond R. Frezier
Real Estate Mortgagee,
investment of
High-Spots in
National
of
Conference
184
l88
189
190
Bankers—-Advertising
Savings
DIVISION
■■ *, .Y.-*"'
..
-, "AV: ■ :
--.A V;
•••*
.
"
Angeles, Cal., Oct. 3 to Oct. 6, 1921
Mutual Savings
Accounts,
Savings
-
.
SAVINGS BANK PROCEEDINGS
INDEX TO
and
Insurance
Life
Combining
■,
Association
American Bankers'
Twentieth Annual Meeting, Held in Los
•.. -t
Results, Alvin P, Howard>-_-!.-_-._-_»_-«,-.--«-^^-- —---Page
192
Page 193
Page 194
Banks, William E. Knox
Economy, John
Public
S. Chambers
Page 195
Composite Banks, H. P. Borgman
Real
Bakewell
Page 196
National Banking Act, Oliver J. Sands__Page 197
Mortgages—Interest Rates, W. B.
Estate
Amendments
to
Report of the Resolutions
Page 198
Committee.
Officers
of
Election
:__Page 198
...
CG'av
■.
:-\f\
and Savings Accounts
Combining Life Insurance
By
C. Robinson, President
A.
permanent incentive, a
A fixed and
Peoples Savings and Trust Co., Pittsburgh, Pa.
reasonable and definite
essentials to success in any line.
Without these,
energy is dissipated in vain effort; and resolution wastes
itself without result.
The great majority of the human
race must have wise leadership and the providing of motives
goal
are
essential to progress.
superior to
our
and
institutions,
As bankers we have, apart from
interest in the prosperity of our
general prosperity of our country.
Our
interest in the
an
deeper motives than
seeing our deposits increase.
The return of prosperity to
our country waits on the creation of fresh capital, and the
new capital can come only from
production and saving.
Anything we can do to promote the return of the tide of
preaching of economy and thrift has
business is to
us
a
duty.
One of the most serious problems in any
savings institution
It is not so
is the excessive turnover of savings accounts.
hard to put new accounts on our
of cost and energy;
books—this is
a
question
but the serious matter is to keep them
alive and growing, and
The
neither growing
few in number compared
it is live accounts we want.
large savings accounts which lie undisturbed,
nor
shrinking,
with
our
are
fine; but they are
value when
small accounts which have little or no
desirable as insurance
die to win. Even with
endowment insurance, a person who lives until the maturity
of his policy would be better off if he had regularly invested
his premiums.
This is no argument against insurance.
having carried insurance; and that,
be for his loved ones, he has to
may
I believe every man
For
offset the disadvantages
one
the plan was
becomes
The
our
useful citizen and
a more
a more
savings
accounts
more
expanding, has been with
and continuously
matter of long
permanent
me, as
with
you, a
consideration.
There
important methods of providing for
two very
are
the future—a
advantages of the savings account
are
has control of liis accumulations while
that the individual
he lives,
draw under reasonable restrictions and gets a
In the interest
of the human
paid.
so
for
pressure
many
of necessity or the urge of
may
intervene at
completion of the fund
so
a
premium in order to keep the policy alive.
that, when
individual lives the
full
period of his polio.,- it would be to his financial
his premiums in
pre¬
regular compulsion to the
disadvantages
are
the
name
of
So, after a year of construction,
Pennsylvania.
had an original idea; but, shortly before
making our plan public, we learned that a similar enterprise
was being conducted by the Lincoln National Bank of Fort
Wayne, Indiana, operating under the "Gesell Plan."
Those
accounts were sold as "Victory Accounts,"
I shall speak of
We
the
supposed
we
operation of the "Gesell Plan" a little later
with the
Recently, the Harris Trust &
in
a
an
advantage
savings account instead of
in connection
operation of other similar plans.
Savings Bank of Chicago,
conjunction with the Mutual Life Insurance
Company of
brought out a plan of combining a savings
and insurance, similar to ours in many respects.
New York, has
account
Colonial
The
Trust
Company
of
and the
also recently
general lines, differ¬
Reading, Pa.,
Metropolitan Life Insurance Company have
engaged in
an
enterprise along the same
ing also in detail.
Its
if he bad put
any
earnestly
advantages of providing for
death, and of having
payment of the
the infirmity
corrected by the
beginning, the plan was approved by the Insurance Commis¬
sioners of New York and Pennsylvania, and by the Commis-
with¬
reasons.
Life insurance has the
mature
are
can
fair earning
often hinder and frequently destroy
habit; besides which death
time and prevent the
desired
The disadvantages
will, the
temptation, which
the saving
The
savings bank account and life insurance.
of the other; and, con¬
formally launched a year ago this month under
"The Peoples Insured Savings Plan."
Before
valuable customer. ;;sioner of Banking of
problem of how to reduce the turnover and make
savings
combination of the two
seemed ideal in theory if it could be worked out in practice.
About two years ago my ideas had become concrete enough
to call for some experimenting; and, after discussing them
with the representative in Pittsburgh of the Equitable Life
Assurance Society of the United States (he being an old and
intimate friend with whom 1 could discuss my ideas freely
and informally), our conclusions led him to submit the idea
to his company, and led me to present it to the officers of
my institution, who constituted a sort of 'Avar college."
The plan underwent countless modifications and almost
endless revisions; but the fundamental idea persisted in
living, despite all criticism.
a
a
the advantages
advantages of the other; so that a
double interest in this
growth—first, that it swells our deposits; and, second, the
effect on the depositor who.thus gives promise, and so often
in due time gives fulfillment, of material prosperity; and so
We have
regular increase.
combining
versely, the disadvantages of the one are
opened, and whose value lies in a permanent and more or
less
adequate amount.
carry an
with life insurance, for, mark you,
account
of the
should
long time I have had the idea of
a
-A
There is also the "Grizzard
In
the
order that you
may
»
Plan."
understand the general scope of
added, I shall give you a synopsis of
by
insurance feature
the idea as worked out
selling of savings accounts, with an
our
institution with the Equitable Life Assurance Society;
between our plan and other
and then sketch the difference
SAVINGS
plans previously mentioned.
This will give
a
BANK
general idea
"The
Peoples
bank to the
Insured
Savings Plan" is a 4% savings
the Peoples Savings & Trust
Company of
with
The policy that the Harris Company issues also contain*
"Total Disability" clause under which, in the case of a
$10,000 policy, the depositor would receive $100 per month
a
for the remainder of his life; and, upon his death, his beneficiary wmuld receive $10,000, the face of the policy.
Also,
in case of death by accident, the policy pays double the
follows*.
vary as
$7.45 between ages of 18 and 40
years.
$7.59 between ages of 41 and 45
years.
$7.84 between ages of 46 and 50
years.
The
insurance is
always
being
protected
amount which stands
book, and the
A concrete
face amount.
The essential difference between
decreasing term policy, the insured
a
the
for
to his net
difference
between
the
of 25 years of age
savings contract.
If he is living at the end of ten
years.
on
the
to
the
Ours has
at the
maturity of his
disability
no
double in-
nor
The "Colonial Trust Plan," of Reading, in connection with
the Metropolitan Life Insurance Company, also contemplates the insurance as a fixed factor, the insured paying for
Let it
is saving $1,000
himself.
He brings to the bank $7.45 monthly for a
period of 120 months, which amounts to $894.00 at the end
ten
insurance
demnity feature.
for
of
the
plan is the option extended
our
purchaser to continue his insurance
save.
example shows clearly how it works:
a man
"Harris Plan" and
credit in his savings bank
amount which he contracts to
be supposed that
depositor, who then pays his premiums direct
to the insurance company,
Pittsburgh, combined with life insurance in the Equitable
Life Assurance
Society of the United States, based upon
monthly deposits over a 120 months' period.
The monthly
deposits
185
tinued according tO|this option, the policy is delivered by the
of the main theme of the discussion.
account
DIVISION.
years,
the constant and unvarying quantity of insurance during the
whole term of the contract.
he
In the event of his death before
receives from the bank $1,000, the $106.00 difference between
what he has deposited and what he withdraws
net amount of savings credited to his account, plus the full
at|4%, less the cost of his insurance for the period.
amount of the insurance for which he has paid,
being interest
this
man
die, let
the plan long
ever
us
say
enough to
Should
for example, after he has been in
$200.00, his estate,
save
or
wh'omso-
he has named to receive
$800.00 from
it, receives this $200.00, plus
Equitable Life Assurance Society.
The
the
deposits, which
go
to the credit of those who join the plan,
^receive 4% compound interest from the bank.
join receive
which show
Those who
simultaneously the
gross amount
of their deposit
amount to credit of depositor at
any given month,
They also receive the Equitable decreasing term insurance
policy, which at all times, as explained above, insures them
for the difference between what
they have saved arid what
they contemplate saving—always assuming, of course, that
deposits are maintained regularly.
The cost of this
their
insurance
to
years,
the basis of $7.45 monthly deposit, is $75.33
an
the
cost
average
depositor
63
of
over
cents
objective.
a
the
whole period
month
for
of
such
ten
or
$1,000
The operation of the "Gesell Plan"
does not materially
Peoples Insured Savings Plan," except that
different rate prevails for each age, and in the case of death,
instead of
point of view; from the customer's point of view;
paying the insurance
to the
beneficiary direct,
as
the
froni
the
insurance angle; from the viewpoint of cost; the selling plan*
and the results obtained, with more general remarks in
conclusion:—
First-—Is it
practicable?
the forms which
My
invented and
we
is
answer
"yes."
With
the mechanical
use,
opera-
tion is relatively simple, capable of being operated by average
The adoption of the plan automatically selects
clerks.
patrons for the bank who contract to be customers for
period of ten
and in most
Their accounts
years.
they
cases
of
coming to
service
of
attracts
a
are
.various
departments.
high class of people.
the result of
dormant and forgotten.
Those who
are
that they are taking
imposes
think
before
a
The
proposition
A great
into this plan
come
adopting
a
ten-year program;
definite monthly obligation;
certain
bank
many
impetuous moment, and remain
an
know in advance that they
fault
Our
gets into the habit
once a person
institution, it is not difficult to sell him the
our
our
very
a
growing each month,
are
in personally each month.
come
experience indicates that,
accounts
:
v
differ from "The
a
Now that the idea has been presented,, it is important to
discuss it from the following angles, viz.: Prom the bankers'
bank book containing two parallel columns,
a
and
on
the expiration of his savings contract, he would receive the
penalties.
Equitable does under "The Peoples Insured Savings
Plan," the Lincoln National Life insurance Company con-
gives to the bank
tracts to pay
In
other
that de-
words,
they
of its ability to fulfill the contract.
of
account
it direct to the bank to be added to the savings
the
deceased.
organization has
doubt full information
chandising it
can
understand
I
that
the
Gesell
office here in Los Angeles, where
an
as
to its
plan and its
success
in
no
mer-
be obtained.
of several
companies,
on a
monthly payment basis.
If
the
depositor lives, at the maturity of the policy he receives its
cash surrender value.
death before the
of
The
policy matures at
objective is reached.
once
in
case
I think the big
idea
a
selected class which feels reasonably
Another important point
operating this plan, it has
is the fact that, where
potential prospect in
a
in its town who already has a savings account.
sold the
The "Grizzard Plan," operating in several cities, is essentially the buying of life insurance, of any kind, from a choice
committing themselves, which automatically
bank is
every man
He has been
Now lie is offered savings plus the
savings idea.
insurance feature at such
a
powerful motive for coming
couple of cents
a
sure
small
that it furnishes
cost
lie
our way.
reasons,
"For
,a
a
day, why not enjoy the insurance feature?"
a
We have been asked, "Are you not piling Up an excessive
liability
in
Savings
your
amounts of
Department
deposits maturing at
one
having
by
time?"
The
large
answer
dominating this plan is recognition of the fact that many
people fail to buy life insurance because they hesitate to com-
is that the plan is in constant operation;
mit
who have saved regularly for ten years with us are most likely
themselves
line,
it
is
to
the
substantial
popularizing
premiums
of
life
annually.
In
insurance paid
a
for
monthly.
Savings Bank Plan of Chicago, is
as
follows:
Insurable risks between 15 years and 50 years, 120 months'
depositor, and the usual medical examination by the
When issued, the policy is delivered
insurance company.
to the bank and held in trust
by the bank.
offered under the "Harris Plan"
ary
Life Insurance;
The insurance
by the Mutual Life is Ordin-
and the buyer of the insurance has the
option, after completing' the payments at the end of ten
years,
of either getting his value out in cash by withdrawing
the amount
on
deposit in his savings account and turning in
the insurance policy at its cash surrender value, or he
may
withdraw the amount in the savings account and continue
a
life
policy, paying the premium based
time the
the
policy
was
on
a
his
age at
the
originally taken out when he went into
plan at the commencement of the ten
without
forget
us
over
instrumental
contract, monthly deposits varying according to the age of
the
to seek our advice as to the
they have accumulated.
The Harris Trust &
physical examination.
year
period and
If the insurance is
con-
new
people
are
coming in daily, and most important is the fact that people
night when
in
have, in
we
are
on
been
cases,
a
future
The most important thing/from
banker's point of view, is that this gives
and concrete plan
not going to
many
their footsteps toward
guiding
free from financial worry.
a
ultimate disposition of the funds
Certainly they
t(f him a definite
which to sell his Savings Department-
something which has been lacking heretofore in the American
Thrift program.
Savings advertising generally has gone
a
little stale in spite of the impetus given
is needed is
a
new
by the war.
What
note—something striking and interesting
besides being fundamentally
wise and safe.
So, with
corn-
bined savings and insurance, the banker approaches his public
with
to
a
save
definite amount to be saved,
it,
a
given time,
reached,
ones,
definite amount which
a
the
definite
assurance
comforting
and all for
a
a
definite time in which
can
be withdrawn at
any
of the ultimate goal being
promise of protection for loved
small monthly deposit well within reach
of the average pocketbook.
dising proposition and
It gives the banker
removes
a
merchan-
the necessity of exhortation
CONVENTION.
BANKERS'
180
however, that there is a very
adopt a
platitudes to induce the people to
and the usual
part of several of
thrift program.
Savings Bank of Chicago, sums up the advantages
&
seated on account of the extra
of
combination
low rate of closeout as
"These accounts will have a very
savings bank.
the turnover in the average
a
figure
would in
companies report
be dormant and
under the
the ultimate amount of
the ten-year period will
profitable from the standpoint of the
bank.
Inasmuch as the smallest certificate issued is for SI ,000, the average
balance in each account during the ten-year period will be not less than
$400 00 for each $1,000 certificate issued.
Furthermore, at the expiration
of the ten-year period the customers will have available, either for redeposit or for investment, substantial sums of money."
v
the bankers in tin1 plan may
The interest exhibited by
A combination of
a
writes
with
penses
,
bridge
the person's mind, and spurs his determination
sustained action because, while he is saving for himself,
this gap in
to
he is also
protecting
showing the
—one
loved
some
In the bank book,
which
we
I think this arrangement has an immense
given month.
psychological effect
they
deposits and the
credit of the depositor at any
At a glance
in their
what they can with¬
the people who join.
on
exactly where they stand each month
can see
thrift program;
they know to a penny
so by adversity.
The issuing of the
draw if forced to do
policy—tangible evidence in their hands of a busi¬
transaction—has a very favorable effect on the sale
insurance
ness
of the idea.
The smallness of the
reach of
the
average
monthly deposit puts the plan within
pocketbook, which is important to
the masses.
Questioning people
why they joined brings answers like these: "An easy
to
"It will protect my
"I feel that if I join I shall be compelled to
to save for my child's education."
way
mortgage."
save
"I
home."
my
going to start
am
of so-and-so in
little business one of
case
I don't live to accomplish my pur¬
In other words, the selfish idea, that is, saving for
pose."
later, dominates their action; but the
themselves to spend
insurance feature at such
urge
a
And they all add—"It will be fine to take
these days."
care
"I want to get $1,000 for a payment on
regularly."
a
small cost furnishes the permanent
which keeps them going, which is
element
The
viewed
from
ineligibility of
the
many
bankers'
highly desirable
a
standpoint.
payments, he would be
hence,
A
is
were
they
were poor
surprised when the doctor told them
not
year's experience has developed the fact that
groundless.
The
any
proposition, far outweigh
any
our
so.
such fear
good-will and word-of-mouth
tising, which the successful applicants give to
rejected.
risks, and,
adver¬
bank and
adverse criticism by those
At first
doubtful
we were
as
to how the
physicaf'examina-
tion, necessary to secure the insurance, would be received.
The people
and did not
Before
who
are
seemed to understand this
as a
matter of
course
object.
writing this, I asked various insurance companies
active
or
who have indicated their intention of be¬
coming active in this idea, for their candid expression
the merits and demerits of the plant
is
an
as
to
The whole proposition
innovation with them; and they hesitate, in view of
their lack of much
experience, to comment
upon
bility viewed from the underwriter's standpoint.
is the most desirable one
and is much less
the desira¬
The fact
foregoing is an expression
important to note that the
personal opinion.
Our company, after careful considera¬
tion chose the first method, that is the reducing term policy,
because
felt that it served the purpose for
we
which it
was
ultimate amount with
the lowest possible eost for the insurance, besides keeping
clearly and simply in the customer's mind just what he was
striving for and that he was not paying for anything not
necessary to this end.
We are not selling insurance, but are
selling savings accounts plus insurance.
If a man wants
insurance beyond what we are offering him, it is better for
him to buy it direct.
We are not life insurance agents.
We
get no part of the insurance premium either in commission
intended, viz., the guaranteeing of the
or
Our interest is as bankers.
otherwise.
The second and third forms of
see, are more
as
insurance, I can readily
desirable from the underwriter's point of
view,
the unit remains constant.
If I am correct,
the buyer of
course,
mentioned also give to
privileges which, of
costly to him but more desirable to
the last two ways
the insurance conversion
would be more
companies.
the insurance
It is also well
;
to keep in
mind that in New York the
"Armstrong" law regulates the volume of new
can
be written by a company
in
a year.
business which
The putting of a
inexpensive insurance through savings
the country might seriously interfere
take on a desired amount of more expensive
large volume of this
institutions
all
over
insurance.
In the
beginning there
were
was some concern as
insurance agents.
to the attitude
We thought they might feel we
infringing and would be hostile.
such fears to be groundless.
A year's experience
At first some agents
expressed dissatisfaction, but they soon saw how thoroughly
our literature promoted
the discussion of life insurance in
general,
and caused people to think and talk about life
before had given the subject consider¬
insurance who never
ation.
It would
be hard to find an agent,
of either the
other company in our territory, who would
honestly say that the "Insured Savings Plan" has affected
his income adversely.
On the other hand, it is not uncom¬
mon to hear agents assert that people have opened up the
discussion of life insurance with them by introducing the
Equitable
(i
in a better position to take care of the increased pay¬
position to take care of the increased pay¬
of
has proven
knew in advance
of insurance
policy on some permanent
The third plan
in most
cases
slightly larger monthly payment than the
advantage of carrying a level amount
form.
from the standpoint of the life
complicated.
Inasmuch as we have not yet had any practical experience with this class
of business, we are unable to express any definite opinion on the subject.
Our personal preference would be for either of the two last mentioned plans.
ments on a life
insurance company
of the
to whether their rejection would create any
as
so
ments, he would be in a better
bad
feeling.
Not so.
We had, of course, a certain class which
applied for insurance, which was rejected; but these people
thought
is
plan calls for a
with the ability to
people for insurance caused some
judgment, is unde¬
inasmuch as the ulti¬
small that the relative administration ex¬
standpoint of the insurance company,
deposits: and the idea we have had in mind in
connection with this particular plan has been to issue a policy which might
afterwards be continued on some permanent form.
This would probably
be more convenient to the depositor in that, being relieved of his monthly
remember when catering to
as
the depositor: but, in our
during the entire time of the
It is
amount of the
gross
other the net amount to the
diminishing amount and
This is obviously the cheapest
mentioned, the insurance is a
first plan, but has the
one.
give, are two parallel columns
Mr. Frederick H. Johnston»
become d sproportionate.
The second
insurance
presents to the
The insurance feature tends to
three, the Vice-President of the
time the deposits mature.
mate amount of insurance
and woman of modest means a concrete
too remote.
seems
out at the
sirable from the
designated goal, which has heretofore been
a
level amount
a
follows:
plan from the standpoint of
schedule
lacking.
The average person too frequently becomes discouraged in
building a savings account because the goal at which he aims
average man
as
In the first case
runs
savings account with a life
policy, secured by small monthly deposits,
policy for
savings.
Prudential Insurance Company,
be
gathered from the fact that we have received hundreds of
letters from nearly every State, first asking for particulars,
and then for definite advice as to how to adopt it.
savings to date and the ultimate
As to the choice of these
large enough to make the accounts
be
reducing term policy of life
Second—The issuance of a term
balance in these accounts during
"The average
a
amount equal to the difference
an
equal to the ultimate amount of accumulated savings.
Third—The issuance of an ordinary whole life policy for
in size.
plan will increase steadily
feel their
that the
amount.
of the year.
completes the payments
of every depositor who
account
is issued for
between the accumulated
written, and the
is impossible for these accounts to
"Under this plan it
the
insurance
wouid have a severe shock if they
books at the commencement
of accounts on the
phase of American thrift, indicates
under which
First—One
compared with
stopped
the turnover in their savings department, which, in my opinion,
a very few cases be less than 20% annually of the total number
officers of most savings banks
to
The insurance
f>% of the total insurance
lapse rate of from only 2% to
new
three methods in force:
Inducement of the
savings account and life insurance.
a
in this
proposition appeals to them with considerable force.
To date, viewed from the underwriter's angle, there are
of the
banker in these words:
plan from the standpoint of the
"New accounts are
way
Vice-President of the Harris Trust
Mr. Robert O. Lord,
well-defined willingness on the
the great insurance companies to
or any
subject of the "Insured Savings
Plan," which has resulted
The general
competing with the Equitable in
Pittsburgh, are not antagonistic to the proposition; and in
many instances have gone so far as to write, expressing their
commendation of the idea.
The principal reason why we
in the
buying of policies direct from the agent.
agents of the companies,
have had
no
opposition from agents is that we spent a year
I
preparing
well
BANK
plan and. carefully considered this angle
our
others.
as
SAVINGS
No bank
as
put this idea to work without
can
long and careful preparation.
high, must be considered with
may seem
the facts that the account is
constantly growing;
a
that it is
ten-year account;
that if it does
not
average
balance of about $500 00
and that
we
have
This
lapse it will have
over
the whole
an
period;
splendid chance of securing all of the other
banking and trust business of the customer.
Consider also that the initial promotion
expense includes
original books,and forms, cabinets,
up
graveling expenses, original advertising, drawings and plates,
&c., &c., the duplication of which will cost very much less,
Also
consider
that
expenditures will
lay, much
junction
the
with
with
secure us,
business.
new
the
created
momentum
by
slight additional out-
a very
Taking all of the foregoing in
tremendous
advertising
general
which the introduction of the plan
gave our
do not think that the cost of
securing this
exorbitant.
Were
we
to discontinue the
its whole expense off to
for
advertising,
con-
new
business is
now
and charge
plan
would be well repaid
Ave
time and money by reason of the
great publicity
good Avill resulting from bringing out the idea.
The
business
men
the
over
ducing
generally
plan;
and
quite
were
met
Ave
enthusiastic
as
as we Avere
commendation for intro-
Avarn
Avhich
spread
to
over
other depart-
our
cents.
We
all
particularly careful to impress
were
advertising, that
savings accounts.
it
read
"It is
action
important to remember,
savings account.
You
Avill
made
we
observe,- if
little book, that the main sales argument is—
Live-to-Win Plan."
a
point.
our
most
the public, in
strongly the insurance end of it,
the
to
is
upon
selling insurance, but
Ave were not
This
featured
Ave
incident
you
depositors' angle.
We have had several deaths, and have paid in each case
objective of the depositor.
We, of course, are not
the full
anxious for such termination of accounts; but, in view of
the advertising value of such payments, I was not surprised
that
advertising
our
smile and
have
copy we
so
ever
We do this because
Again and again
we
know the people
primarily by selfish motives;
and, if
we stress
are
Ave
When
starting
during the first
said,
we
year,
the introduction of
Ave
this
moved to
could
time
Ave
would be far greater than if
of
dependent whom they wished to protect.
some
Yoju will note, when
language
used.
you
read
was so
one-syllable Avords,
mind.
average
In
primer.
a
One of the
to present the proposition
was
that it would be grasped by the
so
passing,
I
may
say
that much of the
advertising matter issued by banks is Avritten
away
above
the heads of the average person?
used
liberal
newspaper
mailed the booklets to
instantaneous.
a
street
space,
selected list, and
cards and
car
the
response was
I understand that the Harris Trust & Sav-
ings Bank is organizing,
interest the result of
like every
agree
or
has organized,
a corps
of personal
mentally that it is
have tried
This proposition is
a
can get a
thousand
Avonderful thing, where
advertising exclusively; and,
is about to try
in the
near
which
is
personal solicitation,
future will
the
proposition
it is
their experience.
other good proposition—you
got ten to act upon their favorable conclusions.
better
and
you
We
that the Harris
comparison of notes
a
be extremely
interesting in deciding
cheaper method
I think probably
over.
now
a
of
putting the
combination of the
methods wiil be ideal if expense can be
In
kept within reason,
merchandising this idea, it should be kept in mind that
a
ten-year contract, that the average person does not
like to commit himself
in view of
this,
drawat value
may seem
justified
we
of
irrevocably
so
far in advance; and,
felt it good business to stress the with-
the
account
at
any
given month.
This
to be poor salesmanship, but our experience has
our
attitude in this matter, because the
person—many
always likes to
to any
2,000
accounts
whose earning
see
the
Avere
is not
a
we
appealing.
This plan has been in operation with
Up to the time I left Pittsburgh
Ave
us
since Oct. 9 1920.
had opened 2,940
contracting for deposits of $2,940,000, which of
means
the writing of this much insurance.
applied, but
rejected for physical
were
Also 172
persons
With
reasons.
ac¬
course
pay-
rolls in the Pittsburgh district at less than 40% of normal,our
savings business has naturally fallen off
erably at the present time; but I
am
consid-
very
convinced that the idea
is well fixed in the public mind—has met with general
ap-
proval and will enjoy
are
a
big revival when
our
industries
again normal.
Out of the 2,940 accounts obtained to date,
This is
a
73
have
small proportion in view
the acute industrial depression in Pittsburgh.
who have withdrawn have assured
Those
that they have done
us
through sheer force of necessity, and will
come
back into
it just
as soon as their finances permit,
We have had no cases of lapse as a result of
any misunderstanding or dissatisfaction Avith the plan, which I
think is a very significant fact.
The question may be asked whether or not the "Insured
Savings Plan," instead of creating
It is true that
many
of
our
new
one
business,
causes
account to another.
depositors availed themselves
of the plan, but rarely by closing their-regular savings
counts; and
a very
ac-
large majority of insured savings accounts
thus far secured are new.
It is my judgment that if the "Insured Savings Plan,"
not necessarily our "Insured Savings Plan," but the general
idea of combining savings accounts with life insurance, does
not become a dominant factor in the American thrift proit \yill not be for lack of acceptance on the part of
the general public, and practicability from the bankers'
gram,
point
of
vieAv.
The
restraining
factor
in
its
universal
adoption will come from the underwriters,
I am not sufficiently versed in insurance to pass judgment
as to the reason for the hesitancy, which seems to mark the
attitude of. the insurance companies toward the rapid extension of this idea throughout the land.
They seem to
be willing to experiment with it; but, whether the result of
their experiment will justify them in going after this business
in a big way, I do not know.
But whether or not the idea
prevails, I am convinced that tjjp people will welcome it
wherever introduced; and, if our institution has done noth-
average
ing
staple factor—
the
before he commits himself
be
The fact that they join the
to
way out
long-termed venture.
power
as
enormous
the people to whom
among
merely the shifting of funds from
solicitors who intend to sell it by canvass; and I aAvait with
two
secured
we
shortly to follow With the
decrease in pay-roil incomes
so
booklet, the simplicity
our
It sounds like
hardest things we had to do
can
if
would be satisfied, inasmuch
did not fully anticipate the tremendous industrial
depression which
con-
attempt primarily to inspire them to act in behalf
"We
idea, involving as many details
as this does, is an educational proposition, taking a long
time to make it stick in the minds of the public.
At that
of
success
to
to
broad
a
announced:
new
a
later on, our chances of
we were
We
with
me
he
had; $1,000 back for $14 90 paid in."
lapsed and 172 closed.
in
when
it proved.
vince them that they were saving for themselves, to spend
of
to
came
manner
first death and it is going to make the best adver-
our
tising
And
manager
cheerful
a
counts
our
While
factor.
they were in have convinced us that the plan is fundamentally sound, at least viewed from the bankers' and the
and practical method of encouraging thrift,-—
a new
commendation
thrifty, and
The eagerness with which the
people accepted the idea,
and the enthusiasm with which they talked about it after
value
institutions, I
our
and
a
initial
our
of their desire to be
this desire and willingness to at least start is the most im-
a
heavy cost of getting
187
plan is conclusive evidence
portant
So far, each SI,000 account has cost.us about
$7 00.
figure, although it
DIVISION.
more
many
happy
than to teach the doctrine of systematic thrift to
people whom we have already secured, I shall
the economic contribution we have made
over
our'community.'
^
BANKERS'
188
CONVENTION.
Real Estate
Mortgages
By Raymond R. Frazier, President Washington Mutual Savings Bank, Seattle, Wash.
1.
Investment of bank funds.
2.
Liquidity.
3.
Extension
the
and
published report of
an
foreclosure.
February of this
this
Division and
of this
ex-President
an
nationally recognized authority
a
on
to me,
seems
contract
by William E. Knox,
specializing
of real estate
United States Senate Banking and Currency Committee in
year
one
billion, three hundred million of this amount is invested
subject
has
been
in real estate mortgages;
and that, despite the depreciation
fully
thoroughly
so
this Division,
conferences of
of
loans which
reserve
one or two years.
long time
a
incorporating the principle of amortization; but
what
deposits in mutual savings banks in New York State and
mortgages "on
however, that the most satisfactory form
that there
billion, five hundred million dollars in
estate
highly successful financial
mortgage
on
St. Louis two years ago,
two
other
mortgage for a savings bank is
savings banking, Mr. Knox is credited with the statement
are
of its real
are
right to call the loans after
It
argument presented to the
all
And there
institutions
Amortization.
5.
demand."
Term of maturity.
4.
In the
stitution which makes
Relation to sound savings banking.
(a)
and
covered
as
former
at
particularly the conference in
I have already dwelt
as
some¬
the importance of the subject under the head
on
"liquidity," I believe it unnecessary to elabo'ate fu -ther,
except to say this; it would be
great boon to the people
a
of the United States if all
savings banks in the country would
in the value of many classes of bonds and of Government
adopt and specialize
some
securities, these real estate mortgages have not shrunken
real estate mortgage
in value.
their
There is no, division
of opinion as to the desirability of
this form of investment for
and New
of
five
have
savings funds.
In ten Eastern
England States, 588 savings banks, with
resources
billion, three hundred ninety-eight million dollar^,
holdings
mortgaged
aggregating
billion,
two
hundred six mil Jon dollars, which represents
two
40.9% of their
entire assets.
is not
states
prohibit
a
is
It
however,
true,
savings bank lending in
usually not to exceed 60%
is done to encourage
of their funds in
75%, of such
or
that
excess
percentage of its resources against mortgages
on
of
many
certain
a
real estate,
This
resources.
savings banks to invest certain portions
liquid securities, to the end that they
more
be in position to meet all ordinary withdrawals
may
on
demand.
real
two
are
estate
why savings banks should favor
investments.
First: because, when
reasons
mortgage
carefully selected, with
freedom from
proper
special hazard
margin of security and with
they constitute
occupancy,
a
security equal, if not superior to most of those made legal
savings bank investment.
Second:
in the various States for
because
savings banks
are
conducted,
should be, with
or
high regard for the welfare of the communities they
and the investment of
a
serve,
savings funds in mortgage loans tends
to
keep the savings of the people within the community
where such savings originate.
As to
Liquidity of mortgage loans—"Liquidity" is used
in
here
a
connection.
new
Real
estate
usually referred to by financial writers
The
question is, how to transform
that is
"liquid."
matter of fact,
At first this
however, it is
a
as
mortgages
"frozen assets/'
something
pay
intervals from the very
of course,
invests its
a
on
real estate
the principal at frequent
on
beginning.
money
As
liquidate itself by
the simple process of requiring a borrower
to
difficult.
one
thing that is easily done".
a
That is, a frozen asset may be made to
mortgage
are
"frozen asset" into
may appear
The real savings bank,
for interest' only and therefore
does not sell its mortgages on the market.
It is not a legiti¬
savings bank to traffic in mortgages.
It is, however, the duty of a
savings bank to insist upon the
liquidation of its mortgage loans and to afford to the borrower
function
mate
of
a
the opportunity of
liquidating the mortgage debt by period¬
principal.
Paying off a loan in install¬
ical payments on the
ments
is like
instead of
having
has
an
in detail.
army
The borrower,
large payment to look forward to and
one
succession of moderate payments which
easily be met.
The savings bank lending the money
worry
can
attacking
over,
has the
clear of indebtedness.
in
and therefore
an
increasing margin of security,
increasing element of liquidity in its
an ever
ever
mortgage investments.
Terms of
Maturity.—At least
namely, to ten
as
good
of Jour "big
as
years.
1
a
one
of
our
States, California,
real estate loan shall be
Perhaps
another's.
Insurance
one
man's opinion
companies
which
estate
partial payments
on
I know of at least
on
this
have
hundreds
years,
the principal after two
one
very
of
mortgages to make
long time real estate loans, that is, five to ten
enforce
made;
I believe it is the practice of many
millions of dollars invested in real
years.
ever
in
of
devised to encourage
or
savings bank
a
offer
can
to promote the economic
more
to increase the
total of human
sum
and
Extension
Foreclosure.—In
his
excellent book,
but to
or
three
successful savings in¬
"The
Savings Bank and Its Practical Work", William II. Kmffin,
Jr., wisely observes that "one of the first signs of danger in
real
loans
estate
is
tardy payment of interest and taxes.
This indicates that the borrower is
'sailing close to the wind,'
and his mortgage, instead of
a
drag weight.
a
insist
to
be
There is but
he
Mr.
done."
one
help to him, has proved
safeguard against this:
payment of the
prompt
upon
can
being
kindness to many mortgagors
a
interest and taxes.
Kniffin maintains that
rigid in requiring performance—"not harsh
simply
as
a
would
it
if the mortgagee
business proposition," insisting
were
unkind, but
or
due dili¬
upon
in the payment of that which is justly due.
gence
In my own
bank, in Seattle,
$150,000, and the
Five years ago,
have 4,500 real estate
we
smallest of which is $200, and the largest,
mortgage loans, the
of which is
average
when
we
a
little
$2,000.
over
had 2,500 real estate loans, the
problem of delinquencies became annoying.
I called
my
stenographer and dictated what, I chose to designate "A
New
System
Handling
for
We believe
legal
cap.
ever
worked any
officer of
that
the bank
can
pages
of
system of handling delinquencies
better than
maintained at
we
no
the
When
Delinquencies."
transcribed it covered about twelve
system was
Among other things,
ours.
time and still maintain
deal successfully
with
that any
an
ordinary
delinquency in connection with his regular work, but that
it is the unusual
call for
there
of
that
cases
cause
the real trouble and that
judgment and quick action.
no
are
two
In the unusual
cases
alike, and because of this fact the problem
delinquencies becomes greater in direct proportion to the
growth.
It is imperative, therefore, in all savings
bank's
banks
owning
gages,
that
any
considerable number of real estate mort¬
be placed in charge of the work of handling
a man
delinquencies who will, if
to
it, to the end that there
immediately
the
the
end also
man
to the
in
upon a
that
charge
devote all of his time
necessary,
be
may
an
absolute "show down"
borrower's becoming delinquent, and to
if arrangements entirely
are
attorneys of the bank for collection.
At the time of
fact that the
know the
installing this
man
to
new system, we
"shall
importance of dealing gently with those who have
treat
their
obligations
know when and how to take
to
recorded the
be placed in charge of the work
with unfortunate and unforeseen difficulties and who
met
to
satisfactory to
not agreed to, the loan will be handed
shall not hestitate to lay 'the iron hand' on
limits the time for which
is
No service
community would do
a
welfare of its citizens
a
advantage of
owners
owners
This form of real estate mortgage loan
of the best methods
one
the
to
as
thrift; it also results in the ownership of property free and
This
There
only
well
as
happiness in the community.
,
investments.
approved form of amortized
respective communities,
business property.
Savings fund legislation everywhere "ecognizes real estate
mortgage
011
loan and offer it to the home
advantage of
improve the bank's position,,
assignment of rents, insisting
new
cipal
as,
on
an
every
appear
who
shall
opportunity
for example, taking an
the borrower obtaining a
loan elsewhere before it is too late,
security in consideration of
those who
indifferently;—and
obtaining additional
extension of interest
or
prin¬
payment^, and, lastly, who shall be a good salesman
and who will prosecute the work of immediately
properties which
come
into
our
possession."
selling
any
SAYINGS
BANK
DIVISION.
189
Investment of Savings Bank Resources
By Samuel H. Beach, President, Home Savings Bank, Rome, N. Y.
Of all
the duties
bank there is
of
business
nomic
none
details
conditions,
mitted
to
The
their
how
and
then
the officers of
upon
closer
the
attention
investment
to
of
savings
a
care, greater
knowledge
changing
eco-
funds
the
com-
consideration
attractive
a
should
particular
be
safety,
security
and
may
no
appear,
it should be scrupulously cast aside unless when submitted
rto the acid test of the closest
surrounded
by
of
♦concensus
•of
unsually
into
cash.
This, of course,
and
business
ex-
and savings banks,
tury
since
have made
ago,
their
whether they be in
siderable sacrifice, be
1907, when for
mutual
a
sav-
portion of their assets
Our
na-
Many banks have
always bear in mind that
the greater portion of the liquid assets of the country con-
ticular year but in
during the next two
accumulations
par
•Congress,
the
national
savings deposits,
stances
banks
that
in
they
to
under
nor
by
Act
of
the
strictly
any
cireum-
segregate
so
case
no
compel
they be used in the commercial business of the
can
bank.
until
the
reason
bot-
possible,
as
placed their investments
so
definite amount of
certain
a
sist of the small holdings of the many rather than the
large
few)
money ;
banks fully realized the advantage of having liquid as large
a
bonds
benefit of immediate cash
the
cen-
a
to be exact since the
explainable
no
and where this method obtains
of
over
carrying large blocks
immediately converted into
to the small
we must
con-
of bonds which can, at some price and generally at no com
tional legislators will never haVe performed their full
duty
(and
readily
establishment
practice of
a
considerable
a
to be
as
torn suddenly dropped out of the bond market, have savings
requisite of safety appertains to the invest-
saver
withdrawals,
has always been true
autumn of
dictates
heavy
business depression and must therefore have
judgment
national bank, State bank, or trust company.
a
meet
portion of its investments in such form
stock savings bank or the interest department
a
to
but only during the past few years,
ment of all trust funds,
ings bank,
to be
prove
to be necessary.
proven
This primal
scrutiny it shall
ready
both at times of public excitement and in prolonged times of
safeguard and restriction which the
every
human
.perience has
stand
ways
vertible
care.
first
very
matter
imposed
requiring greater
This applies with equal force to the laws governing
for
same
three
or
account
on
bank has not only the
a
the bonds maturing in a par-
on
of need
ease
to have
as
maturing every year
can sell all bonds
maturing
years and obtain very
nearly
of the short time the securities
have to run.
In consideration of the
supreme
necessity
that
the
in¬
vestment of havings acquired by continual self-denial should
be protected and hedged about by
every
known safeguard,
State banks and trust companies and recent experience has
it is highly proper that such investments should
proven that the law should be so
be restricted, but should be specifically designated by law.
there
the
so
be
can
department
and
that in event of disaster
the
or
the
Savings Department and
sources
commercial
department
failure that all the weakest
-of the bank's legal assets could not
to
rigid that
so
shifting back and forth of assets between
no
savings
exacting and
suddenly be transferred
thus
become the
sole
re-
from the sale of which to provide for the payment
of the savings depositors.
There
other
are
This necessity has been recognized by 27 of
and when, by reason of changing conditions,
of
investment
considerations, however, in addition to
Acceptances.
they were of
maturity, that in
.-amount
of
rate
interest,
already invested in
the
While
to
the
money
on
as
obligated
way
happen to be less than the
other high class securities, still such
particular func-
one
savings bank is to devote local money
practicablejto local
savings
any
of the depositors in real estate mort-
condition does not usually rule, and
a
class of
or
banal?
to
far
as
mortgages
nearly
as
possible up to the limit the law allows.
Real
Estate Board of
Chicago, rather consider-
ably overestimated the amount of money available for real
estate
loans.
purpose
that
His
the diversion
nels,
which for
prevalent,
real
remarks,
nevertheless,
served
of savings money into commercial chan-
the
past five years
has
been
loans;
and
is
it
an
indisputable fact that,
least in the East, were it not for the Mutual
during the high
would
available,
needs
for
were
money
have
been
real
never
Attractive,
increasingly
largely responsible for increased interest
was
estate
there
good
a
for he brought clearly into the limelight the fact
loans
estate
so
six
no
at
per
time
a
when
as
interest
return
are
to
a
resources
by law.
savings bank, and this applies equally to the Savings
any
form
of banking
institution,
must
al-
investment for
so
sav-*
railroad bonds
or
the larger
*
daily
York
balances,
Clearing
rise
gave
House
metropolitan
banks
drastic
to
and
the
are
rates,
now
per-
are
the
even
so
old
3%% and 4% which Acceptances formerly netted
In the
year
11)19, the Savings Bank Section of the A. B.
A., believing that these securities should be made available
for such banks
wished
as
making them-legal
mittees
in
to
through
purchase them,
the
effort of
succeeded
of
one
its
in
corn-
securing permissive legislation in 25 of the 27
States where legislation
was
The legislators of
necessary.
those States which made Bankers Acceptances and
Bills of
Exchange legal for savings banks to buy and hold, builded
wiser than they knew; for the World
Acceptances
sudden
dollar
class
and
heretofore
exchange,
of
paper
War affected Bank-
it did everything else.
as
increased
in
a
almost
In the first place,
unknown
manyfold
American
the
caused
which can
be invested in this form of security, is wisely limited
unattractive
purchaser,
and
many
certain of being paid at
render attractive, in comparison,
the world
semi-permanent
quickly into available funds in times of stress; and in
of the States the proportion of a bank's
to
enormous
can in no way be relied upon to be turned
as
so
the interest return ruled
daily balances subject to check,
on
sav-
investments and
necessarily classed
an
the. commercial
as
the
on
New
the
would have caused
are
class and
a
consequence
and
ings bank, they
Department of
returns
by
which
the
'
regards
soundness, as mortgage loans unquestionably
A
interest
;action
money
housing
a
The growing tendency, however, of commercial banks to
ers
cent
as
been
bid for heavy deposits from savings banks, by offering high
months,
urgent.
however,
at
Savings Banks
rates of the past eighteen
absolutely
on
and
laws
new
centres on daily balances subject to check.
rates of
in his address
sound
pass
the rates allowed by the banks in
low
estate
to
compared with municipal
as
with
even
mitted to pay
Secretary of Commerce Herbert Hoover,
before the
ings banks
real
on
high
so
It is. therefore, the practice for
uses.
loan
so
is both
necessary
Bankers Acceptances have
low that they seemed
or
savings bank officer is in
ruling interest rate
tion of
the
the advisability of any
on
gages should the interest return
~a
maturity,
purchase.
no
invest
of
particular group
a
-securities, each has its bearing
particular
date
sight which
well known form of commercial paper for many years, but
funds.
The
into
becomes
48 States;
our
some new form
which will embrace and make legal the security in question,
safety which should actuate the investor of savings bank
<
it
only
A recent example of this is the form of security known
Bankers
^
looms
highly desirable
not
the
market,
and
rise in the interest rate;
unprecedented
the
even
States Government to
net
demand
for
investor
for
of-this
this
alone
but when the
money
securities issued
the
demand
volume
all
over
by the United'
approximately 6%,
Bankers Acceptances, high class, unquestionably good and
liquid though they
It
was
are,
had to follow in the wake,
just at the critical time when deposits
were pour-
ing into the savings banks literally by millions of dollars,
that
a
full
realization
began
to dawn
upon
the executive
not only high class
officers, that Hankers Acceptances were
the very fact of tin1
eminently desirable securities hilt
and
easily
could
vested
becoming due,each day.
seems especially attrac¬
security which
Another form of
the railroad Equipment
is that of
savings banks
to
revolving, with a
kept constantly
be
fairly definito amount
tive
in¬
marketing method that the funds so
buying and
the
familiar with
and they found as they grew
in price:
tion
virtually precluded deprecia¬
period they had to run
short
CONVENTION,
BANKERS'
190
and provisions of the Transporta¬
Savings Bank Division's Committee on
operating under the terms
The
Act.
Liquid Securities is using its best efforts to secure
legal for savings banks to purchase
sirable form of security
especially safeguarded form of rail
further issues of this
this
indeed
is
would, at
reference to the gravity
and
while it would
and,
Act of 1920: and $300,000,-
loans by the Transportation
new
000 by the
So
Deficiency Act of May 8. 1920.
$2,050,000,000 lias
Commission
Commerce
Interstate
for
Government
1920. and
will
be
the*
of
for
that
material and supplies without any
its
transported troops and
Adamson
eight-hour law
hundreds
of
to
fell short of the rentals it had obligated
and consequently it
before
final
of
The
without
operation
momentous
The
change.
miles, or 90%
the
preparation
least
and
arrangement with
Is there
ism.
earning
Their com¬
were
pooled in in¬
with
everything
else through
Workmen that bordered
soviet-
upon
wonder that the Government failed
any
railroads
maintained,
poorly
were
to
that
became badly
dis¬
organized, and had to have funds in addition to rates and
fares in order to keep them going and to
taken away
The
in
them
return
the
condition
same
fulfill the promise
they
in when
were
substantially in
they
were
as
good repair and as well equipped
January 1, 1918, was given
on
includes
loss
refrigerator,
ing-car,
only by
not
last
held
Treasury
the
The difference is $1,900,000,000;
Railroad Adminis¬
suffer.
words, Government operation of railroads cost
this
be
loan securities under the
new
the
day, or in ail
to build the Panama
the
Canal.
of operating sleep¬
expenses
waterway, and express com¬
inland
railroads, and also the
panies and other carriers besides
third parties for damages
this, however, is water over the dam.
frankly admitted the blame and is
large sums that must be paid to
and other causes.
All
Government
has
The
rectifying
now
far
so
wrongs,
as
put in the
gress
about
brought
road
and
regards the railroads,
which
through the emergency measures
fair-minded Com
a
transportation act 1920, which lias indeed
The days of the piratical promoter
The danger now lies in the de¬
speculator are gone.
of labor and
vitally affecting every rail¬
order,
new
a
security owner.
of those who are seeking
the efforts
If through
preferential treatment for sections or classes.
rates or values are ever
these disturbing influences
fair return and safe
a
the
only
recourse
its demonstrated
all
return
A
tual
banks
hold
alone
amount of over one billion of
and exert every effort to
Owners
of
Association
board
them
Railroad
highest class engineers in the
for
will be
National
Securities, which has
of its leaders by appointing
data
which
aggregate
Engineering, consisting of five
ering
studying
the
uphold the hands of the
of
of Economics and
and
in
dollars) to bend every energy
again demonstrated the wisdom
a
indeed be a
of such return is a vital
railroad securities (and the mu¬
for every holder of
savings
iniquity.
ownership would
calamity and the very possibility
reason
and this would
Government ownership, with
extravagance and
Government
to
railroads;
left to the
taxation and eventually
mean
reduced
bonds can get:
security: then public finance will be
where holders of stocks or
the point
below
of the
from the owners?
promise that the railroads should be returned to the
owners
will
earnings spent
this, plus the cost of winding up the
In other
roundhouses,
along
$905,160,000 of standard annual returns, or
make its
the
operated
machine shops, and
storehouses,
the
1,410 seized companies had 240.-
properties, worth $20,000,000,000.
use
for
of all the railroads, and were
upwards of five billion dollars gross a year.
discriminate
night
over
private to Govern¬
the Federal control act, from
through
mental
passed
industry
greatest
country's
total aside
liquidation, the
gross
which
securities
$300,000,000 of
transportation act of 1920.
mands
the railroads.
itself to pay
bined
without
all
rolls,
pay
adjustment of rates and fares or thought of profit;
proper
000
trains, and added
shops and
to
of dollars
millions
supplies Without any
war
families, applied the demoralizing
and
employees
inventory, and used them
free passes by the thousands to
accurate accounting, gave
public
of the railroads
During that time also the Gov¬
for 20 months.
own
ernment
March 1,
began
But partly offsetting this are the $050,000,-
railway
August and
months
six
the
$11,008,421,110
$2,850,000,000.
But
$300,324,033 of cash and about $600,000,000 of
draw
$200,000,000 which the Director-General says
the
called
be
from
and
probably
will
the Treasury to pay the compensation guaranteed by
upon
the
by Con¬
been appropriated
far
so
Adding to this the $000,000,000 of warrants which
gress.
the
30.
$300,000,000 for
1919; $200,000,000 for settling accounts and
for us to bear in mind.
Government assumed control
the
Govern¬
$750,600,000 by the Federal Control Act and Act of June
five times as much as it cost
over
railroads
the
appropriated: $500,000,000 and
ment's own losses, Congress
few
took
this promise
meeting
regard to so technical a matter, there are a
in
When
as
period
transition
the
taxpayers of this country over $1,000,000 per
detail
to
through
into
cold hard facts which it is well
an
with
accord
In
tration, seems to be the loss the Government must
serious question
a
ihe standard contracts and
by
1920.
of
presumptious and idle for mc to attempt to go
both
as
the point,
investment
railroad situation.
the
it
accentuates
bank
be complete without a
time,
It
savings
of
discussion
no
obligation,
railroad
of
Speaking
that
also
but
and for the further purpose of taking care of the
000
obligation.
road
of
will render possible
which
be enacted
shortly
will
lation
railroad legis¬
to be hoped that Federal
it is sincerely
and
legis¬
highly de¬
which will make this intrinsically sound,
lation
Wilson
transportation act
issue^by the National Railway Service Corporation,
Notes
tion
President
i
country, which is gath¬
the question in that broad way
distinctly helpful as a guide
and foundation
legislation.
remedial
High-Spots in Business Building
By W. It. Morehouse, Cashier, Guaranty
Your
Invest
-
Thousands
business-building
appropriation,
good and will
good
some
of
vesting
secure
it,
steps
in
Spend
year
what
methods
It.
new
I
business
are
constantly
A few
are
find
a
comparatively
spending their
easy
appropriation
these worthless mediums.
sale
and
are
The indications
us
should bankers
business-building?
~*Kr.
take
in
order
to
reduce
to
with
not
buy mediums without due investigation, and as
incur a loss in many cases.
What is the remedy?
of
Like
mean.
the minimum.all
a
in¬
are
con¬
What
waste
Angeles, Cal.
cooperation among
another through the
telephone, the telegraph, and through the mails.
Not all of us are, or
ever
will be, expert in business-building, and therefore, some of us will
need to rely on the judgment and experience of others.
Let there be a
mutual understanding between the members of this division of the Ameri¬
can Bankers Association
that when any member is confronted with a prob¬
lem in business-building on which he wishes further information, that it
is his right and privilege to inquire of bankers to ascertain their opinions
The solution of
worthless
on
spending their
explain
business-building
nevertheless
Banks
when they buy
we
of
are
me
every
results commensurate with the cost, but the majority
banks.
that too many
sequence
Let
it.
styles
nothing,
for
our
wasted
Some banks
investing
new
Appropriation—Don't
needlessly
Every season brings forth many new mediums.
being offered.
are
Business
are
mediums.
not
clothes,
women's
New
dollars
of
Trust & Savings Bank, Los
ourselves.
on
the
The
We
our
problem as I see it, lies in closer
ought
to
keep
in
touch
with
one
proposition.
members of the
Financial Advertisers'
Association, of which I am
proud to be a member and a past president, have a similar plan.
is a common understanding between
the five hundred members
Association/that
they
will
exchange
ideas
on
business-building.
There
of this
As an
SAVINGS
example,
will
we
about which
I
to
ten
or
had
hand
first
members
dollars
of
members of
the
certain
a
the Financial
experience in the
either
of
offered
am
fully informed. It appeals to
information
decide
to
me
I
what do I do? I either wire
so
dozen
a
have
feel
I
not
am
tigate it further,
that
say
the
of
for
or
Financial
Advertisers'
If
the
way
I get
information
helps
as
arrangement
saving
are
thousands
will attract them to
why not have a similar understanding among the
Savings Bank Section of the American Bankers' Association.
impart
the past
In
In
both,
twenty
have had two distinct periods in advertising.
carried to the extreme.
First came stereo¬
bank
advertising was
typed advertisements, and in recent
and
treme
it
is
are
true
the
now
that
effort
in
was
advertisements,
its
and
was
the
to
should
defending
have
cational
so
done,
to
as
our
other
stereotyped advertisings,
About all
that
early
style of bank advertising unreservedly, I
developed these sterotyped advertisements as we
by improving
their
and
appearance
the whole field
of
amount
of
officers
its
and
capital,
directors,
making them edu¬
of
advertisements.
In
of
amount
it
and
about to make
person
the
its
furnishes
deposits
I
not
am
so
that
to be more concerned about telling people
being built, how much grain is harvested, how much
in
are
informing
transactions.
company,
its
advertise
that I
their
there
or
majority
being the
is
half
of
also
present
our
sell
venture
to
and
sell
them,
ships
many
record
are
is mined, than
their
where
banking
and
long
as
one-fourth
over
withdrawing
departmental
about banks
as
of
to
than
have
we
business.
In
a
fact,
predict that before long
our banks will turn back toward the
perhaps striking the happy medium, when they will again
what they ought to know about banks and banking.
If
original
idea,
tell
people
the
banker will do his
every
a
closer
will
and
abandoned
cause
told that
ourselves
to
how
we
as
is
of
use
the people
the
the trouble
it.
how
He
What
isn't
does
I
rate
interest
of
confident
am
the
know
to
he
that
will
the
about
is
to
and
what
on
to you
prove
rendered
by
wants
I
to
to
recently
these
In
my
facts
activities,
own
us
the
series
see
interest
to
books
of
and
bank¬
news
items
series,
the
the
I
personal
my
keep
can
In
series
of
and
the
when
didn't
the
day
one
people called
surplus
it
want
newspaper
closed,
Financial
to
office
requested
from
Editor
miss
for
remarks
am
one
by
that
time
were
making
So
hundreds
was
day
scrap
I
Express,
daily for fifty-one
I
claim
the
that
reading
paper over
is
other.
The demand
it has
banker
been
wishing
copy
of
the
which
any-series
years
appearing
is conclusive
in
booklet
was
form
for
a
nominal
series
expense
from
the
ran
bank
an
in
a
local
to the bank.
used
in
a
years.
the
most
large
popular
daily
evidence that
the
news¬
public
so
great and
general
so
any
persistent,
distribution.
Any
secure the same by calling at the office of the
Security Trust & Savings Bank or at the Guaranty
me
your
card,
It has be(>n
thirty-five
estimated
days
that
is worth several
I will have
a
with
the value
only
of
a
the
Angeles
ascertain
effectiveness
you
will
will
give me a
up
Mr.
that
Besides, this
good opportunity to prove to you that I am not far afield
is hungry for information on banks and banking
they will read with interest and profit to themselves your ad¬
saying that the public
and
advertising that before leaving Los
wish to use a similar series in your home paper.
you
in
of
in
their
of
support
employes.
a
the
cam¬
business-getting
your
Many
of
patrons
your
for them the only
are
employes
your
able
are
that
informed
are
realize
that
there
on
to
point
the
answer
for
employes
who
and practice of
leader,
some
day business
every
are
the principles
on
some
in
one
are
their
their
studies.
large
a
His reply
no
national
bank
approached
was
for
the
designed to impart bank information
course
that his employes were already well
was
in¬
However, he finally agreed to
asking them ten very ordinary
course
was
necessary.
his oldest tellers by
the subject
on
some
of banking.
You
imagine how surprised he
can
they
were unable to answer correctly more than
75%
This incident is mentioned to show how
easy it is for
on
I
years
the public by providing
found
Have,"
best
the
some
for
means
you
can
make of your
what
to
of
for,
save
educating
your
own
em¬
so
how
to
and
without
accomplishing a great deal.
The
advertising is to show the people how to
object that they
some
banks
these
safes
can
and
grasp
reasonably
The
use.
in
bank
circulation
with
in
which
Los
to their credit the
very
I
associated
am
Angeles,
the
and
substantial
has
depositors
of
$1,140,000.
gratifying then the large sum saved is the fact that
being increased at the rate of nearly $20,000
every month.
these savers began, one teller could
handle their business, now it
What
is
still
this amount
When
takes
two
plan
more
tellers
and
venture
and
the
coin
a
How
to say
of
some
much
counting and assorting machine to handle
you think they would have saved without
do
assistance
of
mechanical
a
that not one-fourth
them
would
of
have
never
safe.
a
procedure,
Instead
Other
the
are
device to help them save.
I
they have accumulated, in fact,
what
started,
majority began with $1.00, just the
of
sum
is
business.
loan
in
Have"—"Save
outline to them some plan, and so far as
pos¬
mechanical device that will help them to save.
By way
permit me to direct your attention to the little home safe
tising these safes have
their
directed
and
then
many
of
time,
be
to
"Save
some
illustration,
18,000
needs
person
preaching,
on
end
sible, provide
a
go
the
expect to secure, and
of
average
might
until
use
save,
that
We
money.
for
amount
as
records
our
required
in
show,
order
to
the
get the
business
building mediums which have a plan of
Savings Plan and the numerous Savings Clubs.
School
of
holding up as an example of thrift some of our
distinguished
millionaire oil operators and steel
magnates, show these people how to save
for an education, or a
modest home, or for the first
$500 with which to
enter business of their
own, and you will get
large results for
thrift
our
that
when
come
should discontinue to
we
campaigns-—they made
statement—Unless
words, unless
effort.
your
The time has
in
you
can
you
can
look
us
save,
certain statements
use
ridiculous.
Take for
had better drop out.
you
instance
In
other
save
money you are failure.
Nothing could be more
History reveals that many of our greatest men died
poor—
great surgeons,
physicians, preachers, teachers and writers—who can say
they were a faiure solely because
they died poor?
When you advertise
misleading.
that millionaires
that
or
made
are
people who
as
a
are
result of
unable
saving
to
save
few dollars in
a
dismal
are
savings
a
failures, you
ignorance.
your
dis¬
Competition for Savings is Keen.
To-day it takes
the
best
very
plans
you
suggest,
can
suitable
some
supplemented
by
device for saving, to
get the average person to put his heart
saving money in a savings bank account.
If there is a banker
here who doesn't think we
have some stiff competition, let him take in¬
ventory of the hundreds of get rich quick schemes that are
flooding our
and soul
country
in
to-day.
Over
$500,000,000
lost
was
fleeced by these shrewd
promoters.
these unscrupulous
persons are heralding
were
"Why
cent,
cent?"
are
in
save
when
bank account where
a
we
Take
can
up
pay
daily
your
to
spend,
In
fact,
saves
to
by
some
reader
six
to
offering 3
of
us
certainly
the
4
or
are
you
of
this
respect,
pages
a
and
newspaper,
them
convinced
of
choice
per
per
the people
the
is
the
of
cent,
cent.
you
that
same
over
he
which
could
paper
and
every
the
comes
you,
save
of
the right type of
you
pay,
being in
from
how
per
by
have
we
his
special
spending.
Look
is
offered
bonds earning
advertisement
home
to spend—spend.
can
person
any
that there
your
saving.
a
spends
person
or
stocks and
"coming back," but not until
is
a
savings bank
streets
calls out to
hundred
one
to
show
to
note
fifty different
Go down
four per
or
say that there
why it is to their advantage
undertake
town, and
Perhans
"Come back."
It
popularize it with
business building.
advertise for savings accounts,
interest
to
venture
benefits
interest for
pass
who
savers
This is it:
only three
twenty
I
wondering if the savings bank account
and
can,
rate
is
window
public by
When
he
eight
almost every
some
from
advertisements
our
from the house tops?
the interest
They are convincing, and many
piece of merchandise he doesn't need
financial
every
shows
these
because
for,
the
of
to
year
spending.
savings for
on
that
one
some
last
And what is the propaganda that
anywhere
you
fifty advertisements which show
the
Baillie, Financial Editor of the Express, and
him hoVv he regards it.
If you will do so I am sure that
call
from
kind
and
employes
looking
are
three of
of
questions.
have
from
this
for
also start
you
Savings Accounts.
I
save
dollars
it.
of
campaign
your
ployes.
to
thousand
May I suggest that if there is anyone here who is the least bit skeptical
about
that
find
among
use
for
newspaper
advertising point of view
that
be
to
banks
the extent of their
employes' information.
have been examining young bankers in questions ap¬
pertaining to banking, and I dare say that the average bank clerk can
answer
correctly only about 70% of the most ordinary questions.
Last
year 13,000
banks used my Written Examinations for Bank
Employes.
This indicates that there is a
great need for educational work among bank
employes.
May I suggest that you supplement your educational work
can
at the
Savings Bank, or, if you will hand
mailed to your home address.
series
to
proves
series of talks
to
these
For
or
unsolicited
subject of banks and banking than in most
for this
copy
or
talks
fifty-one
fc
The
to
of
published
a
Evening Express
Trust
public
term of
interested in
more
that
a
series
any
employes.
test
questions
of
them
the
same
see
from
employes.
employes
bankers
the cashier
and
a
close
in which he stated that the series had proven to be the most
popular that had ever appeared in the financial section of his
paper.
The
import of this statement is further emphasized -.when I
say to you that the
Express has been published as a leading
with
If
of interesting him in a
formed
bank,
received
newspaper,
keeping away
start
you
up,
that your
your
all
employes
direct
bank
re¬
part,
my
to
purpose
ex¬
praised
own
becoming better posted
Recently
was
Not
These
bank
they
the
on
One
Angeles
of
work.
many
copies that
series
time.
Los
the talks
them.
of
the
other
to
the
of
any
of
the Evening Express
up
additional
People
papers.
subjects be published
from
fact, when
paper,
missing number-—stating that they
into the
and
letter
on
for
all
similar
that
a
for publication in the Los Angeles Evening Express.
kept strictly to my subject, that of banks and banking.
if the people read these talks.
From the very first number,
caught the attention of thousands of readers and held their
came
hausted
and
I
through to the end.
asked
quests
sav¬
very familiar.
thirty-five educational talks which
series of
a
inadvertently left out of the
and
find
I
his
prepared
talks
Let
but
know
to
terms.
by speaking only of things with which I
call your attention
me
his
beyond reasonable doubt, that
people are open to receive information on banks
ing, and if given the opportunity, will read advertisements or
subject is properly handled.
I trust you will pardon
allusion
in
bank,
where this
down
was
account
an
that
ad¬
our
year
American
Let
referred
we
read
each
he
We
them—it
open
sawed
lumber—what
service
receive
can
is
didn't
served
we
be¬
effective.
bank he is about to entrust with
a
about
I
people
what
lumber
in
wasn't
advertisements if
our
who
of
it
advertisements
the
dealing with banks and
scope,
now
banking, that
well-informed
bank.
your
how well
see
transactions.
desirous
which
some
man
feet
especially interested
wants
advertising,
banks and the public
our
stereotyped
with
not
the
thousand
many
read
Perhaps
was
something about the kind of
ings—he
what
so-called
would not
business.
our
but
served
to
State?
educational
of
use
day follows the night.
as
the
and
vertisements,
care
make
permitted ourselves to be convincd that
we
were
and
friendly relationship between
surely follow
as
We
more
duty,
—just to
millions of the
many
our
not
are
more
banking, and
and
This
money.
service
so
and
advertise ourselves
us
Not.
of
and
back
to
more
corp
your
bank executives to be mislead
one-fourth, the patronage
are
the
questions asked by your customers correctly and promptly,
your bank will
hold the patronage and confidence of these
patrons.
If not, many cus¬
tomers will drift away to other banks.
Make a test—when you get home
lumber
a
wishing to sell
banks to the millions who
our
our
Just
little
so
let
this
of
to .depositing
must
people know
to
banks
the
of
on
company,
of corporations.
banks,
customers.
American
service
how
copper
carry
of
case
present day
our
some
by advertising the banking business.
so
group
our
confined
but
patrons,
a
to
mercantile
any
have not only to sell
case, we
now
any
patronize
is
how
the
is
nature
If every banker present will
who
banks
on
officer—so
with
Enlighten
Up To Your Educational Campaign.
among
do
a
an
render.
The best medium through
educational
further, that when
public
will
contact
its
for
goods and not the goods of others.
I believe
saying that the banks of this country have more
own
public than
population
the
believe
company,
conservative in
am
sell the
to
our
of
don't
about
products, undertook to do
own
They
I
mining
a
the public
of
names
the
like
meet
make
appear
they
of
many
but
sure
the
information
of
bank.
your
an
persons,
Follow
education
of
campaign
to
banking connection than
a
fact,
and
valuable
more
Good
of
Nothing
ex¬
While
nuts."
banking, the public would not be
woefully ignorant on the subject of banking as it is to-day.
Take one
these stereotyped advertisements,
containing the name of the bank, the
as
I
to
of its officers and directors.
names
we
cover
the
to
gone
"soup
paign
of
advertising everything
on
to
will become depositors.
ignorance,
education
never
of
appeared in these
bank, the amount of its capital stock
the
of
name
the
that had
say
have
we
in all
sameness
right direction.
the
was
a
deposits, and the
Without
want
years
advertising everything from
there
of
May I recommend
Advertising to Become Popular.
years we
information
go
prepared
are
by all classes of people.
thousands
through
you
advertising is educational in its
A
■Educational
services
Why
really interested in information about
are
you
his
banking,
people
the
read
that
the
and
to
if is
it
191
dealing with this subject.
sun—when
bank
your
which
annually,
members of the
under
people, and
this
by this
Association
vertisements
In
This
kind.
against the medium.
medium
time permits,
as
DIVISION.
Association, whom
Advertisers'
reliable
most
write,
this medium.
of
use
advertising
and I wish to inves¬
me,
or
BANK
don t dwell too long upon the
because just now you are at a disadvantage in
competition with
other investments paying a much
•
192
BANKERS'
/ :; ;
.
CONVENTION.
that accounts can be opened with a dollar
they can spare, to which they can add any amount at
any time.
Tell them that if they need a few dollars they can draw it
without disturbing the interest on the remainder of their account.
Drive
home the fact that the amount deposited never falls below par, but is increased from time to time as compound interest is added—that their account is always worth one hundred cents on the dollar, and the principal
To accomplish this, get into the habit of corresponding with other bankers,
and find out from them what has been their experiences in handling mediurns with which you are not familiar.
3. Make your advertising educational.
Tell the people about your
higher rate, but tell the people
just the change
or
safe>
closing, may I leave these few suggestions with you:
In
mind that
in
Bear
1
shelf the
cut down the waste in your business building
by investing
produce large results.
only in those mediums which
appropriation
your
the
next.
You can
2.
business building program to be very effective
a
continuous, and not something to be used one day and put on
must be
bank and explain to them how they can carry on their banking transactions, and you will find the public is more interested in banking than
they are in most any other line.
4.
Encourage your employes to study banking in order that they may
be able to serve the public more efficiently, and in this way reflect credit
upon your bank.
I
Lastly. Let us recognize the fact that competition for the saving* of
American people is keen, and in order that we hold our old business
and secure our full share of the new, we must push our business-getting
medium to the limit.
National Conference of Savings
By Alvin P. Howard, Vice-President,
I
explain
of you have been called upon by your Directors to
suppose some
why it is necessary to spend so much money for advertising.
Those of you
who have not been asked this question should be able to understand with
what terrible fear the answer is made.
There is something about a capable
business
successful
and
pels
a
to give
one
that
the
Director that
Bank
a
said
right answer as soon as possible, and let it be
the
>
except that I
morning
feeling in your faces that leads me to believe you
I need not tell
wish the facts.
nevertheless,
but,
convinced,
this
before you
institution
banking
He
been
had
possession
claimed
Bank
wanted
and
you the
the advertisement of a large
surplus of several millions.
explanation of why a check in his
and
investigation of this subject suggests
An
determined:
these
That is the basis of re¬
of
do
whom
First—to
you
things
definite
are
Make no mistake about it,
advertising
be.
may
matter how indefinite the other arguments
I believe that the financial advertiser who com¬
no
his audience, even though it may take
many drops of water to wear away the stones of suspicion, ignorance and
improvidence.
I happen to be an inactive officer of a daily newspaper in
New Orleans, and 1
have taken particular pains to observe the general
them
pletely answers
of
advertisers
It
character
is
view.
of
thing good
offer,
services
the
premises.
Church
they
the
they
For example,
Magazine,
know exactly who needs their
not
continue
that does not
theory
that
offer their
to
mood to digest
proper
These
two
are
sermon
a
things that
believes
advertising in
in
but
garters,
wears
everyone
principles stand out
Obviously, we wish to present
need
who
the
service.
preted through
the
midst
the
in
the
arguments
the
to
answer
in
apparent
saving
of
reached.
are
advantages
above,
Time and
thrift
of
to
avail
when
tell
John
is
turning
he
of
men
should reach the persons
we
Ask
it.
them
Involves the
Doe
he
that
his
over
walks
many
now.
persons
inter¬
as
have been spent in preach¬
energy
industrial
the
to
the
worker,
salaries
(old and young), school children and the Xmas spendthrift.
fact,
us
those
to
question
but
general,
before
problem
first
in
life
why and
who do the spending,
must
his
to
anxious to
will
you
high cost of food,
and
save,
earnings
are
convince
wife.
As
matter
a
for it is of
him
no
the
fact,
observed
have
I
man
that
of
but somehow they cannot
save,
promptly receive
tale
a
of
that
woe
clothing—in short, the necessities of
rent,
hand
"the
the
the
States
that
for
in
is
it
and
money,
homestead,
the
obvious
where
there
of the
form
that
is
female
Our home economic
same.
in
no
about
her
anger,
you
home
a
that
a
name,
place
or
the
to
ex¬
whether
much
so
may
clothing
she
that
the value of
each
an
month
herself
for
the
to
You
needs
may
you
the
remonstrate
are
little
a
and
afraid
not
education
as
Taking
all
that
learned
a
how
his
household
written
are
times
many
great deal
in
this
convinced that the persons who spend
over
in a year's time have received a
field,
been
through
directed
results
advertisements.
towards
by preaching
handsome
in
Bond.
luxury
He is
the
to
from
man
the
of apology to
duty
of the
and
who
proceeds
you
can
of
way
observation in this respect is due to
women
played golf.
It
way,
and
cent,
of the money turned
education
Savings
By
our
per
liberal
But
spenders,
the
particular
eighty
with you, but unfortunately
have all
the
you
my
You
It is
manager.
have been educated by reading
appeal to you as a man.
I believe we
to
Bank
cannot
supply
a
Five
in
similarly, I
their
own
to
has
Dollar
aim»*d
a
beautiful
white
needs
Liberty
is akin to the "bloodleee turnip."
talks with
men
state
that
of'all classes.
is the beat advertised article in the world,
notwithstanding the Gillette Safety Ratsor and the Ford Automobile.
have
not
obtain quick
personal
Hundred
am
particular
advertising
hope
his
friends and relatives, I should
many
ball
at
an
of
as
and
Results,
exquisitely drawn adver¬
as we do golf balls.
and
advertisements
may
I,
therefore,
is
second
be
to
point
in
order
we0find
discussed,
that they
say
determine, what
to
that
deal
great
a
kind of person we are
addressing and the medium of
have
wish
that
agreed
who
have
we
control
in
"The Ladies
opinion, is it
Without
not.
be
must
Home
cannot
is
specific.
Journal"
the
of
Glance
urgiing the
at
con¬
the
If
we
States
United
advertise¬
page
a
of
use
will find that
you
advertising.
our
women
of
upon
earnings, it is quite evident that
our
judgment for
any
vanishing
a
is specific.
it
cream
In your
believe that much of it is
I
yours,
the readers of advertisements to
urge
well
safe
a
the
to
topic
depends
fact that Savings Bank Advertising is equally to the point?
a
substituting
We
because the
it
speak
complexion beautifier, and
a
or
to
the spending of
of
topic of conversation
ment
for building a
save
home,
known
thing
wealthy men of our age began by saving, because
do, and for many similar reasons.
Are these the
to
topics of conversation in which the spenders are interested?
arguments that appeal mostly to men?
In the final
Are they
not
analysis,
our
spenders
do
the
not
interested
are
operation
of
in
the
household,
a
believe this,
tangible
the
or
things
stern
that
necessities
I suggest that you make
it
have
of
to
life,
the
with
if
and
do
you
point to talk to the various
a
with whom you
women
come in contact.
I have discussed the subject with
stenographers, clerks, welfare workers, women in the neighborhood of a set¬
tlement house, trained nurses, white
servants, and the wives and friends
those with
of
whom
I am thrown in social contact.
Do they read adver¬
They certainly do read advertisements prepared especially for
presenting subjects in which they are interested, whether it be a
fangled fireless cooker, or a recipe for some particular kind of baking
tisements ?
new
powder,
do
do
to
It
attractive
greensward
400
You
yarda
of
or,
read
not
have
is
of
one
their
educational
you
in
are
much
of
the
only
can
for
advertising that
saving—like
medium
read
that
those
that
that
find
will
you
is
that
naturally,
used
by
it
is
by
Is
ocean.
reaching
the
it
the
to
up
If
see
so
it that stresses
possible that results
through
the
true that the
as
present
brings
spenders.
ludicrous
not
spenders
who pre¬
should
urges people to spend, and so little of
advertising
spenders rarely
shipping and trading pages?
Committee
a
but they
;
or
Bankers
This,
way.
they read, and is it not just
financial,
is
it,
drop of water in the
a
be obtained
the
same
advertising medium
mood
pages,
schoolteacher
efficient
an
time, the Savings
a
in the
arguments
an
Department Stores
financial
appear/erf)
education, and like
subject for study at
question
a
the
of
news
that
matters.
money
matter
a
the dress
course,
advertisements
with
sents
of
the
Associated
Banks
in
New
Orleans
whose
duty it is to select those advertising mediums that will be most effective,
and
to "decapitate"
that large class of advertising solicitors who make
advertising
profits
mittee
been
has
amount, because
by
playing
successful
bank
one
in
against
reducing
usable
the
other.
by
space
This
Com¬
considerable
a
it recognizes the
imperative duty of getting value for the
It is surprising to see the number of
worthless advertising mediums
city like New Orleans.
I will not bore you with details, but suffice
dollar.
in
q
it
to
the
that the Committee has in
say
people
the
laboring
problems,
wage
in
interest.
at
arguments
short,
The
Labor
A
When
he
of
but
money,
topics
of
conversation
that
of
the
Savings
interest
A
in
direct
amount
of
ciation
and
in
has
two
the
New
on
on
week
that
was
handling
windows
idea
is
interested
other
saving
in
hand,
in
I
saving
by calling to
it.
of
contained
not
are
the
believe
bit
a
your
most
the
words
in
have
the
found
money,
even
one
the
on
of
to
the
to
were
interest ^>aid
an
and
account
Saturday night,
street
the
making
functions
women
went
understand,
payments as
women
"3*£%
because
attracted
money
to an
Asso¬
on
on
to-day."
when
all
the
we
Savings;"
the
windows
the
its
I
of
watched these
the people af
purchases
small
a
the
for
community,
usually
think
investigation
larger
rate
of
Sunday,
and
I
Association,
Homestead
the purchasing of
Further
by
has
their
of
into
do with
specified.
a
of
Homestead
sums
and
attention
your
building; the Bank advertises
corner
advertises
door
the affairs that have to
thrifty
Branch 'Bank
a
savings—Open
are
difficult
A
up.
sharing
next
attending
making of
these
and
are
organizations
generally
which
the
its
a
Orleans
neighborhood
noticed
the
expand
Association
"6%
business
and
only
doings of the contractor;
competition with the Savings Bank for
25c
Homestead
words
reach
good,
the
advertising used by the Building and Loan, or Homestead Asso¬
casual study of their methods would convince
any one that they
method of
ciation.
to
that
is
spending and
him
On
from
like
it
he
paper
the
the
talking to laboring men that they
though they have nothing to do with it
would
medium
though
the
and
not
Bankers.
I
those
even
reads
working hours, strikes,
the earning
only
who is not in the proper frame of mind to
digest
man
thrift.
of
mind
Journal,.
propaganda
are
minute
a
advertisements
have
to educate
man
for
carefully prepared
"slice"
speak
the
up
versation
*
nothing new to those of you who are familiar with
idea, but I submit and maintain that it is not the
Banker.
Think
to
me
our
we
are aiming in the right direction, and that is what
by pointing out that you must know to whom you are talking.
ac¬
minute.
a
of
suppose
reaches the
keep
you
indi¬
own
compensate
because she will continue to buy
Bervice,
suggest
even
to
dollars
of
your
receive
keep your earnings.
you
billions
apply
you
difference
no
telephone
dollar and
economic
Savings
makes
own
Ignore
that
go
extravagant expense account, and if
this
duty of
money
in your wife's name,
where
the
to the value of
realize
your
fuel,
matter
the
It
life.
of
the argument'to
bring
does
account
an
with
the
the
attention,
the
spends
necessities
service?
bank
a
children,
I
cradle"
spending just the
and
Where
vegetables,
her
the
for
represents
your
at
credit of
of
close
your
college professors have estimated that, at least, eighty per cent,
amount of money spent by individual citizens of the United
case,
meat,
the
the
does
spent
this
count
rocks
to
total
is
vidual
you
thought
representatives of
species,
perts and
of
first
that
cradle
the
of
ask
mean
There
Bringing this
much
I
drive, and it is resting 250 yards away in the
be obtained unless you
I
life.
no
with
So
You
straight for the flag;
not going absolutely
was
your
adjoining cemetary.
an
them,
■■■
particular
have sliced
you
of
tising.
large part of Savings Advertisements, would indicate that
a
people
wrong
ing
The
garters.
on
subconsciously
are
same
do
goods
their real wishes in
express
Garter Company
a
the
upon
some¬
overlook the fact that a person reading a Church Magazine is not in
the
the
do
advertisers will
medium
a
subjective point
a
the number of advertisers who have
see
hand,
through
rather than
objective
an
and yet
other
the
and
from
alarming to
to
On
wares.
has reached
swing that the ball
your
but lo!
the
definite things that must
to speak; Second—What
two
wish
topic of conversation do you wish to discuss?
of
Funds" when the
"Not Sufficient
available money.
much
so
an
marked
returned
have
to
capital
a
it typifies the curiosity that is aroused.
sults because
be
showing
bank
the
to
came
of
Every ounce of energy, every atom of physical prowess and ab¬
sorbing mental attention, has been given to the white flag in the distance
standing in the hollow cup; Jim Barnes himself could not tell at the top
away.
story about the ignorant man who noticed
old
a
Hibernia Bank & Trust Co., New Orleans, La.
by the very
-
position
my
sort of kindred
a
im¬
gentleman himself.
somewhat
is
This
are
become
lengthy discussion of the merits of the case is barred
of
nature
notice
has
who
man
Bankers—Advertising Results
of
a
a
man
home and
showed that
interest
paid
making
their weekly
payments toward the ownership of a full paid share of stock.
The capital
by
the
Homestead Association, and that they
were
SAVINGS
and
surplus
authorized
of
the
Bank
capital
was
impressive enough, but it was
by the Homestead Association.
advertised
BANK
met
by the
switchboard;
advertisements
in
the
I
of
field
open
That
these
is
the
I
the savings business in
Industrial Plaints through the
Pay¬
Savings System, schools, and other
ways with which you are familiar,
and investigated the
experience of a Welfare Association
working among
the wives, mothers, sisters and
daughters of industrial workers, merchants,
butchers, bakers, etc.
In the days of the
bar-room, a man kept a large
part of his weekly pay for" liquor, but since this
pleasure has been "Volsteadily" denied him, the pay envelope is turned over to
the spender almost
/'■
When
know
they
consider that approximate
the names of
we
in
of
75% of the Savings Accounts in
it
women,
the
are
provident,
some
is
difficult
not
to
realize
The
suggestion
with
the
that
hearty
Bank
approval,
undertake
in
except
this
form
of
instance,
one
Homestead
other
Viewed
where
or
in
any other
contrary,
of
are
form of material
the
water
supply
You
or
do not
I
opening
gas
great capacity and the sawing is
done
the faucet,
at
outlet,
account
listed
are
with
advertising
to
returned,
880,;
initial
definite
a
as
For
that
a
Xmas
$301,840.
I
The
of
one
has .been
done
spendthrifts.
It undoubtely
persons in a country
these
in
the
order to
your indulgence.
advertising results,
work
great
or
an¬
thuB
of
use
great deal of additional
ask
for
or
accounts
these
ascertaining the results of advertis-
a
them, especially which
this
sort
one
new
the
I
more
because
in
clearly make
advocating these
not
am
it
lot
a
like
of
and
thrift
ques¬
children
men,
time
where
ours,
be
cannot
educating the
takes
information
advertising medi¬
thought
is
stifled
extravagence advocated.
was
the
result
to
show
figures.
advertising results for Savings Ac¬
and then to give you a method of
determining
If I have not accomplished this, I would be
pleased
questions
any
now
later,
or
expert in these matters,
an
conduct
how
be attained,
in
answer
hot
intention
my
should
counts
or
method of
Naturally,
These 880
best results.
"cure-all"
a
educate
to
from
cards
advertising of
opening the account.
deposits amounting to
have exaggerated here and there,
may
to
electrictiy,
gas
had
point.
tioned
a
gas,
bank
a
for
reason
constitutes
ideas
at its point of origin.
Quite the
mains and electric transmissions
energy
piping,
water,
the
produces the
my
at the exact point
save
save
If
In
screen<l-:'
The
for
be obtained
can
ums
my
It
elemental to
seems
the
upon
obtained by means of a small
card, which is
depositor of the bank.
The card asks a
depositor , to
mark why the account was
opened at our bank.
new
ing in dollars and cents.
and
different light, it
begins to be spent
spent for advertising.
have been
each
reasons
obtained
.
a
money
reply that should be
proper
easily flashed
top,
as
cards
somewhat along the lines of the operation of
in one,
be
name
and
Association.
it could
accustomed
difference,
Savings and In¬
is combined
the
money
figures show conclusively that out of 3,640
slightly less than one-quarter, had checked
the national
vestment
hear
The
pointed out that he would not be true to French custom unless he
his responsibility to be the sole educator of his household.
I
add, that it is difficult to understand this after one has
observed
our
want,
you
to
questions
idea.
recognized
thrift of France as a continental
power.
This weakens my
argument to a certain extent, but there is
because the thrift of France is a
proposition in which
who
paper,
educa¬
where
anxious
are
Director
that
figures
to
the
the
savers,
whether
they
be
indifferent or
extremely
yet advertising reaches very few of them.
In speaking to
people in New Orleans of French descent, I found a
strong
of the fact that the bread-winner is the head of the
met
was
these
properly sub-divided into the various
classes, such as news¬
bill-board, general advertising, etc., with a further
sub-division for
of each New Orleans
daily newspaper.
Approximately 40% of
these cards are returned, with the reason
for
opening the account, and we
hope to increase this percentage as the public becomes
our
that
that it is his
duty to become convinced of the thrift idea, and then
proceed to educate the members of his household.
In some instances, I
confidentially informed, in a very nice way, that the task was a dis¬
agreeable one, because the women seem to be
utterly ignorant of the
things that are easily understood by constantly
reading Savings Bank ad¬
own
you
Bank
designate by check
house,
vertising.
where
'
various
to
friend
that
a
all
These
was
might
is
mailed
main
and
place
figures.
and
the
recognition
tion
to
that
v
are
the
seems
made
art
Banks
193
short,
the
have tried
roll
intact.
in
things begin to be used.
to be the only
logical place to save anything.
Incidentally, it
advertising theory of a Company that sells thousands
of devices for
saving gasoline before it enters the carburetor of the
automobile, '
I followed
two organizations and convinced
myself that
Homestead Association had
won,
because it was
talking in terms of competition for the
savings of the spenders.
the
DIVISION.
with
but rather
the
a
understanding that I
who
person
am
has attempted to
investigation of the subject.
an
Mutual Savings Banks
By William E. Knox, Vice-President and
Chairman and Gentlemen
of
Mr.
ing coals to Newcastle, it
to
gathering such
Sunday to hear the
a
by holding
mutual
We
old
same
while, I think it does
lost
up,
the Convention:
to me,
seems
this; and yet
as
to
even
all of
us
bring¬
to church regularly on
go
story, and, while
we may tire of it once in a
So I do not think there is anything to be
good.
us
It is rather like
to talk about mutual savings banks
we
assembly like this, again the ideals of the
an
savings banks.
the
are
in the country who have absolutely
whatever no selfish interests at heart.
We are the one great financial
body
in the country that comes closest to the
people; and we are the one great
financial interest in the country that renders the most service for the
least
personal return.
When the savings banks were first thought of, one hundred
and
more
side
the
of
the
years
practice
any
one
deposits
of
New
When
York
and
the
in
first
other
Legislatures limited the amount
bank in its original charter
own
banks
States,
amount.
started
it
to $500,000, and that
that
a
matter of
a
char¬
was
supposed to be enough
was
$258
fact, the second year after our in¬
question
grave
thing for another
owed
we
As
was
would continue the
last 20 years.
than
more
with
year or
the
trustees
not, because
our
whether they
balance sheets
had.
Those were inside figures,
but they thought they would try it
first and only time that we have ever
we
We
such
on
the
last year we took
In
in
all
the
States
is pretty
that
a
ice.
So
the
far
in
the
savings bank
half-million-dollar
in
capacity,
one
deposit
day within the
the counter.
over
same.
would
where we have mutual savings banks, and
Washington and California, the modus oper¬
A number of disinterested citizens who feel
be
good
a
thing
for
the
community,
get
to¬
gether, apply to the State authorities for permission to begin business, and,
after having their past lives reviewed by the proper authorities, their re¬
sponsibility looked into and their efficiency checked
New
In
York
under
the
individual
if
the
such
and
bank prospers.
time
which
of
pockets,
them
prevents
the
Board
in
a
of
the bank
two
of
is
be
directly
In
or
done
tion to it that
they get
up,
do
to
small
them
expenses
indirectly
can
in
have
see
more
comes
to
years
of
a
charter.
than
or
affairs
lutely everything.
of
afterwards
the bank until
live under
surplus
serve
bank.
The
a
in
in close consulation with the officers,
responsible for abso¬
In the smaller institutions the executive committees fre¬
do
In
the
the
big cities this
territory, where real estate conditions vary so much
of
the
tent
know
city- that
to
no one
in the different parts
but experts in the real estate business
are
compe¬
five proper values ; and so we Employ the beat firm of experts
of,
and
we
do not always take their judgment
as
r
final.
We
we
.supple¬
is
depreciation,
loss
no
the
over
we
as
stamp that
an
we
for every
use,
absolutely detailed report of
allowed to incur
are
no
what¬
expense
directly connected with the business.
give liberally of their time, with no com¬
committee, the executive committee, that gets a
expense
them,
of
one
many
years
operated
we
under
did
In
reserve.
provide that
other
surplus
a
amount
could
or
be distributed
so
York
aside
law
which
certain
a
is
along without
run
the
any
that after it got
bring it below
years
re¬
prudent enough to
were
to
as
However, lately, inside the last few
in
have any surplus
not have over a certain
should
we
we
pleased; but if we
reserve, the law provided
law
queer
could
we
we
should
it
words,
rather
a
York, which did not provide that
surplus at all, if
New
up
to
certain
a
have passed
we
a
law
requires every bank,
before declaring a dividend, to
of its earnings, so that eventually the idea of
bank in the State shall have a very substantial sur¬
portion
that every
plus to back it up.
We
most of us paying interest rates at
3% to 4% per annum.
It
singular thing that in this last year or two we have been asked
by people who ought to know better why we did not raise our rate to 5
or
5%, now that we are earning 6.
I haid from a lawyer, a very wella
are
very
informed
man,
this
not
raise
people do
question.
He
said
interest rate
your
everything else?"
"Well," I said, "if
paying us between Sy2 and 41/, off
to
"I
5%%•
be
For
than anxious to do
more
a-
good
do
not
see
You
me:
to
are
getting 6
you
will take all
our
hands
immediately convert them into this 6% stuff,
happy to do it.
If you can only devise a
at
rjvill
we
them
to
many
years
that
so
do it;
for
way
why
you
bonds that
our
par,
we
we
on
are
can
will be
do that,
us to
we
it."
the savings banks
thought it
province to sit in their places of business and wait until
am
work
appraising of properties themselves when investments are
is almost impossible.
It is practically im¬
possible in New York, although some of even, the big banks do it,'I don't
know how.
But we feel that in a city like ours, which covers so much
quently
made.
We have to make
legitimate
a
small
for every postage
incur; and
we
but which
or
or
certain
a
any
from benefiting by
that it is purely
is
good
amount.
to
Board of Trustees, with maybe
the time; but the investing
management
not
New
accumulate
law
a
In bigger
but they cannot give the personal atten¬
in small places.
So they pass their duties along to
the
a
reserve,
shall
the bank is done actually by the trustees.
can
is
buy.
we
the consequence
decided
to be absolutely
negligible.
the State Baqking Department.
We
so
closely supervised by
that
and
very
practically
very
by the trustees;
they
that
a
us
—
For
that.
places the actual conduct of the affairs
same
The percentage of loss is
expense
State of
out of their
The management of the bank is vested
smaller executive committee which,
the
They
So you
frequently done by the
the directing, of
direct
repaid
self-sustaining.
either
Trustees.
and
is
have
paid employees, who are there all
or
it
be
may
citizenship and philosophy.
one
a
which
they
guarantee fund, which
a
profits of the institution.
of good
cities
once
They have to insure the
shall
it
as
laws
present
They have to subscribe at
mortgages have shown
fee, and another committee that meets twice a
year that gets a small fee.
expenses in an
institution with a hundred and
seventy odd million
dollars of assets are less than
$5,000 a year.
As there are over twentvfive men on that committee,
you see that no one of them, even if
they all
served, would get a very large amount.
is
East
the West,
much the
the
as
bank's
in three times that much
the two States in
andi
thin
limit of
have ourselves;
we
in bonds show
Our
the
was
in
trustees, many
pensation.
We have
set
which
as
investments
The
given to the public at that time;
skating
judgment
our
very
that
ever
another year;
been
are
every
for
and that is the
such
have to report to the State
not
goes,
with
investments
our
that
debatable question whether
reach -that
showed
My
up
State
State
institution to have of the people's savings at that time; and it
any institution in those days would
one
very
stitution
the
the
bank could take.
for any
ever
in
similar,
was
tered to receive
a
development that they would have.
for their charters
the
was
Scotland, and when they were transplanted to this
1814, nobody at that time had the remotest idea of
in
water
tremendous
applied
in
ago
it
ment
that, while all
pen-point
great financial body
one
Comptroller, Bowery Savings Bank, New York City.
simply
was
their
the people came
them, not always graciously at that, I
accept their money from
to say, and
sorry
to pay it back to them when they wanted it.
They
to feel that they Were under any more duty to the public
They had gotten away from the paternal idea of the original
did not appear
than
that.
savings bank
munity
;
ber
our
of
that
men
but in
were
few
in
and dealing with a
number
big cities the banks have
our
depositors has
grown
to be
so
the personal
savings banks, the big mutual savings banks,
as
far
the
as
bars
bank
they
to
seems
that
me
of
one
small
com¬
big, the
num¬
we
have
rather
the first duties of
is to get back
just
that personal touch with their depositors, to take down
can
between
it
so
that
enormous,
lost
the
touch; and
to be
grown
the
depositors feel
bank
officials
and
now
the people,
that every bank official
is
a
to make their savings
friend and not
personal
somebody who is only to be touched by long-distance telephone, if touched
at
all.
actual
We
than
more
we
really think
and
more
sonal
and
are
practice
expend
have
that
had
ever
we
her
that
idea,
it
We
are
banks.
our
are
with all sorte of
service
have
getting that
in
problems.
most
wages
judiciously,
in
apportioned
and
so
that
are
they
Some of.
departments into operation
husband's
.we
and
friends,
me,
and
more
spirit
in
into
them
getting those people
are
us are
which
so
more
the human
getting
and
before;
their
to
seems
a
corning to
us
beginning to put
woman
can
to
more
per-
come
in
that she will know how to
we
can
ao
all
torts
of
little
BANKERS'
194
CONVENTION.
the
in
much
with
the
safeguards that we have, we rather
same
welcome
There is room enough for all of us; and in so many of the States
they have no mutual savings bank laws, where the State bank and
national bank and the trust company has to do the saving for the
you.
of money or effort,
way
them
round
they will appreciate, that will cost not bo
but still be a decided help. Years
ago the savings) bank, every one of them, was a law unto itself as far as
those practices went.
It did not look beyond the four walls of its own
bank.
It had no reason; but now of late years we have felt that we are a
great part of the financial structure of the country.
Think of it, our deposits in the mutual savings banks that I have out¬
lined are somewhere in the neighborhood of seven billions of dollars.
The
handling of that vast amount of money is a great responsibility to us.
We
render a dual service, to the depositors whose money we care for, and to
the community whose business interests we help to buil<^ up through the
collective gatherings of the mutual savings of the very poor.
If we djd
not invent the motto, "Safety first," we applied the motto "Safety first"
from the very beginning; and I come to you with a message to you men
in the departmental banks, the national banks and the State banks, and
every other bank that has a savings department, I come to you with a
message from the mutual savings banks, and that is this, we are not at all
jealous of your entering into the savings bank field.
If you will serve
the depositors as carefully and as safely as we do, if you will try to sur¬
personal things for people that
where
the
doing your full duty, that you
that you are just as careful
and so we bid you welcome
all have in the problems of thrift among the
people, we feel and we know that you are
just as good savings bank men as we are,
interests of your depositors as we are,
are
of
the
to
the great
work that we
people.
We feel that the
American
'
,
people1 have not yet learned the lesson that we thought
they had learned during the war, of spending less and saving more.
We
see on all sides of us signs of extravagance.
Now that the days of unem¬
ployment have come we feel this would possibly be a good time to try to
impress it on the people, to tell them quietly but kindly, "I told you so.
If you had saved when work was plenty and wages were good, you would
be very much more comfortable now."
We have great hope that when
this day of business depression has passed over, more of the people will
have come to their senses and will make use of the various savings institu¬
of the country.
tions
Public Economy
The subject assigned to me for this
for me, is one .of public economy.
I
the cost of government, or the tax burden.
That
understood that to mean
civic
tremendous subject and I can only hope to roughly out¬
touch the high spots.
\
very much like charity in one respect, and one respect only.
It
a multitude of sins, and a vast multitude at that.
Some years ago
It is
covers
people to awaken to their civic duty
here in Plumas County, one of the
a prospector in fact, became
miner,
along financial lines we are very
again,
ing
much in that shape.
The
governmental establishment is that there is too much
politics and not enough business in government.
I say that with a full
appreciation of the fundamental differences between government and poli¬
tics, and between government and business.
I have a very clear apprecia¬
tion of the fact that the government has certain functions to discharge
which business does not have to discharge; but even such functions' can
be handled in business-like way, and other functions on a strictly business
great trouble with our
"
basis.
y;
.
.
•
York wit once said that government was an
but not on.
He might have gone still further
New
A
institution to live
and said that the
government should not live upon the people in the sense of taking more
from the people than was justly needed ior the support and the develop¬
ment of the government.
A government was not instituted to earn money
for itself.
The purpose of just government is to protect the advanced
welfare of the people who compose and support it, to provide law and
order and security, and make business possible.
Without the government,
as we understand it in these days of civilization, there would be no business,
and without business, on the other hand, there would be no government.
As
long as government takes only what is necessary for its proper Bupport
and development there should be no criticism.
But men have never and
perhaps never will agree upon what functions the government should dis¬
charge.
This fact, this difference of opinion, plus the machinations of
politicians have not only put on functions but created unnecessary units
of the government to discharge those functions which add to the cost of
government.
Our legislatures, our administratives and our fiscal agents
under
looking where
forever
are
more
revenue
can
be produced, either from old
and seldom exhibit any real sincerity as
to how expenditures can be cut down.
This state of affairs is going to
continue until the people awake to their power and to their responsibility,
until they begin to exercise an intelligent and continuous supervision of
public affairs.
It is not to be expected in a nation of over one hundred
million, or in a State like California of over three millions, that the
sources
through
or
new
sources,
people would have an intimate knowledge of
government; but
have
to
good
a
triotism
common sense
with
a
of peace.
Historians declare that patriotism, as we know it,
foe
tax
It is
a new
by exessive cost of government, by an
business, checks development and stops
The outside foe comes suddenly, plainly—he is easy to visual¬
within;
from
investment?
for instance,
burden, that retards
easy
of the nation against him.
But
He is hard to see, hard to place, hard
think is that the people are part and parcel
to mobilize the resources
the foe from within comes
to
is
thing; but, however that may be, we are all familiar
the sort that arises in the meanest of us when our nation is threatened
a foe from without.
But, how about our nation when threatened by
excessive
ize.
understanding of the government and be able
are
comparatively
with
all the involved questions of
should not
there is no reason why the average citizen
questions intelligently, and to vote with understanding.
two kinds of patriotism, the patriotism of war and the pa¬
discuss
There
secretly.
visualize; and one reason I
and to discharge those duties.
intend to exclude or to exonerate public officials
the people does not excuse the dere¬
liction of public officials.
Public officials who are derelict are taking
advantage of the indifference of the people, and their crime is so much
the greater.
We are not going to remedy conditions until the people are
awakened to their responsibilities and proceed to exercise them.
There are four kinds of expenditures:
The expenditures that are proper
I do not by any means
mining men of California, a solitary
involved in litigation with one of
the mining corporations in regard to the possession of a tract of land,
a section,
as we call it out here.
The case dragged through the Superior
Court and the Appellate Court and finally reached the Supreme Court
where it went to sleep.
One day the old miner wired to his San Francisco
attorney to know how the case was progressing.
In reply he received a
telegraph saying:
"Everything in statu quo." Not knowing exactly what
in statu quo meant, and finding that none of his associates knew, he took
the telegram to the local post master, who in turn did not know, but he
properly replied, without looking at) it, "That means everything is in a
hell of a fix."
So, governmentally speaking, along financial lines I think
the interpretation placed upon in statu quo by the Plumas post master
is about correct.
Government of the people, by the people and for the
people is not only a wonderful thing.
At times it becomes really amazing.
During one of the great battles of the great war a wounded Irish sol¬
dier was brought in from the front unconscious, very very badly wounded.
The sergeant looked him over and told his orderly to take the wounded
man
into the ruins of an old church.
He cautioned them to treat him
kindly, particularly when he awoke, when he regained consciousness to jolly
him along and cheer him up.
In due time the wounded Irishman recov¬
ered consciousness, gazed around the ruins of the church, and murmured
feebly, "Where am I ?"
One of the orderlies, quicker than the others to
remember the admonition, said, "You are in Ireland."
Gazing again at
the ruins of the old church, the wounded Irishman said "Glory to God,
I could not believe that you had Home Rule."
So, governmentally speak¬
up
discharge their full
his full civic duty,
is, 100%, is rarer than a costly jewel, and far more precious.
The
has never been more propitious than the present for appealing to the
time
afternoon, and just
it this
line
matters; and they are so because they do not
The man or the woman who discharges
duty.
that
is, as you know, a
the cause of their general indifference to govern¬
of their apathy,
cause,
mental
least suggested
at
or
the
Gentlemen:
and
Chairman
Mr.
afternoon,
Formerly Comiitroller of the State of California.
Vice-President, Bank of Italy, Sacramento;
By John S. Chambers,
who
derelict, for the dereliction of
are
the
for
proper
Government, the expenditures that are due
support of the
due to fads and fancies,
material development of the coun¬
political machinations, the expenditures that are
to
expenditures that are due to the
and the
with
With
do with political machinations, there should be
With those expenditures that have to do with development and
the proper support of the Government, there should be no complaint.
try.
expenditures that have to
a vast amount of complaint,
if it
is
it
and
logical
only
It is only right,
Government should increase as
fully understood.
were
that the cost of
population increases and as problems of Government increase; but the cost
of Government should keep pace with the growth in population and in
wealth.
In other words, the tax-paying ability of the public should run
right along with the ever-increasing cost of Government.
That has
the case in this State, or perhaps in any State of the Union, and
not
the Federal Government.
in
of
function
the
and
Government
not been
certainly
The creation of unnecessary functions of
even
meritorious functions at too fast a
has added to the cost of Government.
are those things which are espoused mostly by honest,
pace
Fads and fancies
sincere
the
and
people;
politicians
see
the
advantage of swinging this
that group, and so these things are put through.
We have an
here in the State of California.
In 1919 the legislature passed
or
group
illustration
home for delinquent women.
law creating a
a
That is a dream absolutely.
by the Governor, and is costing us about
$250,000, and each year an increase "will grow, with no commensurate
good.
That is simply a fad, a fad of some of the good women of this
State, put through because they acted collectively.
Men have differed, and always will differ, as to how far Government
It
went
through,
was
sign|ed
matter of material development..
should go in the
It is absolutely certain
public money should not be used for selfish aggrandizement, for
of personal interest; yet it is j equally true that money
should be so used for the development of the country, for those things
the
that
advancement
the
which
will
add
laid down, and
to
the
general wealth.
About the best rule that can be
that can be only in a general way,
is that the public funds
it is to do good
development should only be expended where
material
for
citizens.
Take, for instance, agriculture, a basic
industry.
That is receiving Federal and State aid, as it should.
That
does not mean that some individual farmer is singled out, or that some
to
the
majority of
is singled out, but that what will
group
is
industry,
work
the
being
done by
help agriculture as a whole, as an
both Federal and State Governments.
They
control, irrigation, reclamation, water
scientific study of distribution ; and all those things help agri¬
along lines of quarantine, pest
surveys,
in
culture
its
development,
and they should be done.
calls for the expenditure of public moneys should be
closely scrutinized.
There should be nothing done for private schemes;
Anything
but,
on
that
the other hand, there should be a great
What we want is more business
advancement.
more
The main
of the
but
deal done for the public
in Government, but not
Government in business.
thing before the people of
the United States is the education
people to their civic duties, to awaken them to their responsibilities;
to that along routine lines comes uniform accounting, budget
next
systems,
lines'of
and reorganization along the
efficiency
accounting would simply mean that the cities
and economy.
of ? State, and
and the counties thereof, and
the different States, should have the same classification; that a sum of
money received by any city or any county or any State will be classified
on
the books of any county or any city just the same, under the same
classification.
I may illustrate that by a true story that occurred a few
years ago.
A county auditor here in California -remitted $00 to the State
Comptroller under the head of "Miscellaneous," for three scalpB of three
mountain lions.
There is a bounty of $20 for a mountain lion scalp.
The
statistician in the comptroller's office found that his classification was
wrong, that it-should not, be "miscellaneous," but "protection of life and
property."
The auditor wrote back that he would act on the suggestion
of the comptroller, but that for the life of him he couldn't see how scalp¬
ing a lion tended to protect its life.
The budget, under our form of government, has neither legislative nor
executive powers.
It cannot add nor can it take from the functions of
Government
It is merely a mirror, a picture of the Government as it is
set up.
If the Government is costly, it shows it
If the Government is
Uniform
for
that matter, the
cities of all the States,
SAVINGS
it
•vorage,
sliowsj it.
Ii the Government
is
ran
low,
simply
it
shows
BANK
it.
It
an orderly way of
doing business.
Like
everything else of
derly nature, it minimizes cost
It is not a
ills
panacea,
the
of
Government; but
it
is
a
important
very
ticularly if due publicity is exercised when
President, or Congress, or the Governor in
is
not
the
by the recommendations
of
or-
budget is prepared.
in
or
a
The
Federal
same
such
circumstances, the budget
good; and the people should be
do.
It is
of
the
to
as
toward
has
orderly
an
way of
political
nature
mounted
and
of
and
should
For that
mounted
doing away
to
appeal
the
with
to
come
until
until
pass
they have taken
and
show
their
to
units
12
or
the
an
their
of
15,
units
crat
pro-
interest.
We
have
here
the
State
20 at the most.
That
means
excessive
more
taxation,
and that the
the
be
hence
tax
fair,
Federal
and fruit
Government.
tax
agents
in
the
system, to the
Federal
series of
a
Government
aiid
they
certain
of
to
agents of the States.
it.
Later
The
the National
on
end
war
about to
was
Tax Association
appointed
consider
the tax problem in the
United States, and
That committee recommended a
certain formula
States.
would
do
to
revenue
break,
a
all
requirements.
It
first
certain
by the
encroachment
of
States.
is
This
incomes,
the
two
Federal
liarly
war
A
and
there
was
urged
a
fa-
uniformity of
serious situation is that which relates to the
Federal Government
upon the
tax sources of
the
very
the
particularly
that
sources
Government
State
a
The
circumstances;
States.
true
had
took
them
function, because of
to
came
The
us.
along
been
the
well
of
inheritances
and
of
by the States before
Taxation of inheritances is
pecu-
up.
its
lines
developed
nature.
•
was
in every
forced
to
reach
out
direction for additional
revenue; and so it is apparently that the
of
incomes and of inheritances
by the Federal Government has
stay.
This threatened permanency has
brought about a very
serious situation.
The taxation of direct
incomes and
inheritances, both
by the Federal Government and by the
States, means certain multiple taxation, and in a good many instances it
means
triple taxation and even
more.
I know of an instance
myself where taxation along inheritance tax
taxation
to
come
lines
almost
amounted
there
should
be
of
the
States
to
confiscation;
conference of
a
to
devise
some
the
fiscal
system
of
and
that
is
another
reason
why
agencies of the Government and
taxation
which
would
provide
a
division of sources, which would avoid
multiplicity of taxation, and
uniformity.
The main question before the
country to-day is
reduction of expenditures; but next to that in
importance is a fair taxation
system.
The reduction of the tax burden
may bring relief;
but only
a fair taxation
system will so spread that burden that it will fall
fairly and
proportionatley upon all.
proper
would
give
Another line
Federal
aid.
of
It
encroachment is that of Federal
is
not
an
advantage, but
a
aid, so-called.
detriment.
It
is
It
a
Republican, I
bureaucratic
system
aid
It is
system.
in
was
am
enough
of
slipped
that
in
Demo-
a
upon
vicious system of
a
California says that all
property, except
States, shall be taxed in
propor-
Since then
we have
exempted nut
aid, property up to a certain
up to a certain amount of
of
war
property
every
collegiate grade (whatever that
may mean)
burden, and the bonds of the State, national
and the
Tax exemption is
fundamentally wrong,
class of property owners—and that is what tax
any
taxation.
of
It will be
money,
actual
any
least
at
it
gives
it
found
to
if
Stop exempting
the
sum
people have to
of
will not
same
chance
a
directly.
that
specific
class of property holders, the
and
assess
estimate
for the
money
so
vote; but, if
just how much
record of the value of property
exempted,
dollars.
a
It makes for
but
billion
a
pernicious form
of
exemption is that of exempting the bonds
Government, the State Governments, and the political sub-
Federal
going to
keep
towards
up
divisions of the
a
State
Governments.
That
makes for a
tax-dodging class,
privileged class, and if continued without restriction, it is
in the end great industrial unrest.
criticism among the so-called
mean
It is all coming under a
working classes, people of that kind,
going to end, if persisted in, in dire disorders in the United States,
iBut beyond that, it is
taking money from business, it is retarding development, checking investment, and choking
development.
People who can
put their money, or the bulk of their money, into
tax-exempt bonds are
not going to put them into the bonds of
public utilities or any other prisevere
and is
vate
corporation.
That
that
means
utility, in order to sell its bonds,
That means a higher charge to its
the private corporation or the
public
has got to increase its rate of interest,
The system is
consumers.
fundamentally
just said, choking business,
choking development.
A man can be unjustly
taxed through tax exemption of somebody else's
property just as much as he
can be
unjustly taxed by too high assessment or too high tax rate.
The
all
choking
system
Union,
I
the
of
the
through,
way
investments,
just endeavored to
high spots,
I
as
have
I
as
"This is
better one."
The optimist
for,
this
make
knocking,
better
a
sketch
them.
see
and the pessimist said:
to
and,
and
of tax exemption in the nation
is fundamentally wrong.
have
and
for you
in
in
the
a
poor
old world.
properly replied:
world."
We
a
a
lot
States
of
manner
the
some
pessimist once met,
I could make
"That
hear
rough
very
An optimist and
a
various
is what
of
we
criticism,
much
a
are
here
lot of
a
if
you will; but I think the time has come for action, and I
know of no group that can exercise more influence in the
country to-day,
unless it be the newspaper group, than the bankers who are in touch with
depositors, with
your
do
can
about
is not
that
as
to
men,
vicious from
a
group
the
stockholders and with,the general public.
You
than any other group, unless it be the newspaper
public to
their
civic
responsibility,
to bring
your,
more
awaken
the
education
of
the
people
to
their
civic
duties,
and
through
you.
awakening put
an
end
to
the
present
disastrous
situation.
I
thank
Composite Banks
By H. P. Borgman, Vice-President,
In
discussing the adequacy of the Michigan Laws
separation of savings assets in composite banks,
brief review of these laws.
Prior to 1889 there
the
State
State
banks,
was no
although
Legislature enacted
charge of
as
I
to the
am
People's
segregation
obliged
to
give
or
a
banking department in Michigan to supervise
had a general banking law.
In 1887 the
law creating a
banking department, to be in
we
a
commissioner of banking and amended
the existing laws to
conform with the demands of the times and
this law became effective 1889.
Nearly
a
every session of the
ments to these laws and the
as
Legislature since that date has made amend¬
following synopsis is
a
result of the amendments
the laws stand to-day:
Our law
provides that five or more persons can organize a bank with
capital ranging from $20,000 in cities or villages of 1,500
inhabitants to
$250,000 in cities with a population exceeding
110,000, with a further pro¬
viso that when the total deposits of
any bank exceeds the sum of $5,000,000
the capital of sai<i bank shall be increased to
$400,000.
When Articles of Incorporation are filed and the
banking Commissioner
has satisfied himself that all
provisions of the law have been complied with,
he issues a charter,
authorizing the bank to do such
banking business
articles specify.
These may be for
both classes of business combined.
a
as
its
commercial bank, a savings bank or
The management of the bank shall
be
us
striking
United
1849.
financial aid—let them do
vote,
so
most
the
of
wrong
Federal Government
are-
schools of
tons
sum
any
away
The
particularly in the
was
under
laws
runs
committee
suggested that real estate, tangible property, be taxed at the place of
situs, in tjie State of situs; that
incomes be taxed in the State of
domicile; and that there be a certain
tax upon the net
earnings of business.
An inheritance tax also
vored
it
which, if adopted,
away with multiplicity of taxation and would
produce sufficient
meet
do
quired to
nothing
so
States
money is being run away with.
Under the present system we do not know,
A few years
ago it was estimated that the value of church
property in
San Francisco exempted from taxation amounted
to twelve million dollars,
I would venture the assertion that the total value
in California of church
property exempted from taxation is as much as
seventy-five million dollars.
Nobody knows, because the county assessors have never been re-
the
that there might be a better
understanding developed, particularly along lines of
uniformity and sources
of revenue, and to avoid
multiplicity of taxation.
A few years
ago there
was a
meeting at Atlanta of the representatives of the National
Tax Association, in which was represented certain
agents of the Federal Government
and
certain
a
interest of
con-
of
The
Republican and the Democratic
parties
in Washington as
against State sov-
householder,
every
over 50
property from
vote
people proportionately,
State, but as between the
There should be held
of
such matter.-
any
educational
power
bearing trees, developments
exemption means,
any
the
the
in
political subdivisions of the state.
their keeping.
by the amount
taxing system be
the
of
the
That
If people desire to aid
measured
that
upon
only within
overhead, but condi-
that rests
power
fall
shipping
intelligent interest in things
necessity
burden
not
betweep the fiscal
the
the
to
tion to its value.
churches,
improve until people take a
by exercising the
and
States
Government.
aspects and highway
the Federal Government of the
happen to be
opposed
of
States to discuss
came
While I
be
to
amount
or
Federal
health
that exempted by the laws of the
Government
in
the
The constitution of the State of
the average business
man; but that will
awakens to the needs of the
situation,
in
further
at the roots of our Government, striking at State
sovereignty, State independence, and adding more not
only to the national but the State tax
burden and to the cost of living.
should
interest
centralization
under this so-called Federal
of
a
of
of
care
differences between the
mostly
ereignty.
always
Government
employees.
Such
just as much as it
(concern
an
veteran,
should
ferences
'The
most of
from
States and
of
with unnecessary
away
Then, the expenditures of Government should be
Taxation
the cost
reason
has
It is
of
tions will not
equitable,
trend
politician
and show their interest
derived
budget will
unnecessarily.
The great need is
and economy, which simply means
intelligent and continuous
by
power
or
public
the
themselves'
taxing
assumption by
preroga'
tives of the State.
It becomes worse when
we
stop to consider how this
money is handled.
As a
rule, the joint money given
by the Federal
Government and by the States is handled under
Federal control, which
means a bureaucratic system of
Government, one of the most vicious systerns we can imagine.
under
even
direct
the other States, I
think, anywhere from 100 to
Government that should be
compressed under functional lines
California, and in
125
a
unnecessary
average
appeal to the average taxpayer
not
time,
the
projects.
instrumentality for
just what
Government,
reorganization along lines of
efficiency
along business lines.
It would be
doing
gram
great
not
entirely able to take
were
the
and
Government,
a
are
the
It is
doing business, showing the exact cost
publicity, will result in bringing about
under due
enlarged patronage.
mounted
It is
made to understand
economy.
Now,
been
simply
Government, and,
certain
good.
was
Government,
those lines.
Constitution.
our
every
along:
The system of Federal aid
usually comes along lines of health,
education and public
highways.
It is not, or at least should not
be, »
function of the Federal Government to aid
Legislature,
the
budget under our laws and
The budget is
merely advisory.
It is prepared
by trained men, submitted to the
Legislature or the Governor or the President or Congress for their
guidance, and that is all.
Here in California,
in the Legislature of
1921, we had a budget that called for 81
millions of
dollars.
When the
Legislature had concluded the
grand total was 91
million dollars, an excess of
ten million.
At the
under
195
point oi view. ^ It is
striking almost at the root of our systern of Government in the
United States.
The States, under the
misapprehension that they are getting something for
nothing, are assuming functionsand entering upon projects with the
Federal
Government; and, by the
sanction of the
almost
or
cpre-all, for the
instrumentality, par-
State,
any
bound
an
is
:
DIVISION.
State Bank, Detroit, Mich.
in the hands of
a
board of directors (not less than five) who shall be elected
annually by the stockholders.
The directors elect the president and vicepresident from among its members and appoint a cashier and such other
subordinate officers as may be necessary and every officer or clerk
handling
funds of the bank must be
placed
tinder bond.
The bank is then under the
supervision of the State banking department, and this department is
required to make two complete examinations of the bank each year.
In
addition to the examinations made by the banking
department, the di¬
rectors of the bank
once
are
every six months.
obliged to make
the report must also
a
year
thorough examination of the same
a report of its condition to
when called upon by him to do
be published in
which the bank is located and
banking department.
a
Each bank must make
the commissioner four times
an
a
paper
so
and
circulated in the city in
affidavit of publication forwarded to the
The custom has
grown
in Michigan for the
com¬
missioner to call for these
reports at the same time that the Controller of
the
to
Currency calls for the reports of National banks.
be
a most
satisfactory arrangement
as
it gives any
This has been found
one
interested
a knowl¬
edge of the
condjtion of all local banks, State and National, on a given date.
The commissioner
keeps these reports on file and if he has reason to be¬
lieve that the proper reserves are not maintained in any case or the law
in any manner violated, he can call for additional
reports or order
an exam«
BANKERS'
196
CONVENTION.
savings depart¬
If upon such examination
demand that they be remedied
-ination of the bunk.
satisfactory he can
close the bank.
..
Each bank pays to
gross
he finds conditions not
within a certain time or
~
the State a fee amounting to
amount of its assets at
l-100ths of 1% of the
with a minimum
the time of its examination
this fee is only paid once each year.1 Banks that are organ¬
ized to do both a commercial and savings business have certain rules laid
down governing both branches, but the savings department will be the only
preceding section or shall not keep the investments of the
ment separate or shall not in every respect comply with the requirements
of such section, shall be liable to the State in the penalty of fifty dollars for
each and every failure, neglect or refusal to comply with the provisions of
said section, to be recovered in a suit to be brought by the attorney-general
in the name of the people of the State of Michigan in the circuit court of
•one
touched on here. "
required to maintain a reserve of 12% of its savings deposits
either in cash in its vault or on deposit with reserve city banks or invested
,fn United States Bonds.
Three-fifths of the remainder, or about 54% of
.»the whole, shall be invested in certain classes of bonds which are described
The bank is
.
4n
first mortgages on real estate worth twice the
The remainder of the savings deposits can be
other evidences of indebtedness under certain conserva¬
the bank laws, or on
amount of the
(loaned
on
mortgage.
notes or
tive limitations.
the
lines.
While the Michigan Law
do not
surround the invest¬
they are fairly well
protected from the hazards of commercial, banking.
The banking law of
the State specifically designates the classes of loans and investments in which
savings deposits may be employed and the banking commissioner of the
Federal Reserve Bank came
wato being, gives State banks the right to purchase slock in the Federal
Reserve Bank and adjusts the reserve requirements of State banks that
become members of the Federal Reserve Bank, to comform to the Federal Act.
The rate of interest paid by State banks on savings deposits is not fixed
by. statute, but is loft entirely to the banks themselves, although the law
provides that the interest must be paid at regular and stated periods.
In 1909 the banking laws were amended by the addition of a section
providing for the separation of the savings from the commercial invest¬
ments, and in 1919 this section was again amended to read as follows:
Section 29.
the banking laws, after the
Any bank
combining the business of a
commercial bank and
kind of busi¬
relating
and
banks:
savings bank shall keep separate books of account for each
Provided, that all receipts, investments and transactions
to
each of said classes of business shall be governed by the provisions
restrictions herein specifically provided for the respective kinds of
Provided further, That all the investments relating to the savings depart¬
ment shall be kept entirely separate and apart from the other business
the bank, and that the twelve per cent reserve required by the provisions
this Act to be kept on the savings deposits, shall be kept separate and
tinct on the books of the bank from the reserve required on the
a
ness;
of
of
dis¬
commercial1
hand
deposits, and that such portion of said savings deposits as are on
un loaned or deposited
with other banks or reserve agents and the invest¬
ments made with the funds deposited by savings depositors shall be held
solely for the payment of the depositors of said funds: Provided further
obtaining consent of the Commissioner of the Banking Depart¬
savings bank may, in ease its savings mortgage and bond invest¬
exceed the requirements of Section 27 of this Act, set aside a portion
That upon
ment any
ments
of its excess mortgage
issue
investments, not exceeding its
mortgage
debentures or
capital stock, and may
certificates with interest payable at
stated
periods secured by such mortgages so set aside.
The debentures or mortgage
'Certificates so issued shall be secured by only such mortgages as are upon
unencumbered, improved real estate in use for residence or farm purposes
only worth at least double the amount of the loan.
The records of such
mortgages,
debentures or mortgage certificates shall be kept entirely
separate arid apart from the other business of the bank, and such mortgages
shall be held solely for the payment of such debentures or mortgage certifi¬
cates, and all funds received from the sale of such debentures or mortgage
certificates, and all funds received from the sale of such debentures or mort¬
gage certificates are to be exempt from the reserve requirements of this
Act: and all such debentures or mortgage certificates shall be exempt from
all taxes whatsoever except inheritance taxes.
Sec. 29a. Any bank combining the business
savings bank which
of a commercial bank and a
shall not keep separate accounts as
Real
By W. B. Bakewell,
required by tjie
Chairman,
ladies and gentlemen: In
committee has asked me to speak
distinguish between the current rate of
In mortgage loans we are
applied to this particular class of
investment.
The funds which find employment in these loans are, both in
their origin, in the nature and term of their employment, essential invest¬
ment funds.
Whether accumulated in the hands of individuals or of in¬
stitutions, they represent surplus saved capital of the community and seek
investment for extended periods of time.
While at times largo amounts
of commercial funds often invade the investment field, seeking temporary
or speculative employment, yet so far as this type of investment is con¬
cerned, the real estate mortgage loan, such funds play a very small part for
the reason that mortgage loans are not convertible and do not attract
economic and social forces.
concerned with the investment rate as
rigid observance of the letter
and the spirit of that law,
periodically required to be filed with the banking
kind and classes of investments belonging to the
commissioner details the
and in event of the
savings side of the bank
liquidation of the bank, savings
commercial funds and investments and
applied in payment of savings deposits.
Savings accounts usually represent
the accumulated funds of people who can ill afford to lose any part of it
and by requiring the banks to invest such funds in securities which are
considered the safest, the chance for loss is reduced to the minimum.
There have been no instances in Michigan in the past few years wherein
State banks have been closed by the banking commissioner, the last one to
be liquidated occurring m 1913, which speaks volumes for the wisdom of
our laws, when one considers that there are 553 chartered State banks in
Michigan with total deposits as of June 30 of $874,182,456 67.
It la
worthy of note that the penalty prescribed In Section 29 for failure to keep
separate accounts as required by the law, has never been imposed.
State banks generally have featured their savings departments encourag¬
ing the public to become Savings depositors in every possible way and
adopting the best methods available for the protection of these depositors
and we believe that the reserve requirements, limitations as to investments
and separation of accounts as required by the Michigan laws relating to
banking, are about as satisfactory as they can be made.
investments are
segregated from the
of the branch bank system has
the depositor, rendering it unneces¬
deposit his savings.
There are in Detroit
alone 175 branch hanks, 26 of which are owned by the bank which I have the
honor to represent.
At these branches no loans are made but all the other
functions of the bank are performed, and they are a convenience to the
In the larger cities the development
brought the bank almost to the door of
for him to go down town to
sary
public and render a service which
We
are
strongly in favor of the
is appreciated.
branch bank system-in cities,
furnishing
of deposit in a strong
centra! bank, thereby avoiding the dangers of a multiple of small private
banks which so often influence deposits through convenience rather than
through business confidence or judgment.
We think it will be generally
agreed that a large number of small banks spread through a city is a con¬
stant menace to public confidence in the financial stability of all the banking
interests in the city.
'
'
as
it does,
conveniently located, diversified places
In
—segatroM
Vice-President of the Mercantile Trust Company
your
fluence of certain
State enforces a very
The sworn statements
Estate
studying the subject which
oivit is important, first of all, to
Literest on commercial loans used
for commercial working capital and the investment rate of interest on f untied
loans which are used for fixed capital.
The interest on these two kinds of
loans is governed by entirely different laws and moves along different lines.
While it is true that at times both classes of loans are affected by the same
Influences, nevertheless a change in rate in one does mot necessarily imply
a corresponding change in the other.
Failure on the part of the public to
understand this distinction is the cause of a great deal of dissatisfaction on
the part of borrowers, which 1 have no doubt every one here has experienced.
Am soon as they read in the paper, for instance, that the discount rate of the
Federal Reserve Bank has fallen to 5M or 6, or whatever it may be, they
immediately expect-that the real estate Joan rate will correspondingly fall.
In general, commercial rates respond quickly to changes in the volume
and activity of trade, while investment rates I move slowly under the in¬
Mr.
patterned after it,
and in fact provide for separation
and the Ohio Law which was
provide for absolute segregation
only as a matter of bookkeeping, the safeguards which
ments of savings deposits are such that we believe
>
An amendment to
be situated.
this separation on the books of the bank of
savings from the commercial Investments was a move along the right
Experience has shown that
-
-
in which such bank may
any county
fee of 125. but
same
factors plus the
of San Francisco, Cal.
influence of taxation,
In the bonds of States
and
municipalities of the first class the only factor present is the basic rate,
because with these risks and cost of handling are eliminated, marketability is
far as the large
concerned, we may consider that the
practically equivalent to the prevailing rate on municipal
assured, and such
money centres or
basic rate is
bonds free from taxation; so that, as
the open market is
bonds.
In mortgage loans we
have all of these factors present except marketability.
here because those who invest in mortgage
This factor is of no importance
loans desire the interest to
term of the
continue on the funds so
employed during the
loan.
In
of
accuracy and to build up a theoretical mortgage loan rate; or, reversing the
process, to take a given rate arid strip it of most of these factors—for
instance, deduct from it the taxes to be paid and make allowance for cost of
handling and for risk—and_so arrive at the basic rate or the real yield on
the investment.
This, of course, should never be less than the prevailing
rate on municipal bonds of like maturity.
1 think possibly if some of us
who
still carrying loans on a 6% basis would apply this test we would
for anyone familiar with the conditions
locality to evaluate these different factors with a fair degree
It should be
his
own
possible, then
,
are
find that we are not making
could better employ them in
and that we
possibly, or municipal
sufficient money on our loans
government bonds,
bonds.
In actual
by
an
such
practice we find that the effect of the
economic factor is modified
social,
entirely different set of factors which we will call personal or
the local custom, or policy, or reluctance to change any established
as
depositor, and so
on.
Thse social or personal factors act as a drag on the economic factors
temporary investment.
and resist any tendency to change the rate.
It is to be noted, however,
When we come to survey actual, existing mortgage rates we find a great
that these factors are negative rather than positive in their action, and
deal of variation in rate, both as between different localities and even in the
while they have a potent effect in determining the actual rate charged, yet
same locality.
In order that we may have some key to these variations and
they are seldom responsible for any actual change in the rate.
In the long
to changes in the rate which occur, it is necessary to analyze the factors or
run economic forces prevail, and as long as econorlaic pressure acts on the
elements which enter into the investment rate and those which apply
rate it will slowly adjust itself to new levels.
Thus we find that after a
particularly to the mortgage rate.
number of years mortgage rates do change materially, and rates at present
The elements in the investment rate are five in number: first, the basic
are from one to two per cent, higher all over the country than they were
rate, that is, the bare loan value of the money available for investment as
in pre-war years.
The local variations which we often Find, even .in the
determined by the law of supply and demand: this is what economists term
samehity, for instance, are due to these social factors.
It is often a question
pure interest because it takes into consideration absolutely no other factor
of policy: one bank will maintain its old rate while another will yield to
4han supply and demand; and, second, the element we call insurance against
economic pressure and raise the rate, which results in these local instances of
risk.
This is the added amount which is included in the interest rate to
difference in rate.
induce an investor to assume the risks which pertain to an investment.
The
Mortgage loans are essentially or primarily a local form of investment and
other factor is the cost of handling, that is. the cost of collecting interest,
are. for the most part, dependent upon the local supply of surplus capital.
-etc.
The fourth factor is that of marketability ; the fifth, and by no means
In certain sections this supply is augmented or reinforced by the funds of
the least important, is the factor of taxation, local or federal, in reducing
the savings banks in near-by cities, by the funds of insurance companies or
>the net yield on the investment.
In different forms of investment these
mortgage loan companies.
Each community, then, vrill have its own
factors have a varying degree Of importance and some one or more may be
basic rate as determined by ratio of supply and demand for surplus funds in
entirely eliminated.
For example, in stock investments the important
that community, to which of course, are added the other elements so as to
actors ars basic rate, risk and marketability.
In corporation bonds these
rate or fear
of offending the borrower
who may also be a
SAVINGS
arrive at the local rate.
It is not surprising, then, to find
BANK
great deal of
variation in mortgage loan rates in various
parts of the country.
I have
prepared
schedule
a
based
upon
received
reports
banks in every State in the Union which disclose
both urban
handling
and rural.
largely
are
In
urban
loans
eliminated.
The
the
a
from
representative
wide variation in rates,
a
elements
of risk
and
cost
of
securing such loans is
readily marketable and is capable of accurate appraisement.
The possibility of employing large sums in such loans, well secured by
tangible
values, has long made mortgage loans a favorite form of investment for
property
savings banks, insurance companies, trusts and individuals.
We find, then, that in the larger cities and other
money centres, urban
loans command rates which
compare very
investment, and in
attained
which
most
are
seek the
bonds.
the
sections
6% basis, but the trend has been
a
prevailing rate of interest
rule range from 6 to
as a
reach
to
In certain
high levels
of the
eastern
largely served by mutual banks and insurance companies
exempted from the operation of the income tax these loans are
are
handled profitably on
rates
they have failed
cases
by good corporation
States that
favorably with other forms of
funds available
7%.
upon
to
In the smaller towns and cities where the
less adequate the rates will range about 1
%
are
higher,
or
from 7 to 8%.
and the
find
Ave
prevailing rate
5%.
rural
The
varies
in
great deal greater variation than in urban loans,
these at present ranges from 6 to 10%, although '
city in New Hampshire which
for this greater variation, of
reason
have
loans
a
on
I had
reports from one
as
gave
the rate there
lies in the fact that
course,
greater degree of risk attached to them,
a
different
localities.
It
is
also
due
to
funds available for investment in different rural
the
latpr-established and well-developed
and
the
fact
and this risk
the
of
amount
sections will differ.
prosperous .rural
Federal
com-
panies that specialize in these loans find that the ratio of loss Is insignificant,
Such loans attract the funds of savings banks and
nearby centres, while
many of the large insurance companies prefer well-selected mortgage loans
or farm mortgage loans to all other classes of
investment, and
mortgage
loan companies act as a means of
distributing them
mate those on the best class of urban
private investors,
among
Where these favorable conditions exist the rates
rural loans
on
loans, and in
actually less than those prevailing in near-by cities.
approxithey
some cases
are
As the distance from
money centres increases, the rate advances, and when we
Land
1,
rural
tell
to
loans, but it
what
to
extent
interesting to noet
is
1920, the total amount of such loans made by the-
banks
amounted
to
about
three hundred
and
fifty miHioo
was after, I believe, a little over three
years of operation,
while the total amount of loans held by the joint stock banks amounted to-
about seventy-eight million, the total of these two, I think, would represent
about 10% of the total Federal loan business.
The
principal point of attack
this
on
has
system
been
the exemption
of their bonds from Federal taxation.
The land banks and the joint stock
banks have been greatly hampered during the past year by suits involving
their constitutionality, but recently the Supreme Court has settled all such
questions,
and
I
believe
that
the
Federal
banking system
is
Avell
now
grounded not only from the standpoint of law but from that of public
policy.
I wish I had time to go into the subject of tax exemptions and their effect
loan rates and interest rates in general; it is
on mortgage
is
of great
and
importance,
economic
but it is
It
questions.
large
a
one
clear,
seems
subject which
a
and involves both political
however,
that
come
to the
bonds but the municipal bonds and State bonds and
more
important factor in the rate.
Until land values have become
per-
so
the
of
creation
forth—must tend
to break down our present system of progressive taxation and must tend
to sustain and raise the general level of taxation.
The tax rate is
the variable factors that enter into the interest rate; for that
thing that tends to sustain the tax
I cannot do
rate.
When
more
of
any-
than touch upon that and call it to your attention,
to the
we come
one
reason
Avill tend to sustain the interest
rate
question of the future movements in interest
rates
I find that the opinion of most bankers is that mortgage loan rates will
remain at present levels for some time to come.
In this little questlon-
naire that I sent out I have response from eighty bankers situated in the
different States, and of these sixty-one expect no change in the rate in the
near future, while nineteen expect a softening of rates in from six months
I believe it is
to two years.
bold Individual who will undertake to
a very
forecast interest rates or price movements—because it is nothing, after all*
but a price movement.
I believe it is more sensible to focus attention on
the variable factors in the rate, for it is these factors which will bring about
any
changes in the rate which
The factors are, of course, the
may occur.
basic rate and the tax rate.
sparsely settled and newly developed districts the element of risk becomes
an
Dec.
on
absorb
dollars, and that
In
sections
the risk involved in mortgage loans is very slight and the hanks and
I
that that
and mortgage rates have*
It is impossible at this time
Federal system will
great quantities of tax-exempt bonds—not only these Federal Land bank
In rural loans
«■
been little affected.
197
•
system to date would simply bear out this view
the
fall, but not to
investment mortgages, and urban
DIVISION.
As far
as
taxes are concerned, there is little prospect of any reduction in
the general level of taxation in the
near
future.
Even if Government costs
manently established such rural loans command the highest rates of interest
can
and
reduction, and the caring for the growing war burden, will keep the tax rate
run
It
high
as
10%.
as
in order to standardize the interest rates to farmers, to enable them
was
to borrow money at low rates of
have
Federal
Farm
limit of rate
Loan
System
was
It
provided that
was
than forty years.
I believe in
any
many cases
the loans
are
Case they shall not exceed
made for ten
forty
years.
It
thought that by pooling these loans the tax-free bonds which represented
them and which
were
issued not Avith
a
guaranty but under the sponsorship,
really, of the Government, would meet with
and could be sold at
a
ready market
is
within
not
investors
among
the scope
more
than 0%.
nor
the question of public policy in-
volved in granting such assistance to farmers, but, rather, to
point out the
effect, if any. of the competition of these Federal agencies upon private
available for investment.
rather than decrease.
will be
seem
Federal
with
possible for private capital to compete
agencies both
as
be
a
not
case
private capital
so
much
as a
on
the
and accumulation.
old level,
between
clear-cut division of the mortgage field.
advantage of it.
In
of their
themselves
requirement.
some
cases,
account
on
are not
eligible under the requirements of the system.
care
to
avail
of the amortization
qualified and
Where that is the
for mortgage loans.
Moreover,
wo must
come
Mr. President and gentlemen:
Just
as
I
was
leaving for California I had
and I guess it is a case of fools rushing in.
a
my
be assured of is that
It has taken
banker correspondents
Chairman:
are
very
I
am sure
good p.osition.
for our late and very much lamented Comptroller of the
make suggestions
I
for improvements is not always
a
very
therefore had to make just a few notes since arriving;
subject
Acts in
as
man
a
who .does
posits.
the
paying of interest on deposits.
It does define
subject to not less than thirty days' notice before payment.
a
or
as
Reserve Act defines the several classes of deposits
the National Bank Act and further, in Section 24, recognizes
savings deposits by providing for a limiting loans on real estate which
national bank can make t-o one-third of its time
that
The
provides for a reserve of 3% to be maintained of all time de-
The Federal
same
time
"such
banks may
continue hereafter
and that during the
year
demand deposits decreased $1,400,000,000 while
time deposits increased $200,000,000.
The savings department of the national banks has become
as
deposits and further states
heretofore
establishment
some
of
such
departments
and
the
conduct
forum of special protection for the savings de-
posit is because there has been
no
The creditors of national banks
urgent demand or need for such laws,
are
all given uniform protection and the
losses to depositors in national banks covering the whole period of the. exisso
small
as
compared with the total deposits
has been still further reduced that Congress has,
to
receive
time
by
some
that the provisions of the
no
doubt, not been im«
Acts, if the laws
are properly
It is believed
National Bank and Federal Reserve
administered, provide every possible safety
in the form of legal enactment, and that the protection now afforded deposltors
meets all
possible requirements.
That
the depositor who can
protect himself by withdrawal at any moment and whose
sidered of
a more
is a matter upon which there
if
a
funds
not
are con-
sacred character, should have the maximum of protection
can
be no difference of opinion,
system of investment which removes the possibility of loss can
devised the problem could be solved.
be
Those investments now authorized
to be made by national banks, with the possible exception of investment in
bonds,
are as safe as any
and have proven to be the best for all classes of
June 30 1921,
purchase of mortgage bonds of railroads, public service corporations and
appears
the national banks held
of time deposits and
the
impor-
$9,000,000,000 of demand deposits
It
therefore that the
6aAlngs business of national banks is legitimate and legally authorized.
It is interesting to note that
for
if, very
That Congress has not passed laws specifically
depositors, as convertible investments—loans to individuals, firms and
corporations eliminating as far as possible all market risks, are to my mind
much safer investment for the funds of our depositors than the outright
deposits and to pay interest on the same."
$3,100,000,000
Bakewell for his very carefully pre-
pressed with the necessity for legislation along these lines.
thirty days and time deposits as savings accounts and certificates of deposit
are
come,
(I regret that I haven't the exact figure available) and of late years the loss
deposits as demand and time, demand deposits being those payaole Avithin
which
time to
tence of such banks have been
the adequacy and extent of national bank and Federal Reserve
la av further
when they state that we?
some
and I treat the
providing protection for savings.
savings departments nor the
are correct
popular,citizen,
National Bank Act does not specifically provide for or authorize
The
change.in mortgage rate®,
Act Affecting Savings Deposits
thereof and providing
Currency, and my fellow-confidant, has found out that
any
to reach their present levels,
I
providing
a very
and should
paper.
would further protect us
and improve the savings deposit situation.
very great
American National Bank, Biehmond, Va.
Probably 1 also mis-
who makes suggestions for amendment is not in
market of
I voice the sentiment of the meeting when I say
much indebted to Mr.
suggested improvements or amendments of the Nat ional Banking Act that
man
open
(Applause.)
tant part of the business.
a
some years
expect them to remain at these levels for
I thank you.
understood the general idea, as I understood that he wanted us to talk on
I feel that
level as that prevailing in the
nation-wide movement must be
we may
slowly.
and I think
can
National Banking
telegram from the secretary asking me if I would not say something on this
subject;
a
of the hopeful signs of the times lies in the wave of
one
One thing I feel
will
such
By Oliver J. Sands, President,
go.
far toward the increase of the supply of investment funds,
go
pared
to
However, the demands for capital
which is sweeping over the country at the present time and which
is showing itself in public, corporate and individual channels.
The cumu-
we
Amendments
indication at the present time of such
remember that while the mortgage rate.has risen it has
not reached nearly as high
affected by
The History of the Federal Land Bank
some
still heavy, and it is impossible to tell how far this movement will
loans will continue to be made by private capital and the rates will not be
Federal competition.
There is
lowering in the level of interest rates.
are
are not
case
mortgage
on
flow in to the mortgage field and thus increase the supply of funds available
Those loans
however, farmers will not
privilege, principally
The great bulk of rural loans
are
open market investment rates should fall to their
should fall below the level at present prevailing
lative effect of such
Federal banks and
the
which qualify under the requirements of the system in most cases will take
a
or
If the
economy
same
f believe, gentlemen, that it will
of competition
The supply of funds
at present otherwise invested or the creation of new funds through saving
the investment world.
regards the rate and the length of
run.
With the final readjustment in building costs there
great increase in requests for building loans.
I believe that
It would not
terms
a
The demand for mortgage loans should Increase
must come from one of two sources—either the release of funds which
capital.
time for which these loans have to
Any change in interest rates, then,
must come from some change in the ratio of supply and demand of funds
a
of my talk to discuss all of the details of the
requirements of the Federal system,
at its present level for years to come.
public debt, of debt
on a
loans, funds would undoubtedly bo released from investments and would!
prices which would enable the banks to meet the admin-
istrative costs of the system and still keep the rate at not
It
the
annual payment sufficient to amortize his debt in not
an
twenty years, but in
or
developed.
Avas
so to
their lands, that the
on
such loans should be 6%, and in addition the borrower is
on
required to make
more
interest for long periods of time, and
opportunity to gradually amortize the debt
an
be brought doAvn, the requirements of interest
on
BANKERS'
198
CONVENTION.
convertibility, even of mortgage loans on real estate. I
within bounds when I say that the losses sustained by the
national banks of this country on account of shrinkage in market value of
U. 8. Government bonds, has been greater than all other losses combined
owing to their
believe that I am
within the same
period.
National bankers
which would
would, no doubt, favor any reasonable amendments,
savings depositor, for the development of
surplus of banks and that provision of
The violation of that provision has been
the cause of greatest loss to national banks.
Now if that is good as between
the bank and its debtors why should it not be good as between depositors
and the bank?
The combined deposit'or unsecured indebtedness of any
bank should never exceed ten times its capital and surplus.
The law
education of the general public in the
functions of the bank and the increase of confidence is a matter of great
importance to the future growth of the business as well as the general welfare
of our people.
We have found out during the late unpleasantness through
which we have been passing during this year that deposits are a dangerous
thing and that a bank's weakness might be in its large deposit liability.
I am sure the general laws, both State and national, are too lax in the
matter of capital of banks."
In banking, as in all other business, manage¬
ment is the most important factor, and able, competent management is not
always available, at the price which small banks can pay.
We limit loans
its infancy and the
We
is
in
Resolutions on Postal Savings
As
the
whole it is our
a
Federal
and
Bank
"Resolved,
Association
That the Savings
deprecates
savings banking
against any legislation to
'
It is the sense of
Bank Division of the American
that end.
"The existing system
I nterest,
function of government
of savings banking, the expense of which
this Division that is not a proper
in a competitive system
be defrayed by taxation.
to engage
is to
Bankers'
enlarged system of postal
increased rate of interest, and hereby protest
security and flexibility.
Committee
f continued,
Chairman.
recognize the need for a
we
shall be taught:
increase in the rate of
should be utilized solely as an
adjunct to existing
postal savings to be redeposited in the communities
where collected, thereby best promoting community development.
"While in sympathy with and willing to cooperate in any movement to
banking facilities, such
Resolved, That the Committee on Savings be and it is
adopt or develop a standard A. B. A. system for school
savings banking, which, when approved by the Executive Committee of
this Division shall be known as the A. B. A. system of school savings
"Therefore, Be It
banking.
by the Los Angeles
and to contain
effort to make it appear that the present
construction industries is due to discrimination by the
savings bankers.
We reaffirm our belief in the permanency of value
which has always characterized the mortgage on real estate security. We,
have observed no tendency to withhold loans thereon when a safe margin'
of security was present.
We believe that the banking system of this
country will provide an anilpe fund of capital for mortgage investment in
proportion as construction interests are able to balance their costs and
improved conditions permit such employment in industry and in commerce
as
will provide better wage conditions, and therefore a larger ability to
former
several
on
bankers, and especially by Dr. M. N. Avery and his
the Savings Bank Division.
The con¬
Savings banks topics by State
Superintendent Stern, and Former
American
suggestions of permanent value.
"President W. A. Sadd, and the
Next the report of the nominating
Respectfully submitted,
CHAS.
WM. E. KNOX, V. A.
I
Mr. Chairman, and
committee, Mr. W. E.
gentlemen,
Raymond
Savings Bank. Seattle,
For
H.
DEPPE, Chairman,
A. P. HOWARD, A. C.
ROBINSON/
of this report.
the adoption
(The motion was duly
Chairman:
seconded).
adoption of the report of the
All in favor of the
Committee
Resolutions say aye.
on
(The report was
unanimously adopted).
Officers
For Members
Savings
V
Committee of the Savings Bank Division
respectfully
of the Executive
R.
S.
W. E. KNOX, Chairman
GEO.
President,
Washington
Mutual
Beach, President,
Rome Savings
Bank,
j
N.
CHAS.
Wash.
Vice-President: Samuel
Rome, New York, and
Frazier,
Trust &
I
move
President Bridge¬
Brock, President, Home
Vice-President, Hibernia
Committee: S. M. Hawley,
Bridgeport. Conn.
Geo, E.
Bank, Boston, Mass.
Alvin P. Howard,
Savings Bank, New Orleans, La,
[Signed]
recommends the following nominations:
President:
move
LERSNER,
port Savings Bank,
"The nomination
For
administration,
congratulated upon the success with
-
Knox, Chairman.
Mr. Knox:
members of the retiring
which they have handled the
many important problems which have come l>efore the Division for prompt
action during the past year.
They have set an example of close and con¬
stant attention which it will lie difficult for their successors to surpass.
to be
are
Election of
Chairman:
Superintendent of Banks Dodge,
Comptroller Chambers, and the
members of this and of other divisions of the
Bankers Association, are recognized to be unusually constructive
bankers who are
stagnation of the
purchase homes.
savings
the committees for
on
tributions
"Resolved, That we protest
"Resolved, That we deplore any
official A. B. A. industrial
likewise be encouraged and developed, and its intro¬
duction in industrial and commercial establishments shall be approved.
"Resolved, That we express our sincere appreciation of the thoughtfulness and courtesy which has marked the work of the committees appointed
wealth.
exemption.
It Resolved, That an
banking system shall
associates
against the pending proposal to exempt from
taxation certain investments or deposits in building and loan associations,
and we hereby reaffirm our previous resolutions against any form of tax
through the grades, the
principles of business
of banking and the
hereby authorized to
of hoarded money, we believe that the only
effect of an increase in the rate of interest on postal savings will be to
establish the Government as an active competitor in the banking business,
and to divert deposits from usual bnaking channels without increasing the
aggregate amount of savings or decreasing the sum of so-called hoarded
bring out of hiding any sums
standard plan of school savings
the pupil progresses
•
"Furthermore, Be
of postal savings without
the National
ample protection to savings in
management, supervision, reserves, service,
necessity of thrift, the elements
the agitation for an
paying an
belief that experience has proven that
Reserve Acts provide
of organization,
matter
banking to the end that as
and Other Things.
the banking business
of safety is eternal
through unusual times and
amazing way—the price
an
vigilance.
Whereas,
is as follows:
should be provided by law.
passing
are
developing
By Chaki.es II. Deppe,
reportof the Resolutions Committee
the desire for
Some limita¬
of interest on deposits can be abused and
banks to ge beyond the safety point.
The payment
business has led many
tion in this matter
Report of the Resolutions
Mr. Chairman the
most wise.
should be amended in this respect.
further protect the,
such business is in
10% of capital and
to borrowers to
the law has proven
the adoption
R.
WALLACE
BUTTS."
of the report.
(The motion was duly
seconded and unanimously adopted).
TRUST
COMPANY
DIVISION
American Bankers' Association
Twenty-Sixth Annual Meeting, Held in Los Angeles, Calif., Oct. 4 and 5, 1921.
INDEX TO TRUST COMPANY PROCEEDINGS
The Need of
a Worldwide
Vision, Willis H. Booth
Investments, Joseph N. Babcock.
iPage
Trust
Officer—The
Man
Rhodes Hervey
_
Staff Relations and How to
Research
and
His
Report of the Legislative Committee
Equipment,
Page 206
Report of Committee
Wm.
Figures
We
Need,
L.
Page 214
_
Co-operation with the Bar
on
Page 211
Page 216
The National Publicity Campaign..
Page 209
The
Need of
a
Page 217
Report of Committee
H.
Rose berry
-
Page 213
Protective Laws
on
Report of Committee
;
Page 207
Develop Them, P. E. Hatha way. Page 208
Services—Facts and
Page 211
Reminiscences of the Birth of the Trust Company Section.
Morgan
The
Address of the President
199
-.Page 203
--Page 205
The Spread of Community Trusts, Frank J. Parsons
The Relationship of Insurance to Trusts, H. M.
Page 217
Report
of
Standardization of Charges
on
Nominating
Committee
Page 217
World-wide Vision
By Willis H. Booth, Vice President of the Guaranty Trust Company of New York.
For three centuries after the first
flung along
in
Eastern shore
our
we
developing this great land.
the markets for
our
foreign lands
we
60 billion dollars, we are the wealthiest nation in the world
was
Across the
seas we
and in all
seven seas
and traded in
many
obtained Europe's money and men.
the
the vast wilderness and
as we
forces,
conquered
pushed farther westward,
ever
than doubled the
to
of
And almost
immediately
came
even
have put
of the United States and gave
North America.
without the
the provi¬
adjust itself tb its
war
the
the westward march of civilization.
Then, all the internal
As the holders of
•conditions of the United States
completely altered by
came
a
destruction of wealth
a
creditor position in
before it
was
responsibilities.
new
an
extremely
fully trained
The great waste
unevenly distributed.
We have been the beneficiaries of this unbalanced condition.
problem of using these wonderful waterways and facilitating
were
enormous
has left the wealth of the world
At the
The locomotive
would ultimately become
war,
The
this country into
dential, utilization of steam in navigation, which solved the
the introduction of railways.
creditor position to
our
fact, the United States with Its
short space of time and .really
people the control of all the great river systems of Central
area
than
and the rapid movement of events which the war entailed,
our
The acquisition of 'the Western Mississippi Basin alone
more
matter of
a
us more
the leading creditor nation of the
disposed to attribute
are
As
great creditor nation.
vision increasingly turned inward, rather than outward.
our
We
war.
With foreign people owing
we are
great wealth producing capacity and responding to natural
We sfought and
But,
dollars,
world.
ports.
found the purchasers for bur commodities
which gave us the buying power for theirs.
history.
15 billion
looked for
products, largely agricultural, anjd our
clipper ships sailed the
In
fringe of civilization
looked to Europe for help
and in
just in
not
same
time this destruction of wealth has restricted
capacity for credit of which it
a
a
large measure,
hold
ourselves
time and made possible the outburst of modern American
creditor position
life.
was
the foundation.
large share of the world's tangible wealth
as
the controllers of its credit
aloof from
we can¬
the obligations which our
finance.
The steamboat had materially aided Western develop*
ment, but the railways aided it far more.
grew
"as if the
denly
increased."
filled up;
by
land
Vacant
means
as our
areas
east
the
of
development of
the internal
a
structure,
trail toward the
a
and 86% of
commerce
of
we
the United States
the world.
mileage of those of all Europe.
nal colonization
was
States
was
but also
first time its
of
drawing to
a
The conquest
We Are
as a
on
among
we
all nations.
of
we
the Threshold of Possibilities.
300 billion
With national wealth
dollars and with
a
estimated at
national annual income of
corn;
our
credit
volume and strength.
of the world's gold; 24%
85% of its automobiles.
stand
on
In brief,
the world's agricultural prod¬
•
only the threshold of our possibilities.
visualize,
to
scratched the surface of
development which
measure
would.
up
There
our
have
can
This requires that
treading.
which
new
circumstances
be no turning back, even if we
And, notwithstanding that we are nearer economic
independence than
*
we
We must continue on the path
we are
to the obligations
upon us.
And
much less materialize, our un¬
precedented opportunities.
great World Power.
command the preeminent economic place
we
only begun
the Atlantic
To-day, despite the fact thnt the United States is far from
fully developed,
and underlies
vast, almost inexhaustible, natural resources.
impose
Only
75% of its
We have scarcely more than
close, and the United
over
in
wheat; 25% of the world's dairy products;
contribute one-quarter of
Yet,
the wider Pacific, and was considering for the
position
unequaled
one-third of its mineral products.
accomplished, the long period of inter¬
again looking outward, not only
over
is
ucts; one-third of its manufactured goods, and more than
By the end of 1908, the railways of this country
was
40% of all the gold coin and bullion
52% of its coal; 60% of its cotton; 60% of its copper; 66%
of its oil;
our exports.
commerce
banks, exclusive of the
27% of its cattle; 40% of its silver; 40% of its iron and steel;
clipper ships, which in
magnitude the total international
exceeded the
which
of the world's
merchant marine
exceeded in
of the wilderness
our
The United States produces 20%
that flowered in the famous fleet of
1903
of
in the world is held in this country
of transportation, and more and
1830 carried 94% of our imports
resources
banks, exceed those of all other banks of
the world combined.
replaced
the sea-faring heritage from the early colonists
sun,
The combined
Federal Reserve
Mississippi
wagons were
pioneer spirit blazed
manifested itself in the
By
,
made accessible.
was
Meanwhile,
setting
Cities and States
of their surroundings had been sud¬
the long lines of emigrant
and better
new
more
oxygen
engenders in the world's commerce and
any
other nation, from now on we must
increasingly look outward.
bounded by the
Our vision can no longer be
Atlantic and the Pacific, the Great Lakes and
the Rio Grande; it must
encircle the world.
BANKERS'
'
200
There can be no
permanent peace while famine
CONVENTION.
and unrest
It is equally
all the world's disorders,
tlirough large sections of the world.
stalk
cannot correct
.
its political order is the measure of the stability of its institutions. The most trying situation which we will have uH
the application of this rule will be, of course, in the newrer
obvious
that
We
practical people and naturally restrict our considerthe elements with which we can effectively deal,
countries of Europe, whose financial necessities are most
acute, but whose credit values are much harder to determine.
Every day gives additional evidence of the unfavorable
welfare. And
Buffering from widely inflated currencies and with disorganized political, economical and financial conditions,
our steps will have to be taken slowly and carefully.
Work
and frugality alone can put value behind nations suffering
from currency inflation and deflation by this process is bound
to be a matter of slow accomplishment. In this connection
and emphasizing our new international status in some cities
'in Central Europe to-day, United States paper currency is
the most standard measure of value and it is freely used in
business transactions. It is very probable that this use will
increase and spread as did the use of the Mexican silver dollar
are a
ation to
we
reaction of conditions abroad upon our own
these reactions touch
directly
upon our
so-called domestic
tariffs, foreign trade, immigration,
armament, refunding of war debts, private
Taxes and
policies.
limitation
of
credits, exchange, government loans, moratoria, finance,
all part of the picture.
and many minor considerations are
these vital factors in terms of our
We cannot review any of
own
We realize that no jmnaceas are
needs exclusively.
available and that lasting progress can only be
the
attained by
orderly operation of fundamental economic laws.
of sacrifice
obtain the greatest effect in
we can
tion of the world's
own
only necessary for us to review our
One hundred years
of the same problems
nations in Europe and throughout the world
struggling nation,
that the
new
we
had
many
Blest with Anglo Saxon stability, we were not
This fact, coupled
great wealth of natural resources attracted capital
exposed to violent political disorder.
with
our
from the creditor nations of the world and the
of the wealth producing factors
development
of this country went
oh apace,
History must repeat itself except with the conditions changed,
At the proper
time
must make investments, not so
we
much in Government loans, as in
countries in
order not
but that by
commerce,
Vital Importance of Foreign Trade.
Our foreign trade policies must be
history to find helpful guidance.
have to-day.
in China.
the restora-
equilibrium.
In this connection it is
ago a
It calls
policies and practices whereby with a minimum
for national
the industries of other
only -to benefit ourselves and our
so
doing the wealth producing eapac-
ity#of the world will be increased and thereby the wastes of
constructive.
We can
longer look with comparative indifference upon our
exports as comprising too small a part of our total trade to be
a matter of serious concern when they fall off.
While they
may constitute a relatively small percentage of our aggregate
no
trade (exports being estimated at
10% in 1919) they are a
important percentage of many of our crops, especially
cotton, and food products, and as such make the difference
between stagnation and prosperity in many industries,
in
very
view of the concomitant development of our
productive
Generally speaking, from one-fifth to one-third
of our wheat is exported and from one-half to twro-thirds of our
cotton.
Already we have witnessed the products of field
and factory piling up in granary and warehouse because of
the falling off of foreign buying, and are confronted with one
capacity.
0f the gravest unemployment
problems in our history,
Federal Reserve Board that
is found in the fact that it
demands for capital and it is going to be a question of fine
affords a stabilizing factor which influences both prices and
discernment whether any given amount cu capital should be amount of output.
It enables concerns which miscalculated
employed at home or abroad.
On the wisdom and good the strength of domestic demand to find outlet for products
judgment of the bankers of this country will largely depend which would otherwise be unavoidably carried over, while,
the rapidity with which normal conditions are restored,
on the other hand, it renders possible the filling of domestic
It means that the American people must ultimately become
demand or of requirements that might otherwise have gone
a nation of commercial colonizers as distinct from political
unsatisfied.
From.the price standpoint the effect of foreign
colonizers.
The willingness of a nation to sanely advance
trade is important because, as is well known, only a small
industrially beyond its own oorders after the wealth within surplus is necessary in any given line of goods to drive down
such borders has been reasonably "well determined, marks
prices of such article, while a relatively small shortage as
war
replaced.
sooner
Of course, our own country
its
ability to
progress.
in its growth will have great
will
be
not
It will be
ment.
banking
real'expansion in history
territorial
associated with
an
"the significance of foreign trade
compared with supply exerts a much more
1
America will represent the first
which
It has been aptly stated by the
y
•
aggrandize-
interesting movement to study and as
of the last 10% or
derived.
The future of our foreign trade, as well as our domestic
rests not so much on government and polities
is^only the concrete evidence of business, our
problems oT foreign finance represent the problems of this
proportionate
In most industries it is out
15% of volume that .the real profits are
influence in advancing prices.
commerce,
business men.
"unpegged" by the
mercia) cokmizeis, even witn our financial machinery per- Governments concerned in their regulation in March, 1919,
fee ted, can he rapidly accomplished.
No changes of such and in the following month the United States Government
a
far-reaching character can be safely done except with announced that it would make no further advances to foreign
greatest care.
It is therefore a matter of no small gratifiea- countries, the business of financing our foreign export trade
tion that President Harding has recently voiced a policy
was again placed in the hands of the American people and
which in operation will give proper protection to the rights rightly returned to private channels and enterprise, with the
of American business abroad.
This was a primary consideraexception of such Governmental assistance as could be £
business expansion.
4
B
It would be unwise to suggest
tion and
no
effort abroad
regardless of its
urgency
could be
When
the wisdom and sagacity of our
foreign
exchange
rates were
forded.by the revived War Finance
Corporation. 9
premium in every
The American dollar now stands at a
safely founded until this policy becomes not only temporarily
but for all time
upon
as
that our new role as com-
important financial market of the world, and it is this
premium that is causing most of our troubles,
and
investment, especially of a long term character, depends
It cannot be too strongly emphasized that in the final
for its stalmity upon permanent political order.
Capital analysis, international business must consist in the exchange,
will be attracted to countries in which it is not jeopardized
directly or indirectly, of goods and services f\or other goods
by the danger of either political upheaval or confiscatory and services with the trade differences settled in either gold
Also,
we
taxation.
ment
controlling in our international thought.
cannot be unmindful of the fact that credit
We will be willing to play our part but if invest-
in any
country is made undesirable for the reasons
given, then the fault does not lie with us.
Further, the variations of credit risk will be dependent
upon
the willingness of the country interested to levy and
collect taxation in sufficient
after first
of
a
introducing the
State to
so
measure
necessary
to
meet
economies.
the budget,
The ability
levy taxation without the danger of disturbing
or
credit.
It is only by this interchange
handicap, which is
can
our
we
be
overcome.
...
surplus manufactures, which make up
must have a regular and
are
50% of our exports,
increasing supply of many com-
modities "which are not produced in
"which
that the exchange
king buyers from our American markets,
In order to provide a sustained market for
the United States, or
be entirely
produced in such small volume as to
inadequate for
our
requirements.
We are justified in pre-
TRUST
venting dumping but
for
materials.
raw
India and South
draw upon other countries
must
we
COMPANY
business
tanneries from
our
•201
One of the greatest tasks which confronted the American
We must obtain manganese from
Russia,
America, quebracho for
DIVISION.
of
the outbreak of the
man at
Argentina, crude rubber from Brazil, and the. Straits Settle-
American exports which' amounted
ments, nickel from Canada and New Caledonia, tin from the
United States entered the
Malay Straits and Bolivia, raw silk from China and Japan,
clothing wools from Australia and Argentina, jute from India,
the
war was
adequate banking facilities to take
of
care
an
provision
increase in
ary
flax from Russia and
of other
mass
From the
raw
Belgium, sizal from Yucatan and
materials vital to
our
we
Branch banks had to be opened
a
consider
of
gold entirely out of the'question, it is
we
should
seriously
of
a matter
In
Banks which in
dozen
September, 1920, the Federal Reserve Board estimated
was
due
from abroad
us
unfunded
an
balance,
since
the armistice, of
$3,000,000,000.
The same
authority estimates that by the end of June, 1921, taking
000,000.
to
amount, equal to about 20%
settle,
emphasizes
The handling of
Exchange conditions get
or
goods.
ways to
if it
were
possible, until the
out the world increases.
consumer
industry and agriculture
words,
the
demand through-
evidently local in its
the
is
matter of
of
distinctly American
our
participation
and
so
the
direction
participation will take and its effect
upon our
a
matter of
serious
In
a
should
Bankers'
become
that
a
source
Association,
a
some
of the
be
source
of
our
of
as
I
profit,
well
as
heavy
conditions is
the difficulties in front of
every
taken
that it will eventually
quale facilities for the financing of
are
them, and
field of endeavor.
But
we
there
ago
when
The
in finding
courage
to blaze
of American business
interests, and indirectly, but
less valuable, for the American people as
or
not their efforts have
is not of
effort to
so
succeeded
much consequence
develop
our
the
a
well
whole.
as was
our new
on a
demand^ of a world-wide situation.
Regardless of pres-
mentally far-sighted and constructive.
fruit in due time;
It will bear golden
and that is the paramount consideration,
There is perhaps not a very
clear understanding by the
banks
and
have, faced
on
a
in
some
is evidenced by the thoughtless criticism
uninformed
properly supported
quarters
our
that
foreign trade.
our
banks
have
not
unique situation
these
through
way
Although the
financial failures.
serious
no
we were at
are as
a
American
the peak of the war boom and were
we were
going to get down to normal,
much concerned
as any
a
difficult
one.
branch of business
solution for existing economic problems and are
any
safe policies
All that should
best of their abilities under these trying conditions.
ar$
for the-problems
no panaceas or nostrums
/
The opportune
before the
war
a
•
.
the Federal Reserve Act just
passage of
led to
There
presented,
h:.o ■
.
Jquipmen
r
striking development of
our
banking
system abroad, and to-day there are American branch banks
in many important commercial centres in Europe, and, in
The necessary financial organi-
fact, throughout the world.
now
as
this
far safer basis to-day than it was a year
service of international
export trade,
greatly increased
1920, has been unprecedented,
zation to render every phase of
our
our
have worked their
public in general of the functions and the limitations of
banks, in relation especially to
raw
banks
Our banking system has revealed its inherent
economic position and to
difficulties, much of what has been done has been funda-
American
justly be asked of the banks is that they "carry on" do the
hoped
scale ade-
American
*
which will aid in creating better conditions.
the
Whether
to be
v
committed by self-interest to the support of
the fact that they made the
international banking
quate to the demands of
ent
as
as
a
for the. benefit
none
the
a
every
the.seas there
on
and
The present world situation is admittedly
that
commerce
which
•
wondering how
The banks
banking and
goods
In
in fulfillment of the duty which they had
have been
pioneers"at least have the satisfaction, however, of knowing
they possessed the vision and the
on
ship
every
themselves of-financing
courage
business is
the costs of the founda-
trail in international
nearly
foodstuffs
money
upon
on
strength under the most adverse conditions.
have incurred
which those .who follow build their profit.
The collapse in prices
financial institutions.
deflation since November,
They realized
should remember that the
are
and
difficulties,
foreign business,
some
of the greatest
one
unprecedented scale, threw
on an
our
manufactured
The American
with
nolrrnfrequently exacted of pioneers in
penalties paid by the pioneers
lion upon
our
the needs of
prepare reports on
foreign trade.
pride, to the nation,
many respects.
upon
American
loaned
situation and have endeavored to afford moreade-
penalties which
burden
materials
as
departments
The readjustments during the latter
port in the world and
bankers and financiers have taken thought
They have been pioneers in
period of deflation.
were
sure
merchants and
our
information
marine insurance, freights, forwarding, customs
on
shipping documents, to
cancellatioti of orders
such
gratification to the American
am
trade,
which started at the close of last year, tc%ether with the
.
of
Foreign
business
our
foreign customers and trans-
new
period have been violent and painful.
Financial'Pioneering.
it
at the command of
agency
boom periods in the history of America has been followed by
apprehension.
.
other single
the banker who translated
Born of this war-created situation,
In
indemnity
which
depended
specific countries and follow the trend of the commodity
markets.
be contemplated to-day
can
and
war
banks regarding trade opportunities, and to provide them
No financial
concern.
any
was
the thousands of
with data
while
is world-wide in its effects.
causes
operation of such magnitude
without
demand
consumer
the settlement of the German
same manner
a
closely harmonized.
are more
reduction
foreign trade during the
our
set up to advise the customers of these international
were
begin when the agricultural population is satisfied with the
prices of manufactured goods*, when the wage return in
other
It
manufacturers.
The demand by all logical reason-
ing should begin in the United States and doubtless will
tremendous rate
a
set up to furnish clients
lated the ways of those customers to
But
it would be idle to force production in
European factories,
even
those of
business.
interdependence,
either credit
on
the
Transactions in
greater extent upon the activities of the banker than
a
upon
These balances cannot be
worse.
settled in gold so must wait
entire
our
inability of the debtors
commercial
our
of
a
with
with accurate information.
to
debt obligations, and the evident
1920
an enormous extent as to necessitate
and statistical departments had to be
$4,000,000,000 and $4,500,000,000 of unfunded
This great
themselves in
foreign bonds and stocks increased at
approximately by $1,500,-
debt created since the armistice.
war
days had foreign departments of
pre-war
employees, found
so
employment of experts with large staffs.
If this be added to the previous estimate, it gives
between
us
or
cant grew to such
favorable trade balance less all offsets,
our
this amount has been increased
The credit depart-
forced to double, treble
foreign departments of several hundred employees. Operations in foreign exchange which were formerly quite insignifi-
ere-
ated
into consideration
were
and quadruple their personnel to protect their interests,
concern
barriers against payment in
goods.
there
Credit
Hundreds
exporting firms sprang into existence and all of them
ments of some of the banks
additional heavy
propose to erect
new
clamored for banking accommodation.
put the possibility of payment
that
greatly extended.
or
had to be granted for every kind of commodity;
the debts owed by foreign countries to the United
States,
debts which are so great as to
in
109% at the time the
had to be created and personnel expanded to an extraordindegree in many of our leading financial institutions,
industrial life.
strictly tinancial point of view, when
to
Huge foreign departments
war.
well
marine
no
established.
longer exists.
The
foreign banking service is
former
lack
of
a
merchant
There has been, also, a notable
broadening of the mental outlook of the American people
with respect to foreign affairs.
Branches of American firms
BANKERS' CONVENTION.
202
number of
in practically every country.
be found
to
now
are
men
trained in foreign banking and foreign
The
trade
dorn and on the Continent are so
United State3.
vitally important to the
althoughithis is still the one
Our- near neighbors—Canada, Mexico, Cuba, and other
organization for the countries north of'the Panama Canal—take about one-fourth
vigorous promotion of overseas trade.
And in this respect of our exports. We have a special advantage in the Cuban
we must, perforce, learn a lesson from the foreign trade hiemarket, through the tariff preference accorded to American
tory of older peoples, particularly the British.
products. We can seriously affect the volume of our conThe development of foreign trade by the United States
stantly growing Canadian and Mexican trade only by legisimplies not only education acquired by experience and even lation or diplomatic action, but if these are wise, we need
by mistakes, but altfo the development of trained men.
The have little fear with respect to the future of our commerce
pres^rure of population and industrial produc:ion which comwith these countries.
pelled England and Germany to send their trained eommerThe South American market is apt to be somewhat out of
cial emissaries throughout the world lias not existed in the
perspective in the conception which many Americans have of
United States, although other influences are now working
our foreign trade.
While it does constitute a great potential
to force such a necessity upon us.
If we are to succeed in outlet for our products, its seventy-odd millions of people in
that field of endeavor, however, we must study the experi1920 bought less than 8% of our exports, and much of our
ences of other nations, profit by their mistakes and pursue
present trade there is likely...to,shrink and, in fact, is now
their succesfeful policies as far as possible.
The develop- shrinking as a result of keenly renewed competition from
ment of an efficient consular and commercial system by our
Europe. Both racial ties and means of transportation, cornGovernment is also one of the prime necessities of success
bined with'large investments of European capital, tend to
in this field.
We must study the credits, the markets and bind these Latin republics far more closely to European
the methods of all the foreign nations with whom we deal
sources of supply than to our own.
The per capita purmore thoroughly than ever, before our foreign trade can be
chasing power and the standards of living in most South
conducted upon a safe and profitable basis.
American republics are comparatively low, with the exception
Further, when we analyze the character of the export of the Argentine Republic, which holds an exceptionally
trade of the nation to-day, it is at once clear that there is
high record in purchases from foreign markets. Our future
little likelihood that it can be won awray from us to any
trade in this part ofjthe world is probably secure with respect
disastrous degree, if we are reasonably efficient in supporting
to a considerable number of export products, such as coal,
it, and the buying power of the foreign markets can be for example, but its development on any ascending scale in
restored.
In 1920 there were sixteen classes of commodities
the face of active competition from Great Britain, Belgium,
of which we exported more than $100,000,000 in value in
Germany, Italy and Japan wrill be the result of further investthat year.
These were, in the order of importance, raw ment of American capital there, in addition to large interests
technique is constantly growing,
comparatively weak element in our
.
cotton, wheat, coal
and coke, automobiles,
unmanufactured
lubricating oil, bacon
and lard, illuminating oil, copper products, rye, iron and
steel plates, leather and gasoline.
The total value of these
sixteen classes was in excess of $4,000,000,000.
That of
tobacco, cotton cloths, wheat flour,
cotton alone was
The
$1,136,409,000.
advantages which
which we now hold in mining, oil, and in the meat-packing
industry. If we are not prepared to do this, our trade with
South America will continue to constitute a relatively minor
proportion of our overseas commerce,
par fiast
•
for the production ot
in relation to any
we possess
When we turn our e>'es a€ross
Paclflc towards
kets of the Far East, we see as in South America,
the mar-
that t e
future of our trade there will depend upon the initiative an
specifically the evidence of exceptional natural resources, vigor with which we seize the opportunities to share m the
and, as in the case of automobiles, for example, unusual development of countries where little progress can take
achievement in quantity production.
In cotton we possess Pbtce without aid from Occidental nations. India may ^ e
world monopoly, and, although strenuous efforts are being considered as in the main, a market preserve for British
made to develop other cotton-growing areas, it seems very
manufacturers, but in spite of this, America in recent years
the
of
most
commodities in
possible competition,
this list,
well knowm.
are
These exports are
a
unlikely that
scale,
our
relative position can be seriously
disturbed.
agricultural products which we exi>ort on a large
Tn other
should hold
we
agencies, which
are
highly
place if the efforts of our
our
Department
organized
of
Agriculture
and other similar
constantly spreading instruction in this
field, continue to function efficiently.
,
Special skill in design in machinery of many
created
which,
world demand for American products,
a
kinds has
no
and
morel efficient production and transportation should add to
the importance of this product in our overseas trade.
In due
Our exports of coal are increasing
doubt, will continue.
course
of time American
lished
on
ocean
routes
bunkering stations will be estab-
and
these will
British and other competition on
No doubt there
we
are
many
still
labor
cost is
so
us,
trade that the
much higher in the
Britain, Germany, Belgium
fcition
can
be overcome by more
more
meet
to
war
tem-
especially those articles in which
Great
meeting
us
favorable terms.
classes of manufactures in which
will not be able to hold the export
porarily diverted to
enable
more
or
United States than in
Such
Japan.
comper
efficient production
or
by
closely the foreign labor costs of these products.
:
'
;
" ■
.
Relative Importance
•"When
we
oreign
weigh the relative importance of
customer.
As
our
normal
conditions
our overseas
total exports go directly east across
for this
reason
are
restored,
More than half of
the Atlantic.
It is
that the prompt rehabilitation of trade and
industry, production and consumption in the United King-
•
•
There is now some American investment in the Dutch
Pas* Indies and in China. In the latter country especially,
United States may play an important and helpful role
if it will, although the political problems of our relations with
East are admittedly still to be solved. Japan, as is
natural enough, regards China as the logical market for her
developing manufactures, although the Chinese^ themselves
are n<d entirely cordial to her commercial invasion. Japan
already controls extensive coal and iron resources in China,
and in Manchuria practically dominates the commercial
situation. There are many hopeful indications, however,
that a peaceful solution of the difficult situation in the
Far East will be effected.
In 1920 we bought from Asia goods to the value of $1,283,801,000 and sold $772,000,000 or 9% of our exports. In
markets of Africa, Australia, and elsewhere, it is probable
that we slia11 continue to enjoy a fair volume of export trade
in selected commodities where our competitive position is
strong.
.•
The
cotton, metals, food products and
other commodities in customary volume.
our
t-yP0-
of Foreign Markets.
markets, it is emphasized that Europe is by far our greatest
Europe will demand
gained a considerable trade there in such exports as
automobiles and certain other manufactures of specia
In closing
we
'
•; ' y
Vital Necessity
.
of
To-day.
believe that the vital necessity of
to-day,
renewed and if our
foreign trade is to continue its development, is the prompt
restoration of Europe. The United States cannot safely
evade the duty of aiding in every way possible any plan which
is economically sound and which promises to help the situation in that part of the world.
Our strength should supplement Europe's weakness for a considerable period before it
if the prosperity of the wrorld is to be
TRUST
be fully restored to financial and commercial stability,
can
,
COMPANY
DIVISION.
203
the present conditions which clog and interrupt this flow
Our assistance will
naturally be through the shipment of food,
are overcome.,
materials, machinery and other supplies which will
stimulate production and restore healthful economic condi-
each will suffer from the continuance of such conditions of
raw
tions.
Payment to exporters must be made possible by
Unless all countries co-operate in the task of restoration,
unemployment and financial and trade stagnation
be seen in Central Europe.
a
considerable American investment in long term foreign
very
securities, but the reward will finally be found in the stabili- |
The statement that "in America lies the hope of the
world" has been heard again and again in recent months
zation of trade and finance in
every country.
The general policy in this
country in regard to our overseas
from
responsibilities is gradually changing.
true in
While the vote at
the last general election was considered
date for
isolation, the
such
isolation impossible.
an
resen
ed
the
at
beyond dispute and
now
a
result
a
we
now
are
part as possible.
of the commissions
some
on
settlements.
war
As
That
must
we
play
obligation is to play
our
our
as
European
a
observers
real
very
wisdom of
many as a man-
perity of
rep-
dealing
during the
every country
international
and
issues
frage help
country to
our own
reactions
should by
we
Every
involved.
an
the
will
How-
We believe that, the passions of war are slowly but surely
dying out in Europe and that the normal impulses of men
tions at present
they
cannot
imperative,
which
can
alone.
America
as
assistance
Our
is
leads in the control of
help most effectively.
It
may
that
strange
seem
United States should make
have
we
to
not
are
as
prosperous as
be, and ultimately; will be, but to
that such effort and sacrifice
it
appears
essential and that
are
our own
well-being cannot be protected unless
The nations of the world
now
are
another and upon the constant
them that full
of
many
we
so
us
follow this policy,
dependent
upon
one
flow of products between
prosperity cannot be regained in
any
unless
b§
self-
then to demonstrate that
energy
well
as
as
our
own,
of America in throwing
financial aid into renewing the industry
countries.
to be
The
risks
the
of
task
are
but America is strong enough
sure,
she will accept them, for
It is of great importance to discuss such questions
the Pacific
on
they might
of
and
to accept them-—and eventually
deal.
sacrifices in order to assist European nations at a time
to
when conditions at home
in
she must accept them.
on
should suggest that the
we
now
business
and
economically will
ne.cessary
courage
our
trade
patent enough,
resources
special effort and subject itself
the
upon
other
part, in view of the important domestic industrial and
our
themselves
It will not be
the weight of
Increased thrift and greater
financial difficulties with which
war.
It is plainly
national impulse to help ourselves by helping
a
and
almost
efficiency in production will undoubtedly be called for
of the world,
response.
domestic financial
present
rehabilitate
depends
struggling against appalling handicaps which
overcome
full
a
the prosperity of all other nations^
returning to popula-
are
widespread national
but, when the true relationship between those
evident.
production
the
of
the need for
others
for useful and sustained
a
problems and the foreign situation is fully comprehended,
tive policy in the world's affairs.
e
by
pros-
immediately in
difficult to create the needed initiative
more
face
problems,
intelligent suf-
rationally construe-
assume a
the
swept our people forward in their efforts to win the
much
important it is then that
is
impulse similar to the almost universal interest which
an
the bankers of the country must function
have
it
that the
taken
upon
years
Above all there must be created here
Then, appeals to service found
future
action
impulse to aid in this present economic crisis
part is
intelligent
leaders.
the
dominant influence
a
And
finance
the future.
We must have the needed vision without
as
affairs.
and
the policies adopted and
being visionary and this will take much education in which
Congressional and Presidential election in the
world
of
in trade
sense
this nation will have
meetings * of the Supreme Council of the
League of Nations and
with the
by
force of circumstances has made
very
are
as
now to
Pacific the
Coast,
of
ocean
us on
war
around the world and
means a
take.
we can
that the American
Atlantic to the
The
future.
run
the Atlantic—which
only view that
as
these
has unquestionably made ohe
the
find in the Pacific will
to
the
as
And
we
problems that
come
we
back
world-wide view is the
have the right to hope
Bankers'Association, spreading from the
Pacific, and representing directly
or
indirectly
all interests of this great nation, should be in the lead of
campaign of education by
means
a
of which this nation shall
realize its serious international responsibilities and be fitted
to
discharge them in full.
Investments
By Joseph X. Babcock, Vice-President of The Equitable Trust Co. of New York.
The
world
of
unprecedented
changes
in
economic
conditions
throughout
tion
more
than
before to the important relation which the underlying
ever
factors of currency and credit bear to the industrial and financial
of the
welfare
nation.
rise in the prices of commodities in this country which,
according to the index numbers of the Bureau of Labor Statistics for
wholesale prices, rose from 100 in 1913 to 272 in May, 1920, although it
but
an
acceleration of
generally recognized
in
the amount
our
a
as in a
of money
movement
large
begun
as
far back
attributable to
as
1890, is
now
to
finance
sharp fall of prices since the
our
summer
participation in
measure to the post-war
same
of 1920 and the present
a
corres-
deflation of the currency and restriction
underlying and fundamental
causes
commodities and
on
of
affect
business
desirable, therefore, that
securities
interest
and
factors of the money
of present
effect
rates
on
conditions,
have
also
their
reaction v
the
broad
should study the relation of prices
invested capital to the fundamental
we
situation and that
world-wide conditions
sense,
we
on
should examine the probable
the future
the
present survey, however,
a
course
of anything of value
I shall
use
of security
may,
under
For the purposes of
the
the word only in its restricted meaning
negotiable instrument, either representing
assets
and earnings of a corporation,
or
a
preferred interest in the
evidencing
an
obligation for the
payment of money at a future date and for the payment in the meantime
of
a
fixed rate of interest thereon.
Investments
v
are
rise in bond yields
become
trade,
in commodity prices.
to
inventories
In my opinion, how-
the
are
undertaken; and more capital is
expansion.
are
reduced,
paid for it,
Conversely, falling prices restrict
expenses
cut
down,
and capital
slowly
naturally resulting in reduced interest rates or yields.
There is, moreover, another element in the situation which is extremely
or
ignored.
That element is the value
expressed by its purchasing power, and is evidenced
by the price of commodities.
As capital is invested in the form of money
and is recovered in the
same
maturity of the obligation,
form either by sale of the investment or by
the
the relative purchasing power of the dollar
when the investment is made and the purchasing power of the same dollar
it
comes
back into
the hands
of the investor
is
a
very
important
factor in the situation,
Speaking generally, if interest rates are rising, the market values of outstanding securities with fixed rates of interest or dividend are falling and
investments must be carried through to maturity to prevent loss of principal,
in which
case
interest rates
advantage cannot be taken of the rising interest rate.* If
are
falling, investments can be sold at a profit but the proceeds
can
only be reinvested to yield the same relative return asxand when sold.
If investments are held to maturity and the capital returned is reinvested
as
investor to his
enterprises
new
finance
important but is often overlooked
selected with the object of obtaining the three prime
as
accumulates and is withdrawn for other investment—the increased supply
there is
of the
well
that is to say, the interest rate thereon.
in
mind
as
The Increased demand for capital raises the price that will be
requisites of yield, safety and marketability in the proportions most suited
the
necessary;
required
when
ownership
certain circumstances, be termed an investment.
of
capital.
of money—which is
values and the yield therefrom.
In
a
which govern the prices
security values and the yield from investments.
seems
As this price
fixed rate of return
;ever, this is only relatively true.
and lessened demand
of
It
a
according to the relation of their fixed rate to
It is often stated that the volume of money in its various forms fixes
the yield on investments and that
any inflation of the money supply causes
the
banking credits,
The
fall in market value
or
What really happens, it seems to me, is that a rise, from whatever cause,
stagnation of business is also understood to be attributable in
ponding
continuous state of flux all investments with
in commodity prices, stimulates business; additional facilities for production
a
and afterwards by an inflation of our currency and circulating bank
credit,
of
rise
The price of capital, how-
is primarily fixed by the laws of supply and demand.
a
great increase
measure
arising from the methods employed
The
is in
in circulation, caused in the first place, before
entry into the war, by the receipt of large amounts of gold from abroad,
conflict.
varying factors of safety and marketability.
ever,
the current rate for
The stupendous
was
Yield is the price paid for capital and is influenced in each case by the
the
which have been brought about by the great war and its aftermath
political, social and financial unsettlement, have directed public atten-
own
particular case.
no
loss in value of principal, because capital is not money so
long
jt is held for productive investment, though expressed in terms of money,
204
:
->/
1
■
■
BANKERS' CONVENTION.
jfet
';K,"-v
capital is withdrawn from investment and spent
decreased value is shown in loss of purchasing power.
but if
About the time of the
formation of tlds Division of
Association, formerly the Trust
we
as money
the American
Bankers'
25th anniversary
Company Section, whose
marked change in the trend
general level of values of investment securities
celebrating to-day, there began a very
are
the
tf commodity prices,
and the income return
For many years
therefrom.
previous to this time, In fact
for a period going
back
1st adventurer, who with vision and courage undertook the risks of business
enterprise, rather than with the capitalist creditor, who, timidly demanding
his fixed return, saw the market value of his securities diminishing day by
day and the avails of 'his investments steadily decreasing in purchasing
correspondingly
fixed rate of interest had been
Increasing.
creditor classes. Those who
had money to loan or capital to invest In obligations bearing a fixed rate of
interest and payable at a future date, found that every time their interest
was paid or their capital returned to them at maturity, the amount received,
an account of the continuing price decline, would buy more in commodities
than before, while the advancing value of investments made it possible to
It was an era which
particularly favored the
power.
profits on them practically at will.
take
While the advantages of this
by investors themselves, a
even
situation were not generally
dim perception of the
understood,
favorable position
permeated the minds of the masses,
and there was at times a feeling of bitterness between labor and capital,
During this period the term "bloated bondholder" first came into the
vernacular, and many unscientific and ill-considered remedies for the cure
of social ills, and the material improvement of the farming and laboring
of the investing classes seems to have
classes were
Nea/tbe
presented.
period the "Populist"
close of this
movement had its brief
espoused the cause of bimetalism and
free silver, for the purpose of increasing the supply of money, raising prices,
stimulating business end increasing wages, and William Jennings Bryan
expressing the enmity of labor to capital in the celebrated "Cross of Gold
and Crown of Thorns" speech, became thereby the candidate of that party
while the Democratic party
career,
for President.
Since 1896, however, we
have seen the other side of the
because the currency and credit
picture. Whether
period had been
inflation of the Civil War
finally eliminated (Resumption of Specie payments was accomplished in
1879); whether the discovery of gold in the Transvaal had increased the
and a growing use of currency and
increase in the supply of money
power of the dollar;
at any rate
about the year 1890 conditions changed and the slow ascent of prices began
which, rapidly accelerated by the inflation and general economic disturbance of the war period, reached the highest level in history in the Spring
of 1920.
It should be noted, however, that the rise of commodity prices
was not followed directly by increasing bond yields.
As a matter of fact
the Jow point in the yield on highest grade railroad bonds was attained in
world's
supply of the yellow metal
circulating bank credit had made a relative
and
thus reduced
had
the purchasing
1902, when the average yield was
But that era, which we may well call "The Era of Inflation and Expansion," was in all probability definitely closed with the peak of high prices
in the early part of last year.
Like all movements which affect and are participated in by large numbers of people, the rising tide of prices had by its own momentum reached
a level at which it was unsupported by the underlying economic condition
of the world at peace.
I
The threat of deflation, restriction of credit and a buyers' strike against
prices which people had come to believe were unnecessarily high, brought
about a reaction which rapidly gained momentum in the reverse direction,
and has brought the general level of prices well towards the pre-war basis
and in some instances even below it.
As might have been expected, the process of deflation has been accompanied by great disturbance of business, restriction of production (to the
extent, it is reported, of 5,000,000 men out of work) and a substantial rise
in the market value of high-grade bonds,
What shall we say of the future?Are the conditions of the period following the Civil War to be repeated
or can such deflation as is still necessary he accomplished within a reasonable period and prices stabilized on a level which will stimulate trade and
commerce, attract capital into business, allow fair wages to labor and enable
the orderly resumption of our economic life on the basis of national prosperity and fair reward to private effort ?
After the Civil War this country was a debtor nation, exhausted by four
years of internecine strife and with a large section of its territory ruined
by destruction of property and disorganization of its labor supply. It was
suffering from all the evils of currency inflation and gold was at a high
premium. Under these circumstances, it was forced to depend largely
upon the surplus capital of the Old World to revive its industries, build its
railroads, develop its resources and start it anew on the path of prosperity
and national welfare. (I might remark, incidentally, that Europe profited
largely on the capital invested in this country during the years following
about 3.85%.
been at as great a disadpreviously were in a favorable position.
Making their
purchasing power of the dollar wasrelatively
During this period the investing classes have
vantage as they
investments at
a
time when the
high and when the price of capital as shown by the Interest
i.
Generally speaking, the opport untitles ofthis period were with the capital-
practically to the close of the Civil War, commodity prices bad been falling,
the return on invested capital had been growing less and the market value of
investments carrying a
i a;-:;
that it acred as a brake and prevented a more rapid ascent of prices, at least
up to the outbreak of the war.
The reasons why it was not more fully effective will probably be found
in an increased demand for commodities arising from improved standards of
living on the part of the industrial populations of the wor.d, and probably
also from a certain amount of currency and credit inflation due to an increased production of gold arid a more general and effective use of credit
Instruments,
then its
rate was relatively
commodities was reflected in an increasing
demand for capital that brought about increases In the Income yield offered
for new funds, which in turn was reflected in a fall in market value of outstanding investments of a fixed income return.
If investments were held
to maturity the amount received could of course be reinvested at better
rates, but if required for other purposes It had suffered a tremendous
loss of purchasing power.
It is estimated that the dollar at its lowest point
would buy only about 35% as much as the dollar of 1896.
A single instance
low, the gradual rise in prices of
the Civil War.)
To-day we have changed from a debtor nation to a creditor nation, to
which Europe owes on balance sixteen or seventeen billions^ of dollars,
While the world war probably cost us more proportionately than our own
Civil War, wfe suffered comparatively little destruction of property and
loss of life. Every dollar of our currency to-day is worth its face value in
gold, which, unfortunately, cannot be said of the monetary unit of the
principal foreign nations. We also hold at present more than one-third
of all the gold In the world. We have in addition an infinitely better
currency and banking system than we had in 1865.
In short, we stand to-day the richest and most favored nation in the world,
But the day has passed, if it ever exLsted in modern times, when any nation
could be considered by itself alone. International trade and finance have
indissolubily linked the"nations of the world together and the economic
will be sufficient to show the extent of the loss in value of principal involved
prosperity of the United States to-day is largely dependent on the re¬
in an investment made during the period in question.
3% Bonds of the
establishment of stable condit ions and the settlement iof the many problems,
State of New York due in 1656, probably considered at that time as the
political, social and economic, which now confront the peoples and the
safest and most stable investment possible to obtain, sold in 1906 on a
governments of the old world.
2.70% basis.
The same bond to-day sells on a 4.70% basis, although it is
When such stable conditions will be established, when the many difficult
now exempt from both State and Federal Income Taxes, which were not
questions now confronting Europe will be adjusted. 1 do not pretend even to
In existence at the earlier date.
guess.
It would seem, however, that the history of the three years since
If sold to-day the loss in principal would be approximately 35%.
If the armistice has demonstrated one thing unmistakably, and that is that the
carried to maturity the loss in Income or yield, assuming that the price of
theories of Bolshevism have taken small hold on the rest of the peopie of
capital does not change, would be 2% per annum or 70% in the 35 years the
Europe and are in a fair way to be entirely discredited by the Russians
purchasing
themselves.
The institutions of private property, popular government and a financial
The unfortunate position of the investor during a period of rising prices,
system based on the gold standard still undure. Europe will in time put
however, is far more conclusively, and as one may say, dramatically, shown
its house in order and will bring Its currency into a safer relation to its gold
by conditions in the principal European countries which were engaged in
base, by deflation where it can, by debasing its coinage where it must, by
the World War, and in which the investing classes have been practically
repudiation where no other way remains.
ruined.
For this country, the problem of our present prosperity seems to be
t In Austria, for instance, one typical example will glaringly illustrate the
largely involved in the export of our surplus production,
situation.
In Vienna, one of the most delightful cities of Europe, a family
Let us be frank. The moneys of Europe, as enormously depreciated
could live before the war in perfect comfort on an income of 10,000 Crowns
as they are, in relation to gold and to their pre-war value in terms of com* year.
Today, according to a list of prices published recently in a Vienna
modifies and labor, will still buy more at home than abroad.
Take Gernewspaper the price of a ready made suit of clothes of moderate quality
many for example.
The rise in prices of commodities and labor since the
Is 8,000 Crowns.
/•;outbreak of the war, according to the latest information, is on the average
In Germany the situation is similar although of course not quite so bad.
about one to ten.
That is to say, the purchasing power of the paper mark
In France, the position of the unfortunate holders of pre-war securities,
today is about 1-10 of its pre-war level.
18 quite pitiful, although with characteristic courage and Gallic wit, they
Its exchange value, however, in our money is only about one cent of
lokingly refer to themselves as the "Nouveaux Pauvres" the new poor,
1-24 of its value before the war.
We must admit then that the impoverished
Even in England which economically suffered less from the war than any
nations of Europe are not in a favorable position to buy in our market,
of the other belligerents except ourselves, the yield from the great pre-war
Their depreciated currencies dwindle to almost nothing when offered
fortunes, when further depleted by the enormous income taxes, is no longer
in payment over the American counter. Besides a country with an inflated
sufficient to maintain mansions and estates which have been in the same
currency can only work out its salvation by exporting as much as possible
families for centuries and they are rapidly passing into the hands of new
and importing as little as possible.
Only the excess of exports over imports
owners, whose fortunes wej*e more recently made and are less
exposed to
is capable of procuring the gold that is so sorely needed to bring their curloss by reason of the depreciating value of money and the rise in interest
rencies into some stable relation to their gold bases.
rates.
The same conditions moreover that make it difficult for these countries
During this period of rising prices, however, when as I have pointed out,
to buy abroad, give them a great advantage in exporting their surplus pro-
bond has still to
power
fche
run.
In view of the present
of the income, this Iobs may be
decrease in the
relatively much greater.
Investor in obligations bearing a fixed rate of interest has been at
a
disadvantage, and without considering the violent realignment of
marked
economic conditions caused by the war, there was a great
Industrial and commercial life of the world.
of rising
expansion
m
the
Under the quickening influence
prices manufacture and trade were stimulated, new enterprises were
undertaken, and many new inventions for the saving of labor, the increase
of
production and the reduction of costs, were made.
Through consolida-V
tions and mergers, business was done in larger units and
and
with great capital,
through the opportunities thus provided, many methods of reducing
prices by utilization of by-products were discovered, while overhead costs
were
It
reduced through increased output.
might
perhaps have been expected that this remarkable industrial
development would have brought about a reduction in prices and in the
cost of
living, which however continued to rise.
It is probable, indeed,
duction, and enable them to
uridersell In the market places of the
countries like our own "blessed" if we may call it so, with currencies
are on a par with gold.
Economic conditions throughout the world, however, are in very
world
which
much
the exchange and
and which are of
course largely due to lower standards of living in the countries referred to,
may be more or less temporary.
*
The world grows smaller year by year, as the means and speed of cornmunication increase, and we learn to know each other better.
Conditions, be they economic, social, or political, tend to take on a more
or less uniform aspect in countries whose degrees of civilization and advancement are equal.
Germany now is able to undersell the United States
because her cost of production is lower than ours.
It is probable, however.
of a transition state.
It is probable that the variations in
domestic values of foreign currencies, of which 1 speak,
•205
that
time goes on there will he
as
equalisation of production costs in the
an
two countries which will
make it more
In the meantime let
us
difficult for
one to
But the future is ih the
lap of Ihfe gods.
At this time it appears to be
impossible to forecast the outcome of the
many conflicting constituents of
the economic situation
throughout the world or of their reaction on the
general prosperity and welfare of the
country.
undersellthe other,
remember that the American industrial worker is
the most efficient in the
world, that the inventive genius of the American
people is superior to that of any other nation, that the
United States to-day
the richest country and
principal creditor nation of the world is in a position
to support its
foreign trade and commerce by a judicious use of its financial
resources and the
investing power of its
From the investment standpoint
purely, however, it would seem that
more nearly
approximate those of the period following
present conditions
the
people.
Great Britain's might as
an
ascribed to the fact that the
money to the service of
handsome
return
in
exporting nation
may to a great
degree be
British investor has for
many years put his
shape of
In doing so, he not only got a
yield substantially higher than the
a
yield of British securities, but the funds he thus
provided
British products.
were
countries
used to buy
a
policy to which in
It is true that
are
our
people
we
also
governments and
peoples.
As the nations progress towards political
and in
time,
illustration
the way out here of the extreme
on
diner of the Santa Fe train
coming over the desert, and
tentatious gentleman was seated next to
and
conversation,
as
out in
told
me a
committed.
in
a
comfortable
very
quiet unos¬
him, "Mr. Jennings, I wish
"Well," he said, "I think I
can
in being confined to the
offense which,
His position there was
by the
similar,
do that."
State
and
a
have
the
accommodations
'was
always
there
sort of
a
ferred myself.
It
was a
unusually
good,—so
were
much
always crowded
We
successful darky preacher.
When pressed for
an
answer*
as
to the
suc¬
of his messages, he put it this
way:
"First, I takes a text, and then I
explain it, and then I expound it, and then I put in the razzin'."
I take it
we are expected to take a
text, but cut out the explanation and exposition,
and put in the "razzin'."
trained
That is
a
iittle difficult for
along conservative banking lines for
know if
we
get very enthusiastic about
good
a
subject,
a
a man
who has been
many
years.
However,
experience.
it
would
be
not
very
difficult for
throw away the experiences and lessons of
twenty-five
pany experience,
You
apt to come to our
we are
and find that the other fellow has
got the money and we have
senses
me,
years
got the
if
1
of trust
could
com¬
to
community trust
get rather enthusiastic about the possibilities of this
movement.
When I survey the history of charitable
bequests with a full realization of all of the splendid things that have been
accomplished and of the unselfish things that have been done, I am still
Impressed with the vast*amount of overlapping, the vast amount of waste,
of inefficiency, of conditions which have
changed since the donor made
his gift,
of the lack of machinery hitherto set up to meet those
changed
conditions.
In this community trust
movement", as I see it, properly under¬
stood, with its possibilities appreciated, I see a
possibility for a tremendous
betterment in the method of
As you all
to a trustee,
that is
know, the
a
distributing the charity of
essence
a
community.
in trust for the charity.
Now
bi^ gain. That means that the principal is not going to be dissi¬
pated; it is going to be invested; it is going to be kept intact,
humanly speak¬
a
ing, for all time.
place, the setting
as a
whole, with
That is
up
no
of
a
tremendous gain.
And then, in the second
impartial committee, representing the community
particular interest, and viewing the community and its
an
charitable needs from that standpoint, changing with the times and there¬
fore capable at all times of making the
gift, making the income
applicable
nearly in line with the desires of the oringial donor
to the current need, as
changed
as
tremendous
conditions
permit.
Now
that,
I
maintain,
is
another
advantage.
Now, that you may
This movement is
ago
will
a
say
in Cleveland, but
is from
an
academic
or a
theoretical standpoint.
movement, inaugurated perhaps only eight years
we
are
beginning
now to get some concrete facts to
support our faith and to encourage us for the future.
In Cleveland they have in gifts under wills, and in
living trusts,
like $100,000,000 in due course.
In the meantime they have
income,
useful
but they
thing;
they
are
are
a
something
very
little
doing what to
my mind is an extremely wise and
making careful surveys or studies of the need of
the community along lines of
growing city, with
education.
-
There
was
Cleveland,
a
rapidly
schools manifestly back¬
large foreign population, its
ward. not turning out the type of boys and girls that fitted into the in¬
dustrial
life of the city.
What
more
useful
thing than to make
partial disinterested, high-class study of the lack,
surrounding education in Cleveland?
observation and inquiry
as
Now that
an
Im¬
or the actual conditions
was
done, and from such
I have been able to make,
^
•
some
was
admittedly
very bad in Cleveland.
The firsf
now
political bias,
of the
actual
successfully die
or
with
a
something of that
or
formed
was
funds
or
desire to get somebody or to
sort.
©r
accomplishments
some
eight
years ago, some
foundations have been created.
m
some
of those
whole
one of the most
movement
significant and Important happenings affecting
the
was
formation
of a committee on
community
Company Division of the American Bankers' Association.
The opportunity and influence for
progress along right lines which such a
committee can exert is very groat.
As an instance of this, the committee
already has in course of preparation a compilation of data received from
the various
community trusts throughout the country concerning the actual
status in the differnt cities, the methods
which they are confronted.
adopted, and the difficulties with
Information is- also being gathered
through
or ineffective
charities, all of
local sources of all
important cases of obsolete
which data it is planned to assemble in
a
pamphlet with such explanatory
notes or articles as should make it
a most important addition to the
subject.
Another valuable aid rendered
by this committee is the fostering of legisla¬
tion necessary to a
proper development of the plan.
In this connection it was found that
under the Revenue Act of 1918 the
income of charitable gifts to
community trusts or to trustees in general,
was
taxable, and that the donor was not allowed to deduct
spch gifts up
15% in making his individual return.
This, of course, was of importance
to UlI trust
companies.
With the advice and approval of the Executive
Committee of the Trust Company Division and with the
assistance of Coun¬
sel for the
Association, an attempt was made to correct this situation by
securing a favorable ruling from the office of the Commissioner of Interna]
to
Revenue.
While meeting with a certain
degree of encouragement, It was
deemed best to abandon this
plan and attempt to secure an amendment
A bill was accordingly
drawn, blroad enough to cover chari¬
table gifts to all
trustees, and after a number of conferences with repre¬
sentatives of the Commissioner's
office, individual members of the House
and others, the amendment wds
passed by the House committee and later
by the IJouse itself.
For reasons which we have been unable to
as
determine
yet, the House, in passing the amendment, confined it to
gifts to or for
the
of the very
use
of community trusts or foundations.
when the bill comes
up
endment
a
restored,
extent indicated.
I
have
already spoken of the situation in Cleveland.
equally Interesting but
charitable
situation.
as
an
will
be made
city, and this after only
plished by these charities.
a
In
Boston
the
Charity Fund, has takeD
different position with respect to the
funds
in
hand,
largely undesignated,
annual distribution approximating $250,000
made for the year 1020
among
these grants
the Permanent
entirely
With actual
amounting to $4,340,000,
was
An endeavor
for consideration by the Senate to have the original
all charitable gifts to trustees to the
exempting
community trust, known there
an
new
higb
to the law.
of this plan is simply the making of the gift
competent, capable trustee,
a
delinquency, are prob¬
city life from every angle; and only now
they awr
tremendously interesting study of the administration of
trusts in the Trust
admonished by our worthy
deputy manager here to make our
snappy, in the vernacular.
That reminds me of the story of a
cess
some
Perhaps
this
I robbed them all."
were
papers
very
discriminated;
enjoy
As has been stated in a
previous report, the actual gifts made to
the various trusts and the results
accomplished seem to be in direct propor¬
tion to the time and effort devoted
to the movement
by the various trustees.
morning I appeared for exercise after the transfer,
an
elderly embezzler said to me, 'Mr. Jennings, are you a banker?'
'Well,
yes, in a sort of a way, I am.'
'Well, are you National, or State, or Sav¬
never
come
occurred.
but, being in control, I finally managed to arrange it."
'Ob, hell,' " he said, "I
time to
cities might at
first glance tend to a certain
degree of disappointment.
It must be con¬
sidered, however, that the community trust plan embodies a
relatively new
and radically different method of
making charitable provisions; and taking
into account the slowness with Which
changes of this character are adopted
by the public, there is much of interest and
encouragement in what has
And he said, "The first
ings?'
a
situation which
A review
rivalry to
little difficult because there
out
forty-three community trusts
a
see who could get up into the
"I rather thought I would like to be trans¬
And he said,
conditions there;
rather
were
a
some
gain in purchasing power. ^
Since that Cleveland foundation
and he
was reserved for
bankers, of which there was
large number present at the jail, and he said the reservations there
that it
even
and not be charged with favoritism
which
bankers' tier.
foreign, will for
being published.
Now those, I hold, are'
extremely valuable and useful things, and things which a
community trusH
can properly do, and which
perhaps no other body could
never
however,
particular section
always
you
he put it, to the room clerk
as
and higher prices for
Then the question of recreation, the
question of
And he
he claimed he
way,
Is it not likely, then,
lems that enter into the
penitentiary in
He had to assign the
guests to their respective tiers,
accommodations were not very good.
There wast
the
perhaps
dealing with that is
an
exists.
things brought out by the report, by the study, have been
corrected by thr
mere publicity given to
them, and moreover, a background
created for theuse of those funds later on when
they are available.
we
become engaged in
hotel.
said
so
a
or
a
of his experience
of credit instru-
gold basis throughout the world
Community Trusts
story out of your experience that I can give to the bankers
Columbus, Ohio, for
systems of other
use
a
volume
I said to
on a
new
justice,
none
and by an increased
on the average as now
other than Mr. A1 Jennings, the reformed ex-
was
Los Angeles."
me
high
getting
hank robber and train robber.
would tell
as
does in coming across those
long stretches of desert.
one
I learned that he
we
which
care
I was seated in the
very
me,
our own,
Community Trusts and Vice-Pres. U.S. Mortgage & Trust
Co., New York.
en
President, Ladies and Gentlemen:—
an
great
value
rising market value, while he may expect that the avails of his
investment measured by the prices of commodities will suffer no loss and
may
By Frank J. Parsons, Chairman Committee
1 had
the
measure of
downward trend, and that the
purchaser of Jiigh grade investment
a
yield and
of investors.
bankers have to exercise at all times.
level of prices
ties in
doubt,
no
The Spread of
Mr.
it has been in
securities, either domestic
many years will probably be
relatively high will win the favor
preceding
capital from abroad may result for a time In
sustaining a relatively high interest rate, it seems probable, then, that in the
long run the yield from investments will
accompany the prices of commodi-
and financial and commercial
stability, however, increased
confidence in the essential probity of the
foreigner and in his ability to pay
obligations at maturity will be engendered,
foreign investments on which the yield for
as
While the demand for
permanency
his
years
investment securities. 1
doubtful of the
solvency and political stability of some at least of the
foreign
the
money
do.
can
those of
that
unaccustomed to foreign investment aiid
are
do
in
days she has owed her financial and business
pre-war
What England has done
they
during the period of readjustment this country will feel the
repercussion
of the general situation, which must be reflected in an
enforced recession
our industrial activities?
If our answer is in the
affirmative, it is during
such a period that we shall see low
prices in
say that England seems very much determined, as
flotations of foreign securities in London
show, not to give up a
supremacy.
than
ments, is still not adequate to maintain
Incidentally I might
recent
War
The world's stock of gold, although its
capacity as a
may be supplemented by improvements in the
banking
foreign enterprise.
the
Civil
conflict.
ninety-six of the existing charities of the
reasonable investigation
It is
of the work accom¬
significant in this connection to note that
made in all cases without any obligation
expres sed or
Implied to continue the gifts as annual contributions.
With this sizable
Income, and under the methods adopted of direct aid, it Is
undoubtedly
true that the immediate
effect upon the charitable situation in Boston is
greater than' in any other city where the community trusts exist.
are
The
effect
In
also upon would-be beneficiaries
Chicago, due in large
Harris,
they have funds
measure
will, naturally, be corrective.
to the generosity of the late N.
W.
approximating $750,000, with disbursements to
$22,000 in 1920.
An interesting development
ftyeie has
been the creation of an advisory council comprising tho heads of the
leading
charities of
some
0
BANKERS'
206
CONVENTION.
helpful.
Here, too,
importance of disinterested surveys of conditions has been
studies have been made of the problems of Americanization
stressed and
financial institutions,
and which has heen found very
the
and housing
exhibits accomplished.
In talking to Colonel Ayers, the very able Vice-President of the Cleveland
Trust Company, who has done some of this survey work m connection with
the Russell Sage Foundation, he stated it as his ideal that the community
trust should not engage in work which could i>e done as well at least, by
other organizations; that they should confine their activity, and they would
get the best results by doing things that no one else was equipped to do prop¬
erly, and in which they were able to get better results than any one else.
In Buffalo, the Buffalo Foundation, one of the newer community trusts,
and the
establishment of a bureau of surveys and
and the principle of
adopted by some six institutions who are now actIng as trustees for the foundation.
To tide over the period when income
from gifts under wills known to have been made will be available, and to
provide for necessary studies and publications along charitable lines, a sus¬
taining membership with nominal dues has been successfully worked out.
A publication, covering the field of charities, recreation, &c., entitled
"The Foundation Forum," is being conducted, the first perhaps of its kind,
although a similar paper, "The Equitable Monthly," is issued by the
Delaware Foundation at Wilmington, Delaware.
I mention these things
as showing the different forms that the
work is taking in the different
cities.
An important work of the Buffalo Foundation has been the com¬
pilation of a directory of charities, the Information in this respect having
city but Erie Count y as well,
embraces not only the
multiple trustees has been
been
Incomplete.
The community trust
through which annual gifts to
fragmentary and
very
used in some cities as the medium
are
being made, and consideration has been
ment, at least, between
distribution
is being
charities
given to a working arrange¬
various community chests for the collection and
community trusts or foundations.
of annual gifts and the
The Relationship
By H. M. Morgan,
strongest bid for
the selling of life insurance
business.
From this time on we see a
companies
Insurance
tremendous factors
parallel in the growth
and development of
companies, until to-day they are two
trust
and
In the life of our country
for the conservation of its
service that is of inestimable value.
The significant point, I think you will find, is that fundamentally a life
Insurance company is performing a trust service, for does not the insured
turn over, through the premium mopey, to the insurance company as trus¬
tee for the benefit of the beneficiary, with the understanding
that this
wealth, and are
money
rendering
a
will be conserved, that it,
together with other like amounts,
will be
and that eventually the third party or beneficiary willreceive the stated amount of the policy, and also such dividends as have
safely invested,
accrued during its life.
understood and advocated by the trustees.
the outstanding contribution to the movement
working out of the multiple trusteeship plan, which,
by the way, has since been adopted by some seven other cities, some of
which had but a single trustee originally, and the emphasis which has been
whole has been the
viewing the whole movement from a
consideration the responsibilities involved
laid
upon
into
they were operated
talking points.
really, I think, where the co-operative interest was
this gave.them new
Here is
trust
instrumental in connection with the legisla¬
data which is being received, and
general to lend our influence to a sane and intelligent development of
the community trust plan.
A number of our trustees have received gifts
under wills, and in some instances under living trusts, but no income is as
yet available for distribution,
*
In conclusion, it may be said that community trusts to the extent that
We have also been
whole.
a
tion referred to and
the compilation of the
in
they have become
operative, have worked along sound and useful lines and
successful in avoiding the pitfalls and dangers which
have been singularly
were
predicted for them by those who were
established.
insurance
trustee, rather than to the estate, or to the wife direct.
payable to them as
This was a new Idea to most men, and naturally required
considerable
exploitation to establish this point.
Insurance
companies
were
primarily interested in writing the
Insurance, and when they had had
the
estate of the
interest of their clients, to suggest it.
A further analysis
naturally, in the
j
by the trust companies in smaller
inheritance taxes were nil or were very
expenses
additional
pointed out to them the advantage to
they wrere very glad,
insurance trust,
amount,
had
estates, where the
small, but where there were other
against the estate, disclosed the fact that relatively few men of
cash to take care of these obligations, so that the
although naturally of a considerable less
trust feature
obtained In their cases as well, and the insurance
the same
appeal.
Problem
of Corporation.
I
corporation, where two or three men were
the sole owners, of enabling thfe survivors to buy out the interest of the
deceased, began coming up. and It was discovered that insurance could
be taken out, with certain specific instructions as to the disposal of It, which
would enable them to accomplish their purpose and at the same time supply
the widow with the proceeds from her husband's interest, so we find
that conditions are continually arising which make additional insurance
advisable, provided it can accomplish the purpose desired, and this is
where the close relationship between the insurance companies and the
Again the problem In a close
trust
companies comes in.
of the
the practicability of
lar trust.
Trust Co., St. Louis, Mo.
startling statistics gotten out by
cent of the insurance
comparatively short time, due to extravagance,
advice of friends, well disposed but unqualified for advising on investments,
the lure of get-rich concerns and the general lack of business experience.
After all, does not this offer a big field in which we can make a strong,
effective, general appeal, and is this not where the trust companies logically
for many years
We have been hearing
the insurance
companies, showing what a large per
Is dissipated within a
money
supplement the life insurance companies/conserving for the widow that
which bas been left by the husband, and which in many cases is the greater
for many years
sacrifice, keeping
Husbands, fathers, brothers pay out
part of the estate.
premiums on their life insurance, often at a considerable
this up when everything else is gone, with a feeling that
they are fulfilling
obligation that is due the wife, the child, the mother or father, and yet
In thousands of cases the object of their many years of saving has been
defeated, through their lack of foresight in throwing the necessary safe¬
an
guards around the insurance money.
An Insurance trust solves this problem
most satisfactorily.
It holds
steady income to the one
for whom it was intended.
This trust Is, or should be, flexible enough to
enable the trustee to encroach upon the principal, where it is deemed
justifiable.
A long sickness, a costly operation, a needed rest, a required
change of climate, a college course, a business-training course, an oppor¬
tunity to start up in business, or buy in interest in a business in which one
is connected, and many lother needs show the wisdom in haying a certain
clause broad enough to enable the trustee to act on its judgment when suc}i
matters arise.
The flexibility. of the insurance trust is what makes it so
advantageous and gives it such strong appeal.
Intact the money that
is paid over, and insures a
Beneficial.
by-product—that is, the contact which beneficiaries under
have with an institution, and the counsel and advice that can
Then, too, its
such trusts
be given them
through its various departments
personal side of
out the
a
trust company, and
is beneficial. This brings
the sympathetic, intelligent
such matters demonstrates not only its
adaptability, but its fitness for intimate business relationship it has with
which
attention
its
given
is
all
to
,'v
clients.
■
our mutual
frequently asked, and one in which we
are all concerned.
Some experiences of the St. Louis Union Trust Co.
may be suggestive and helpful.
Realizing that from the insurance man's
standpoint the appeal for additional insurance to pay inheritance taxes
How
can
advantage?
was
we
co-operate with
the insurance companies to
This is the question
most interesting to
to two
him, we have on two
weeks, advertisements
occasions run from ten days
Prior to the time that
in the local papers.
proofs of the advertisements were sent
oxit to the insurance companies operating in St. Louis, with a letter telling
them just when the campaign would start and end, agreeing to supply
them with inserts, copies of the "ads" with their imprint, in such quantities
as they desired, suggesting that they use them during the time these adver¬
tisements were appearing, as well as subsequently, in the mail which they
sent out.
The response was most gratifying, and requests for over 50,000
was run,
of these enclosures were
press
received.
.
"*
belgan dropping it, asking various
and this resulted in another letter
going out, stating that one of our officers would be glad to address their
group of salesmen, and discuss with
them the arguments to be used in
connection with insurance for inheritance taxes, based on the experience
of our trust company in handling various estates.
All of the large com¬
panies accepted our invitation.
These conferences were interesting, and.
I believe, helpful to them, as we gave them concrete cases of trusts that we
are handling, which information they were at liberty to use, as no names
It
was
questions
such means had adequate
argument for additional insurance,
skeptical of the soundness
its application. Further progress will
depend in large measure upon the grasp by the various trustees of the social
significance and importance of the principles underlying the movement, the
character of the associations built up in the various cities, the wisdom of
the initial steps taken and the individual devotion
and energy of the
trusteesand others actively charged with responsibility for each particu¬
principle or
the last campaign
realized the advantage of having such
companies
broad standpoint, taking
and the possibilities for
strictly selfish view.
It seems clear, moreover,
that the publicity given to this movement has hastened the trend toward
corporate trusteeships and has thus been of assistance to trust companies as
service, rather than the
Contact
independently with no definite idea
as to a tie-up between the two.
While the trusts under a will had been in
existence, as we, of course, know, for many years, the insurance trust is
of rather recent origin.
It was conceived and brought into being, and into
its present prominence, primarily, I think, as a result of the inheritance
tax laws, which were presenting quite]a problem in the States that they
were
being administered.
The trust companies began to realize, from
their experience, that in practically no case, in an estate of any size, was
there adequate cash on hand to take care of these taxes.
That, of course,
necessitated the sale of securities, and often meant considerable shrinkage
in the estate, thereby affecting materially the amount payable to various
beneficiaries.
The one solution seemed to be to have sufficient life insur¬
ance to take care of these various taxes, so that the estate itself might be
kept intact.
The insurance companies themselves began to realize that
The
the lines along
of progress, as
principles under¬
York perhaps
New
In
as a
Operated Independently.
For many years
the extent to which the
lying the trust are
Assistant Vice-President, St. Louis
the earliest trust
of the history of
will develop in the near
of Insurance to Trusts
companies brings out the
preceded the selling of
trust service, due in part to the fact that trust powers were in some cases
not granted until subsequently, and also because life insurance was known,
whereas trust service was little understood, and some time was required
for its advantages to be fully exploited and recognized.
,
The names of these companies) indicate the Importance attached to the
insurance feature.
In 1812 we find organized in Philadelphia the Penn¬
sylvania Company for Insurance on Lives and the Granting of Annuities;
In 1836 in New York the New York Life Insurance & Trust Co.; in the
same year in Philadelphia the Girard Life Insurance Annuity and Trust
Co.
of Philadelphia.
Their early announcements and advertisements
stressed the need for Life insurance, indicating this was regarded as their
A survey
Interesting fact that
be considered as typical of
future, the rate
foreing instances may
The
which this work
previously stated, depending upon
were
In
found that insurance agents
about the insurance trust,
|
divulged.
-
the fact that in the large majority
comparatively small amount of insurance was
the explanation being that this was taken out when the man was
addition, we called attention to
of estates of great
carried,
young,
of his
size,
-a
and he thought it was
family.
absolutely essential for the future welfare
he progressed, he began to realize
As his business grew, and
that the income from
this, as well as other interests, was
family, and he found no
sufficient for the
additional need for new insurance.
Explained Stock Sacrifices.
"We also called
attention to the fact that men
balances at the bank.
of means left small cash
This was not strange as it was
only good business
TRUST
COMPANY
to
keep their money working.
Their salaries and their income from their
various investments did not make it
necessary to keep a large amount to
draw
for current expenses.
on
reminded them that,
as
In the
of
case
men
of smaller
in order to meet the expenses
would have to be
loss
a
exchange,
and
close
price paid; frequently
power, and even
type of men of education,
on
the New York
corporations.
a
The
often it
very
increase
quite
was
local market had
a
that
active in the business, they could,
close corporation where the only buyers would
if
so
small
They
which would reduce the size of the
estate
In reference to the
considerably.
advantage of the insurance trust in general, and along
the lines which I have given earlier in
my talk, we referred to the feature
Given
a
that
bring out the saving to
to
they
special instrument
a
The
given them
an estate
different lengths—some shortened to
a
mind.
only, others exercise
admirably in its field and
but it is not In
a
true
sense
and officer of such
a
a
a
may
are
endeavoring to reciprocate in every way
We all realize that their good will is worth a
great deal to us,
can.
Some
or
a trust
and to those officers charged with the
sacred duties of trusi officer.
performance of the important and
transacted by a trust company or a trust department will afford
suggestion
a
confronting the executive
re-
sponsible for the honor, safety and profit of the trust department, and this
casual survey will demonstrate that the trust business is a vast
complex
customers,
and
beneficiaries
relation known to modern civilization.
point and its problems
acts
as a
tions
are as
to
do
with every
almost
business
every
It touches business life at
diversified
as
the affairs.of men.
trustee, fiduciary or agent, and seldom
have
in
as
every
It usually
principal, and its
opera-
trustee,
It acts for individuals
in the capacity of executor, administrator, guardian of the estates of minors
and
♦
institution, and the demands of his office require
butes of character and mental equipment.
incompetent
and
agent.
It
and
manages
persons,
invests
operates
trustee, receiver,
handles
money,
businesses,
rents,
conservator,
stocks,
buys,
bonds
attorney-in-fact
and
improves
his business, in the morale of his associates and
fidence and
good-will of his customers.
sells real
estate? holds and disposes of jewelry, live stock, produce, automobiles,
furniture, libraries, merchandise, machinery, partnership assets, patents,
assistants, and in the
There
of
con-
certain qualifications
are
which should be possessed by every man who consecrates his life to trust
service and is entrusted by his company with the
performance of its important duties, and the protection of its vital interests
against the tremendous
hazards by which it is surrounded.
is not meant personal
requirement of
a trust
integrity, for it is to be
employed in trust work will be
a
officer is honesty.
of probity and
man
uprightness, but the
trust officer Is that he shall not only be
a
By this
assumed that every person
upright, but that
he shall possess that degree of sincerity and justness that will
dominate his
actions and characterize all the transactions of his
department,
This spirit of honesty he will communicate to the members of his
office
force, and It will be felt in the
only
on
very atmosphere of his institution.
It is
this basis of honesty that the inevitable clash of interests
may be
reconciled, and that the customer, the third
person and the trustee may each
be given his due, aM may feel that perfect confidence and
security that are
the foundation stones of the trust business.
I
mortgages,
and
exceptional attri-
many
His ability and personality will
find reflection In the reputation of his
company, in the orderly routine
form of property susceptible of ownership,
while its duties require the performance of multitudinous kinds of
personal
service.
The trust company is employed by corporations to act as
registrar, transfer agent, fiscal agent and otherwise.
in its
The first and most essential attribute of
is chartered, organized, equipped and officered to
trustors
or
A trust officer is the executive charged with the
management and direcimportant business transacted by the trust department of his
thdj^the trust officer is its most important element.
its
mistake
tion of the
A glance at the ordinary and usual business
of the variety and delicacy of the tasks daily
A
plans and ambitions than to make money, and its officers should
be actuated by much higher purposes and aims than to
operate the machinery of a corporation.
In this particular business it is
indubitably true that
many are called but few are chosen.
4
more
officer, notwith-
resolutions of the directors.
fiduciary.
or a neglect of a solemn commitment
does more to
harm the trust business than can be offset by
many acts of diligence, skill
and good faith.
It follows from what has been said that a trust
company,
if it expects to win success and achieve a
reputation, should have much
matter how it writes its
no
is in fact
vagaries of corporate and official nomenclature, but must of necessity be
serve
There
dereliction of duty
be profitable to its shareholders,
confined to those companies exercising in a full measure the trust franchise
company
relationship with those to whom they sell
frequently asked about the matter of estates, how
they
all other trust companies and alienates the confidence
and regard of many
who need the service of a corporate
trust
are
This discussion cannot range the wide field
seemingly indicated by the
The trust
are
persons
few simple fiduciary functions,
tryst company,
corporation
standing the provisions of the by-laws
and
this real helpful service is naturally
advantageous.
men fully
appreciate the efforts that we have
personnel worthy to represent the institution and capable of
performing its
duties, leads not only to financial loss and ultimate failure, but it discredits
A corporation engaged in banking or other
non-fiduciary business
name,
■
responsibility,
& Savings Bank, and Chairman Trust Company
Division,
Association.
while still others are engaged in handling a large volume of difficult and
exacting business requiring the skill, learning and diligent care of a master
may serve
a
Bankers'
vanishing point
and others stretching across the land to the
very horizon.
name
realize
continue,
Erfierson declares that "An institution is the
lengthened shadow of one
man," and this phrase is peculiarly apt in its application to a trust company and its trust officer.
The trust ocmpanies in the United States cast
companies in
of insurance
type
*
seem to
but to grow stronger year by year.
___jGentlemen of the Trust Division:
many
latter
Trust Officer—The Man and His Equipment
California
shadows of
this
perform, as we simply take hold where
they leave off, and in fact make what they have sold
accomplish its pur¬
pose.
We believe that this co-operation is destined not only to
by having
By Wm. Biiodes Hervey, Vice-President, Los Angeles Trust
^
to
should be left, who should be appointed executor and
trustee, etc.
is no overlapping in the service we
folder, giving examples, was prepared and given them for distribution.
!
due
We feel that the insurance
this insurance payable to a trust
company, rather than to the estate itself,
a
the
put forth in their interest and
Sample Forms.
tentative form of trust agreement was
In order
seen
that they, too, come in a close
that many did not realize
had to be created, so
and explained.
been
studying it, specializing in it;
are
insurance, and
discovered
was
has im¬
attracting
have
they have advised properly one to whom
money has been left they not only gain good will, but
gratitude as well, and
being given the power to purchase the securities and other
property belonging to the estate, if desired, thus giving the estate
money
for a partial d stribution in
money on the payment of certain bequests.
It
has
'I
comment to others upon
of the trustee
,
now
which goes further than the actual
selling of the insurance policy, to see
that this money is conserved,
realizing at the same time that it is good
business on their part, in that when
price
a
insurance
in
salesmen.
be the others
disposed, force
Life insurance is
years.
refinement and polish, who
possibilities of intelligently presenting the value of life insurance
in
its
various phases, and I have no doubt but
that a great part of the
first
few shares would bring the price down several
a
points; in
were
proved tremendously the past£ few
a
disposed,, of at the market, and
the original
over
absorbing
local
on
personnel of the insurance organizations
forced sale
against the estate.
We brought out the three kinds of
stock, those listed
those
a
207
An interesting development from
these conferences was the interest
which was apparently shown in trust
service in general, and the talk often
led to wills, executor and trustee,
agency service and the like.
My obser¬
vation has been that the
we
rule, their estates consist' mainly of their home
a
and their business, and these would have to be
disposed of at
Exchange,
means,
DIVISION.
Moreover, this attribute is not
tion, but rather it
is
one for acclaim or advertising or exhibi-
be the casual, customary,
to
quality displayed in all the work and in
and herein
will
be
found
the
truest
royalties, copyrights, liquors, and all other forms of property accumulated
by its patrons. * It engages in manufacturing, merchandising, farming,
tion, criticism
ordinary and expected
attitude of the trust company,
of the influence, prestige
and "punch" of the trust officer.
operating utilities and other business enterprises.
It pays insurance, taxes,
inheritance taxes, assessments, interest, repair bills, claims
every
radiation
income taxes,
against estates, incomes to trustors and beneficiaries, and many other forms
of
demands.
It prosecutes, defends and compromises lawsuits and disIt protects the living and matures the cherished plans of the dead,
befriends the widow and orphan, guides the aged, strengthens the
weak,
putes.
curbs
the
improvident,
discourages the
reckless,
the
encourages
keeps endless secrets and in many ways justifies its claim to be
porated friend."
an
timid,
"incor-
All these things it does for others and, because of its
profound legal and moral responsibility, it is governed, in
existence, by the strict laws of trusteeship.
As
an
every act
of its
officer of the court and
as
Many things done by the corporate trustee
of
to the trustee
loss,
Dereliction in the performance of duty not only entails financial
but undermines that
reputation and good
patiently built up, which is the only
A
business
of such
intricacy,
sure
scope
name,
foundation of
attainments.
meagre
success.
a man
The requirements of the
exacting, the details of management
arduously and
and reponsibility cannot
cessfully built up, managed and made profitable by
or
so
be
sue-
of weak character
business
trust
so numerous, the drafts on
are
so
that none but men of
so constant and the lure of
expediency so insistent,
ability, experience, learning and strong moral character
should be chosen for trust
trust officer of the
the
public
as a
An
institution unwilling to employ
trust company prepared to
duties of fiduciary.
are
officer.
a
type suggested should be unwilling to hold itself out to
assume the sacred and
The honor and highest good faith of
solemnly engaged when it voluntarily accepts
a
a
responsible
trust company
confidence, the property
Sometimes
a
inspec-
trustor leaves
important directions relative to his family and his fortune,
journey from which he never returns.
Business is trans-
acted for infants,
are
incompetents, and others, who in the
unable to check up or
disapprove the acts done
ought to have been done.
very nature of things
or the failures to do what
Human nature asserts itself in the weakness of
officers and employees of a trust
company as well as elsewhere, and times
do come when there is
lesser resistance
a
temptation to lot down
or course
full protection of
a
a
bit and to follow lines of
of» expediency, rather than to do battle for the
trust.
In all these and many other cases the
only sure and safe reliance of the
shareholders, directors and
customers
is in
a
trust
officer imbued with
a
nature and will to
honesty, and possessed of the power to communicate his
spirit to all in his realm of activity.
That trust officers have in the past
fully exemplified this virtue of honesty 1s demonstrated by the fact that we
hear no charges or complaints of
mismanagement,
by any of the existing trust commutes.
good faith
and disinterestedness
the subject of
are not
There is often delegated to the trustee the exercise
and then goes on a
the administrator or corporate and private wealth, it must know and follow
the law.
audit.
or
wide discretion and uncontrolled action.
a
A
trust
officer should have
arfaptitude
department is constantly engaged
m
Many
negotiated
of
with
these
men
of
transactions
are
large
His
behalf of.
on
and diligence of the trust
involve
experience who
power
business.
business transactions
others who rely upon the judgment, wisdoqi
pany.
neglect or abuse of
and instinct for
operations,
corn-
and
shrewd and| sagacious.
are
All
transactions of the trust company, whether large or small, should be handled
prudently and intelligently.
The character of business done by trust
com-
panies is of almost infinite variety, and while much of the active detail
and the directions of its decedents, trustors and principals, as well as when
work is
It qualifies as an officer of the court.
in his specialty, yet the trust officer must have a general
knowledge of all
through
a
long period of years, and some of them last from generation to
When
generation.
of
a
Many of its engagements continue
onc|) a trust company is committeed to the performance
duty, it is not easy to discharge itself until the duty is fully and finally
performed.
A
department, and he should possess the faculty
of clearly grasping and quickly analyzing the problems presented, and of
forming business-like conclusions.
propensity
failure
necessities
assigned by the trust officer to assistants, each of whom is expert
the business transacted by his
on
the part of
a
trust company to realize the fundamental
of the trust business,
and to employ trust officers and other
or
He must
as
well
as
This requires
a
mind with
a
decided
bent for business.
study and analyze business conditions throughout the country
of the specific matters he has im
the particular circumstances
BANKERS' CONVENTION.
208
enter into all its relations and dealings with its customers; and equally rue
it is that none should object because a trust officer knows somewhat of the
one thing that all persons are presumed to know. If a trust officer knows
the law, It would seem that he harms no man or class of men if he imparts
that knowledge to those with whom he deals in his daily round of duty and
to those who, by reason of their infancy, inexperience, Incompetence or
otherwise, are the rightful objects of his solicitude and care. To transact
a trust business with due reference to the law and a clear understanding with
of his institution.
'
customers of mutual rights, duties and responsibilities is not in any sense
A trust officer will find Ids measure taken and his ability tested daily
"practicing law," and so long as freedom of speech is the right of such an
in the management of property, the sale of trust assets, the investment of
officer his privilege in this respect should not and cannot be abridged. Haptrust funds, the provisions for the well-being of beneficiaries, and the direcpy and harmonious relations with the bar are desired and sedulously cultition of the ot her business activities under his charge.
His company will vated by every trust officer who is a practical lawyer, and he will scrupulousfail
succeed in Its mission as he fails or succeeds in bis office.
The trust ly avoid any infringement upon the lawyers exclusive domain, but he
too nigardly to pay a salary necessary to secure the services of a
will reserve to himself the right to pursue his legitimate business in a reason-
reach correct conclusions and properly
his power to understand and justly appraise
problems. His ripened
Judgment, his practical turn of mind, his business acumen and his faculty
of keeping both feet toniy on the ground when others are floating in the
clouds, will be appreciated by those men and women of large affairs who
consult him. as well as by those many individuals who leave to him the
direction of their concerns, and will contribute to the expansion and usefulmediately in
servers
charge, and he can
customers only by
factors
different
the
entering into his business
ness
or
company
indifferent to seek out and attach
of the people, and is
destined to failure in a field where success and honor are synonymous.
It is important thai a trust officer have a practical working knowledge of the
law.
It is not essential that he be a member of the bar or experienced in
the general practice of the law, although such experience is most desirable
and will be found invaluable in his daily work.
While it is true that many
matters involving legal questions can be referred to lawyers for consideration and advice, and that all matters requiring extensive investigation of
authorities, or litigation, or the management of controversies, should be
sent to counsel outside the trust department;
nevertheless, questions are
constantly arising which bear a legal aspect, are entitled to prompt answers
and should be decided by the trust officer.
Most of these questions involve
simple principles of law or well understood rules of equity affecting trusts,
or procedure in the courts of which the trust company is an officer, or business Usages sanctioned by statute, and the trust officer should be equipped
to decide them without the delays incident to the reference to outside
real business man for
to itself such a man,
trust officer, or too
Is not deserving of the patronage
able and honorable way.
Personality is a quality that should characterize a trust officer. One may
ne endowed with many splendid mental and moral attainments which
dignify his personal character and make him a man of large merit, and yet
for some reason be unable to impress a sense of his worth and ability upon
those with w hom he comes in contact. Such a failing is a decided handicap
to a trust officer and will prevent him from realizing his laudable ambitions
and will cost his company patronage and prestige. Men and women are
impressed and won by a man whose open and frank nature is readily understood, and who makes them feel his strength, knowledge, sincerity and
sympathy. Personality is an attribute quickly recognized and felt, but
very difficult to define or explain. It lays hold of the attention and cballenges the regard of the business world, and opens the way to that confidence and reliance that are the first steps toward procuring desirable
trust business. It Js no less valuable in holding the good-w ill and co-operative effort of trustors and beneficiaries.
The trust officer has occasion to interview men and women of large
counsel.
1
means and sound judgment, who must be convinced of the value of the
The judicial' temperament rather than that of the advocate or partisan
service he offers, he transacts business for and with many different kinds of
should be cultivated by the trust officer. It is his province to know or ascercustomers; he represents his company under favorable as well as trying
tain the legal rights and duties involved in the many matters coming to hira
conditions: he directs a large organization, and in these things as well as
for decision or review rather than to seek the establishment of any particular
elsewhere, his strong personality will never fail to contribute to his power
.
rule that might be
law
as
It is his business to follow the
strive to change rules of action or to establish
particular person or situation.
This distinguishes
practicing lawyer.
In his dealings with the legal
helpful or advantageous.
he finds it, and not to
principles to apply to any
that of a
his work from
principles governing
different
the legal
questions submitted and the weighing of authorities.
This strengthens
his company both with the lawyer, who is a valuable and appreciated friend
profession, if he is a lawyer, he
is conscious of the ethical
practice, he is able to understand the points involved in the
consideration, and his mind follows the analysis of
lts
matters under
who desires a clear presentabusiness. Moreover the trust
and to
discuss with patrons the various forms of trusts, testamentary plans, taxation, and the other intimate details of a peculiarly important and specialized
business.
This he cannot do unless he knows not only the business aspect
but also the legal features of all the subjects of such discussion.
The work
of a trust company is an indissoluble compound of business and law, and
those who seek to separate them are ill advised of the nature of the trust
of the trust company,
tion of the matters
and with the customer,
which affect his trust
it his duty and
finds
officer
privilege to initiate trust business
with failure.
business and are very apt to meet
In some quarters
should not
should not practice law. It is
complaint is made that a trust company
practice law, and, indeed a trust company
incorporated to do a law business but a trust business, it is not licensed
an attorney at law but to act as executor, trustee and in other fiduciary
not
as
capacity, it does not hold itself as one who speals or stands in
another but as one who acts for another in the administration
The lawyers properly have
affairs.
and
a
the place of
of property
monopoly of the business of
carrying on litigation for disputants and of
The trust ocmpany has no monopoly
of any kind and meets lawyers and other individuals as competitors in every
part of its chosen field.
Certainly no one can argue that a trust company
is without right to employ attorneys to advise it or to employ officers who
are conversant with the laws which govern and regulate its every act and
appearing for others in court, of
advising clients for compensation.
and usefulness.11'
His human sympathy will Impress
of loved ones.
Last in the catalogue of essential qualifications cf the
the ability to do and say the right thing at the right
The first concern of
personnel work is the development of the employees
direction of those who come to us
as beginners.
In order that this training and development may be of the
highest order, it is essential, of course, to realize that a' careful selection
of raw material is one of the most important and necessary things which
already on our staffs, and especially the
we
have to do.
Industrial concerns, as a
whole, have been quite insistent in the past in
educational training and natural abilities
quickly the details of the business
their choice of young men whose
make them seem most likely to absorb
of the institution which they enter,
shortest space
and so become most valuable, in the
of time, to those who employ them.
in many
graduates of special theoretical train¬
During the last three or four, years there has been a movement
of
our
banks to pick out young college
ing along commercial.and
business lines.
of these develop much more
only
a
quickly than
It has been found that the bast
who comes in with
a young man
high-school diploma.
Under
our
old system too little
attention has been paid to the fitness of
the Individual for the particular work to
which he has been assigned.
If
acceptably he has been retained there, and little effort has
discover whether or not his natural bent fits him to hold a
he fills his post
been made to
position In some other department, along possibly different lines, which
will make him of much more use to the institution he serves.
By a system
of internal
development and close personal observation
place men and women at the work for
times
a man
it is possible to
which they are best suited.
has been condemned because he has not
Many
filled his post accep¬
tably, and little attention has been paid as to whether or not he is fitted for
him.
My experience has shown me that close per¬
the work assigned to
sonal observation of the results
bank
I
am a
may
obtained by every man on the staff of a
expended.
responsibility, small though It
will repay amply the time and money
great believer that
in giving
a man
be, there will develop ixfy him qualities of
may
lie dormant.
our
several
head of each
initiative which otherwise
In the bank with which I am connected we have divided
into divisions—some large, some small.
The
departments
division, however small it may be, is consulted from time to
trust.officer is tact-r
time, the faculty of
maintaining harmonious and cordial personal relations amid the differences
of opinion and unpleasant conflicts which are bound to occur, and the exerelse of unfailing patience. The trust officer meets with all the vagaries
and perversities of human nature, encounters whims, oddities and eccentrlcities, listens to stories of wrongs, injuries and impositions, observes
efforts to gain revenge and to vent malice, learns the miser's greed for
gold and the spendthrifts' indifference to his interests, and witnesses the
display of the entire gamut of human strength and weakness. His poise
will keep him untouched and uninfluenced by any of the baser and un- .
worthy sentiments entertained by his customers and his patience will
enable him to mitigate many asperities and to be genuinely helpful in the
sphere of his labors. By his tact the trust officer will gain the personal
friendship of his customers, will harmonize and keep happy the many
members of his staff, and will promote the dispatch of business and endear
his institution to those who come into business relations with it.
In conclusion, the trust department managed by an honest business man
of legal training and possessing personality and tact, deserves to succeed
and will be successful. It will be a credit to its community, a servant of the
public good and an example to all other companies engaged in the trust
business.
Staff Relations and How to
By P. E. Hathaway, Employment
and aid those he counsels and guides
in tbeir efforts to measure up to acceptable standards of conduct, kindness
and benevolence, as well as those who are the victims of the tragedies of
life. The„wIdow and orphan, the bereaved and unfortunare, the improvident and afflicted, will trust and obey him. His sincerity will not be
questioned, but will be the justification for the reliance and peace of mind
of the members of that increasing trust family that lays upon his company
their burdens and difficulties and fortunes, and the welfare and protection
,
Develop Them
Manager, Northern Trust
time
as
to the
t>
,
Co., Chicago.
work his men are doing.
He is taught that the achievement
division will depend largely upon himself. In connec¬
tion with this we have established a budget system by divisions.
Towards
the close of the year each divisional head is consulted as to his possible
needs for overhead expenses during the coming year, and each item is care¬
fully gone over.
Whgn the appropriation is decided upon he is given to
understand that the responsibility is upon him to see that his expense is
of
good results in his
appropriation, and that there must be no over-expenditure
unless absolutely good reasons are forthcoming.
Results
of this kind must necessarily be slow In
appearing, but we have found that the division heads who are worth while,
not only have entered warmly into the spirit of the undertaking, but that in
many instances they have been quite successful.
Until lately our banks generally have not realized the advisability, or
rather the necessity, of educating their men along banking lines.
It ie
the hope of our Staff Relations Committee to formulate plans along per¬
sonnel and educational lines which can be adopted by a majority of the
trust companies who are members of the American Bankers* Association.
We feel that a great work can be done in this direction which will result in
the development of our men and women and in an improved attitude towards
one another and towards their work.
Wonderful results can be reached,
if the officers of our banks will give some time to imparting their knowledge
kept within that
during the year,
of
a
newly established system
gained through years of study and
The right kind of bank officer
experience, to members of
their staffs.
will not only keep in mind what he can
he can do which will advance his
own interests in the bank, but he will take a broad outlook upon the situa¬
tion and will realize that if he cares to take advantage of it a bank offers
a
wide field for service because of the opportunity afforded for giving
unselfish and affectionate assistance to his fellow-workers in the bank.
How many of our bank officers think of that at all?
They leave the
education of the young men and women to the school teachers and to the
ministers.
The life of the bank officer is very confining at best, but here,
right at his door, if he only had the breadth of vision to see it, is an oppor¬
tunity for practical service in the world in the way of giving advice and
do for the good
of the bank and what
TRUST
COMPANY
encouragement and practical help to young men and women who in
very
many cases need it very sorely, and who in
altogether too
it
either
from
church,
thinks of it the larger the
possibilities
of
one out
he could
will
hundred bank officers has
a
do to really
remember, I
then
as
help (in
school
or
unusual way)
any
more
j Canadian banks have always
provided funds for young
one
well
thought very seriously of what
those under him.
sure, the remark of Abou Ben
am
The
loom, and yet I question whether
ever
who loves his fellow-men."
one
home.
or
Adam, "Write
You
them,
they
juniors and make banking
our
attractive to
fellow-bankers
the
across
border
slightest misgivings.
have
realized
for
time
the
I
importance of selecting their juniors very carefully, not only with reference
to their educational
abilities, but also in regard to their family connections
V'
j
..
'■
-;
nature upon which the
rapidly developing function in
am
here
trial and commercial system.
stated
are
by
a recent
The
writer
this
reasons for
compelling.
are
important in such
only by
a
knowledge of business principles.
To
secure
careful and
a
research.
There
are more
applicable and profitable
gaining such headway in recent years.
to
*
explain why the function
so as to
make them
situations,
concrete
has
been
profit, of keen competition—absolute
pies, is imperative.
and decision
The time of rule-of-thumb methods, shrewd
by instinct rather than by intelligence has passed.
must become more
processes?
markets,
,
conditions
price
necessity of
nearly an exact science.
The demand Is
gbessing
Business
more
s
The public is growing calloused to unsupported
superiority by advertisers.
that of furnishing accurate information not
merely to
by legislation
departments,
single industry.
a
So far
as
recent years
single enterprise
a
they
unhampered
are
number of large business
a
organizations, through statistical
aim to furnish their members with facts relative to con-
now
ditions in the industry as
whole.
industry-such
as
source of material,
Among them
The" science
etc.
and
crediting gains to trust^states
competent trust officers.
Its
im-
The truth about it should be
authoritatively pre-
for trust business which
ficiaries.
Here is
service to
In all of this investigation work
a
research do-
are
promising both to the trustee and the bene-
field where
a
research bureau organized
a
all.
us
on a
co-opera-
perform^ valuable
In the fields of corporate and "living" or "voluntary" trusts, life, fidelity
and title insurance, and suretyship, there are many opportunities for studies
and surveys which would contribute i#ateriaily to the amount and the
more scientific and economical conduct of
business.
our
We have but few
really authoritative facts^about such matters.
Doubtless, some pertinent
statistics have been compiled but they have been made only partially, if at»
claim
important direction which business research has taken in
but to all the units of
which credit extension
has led to the creation of separate tax departments in many
companies to
serve both themselves and their patrons.
Also, it has opened new avenues'
customers,
i
the
otherwise!
many
our association.
all, available for
preparing his plans and
An
in
properly amortizing losses Xnd
administering his work.
ever
claims of
upon
transportation facilities,
trends,
is scarcely known to
urgent
before for facts carefully collected and
scientifically analyzed and
which afford to the business man a solid basis for
than
investigations that the data
five basis between trust companies would be able to
and effects, of means and methods of facts and princi-
causes
We Need
partment could play an important part.
The entry of the Federal Government into the domain of direct taxation
has greatly complicated matters
affecting income and inheritance taxes.
It
In the present state of commercial
organization, of complex forces in the
business world—of narrow margins of
knowledge of
firm conviction that the result
a
anlyzing and arfaying commercial facts,
immediately
a
of business facts is
survey
concrete reasons to
have
we
sented to
These propositions broadly state, in the abstract, the justification of busiof collecting,
realize
a
problem for business research."
ness
we
pavings Bank, Los Angeles, Cal.
portance is increasing.
comprehensive
quite
be changed
be made; but
be derived only from
careful and comprehensive
survey of business facts.
"4.
can
are most reliable and complete.
We should know the borrowing company's organization and policy; efficiency of
plant, methods
a
and
A better knowledge of business
principles can
can
far been
so
is to be based
They
"1. The immediate and primary need of business
to-day is intelligent
direction and control; individually,
generally.
"2. Intelligent direction and control of business can be had
"3.
This work has
will be well worth while.
series of propositions:
better
as
■'/'v
•
"Commercial Research" in the form of
on
study banking subjects,
behalf of the committee to ask
you to give us the best you
on
have along these lines, because
American indus-
our
The
Staff Relations Committee is
We feel that great progress
By L. 11. Koseberry, Vice-President of S ecurity Trust &
a
to engage.
are
good many systems In vogue now
a
Research Services—Facts and Figures
Business reseach is
they
to the fullest extent that it is impossible for a*committee of this kind to do
any lasting good without the hearty co-operation of the officers of our banks.
'
some
and
advantageously.
that they will feel that they have entered a noble
profession which
so
can make their life-work without the
Our
which
wish to
interchange of ideas along these lines.
experimental,
We must raise the plane of
in
who
entering has been developed to some extent by several
banking institutions
in the United States^ the committee feels that there is
great need for an
The whole thing is right in that
sentence.
one
work
encouraged work at night schools, and have
men
other subjects of cultural value.
as
While work of the
;
down
me
209
and their adaptability to the
have
many cases
received
not
DIVISION.
that
We must prove to-ourselves,
our use.
facts, but which in truth
as
are
mere'declarations,
we have come to regard them as truths,
not taken
A few
as
many things about our trust business which
well
we
so
as
are
to
our
prone
to
often reiterated
The public, however, has
readily to these general claims.
so
years ago the Trust Company Section of the California Bankers'
Association made
closed probate
an
authoritative analysis of
thousand
one
consecutive
from the records of the Probata Court in Los Angeles
cases
County, and a similar number of like cases from the records of the Probate
Association, the National Retail Dry Goods (""Court In San Francisco County.
The results were truly illuminating from
of Credit Men,
&c.
Especially
many angles.
It disclosed that the service of corporate fiduciaries was
spreading investigations
by
the
Federal Trade
superior to that of all classes of individuals from every angle of the test.
a
are
the Tanners' Council,
the National Retail Hardware
Association,
the
noteworthy
are
Commission,
Tariff
the
the
Bureau
Commission, the
the
war,
National
Reserve
War
of
Foreign
Federal
Industries
Board—of
Association
particular
and
Reserve
Board.
The
value
Domestic.
Board,
research
to
Commerce,
&c.,
and,
services
bankers—have
of
the
during
the
the
Federal
become
almost
indispensable parts of the intelligence equipment of American business men.
Already a number of the larger banks in centres like New York, Chicago,
Boston, and
ments
with
some
of the Pacific States' cities, have model research depart-
for the special study of problems connected with commodities and
commercial
and
Industrial
developments,
local, national, and
even
international in scope.
Good types of such organizations are the service
department of the National Bank of Commerce, New York City,* with a
personnel of twenty experts, and with a branch office at Washington to
keep in closest touch with the activities of the National Government.
Bankers Trust
Company of New York City specializes its research cori-
cerning investment securities.
places special emphasis
of the
pany
The
same
The
Irving National-Bank
foreign trade.
upon
city maintains
of New
The Guaranty
York
Trust Com-
highly efficient foreign trade department,
a
offering world wide business research facilities gathered at home and from
abroad through its extensive network of
foreign branches.
Its bond statistical department has massed imposing figures
affecting industrial securities.
Numerous other banks maintain statistical and research
departments
quite as efficient as those mentioned.
From the
foregoing brief
review
of the progress of business research in
this country certain features stand out.
These
are:
The (Treat variety and
Yet, in the face of this trust companies
than individuals, public administrators
which
tion
were
were not
published.
should be heavy.
Nothing will authoritatively disclose this, however, hut
a search of the probate records in
for a research department.
In some phases, and in
rapidly developing.
now
way
any
tions in the most
a
with
manner
its
neighbor's affairs entrusted
clients
a
our
imposes
upon
our
face
most
that
to
one
him
It is
existing between
he,would with his
a
trust company
care
towards
the
of
the
problems
which
In addition
confront
general
they must meet
many
special problems which arise from the special character of their trusteeship.
be of service in these lines and
where little has yet been done.
especially
in
the fields
In the banking department of the
company
would fall the
compilation of statistics in regard to loans and money rates,
The purchase and sale of securities would
provide a wide opportunity for
study of investments
trust
in which extreme care must be exercised by the
department in dealing only in issues safe for and required in their
Similarly, in the credit department great possibilities exist.
The
trusts.
science of
collecting information is
a
broad
one
specialized organization
a
our
members conclusions
That the opportunity for
is indicated by
a
random glance
pages
of such
Advertising.
of
Farm
.
Mortgages.
Investment of Trust
advantage?
should exercise greater
than
the former this extreme
banking and other business institutions.
Research should
and methods, by
Uniform Stock Transfer Requirements.
as
yet in its infancy.
It is extremely
Funds.
Inheritance Taxes and Voluntary Trusts.
Solicitation of Trust Business.
Interest
The
information
necessarily it
aTUj
must be
'
Rates.
which
is
in such
conveyed
based to
a
is
articles
valuable,
but
great degree upon individual experience
general report rather than upon accurate data produced by means of
comprehensive surveys.
processes of
ence
companies
now
the community charitable
Statutory Fees for Fiduciaries.
affairs of the latter.
Trust
is work
field, and onejwhich Is
as
at the titles of the leading articles which have occupied the
periodicals as "Trust Companies" during recent months.
stronger obligation,
for the patrons whom they serve.
The highly confidential relation
own.
and
bis
success,
research In the field of trusts is
closely to the subject of research and to
it might be undertaken to
well-accepted precept of human conduct
care
a new
New forms of trusts, such
progress, application,
other form of business enterprise to perform their func-
intelligent
This
Equipment Trusts.
Trust companies and trust departments are under
perhaps, than
States.
our
sections of the country, the business of
which can draw from the experience of all of
unobtainable elsewhere and of general value.
consolidated and co-operative basis by
pertinent to ask, will it not be advisable for
their attention
number of
trust, various phases of "living" trusts such as life insurance and subdivision trusts, etc., are arising continuously, warranting a study of their
the trust companies of America.
turn
many
a
trust administration by trust companies is
Future
Therefore, is it not
we
competitors.
With such advantages proven as facts from court records,
and not asserted as unsupported claims, the impetus to estate business
Trust
inquire when and in what
The probate records in all of the States will,
rule, probate an estate in the shortest time with the least expense, with
the minimum amount of litigation, with less shortages and mlsappropriations, and with the most accurate system of accounting, than any of Its
possibility of its employment
members to
securing less of this business
are convinced, disclose that the American trust company does, as a general
applicability of the research function; its recognition and adoption by so
many large and staple institutions; its quality as a service function; and the
on a
were
and attorneys.
For local reasons
deemed quite sufficient at the time, the results of this examtna-
Prepared
in
the latter
form
by
means
of
the
research, ft would give scientific results based upon the expert-
of all and would bo at the disposal of all—to
their infinitely greater
advantage and profit,
it is admitted that some forms of research
may
best be performed by
the individual trust company, if that company is willing to properly
equip
maintain such a department.
Indeed, no company of any size can
ami
function
efficiently without such activity being included
organization.
Much
more
of it however
can
best and
more
as
a
part
of its
economically be
performed through the cooperative action of all the trust companies, and the
suggestion Is made that these companies, through the existing organization
of the Trust
establish
a
studies and
Company Division of the American Bankers'Association, shall
central
research
bureau
surveys of some of the
to
undertake,
on
a
nation-wide scale,
broader problems which to-day affect
CONVENTION.
BANKERS'
210
bureau should, as a matter of
prudence, be small.
It would be wise to create a small compact staff and
to attack and complete but one subject at a time before proceeding to
another.
As the bureau demonstrated its value, its scope could be broad¬
ened and its personnel and equipment Increased.
While the initial venture might be small, however, there would be no
obstacle to its proceeding along the lines of an established program and
while such a program would, require further deliberation before adoption it
may not be inappropriate to illustrate here types of study.
This program
could be attacked piece-meal but as the bureau grew its main headings
might serve to mark the divisions of labor.of an organization conducting
permanent investigations along, the lines laid down.
The main headings of
The beginnings of such a
members.
our
theinselves as follows;
pertinent program suggest
a
will probably yield the most
This study
American Trust Companies have failed or how many
trust departments of failing banks have not been fully solvent?
What has been the effect of a failing bank on its trust assets?
Has any loss in fact been suffered by the beneficiaries of its trusts, and if
so in what proportion to the other creditors of the failing bank ?
(b) Are trust companies more prompt than individuals in initiating and
closing the administration of estates of deceased persons?
(c) What class of executors or administrators render the best and most
regular accounts to the Probate Court?
(d) What are the comparative earnings and losses on estates committed
many
companies and to others?
to trust
the expense of corporate service vs.
regular, overhead and extra expense.
(e) Compare
to
(/) Does
trust
individual service as
administration reduce ensuing litigation
excepting claims of invalidity of wills?
company
estates from any cause,
in
Origin of New business.
3.
been
ments what were
that
minds of our advertising depart¬
All experts seem to agree
is directly traceable to advertising.
the sources of new trust business.
fraction of new business
mere
a
matter of doubt in the
a
What proportion comes
from outsiders and how does it originate?
How much is attributable to
new laws and new uses for trusts?
What can be traced to the enthusiasm,
the training and the opportunity of one trust officer over the others in the
same institution?
The real origin of new business is an important dis¬
covery for any institution, and would solve the harrassing problems of ot[ir
What is that
unrecorded
We should know with some
certainty the answer to these questions
business to build up and
to discourage.
Nothing but an authoritative analysis, predicated
facts and figures, will accurately disclose this.
The experience of all
companies in this matter must be more or less the same.
Facts
these sources could readily be collected and digested to our profit
determine what class of fiduciary
agencies are not mentioned by way
allay
fair lawyers that American trust
companies are engaged in the practice of law in any real sense.
What little
they may be doing in this respect is in conformity with long-established
business practices and the every-day requirements of the people, and to
a far less extent than is being performed—with the consent of the bar—by
rendered is merely an accommoda¬
Most of
with slight prospect for any profit.
know that a trust department not
only can be made to pay good divi¬
yield a large return in good will to the
It
bond and
There must be ways of proving this to be true.
organization.
growth of our
establishment of the trust
department or the assumption of trust powers.
From surface indications
there is every evidence that as between competitive banks, those with
trust functions are rapidly outstripping those without.
There is scarcely
a large bank left in the country but what preforms trust functions either
interesting to know the comparative
would be
banking
itself
or
departments
through
a
before
the
The relation between
growth of bank deposits could readily be determined
Many institu¬
All of
its importance in plans for building and consolidating banks for
department which directly
tions would give a
grant
after
and
subsidiary or allied institution.
trust business and the
a
collected available data.
good deal to know the truth about this matter.
the future.
6.
A research bureau could
on
phases,
important
Taxation.
perforin
a
needed service in keeping us informed
to us, of income and inheritance tax,
legislation,
practices and experience against which no commercial' tax service
could successfully compete.
From the data thus secured defects in existing
rules,
law and the need for new
lead to helpful
substantive law might be disclosed which would
legislative action.
7.
A
Co-Opefation with Lawyers.
truly alarming nation-wide breach has been
between trust
companies and lawyers.
created or is threatened
On our side we have felt that the
entirely to misunderstanding by the bar of the real
facts in the controversy.
The basis of the lawyer's unfriendliness is the
belief that trust companies are practising law to their detriment.
If facts
disclosed that this basis was not true, would not our problem with the
rupture is due almost
attorneys be
gate
this.
solved?
investigation by our research bureau ought to
authoritative
An
for all time any
suspicion in the minds of
certainly as well.
Committee on Co-Operation with
other business agencies, and
many
The work of your
Authentic records are readily available to investi¬
In how many estates do trust
service, either through their own
the Bar would have
successful if performed
it.
aided and its result far more
been immeasurably
with the aid of such an
investigation, than it has been without
/
8 .Publicity.
and expert preparation
campaign which marks an epoch in
this direction on the part of the American Bankers' Association.
While
the results have already been appreciable, the full effect of the campaign
will be years in maturing.
The accomplishments of this committee should
not be minimized.
Yet, how much more convincing and productive would
publicity after very careful
Our committee on
has
been
such
prosecuting an educational
assisted by a bureau of
would
publicity have been if the committee were
The committee must have
facts and figures to
advertisements.
lack of essential
its appeals and general claims of superiority
basis for its attractive series of
have been furnished as a
for trust company
Proven and pertinent facts
under discussion.
research of the type
felt the.need and handicap of a
support
service.
keenly the
and attractive
trusts likewise must have felt
lack of established data in its
attempt to stimulate this new
form of charitable trusts.
'
/
•
arduously and
their trust rates, the
fees fixed by statute, and to compile them into our standard schedules.
All of our other committees, through the lack of a research organization
or sufficient
funds to properly investigate their assigned subjects, have
been compelled to deal in unattractive generalities and to only partially
The
committee
standardization of fees has labored
on
to obtain from our members
with only partial success
reveal the truth In their respective
While in general, investments
investigations.
Investments.
9.
invesments
non-taxability, and
of trust funds roughly parallel
of the bank's own funds, yet the
elements of security,
accentuated in trust investments than in others.
The experience of bankers, and the requirements of law on this matter would
be valuable and would tend to further raise the standard of corporate trust
permanency
are
more
could act as a clearing
be scattered to all of us.
A central research agency
responsibility.
such assembled facts could
10.
Special Investigations.
membership.
trust
their trust functions to the institution as a
dends, but can also be made to
whole
of criticism but merely to show that
offend least in "practising law." if,
by a
upon
good trust companies either underestimate or
tion to the bank's customers,
us
companies of the country
trust
from
that
what
Other Departments in Same Institution.
Some of them think the service
whole.
labor unions,
part of their official staff
Vho render free legal service to their members in many private
disconnected with their association work.
These practices by lay
Continually the officers of our
guidance in the discharge of their duties
recounting other topics which might form the basis of
investigation by this bureau, but the above types will serve to
be accomplished and the values which lie dormant in the
us.
We must sooner or later come to this decision, if we are to
We could go on
misestimate the importance of
by
producers' associations, etc., employ as a
matters
a
Value of Trust Department to
The heads of some of our
Business associations, such as
men's association, automobile clubs,
attorneys
central research department.
5.
doubtless so drawn.
are
division ask for special data for their
and the determination of important
policies to be followed by our membership.
The special committees which
from time to time function for our Association only partially succed in their
work, through the lack of reliable data.
Many of our members from time
to time keenly feel the need of some speical aid on a topic or subject of vital
interest to them or their customers.
The repository for such special work
would most naturally be our research bureau.
Were the problem small or
large, it could be handled with equal facility.
Its reports would speed up
the yearly tasks of our division and yield results of real consequence to our
furnishing appeals most to the
the public?
us
ones
boards of trade, credit
farm
house through which
Classification of Trust Company Service.
with any certainty what class of ser¬
public ?
(b
How many of them know what part of their business is profitable
"and what part not?
■*.'[
(c) Are some of us maintaining a costly service which is little used by
we may
the State of California; equally as many
drawn by realtors in
How many trust officers know
(o)
.
are
service and
advertising heads.
vice they are
stated that 22,000 recorded
11 ow is the rest produced ?-.
fraction ?
4.
month
wholly by outside lawyers?
It has
legal instruments per
legal business handled
authoritatively
been
accumulation of trusts is productive of a large
fact that the
a
amount of new
The committee on community
the least productive to
attractive?
(b) Compare the amount of litigation against trust companies to that of
litigation against individuals in like capacities originating from any cause,
especially from negligence, misdeeds, favoritism, prejudice, &c.
of private trusts are the most or
the bank and to the beneficiary?
What the most
{a) What class
It has long
Is it not
Trusts.
Private
2.
legal advice or legal papers do our
free
indeed, they offend at all.
immediate results to the greatest
companies, since all are engaged more or less intensively
in this business.
In such an investigation it would be well to learn the
truth or falsity of the claim which has gained publicity, that no loss to an
estate has ever been suffered through the fault of a trust company.
This
is a large claim, and we are puzzled to know whether it is founded on
imagination or fact.
The purpose of an inquiry in this field would be to
ascertain, and if possible prove, substantially the following facts:
number of trust
(a) How
independent outside lawyers have not
the
Administration of Estates of Deceased Persons.
1.
been involved where
represented us? What amount of
house counsel actually give or draw ?
In how many law suits have we
counsel?
retained
companies furnish any legal
office attorneys or through their outside
profitable
illustrate what may
fields about
and the exactions of our customers and
is already compelling the
and figures by some of the larger trust
keep abreast with modern methods
business
modern
of essential
accumulation
facts
Competition
The smaller ones cannot
companies.
however
conditions.
research department.
for its establishment.
general value, as a cooperative
be
no
afford the expense. No one agency,
well, nor prove of so much
There would seem to
The wonder is tha t
powerful, can accomplish the work so
further need
to argue
it has not been started before.
How much will it
the outset
it may be stated that research work which is inadequately supported and
poorly manned is worse than useless.
The results must be scientifically
obtained and absolutely reliable to be of any value.
Such results can only
be secured by competent trained men who are given proper working facilities.
With an appropriately modest beginning such a bureau would require a
budget of $50,000 for the first year, a part of which would be for permanent
equipment.
The items in this budget are indicated on the outline attached
hereto.
It would be useless to appoint a committee to further investigate
the advisability of establishing such a bureau for the collection and dis¬
tribution of facts and figures which we need, if it were not conceded in the
beginning that adequate funds would be furnished.
A ready suggestion to
But
one
further
aspect remains to
This is important
cost ?
be considered.
enough to determine in advance, but at
subscriptions from our membership
Committee on Publicity which last
If such a plan were
rejected the Association officers must of necessity provide adequate funds
through their regular channels.
Without this assurance of financial sup¬
port, further consideration of the project would be idle; but the amount
required is not large when compared with the results to be obtained.
This field promises the most productive and progressive accomplishments
which our division has heretofore attempted.
It is essential to the further
secure
at
these would be through voluntary
large on the plan adopted by the
year
raised approximately $100,000 in this manner.
prosecution of our work and the attainment
committees,
now
and indeed the prestige of our
of beneficial results by our
whole division.
The time is
should not be difficult to obtain, and the demand
other outcry.
Let us be the first arm of
Bankers' Association to reach out in this cons tractive field
opportune, the money
for the service is heard above every
the American
and
accomplish something of definite value to our
membership.
TRUST
OUTLINE
OF
BUDGET
FOR
TRUST
COMPANIES
COMPANY
BUREAU
OF
RESEARCH.
1.
Director
Assistant Director
(2)
Research Assistants (at $3,600)_-_T_-_..7,200
Statistician
3,600
—-$6,000
5.
Stenographers (at $1,380)..
A
_
services, &c
2,400
________
6-
2,760
...
Total Salaries
of investigators while making investigations in
parts of country
various
5,000
Operating Expenses—
Stationery, supplies, postage, &c.
Desks, chairs, tables, typewriters, filing
cases,
office paraphernalia.
/
President
Total
3,000
...................
Committee
10,040
2,500
Rent
$50,000
Officers* Reports-Trust Company Division
Edmund
D.
Hulbert,
On June
President
The
This
1920 there
30
States, 2,241
Merchants' Loan & Trust Co., Chicago.
■
7.
__$24,960
2,000
Traveling Expenses—
Expenses
Equipment—
of
$2,500
Library Equipment—
Purchase of books, handbooks and other
necessary reference aids;
subscriptions to periodicals, information
_
Secretary and Librarian
(2)
Address
Printing—
tions in hands of member
companies
4,000
(1)
3.
211
investiga¬
(1)
2.
4.
Costs of printing and
multigraphing pamphlets, circulars and other
matter for publicity purposes and for
placing results of
Salaries—
(1)
(1)
DIVISION.
were
trust companies,
30,139 incorporated
banks in the United
8,030 national banks,
deposits of trust companies
were
all others, 19,868.
9,764 millions, national banks 17,155
being an important anniversary, the occasion calls for a review of
the past, a taking stock of the present and some forecast of the future.
A quarter of a century ago, a
group of men, whose names should be held
in grateful memory, organized the trust
companies into a section of the
American Bankers' Association, the better to
promote the common interests
1,549 millions, national banks 2,757 millions, all others
1,782
millions; that is-, trust companies which comprise only about
7% of the total
number have about 25% of the total capital and
surplus and about 23%
of the total deposits, according to published statement.
This, however,
of such institutions.
does not tell the whole story.
On Sept. 9, 1896, the following call was
issued, which
resulted in the first meeting being held in St. Louis
on
Tuesday, Sept. 22nd
of that year.
Dear Sir:—The advantages of the national and various State
associations
of Bankers suggests similar
gatherings of those managing trust companies.
As there has been but little published as to trust
company practices and
no genera] meeting for an
interchange of ideas as to them, each company
has been forced to establish its own precedent without
having the benefit
of the experience and methods of other
general
companies.
There has been no
uniformity of action, similiarity of laws, or practical
move to secure
benefits to
be derived from
if at such odd
times
to interfere with the general convention
there were some proceedings specially suited to trust
companies, the meet¬
ing of the Association would be of broader interest and its membership
increased.
At the annual meetings of the American Bar Association there
are at some such odd times
organized meetings of the "Section of Legal
Education" and "Section of Patent Laws."
The plan of separating these
distinctive branches into sections has proved to be of benefit to the
general
as
not
association.
You are invited to send a representative to an informal
conference of
trust company officers to be held during the
meeting of the Bankers Asso¬
ciation above mentioned.
Announcement will be made during the session
of the convention of the hour and place of ihe conference.
questions discussed will be whether
Among the
national gathering of trust companies
a
section of the American Bankers'
Convention?
If you cannot be present, we should be
pleased to have from
you an expression to be read before the conference.
would
be
more
This letter
successful
was
if held
others
a
Under
States.
these
should insist upon
whether
circumstances,
tional
charters.
render
can
trust
I have asserted
welfare and
control
Denver, Colo.
were
reported
as
being
American
Trust
&
Savings
Bank,
Hodenpyl, Michigan Trust Co., Grand Rapids.
Peter Dudley, Trust Officer, Security Title & Trust
Co., Chicago.
Henry W. Leman, Vice-President Chicago Title & Trust Co., Chicago.
James R. Barret,
Ohio Valley Bank & Trust Co.. Henderson, Ivy.
Secretary St. Louis Trust Co., St. Louis, Mo.
E. Hicks
Herrick, Assistant Secretary Real Estate Trust Co., New York.
J. B. Case, President Lincoln Trust Co., St. Louis.
Treasurer Union
Co.,
Trust
Co.,
St.
Louis.
over
interest rates than warehouse
Interest
The latter item
Julius S. Walsh, President Mississippi Valley Trust Co., St. Louis.
Breckinridge Jones, Second Vice-President Mississippi Valley Trust Co.,
now
living when losses
ignored in
a
a
most
cal¬
time in the experi¬
were so genera
when bankers pursued so broad and altruistic
lor
so severe,
conditions in
war
policy in their efforts
to
large part of the country were such that
negligible and therefore interest rates were low and stable.
No
a
I believe
able committee having the matter in charge,
We must frankly admit that in
very
satisfactory solution.
a
the past many trust companies
usually
the course of business and in their
through inadvertence did things in
advertising which justly aroused the
of the
resentment
profession whose good
will is
so
valuable to
The
us.
influence of this division has been exerted to persuade trust
companies to
discontinue these objectionable practices and to a great extent our efforts
have been successful.
As to the matters that are still in
dispute, they
must be settled
finally
of how the interest
the basis of service and efficiency.
on
of those
best be served and not
a
of
It is
who have property to leave when
question of whether lawyers
entitled to do certain things.
or trust
a
question
they die
companies
can
are
We must get this discussion above the plane
jurisdictional dispute between labor unions.
a
Permit
me
to conclude
by expressing
appreciation of the honor
my
you
have conferred upon me and the many courtesies which
you have shown me
during
my term of
served with
me
are
office.
I wish especially to thank the officers who have
during the past
even when
year,
and who have cheerfully borne with my
they added to their
especially due to
a
own
burdens.
Mr. J. W. Flatten, who
My acknowl¬
retired from the
His advice and support have been
year ago.
invaluable.
Reminiscences
Louis.
of
the
Birth
of
the
Trust
Company
Section, by Breckinridge Jones.
The fact that the
name "Breckinridge Jones"
appears last
He has been called "the father of the section."
the programs, which have been presented to
will find therein
an
you
on
the list is
If you will
for this meeting, you
index of addresses and discussions held at
during the past twenty-five
years.
operation and laws pertaining to
of our working together.
Many
our meetings
improvements in methods o^
business have been made during the
Much, however, remains to be done.
our
That this segregation has had a profound effect, not
only upon the
welfare of the trust companies but upon the welfare of the public as well, no
question.
Not only has the work of this Section tended to raise
the technique of fiduciary institutions to the highest standards, but It has
educated the public to the advantages of skilled and conscientious
corporate
other way.
be
to
seems
I venture to say that there has never been
of any bank officer
presidency of this division
Peoples Trust & Savings Bank, Clinton, Iowa.
State Trust Co., New York.
Fargason, President Memphis Trust Co., Memphis, Tenn.
Harry A. Kahler, Security Mortgage & Trust Co., Dallas, Texas.
no
have
regulated by world conditions, by the cost of doing business and
Willis
management
men
the price
shortcomings
Chicago.
John T.
one can
oppose their
all questions concerning material
no apology for
expressing disapproval of the
banks for lower interest rates being made by those
Such efforts can have no very great effect as banks have
edgments
years
on
on
J. II. Ingwersen, Cashier
open
com¬
com¬
The troublesome problem of our relations with the Bar
will,
Anton G.
significant.
if trust
was,
such conditions exist anywhere at present.
Chicago.
St.
to this
over
losses were
Henry M. Dechert, President Commonwealth Title Insurance & Trust
Co., Philadelphia.
Paine.
have nothing but trust
therefore make
Before the
present:
H.
soon
answer
assist the unfortunate to got on their feet again.
Louis, Mo.
Northern Trust
would
right to be heard
our
general onslaught
culations.
following representatives of trust companies
Orde,
such trust
spread.
Fidelity Trust & Safety Vault Co., Louisville, Ky.
Tompkins,
we
The pertinent
eventually reach
F.
permitting
their capacity for superior service, why
proven
Columbia Finance & Trust Co., Louisville, Ky.
George
service which the national bank
no
When the question of
done
was
panies in the country.
through the efforts of the
Cornelius
and
cannot render equally well, and the
render to its patron important and vital service im¬
ground that if this
Lincoln Trust Co., St. Louis, Mo.
Filley,
heard
very
There is absolutely
can
by the risk involved.
Union Trust Co., St. Louis, Mo.
D.
be
that the trust company
company
panies have
Mississippi Valley Trust Co., St. Louis, Mo.
John
right to
can
possible to national banks.
or
Cashier
a
or
companies to become members of the Federal Reserve System was
before
Congress, one eminent New York financier strenuously opposed it on the
Title Guarantee & Trust Co., Chicago, 111.
Assistant
have
we
all questions relating to material welfare,
otherwise.
We have in Illinois
on
fiduciary
of wheat, but false propaganda to the
contrary may do great harm.
The Union Trust Company, Indianapolis, Ind.
Moyer,
com¬
adjuncts, and
ence
L.
surplus of trust
large national banks have found it desirable to organize trust
company
some of us are wondering why these banks retain
their na¬
our
Security Title & Trust Co., Chicago, 111.
W.
and
properly be called banking, and the results have been
surprisingly gratifying, both to the public and the stockholders.
Most of
rates are
The Northern Trust Co., Chicago, III.
The International Trust Co.,
Capital
broad banking laws, which permit trust
companies to engage in every sort
no more
Continental Trust Co., New York City
A
U. S. Mortgage & Trust Co., New York City
Franklin Trust Co., Brooklyn, N. Y.
The
millions.
being heard
commercial,
high in authority.
signed by officers of the following companies:
Co., Boston, Mass.
14,796
It has never been required that trust com¬
panies publish the amount of real and persona] property held
by them in
trust, which we know far exceeds the amount held as
ordinary deposits.
I believe it is conservative to say that trust
companies have more property
in their direct control to-day than any other
group of banks in the United
as
Old Colony Trust
St. Louis Trust Co., St.
all
panies
of business which
personal acquaintance.
It has occurred to us that it might be desirable and
practicable to have a
gathering of representatives of trust companies at the meeting of the
American Bankers'Association, to be held in the city of St. Louis on
Sept.
22-24 next.
Many trust companies are now members of that Association
and
millions,
of trusts to
We
are
degree which could have been accomplished in
justly proud of the record and of the place occupied
a
by trust companies In the financial world to-day.
On
this,
American
whmi it
the silver anniversary of the Trust Company
Bankers'
was
Association, it
may
taking its first feeble steps.
days-of the Trust Company Section, I have another
message
Section
possible,
and whose intelligence,
qualities made association with them
In retrospect, I can see that
the
brightest spots of
In
purpose
in sending this
to the convention—to convey my greetings to those
never-ceasing efforts and highly developed
thb
Section of the
be interesting to recall the days
In addition to reviewing the early
1890
I
tried
to
my
an
power
keen wit and general good
enjoyable and profitable privilege.
period of the infancy of the Section
life—one of
whose
men
of co-operation made
my
as one of
most cherished memories.
gather information explaining the work of
a
trust
company and was unable to find in print even fifty pages of such informa¬
tion.
There
were
at that time 63
trust companies in the United
States.
Contrast this situation with that of to-day, with the great volume of in¬
formation pertaining to trust companies, that is available.
BANKERS'
212
At'that^time the term "trust company," while familiar to the
CONVENTION.
Americam
Most people thought it meant some¬
thing undesirable, considering it synonomous with "pool" or some similar
term carrying the meaning of a combination in restraint of trade.
This
may seem exaggeration, but its truth is borne out by the following excerpt
from a paper presented at the first meeting of the Trust Company Section
by Mr. Ralph Stone, then Trust Officer of the Michigan TrusWCompany
of Grand Rapids, Michigan, and now the guiding spirit of the Detroit
misunderstood.
people, was widely
Trust Company:
„
conspiracies in restraint of trade.
The copies of these laws were
returned with an explanation that it was the statutes relating to trust com¬
panies which act as trustee, executor, &c., which we desiredIn one case
the Attorney-General, to whom the letter was referral, replied that he
regretted misreading the first letter on the subject, but that after a thorough
search he was convinced that there were no statutes of his State relating
to trust companies, and that, as far as he could learn, there were no trust
companies doing business in his State, except the Standard Oil Co."
tions and
arid
Attorney-General could be so misinformed, what could be expected from the
general public?
It was only through many years of effort that a better
understanding of this matter was obtained by the public.
As late as 1907
the trust company was still being explained.
At the American Bankers,
Association Convention in that year Hon. Charles Emory Smith, at one
time Postmaster-General, and at another Ambassador to Russia, spoke on
the "Distinction between Trusts and Trust Companies."
Many—I believe it might be said a majority—of the banks in the large
cities where trust companies were generally operating, did not fully under¬
stand the functions of a trust company and looked on such institutions with
suspicions and as unworthy rivals.
How could they do otherwise, when
the name was constantly surrounded by the fog of ignorance?
There were
If the
men
his personal
funds/^Tsuch supervision he would consider
his personal
liberty and a violation of his constitutional rights.
instead of resenting, it welcomes it, for
the
who had risen to
the positions of Secretary of State
realized that the trust company was not
so much a rival of the banks as it was the banks' outgrowth or corrollary—
& co-ordinai^ branch of finance.
They remembered that the reason the
first trust company was formed in New York (and probably in the country
—see note *) in 1822 was because banks could not attend to certain busi¬
ness outside of the City of New York; that if the banks could have done so,
what is now the Farmers' Loan & Trust Company, of Tstew York City,
educated bankers, however, who
least
infringement of
but
it desires anything that will help in
safeguard the interests it holds in sacred trust as executor,
to
guardian,
trustee,
an
however, is subjected to such an examination,
The Trust Company,
in any other fiduciary capacity.
or
managed trust company not'only has the conscience and
In fact, the wellresponsibility of the
protect
individual, but it has its freedom so restricted as unquestionably to
possible dishonesty, error in judgment or carelessness
its customers against
in
"During the collection of the material for the paper an incident occurred
which may lie worth relating.
In response to a request addressed to the
Secretary of State for each State for a certified copy of the laws relating to
trust companies, about half a dozen Secretaries transmitted copies of the
laws regulating, restricting or prohibiting pools, trusts, unlawful combina¬
.
management.
Intelligent
men,
both bankers and trust company officials, appreciated
the situation and what might have grown into a
wall of flame, a permanent
smothered out
of
protection and in order to educate the public, companies doing a legitimate
trust company business should have a national organization.
Many advo¬
cated organizing an association composed exclusively of trust companies,
antagonism between the banks and trust companies, was
when it
but
there
as
which
was a
It became apparent that, both for the purpose
tiny blaze.
was
already in existence the American Bankers' Association, of
already members, others thought
number of trust companies were
a
formed
One year before this
and work with it.
it wise to clasp hands
body to recommend changing the by-laws so as to
pany
Section
was
application was made to the Executive Council of the parent
an
provide for a Trust Com¬
The argument was made that there was no precedent In the
action were taken it would
Section,
Association for such action, and that if such
result in
unifying the strength of the trust
It
Association.
a paper
entitled "The Trust Company Question." |
be referred to as
should
matter
in those
a
It was through my preparation
Now there is no question.
days.
of this paper,
was
before the Missouri Bankers'
That this
question, shows the trend of thought
this time I read
Three years before
companies and produce a factional'
granted.
The application was not
strife.
and our membership in the American
that I gained the
Bankers' Association,
acquaintance of so many bankers who had the interests
correspondence
commitment on the
part of the parent body I took the privilege of sending out a call for the
meeting of trust companies, to be held in St, Louis at the same time as the
companies at heart, arid so in 1896 after some
of the trust
with
prominent trust company men. and without any
National Convention of the American Bankers'
Association.
The purpose
discuss the organization of a Trust Company Section
Bankers' Association, and the call was signed by 15 trust
of this meeting was to
of the American
companies, representing 8 separate States, as follows:
Boston—
Old Colony Trust Co., by T. Jefferson Ooolidge Jr., President.
started.
It was realized by the financial student
New York—
Continental Trust Co. of the City of New York, by Otto T.
that our development to a certain point could,, be easily handled by the
Bannard President; United States Mortgage & Trust Co.,
by G. W. Young, President.
bank, but that, with the marvelous development of our country, the densit y
Brooklyn—
Franklin Trust Co., by Geo. H. Southard, President.
of population, and the aggregations of wealth, came a demand for a more
Chicago—
The Northern Trust Co. Bank, by Arthur Hourtley, Secre¬
complex community.
The trust company, a conservator of wealth to work •
tary; Security Title A Trust Co., by Peter Dudley, Trust
Officer; Title Guarantee & Trust Co., by Frank H. Sellers,
hand in hand with the bank, the creator of credit, was the invention of
Trust Officer.
American genius,
V 7
Indianapolis—The Union Trust Co., by John H. Holliday. President,
This spirit of antagonism to trust companies was reflected in the legisla¬
St. Louis—
Mississippi Valley Trust Co., by Breckinridge Jones, Second
tures of several States, evidenced at every session by bills to restrict the
Vice-President; St. Louis Trust Co., by John D. Filley,
Secretary; Union Trust Co. of St. Louis, by C. Tompkins,
powers of trust companies in States where those powers were broad and
Treasurer; Lincoln
Trust Co., by A. A. B. Woerneide,
by factions opposition to the bills giving ample powers in States where
SocrGtory
additional legislation was needed.
The records of my own State show the
Louisville—
Columbia Finance & Trust Co., by Atilla Cox, President;
case of the State of Missouri vs. Trust Companies, in June 1898, in which
Fidelity Trust & Safety Vault Co., by John Stites, VicePresident..
•
.
the Attorney-General tried to put them out of business, on the ground
Denver—
The International Trust Co., by F. B. Gibson, Secretary.
that they were exceeding their charter powers in receiving deposits subject
It may be interesting to give here a copy of that first call.
It read:
to check.
The Supreme Court ruled otherwise, however (144 Mo. 502).
"The advantages of the national and various State association of bankers
Many of these conflicts were bitter, all were serious.
might never have been
..
I remember at the time
Companies a Senator said to me.
"My young friend, if you pass this bill, is there anything on God's earth
that a trust company can not do?"
In an effort to introduce a little
levity into a tense situation, I said, "Yes; I do not think the trust company
could have twins."
His reply was, "Well, they certainly do not need to
have offspring, because under this bill they would have life everlasting."
In spite of what he said', it has developed that while a trust company cannot
have twins it has had a grand-child.
In our Trust Department hangs a
Yet they were not
£
was
without amusing incidents.
advocating legislation for Trust
Below it is the legend; "The
picture of a baby.
Mississippi Valley Trust
Company's first grand-child, born Dec. 28, 1900.
At the date of her
birth her father was nineteen years old and the Mississippi Valley Trust
guardian."
Company was his
introduced to prohibit a trust company from
child. In defense of this bill, on
the floor of the Senate, the Hon. Howard Graj^r then Senator from a
Southwest Missouri district, now Judge of the Appellate Court of Spring¬
In the early '90s a
acting
bill
was
guardian of the person of a
as
field, referring to Senator Major
the dlstinquished Senator
(afterwards Governor), said he could see
from Pike County alongside of that great apostle
and opponent of corporations—
Pullman coach passing through
Pike County, and he could hear the Senator saying to that crowd of Pike
County people, "We were boys together, went to school together, spun
tops together, went swimming in the same creek; we have been brethren in
the church and brethren in the lodge; I have married into your family
and you have married into mine, but when the time comes for me to pass
into the Great Beyond, with one expiring glance I shall say, 'Oh God; I
cannot trust any of these fellows; give me a corporation to take care of my
of democracy,
champion of individual rights
William Jennings
Bryan, on the rear end of a
continued, in abated breath, "Of S-e-n-a-t-o-r-s-I
Just think of committing the immortal soul of a human being for its religious
training—its moral education—to a s-o-u-l-l-e-s-s corporation.
Just picture
child.' "
Senator
Gray
the little child being sent to
I do not know whether it is
Sunday-School.
the porter that takes it, but in my mind's eye I can see
child, on its knees, when it is to be put into its trundle-bed at
the president or
that little
night, lift its little hands high
above and say that prayer that it has been
God damn everybody else.
taught to say: 'God bless the trust company;
Amen.' "
The
having
has
The bill was
record
a
the
of
trust
defeated.
companies
sou] to be fiction.
composite
soul
of
proves
the
maxim
about
its
doing their duty, cannot act in any
Men directing a trust company, if
other way than'conscientiously.
As a
corporation, the law says that the trust company is a person and its opera¬
tions have shown that it has a soul.
A customer once sauPof the Missississlppi Valley Trust Company that It was "Not only a financial institution,
but a human being."
A trust company has restrictions that do not apply to
individuals.
This corporation is
vision that would be
his
in
subjected to an examination and super¬
resented by an individual; for do you kndw of any indi¬
vidual who would not
indignantly refuse to allow an outsider to examine into
personal and private books to see If he were
he said he had ?
reality he had all the cash
engaged In speculation, or if
He would be insulted if the
privilege were demanded of checking up all the securities in his possessio
to find out if there were any possibility of his trust funds being mingled with
those managing trust
companies.
As there
published as to trust company practices and no general
meeting for an interchange of ideas as to them, each company has been
forced to establish Its own precedents without having the benefit of the ex¬
perience and methods of other companies.
"Therehas been no general move to secure uniformity of action, similarity
or practical benefits to be derived from personal acquaintance.
"It has occurred to us that it might be desirable and practicable to have»
of laws
a
gathering of representatives of trust
American Bankers' Association to
companies at the meeting of the
be held in the city of 8t. Louis on
Sept.
members of that Association,
with the general Convention
there were some proceedings specially suited to trust companies, the meet¬
ings of the Association would "be of broader interest ana its membership
increased.
At the annual meetings of the American Bar Association there
are, at some suchiodd times, organized meetings of the 'Section of Legal
Education' and 'Section of Patent Law.'
The plan of separating these
distinctive brancbes-into sections has proved to be of benefit to the general
22-24 next.
Many trust companies are now
and if at such odd times as not to interfere
Association.
"You
a representative to an informal conference of
officers to be held during the meeting of the Bankers' Asso¬
invited to send
are
trust company
the session
Among the
national gathering of trust companies
a section of the American Bankers'
ciation above mentioned.
Announcement will be made during
of the Convention of the hour and place of the conference.
questions discussed will be whether a
would be more successful if held as
Association.
"If you cannot be present we should be pleased to
pression to be read before the conference.'
When this meeting was
seventeen
called to order on Sept. 22 1896 there were present
representatives from
discussion of problems
matters of history,
the Trust Company Section was
The
men
were
Association being
the amendment
Trust Company Section.
formed, the by-laws of the
of the Convention, the very hour
permitting the formation of a
who
States.
through the aid of the talented
amended in open session
offered,
After a thorough
Section, are now
Joseph C. Hendrix, then
the American Bankers' Association,
ten different
which, due to the Influence of this
Chairman of the Executive Council of
was
have from you an ex¬
first charged with the
Chairman—Henry M.
destiny of the Section were:
Dechert, then President of
Title, Insurance.& Trust Co.,
the Commonwealth
Philadelphia, Pa.
Vice-Preslednt of the Old Colony
Vice-Chairman—Gordon Abbott, then
Trust Co.,
Boston, Mass.
Secretary—Anton G.
Hodenpyl, then Secretary of the Michigan
Trust
Co., Grand Rapids, Mich.
not
It can be truthfully said that a trust company
its Trust Estates Committee, its Executive
Committee, or its Board of Directors.
suggest similar gatherings of
has been but little
Executive Committee—Breckinridge Jones,
Trust Co., St. Louis, Mo.;
Chairman. Mississippi Valley
Frank II. Sellers, Title Guarantee
& Trust Co.,
Co., New York City; Geo. H.
Southard, Franklin Trust Co., Brooklyn, N. Y.; Anton G. Hodenpyl,
Michigan Trust Co., Grand Rapids, Mich.; John Stites, Fidelity Trust &
Safety Vault Co., Louisville, Ky.; Geo. W. Young, U. S. Mortgage «fe Trust
Co., New York City; Francis P. Bangs, State Trust Co., New York.
To Mr, Hodenpyl, first Secretary of the Section, belongs more credits
than we are able to realize.
It was largely his untiring efforts that accom¬
Chicago, 111.; Willis S. Paine, State Trust
plished the detail of the perfected
organization.
I remember well how
be
Companies" Mr. W. T.
Mackay of Cleveland, in his article on the "Growth and Future of the
Trust Coijnpany," says: "Claim to priority is made for a Philadelphia com¬
pany, the Pennsylvania Co. for Insurance on Lives <fc Granting of Annuities,
that company having been organized in 1809.
It was not until about thirty
years later, however, that It was authorized to do a trust business."
*
Note.—In
the
March
1907 Issue of "Trust
-
TRUST
took
COMPANY
task when the press of business matters at my institution resulted
me to
In my being unable to give the necessary
the Executive Committee in 1897.
time to
duties
my
as
Chairman of
I quote from one of his letters to me:
plaining, but I just want you to understand how annoying it is to me to
hear nothing whatever from you.
You are a good boy, and I am very fond
but
The first
On
our way
formed
was
there various members of the
committee stopped in Philadelphia to call on the President of the Section,
Mr.
Dechert.
We were
pleasantly surprised by his having provided
luncheon in Parlor C of the old Continental Hotel, in which
fifty
some
distinguished visitors.
or
Mr. Dechert had
as
room
This function
was
recognized
as a
great compliment
to us and added much to the enthusiasm of the members of the committee.
The following year, when the committee met in New York City,
George W. Young,
banquet for
member of the committee, arranged
a
Delmonico's.
us at
There
ing financiers of the East present.
were some
sixty
a
or more
purpose of
the largest cooperative fund
In writing thus of some of the history of the early days of the
pany
this
voted by the Section.
ever
trust
Com¬
Section I feel that I would be ungracious, and not responsive to my
impulses if I did not refer to the fact that in 1904 the Trust Company
|
1897, IhWecity of Detroit, in the Turkish Room at the Hotel Cadillac,
Then it
held.
was
was
In my files on
we
as
a
loving cup,
as
for
drank to the future of the Section.
I regret very much my inability to be present at Los Angeles this year and
personally greet my many friends who will add
a
chapter to trust company
I find pleasure, however, in the thought that
history.
my
son,
Daniel
W. Jones, Assistant Secretary of our institution, is brining this message to
you as my
substitute, and this recalls to
my
mind that in
of the early
one
member of the Executive Committee.
been conferred upon me
"I appreciate the honor that has
and feel that it is something I should be proud of.
1 believe in the years to come
when
one
of
little boys comes to looking
my
back and finds in the records of this organization
his father's
name con¬
here
today."
The
organization has always been in the hands of worthy men and their
continued Interest and fidelity is assured,
The Trust Company Section,
the Trust Company Section I find the program of the first
prove
days that had gone by.
gentlemen
that the mist of ignorance and uncer¬
'
of the
the trust company business, he will meet, I am sure, the sons of many of the
tainty concerning trust companies began to disappear.
meeting, and it is reproduced here, with the belief that it will
home and has often been put to practical use
my
nected with its early days, he will have reason to be proud and if he is in
,
the first meeting of trust companies, as a section of the American Bankers'
Association,
footnote* which cup has ever since been kept as a treasurered memorial in
(at the Cleveland Convention in 1899) in responding to my election as a
of the lead¬
A silver souvenir matchbox, of original
present and is carried by some of them to this day.
esting:
needs was edu¬
cational publicity and the result of that session was the setting aside for
meetings of the Trust Company Section I made the following statement
Mr.
most elaborate
design, made especially for the occasion, was presented to each of those
In
here in St. Louis, it was recognized that one of our greatest
it had
guests to meet us
sixty of the leading bankers, editors, professional and literary
of Philadelphia.
men
fact that at the 1919 Convention of the American Bankers' Association, held
example at that meeting in St. Louis in 1919, when with fond recollection
a
been the custom to hold receptions for the President of the United States
and other
That there
is shown by the
Section presented me with a beautiful loving cup, engraved as set out in the
meeting of the Executive Committee after the Section
held in New York City.
was
companies*
its purpose and its value.
company,
is still much work to be done in this direction, however,
own
have tried my soul awfully during the past six weeks."
you
assisted materially in accomplishing the solidity of the trust
organization and educating banker and the public generally to a better
understanding of the trust
"There are just three things for you to do.
One of them is to pack your
doll rags and come up here at once, so that we can arrange the whole detail
of the August meeting.
The other one is to write me very fully, giving
your instructions as Chairman as to what you want to have done, when I
will see that they care carried out.
The other is not to reply to this commu¬
nication, and then I am afraid I shall be cross.
"I do not mean this letter in the light of serious fault-finding or com¬
of you,
213
DIVISION.
now
called "Division," is on
permanent basis.
a
inter¬
*Footnole.—"To
Breckinridge Jones. Father of the Trust Company
Section of the American Bankers' Association in affectionate recognition of
his devotion to the interest of the Section, Sept. 22,1896.—Sept. 1.3,1904."
-*
Order of Proceedings.
Convention called to order by the Chairman at 9:30 a. m. (local time).
Roll Call,
Address of Welcome,
Report of the Legislative Committee, by H. M. Camp¬
by Mr. Elwood T. Hance, Secretary of the Union
Trust Co.,
Detroit.
bell, Chairman of Board Union Trust Co.,
Reply, by Mr. Henry M. Dechert of Philadelphia, Chairman of the Section.
Detroit, Mich,
Report of Executive Committee, by the Chairman, Mr. Breckinridge Jones,
Vice-President
Mississippi Valley Trust Co.,
Louis.
St.
Paper, "Powers and Duties of Trust Companies when Acting
under
as
Trustee
expanding, until, in a broad sense, they and their clients are interested
Corporation Mortgages," by Mr. Frahcls S. Bangs, Presi¬
almost
dent State Trust Co., New York.
Discussion—Each
Ralph
Stone,
participant
limited
Officer
Trust
to
five
Michigan
The
minutes.
Trust
It has been the
Trust
and we have from time to time, made reports
Co., Philadelphia. Pa.
of three
for
serve
V
At
General
During the past year several bills have been introduced in Congress, but
members
three
of Executive
Committee
to
a
been made, and, except as questions may
other
1897=114
1901=348
1905=638
1909=
981
1898=150
1902=414
1906=718
1910= =1,007
1914=1,201j1918=1,833
1903=501
1907=846
are,
1912= =1,206
the
community.
The
banking
interests,
through
There
We have endeavored to secure
hearing upon these amendments, but have not been successful.
1916=1,4591
various
however, two proposed amendments which the Legislative Committee
believe should receive special attention.
♦1915=1,37211919=1,965
1911= =1,137
1908=931
of
provisions affecting them, all of which cannot be reviewed here.
1913=1*363! 1917=1,625
1904=566
and inevitably must affect trust properties in common with
properties
committees and individual effort, have given much attention to the
Membership by Years, 1896 to 1920.
1900=253
The Revenue Act touches almost every phase of business and
domestic life,
8ection is shown by the following figures:
1899=190
progress has
arise under the provisions of the
Revenue Act, it is extremely improbable any particular measure will receive
attention.
The growth of the
membership of 17 at its inception.
=
congestion in both houses little
owing to the unprecedented
years.
Discussion.
that first meeting the Trust Company Section had 114 members: this
compared with
of our activities to the various
meetings of the Trust Division.
Discussion.
election
looking after legislative matters,
give special attention to such legislation as may affect trust business,
to
Dechert, President Commonwealth Title Insurance & Trust
and
aim and intention of the Legislative Committee of the
Division, in co-operation with and supplementing the able work of
the General Counsel of the Association in
Paper, "Relations of Trust Companies to Trust Estates," by Mr. Henry
Nomination
immediately affect trust properties and their
which directly and
administration.
Discussion.
M.
in
I do not
in the few words I have to say to go outside of those
however,
matters
Co.,
Grand Rapids, Mich.
v
law arid regulation affecting the general welfare.
every
intend,
Paper, "Statutes of the Several States relating to Trust Companies," by
Mr.
the field occupied by trust companies has been constantly
In recent years
a
We have,
however, suggested certain changes hereafter referred to, and have submitted
It may
acting
as
be of interest here to record that, in appreciation of Mr. Hendrix's
our
doctor at the borning. when a memorable st ruggle came up at the
to secure
Detroit meeting between Mr. Hendrix and Mr.
Russell of
Detrpit, repre¬
senting the progressive element, against the "Old Guard," as they plumed
themselves, led by Mr.
Section
of this
year, and
that
make it
Rhawn and Mr. Tracy, it was the solid support
turned
the
tide,
made Mr.
At the first
meeting, I
was
First:
"trust
That
Section
called on to present the needs of the trust
see
that
no
company
used
the
Section should
use
its
best
efforts
to
the words,
bring about
trust company
a
and unfair.
some
a
cost of a
banking journals to
publish the papers read at the meetings, and to devote some space
questions of special interest to trust companies.
How great progress has been made
to the use of the words "trust
to
There
the property
as
or
objections to the proposed rules:
reasons
alone
at the time the gift is received as the
a
or
general banking laws; and if they were created under general banking laws,
get 810,000, but after
tax
upon
good of
sale only so much as remains after paying a
especially from the financial press, and also from many of the other news¬
of the United States.
It is but fair, however, to make special
mention of the fact that the magazine "Trust Companies," which has been
endorsed by the Executive Committee of the Trust Company Section, is
truly "A Monthly Magazine devoted to the interests
United States,"
as
of Trufct Companies
its policy is stated on its title page.
It
was
established in 1904 and its Editor and Publisher, Mr. C. A. Luhnow, has
of the Revenue Act is sufficiently
into
a
quasi commercial transaction,
The operation
*
instincts
for
generosity.
sympathy will do
no
The
drastic, without discouraging the natural
injection
into the law of a little human
harm.
Again the difficulty of determining the cost
the last preceding owner by whom
Act are
of the gift to the donor or
it was not acquired by gift is also likely
Included in the gifts subject to the
heirlooms, books and manuscripts, works of art, cherished house¬
in many cases to
be insurmountable.
hold belongings, Christmas gifts,
whose value lies chiefly in the
recipients of
a
wedding presents and many other things
Imagine the
sentiment attached to them.
Formation of Savings Bank Section, which some trust companies joined
"We gratefully
furnish us with a certified
wedding present replying to the donor:
acknowledge acceptance of your gift provided you
♦
it may
The spirit of the gift is destroyed.
in order that the Government may get a little more money.
find that such progress has been made in the matter of
publications and other printed information relating to' trust companies.
The cause of the trust companies has met with very substantial cooperation
in the
a
The generosity of the donor is converted
Along with the progress made in the enactment of law s for the
of what the gift cost
the value of the property above what it cost or what
be estimated to have been March, 1913,
and were trust companies in name
only.
trust companies, we
that the donee must ascertain the
tax upon the basis
810,000, which cost the father $1,000 25 years before, the daughter does
It meant as a rule that they were only banks of discount and deposit, could
papers
The significance of the gift is lost if It must
the last preceding owner
not
exercise trust company fuctions,
the value of
basis for ascertaining
by whom it was not acquired by gift.
father, because of love and affection, gives his daughter property worth
the donor
If
'
sufficient to justify fixing
are
be accepted subject to the requirement
specifically governing trust companies, whereas now there are in all
the States special laws pertaining to trust companies.
Such institutions
used the name had come into existence under special charters, or under
not
the. last preceding owner by whom it was not
Some academic theorist must have devised this scheme.
several
cost and in case of sale must pay a
thirty States which had no
laws
of
This distinction is illogical
take effect .
substantial reason for placing gifts inter vivos upon
gifts by will or in contemplation of death: to say
the gain or loss, in case of sale.
company," and the enactment of laws govern¬
were
no
gift to the donor
are
Sentimental
under the supervision of this Section as
Detroit, there
There is
basis than
acquired by gift.
ing trust companies in the various States, is shown by the fact that at the
time of the first meeting in
different
nothing of the embarrassments and practical difficulties of determining the
publication make a compilation of
laws of all the States.
Fourth: That the Section try to induce some of the
preceding owner by whom it was not acquired
by gift, while in the case of bequests, devises and inheritances, the basis
is the value at the time the bequests
greater uniformity in laws relating to trust companies (This means that in
many States we should see that some kind of a trust company statute was
enacted.)
.
Third: That the Section have
that;, in the case of gifts made after
shall be the
Dec. 31, 1920, the value, as a basis for taxation in case of sale,
company" unless it did a legitimate trust company business.
Second: That
Act above referred to, which particular¬
Section 203 of the new Act amends Section
202 of the Act of 1918, so as to provide
cost to the donor or the last
should
This inability
The multitude of conflicting
impossible for all to be heard.
of the Revenue Act of 1918.
suggested:
the
briefs, which we trust may have some effect.
hearing is perhaps unavoidable.
ly affect trust companies, are proposed amendments to Sections 202 and 407
companies of the United States, and from the records of that meeting, I
was
a
The two provisions of the Revenue
Hendrix President that
led to Mr. Russell's being President the following year. -
find that it
views in
political and business interests, many of them of unparalleled importance,
statement of its cost."
BANKERS'
214
father to son for more than one hundred
been offered a fabulous price
distinguished member of
a
The sword has been handed down from
prominent Virginian family.
a
by him to
owned by Lafayette was given
The present owner has
years.
for it, but he has refused to part with it.
what value would be taken as the basis for the tax?
Lafayette, provided that it could be shown what he paid for it?
to
There is also grave
doubt
the commissioner to fix the value, in the absence of all information avail¬
In a case where the cost to the donor is unknown,
able for that purpose.
well
as
as
the time when the property was acquired, and it is also unknown
whether the donor acquired the property by gift or purchase, the
the commissioner in
fixing
value would be
a
a mere guess
action of
and purely arbi¬
The Government cannot exact a tax fixed •with no knowledge of the
trary.
hearing.
facts and without a
There has been some
Such action is not due process.
apprehension
on
ground for the apprehension—that the word "gift" as used in
and there is
the Revenue Act might be construed to include what are generally known
as
recent years,
The voluntary or living trust, so-called, has,
voluntary or living trusts.
in
passed that would in any
was
Arkaksas.—No report.
California.—A bitter fight between trust companies and lawyers deveThe enmity of lawyers was intensified some months
oped in this State.
advertising being carried on by trust companies.
by the increased
Late in January your Chairman was advised that at the
instance of the
the "Practice of Law."
In purpose and effect these bilis were
aimed directly at trust companies,
Extensive preparations were made to
these measures and
oppose
a
which
problem
was
purely local and your National Committee
funds were raised, committees appointed, and everything possible
the fight,
done to
is in
secure
newspaper
The substance of the lawyer bill
co-operation.
part as follows:
.
Making it unlawful for any hank, trust company, etc., to render or give
connection with the making or preparation of wills, trusts, or
The
or
voluntary trust is not a gift, hut is more of the nature of a transfer under
or
In these cases, as well as in the
(e) and (e), Sec. 402, Revenue Act of 1918.
case
of
ojf transfer by bequest, &c., the basis for the tax is the value at the time
acquisition
of
the
with 'equal force in
The reason
property.
the
this provision
for
of property acquired under
case
a
tary trusts, the inevitable result must be to discourage, if not to
the
applies
voluntary trust.
provisions of the proposed amendment respecting gifts include volun¬
If the
of such
acceptance
representing
interests In
many
a
serious and
fiduciary capacity, incurring
Congress probably did not intend to include voluntary trusts in
the category of gifts,
modified
so
but
doubt has arisen the amendment should be
as
to remove all
as
ambiguity.
called is the proposed
This amendment relates to the determination
of the value of the estate of
As the law now stands, after a
inheritance tax.
the tax
may
fixed
basis for assessing the
valuation has been reached,
deceased person as a
a
and
be called for,
and the estate distributed,
paid
a new
appraisement made and
of which the executor and the distributees are all liable.
for the payment
injustice have resulted from enforcing this law, and
Much hardship and
the proposed amendment is offered
as a
It provides that upon
remedy.
he is relieved from
the executor filing a proper report and paying the tax,
further personal
distributees
they
true
entitled
are
to know,
as
far as it goes, but there are others
The heirs and
closing of the estate.
without
unnecessary
delay what taxes
called upon to pay before they enter upon the enjoyment of their
are
inheritance.
quite
This is good
liability.
in the prompt and final
interested
additional return
an
additional tax assessed,
an
In the
absence of fraud or concealment, the first valuation is
as a later one.
This is particularly
likely to be fair and reasonable
as
communities
in
where
property
values
rapidly
are
increasing.
A
The blil further made it unlawful for any bank, trust
consideration.
advertise that it would give service or advice in connec¬
tion with the making or preparation
issuance of any pamphlet,
of wills
officers
deemed
a
misdemeanor, and the punishment
imprisonment in the county jail for
term not exceeding six months, or a
a
For the corporation violating the pro¬
visions of the Act, the penalty was a
reported that
was
"personal" solicita¬
officer or
therefor
Any violation of the Act upon the part of an
to be
was
fine not to exceed $5,000, or both.
It
trusts, etc., through the
or
circular, hand-bill, letter or newspaper adver¬
There was apparently no restriction upon the
tising.
tion of business.
very
fine not to exceed $1,000.
spirited hearings
conducted before the
were
Legislature during which the lawyers made most acrimonious attacks
trust
companies.
Not
a
was
stated that there
this purpose.
to
was
any
secure more
and larger fees, and compel business people to employ'
as
they have in the past, safely perform certain common acts as a necessary
The measure introduced by the law¬
part of their business transactions.
passed the Legislature and was signed by the Governor.
thereupon invoked and the required number of signatures
State can pass upon
the next general election, which will be Nov. 22,
provision for
a
reason
why
a
tion.
Colorado.—Bill introduced to increase the powers of trust
I have
doubt that Congress wishes to be fair, but the
no
securing the
necessary
as
conspiciously
as
the
■
Whatever
Legislature and is
number of bills were presented to the
difficulty lies
maijor questions
which
'■
indirectly affecting trust business as reported in a special
be done by any of the members of the Association to
bringing about the changes suggested will confer
HENRY M.
a
assist
benefit upon all.
limit of deposits in savings
An Act amending an Act concerning the
1.
banks.
2.
An Act concerning investments, of savings
banks, which also covers
Legislative
Trust Division,
ments in
covering invest¬
3.
An
railway equipment obligations.
authorizing savings
Act
bants
to
install and rent safe deposit
boxes.
CAMPBELL,
Chairman,'
important
practically all of which are of a local nature, are as follows:
ones,
savings departments in trust companies and State banks,
can
Of nineteen
legislature, but many of them died in the Committee room.
bills directly or
pamphlet issued from the Bank Commissioner's office, the most
likely to occupy the attention of Congress, to the exclusion of everything
else.
in
States
attention to matters which,..while important in
themselves, do not stand out
are
of disagreement, by the United
such determination to be final and conclusive on all parties.
Court;
in
case
companies in
in force in this State.
Connecticut.—An unusually large
valuation cannot be arrived at by agreement
this legisla¬
oughly understand the situation and overwhelmingly set aside
now
no
1922.
State-wide referendum is permitted under the Consti¬
tution of the State.
It is believed that the voters in due time will thor¬
This
general banking business which was duly passed by the
There is
successfully
of the
secured, which suspends the operation of the law until the voters
appraiser—is quite likely to be affected by the increased value resulting
with the commissioner and in
A referendum
yers
was
an
.
could,
their sendees in unnecessary instances where such people themselves
in
what it really was at the time of death.
used for
attempting
legal monopoly and enable
It is believed that the lawyers of California are
of
over
although it was
abundant material which could have been
subsequent valuation—unconsciously perhaps and in good faith on the part
increase
The trust
legislative hearings.
attack against the bar,
legislation which in effect will set up a
secure
them to
declaration of trust, or any advice
cited by the lawyers at the
companies refrained from
against
of improper or inferior
single instance, however,
service in the preparation of any will,
given,
The other point to which special attention should be
amendment of Section 407.
distribution of the estates of deceased persons, etc., for any
company, etc., to
for failure to live up to the Act are too drastic to justify a
the penalties
trust company
the risk.
prohibit,
The practical diffi¬
by trust companies.
trusts
culties in complying with the requirements of the Act are too
in
the probating
compensation
service or advice or information concerning any matter of law or
who, for any reason, cannot or do not desire to administer their own prop¬
general appointment, or in contemplation of death, such as Is specified in
could, there¬
Business interests were enlisted in
fore, do little to assist in the situation.
any
a
permitting
counter bill was introduced directly
companies to draw wills, declarations of trusts, give legal advice, etc.,
were the things that the lawyers were definitely endeavoring to stop.
trust
proved to be one of the most valuable and satisfactory
Frequently the trust is primarily for the benefit of the donor.
Legislature
lawyers of the State, two bills had been introduced into the State
to regulate
methods yet devised for the care and protection of the interests of persons
erty.
the Arizona
when completed,
succeeding legislature.
doubtless be introduced at the next
will
The
the part of the trust companies—
legislation
Bankers' Association is drawing a banking code which,
-ago
the validity of the provision authorizing
as to
no
affect trust business, but stated an attorney employed by
way
But
that poverty or misfortune compelled the owner to sell the sword,
Would it be the cost
suppose
Arizona.--Reported that
the law might operate—a sword
Another interesting illustration of how
once
CONVENTION.
4.
Committee,
An Act amending an Act concerning wages
and contracts which affects
banks', individuals' or firms' right to recover full amount of
American Bankers'
interest
Association.
principal and
stipulated in any negotiable instrument acquired for value
and in
good faith, limiting the amount of interest allowed.
certain securities.
5.
Report of Committee
D.
on
Protective Laws, by Nathan
An Act concerning the sale of
6.
An Act amending an Act relating to interest
7.. An Act concerning
8.
Trust Co.
I
account
on
Protective
Laws,
encroach unduly upon your time and
therefore, to
States.
in
cover as
briefly
as
State Legislatures, the report
if given in
patience.
its entirety, would
It shall be the endeavor,
possible legislative activities in the different
Forty-three of the forty-five State legislatures began their session
January,
session
on
February and March of the present
April 5 and Georgia
There has been
no
9.
on
year.
Florida opened
June 22.
deviation from the method adopted by the former
An Act amending an Act concerning
10.
paid
on
11.
An Act concerning tax on savings departments
possible to the
one
in which he resides, and he in
through the State Vicfr-President and the Committee
State Legislation of the American Bankers' Association.
no
conflict of interests in this method of operation.
of the legislatures in the different States,
a
letter containing instructions
was sent to
each State Vice-President requesting
Committee
on
State Legislation and the
him to work through the
member of the Committee
Protective Laws, Trust Company Division, assigned to his State.
attention
wras
on
There has been
Prior to the opening
on
Special
directed to the possibility of bills appearing in the various
Banks & Trust Companies had active men on
carefulall
any
honor in this respect
bills which
would be unsatisfactory
as
than
committee."
The report by States follows:
Alaska.—No report.
of the Legislature briefly
summarized as follows:
for the assessment and taxation of shares of banks;
which codifies all previous banking
profits.
a
providing
general banking Act
a
legislation; and an Act repealing
tax of one-fifth of 1%
on
the
capital, surplus, and
These bills were all enacted and are now on
the statute
book.
A bill
Banking Com¬
for consideration as
guaranteeing deposits and eliminating the office of
was
introduced, but
Florida.—No
,
companies passed at
Delaware.—Legislation concerning banks and trust
this session
the result of the intervention of the Delaware State
"in
the legislature
bills which would be helpful.
missioner
or
during
vigilance to look after
to get through
A
died in transit
consumed
We have found this true
the sessions of many legislatures and it took more
the present year's crop of bills has brought to life many of this character.
large number, however, we are glad to report,
much effort was
structive legislation on the statute books.
undivided
legislative oddities having been
will not surrender to him
as
legislation, than In putting con¬
lay agencies.
we
and
in defeating what might be termed adverse
present law imposing
The Chairman last year reported many
their Legislative Committee
legislation presented,
defeating uiidesirable legislation, in fact more time was
State legislatures defining the so-called "Practice of Law" by laymen and
introduced, but
and savings
departments in trust companies in the State of Connecticut.
Both the Connecticut Bankers'Association and the Association of State
used in
as near as
in national banks,
whereby they are placed on an equal footing with savings banks
work this year.
States located
includes banks, trust
companies, savings banks and national banks.
who watched
Each member of the Committee has been assigned certain
deduction of amount of taxes
estate by certain corporations which
real
Chairman of the Committee, Mr. Theodore G. Smith, in conducting our
turn has worked
companies, building
and corporation fees, which in¬
An Act covering tax on capital stock
cludes banks and other corporations.
of the meeting of forty-five
Committee
Concerning the organization of banks and trust
and loan associations and investment companies.
of the Trust Company Division of the American
Bankers' Association:
On
of your
and
other property.
Prince, Vice-President Hartford-Connecticut
Mr. President and Members
charges.
false statements of the value of stocks, bonds
was
never
brought
up
Bankers'Association.
The State
bills' hostile to trust companies introduced.
comptroller is now compiling new banking laws, but a copy
at the
present time.
is not obtainable
■
TRUST
COMPANY
Georgia.—No report received.
2.
Hawaii.—No report received.
bank receives
a
a
deposit made by
for payment on the next succeeding business day.
Montana.—The following bills were reported as
one person
a bank refuses through mistake or error to
check which it should pay, the bank is not liable to the depositor for
depositor alleges and proves actual damage
by reason of such non-payment, and in such event, the liability shall not
H. B. 133
Provides
that
chattel
when
mortgages
acknowledged
year
after he has received his canceled vouchers
they
are
forgery within
or
shall have power and authority to accept for
and
-
ing holders thereof to draw drafts
on
so
one
189
Protects
and
or corpora-
any one person
were
presented which would in any way affect business
Up to this time they
rate.
were
in regard to the
was
restricted to 6 %, now the legal rate
it is said to be working to the value of the banks.
While they have not raised their rates promiscuously , the loans on
provides for Saturday afternoon
of any bank,
condition
which
was
amended on second reading so that the truth of such statements constitutes
good defense.
are to
sureties by providing that if the
principal maker of
any note
shall die, and
the creditor does not present such instrument for allowance within one year,
the sureties are released.
H. B. 200 Adds section 4a to "An Act to revise the law in relation to
Commission
which regulates the investment laws under which the State banks operate.
,
,
The law, in fact, was brought down to date in every way, and we now have
the opportunity of investing in the more liquid securities which before were
Act to revise the law in relation to
an
luxuries
be 7 % and will continue to tof.
classed
H. B. 154 Amends section 3 of
.
issued for
Now Hampshire.—The most important bill passed
usury
willfully and maliciously circulate deroga¬
tory statements, about the financial
a
so
Another important law passed was introduced by the Bank
crime to
a
letter of credit
is the contract rate and
hours at the banks' option.
H. B. 131 Makes it
or
Nevada.—No bills
validity of instruments "negotiated by banks on
noon
time not exceeding one year, provided that the total amount of drafts
accepted
of trust companies.
the collection of the instrument, the forwarding bank has used due diligence
in other respects.
B.
its correspondents at sight or
duced at the recent session of the Legislature.
it Is not liable for the failure of payer bank to account for the
proceeds because of Its insolvency or through default,
providing, in connection with
H.
or
accepting or issuing bank.
Nebraska.—No legislation unsatisfactory to trust companies was intro¬
,
the instrument for collection directly to the bank on which it is drawn, and
Saturdays after twelve o'clock
it,
upon
sion, shall not at any one time exceed 20% of the capital and surplus of the
H. B. 172 Provides that any bank which received for collection or de¬
posit any instrument payable at any bark in another city, may forward
'
payment at a future date,
drafts drawn upon it, by its customers, and to issue letters of credit authoriz¬
has been notified that
ready for delivery.
10% of its deposit liability, instead
a compliance with the
requirements and conditions of the banking laws of Montana.
Chapter 217, Laws of 1921, page 465, provides that Montana banks
forged checks unless
or
or
a reserve of
a reserve of 15% of its deposit
A compliance with the Federal Reserve Banking laws, rules and
reserve
recorded shall be valid until ninety
days after the maturity of the debt or
an extension thereof.
H. B. 141 Relieves banks from liability for raised
depositor shall have notified bank of such raising
bank, shall maintain
regulations by member banks shall be held to be
proved.
so
having been passed:
every bank, except a
of 15%, and a reserve bank must maintain
liability.
such non-payment unless the
damage
trustee of any real
as
Chapter 94, Laws of 1921, page 87, provides that
reserve
N. B. 182 Provides where
exceed the amount of
Prohibiting foreign trust companies from acting
3. Providing that instruments falling due on Saturday may be presented
in trust for another, in the event of the death of the
trustee, the deposit and
interest shall be paid to the person for whom the
deposit was made.
pay a
215
personal estate.
or
Idaho.,—No bills affecting trust companies introduced.
Illinois.—The following laws were enacted by the last
Legislature:
N. B. 122 Provides that if
DIVISION.
illegal.
as
New Jersey.—The only legislation affecting trust companies,
the last Legislature as
trust Company
passed by
Assembly Bill No. 200, which provided that any
having its principal office and
one or more
all located in the same county might, with the approval of the
of Banking and Insurance, change the location of its
branch offices
Commissioner
principal office to the
mortgages of real and personal property" in for July 1 1874, as amended.
location of
Provides that
location of its principal office; and change the name or designation of any
shall be valid
no
as
mortgage, trust deed, or conveyance of personal property
against the creditors of the mortgagor,
even
though ad¬
mitted to record, unless it shall be recorded within ten days of its execution.
Indiana.—Bill introduced which provides among other things for the
following:
I.
of net earnings of compan y to be carried
per cent,
these
of the capital, and forbids the payment of any dividend from such capital
unon
bill
company to
file bond
or
bonds with
the State Bank Commissioner for the faithful performance of their duties.
3.
Restricts the suretyship powers of trust companies to bonds of guar¬
dians, executors and other fiduciaries appointed by the Court.
(Present
bill grants companies right to become surety for practically any
firm
or
person,
corporation).
companies except for life insurance companies.
5. Bill passed which prohibits all State banks and trust companies from
Iowa.—A bill
intended to forbid trust
was
panies and banks from administering personal estates.
This bill
was
com¬
killed.
It appears that small banks in certain communities in the State gave ill
advised directions to customers
This is
a
or
handled
incorrect record which
or
badly, leaving an
estate
an
followed
was
by endless
trouble.
good argument against banks with inadequate capital and surplus
being granted trust
powers.
1
1.
same
city by
a
vote of two-thirds of the directors
as
low
as
The present law sets the minimum at
$25,000.
$100,000.
Two bills
introduced in the House, namely: Assembly No. 220
were
associations
individuals not licensed
or
The bills in question were drastic and
thereto.
it
was
feared that they
The trust companies
Both
legitimate purposes of trust companies.
of these bills died in committee.
no
it is reported that
legislation has been passed which is of special interest to trust
mittee, recommended
were
all of minor
a
companies.
legislative com¬
number of changes in the banking law, but
importance.
they
A very rigid "blue sky" law was passed,
but details have not yet been reported.
New York.—There
were
introduced in the last session of the Legislature
eighty-three bills which would affect banking interests in one form or
another, but of these only eleven bills were passed, some of these
due,
we
being
It was reported all these bills had the
of the Superintendent of Banks.
that would in any way
No legislation was
enacted
interfere with trust company activities, and this is
believe, to the endeavors of the National Committee on Publicity.
advertising booklets that
were
legislators copies of all
issued by the committee and such as were
being used by the trust companies in the national advertising campaign.
endeavored to have
a
bill passed requiring the re¬
codification of the trust company law of the State.
but unsuccessfully,
and
Assembly No. 269, both of which were designed to prohibit the practice
of law by corporations, voluntary
Mr. Sisson, Chairman of this Committee, sent to all
A bill defining "Practice of Law."
3. A "cooperative" banking law.
This
but was not
reached by the House before adjournment.
approval
Permitting organization of trust companies in towns of certain sizes
with capital
2.
point in the
the approval of the Commissioner of Banking and Insurance.
amendments to existing statutes.
Kansas—The following bills were defeated:
Among
lost in the shuffle in the last hours of the session.
The New Mexico Bankers' Association, acting through its
introduced which
was
in which
good and others bad, either died in
New Mexico.—New laws have not been published, but
starting branch banks.
inadequate
some
authorizing trust companies to change their place of business
would interfere with the
Bill passed which allows trust companies to act as agent for insurance
4.
concerned,
bill should haVe passed, and in fact it did pass the Senate,
Requires the active officers of the
2.
branch office to the
the location of which had been changed.
or were
was a
to another
surplus.
a
A number of bills either directly affecting trust companies or
to the surplus account until such surplus equals twenty-five (25) per cent,
and
branch office; change the location of
trust companies were
committee
Requires ten (10)
a
branch office,
It
was
to prevent the promotion Of trust
also attemted
companies
by the
payment of big commissions.
This literature was doubtless read very carefully and
trust
with good results to
companies.
Mr. Andrew H. Mars, Vice-President of the
Fidelity International Trust
Company of New York City, who is State Vice-President of the A. B. A.
Maine.—The only legislation enacted was a slight change in relation to
for New York, in rendering his report to the State
Convention, says:
taxation of bank stock.
Massachusetts .—Bills defeated which Was designed to stop trustcompanies
A bitter fight developed in the House at which time the
advertising.
lawyers presented certain pieces of trust company advertising which they
cited
as
objectionable from the standpoint of inviting legal business.
The general situation in this State has been very bad, resulting in several
recent trust company
failures.
These, however,
were
known to be weak
institutions, but the laws of Massachusetts would not permit the State
"The National Publicity Committee begins to feel
New York State are satisfied that the trust companies,
that attorneys in
especially in New
but, on the contrary,
are working with them and for them, as you will note that in every booklet
and advertisement issued by the Committee above referred to they recom¬
mend the services of attorneys in all legal matters, and the National Com¬
mittee recommends that this matter be followed as closely as possible in
order that the legal profession and the trust companies of our great State
may at all times work in the closest harmony and co-operation.
York City, are not working against their interests,
Treasurer, under whose jurisdiction they operated to liquidate them or close
them.
which
An officer of
were
one
of these so-called trust companies, Investments of
known to be unsafe and the institution in
is credited-with the creation of
a
bill to establish
a
a
tottering condition,
guarantee fund for trust
companies with savings departments and savings banks.
.however,
closed.
was
•
The
measure,
withdrawn and the institution in question has since been
effective work
in following these bills.
At the regular session,
several bills giving State banks certain trust company powers, and trust
companies certain banking powers were introduced and
State institutions having
a
a
bill
was passed
minimum capital and
surplus of $150,000, banks with a capital below that amount being limited to
acting
was
as
was
administrators and executors for deceased
passed by both Houses of the Legislature,
Governor.
residents.
but
persons.
was
This act
vetoed by the
A great deal of effort was centered in opposing legislation which
deemed to be not in the Interest of general trust company business.
Minnesota.—A very .troublesome
situation
arose
in this State In connec¬
tion with one of the so-called Lawyer Bills which will be reported upon in
connection with the Committee
on
Co-operation with the Bar.
Missouri.—Bills passed as follows:
1. Permitting Investment In stock of
Two years ago some of this
repealed and this year a clean sweep was made of all
of the principal, the Income or the inheritance on North
taxation
Dakota securities
residing without the State.
Ohio.—The following Is a list of the bills
passed at the last sessionof the
State Legislature:
S. B. 25 which is
executor
or
a
slight amendment in the sale of real estate by the
administrator to pay decedent
H. B, 92 authorizing the Governor, upon
ing and loan association
or
,
S. B. 28 which Increases the
out of the county
debts.
application of any bank, build¬
railroad, to commission guards or employees
with usual police powers.
penalty for removing mortgaged property
in which it was situated at the time It was mortgaged.
H. B. 128 in matters of consolidation of banks, "reserves the
exclusive
right in and to the corporate-name of each of the banks parties to such
consolidation," thereby preventing any other bank such title.
S. B. 31 is an amendment to Section 10969, relating to the
appointing,
and duties of guardians whereby guardians may be appointed for
"an incompetent person by reason
domestic exchange and other evidences of debt originating In connection
disability
with foreign or domestic trade.
adjudgefa
was
companies,
taxing intangibles held by non¬
legislation taxing North Dakota
securities held by people without the State.
powers
corporations dealing in foreign and
Act was passed.
legislation particularly affecting trust
There has been in the past
heldfbylthose
Michigan.—The State of Michigan not only has its regular session of the
Legislature, but Is susceptible to special sessions.
powers to
Dakota.—No
with the exception of the repeal of laws
legislation
,
The Massachusetts Trust Companies Association did very
giving trust
North Carolina.—General banking law
North
or
infirmity."
of advanced age or mental or physical
Under the briginal section, it was necessary to
person either an
idiot, imbecile, lunatic, drunkard or insane.
CONVENTION.
BANKERS'
216
living trusts, reserves the right to the creditors of
8. B. 152 relating to
trusts that any beneficial interest reserved to such
creator of such
the
permitting banks to invest in the capital stock of corporations
8. B. 121
that
such
Proper
informed
that there
a
Utah.—No
which may be provided for and deprives the
stock in such d way as to make them definite and certain.
Oklahoma.—A bill was introduced in the Legislature to prohibit trust
companies from acting as agent for insurance companies, but the Bill was
reached p. vote in either house.
killed in committee, and never
In 1917,
codification and revision of the banking laws of the State.
Commission reported to the next Legislature, which met In January,
1919,
Banking Commissioner and the State Banking department, and
codification of all the banking laws.
The report was approved
and the Commission continued and directed to report to the Legislature of
permit
a
especially of the trust companies, the necessary State constitutional amend¬
ment was adopted and the Commission have completed their Report and
submitted copies of
it to the Legislative Committee of the Pennsylvania
to the trust company section of the Pennsylvania
Bankers' Association,
to certain
Bankers' Association and
of the trust companies and banks in
Various meetings were held in each of those
State.
the larger cities of the
cities, at the instigation of the Executive Committee of the trust company
of the Pennsylvania Bankers' Association.
section
a com¬
providing for payment of check or draft by a depositary after
or
-
the investment by banks in the stock of national
companies.
trust
I
Raising of the rate of interest to 4M%
8.
.8 of 1%
savings deposits was re¬
for taxing bank capital.
rate from .7 of 1 % to
\
Washington.—Some relief was reported from this State in respect to the
of trust business.
of advertising for and solicitation
manner
Wisconsin.—'Trust
State
granted
powers
and
banks
bank
additional
''
Wyoming.—No report received.
all the State Legislatures in session this year.
The above report covers
co-operation given by the State Vice-Presidents we would
For the hearty
like to recommend that a vote of thanks be spread upon the records
meeting, and I would respectfully recommend that our Division,
of this
through
make every- effort to have each State
its executive offices and Secretary,
and insist that special committees be
organize for their own protection
of looking after legislation, to promote constructive
formed for the purpose
legislation and to keep from being enacted Into laws legislation which
a
-
companies.
powers to trust
work
I,
"
Virginia.—No report received.
West
would
hardship upon bankingt interests.
Respectfully submitted,
COMMITTEE
company section of the Pennsylvania Bankers'
trust
«
on
increasing the
sponsible for the introduction of a bill
in Philadelphia in February, last, of the Executive
bined meeting was held
Committee of the
Subsequently
companies having savings departments may
savings deposits from the day of deposit to the day of
Bill providing for
banks
Commission and the co-operation
Through the activities of the
1921.
Bill
6.
be
basis
required in order to put the various banking institutions on such a
on
the death of the maker.
reported that, in their judgment, a constitutional amendment would
as to
Bill relating to investments by banks in Canadian bonds.
Bill providing that trust
withdrawal.
revision, codification and amendment only of the laws governing
a
Bill providing for deposits of funds in Canadian institutions.
5.
Legislature authorized the appointment of a Commission of six mem¬
bers to prepare a
unions."
Bill relating to the incorporation and management of "credit
allow interest
Oregon.—No Bills affecting trust companies.
the State
follow|s:
as
Providing that banks may charge interest at a rate greater than six
7.
Pennsylvania.—In this State a rather unusual condition exists.
session
3.
amendment to the statute, covering the issue of non¬
par
are
report.
4.
There was also an
We
desirable.
2.
Ripper Bill.
The
highly
(6) per cent in certain cases.
corporation in such case of the defense of usury.
H. II. 249 establishing the Administrative Code commonly known as the
the
therefore
are
little hopes of getting this legislation before the
Vermont.—Bills introduced
1.
corporations to Issue bonds running for more than
at any rate of interest
year
was
consider other matters.
to
organized under the Edge Law was duly passed and signed by the Governor.
8. B. 198 put into effect certain amendments to the Blue Sky Law.
8. B. 232 authorizes
restrictions
concerns.
present session of the Legislature because it was called in special
subject to be reached by the creditors of such creator.
creator shall be
ceived at the Division Office in New York calling attention to the fact
legitimate trust companies are reflected upon by the operations of
this will not be necessary to so stigmatize an aged or
By this amendment
disabled person.
ON
PROTECTIVE LAWS,
Nathan D. Prince, Chairman;
W. 8. McLucas,
Geo. W, Holmes,
John W. Chalfant,
each of the said committees, acting separately, but in reality cotemporan-
John Stites,
Fred G.
eously, that the Commissioners should not urge passage of their code and Bill
John H. Coverley.
Bankers'
Association and the Legislative Committee of the Pennsylvania
After
Association.
Legislature, and use their best efforts, informally, to
trust
provide for
addi¬
an
appropriation to cover exhaustive distribution of the code to the
tional
Report of
companies and banks of the State, and that the trust companies would
Committee
William
by
.
during the next two
after sufficient hearings,
for action to the Legislature
This postponement was
years,
should be presented
of 1923.
due, primarily, to two things:
great many years in this State,
of the
savings banks and private bankers, have very generally' been doing
business, though under different restrictions, and some
the same banking
of them. In
addition especially the trust companies, have had very broad
(2) The Code, as recommended by the Commissioners,
fiduciary powers:
attempted
to
have
one
real
fundamental
law
governing
all
the
aboye
Institutions, with certain provisions affecting only each of them, and
result
was
great deal of difference of opinion and very pronounced opposition
a
evidenced by the trust companies in
the larger cities.
of the Executive Committee of the trust company
vania
Bankers'
Association
Commissioners in
met,
Harrisburg
on
Informally,
A sub-committee
section of the Pennsyl¬
with
the
entire
Board
of
11, last, and spent the entire day
Mar.
going over, item by item, the code, with -the result that the necessity of
postponement was clear to all of the Commissioners, and with the further
result that in some
particulars, the amendments and changes desired by
the trust companies to the
preliminary report of the Commissioners will be
'
adopted by them.
as
agreed upon,
the Committee.
<
—about
and
very
a
year
no
action
was
The matter will
a
taken and the Bill
now come up
half from now;
introducing
early in the next Legislature
careful consideration by the banking interests of Pennsylvania, to¬
and
a
real
produce fair and beneficial legislation so that it is anticipated that
the code will be
Various
adopted early in the next session of the Legislature,
8% by special contract (the present limit being 6%
on
all loans)
were
in¬
The result has been
forcing of money out of the State, drying up the supply of mortgage
and placing the unfortunate mortgage borrower in the position
money,
where he either has to go
Porto
without funds
or pay an
exorbitant brokerage fee.
Rico.—Nothing to report.
South Carolina.—Nothing to report.
South Dakota.—-No report.
Tennessee.—A special contract law Was passed which fixed the legal rate
of interest in Tennessee at 6%, but provides that by special contract the
rate may
There
be made
also
as
high
as
Co-operation with the Bar, from Mr. Miller, who is not here.
read it in full, but the work of this
efforts to harmonize the relations between the attorneys
to
8% If such contract is in writing.
the unfortunate trust companies who
are
and the trust
of
Bchemingly beset, and in other
companies
were overstepping the bounds In the matter of advertising and ethics, as
the lawyers view them.
A summary of the report in respect to legislative
activities induced by the attorneys, and the efforts to combat them, is as
follows:
In the State of Washington, which formerly was more drastic
than any other in legislation against trust companies, even performing their
legitimate trust functions, there has been a decided improvement in the
attitude of the bar toward trust companies and slight relief was secured at
the recent session of their State legislature.
In the State of Kansas a bill
instances
extending
somewhat chastening hand where trust
a
directed against trust companies was
killod, and in the State of Iowa one
designed to take away powers from
trust companies
was
also kept from
In Pennsylvania a commission was appointed to recodify the
States
amendment a sec
disqualified from acting under any
banking laws, and there was inserted in the proposed
under which
instrument
a
trust company would be
not
for a
during which time it is hoped that the provision will be elim¬
prepared
by
The
them.
recodification,
however,
was
presented to the Legislature, and will, therefore, probably go over
year or
two,
In Massachusetts
inated.
the
presentation of
for this
a
a
strong fight
developed in the Legislature over
bill which was designed to prevent trust
a
very
companies to
The excuse urged
proposed legislation was an advertisement of one trust company
to
In California there has been, as you know,
which objection was taken.
serious contest, which resulted In the passing of a law
directed
against trust companies, which is to be voted on by the public in the State
on a referendum.
I will not attempt to report in detail as to that matter,
but
would
suggest that such
men
report
be asked for from one of the trust
from California.
,
during
been some increasing friction between the trust
companies and the bar, induced not by the better and more substantial
and older membdhs ofthe bar, but by a younger set, who were not supported
Briefly, I might
say
in respect to the situation in California that
the past few years there has
in
their efforts
unanimously by the members of the bar by any means.
This situation extended, and at two
were
law enacted
I won't
Committee during the year was devoted
companies in various sections of the country, rushing to the assistance
company
Rhode Island.—The only legislation which was passed was a "Blue
Sky"
law wbish regulates the sale of securities.
(Applause)
honor to present the report of the Committee
Mr. Lathrop—I have the
on
advertise their trust business, but the bill did not pass.
Bills, permitting the increasing of the legal rate of interest to
troduced in the Legislature, but all failed of passage.
the
it died in
and, in the meantime, will be given
gether with the Commission, there being hearty co-operation
desire to
Miller, another able member of
L.
In his absence, I will call on Mr. E.
Lathrop, of Los Angeles, for some statement on this question.
passing.
The Commission's report was subsequently presented to the Legislature:
but,
sorb thumb, the relations with the bar.
the staff of the Northern Trust Co.
State banks, savings banks, building and
banks and trust companies, all, with the exceptions
Northern
Chairman—It would not do to have a meeting of the Trust Company
We expected to have with us to-day Mr.
impracticable at the present day, due especially to the fact that for a
loan associations, private
Vice-President
Co., Chicago.
Division without exhibiting that
Pennsylvania banking laws are very involved, some of them obsolete
(1)
and
a
Trust
be continued for another two years, and that the Code as finally prepared
Co-operation with the Bar,
on
Miller,
S.
then recommend to the Governor and the Legislature that the Commission¬
ers
Boyce Jr.,
but should report the same to the Governor and the
this Legislature,
at
all day discussion, it was unanimously resolved by
an
previous sessions of the Legislature bills
introduced seeking to restrict the activities
and the work-of the trust
by which in suits against banks for damages
in erroneously refusing to cash checks, the party bringing the suit can collect
companies; and finally at-the last session
only the actual damages, and the
prohibition of the practice of law by unlicensed persons, not, only
was
a
same
had to be shown before recovery
could be made.
Texas.—Bill introduced designed to protect the use of the word "trust"
in corporate
A.B.A., for
American
titles which had been urged by the Trust Company Division,
some
time and which
Bankers'
"trust"
can
ducting
a
Association.
was
prepared by the legal counsel of the
Under the laws of this State the word
be used in corporate titles by institutions other than those
banking
or
con¬
fiduciary business provided that the word "unincor¬
porated" is displayed beneath the title.
concerns
This is always displayed by such
in the smallest possible kind of type and hence is alrftost unreadable.
of the Legislature a bill was
under a
trust
companies, but banks generally, and various other organizations, notably
boards of trade, real estate operators, and others who in the- matter of the
passed.
Now this bill
was
so
broad in scope that it included
conduct of their current business
do
other
and
The
opposed not by the trust companies,
have occasion to draw instruments
things which technically probably is the practice of law.
matter being so broad in scope, was
but, in the first instance,
association,
and
the
hands at the present
In California
we
by the California Bankers' Association, as an
matter
time.
have
a
of opposition
to
the movement is in
somewhat mixed blessing in the
initiative and
Most of the "unincorporated" concerns are formed for the purpose of
issuing
the
and selling oil stocks, and it is the custom of these companies
Governor, the referendum was invoked, and, the necessary signatures
all parts
of the United States resulting in
many
to circularize
letters of inquiry being
re¬
referendum.
When
their
•
this bill became
been secured, it became effective.
a
law
by the signature
of the
having
This automatically prevents the opera-
COMPANY DIVISION.
TRUST
tlon of the law and estopped it until the
people of theJ3tate have an oppor¬
tunity to vote upon it, which will take place in Nov., 1922.
In the mean¬
series is appearing
time it is probable that a campaign will be conducted to inform the
people
of the issues, and in order that they
ences
intelligently voice their sentiments.
may
The outstanding feature of interest in this situation,
however, Is this,
«
that for the first time in the history of the
controversy between the lawyers
and the trust companies the real
who
are
people, the real parties in interest, those
either being deprived of something, or who are having something
saved to them, will have
an
opportunity to
what they think about it.
say
In Nov., 1922, It seems to me, the
eyes of trust company America will be
turned toward California, because, as I
say,
for the first time in the history
be In
general
any
appear next
The first advertisement of that
abstract article.
in the magazines of this month.
We have already on hand
month,
a
The next one will
series of personal experi¬
and incidents which can be told in narrative form, which I am sure
will be of Very great
interest to the reading public and will have
Next month, for instance,
appeal.
we
or
217
we
have
a
wide
a very
story of an estate in which
quote directly from the court records an endorsement of trust company
service that will be most valuable.
In the first year
proceeding.
way
we
That is the basis upon which we are
had to lay
foundation stones in the
some
of general statements, but we purpose now to go on to the relation of
these concrete instances of trust company service and fiduciary service,
of this controversy, the people will have an
opportunity to decide whether
which
they wish the trust companies to continue to perform their business in the
way they have been doing it, or whether they should be restricted in the
manner in which the'
attorneys are seeking to curb them.
other appeal that we can
of its
we
believe will do
more to
actually take the
make.
And
experiences, and in its judgment
so your
as
message
horde than any
Committee, in the fullness
trust company officers, feels it is
warranted in asking the support of the Trust Company
Section for
a con¬
tinuation of this campaign, and, if possible,- even larger support than we
have received during the past year.
The
National
Publicity
Campaign,
Sisson, Chairman of Committee
Mr. Chairman and Gentlemen'.
Francis
by
on
H.
Publicity.
Fortunately for you and for
I do not want to go
into
any
it will be of value to the
am sure
we serve
also.
extended discussion of it further than that,
because the matter has been so fully covered in our bulletins and In our
the report
me
I
companies we serve, and of value to the people that
of
the Committee can be made very briefly
to-day, because it has all been
printed and it is all In the shape of exhibits, which no doubt most of you
printed summary, which I hope you will take the time to read; and if, then,
have any reactions which we have not already heard from, we shall be
you
at your
service at any time.
We do not
assume
either ultimate or complete
widsom about advertising, because I have lived long enough and worked
have seen, but, if you have not seen, they are available to
you at any time.
It has been summarized in this last pamphlet which we have issued, entitled
long enough at that particular end of the fiscal and fiduciary business to
"The
realize there is not any final answer,
1921
National
Publicity Campaign," and there you may see the
exhibit of the thing itself, some measure of the results attained, and a fore¬
cast of the future, In so far as we have been able to offer it to
you.
of you have not seen this
If any
pamphlet, I hope you will take the opportunity
Now,
have also copies of the bulletins that have been issued during the
year, eight in all, which I think in condensed form have presented the story
we
of the trust companies' appeal lor new business as
effectively
as
anything
available to any of you who have not
are
proven
them, and I hope have
seen
profitable to those of you who have.
Our little
booklet
issued, early in the
"Safeguarding Your Family's
Future,"
which
whole, and will cause a sense of pride and satisfaction to you all.
on
the part of the cause we represent or of the opportunity pre*
sented.
With that brief statement, I want to leave the matter in your hands, but
with the very serious hope
that, representing, as I do, a trust company
amdunt of any trust company In the country
which contributed the largest
this
particular fund, that it is a thing that we can continue to-day
was
Is doubtless familiar to you all; but, if not, that is
year,
as a
and not
to
profitably, and
your
also available to you.
and profiting
If we fall to do that, the failure has,been on the part of your committee,
have been able to get out, either individually or collectively; and they
we
also
our way,
all concerned, and which we hope will reflect credit upon the trust com¬
to
panies
that is offered to get a copy.
But, feeling
by the experiences of ourselves and others, we intend/ if possible, to con¬
tinue this campaign along lines which we are confident will be profitable
a
thing for which we can honestly and enthusiastically ask
cordial support.
We have Just recently sent out a letter, in which under the
authority
of the Executive Committee, we have suggested the scope of the
campaign
for the next year, and to that we ask your earnest attention and considera¬
tion, because that is
question which
a
we are
Report of Committee on Standardization of Charges,
facing to-day collectively.
by George D. Edwards, Vice-President Common¬
wealth Trust Co., Pittsburgh, Pa.
With that letter has gone a subscription blank, in which we have asked for
subscriptions from the trust companies
cent of the combined
scribing
reason
although
we
success
the basis of l-100th of
one per
capital, surplus, and undivided profits of the sub¬
subscription to be less than $25.
company, but no
of the
on
achieved during the past year in our
had to feel
our way
for
a
We hope, by
initial campaign,
those who did not, that we have to some extent Justified a continuance of
the campaign on a larger scale, perhaps, than last year.
Last year we had
subscribed altogether about $65,000, and of that amount there
which is'in
concluding months of this calendar
process
year.
now
It is
our
hope that
we can get
subscribers this next year, and a larger sum for a better and more
more
effective campaign.
About 700 trust companies in all subscribed for the
last year's campaign.
scribe
$100,000,
others,
we
If
get 1,000 subscribers this year to sub¬
can
we
through the national media
can,
impress the merits of the trust
have used, and
we
companies upon the
very
large
audience that is willing to hear it and respond to it, very much more ef¬
fectively than
we
That is
way.
did this last year and very much more profitably in every
our
hope, and I hope that the
success
that
we
have achieved
in the way of actual results, in the way of public comment, in the
way
of
goodwill created during the past year has justified an enlargement of the
standardization of fees and get them on a scientific basis as soon as
for the whole of the United States.
done.
as
Some of it lias been experimental, and some of it not as resultful
would wish, but from the hundreds and hundreds of letters we have
we
had, from the direct testimony of
results secured
own
kindly goodwill that has been created, We have
minds
is much
money
of our trust companies, of actual
(from the reflection we have had in financial and daily news¬
paper press of
our
scores
as
surveyors of
more
no
doubt in
the situation that the expenditure of this
than justified-.
You know as well as I.
or
better, that
have only scratched the surface of fiduciary service in the United States.
we
Very few people understand it, and very few people know what it can do
for them and be to them,- and the
our
carrying
our message
Now, there
you men
stances
individually'in
only way they are going to know it is by
to them.
of carrying that message.
are many ways
communities; it is carried in
your own
collectively, effectively,
as
It is carried by
in New Orleans and
some
some
In¬
other cities.
But back of it all, I believe we should have a continuous national campaign
of either this sort
which
we can
or
something
build our
own
better, which will give the background upon
institutions In their business-getting activities
effectively.
more
If there is any question In the mind of any of you in relation to this
campaign which is unanswered, if there
are any
doubts about its utility
mittee
experiment with the report and schedules
benefit of their advice.
hundreds of letters,
some complaining about this, and some suggesting that, and as a result of
that last year there was presented to the convention a schedule of fees
which was adopted for use generally as a basis of compensation for the
trust companies throughout the United States.
During the year we have
received probably 400 letters of commendation i
I have here the gist of a
great many of those letters, which I am not going to read, but it seems as
though the general schedule of fees which was turned in in the report last
presented for a year .and to give the committee the
During that year the committee received a great many
year
Of
has been quite satisfactory.
course the schedule of fees will not fit every community.
on
which it is worked.
trust
we
have
no
to
companies, they are endeavoring by the use
For instance,
schedule; they
done in 30 or 60 days.
Now the schedule which fits California
New York.
New York's customs are different from California.
adapt it into a schedule which fits their own locality.
California, which at the present time is adapting the new
will have it
does not fit
New York
City,
as
I understand, has adopted a schedule of its own.
Jersey has just lately adopted a schedule of its own.
within
our
Now, that is the story
only
a
as
mittee feels that the work has not been lost,
as we
that
a
great deal has been ac¬
complished, that small trust companies have been able to have a
guide
feeling that they
experience of the committee is that It
stopped to a considerable extent the price cutting throughout the country.
I know It has here in Los Angeles, where! we are in a great deal better situa¬
tion; and it has taught the trust companies to a certain extent that they can
not expect to grow and develop and be a good, genuine, up-to-date trust
company unless tbey can get fees that are profitable to themsejyes-as well
whereby they could conduct their business and charge for it,
were
as
not doing it at a
(far to the customer.
loss.
The
a
With these things having been
large extent.
*
J
learned and gained
satisfied that the Association has
'
to serve
effectively as
have to present it.
I feel that
we
Report
than others, want to continue to drop our buckets into empty
and we do not want to spend our money in any sort of activity
that is not sooner or later reflected on the right side of the ledger, but I
believe we have also a very distinct field of service in telling the American
people how these important interests in their lives can be safeguarded and
protected and executed by the efficient trust companies of the country.
of
Nominating, Committee,
by F. W. Blair.
Mr. Blair.—On behalf of the Nominating Committee,
have not
great opportunity, a distinct money-making opportunity, because
we, no more
wells,
of the United States
of conception alnd execution.
powers
New
The Mississippi
|
Valley necessarily will have to adopt a little different schedule from the main
schedule or from the California schedule.
But taking it all in all, the com¬
possible, and, if not, to profit by
thought here, of course, other than
the interests of the trust companies
lies
theories
the
of these schedules of fees
But from the reports we have received from
would be
delighted to hear those questions and to have expressed to them
Each com¬
munity has different customs and different practices and different
benefited to
because
the
presented its report, which was adopted in a tentative way by the
and the convention members of the Association throughout
the United States were asked to
by the efforts of the committee, I am
those doubts, in order to answer them if
and
possible
A year later, two years ago, the com¬
and it; serviceableness to the trust company as a "whole, your committee
them;
Mr.
convention,
campaign along these lines next year.
I appreciate that there are logical criticisms of some of the things we have
Three years ago the committee was appointed to work on
snappy.
remains
of expenditure during the
Mr. President, and Gentlemen:—I will make this short
Mr. Coverly:
time, and had to compromise between
the large and small, and the East and the West, and those who knew and
about $6,000 unexpended,
Chairman:—Mr. Edwards is not present, and we will again call on
Coverly to answer to this number on the program.
the list of
as
names
which I shall shortly read, the
I desire to present
first five being suggested
ending 1924, the last
members of the Executive Committee for the term
name
being suggested to fill the vacancy for the term
ending 1923.
I
consideration a great many names,
and in selecting the following it was governed to a certain extent, to a
great extent in fact, by locations, it being sought of course, as is the practice
which has been followed heretofore, tp distribute, the Executive Com¬
will say that the Committee had under
the country as we could.
We have taken further into
in the Association
There may come a day when other organizations can do it as well as we,
mittee
but certainly that day has not yet arrived, and I believe we have not only
consideration the services of men who have been active
an
opportunity but
Americah people as
a
a
duty to the communities in which we live, to the
whole, to carry this message to them in such
an
appealing form that they will respond to It and we will profit by it.
It is our desire this year to
make
our
personal in its appeal, and to relate
have come to the knowledge of trust
value
a
advertising
very
human and very
series of personal incidents which
company officers,
in which the great
gf trust company Bervice Is Illustrated more effectively
ft ban it would
as
widely
over
and have given it of their time.
With that explanation, I desire to present
the following recommendations:
Francis H.
Sisson,
Vice-President Guaranty Trust Co. of New York;
Company, New
President of the Mercantile Trust Co.,
St. Louis; L. H. Roseberry, Vice President of the Security Trust & Savings
Bank, Los Angeles; D. Ansley, Vice President of the Central Trust Co..
Uzal H. McCarter, President of the Fidelity Union Trust
ark, N. J.; Thomas C. Hennings, Vice
BANKERS'
218
San Antonio, Texas.
man
And, to fill the vacancy, WilliamT. Kemper,
Chair¬
City, Mo.
o^ the Board of the Commerce Trust Company, Kansas
I desire on behalf of the Committee to nominate
CONVENTION.
these gentlemen for the
Chairman.—Gentlemen, you have heard the report of the
Nominating
instructed
of the delegates present for those gentlemen to
Chairman, I move you the Secretary be
the unanimous vote
fill the offices suggested.
to pass
(The motion was duly seconded, put by the Chairman,
and unanimously
1
carried.)
Chairman.—The ballot has been cast, and Mr. Sisson, Mr.
Mr.
Hennings, Mr. Roseberry and Mr. Ansley are elected for
expiring in 1924,
McCarter,
the terms
and Mr. Kemper is elected to succeed Mr. McLuc?
/ |
resigned.
Now
nominations fo President of the Trust Company
Division/are in\
desire to nominate Mr. J. A.
dent of the Guardian Savings & Trust Co. of
Hous^, Presi¬
Cleveland, now Ifirst Vice
President of this Division, and a man well known to
Division,
all
and much interested in the American Bankers
members of this
Association for
Gentlemen,
your
new
chair?
Mr. Hulbert.
that perhaps can be
duty to be performed, and
done by the ex-President, and that is to call for
ensuing year.
nomi¬
nations for Vice-President for the
Mr. Martin.—Mr. President, I
Vice-Presidency of the
the service of this
been
a
very
would like to place in nomination for the
Section Mr. Theodore G. Smith, Vice-President
Central Union Trust Co., New
York.
Mr. Smith has been many years in
Section, serving on the Executive Committee, and has
efficient Chairman of the Executive Committee during
past year.
I respectfully place his name
Mr. Blair.—I second the nomination.
the
in nomination.
Chqirman—The vote has been cast, and Mr.
Smith is duly elected.
I wish to again thank you for your
patience with me in
The meeting will now stand adjourned.
Mr. House—Pardon me, Mr. Chairman.
I indeed would be ungrateful
the past year.
if I did not express to you my
upon me
appreciation of the honor you have conferred
in electing me to the Presidency of this Division of the American
As I look over the illustrious and very successful
Bankers* Association.
many years.
men
Mr. Blair.—I second the nomination.
J. A.
House, which has been duly seconded, as President of this Division for the
ensuing year.
Are you ready for the question?
As many as in favor of
Chairman.—Gentlemen,
this
Mr. House.—1 prefer you to,
Gentlemen,
order.
Mr. Guest.—Mr. President, I
you.
Chairman.—I believe there is only one more
What is your pleasure?
Mr. Ilervey.—Mr.
unanimous.)
congratulate
I
House,
Chairman.—Will you take the
offices of members of the Executive Committee.
Cqmmittee.
(The election of Mr. House was
Chairman.—Mr.
President.
motion say
aye.
you
have heard the nomination of Mr.
Opposed,
who
have preceded
me,
I rather feel my weakness to perform the
this Association in the manner in which
duties of the office of President of
it should be done, but I can
me
and to perform
only promise to you to do the best there is
the duties of that office to the best
of my ability.
thank you.
no.
CENTRAL TRUST COMPANY NEW^ERSEY
Capital, Surplus & Undivided
Trust
Profits_$455,000
Funds separate from
WE
HAVE
UNEXCELLED
TIONS, AND WILL REMIT
H. H. GRACE, M.D.,
President
Resources
$4,000,000
^
the other assets of the company
FACILITIES FOR HANDLING
$1,350,000
COLLEC¬
DAILY OR WEEKLY AT LOWEST RATES
JOHN B. CLEMENT, 2nd V.-P., Sec. Tres.
in
I
Associated Bankers Corporation
Supplementing, not competing with, /oca/ franft service
Designed by Interior Bankers—
To broaden the market for their acceptances
To buy commercial paper
who require credit in
To give its
excess
of their customers
of local loan limits
members the service of
Corporation of their
a
Securities
own
AUTHORIZED CAPITAL, $5,000,000
John
T.
Manson,
President,
First
Bank of New
35 WALL STREET
National
Haven, Conn.,
Chairman of the Board
'
NEW YORK
219
Clarence M. Sherwood,
President
Charles C. Barlow,
Arthur C.
Quainton,
Secretary
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WINSLOW, LANIER & CO.
59 Cedar Street, New York
BANKERS
Deposits Received Subject to Draft
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FOREIGN EXCHANGE,
LETTERS OF CREDIT
224
and dividends
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