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Bankers’MHtrust
SUPPLEMENT
TO THE

C ommercial & f iw cial Ç hrowicle.
aw
[Entered according to Act of Congress in the year 1898, by W i l l i a m

VOL. 67.

B. D a n a C o m p a n y , in office

N E W YORK, SEPTEM BER 3, 1898.

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THE WORK OF THE CONVENTION.
It is not necessary to give reasons for the issue
of this special Supplement, reporting in full the pro­
ceedings of the Annual Convention of the American
Bankers’ Association, held at Denver last week.
The Association is a body which is growing in use­
fulness as well as in years. The present was the
twenty-fourth annual gathering of the delegates.
Hence the Association has rounded almost a quarter
of a century of life.
The period has been an im­
portant one in the history of the nation, and thi
Association has enjoyed a career of great usefulness
both in promoting the growth and welfare of its own
members, and in advancing the material interests
of the country. The name of Mr. George S. Coe is
closely identified with the earlier work of this bank­
ers’ guild. And to show the prominent place held
by the annual deliberations and discussions, it is only
necessary to refer to the fact that it was at the an­
nual Convention, held in Baltimore in 1894, that the
celebrated scheme for the reform of our currency,
known as the Baltimore plan, was promulgated by
the bankers of that city.
In a body of the magnitude of that of this Asso •
ciation, it is impossible to avoid more or less friction
at times by reason of the existence of opposing




N o. 1732.

views. Such conditions, too, often lead to apathy
on the part of some of the members. This will ex­
plain why there have been occasions within the last
decade when it seemed as if the Association were
losing some of its prestige.
But all this has now
been changed. It appears that the paid membership
of the Association has increased from 1 ,7 1 1 in
1894-5 to 3,350 in 1897-8—that is, in three years the
membership has almost doubled, certainly a striking
record.
We shall not undertake to explain the
cause of this growth. It is the fact itself that inter­
ests us.
The Protective Committee, which began
work in 1894, and which undertakes to protect the
banks from the operations of swindlers and other
criminals, is inclined to think that the large infusion
of new members is closely connected with the incor­
poration of this new feature in the Association’s
work. But it will have been noted from our re ­
marks above that 1894 was also the year when the
Baltimore currency plan was unfolded, and it may
not be out of place to suggest that possibly the great
prominence which that plan gave to the deliberations
of the bankers in the eyes of the world had something
to do with the influx of members since then. A t all
events, the expansion in membership is an accom­
plished fact.
President Hendrix notes that the
3,350 members represent ar investment of more than
\
a billion dollars in the business of banking and the
custody of more than four billion dollars of deposits.
He also avers that the Association is the oldest asso­
ciation of bankers in the world.
We think, too, that the programme laid out for
the present year’s Convention was of more than or
dinary excellence. A very useful series of topics
was provided for discussion and consideration.
Moreover, the papers specially prepared on these
subjects, by speakers assigned to the task, appear, al­
most without exception, to be of decided merit—
furnishing an added reason for spreading them be­
fore our readers. We know that not all the mem­
bers of the Association take the same view of the
usefulness of these “ set ” speeches. A prominent
member of the Executive Council, in talking with
one of our representatives, expressed the opinion
that it would be well if the “ literary ” feature of the
annual gatherings could be omitted altogether. Hi*
experience was that the five-minute speeches are

8

B A N K E R S ’ C O N V E N T IO N .

much the more popular. For ourselves, we think it
woujld be a mistake to eliminate the prepared ad­
dresses, especially where they yield papers of such
merit as those produced the present year. We do
not overlook the fact that our bankers are intensely
practical, that they do not like to be bored by long
dissertations on theoretical questions, and that they
feel that they have no time to waste, especially at
these annual gatherings, where pleasure and the
social features form strong diverting attractions.
But without the prepared addresses and the topics
on which they are based, there would be nothing to
discuss— nothing to talk about. The speaking, too,
would lack preparation and deliberation. To assign
speakers beforehand, affords opportunity for re­
search, study and investigation; out of such study
come results of great value and usefulness. Re­
marks based on anything less substantial than this
can have little worth. Imagine the value of an off­
hand speech (delivered without previous prepara­
tion- or thought) on Days of Grace—one of the
topics tfie present year, which has drawn out an
able paper by the speaker selected for the occasion.
: Where the “ literary ” feature has been a draw­
back in the past, the trouble has been not in the lit­
erary feature itself, but in the selection of the topics
and the assignment of competent, painstaking speak­
ers^ : There is no need for discussing merely theo­
retical questions, when there are so many practical
subjects commanding attention. We think Presi­
dent, Hendrix, whose address was an excellent one
from every standpoint, has the right idea.
After
stating that in the past the Conventions have been
devoted" for the most part to listening to learned
essays—that the members went away with a mass
of arguments and facts and statistics to digest, and
many of them never came back—he dwells on the
change that has now been inaugurated. “ In recent
years we have sought to draw upon the experience,
practical thought and philosophy of our own mem­
bers— in short, to develop home talent—and we are
much better satisfied.
We are practical bankers
dealing with conditions as they are; and never ex­
pect to be ideal bankers dealing with conditions as
they might be. . . .
We hope in this Conven­
tion that the individual member who has any ques­
tion bothering his brain will make a demand draft
upon us all. We are here to help one another all
we caq; to discuss practical questions; to get up a
crpss-fire of questions and answers upon points of
law and practice; and to get the benefit of many
minds.”
Qut of these efforts there have come the speeches
and addresses of the present year. We think that
these productions have not only been instructive to
those attending the Convention, but that they are de­
serving of a wider circle of readers—that every one
interested in banking and finance should peruse
them. We accordingly reproduce them at length on
subsequent pages.
Indeed, as already stated, we
furnish a full and complete report of the proceed­
ings o f the Convention. We have sought to make
the report creditable in every way—using heavy
paper, large and clear type, and in other ways aim­




ing to add to its attractiveness. We hence h^ve a
publication which will be of permanent value, we
think, both by reason of the. matter included within
its covers and the way it is presented to the public
eye. In the article which follows we furnish an
outline of the nature and contents of the different
addresses.

THE PAPERS AND ADDRESSES A T
THE CONVENTION.
A s indicated in the foregoing article, the papers
and addresses presented before the Convention were
of considerable merit. Our readers who can spare
the time for the perusal of these papers will find
them very instructive. Whether or not one agrees
with the views advanced on any given topic, they
furnish much food for thought and reflection.
President Hendrix’s address will take rank with
the best of the opening addresses delivered by the
presiding officers at these annual gatherings.
It
was in excellent taste and temper, discussing the
issues of the day in a clear and dispassioned way
without evidence of rancor or feeling. On a careful
analysis we should, perhaps, be found to differ with
him on some points, but his utterances as
a whole will appeal to all thoughtful students.
Mr. Hendrix speaks in a moderate, conservative
way, and does not give unnecessary offense. With
reference to the currency question, his recommenda­
tions may be summed up in the remark that it is no
easy task to create a bank currency system to fit
seventy millions of people distributed over an area
of three million square miles, and to meet the diverse
needs of different parts of the country. Our com­
plex monetary situation, he observes, adds to the ob­
stacles to be overcome. Nevertheless, “ we should
do all., in our power, by counsel and suggestion, to
perfect the meritorious measure now pending, and
to encourage the prevailing sentiment it represents.”
Mr. Hendrix does not believe the creation of small
banks would furnish a remedy for the lack of bank­
ing facilities complained of in some of the remoter
sections of the country—in which respect he differs
sharply with some of the other speakers who ad­
vanced views on this point.
He sa y s: “ Small
banks are not a remedy.
They cannot exist where
industry is not diversified to some degree, so that
money may be kept out in the different seasons. In
Canada the branch bank system meets the want,
and it would do so in this country, giving a better
distribution of loanable capital and an interest rate
more nearly uniform.”
There is one fact which this year’s discussions
bring out very forcibly—namely, that the old preju­
dice against a currency based on assets is gradually
dying out. Both the direct and the indirect refer­
ences to the subject in the leading papers furnish
evidence of the truth of this statement. Many of
the speakers are not yet prepared to go so far as to
advocate the repeal of the io per cent, tax on State
bank notes.
Even Mr. Hendrix, in his address, is
led to rem ark: “ We have as an Association steadily
resisted the repeal of the io per cent, tax on State
bank issues.” But Mr. Hendrix sees clearly that no

BA N KERS’

C O N V E N T IO N .

inferences can be drawn from the experience attend •
ing fredom in bank note issues before the war, the
conditions now being so vastly different.
So in
another part of his address we find him saying:
“ The safety and uniformity of a currency based
upon bank assets is not open to question.
It is a
matter of regulation.'"’ A lso : “ The great improve­
ment in every department of finance renders impos­
sible the recurrence of the old days of * wild cat ’
and ‘ red dog ’ currency, and we may dismiss from
our minds the idea that, under any future currency
system, money brokers will have to keep us com­
pany. The question is far above that level.”
The address of Mr. William L. Royall, of Rich­
mond, on “ The Need of Banking Facilities in Rural
Districts ” is from beginning to end a plea for small
banks, and the repeal of the io per cent. tax. Mr.
Royall is a lawyer, and is not, we believe, engaged in
the banking business.
We had occasion about a
year ago to refer to an able paper of his on the sub­
ject of “ Trusts.”
He is a forcible writer and
speaks to the point and without ambiguity. Mr.
Royall notes that there is abundance of currency in
the cities; none in the country, whence the clamor
•comes. People in the cities have plenty of money,
"because for one thing they use scarcely any. They
•do all their business with checks, and need enough
•only to go to market and pay street car fare. But
in the agricultural districts there are no banks for
the people to check on.
The io per cent, tax on
State bank issues makes any but national banks im­
practicable. The national banks are founded on
national bonds, of which the farmers have none, and
they are also anti-rural in their natures, says Mr.
Royall.
Why is it, he asks, that the country peo­
ple, so much in need of actual cash, can
.get none ? It is because all of our currency
is good at its face in every part of the
United States, causing it to go to the commercial
•centers and leave the country people destitute. Mr.
Royall contends that the money which is sent West
and South in the autumn is not used to buy grain
.and cotton. That is all paid for with exchange. It
is used principally to pay labor and therefore gets
spread out among the people. But in three months’
-time it has all returned to New York, and the coun­
try districts are again destitute of it. It is this con­
dition, the fact that the New Yorker, according to
the papers, can borrow at 2 per cent., while the coun­
trymen must pay 10 per cent., and frequently cannot
procure cash at all, that furnishes the basis for the
free silver movement, though if the farmer only
knew it, says Mr. Royall, the silver dollar would
leave him just as the greenback does. There is but
•one possible remedy in the estimation of the speaker
— a banking system which will permit each locality
to bank upon such resources as it has, with banks
managed by local directors, who are acquainted with
the people of the neighborhood requiring banking
accommodations. This last requirement, he thinks,
is just as important as freedom in banking, for
money is loaned upon knowledge of the borrower’s
•character.
Mr. John W. Faxon, the Secretary of the Ten­
nessee Bankers’ Association, in his paper adverts to




9

the evils of a constantly fluctuating currency where
a Thompson or Dye’s Bank Note Reporter, giving
the latest quotations of discounts, is necessary. His
theme, however, is “ Banking as it Relates to In ­
dustrial Development,” and he makes a strong argu­
ment, showing the usefulness of banks— how they
promote and are essential to industrial development.
He calls money the co-partner of industry, and well
says that without it the industries of the country
would meet with but poor success. “ Industrial de­
velopment is a consequent result of commercial ac­
tivity, upon which it mostly depends. Commercial
activity is absolutely impossible without monetary
advantages, and the only means of securing mone­
tary advantages is through the instrumentality of a
sound system of banking. In truth, industrial de­
velopment, commercial success and monetary power
are all inseparably interwoven through the indispen­
sable province of banking.”
He makes a forcible
plea for a system of small branch banks founded on
a sound basis.
The text of the paper prepared by Mr. E .: H.
Pullen, the Vice-President of the National Bank of
the Republic—“ Thirty-seven Years in a Bank
hardly indicates its breadth or character.- I t is.
something more than the prosaic record of one who
has spent thirty-seven years in a bank. Mr. Pullen
makes his paper the occasion for indicating the great
changes which have occurred in some of the methods
of banking during the time covered by him.
Mr. Pullen does not look with favor upon the prac­
tice of paying interest on deposits and bank balances.
He notes that before the inauguration of the N a­
tional Banking System interest was allowed only in
rare instances.
“ Banks at that time wisely and
justly held that they were organized to make money
by the employment of their capital and deposits, so
that to buy deposits then would have seriously re­
flected on the banks so doing and impaired their
credit. Nevertheless, this pernicious practice, in­
stead of decreasing by reason of unfavorable ex­
perience, has grown with the passing years, and has
become so fastened on banking methods that it will
require heroic measures to dislodge it.” He refers
to other marked differences between the present and
the past. Old-fashioned banking, he says, did not
include the furnishing of capital to customers, but
strictly confined accommodation to the discounting
of acceptable notes given for value or secured by sat­
isfactory collateral, thus restricting borrowers to
well-defined limits. Accommodation paper was not
favorably regarded, and single-name paper without
security was not tolerated. Nor did old-fashioned
banking encourage collections at a loss in exchange
and time through an extensive system of “ par ”
points. In those days, too, it was considered very
unprofessional, indeed disreputable, to interfere
with a neighbor’s business by soliciting his accounts.
Nowadays, it is openly, ostentatiously done.
Mr.
Pullen makes an earnest plea for bank clerks, and
thinks that greater consideration should be shown
them.
Mr. James T. Hayden, the President of the
Whitney National Bank, New Orleans, has “ The
Bank Clerk ” as his specific theme. Every one will
endorse his statement that “ an over-worked clerk

10

BA N KERS’

C O N V E N T IO N .

ceases to be reliable, and when it is found that an
employe is nightly at his desk, working * overtime/
one of two things is at once evident—either he is in­
capable or overburdened. In either case the remedy
is plain, and prompt action should be taken—he
should be changed to a position that he would be
fully qualified to fill, or he should be relieved of an
unjust burden by an assistant.”
Mr. Hayden
speaks in the highest terms of the bank clerk—his
honesty, accuracy and intelligence— and dwells upon
the importance of the part played by him in the
mechanism and success of the bank.
“ Uniform Laws for Holidays as Well as Days
of Grace ” is a paper which none of our readers can
afford to overlook. It is a very thoughtful study of
the subject. The paper is by Mr. George M. Reyn­
olds, the Cashier of the Continental National Bank
of Chicago.
Mr. Reynolds, in his investigations,
has covered a great deal of ground, and the informa­
tion and facts which he has brought together should
be interesting to the general public, as well as to
bank officials.
In style, as well an in substance the address of
Mr. W. S. Witham, of Atlanta, Ga., differs from the
addresses of the other speakers. Mr. Witham spoke
in his characteristic way, and possibly his re­
marks will not appeal equally to all. W e shall not
attempt to pass judgment upon the speech. His ob­
servations seem to be based entirely on his personal
experiences. A s he is the head of a large number
of country banks, and has not met with any reverses
in their management, he argues in favor of inde­
pendent banks— rather than branch banks.
In “ Patriotic Spirit of Bankers,” Mr. J. D. Pow­
ers, the President of the First National Bank of
Owensboro, Ky., spoke in words befitting the occa­
sion. He pointed out that “ honor, patriotism, rev­
erence, all things which our fathers esteemed as
more precious than gold, have not departed, but as
a rich heritage have been transmitted to their sons,
and stand out as pre-eminently in the character and
acts of this generation as they shone resplendent in
the days of the Revolution.” He refers to the
services of Robert Morris and Stephen Girard in
early times and to the patriotic action of banks
and bankers generally at every period in the Nation’s
history. “ What is the first great care,” he asks, “ of
a nation about to engage in'w ar, offensive or de­
fensive ? To look well to its finances, and to see
who will sustain the Government’s credit and fur­
nish the means with which to provide an army and a
navy, and having provided them to provide for
them. Where and to whom does it look? What spirit
is invoked to work out the problem but the patriotic
spirit of bankers? In this glorious land that spirit
has never been wanting from the time that Robert
Morris answered the call and furnished Washington
the means to win the battle of Trenton, even down
to the glorious, though bloody, field of Santiago.”
The subject of the “ Protection of Bankers’
Drafts” is one of the utmost importance to the whole
banking community. The thoughtful paper which
Mr. Arthur C. Anderson, the Cashier of the St. Paul
National Bank, has prepared on the subject, will, we
are sure, be greatly appreciated.
He com­
ments with considerable severity upon the lack



of precaution on the part of lithographers and print­
ers in leaving blanks unguarded, with the result
that forgers and swindlers have no difficulty in ob­
taining genuine blanks. In a letter to us he notes
the case of a man who by this means in less than
two years, raised over $70,000, using genuine blanks,
but forging all the filling.
Mr. Anderson believes
the best safeguards lie in the use of a specially pre­
pared, water-marked paper. And as an additional
precaution, he would have the paper in two series,
one to be used for drafts of smaller amounts, and
the other for drafts of larger size. He would have
the paper manufactured for the Association only by
such a paper mill as can demonstrate its ability to
manufacture what the banks wrant, and keep it safe
as long as the paper is in its hands.
Furthermore,
he would have the paper distributed to only such
plate printers and lithographers as shall be under
bond for its careful use, and liable for all uncan­
celed samples and whose places of business shall
be open at all times to authorized inspection. Ob­
viously, this recommendation reveals a trend toward
centralizing in the Association certain powers. We
find on communicating with Mr. Anderson that he
distinctly admits such trend. His belief is that in­
stead of the banks being merely 10,000 separate in­
stitutions, with nothing in particular to draw and
hold them together, the American Bankers’ Associa­
tion should steadily unite on all points upon which
it is possible to unite, both for offense and defense.
He instances the success attending the Association’s
work in providing a common means of protection
against professional forgers and bank burglars as
evidence that other efforts along these lines can ’be
undertaken with advantage.

THE TRUST COMPANY PROCEEDINGS.
It was a happy thought that suggested the idea
of the formation of a separate branch or section
where the distinctive interests of the Trust Com­
panies might receive special consideration.
The
American Bankers’ Association is not composed ex­
clusively of banks; it comprises many other finan­
cial institutions, and some of the most prominent
private banking concerns in the country have mem­
bership in it. No doubt the Trust Companies con­
stitute the largest single interest outside the banks
themselves, and in view of the magnitude of their
operations and their wonderful growth it was a wise
move to organize them in a separate class. It is a
well-known fact that to a certain extent the Trust
Companies have been trenching upon the business
of the banks, but this seems to have caused no fric­
tion between the two classes of institutions, and they
are evidently working harmoniously together.
The “ Trust Company Section ” at the annual
Conventions discusses only questions that relate to
the functions and business of the Trust Companies
themselves.
Currency and financial questions, in
which all have a common concern, are, of course,
treated in the main body of the Convention. With
characteristic energy the Trust Companies have
taken hold of their branch of the work and made a
great success of it. The departure dates back only
one year—that is, it was last year the first meeting

BA N KERS’

C O N V E N T IO N .

of the new branch was held, the present being only
the second annual gathering. Yet the deliberations
have already risen to proportions that show that the
Trust Companies have here a field of great useful­
ness, and they are determined to occupy it and de
velop it. In the official volume of the Convention’^
proceedings for last year, the proceedings of the
“ Trust Company Section ” occupy twenty-four
pages. Our report of the present year’s proceed­
ings of this section given in the current Supplement
occupies 1 7 pages three times the size of those in the
official volume. It is obvious, too, that the discus­
sions are proving very profitable, and that the com­
panies are going to derive considerable benefits from
these conferences and gatherings, where opportunity
is offered for showing to the public the manifest ad­
vantages which the companies possess for discharg­
ing “ Trust ” functions.
The “ Trust Company Section ” meets simul­
taneously with the main body, but in a differenc
place.
Mr. E . T. Jeffery, a director of the In­
ternational Trust Company, of Denver, and also
President of the Denver & Rio Grande Railroad, de­
livered the address of welcome.
And a happy
speech it was— cordial, appreciative, enthusiastic in
its admiration for Colorado, and yet so reserved in
presenting her claims. What for instance could be
finer or more felicitous than the following closing
rem arks: “ We do not welcome you because our
State has unparalleled natural resources, although
we like to speak of them; nor because of her sub­
lime physical characteristics; nor because of het
pleasant valleys and her fruitful fields. We wel­
come you because you are our brethren from various
parts of this broad land, intent with us in building
and strengthening, by lawful means and in honest
ways, our financial, commercial, industrial, mining
and agricultural interests. . . . And to Denver,
our Capitol City, we bid you thrice welcome. Our
hearts go out to you in friendship and hospitality.
We pray that you will have interesting and instruc­
tive interchange of opinions on the important sub­
jects that are to come before your Convention, and
that your leisure hours will be gladdened bv our
azure skies and our genial and exhilarating moun­
tain air. Our success in contributing to your en­
joyment will be the measure of our happiness.”
The first of the regular papers read at the meet­
ing was that of Mr. Felix Rackemann, counsel for
the Old Colony Trust Company, of Boston.
Mr.
Rackemann dealt with the subject of the “ Duties
and Liabilities of Trust Companies Acting as Trans­
fer Agents and Registrars.” His treatise (for such
it may not improperly be called) shows him to be a
clear thinker, and possessed of keen powers of analy­
sis.
Presumably, every Trust Company has taken
pains to ascertain its duties and liabilities when act­
ing in the capacity here mentioned, but Mr. Racke­
mann presents some things in a new light, and as no
company can afford to leave any point uncovered in
the discharge of so important a function, the man­
agers of these institutions owe it to themselves to
give thoughtful consideration to what Mr. Racke­
mann says. In dealing with the branch of his sub­
ject devoted to a discussion of the duties and liabil­
ities attending the exercise of the function of Regis­



11

trars, so-called, of corporate securities, the author
points out that the practice of having stock certifi­
cates signed by a Registrar in addition to the Transfer Agent resulted from the disclosures in 1863 of
what are known as the “ Schuyler Frauds.” Robert
Schuyler was the President of the New York &
New Haven Railroad Company. He was also con­
stituted transfer agent. A t the same time his firm
was engaged as stock brokers. Out of the double
relations there arose the charge of fraud and the
over issue of many thousand shares of stock. This
scandal, and other similar occurrences, which came
up about the same time, induced the New York
Stock Exchange, in January, 1869, to adopt a regu­
lation or by-law, requiring that the shares of all
active stocks should be registered at some agenev
approved by the Exchange. Mr. Rackemann sug- 1
gests changes in the methods of registration, so as
to remove misapprehensions as to the significance to
be attached to the act of registration and to define
the Registrar’s duties under the act.
Part of the programme of the “ Trust Company
Section consisted of a symposium of papers on the
subject “ Why Trust Companies Are Better
Equipped than Individuals to Act in Trust Capac­
ities.” Different branches of this subject were as­
signed to different speakers.
Mr. W. E . Fisse.
Counsel for the Lincoln Trust Company, St. Louis,
in discoursing on Trust Companies as Trustee under
a Will, pointed out that these companies are a dis­
tinctively American institution. No trace of the ex­
istence or operation of associations of this character,
he claims, is to be found in either the general or the
legal literature of foreign countries. He sets out ac
length the advantages which must result from the
selection of a corporate agent as trustee— such as
security for the funds of the estate, integrity in ad­
ministration, promptness in the dispatch of business,
unbroken continuity in management made possible*
because corporate concerns are beyond the accident
of interruption by sickness or death, etc., etc. These
are general advantages. He also enumerates many
special reasons why a Trust Company should be pre­
ferred to an individual as an agent for carrying out
the wishes of a testator. He notes a marked tend­
ency to adopt schemes of testamentary disposition,
whereby the donees are restrained of the full do­
minion over the property given to them.
Mr. F. B. Gibson, of the International Trust
Company, Denver, discussed the closely related
question, why it is best to select Trust Companies
as Executors and Administrators,” and makes out
a strong case. Mr. Arthur Heurtley, Secretary of
the Northern Trust Company, Chicago, shows why
the Trust Company must be preferred “ as Trustee
Under Private Agreement.” With the limited space
at our command in this article, we cannot undertake
to furnish even an outline of these remarks.
Mr.
Heurtley sums up by saying that the individual can­
not and does not offer as trustee the stability, se­
curity and experience that are afforded by a Trust
Company.
A s to the Superiority of Trust Companies to
Individuals as Assignee and Receiver,” President
John H. Holliday, of the Union Trust Company, In­
dianapolis, says that so far as he can learn no Trust

BA N KERS’

12

C O N V E N T IO N .

Company in this country has defaulted in its capac­
ity as trustee. The few instances of companies fail­
ing have not involved the trust estates committed to
their charge.
He lays great stress on the advan­
tage which the possession of ample capital gives
the Trust Company for acting as receiver or as­
signee. To the genial Secretary of the Trust Com­
pany Section— we mean Mr. Anton G. Hodenpyl,
o;f the Michigan Trust, Grand Rapids—was as­
signed the task of proving that the Trust Companv
is especially well fitted to act “ As Guardian of
Minors and Incompetent Persons.” Mr. Hoder.
pyl has to confess to one instance where the Trust
Company was at a disadvantage and came near be­
ing baffled, but where the ingenuity of the officers
of the company came to its rescue and happily solved
the problem. The experience had an amusing ele­
ment in it, and we will let Mr. Hodenpyl relate it in
his own words.
“ Some years ago,” he says, “ we were guardian
of the person and estate of a young and handsome
widow of nineteen, who became infatuated with a
man already married and father of two children.
Briefly he proposed an elopement, which, of course,
would have resulted in the moral destruction of our
ward. Argument and persuasion were of no avail.
She knew it was wrong, but could not resist the
wiles of the destroyer.
Argument with the man
was met with defiance on his part. Thefe was np,
legal method by which we could separate the couple.
A father under such circumstances would have
thrashed the man in the case. We regarded ourselves as standing in the position of a father to the
woman, but naturally did not care to do the thrash­
ing, so we employed a man to take this off our hands,
and he did this work very thoroughly, and according
to contract. The young woman was at the station
at the time, ready to start with her lover, but
through our intervention he was not in presentable
condition, and failed to join her. Our act was il­
legal.
We should not have taken the law in our
own hands, but unless we did it the woman would
have been ruined for life.
We have always been
satisfied that we were justified in the act.
The
sequel is that the young woman married a very es.timable gentleman,, and now lives happily several
thousand miles away from the exciting scene, and
1 may add that she feels very grateful to the guar­
dian for its illegal act performed in her behalf.”
THE BUSINESS OUTLOOK.
By O. D.

A

sh ley,

President Wabash Railroad.

The conditions of trade and industry in the
United States, as illustrated in the statistics of the
fiscal year ending June 30, are so remarkable that
men are led irresistibly to very sanguine expecta­
tions and optimistic conclusions, even when dis­
posed to tone down the colors of the picture to tints
of less exaggerated hue.
A t the close of the fiscal year, June 30, 1897,
the country was treated to an exhibit of trade sta­
tistics unequaled in our commercial history viz., a
statement showing a balance of $287,000,000 in the
value of merchandise exports over imports. This
astonishing result is now followed by a statement



for the year ending June 30, 1898, which seems in­
credible, inasmuch as it gives the country a bal­
ance of $615,000,000 in exports over imports, or
more than double the great sum produced in 1897*
I f such figures had been predicted two years since,
the prophet would have been considered the vic­
tim of a wild dream, for even with very hopeful
views no one could have imagined so great a change
in the current of trade.
Following up this statement with an analysis of
the exports which compose this extraordinary ag­
gregate, we find a large item of the increase to be in
grain exports, and especially in wheat— not only in
the quantity but in the value of the product. A
similar increase in quantity extends to corn and
other cereals, accompanied by a sympathetic ad­
vance in their value, although by no means equal to
the change in wheat. We can readily understand
that an active stimulus has been given to the export
of these agricultural products by the comparatively
short crops in Europe. Abundant harvests in this
country have of necessity supplied the deficiencies
of Europe, and at the same time for the same rea­
sons enhanced the market value of the products.
The increased export of food products in quantity
and in value is, therefore, accounted for as the nattitld consequence of crop conditions, and if our
.large gain in exports had been confined to breadstuffs there would be nothing to excite surprise.
But as we continue the analysis of exports
we are brought to the consideration of items
in our export trade which open a new and very
encouraging view of our industrial expansion. We
have been not only supplying the outside world
with bread and provisions, but have added exten­
sively to the aggregate by manufactures which ap­
pear to have competed successfully with those of
other countries, where cheaper labor would, natu­
rally, have placed us at a disadvantage. Thus we
have exported manufactures of iron and steel, loco­
motive engines, steel rails, machinery, agricultural
implements, bicycles, and other articles which have
attracted the manufacturing enterprise of the coun­
try. In cotton and petroleum, too, the exports ex- ‘
ceed in quantity the records of any previous year,
although in market prices the comparison is not so
favorable.
These very remarkable features in our foreign
trade have been made the subject of intelligent
comment in commercial editorials, accompanied by
statistics which it would be superfluous to repeat.
They constitute, however, the bases of favorable an­
ticipations in regard to the future prosperity of the
country, and must be constantly borne in mind in
order to make a trustworthy forecast of trade and
industrial development. Precisely the same satis­
factory conditions were recognized in the early
spring from the monthly statements up to that
period, but these expectations were suddenly neutral­
ized by the outbreak of the war with Spain in April.
The influence of this interruption upon the business
interests of the country could not, of course, be ac­
curately predicted, although the inequality of the
belligerents led to belief in a brief interference only.
As it now appears, this opinion of but slight effect,

B A N K E R S ’ C O N V E N T IO N .
comparatively speaking, has been justified by the
results, and the country is now established, so far as
its commercial, industrial and financial affairs are
concerned, in the statu quo ante helium.
It is, therefore, in order to take up the threads of
the subject as they were left in April, and weave the
fabric of anticipation by reuniting them, and adding
to their strength by the statistical facts which have
since been developed in completing the foreign trade
record of the year.
Thus far, according to the figures given, an
argument in favor of great prosperity in the near
future, of overwhelming strength, is furnished, but
it is necessary to examine at thfe same time the con­
dition of home industries, agricultural, manufactur­
ing and mining, as well as the financial affairs of the
country, and, collaterally, the transportation inter­
ests, all of which must be considered in making up
an intelligent diagnosis of the case.
A s to our agricultural interest, it needs but little
proof to establish a belief in its very great prosperity
beyond what is furnished by the crop and market
statistics during the years 1896, 1897 and 1898.
Satisfactory harvests and full prices for wheat, corn,
oats and hay have enabled farmers to pay off mort­
gages and accumulate surplus capital, and it is by no
means an exaggeration to say, that at no period
for many years have the results of this description
of agriculture been so gratifying and successful.
In cotton, while as to price there is less reason
for exultation, there has been an immense increase
in crops, and it is not unreasonable to suppose that
with the improved methods of planting, cultivation
and economy in labor, the profits have been fairly
remunerative.
It is not practicable within the limits of this
paper to follow up these inquiries as to tobacco and
many of the minor products of agriculture, nor as to
the profits on petroleum; but if we may rely upon a
consensus of general opinion, the conclusion is
favorable to fairly prosperous conditions in these
departments of industry.
In regard to manufacture, it is difficult to form
any trustworthy opinion, especially as to textile
fabrics of wool and cotton. In these last the im­
pression given to people who depend upon market
reports and labor statistics is not wholly satisfac­
tory, although in the South the accounts are more
favorable than at the North. Some doubts may be
entertained also as to the profitable results in man­
ufactures of iron and steel, although recent devel­
opments are more promising. Coal mining, whether
in anthracite or bituminous, has been somewhat un­
successful during the past two years, but it is evi­
dent that the evil, if it can be so called, of over­
production has been the principal cause of the ad­
verse conditions. It would be curious and interest­
ing, at this point, to show by statistical exhibits the
influence of the well established supply and demand
principle upon the profits of production and manu­
facture. The tendency in a country peopled by an
enterprising, industrious and energetic race is to
overdo constantly, and the inevitable consequence is
over-production and lower prices. And so in every
great industry which attracts attention, whether in




13

agriculture, manufacturing, mining or transporta­
tion, the element of competition is always apt to be
abnormally developed to the temporary prejudice of
the agencies of development, but to the benefit of
the consumers, which is also temporary. Thus coal,
iron, copper and petroleum are brought from the
depths of the earth in vast quantities, and its surface
is covered with superabundant crops, while manu­
factories are multiplied, until the markets are glut­
ted and prices fall below the cost of production.
Such a review of the industrial production of
the country, embracing a statement of its enormous
growth during the last decade, would illustrate the
present situation with regard to the manufacturing
and mining features before referred to. It would
prove that there is nothing strange in the prevalence
of depression in some branches of business, while in
others there is comparative prosperity.
Human
intelligence has never yet been able to regulate pro­
duction by probable or possible consumption, nor
can such foresight be expected. > It is, however,
quite practicable to limit production, from time to
time, to the demands of consumption.
Taking into view the time-worn argument of
supply and demand, it is. safe to say that, upon the
whole, the country has been making satisfactory
progress in general industry.
A t this stage of investigation it is not inappro­
priate to allude to the importance of foreign mar­
kets to a country like this, teeming to overflow with
agricultural products and manufactured articles.
The reciprocity clause in our tariff legislation seems
to recognize this need of expanding markets, and to
chat extent would appear to neutralize its protective
features where they approach prohibitory enact­
ments. At all events, it is obvious that if this coun­
try is likely to become such an immense producer, it
cannot be confined to the home market without re­
stricting the growth of our manufacturing indus­
tries and contracting the area of agricultural pro­
duction. We are thus brought face to face with a
piobiem in the domain of industry, which will re­
quire the most judicious and intelligent considera­
tion on the part of our legislators. Within the last
decade, protective trade walls have been reared in
some of the leading nations of Europe, such as
France and Germany, and many of our products are
thus practically shut out of those markets, because
we are not allowed to compete upon equal terms.
Now, if reciprocity can break down any of these
artificial barriers by opening the doors of trade on
both sides, it would appear to be the adoption of
intelligent but, at the same time, retrograde meas­
ures, not in harmony with high protective theories.
A striking illustration of the growth of our
manufacturing industry and its progressive occupa­
tion of the markets, domestic and foreign, is fur­
nished in the statement of exports and imports of
manufactured iron and steel for 1880 and 1898:
In
In
In
In

1880 the imports were valued at........................... $71,266,000
1880 the exports were valued at .......................
14,716,000
1898 the Imports were valued a t . . . . .................... 12,615,000
1898 the exports were valued at............................. 70,367,000

That is to say, we have in nineteen years completely
reversed the position. Quoting from an intelligent
article upon the subject in the New York Evening

14

B A N K E R S ’ C O N V E N T IO N .

Post: “ American manufactures have since 1880
taken possession of five-sixths of that portion of the
home market which was formerly held by foreign
manufactures of iron and steel, and have at the
same time increased their own sales in foreign mar­
kets 400 per cent.”
An examination of the items of merchandise ex­
ports in the fiscal year ending June 30, 1898, and
making up the grand aggregate of $1,231,000,000,
will show other remarkable instances of growth in
our supplies to foreign markets, all teaching a lesson
of practical value to students of economical science.
It is not material whether this great result has been
promoted by a protective tariff, which, according to
its advocates, has encouraged and developed skill
and economy in manufactures, or whether it is due
to extraordinary richness in the fields of production
and to adverse conditions in foreign markets. The
one important fact is, that this country has become
a competitor in foreign markets with the foremost
nations of the world, and the vital question is, How
can we maintain that position?
Hence the subject of reciprocal trade with the
leading commercial nations of the world must be­
come more interesting and more important.
As
now presented to the business community the im­
port and export statistics of the last fiscal year are
one of the strongest arguments in favor of future
prosperity which can be advanced, but whether
these statistics are the record of phenomenal and
temporary conditions, or an improvement in our
commercial affairs which may be permanent, is a
pertinent and important question. It would be an
over-sanguine view to anticipate a continuance of
such results as the figures of 1897 and 1898 estab­
lish. Imports are likely to increase largely, in sup­
plying the wants of people who have added so much
to their pecuniary means, and it would be unwise to
count upon a continuance of the enormous grain
exports of the same period. But although it is quite
probable that a decided change will take place in
these respects, the country can easily bear a reduc­
tion in the apparent trade balance and still enjoy a
high state of prosperity.
The transportation interest, mainly represented
by the railway lines of the country, has bright pros­
pects, so far as the volume of traffic is a factor in the
case, inasmuch as good crops appear to be assured,
and the general business of the country seems
equally promising.
Much, however, will depend
upon the regulation of a competition often severe
enough to neutralize the advantage of abundant
crops and more active trade. In short, the main­
tenance of fair rates is quite as important to the
agencies of transportation as the volume of traffic.
I f common sense governs railway administration,
the future may be considered very promising.
The subject of currency reform should not be
ignored by those who are trying to forecast the
future, and to shape their own business projects ac­
cordingly. The necessity of sound legislation in




this direction seems too obvious to require much
argument. There is but little difference of opinion
among business men as to this; but in the multitude
of plans advocated we may possibly find the chief
obstacle to a successful solution of the question.
For this reason it is of vital importance to eliminate
from the discussion individual preferences, when it
is possible to agree upon the essential features of
proposed legislation. I f concessions here and there
are practicable, without violating the substantial
principles of sound currency reform, it would seem
to be wise and judicious to unite upon a bill which
will be most likely to harmonize conflicting opinions
and overcome opposition. The country needs cur­
rency reform, but all plans to accomplish it cannot
be adopted, and the main object is so vital to the
permanence of business prosperity that time should
not be wasted in efforts to carry minor points which
may, perhaps, defeat the great end sought to be
accomplished. *
Under such an impression of the necessity of
adopting substantial currency reform, the writer ab­
stains from any criticism of the bill recommended
by the Indianapolis Monetary Convention, although
some objections to minor clauses in the plan could
easily be formulated. The great want of the busi­
ness community is a healthy and permanent reform
in our currency. To attain success in that direction
there should be no quibbling over trivial points, and
no puerile vanity expressed in the desire to give one
plan preference over another, so long as the princi­
pal objects of safety and stability are kept in view.
There may be defects in the proposed measures
which will become evident in practical operation;
but, if so, amendments can be added from time to
time. It will be far better to try this plan than to
flounder for years, perhaps, in this uncertainty and
danger.
Bringing to a focus the rays of light which bear
upon the future, it must appear, even to conservative
men, that seldom in the commercial history of the
country have the conditions been so favorable to its
great prosperity. The stimulus to new enterprise
and industrial activity is strengthened by a com­
bination of circumstances which implies confidence
among those who constitute the motive power in
every well-founded business expansion.
I f any
danger lurks beneath these signs of improvement, it
is more likely to come from excessive activity and
undue inflation than from any error in the statement
of conditions. It is very difficult to regulate these
waves of business progress, or to check their flow
in directions so plainly indicated, but it is not out of
place to remind students of such changes in the cur­
rents of trade, industry and enterprise, that the more
rapid and extensive these movements are, the more
severe will be the inevitable reaction. The strong­
est basis for a substantial and durable improvement
will be found in careful and intelligent movement
on the part of the leaders in the world of trade, in­
dustry and finance.

BAN KIN G

SECTION

A merican B ankers ' A ssociation .
Twenty-fourth

Annual

Convention,

Held

August

23,

24

and

25.

Pages 26
Pages 28
Pages 31
Pages 34
Pages 36

to 27
to 31
to 33
to 57
to 40

INDEX TO CONVENTION PROCEEDINGS.
Pages 15 to
Pages 18 to
Pages 21 to
Pages 23 to
Pages 25 to

Uniform Laws for Holidays» Etc.»
Need of Rural Banking Facilities»
Banking and Industrial Development»
Patriotic Spirit of Bankers» The Bank Clerk»
-

18
21
23
25
26

Safeguards Against Check Raising,
Thirty-seven Years in a Bank,
The Country Banker,
Detailed Proceedings,
President Hendrix's Address,

Uniform Laws fo r Holidays as W ell as Days o f Grace.
c'

By

G eorge

M.

R

eynolds,

Cashier Continental National Bank of Chicago.

Days of grace were originally allowed by the custom
of merchants as a matter of favor or indulgence, as ap­
pears from the name itself applied to these days. Later
the custom received the sanction of the courts, and grew
into the unwritten or common law, and finally it was
enacted into the statutory law of England in 1705 by the
statute 3 and 4 Anne. The practice of allowing as a
favor a number of days within which to make payment
after a bill falls due is not confined to the common law,
but prevails in many if not most of the States of Conti­
nental Europe. In fact, it may almost "be said to be a
universal rule of the commercial world to thus allow
more time for the payment than appears upon the face
of the bill.
The custom doubtless had its origin in the early days
of commercial transactions, when money as a medium
of exchange was not uniform, and the primitive methods
of communication and travel caused the merchants to
meet with difficulty in obtaining sufficient specie to meet
their payments, and as a matter of favor the payees
permitted them a few days in which to get together suffi­
cient coin of the realm to settle their bills. It would
seem in these days of large commercial transactions,
when the great bulk of the business of the commercial
world is transacted without the actual passing of money,
that the reason for the granting of three days’ indul­
gence has entirely disappeared, and with the disappear­
ance of the reason of the law it is the opinion of many
that the law itself should change, and days of grace no
longer be allowed.
The custom of allowing days of grace is deeply fixed
in the laws of the commercial nations, but the number
of days originally allowed varied all the way from three
days, the prevailing time in England, Ireland and the
United States, to thirty days in Genoa. In Frankforton-the-Main it appears to be four days; in Sweden six;
in Bremen and Denmark eight; in Russia and Hamburg
twelve; in Rome and Brazil fifteen; in Spain fourteen,
and, as indicated, in Genoa thirty days. These matters
are controlled more or less by statute and are subject to
change, and my figures may not be accurate at this time,
but they show the prevailing custom in the different
countries. The tendency is toward the allowance of
fewer days of grace in the countries of Continental Eu­
rope, and, in fact, it may be said to be toward the aboli­
tion of all days of grace. When Spain and some of the
other countries of Continental Europe become provinces
of the United States, as they bid fair to become if the
present policy of the Spaniards is pursued, it is reason­
able to presume that more enlightened commercial laws
will be introduced, and that the days of grace will be
diminished.




By examination of the authorities published as late
as 1890, I find that it is said that no days of grace are
recognized in Amsterdam, Antwerp, France, Germany,
Leghorn, Leipsic or Naples. And another authority says
that Genoa has abolished her thirty days of grace above
referred to.
On the uniformity of the custom Chief Justice Mar­
shall may be quoted, speaking in the case of Washington
National Bank vs. Triplett, 1 Peters, 25: “ The allowance
of days of grace is a usage which pervades the whole
commercial world. It is now universally understood to
enter into every bill or note of a mercantile character,
and to form so completely a part of the contract that
the bill does not become due in fact or in law on the day
mentioned in its face, but on the last day of grace.”
Under the rules of the law merchant, independent of
statute, I believe the commonly accepted view of the
best authorities on commercial paper is to the effect that
all bills of exchange or negotiable notes, except those
payable on demand without specification of time, and
except, of course, those expressly without grace, are en­
titled to three days of grace. The question whether
sight paper is so entitled under the law merchant has
been somewhat of mooted question, and has formed the
basis of much expensive and annoying litigation, but
the great weight of authority, both of text writers and
adjudicated cases, is in favor of the proposition that a
bill drawn at sight is entitled to grace.
When grace is allowed at all in the United States, the
number of days is practically uniform, though at one
time I find four days allowed in the District of Columbia
on paper negotiated in bank, and I believe it was held in
one Kentucky case that, where the statute does not fix
the number of days of grace, it is fixed by the law mer­
chant, and as the law merchant varies in different places,
the custom governing in a given place might be proven,
and thus it might be shown that it was different from
the original three days.
The law merchant and the common law, of course,
must give way to the statutory enactment, and I find
that the legislatures of the various States of the Union,
without exception so far as I know, have from time to
time enacted laws which are either declaratory of the
law merchant or in derogation of it, more frequently the
latter. And thereby the absolute or practical certainty
of the law which prevailed under the law merchant has
been interfered with, and we have as many different
laws concerning commercial paper as there are States
in the Union. As an instance of the passage of statutes
which are declaratory of the common law, I find that in
Iowa there is a law declaring that demand paper is not
entitled to grace. But this was without doubt the law

16

BAN KERS

prior to the enactment of such a statute, and it has no
effect. As an instance of enactments derogatory of the
common law may be cited Colorado, Connecticut, Cali­
fornia, District of Columbia, Illinois, Montana, New
York, North Dakota, Ohio, Oregon, Pennsylvania, Ver­
mont and Wisconsin, where all days of grace are abol­
ished. This meddling by the legislatures of the several
States with the law merchant has resulted in great con­
fusion, and has made that uncertain which was for­
merly certain. And before the banker in Colorado can
know when the note which he sends to New York for
collection will be due, he must inform himself of the
statutory law of New York, and vice versa.
The remedy for the conditions prevailing is found
either in no statutory legislation, or else in uniform stat­
utory legislation, which we cannot hope to attain, unless,
indeed, all the States might be brought to the position of
New York, Illinois and California, and some other com­
mercial States, which have taken the common-sense
view of declaring that a note shall be due and payable
at the time named on its face. Opposed to the sugges­
tion that the remedy might be found in no legislation,
and thus leaving the matter to the law merchant, are
several decisions of the Supreme Court of the United
States, concurred in by other high authorities, to the
effect that the usages of banks in particular localities
may establish laws varying from the general law mer­
chant. But this is a detail which it is hardly worth
while to go into in this connection. See Section No. 623
in the first volume of Daniel on “ Negotiable Instru­
ments.”
The law with relation to holidays in commercial mat­
ters is intimately and inseparably associated and con­
nected with the law with reference to days of grace.
It often becomes of the utmost importance to the banker
to know how commercial paper which falls due on holi­
days shall be treated as to presentment, demand, protest,
etc. The law merchant was sufficiently certain in this
respect, and even more certain than in respect to what
bills were entitled to grace, and it is well settled under
the law merchant, independent of statute, that a bill
entitled to grace, where the last day of grace is a holi­
day or a Sunday, which in law is a holiday, is payable
on the day preceding such holiday or Sunday. Whereas,
under the same Jaw merchant, a bill without grace fall­
ing due by its terms on a Sunday or a holiday, by opera­
tion of law is due on the day after such holiday or Sun­
day. This distinction grew out of the origin of the cus­
tom of allowing days of grace, a custom, it will be re­
membered, which was originally an indulgence, and the
reasoning was that, while the payee did indulge the
payor for three days, yet, if the last of the three days
was a Sunday or a holiday, there was no reason why
the payee should indulge him a fourth day; and so the
law merchant settled it that payment, etc., should be
made on the day preceding such holiday. While, in the
case of the non-negotiable bill, or the one not entitled to
grace, the payor could not be expected to pay the bill
until it was actually due, and so the payee must wait
until the next secular day. All this matter as to when a
bill falling due on a holiday shall really become due and
payable, which was then sufficiently certain under the
law merchant, has likewise been interfered with by
statutory legislation in the different States. In seven
States we find that where the last day of grace falls on
a holiday the bill, by statutory enactment merely declar­
atory of the law merchant, says that it is due and pay­
able on the day preceding such holiday. While in other
States, in derogation of the common law, we find statutes
which say that a bill on which the last day of grace is
a holiday or Sunday becomes due and is payable on the
next succeeding business day.
All this is productive of very great confusion and
annoyance, because of the uncertainty in which it leaves
the law. The remedy for this confusion, likewise, would
be found in no legislation, which would make, as above
pointed out, all bills fall due on the day preceding the
holiday if with grace, or the day after the holiday if




C O N V E N T IO N .
without grace. Of course, it goes without saying that
the allowance or non-allowance of grace, and the ques­
tion as to when a bill becomes payable with reference to
a holiday, and the question as to what days are holidays,
are governed by the law of the place of payment, and
not by the law of the place where the contract was made
or the bill is drawn.
This brings me to the consideration of another im­
portant question in connection with the treatment of
commercial paper as to grace and holidays, and that is,
the days which are treated as holidays. There are two
classes of holidays for bankers; those called legal holi­
days, and those which are holidays only by custom of
the community in which they are observed. In observ­
ing legal liolidays, bankers find no difficult questions
arising, for on such days they do not open their offices
and do not therefore transact any business; but days
which are not legal holidays, but are holidays only by
custom, are a source of much annoyance, and it is very
perplexing indeed for bankers to know how to treat
paper maturing in their own and other States upon such
so-called holidays. I find upon a hasty examination
that no less than twenty-six secular days are considered
as holidays in the various States of the Union. With­
out attempting to detail the days that are holidays for
each State I furnish you with the following table, which
shows what days are holidays, but does not attempt to
show the States within which they are so declared to be
holidays:
January 1, 8, 19; February 6,
first Wednesday, 19, 26; May 1,
September, first Monday, 9, 12;
tion Day, Thanksgiving Day, 25;

12, 22; March 4, 21; April,
20, 30; June 3; July 4, 24,
October 31; November, Elec­
December 25.

Besides the days shown in the above table, in many
of the States of the Union, notably New York and Mas­
sachusetts, Saturday afternoon has been declared a half­
holiday, and In many of the States I find a law prevail­
ing to the effect that where certain holidays, such as
New Year, Washington’s Birthday, Memorial Day, July
Fourth and Christmas, fall on Sunday, then the next
succeeding Monday is a holiday. And sometimes there
are provisions that commercial paper falling due on a
Sunday, which is also a holiday, shall be due and payable
on the Saturday preceding, and sometimes there are
provisions that such a paper becomes due on the next suc­
ceeding business day or on the following Tuesday. As an
illustration of this, the bank with which I am connected
recently sent for collection to a bank in a distant city an
item which matured on a Monday which was a holiday
In that State. The collecting banker being in doubt as to
the proper interpretation of the law, protested the item
for non-payment on Saturday, and, it still remaining un­
paid, again protested the same item on Tuesday. I also
find numerous and varying provisions as to paper fall­
ing due on Saturday which is declared by the statutes to
be a half-holiday in the afternoon, and the provisions
vary greatly in the different States. I made a hasty ex­
amination of the statutory law in a number of the States
with reference to grace, holidays, etc., and I might sum­
marize my examination as follows;
Arkansas—grace according to the law merchant. Bills fall­
ing due on a holiday are payable on the preceding day, but
notice of protest, etc., may be given on the next succeeding
day.
California—no grace is allowed; and, as to when a bill fall­
ing due on a holiday becomes payable, they follow the rule of
the law merchant, and It is payable on the next succeeding
business day.
Iowa—grace is allowed on notes, acceptances and sight
drafts. No grace on demand drafts.
A bill maturing on a
Sunday or a holiday is due and payable the next succeeding
business day.
Illinois—no grace allowed. Saturday is not a legal half holi­
day, although it is observed by custom in Chicago, all the year,
and bills maturing on Saturday are therefore payable on the
same day, while those maturing on a holiday or Sunday are
payable on the next succeeding business day.
New York—grace was abolished in 1894, and a bill falling
due on a holiday is payable on the next succeeding business
day, except in the case of a half holiday on Saturday, when the
bill is due and payable in the forenoon of such Saturday, but
notice, protest, etc., may be made on the next succeeding

B A N K IN G
secular day in case the bill is not paid by noon of the half holi­
day. There are many other details of the law which are quite
intricate in New York on the questions of holidays, present­
iment, etc.
In Massachusetts, the latest authority that I examined
showed that they allowed grace on sight paper, but not on de­
mand paper or checks, or when novtime was specified, and a
bill falling due on a holiday is payable on the next succeeding
business day.

The above details show beyond question, to my mind,
-that by the statutory enactments of the various States
the law merchant has sunk into inextricable confusion,
and no one thing has contributed more to this confusion
as to the certainty of time payment, etc., than the vari­
ous enactments in the matter of the days of grace, holi­
days, and the time when demand, protest, notice of
protest, presentment and payment, etc., must be made
with reference to holidays. The remedy would seem to
me to be in no statutory legislation on the subject, leav­
ing the law merchant to settle all these questions, or,
better still, would be in the utter abolition of days of
grace, since the reason for their existence has long since
passed. Uniformity of law can never be obtained in
this respect by statutory enactment, unless it be along
one or the other of these two lines. I do not believe it
can be along the line of no legislation on the subject,
for the reason that States like New York, Illinois, Cali­
fornia and Massachusetts, which have taken the ad­
vanced stand of abolishing days of grace, will never be
persuaded to take the backward step and repeal their
statutes on these matters.
The remedy must, therefore, be along the line of uni­
form legislation in the various States of the Union.
Modern methods of communication, and the present ex­
cellent facilities for transportation, as well as a uniform
medium of exchange, make a nuisance of that which
was doubtless a desirable if not a necessary practice at
the time of its inauguration, and days of grace having
long ago outlived their usefulness are relics of antiquity
that should be expunged from our statute books and
relegated to the archives of the antiquated.
Inasmuch as it is necessary to change but a single
section of a chapter of the laws on the statute books of a
State to abolish the days of grace allowed on a bill in
that State, it is quite past the comprehension of intelli­
gent business men that we do not now have uniform
laws on this subject, for days of grace and their aboli­
tion is a subject that has been much discussed before
this and the various State associations.
That laws allowing days of grace have not been re­
pealed in all the States is accounted for, I think, by the
fact that in the politics of this country there has been,
unfortunately, a growing feeling of antagonism toward
aggregated capital when it is employed in banking.
The conscientious law-maker, appreciating his good
judgment, consults the banker on the subject of pro­
posed legislation, and does all in his power to have
enacted laws which would be beneficial to commerce,
but the professional politician, knowing his views, not
only advocates the passage of laws directly opposite to
those proposed by him, but appeals to the prejudices of
the people to condemn the banker for having proposed
the passage of what the demagogue pleases to call meas­
ures favorable to the money power and oppressive to
the “ sons of toil.” As an evidence of the existence of
this antagonism toward banks and bankers I will read
a clipping from a newspaper published in a State where
days of grace are still allowed by law. It is as follows:
A movement is on foot to repeal the sections of the code
which relate to the days of grace. We do not see why these
sections should not be repealed. When the country was new,
mails uncertain, and intercourse limited, the maker of a note
was allowed three days after maturity in which to pay without
protest. It was a wise law at that time. We do not see the
necessity of it now. The farmer has to pay interest on these
three days, and he is not benefited in the least. It is more
■difficult to count interest on the odd days. It is more difficult
to make collections, ¡apd. we cannot see where the benefit comes
in to any person. It seems to be one of the good things which
are out of date. Sopae fifteen or twenty States have already
done away with days of grace, and we see no reason why this
State should not be among the number. We are suspicious of




S E C T IO N .

17

anything that is recommended by banks, but in this case we do
not see what harm there is in acting upon their suggestion.

I know that a determined effort was made by the
bankers of this State to have the law allowing days of
grace repealed, but the sentiment of opposing whatever
is proposed by bankers was so strong that the law was
not changed, and this State, though well to the front in
most things, continues to follow ancient practices in
this matter.
National holidays are not, in my opinion, too numer­
ous in this country.
On the contrary, I believe we ■
should have a greater number of such days and fewer
days made holidays by the law or custom in so many
different States. A day set apart by the nation as a legal
holiday in commemoration of some important event in
its history, should be observed by bankers and business
men generally. A proper observance of these holidays
will tend to develop a national spirit, and since freedom
of thought, speech and action in this country has brought
together as one nation representatives of almost every
nationality on the globe, it is desirable that we should
employ every available method to teach these people to
have a proper conception of our free^ institutions, and in­
culcate in them that spirit of patriotism which will
cause them to love our country and honor its flag.
National holidays are also desirable as days of rest
and recreation for the business man.
They promote
health and energy, and tend greatly to increase the effi­
ciency of those observing them. In the United States
competition in business has grown to be so sharp that
the successful business man finds it necessary to apply
himself very closely indeed if he would keep well in
front in the affairs of business, and certainly no class of
business men in the country work under a greater strain
and higher tension than do bankers. In the discharge
of their duties they from day to day draw upon their
nervous forces as large drafts as their physical system
will honor, and they go on from year to year utterly
oblivious of the fact that the human system, like the
finest steel, will eventually wear out, until finally their
physical system becomes insolvent and their drafts
against it for more nervous fluid are dishonored and go
to protest. Apropos of this thought, I beg your indul­
gence for a moment that I may read a very brief article
on the subject of I That Drop of Nervous Fluid,” taken
from the “ Murder of the Innocents,” written by Thomas
Wentworth Higginson in 1863. It is as follows:
If we fail (which I do not expect, I assure you), we fail
disastrously. If we succeed, if we bring up our vital and mus­
cular developments into due proportion with our nervous
energy, we shall have a race of men and women such as the
world never saw. Dolorosus, when, in the course o f human
events, you are next invited to give a Fourth of July Oration,
grasp at the opportunity, and take for your subject, “ Health.”
Tell your audience, when you rise to the accustomed flowers of
rhetoric as the day wears on, that health is the central lumi­
nary, of which all the stars that spangle the proud flag of our
common country are but satellites, and close with a hint to the
plumed emblem of our nation (pointing to the stuffed one which
will probably be exhibited on the platform), that she' should
not henceforward confine her energies to the hatching of short­
lived eaglets, but endeavor rather to educate a few full grown
birds.
As I take it, nature said some years since, “ Thus far the
English is my best race; but we have had Englishmen enough;
now for another turning of the globe and a further novelty.
We need something with a little more buoyancy than the Eng­
lishman; let us lighten the structure even at some peril in
the process. Put in one drop more of nervous fluid and make
the American.” With that drop a new range of promise opened
on the human race, and a lighter, finer, more highly organized
type of mankind was born. With the new drop came new in­
toxication, new ardors, passions, ambitions, hopes, recreations
and despairs, more daring, more invention, more disease, more
insanity, forgetfulness at first, of the old, wholesome tradi­
tions of living, recklessness, of sin and saleratus, loss of re­
freshing sleep and of the power of play. To surmount all this
we have got to fight the good fight, I assure you, Dolorosus.
Nature is yet pledged to produce that finer type, and if wt:
miss it she will leave us to decay, like our predecessors—whirl
the globe over once more and choose a new place for a new
experiment.

The American business man needs and should take
more holidays or days of rest; days when he can dismiss
from his mind the details of business, and in the society

18

BA N KERS’

C O N V E N T IO N .

of his family and friends cultivate those traits of human
character which will convince him, if he would not be­
come narrow and selfish, that he must occasionally de­
part from his daily routine of business, mingle with
others and see the world, as is sometimes said, “ through
the eye-glasses of other people.” Nothing so broadens a
man as contact with his fellow-men, when matters of
mutual interest are discussed, each furnishing for the
other some new thought as the basis for some change in
present methods employed in business and social life.
Opportunities for this contact with others, outside of
business life, would be afforded by uniform laws for
holidays in all the States, thereby providing days which
would be observed by all the people of the Union.
One of the purposes of every practical Bankers’ Asso­
ciation is to secure uniformity of action on all questions
affecting the banking business—not only in securing and
establishing new laws and customs governing banking,
but also in weeding out the old which have been ren­
dered obsolete by changed conditions.
The banking
system of our country is the product of evolution rather
than the adaptation of any well defined and general
plan. The progress of this evolution has been marked by
an adaptation, more or less complete, to the demands of
business under the different conditions as found in the
various stages, working the rapid and most wonderful
development of our country. The growth of commerce
to its presept huge proportions has been in spite of
rather than because of favorable banking laws, and the
development of banking has been quite as much in
modifying or letting go entirely outgrown and obsolete
customs, and in the adoption of new customs more clear­
ly in accord with the new conditions. The development
of banking has been beset with difficulties ever since the
thirteen separate and original colonies, with all their
jealousies and suspicions of one another, agreed to pool
their issues and establish a common government. What
little interstate commerce was carried on then was

hampered and restricted as much as though each colony
had been a separate and remote nation. There was no
attempt at uniformity governing commercial transac­
tions. With different moneys and different standards of
money, as well as different local laws and customs gov­
erning commercial transactions, the only wonder is that
our commerce grew at all. From these conditions has
been evolved the banking regulations and laws of to­
day, following the rapid growth of commerce, but al­
ways a little behind, adapting itself as best it could ta
the requirements of the time rather than taking the
lead and fostering healthful conditions surrounding com­
merce, as many contend it should. Banking development
has heretofore been chiefly occupied in keeping up with
the commercial procession and in cutting loose from
customs and laws, wise in their day, but whose useful­
ness had been outlived. From the unfavorable commer­
cial relations of the early colonies there has been a con­
stant though slow growth in uniformity of law, espe­
cially in banking and commercial law. So much inter­
state business is now transacted that a uniformity of all
laws governing commercial transactions is not only de­
sirable, but, in justice to all, necessary.
The agitation of the question by this association has
done much toward the abolition of the days of grace
in States where no grace is now allowed on bills. It can,
by proper agitation of the subject, do much toward the
abolition of local holidays, legal and'otherwise, observed
in various States and cities, and the establishing of
more national holidays which will be observed by the
different States in the Union, thereby eliminating many
difficult questions which now annoy business men, on
account of the dissimilarity of days now observed as
holidays in the various States.
Let us continue our agitation of all these questions
until we have uniform laws in the matter of holidays,
days of grace, and, indeed, until all the laws governing
commercial transactions are uniform in all the States of
the Union.

The N eed o f Banking Facilities in R ural D istricts .
By W

il l ia m

L . R o y a l l , R ic h m o n d , V a .

Mr. Chairman and Gentlemen of the Convention:
The vast mass of the American people have yet to
learn the elementary propositions upon which true
finance is founded; to wit: that money has its own
value, and that its value does not come to it from law,
as the great bulk of the people believe to be the case;
that this value rests, like the value of everything else,
upon the labor required to produce it; that demand be­
ing conceded, if it takes a day’s labor to produce 23.22
grains of gold (what we call a dollar) and a day’s labor
to produce a bushel of wheat they are of the same value;
that the province of the dollar is to compare itself with
the commodity and determine that each embodies the
same amount of labor, whereupon we say a thousand
bushels of wheat are worth a thousand dollars; that
this being determined, business is not purchase and sale
of commodities for money, as the people believe, but
exchanges of them effected by swapping drafts for their
value in the banks; that the all important thing then
is to keep the money—the standard of value—always in­
tact, whereupon business is conducted by exchange of
credits, and these credits will swell out to any size re­
quired, furnishing all the money that can be used; and
that the all important thing after the preservation of
the standard of value is to give perfect freedom to
credits. The vast mass of the American people have yet
to learn these elementary truths, and yet they must al­
ways grope in the dark and be always producing con­
fusion until they do learn them.
The clamor of the day is for “ more money.” It is
the backbone of “ free silver.” To get “ more money,”
more than 6,000,000 of voters declared in ’96 for “ free
silver.” They were willing to take bad money to get




more money. This seems absurd, but there never yet
was a great popular movement like this without some
solid cause behind it. The fool pooh-poohs the whole
business. The wise man looks for the cause. Let us
take the part of the wise man.
When looking into the case the first fact to meet us is
abundance of money in the cities. But there is none in
the country, whence the clamor comes. I made an ad­
dress to the Banking and Currency Committee of the
House of Representatives, December 19, 1896, in which
I produced proof that the people in the agricultural dis­
tricts have no money at all. It is printed in “ Hearings
and Arguments Before the Committee on Banking and
Currency, House o f Representatives, Fifty-fourth Con­
gress, First and Second Sessions, 1896-97,” a volume to
be found in all public Libraries. I add the following:
D. H. Lynch, a real estate dealer in Richmond, Virginia,
received the following letter from a man in Nebraska, to
whom he had sold a farm:
C o l l in s , N e b r a s k a , December 29, 1896.
Money close here and I hard up at present. The Bank loans
money at 3 per cent, a month, when they got it, but ha’nt any
to loan now. Can’t borrow at all.
Yours truly,
S. H. R oberts.

This man had a farm in Nebraska worth $7,000, with
200 head of horses on it, and he could not borrow
enough money to move to Virginia. I have the letter
here, and any one may look at it. I assume every one
here knows the country people have no money, and I
shall not waste time proving it. Whoever fails to know
this can get full information from the address referred to.
People in the cities have plenty of money, because
they use scarcely any. They do all their business with

B A N K IN G
cheeks, and need enough only to go to market and pay
street car fare.
But in the agricultural districts there are no banks
tor the people to check on. Every one knows this to be
a fact. Why is it ? Because the tax of 10 per cent, on
the issues of State banks makes any but National banks
impracticable.
The National banks are founded on
National Bonds, of which the farmers have none, and
they are anti-rural also in their nature. There are no
banks in the country then for the country people to
check upon, and checks are unavailing to them. A
check is of no use to a Cowboy on the Plains. The
country people must have actual cash for their affairs,
And yet they have none. Why is this ? It is because all
•of our money is good as its face in every part of the
United States—gold because of its intrinsic value, silver
because the Government practically gives gold for it,
.and greenbacks and National bank notes because the
one is the Government’s note and the other bears its
-endorsement. This being so all of it goes to the Com­
mercial centers, and leaves the country people destitute.
I am not giving a reason why it all goes to the Com­
mercial centers, though I have a reason that is perfectly
satisfactory to myself at least. I am only stating the
fact now, and of that there is no sort of room for doubt.
For proof, I may add to what I have said the following:
We hear every fall that money is scarce and interest
liigh in New York, because all the money has been sent
West to move the grain, and South to move the cotton.
This money is not used to buy grain and cotton. That
is all paid for with exchange. It is used principally to
pay labor and, therefore, gets spread out amongst the
people. But in three months’ time it has all returned to
New York, interest is again normal there, the country
-districts are again destitute of money, and the same
process must be repeated the next year.
So it is then that a condition of affairs has been
brought about in which one part of our country, the
-cities and towns, have plenty of money for their affairs,
while the country people are wholly destitute. This is
unjust, and it is wrong. The countryman naturally re­
sents it. He reads in his newspaper that the New
Yorker can borrow all the money he wants for 2 per
cent., while he, with valuable property, can get none at
10 per cent., and he feels that he is wronged. He is
wronged, and he has my deepest sympathy. There is
the seat of free silver’s strength, though if the farmer
•
only knew it, the Silver dollar would leave him just as
the greenback does. It would be good for its real value
-ah over the nation and, as it would become the sole
money, it also would go to the Commercial centers.
Free silver would only produce a general liquidation^
and then It would leave the farmer as greenbacks do.
' The great upheaval for free silver came then from the
country people, who joined forces with the idle work­
men of the cities that the threat of free silver threw out
of employment. It had its origin in the countryman’s
unsupplied need for money, and we will have to face it
again unless we remove the cause of the countryman’s
•discontent. This is the case that confronts the country.
Shall we allow it to remain as it is ? I say we should
not, and for two reasons:
,
First: It is unjust, and injustice always brings dis- aster.
Second: It will work up another free silver ghost, by
: some other name, if not free silver. That arrests enter­
prise, makes idle workmen in the cities, and multitudes
of unemployed everywhere. Then comes another un­
natural union between the farmers, who have no cur­
rency, and the unemployed of the cities to strain the
pillars of our institutions as they were strained in 1896.
We should remove the prime cause of all this, and there
is but one possible remedy—a banking system that will
permit each locality to bank upon such resources as it
“ has, with banks managed by local Directors, who are
-acquainted with the people of the neighborhood that re- quire banking accommodations. This last require_ ment is just as important as freedom in banking.




SE C T IO N .

19

The farmer can borrow no money from a National
Bank. They are all in the Commercial centers, and their
Directors have no personal acquaintance with the farm­
ers. Money is loaned upon knowledge of the borrow­
er’s character. The farmer applies to a National Bank
for a loan, and is told the Bank has no money, which
means it has none for him, because the Directors do not
know him. I repeat then that the sine qua non for
peace and order in the United States is a banking sys­
tem that will permit each locality to bank as it pleases
upon such assets as it has, and will secure for the Di­
rectors o f the local banks, local men who are acquainted
with the people living around them. The whole case
rests right there. This amendment o f the law would
carry the remedy to the seat o f the disease. But we
will never have peace and contentment until our bank­
ing system allows these two measures. The farmers will
always be without banking facilities and discontented,
therefore, under the present system, and until they can
have their local banks based upon such property as they
have, whose Directors know them and will grant them
the accommodation they need. But allow a locality to
have perfect freedom and the facilities for banking on
what it has, and it will have, relatively, as many bank­
ing resources as Wall Street has. Its system may be
one that Wall Street will spurn. But if it supplies the
needs of that locality of what consequence is Wall
Street’s contempt ? To have these local banks it is es­
sential that they Shall be allowed to issue their circulat­
ing notes, because a very great proportion of them
would do a very limited business, and with a small cap­
ital, and they must be permitted to supplement their
capital by notes in order to have resources enough to do
a paying business. I know the prejudice against State
Banks will never permit the re-establishment of them,
and I do not argue for them. But all of their advan­
tages can be secured without a resort to them. Permit
National Banks to issue as many notes as their Direct­
ors think proper, and upon the security of the assets of
the bank only subject to as rigid inspection by the Gov­
ernment as can be asked, and the Gordian Knot will
be cut.
Suppose a bank in the interior of Texas with a half
million of dollars’ worth of property, convertible into
that much gold, should put out five hundred thousand
dollars of its notes upon the security of its own assets
only. The bank being unknown in New York city, its
notes would not be accepted there. But all the people
of Texas living anywhere near the Bank would know
that it was perfectly solvent, that its notes were per-"
fectly good, and the notes would, therefore, circulate as
money amongst those people.
Is it right that they
should be kept, as they now are, destitute of all means
by which they can- conduct their business merely be­
cause Wall Street does not desire to take the notes
whose character it does not know about ?
Let no man suppose I am an inflationist. I am a
single standard gold man of the extremest type.
I
would require a bank to pay gold for its notes on de­
mand, or to be instantly put into liquidation through
Receivers. The only trouble my views give me is the
fact that the inflationists also call for the repeal of the
tax on State Bank notes. But we are as far apart
everywhere else as the two poles. I want to give the
industrious man an opportunity to make use of his re­
sources, but under the severest restrictions. They want
to help the cause of cheap money, and to legislate money
into the pockets of those who are too lazy to work for it.
Though we both work for one thing—that is, the repeal
of the 10 per cent, tax on notes—there is nothing else in
common between us. But why should these Texans be
kept in their present state of destitution when they are
entirely capable of supplying themselves with every­
thing they need if they are only granted freedom to use
their own resources in such a way as will bring them
the best results ? The answer to this question in every
man’s mind is, because they will put out notes that will
get into general circulation all over the United States,

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BA N KERS’

C O N V E N T IO N .

all of which being at a discount and many of which
proving worthless will thus cause losses to innocent and
unsuspecting people. I think the possibility of evil is
very greatly exaggerated.
Before the war the notes of State Banks caused
trouble. But why ? Our steam and electrical develop­
ment was very imperfect, and when State Bank notes
once got into a community it was hard to get them out
of it. A North Carolina customer of a Richmond, Va..
merchant would inevitably tender North Carolina notes
that he had had to receive in settlement of his account,
and the desire to keep on good terms with his customer
would make the Richmond merchant accept them, and
as there was no rapid communication between Rich­
mond and the issuing bank, they would get out into
circulation in Richmond and remain there to the annoy­
ance of the people until they were bought up by brokers
and sent back to North Carolina. But every part of the
country is now intersected with rapid means of com­
munication, and all parts are in instant touch of each
other. A North Carolina note would not be a day in
Richmond before it would be hurrying back to the bank
that issued it, with a demand for payment of it in gold.
Besides, no interstate payments are now made with
cash. Our network of banking is so complete that ex­
change can now be sent to every point, if not exchange
on that point, exchange on New York or some other
point of general commerce, and all interstate payments
are made now with exchange. The notes of the local
banks would, therefore, never leave home now. The
people there would want them, the people away would
not want them, and they would stay where there was a
demand for them rather than go to a place that did not
want them.
The popular conception of a need for a currency note
that will circulate all over the country is an utter error.
Who needs such a note ? General business does not, be­
cause, as explained, general business is all done by ex­
change. No one needs 'it but travelers, and they can
protect themselves by carrying enough gold in their
pockets for current expenses and bank cheeks on the
cities to which they are going. The upshot of the busi­
ness then is that the general public would never see or
hear, under present conditions, of local bank notes, and
the rural communities that now have nothing to conduct
their business with would have all the media of ex­
change that they need. Because, as the notes of the
local banks, though perfectly good in fact, would not
be known away from home, the discount thus put upon
them would send them home whenever they strayed
away, for the use of the people who appreciated them
and for whose use they were issued. This is really the
ideal currency system. I don’t know that I can do
better than to illustrate with the facts in one State prior
to the Civil War, as the records show them, and I take
my own State, Virginia.
In 1861 Virginia had 1,500,000 people, but 500,000 of
them were slaves, incapable of contracting, so that for
the purpose of the case she had 1,000,000 of people. Her
banks, for twenty-five years, had had out ten millions of
dollars of notes that circulated at par all over the State,
furnishing all the greatest abundance of money. There
was a bank at almost every cross roads, whose manager'
knew the farmers, and gave them such accommodations
as they were entitled to. These notes were at a dis­
count of only one-quarter of 1 per cent, in New York,
and no man ever lost a dollar by a Virginia Bank note.
Contrast that situation with Virginia’s present Situation.
Now she has 1,700,000 people, all capable of contracting.
Sue has thirty-seven National Banks, and great districts
as large as some of the States of this Union that have
no banks. If you should rake up all the currency in the
State outside of the cities and towns, I don’t believe you
could find $250,000. I say then that her condition before
the war was an ideal one, and that the condition of her
farmer to-day is a pitiable one, and I say, further, that
if that condition was possible for Virginia then, it is
just as possible for all the States now.




In point of fact, the condition of every Atlantic State
in 1861 was just thiat of Virginia. The evil of State
Banks was confined to the new and growing West,
where they had “ boom ” banks as well as “ boom ”
towns, and the West was rapidly eradicating the evils
of the system and securing its blessings when our pres­
ent absurd financial system was forced upon us as a war
measure. The same official reports of Virginia show
many other interesting and important facts. The Farm­
ers’ Bank of Virginia was a great institution, with
branches in many parts of the State, and one of them
was at Blacksburg, a small village of two or three
hundred inhabitants in Montgomery County, which is a
blue grass, grazing region of country as fine as any in
the world. This branch had a capital of $60,000, and a
surplus of $50,000—that is, it had $110,000 of resources.
But it had out its notes to the amount of $146,274, and it
kept in its vaults only $29,555 of specie against those
notes. With notes, capital and surplus it had, there­
fore, $256,000, but its deposits were only $7,042. It had
out loans, however, amounting to $227,000, which added
to the coin on hand about balanced its resources. Now
this trifling deposit account has a deep meaning. It
means that the farmers around, who borrowed the
bank’s money, did not take their loans in the form of
credits on which they checked.
It means that they
took the bank’s notes and put them in their pockets and
carried them home and paid them out to their neighbors,
and, as everybody had perfect confidence in the bank,
whose managers were the leading people of the com­
munity, nobody ever thought of going to the bank and
demanding redemption of the notes in coin, so that once
out they remained out indefinitely and circulated around
among the people, performing the functions of money as
well as the purest gold dollars could.
This is the way in which Virginia banks were able
to put out five and even eight dollars of notes for one
of specie kept in their vaults, and this is the reason why
they were able to issue on a small capital just as many
notes as the people had any use for. The result was
they could so multiply their capital that they could
afford to charge very low rates of interest and the peo­
ple generally had an abundance of money at the most
reasonable rates. Now they cannot get it at any rate
whatever, and reading in their papers that the New
Yorkers can get all they want at 1% per cent., they are
naturally discontented. This Blacksburg case (and the
reports show the country Tvas full of Blacksburg cases)
contains the whole argument upon the subject.
The
banks must be local, and they must have authority to
swell their capital by issues of notes payable in gold
coin on demand or the capital will not be sufficient to
loan money enough to pay the expenses of the business
and leave a profit.
In the présent state of things it would be absolutely
impossible to get what are called “ wild cat ” notes into
circulation. The whole country is covered over with old
and established banks, nothing like so numerous as they
should be, but numerous enough to prevent that.
No
new bank could either get its notes afloat or keep them
afloat if the present old banks frowned upon them, and
they certainly would frown upon them unless they knew
the bank issuing them to be sound. A “ wild cat ” bank
is started at Farmville, Va., one of its notes is paid into
a retail store in Richmond, the store keeper sends it next
morning to Ms bank in his usual deposit, the bank
throws it out, that fact is telegraphed or telephoned
to Farmville, and that is the end of this “ wild cat ”
bank. But, it is said, a number of these notes will have
gotten out into circulation before this old bank con­
demns the note. It might have been done before the
war, but it would be impossible now, with our fast
mails, telegraphs and telephones. The moment organ­
ization of such a bank commenced, every other bank in
the State would be notified of it, and each old bank
would make free announcement of its intention to black­
list the new notes. This fact would be known every­
where in the State before a single note got out, and the

B A N K IN G

SE C T IO N .

21

I am sometimes told that the Supreme Court of the
operators would never be Able to float one unless
United States has construed the Constitution in opposi­
through a criminal act. Everything pertaining to this
tion to my views. This is true, but this construction is
matter has changed since 1860, under the influence of
part of the war doctrine put out a third of a century
fast mails, telegraphs and telephones.
ago, to enable the Government to Carry on the Civil
The Atlantic States had unsecured bank notes only,
War, and the sooner it is abandoned the better. That
prior to the war, and they had the best currency system
construction is part of a series of decisions which hold
any people ever had. As I have said, the only com­
that the Congress of the United States can convert a
plaint of that system came from the new and growing
piece of green paper into a dollar, a thing which the
West, and its evils there were incident to a new Society,
Almighty himself cannot do without first changing the
and not to the banking system.
laws of the Universe.
I don’t think I have ever seen an American that was
We have to submit to and obey the decisions the
aware of the fact, but England, Scotland and Ireland
Court has made while they remain the law, but that
have to-day exactly the banking system that I contend
does not preclude the citizen from examining those de­
for. Each island has local banks scattered all over it
cisions and pointing out that they are not in harmony
that put ouc their notes upon no security, whatever, but
with reason or the spirit of our institutions.
the assets of the banks themselves. These notes are at
The idea of the -whole paper currency being issued
a discount thirty miles away from the banks that issue
by private banks instead of by Government or Govern­
them, but they furnish the people living around those
ment agencies is an essential part of the fundamental
banks with an abundant ana perfect currency. A full
idea of the fathers of our Government. They intended
account of them can be seen in my address already re­
that the individual should be everything, the Govern­
ferred to at page 191. Great Britain’ s whole internal
ment nothing, except for the few things that all are
economy rests upon these banks.
equally interested in. They had never heard the word
I have several copies of the address, which I will
Socialism, but they knew the evil and all of their work
take pleasure in banding to any gentleman interested in
aimed at guarding against it. Paper money issued by
the subject.
the Government is the surest aid that Socialism can
What I contend for is the plan of our Constitution,
have. The local bank with its local notes is the surest
and although it is the fashion of the day to sneer at
safeguard for local self rule. The essence of the one
those who talk of the Constitution, I have the most
is collectivity, the essence of the other is individuality
slavish adoration for that incomparable instrument
and that is essential to the continued freedom of a free
which I never fail to manifest when an opportunity of­
people.
fers. I have stated the argument to prove that this is the
Constitution’s plan in the address already referred to.

Banking as it Relates to Industrial Development.
By

Jno.

W.

F axon,

Secretary Tennessee Bankers’ Association.

Mr. President, Ladies and Gentlemen:
|f
This address is intended more for the masses than it
is for bankers. The banks are already acquainted with
most of the facts herein set forth.
It is not my purpose to occupy the time allowed me
with an attempt to educate the people upon the financial
issues of the day. Some of the many theories advanced,
in the past few years, are utterly reckless, and impos­
sible to be understood, even by the best students of
monetary conditions, or the elucidator of the most diffi­
cult financial problems.
That there has been great progress in our system of
banking in the past half century, no one will deny; and
that we now have the satisfaction of seeing every dollar
of currency worth a dollar in gold, every day we live,
is an evidence of that progress. Many there are in this
audience who can easily remember the uncertainties
which surrounded commercial enterprises and industrial
development not so many years ago, when in every busi­
ness house there hung a Thompson or Dye’s Bank Note
Reporter, giving the latest quotations of discounts, on
the constantly fluctuating currency with which our coun­
try was flooded. It was utterly impossible for a busi­
ness man at that time to tell the profit on 'a transaction,
for by the time such money had circulated to any great
extent, it might have fallen or risen in value from 10
to 20 per cent. But now, thanks to that American idea
that we must go forward and not backward, we have
a stable currency, circulating throughout our entire
realm, from Maine to Florida and from Florida to the
highest point on the Pacific Coast, where a dollar is
always and everywhere a dollar. Let us hope that the
people of this great nation will never destroy a system
so satisfactory, by tampering with it for the purpose of
advancing the interests of any political party. Partisan­
ship should be set aside when it advocates schemes to
put the greatest stumbling block in the way of indus­
trial development and commercial prosperity.
How strange it is that there are so many people with



,so many curious and erroneous ideas in regard to banks
and banking. Many of these errors can be traced to the
teachings of those who, in order to curry favor with the
masses, endeavor to prejudice them against banks, by as­
serting that those who are engaged in banking abound in
luxury and indulge in a continuous round of pleasure, as
they spend their days in extravagant living, and in count­
ing and gloating over their earnings, which they have
“ squeezed,” in a doubtful manner and in devious ways,
from their customers.
They have alsojbeen led to believe that the hard­
working and impecunious citizen is the prey of the
banker; that the ipse dixit of the banker is the cause of
the failure or success of a large proportion of the busi­
ness men of every community.
While this belief is very prevalent among the poorer
classes, it is a fact, easily proven, that the majority of
men engaged in the banking business, both officers and
employees, have little or no pecuniary interest, in the
shape of stock, in the banks in which they are employed,
but, on the contrary, they are hard-worked, from six to
ten hours a day, and many of them on moderate salaries,
in a business requiring the most laborious and exhaust­
ive mental exertion, as well as the highest test of re­
sponsibility.
It is a part of my duty to correct, if possible, the im­
pressions I refer to, and to change the current of thought
of that class who look upon bankers as financial tyrants
or overbearing monopolists.
A bank is not only a place for keeping in safety the
surplus money of a community, but it is the point of
concentration for capital, so that that capital may be
utilized in the best possible manner for the development
of the industries of towns and cities, and at the same
time afford an opportunity to men of credit, engaged
in manufacturing, contracting, merchandising or farm­
ing (who have but little capital of their own), to extend
their business, so as to increase their own wealth and
the wealth of the community in which they live, as well

22

BA N KERS’

C O N V E N T IO N .

;as to furnish good or better wages to those who earn
their living by manual labor.
Money is the fundamental element of banking, as it
is the only recognized medium of exchange, and as a
medium of exchange it is the basic principle of com­
merce.
Banks are in every sense a benefit and not a curse to
-the people. The capital stock of a bank is made up of
funds, generally in small amounts, subscribed by num­
bers of persons, who are called stockholders.
It is stated that 500,000 people in the United States
¿bold shares of stocks in banks. These stockholders are
from among the people of all classes in life, and it is
.estimated that there is one billion and fifty millions of
dollars invested in bank stock in the United States by
these people. Wealthy men, poor men, old men, young
men, laboring men, married and single women, widows,
administrators of estates and guiirdians of orphans or
of minor children, have all contributed, in small sums,
generally not over from $100 to $1,000, to make up the
capital stock of the bank.
The officers of these banks are hired men, working on
: salaries.
Banks loan money to the public on security, where
the borrower is a man of credit, and is supposed to be
honest, for which a charge is made, which is called dis­
count. These loans are made to business men or cor­
porations, to enable them to increase for the time being
their capital, in order that they may add to their stocks
. of goods, or to the material to be used in their manufac­
tories. From the sales of these goods, or the product of
their factories, they pay off this paper to the banks and
¡place the surplus earnings to their profit account.
Loans are also made to farmers and commission mer. chants, who draw drafts or bills of exchange upon those
to whom they have consigned their produce. The farmer
frequently needs money to purchase his seed for his
. crops, or with which to buy farm machinery, thus en­
abling him to put in larger crops and to supply more
. efficient machinery for farm use.
But for the banks the farmer would be without this
assistance, just at the moment when it is most needed.
The laboring people in the employ of the manufac­
turer, contractor or farmer derive benefit from the earn­
ings of the loans made by the banks to their employers
in the shape of profits, a part of which are applied in
- payment of salaries or wages.
The same assistance is furnished by the banks to the
¿.millers, lumbermen, owners of coal mines, or ore banks,
to enable them to place their output on the market. The
last mentioned interests
REQUIRE LARG E C A P IT A L TO H AND LE THEM.

1 is said that coal, after it is mined, is worth eight times
It
. as much as it is in the ground.
Banks, if carefully and economically managed, yield
money to these stockholders, which is called profits. A
.portion of these profits are paid—generally semi-annually
—to the stockholders, in the way of dividends, while the
balance is placed to a surplus fund, to be held for the
purpose of paying any losses that may occur to the
banks.
For the past five years, I am informed, the interest
paid upon the capital invested in banks has not averaged
over 6 per cent, per annum, and this moiety has been
divided among the stockholders of banks, which is but
a small revenue arising from their investment.
While there is a class of men in every community
who are not bread winners, on account of their indolent
habits, and who are unable to borrow money from
banks, it is seldom that any man of good character, who
is attentive to his business, fails to secure an accommo­
dation from a bank when it is required. In most cases
banks furnish the capital and labor receives the benefit.
Capital, separated from labor, brings upon us indus­
trial depressions, but where capital and labor go hand
jin hand the result is always commercial prosperity.
The business of the world is kept in motion by cap­




ital. Manufacturing, the building of railroads, farming
and merchandising are sources from which the largest
proportion of working people obtain their wages. The
banks furnish the capital for carrying on this industrial
development, and they are thus the real providers of
money with which to pay the wages and salaries, by
which thousands of the laboring classes are kept sup­
plied with the comforts of life, and through which
means happiness is brought to the homes of their fam­
ilies.
The truth of this was most faithfully demonstrated
in the years of the recent panic, which was one of the
most disastrous industrial depressions this country has
ever experienced. During this period, when every one
should have been seeking devices to mitigate the severity
or shorten the duration of the panic, in certain portions
of the country men were agitating strikes, one of the
poorest panaceas for such a calamity, while the banks of
New York, the aorta of financial life to this country,
and the banks in other large cities, were issuing clearing
house certificates, and thus relieving and counterbalanc­
ing to a great degree the loss of our money circulation,
occasioned by the lack of cautious discernment on the
part of those who hoarded up and hid away the money
of the people.
This action of the banks enabled the fires in the fur­
naces to burn, the wheels and machinery of our shops
and manufactories to revolve, and furnished to millions
of employees their daily labor, by which they secured
the means to procure the necessaries of life.
What would the result be to-day if banks and banking
were abolished? Millions of laborers would be thrown
out of employment, and would be deprived of shelter,
clothing and subsistence for themselves and their fam­
ilies. Available capital would be, in the main, reduced
to so great an extent that all the industrial interests of
the country would be stopped, while prosperity would
disappear like
“ THE BASELESS

F A B R IC

OF A

V ISIO N .”

Besides being the agency through which the surplus
means of all classes of society are made to serve the de­
mands of all branches of business, in the way of depos­
its, the banks of the country are the guardians of idle
capital and are one of the most important factors in the
industrial development of a State. The trade area of
cities and towns steadily increases under the financial
facilities afforded by banks.
Money is the co-partner of industry, and without it
the industries of our country would meet with but poor
success.
Industrial development is a consequent result of com­
mercial activity, upon which it mostly depends. Com­
mercial activity is absolutely impossible without mone­
tary advantages, and the only means of securing mone­
tary advantages is through the instrumentality of a
sound system of banking. In truth, industrial develop­
ment, commercial success and monetary power are all
inseparably interwoven through the indispensable prov­
ince of banking.
The facilities of banking produce credit accommoda­
tion, and this is vitally essential to commercial prosper­
ity and industrial development.
If every county in Tennessee was provided with a
bank, available capital would be secured for the develop­
ment of any industrial enterprise in that community,
and for the enlargement of the commercial undertakings
of the people.
With five hundred depositors in a small town, and
the average deposit of each depositor only $100, fifty
thousand dollars would be concentrated at one point, to
be used for advancing the business interests of the town.
On the other hand, if each of these depositors retained
his $100 in hoarding, he would be in no position to help
his town or its inhabitants.
Thus we see that banking is a system which procures
the greatest possible good and the widest conceivable
advantages for the greatest number of people, and the

B A N K IN G

2a

S E C T IO N .

community in which a bank is located is thus aided in
carrying on prosperous ventures and extending indus­
trial development, by getting together small sums of
money as deposits, which in their separateness would
avail nothing, but when taken in the aggregate can
achieve a most wonderful success.
I have not the time to discuss the best system of
banking for the nation, but the conclusions in this ad­
dress are derived from the standpoint of a sound and
judicious system of banking.
Some of the most eminent bankers of the country are
strong advocates of the Branch Bank System. In almost
every nation of note branch banks are permissible. The
Bank of France has branches in ninety-four towns and
cities outside of Paris. The Imperial Bank of Germany
has 220 branches. Scotland’s ten banks have 878
branches; Canada has thirty-eight banks, with 483
branches; Ireland has nine banks, with 353 branches.
The Bank of England has nine branches, while strong
private banking houses have the privilege of issuing
notes, as well as that of establishing branches. Italy,
Australia, Russia and Austria—in fact, nearly every
country in the world, except the United States, has the
branch bank system.
Should this system be adopted in the United States,
there would be a centralization of capital in the larger
cities, where the parent banks would be located. With
large banking institutions in the principal cities of Ten­
nessee, branch banks could be maintained in almost
every county of the State, where there *is not now suffi­
cient capital to organize a bank.
The minimum limit of the capital for branch banks in
each State should be $10,000 or $15,000, which amount,
with a fair line of deposits, would furnish financial relief
to scores of small towns, where there is now but little

available capital. These banks, with the capital of the
parent bank to support them, would be the means of ex­
tending the industrial development of numerous coun­
ties where the natural resources now lie dormant. The
great advantage of such a system would be protection
to its depositors by the parent bank, and unlimited
money to. all worthy enterprises, as well as an opportu­
nity to the citizens of the county to place their saving»
in a bank, where they would be free from the tempta­
tion to waste them, and at the same time relieve them
of the great risk they have to contend with, in keeping
their money about their premises.
This system would tend to the retaining of our banks*
money in our own larger cities of the State, at the parent
banks, and not lead the banks of the State to place their
surplus funds in the East or West, as they do now, for
the mere pittance of interest which they receive. Alt
large loans, made judiciously, by branch banks, could
be furnished from the parent banks, and there would be
no necessity for the depressive cry of a close money
market which has so frequently beset us. In panics
there would be such a combination of interests that
branch banks would be able to weather the storm from
aid furnished by parent banks.
The only difficulty in the way to the establishing of
this system of branch banks, so necessary toward develop­
ing every section of the country, is the objections which,
will be offered by partisans, many of whom will oppose it,
particularly if the method suggested has any restrictions
thrown around it by law to prevent or relieve it of that
odium which was attached to the ante-bellum system
of State banks.
We can only accomplish such a change under a sys­
tem of sound banking, where both the depositor and
note holder are fully protected from loss, beyond the
possibility of a doubt.

Patriotic Spirit o f Bankers.
By

j. D.

P ow ers,

President First National Bank, Owensboro,

A long course of prosperous industry does not unfit
those who have been winning the spoils of peace for the
defense of their country at a time of great national
danger, the accumulations of peace being the true re­
sources of war. Paradoxical as it may seem, the subject
assigned me may be abridged by expanding it, so as
to make it read: “ The Patriotic Spirit of Bankers of
America.” So from the subject thus “ abridged ” I
shall proceed to the discussion of the topic.
While the subject does not question that the love of
country is general with all classes, it does assume the
prevalence and diffusion of the spirit of patriotism
among that class whose representatives are here assem­
bled, and accentuates its existence as a characteristic
thereof.
Honor, patriotism, reverence, all things which our
fathers esteemed as more precious than gold, have not
departed, but as a rich heritage have been transmitted
to their sons, and stand out as pre-eminently in the charac­
ter and acts of this generation as they shone resplendent
in the days of the Revolution. Though there is neces­
sarily a distinction between the acts of heroism and
those of patriotism, they find unity in the accomplish­
ment of high resolve and noble purpose, when uninflu­
enced by the ends of vainglory, or the glamour of the
deeds to be performed.
So, looking first at the heroic side of patriotism, we
see the patriotic spirit of those who personally answer
the call of their country for its defense, its protection,
its honor, its glory and its renown. Without distinction
of party, place, position or section, they consecrate their
lives to its glory. Some leave the quiet country home
with meadows, brooks and flocks, giving a fond and per­
haps final adieu to mother, sister or sweetheart, and with
a father’s blessing go forth to return, perchance, no
more forever. Others, giving wives a fond, last em­




K y.

brace, looking lovingly upon the blessed bonds of their
union asleep in the cradle, or prattling abbut their knees,
little recking of the woes that betide them, rush under
the exciting influences of the hour to meet the enemies
of their country.
We see them in the tented field, alert for every duty,
actuated by lofty desire, and driven on by a patriotic
spirit, eager for the fray, anxious to meet and defeat
the enemy. In answer to the order, “ Forward, march ! ”
they keep quick and regular step to the music of the na­
tion. See them on the lonely sentinel’s beat, standing
guard under the quiet stars, or in the raging storm.
See them at their post of duty with the missiles of death
showering about them. See them advance in the face of
the galling, deadly fire, as they go, breasting the hail of
shot, the storm of battle, the thunder of the oncoming
foe, the lightnings of hell, to victory or to death. Some
wildly exultant over the great victory won, others, alas,
wounded, bleeding, frenzied with thirst while the stream
of life fast ebbs away, dying, dead. Where in all this
carnage are the Florence Nightingales, the Clara Bar­
tons, the noble women of the Red Cross, whose gentle
touch, angelic look, sympathetic, kindly word and help­
ful hand allays pain, quiets anguish, soothes the soul and
gives hope to the future, peace to the dying, and consola­
tion beyond the grave? Think you that the spirit o f
patriotism in them is less than in those to whom they
are as ministering angels? What of all the blare of
trumpets, the waving of banners, the pomp and circum­
stance of war, without the sinews of war, without the
money and credit to sustain it? What, then, is the first
great care of a nation about to engage in war, offensive
or defensive—to look well to its finances, and to see who
will sustain the Government’s credit, and furnish the
means with which to provide the army and navy, and
having provided them, to provide for them. Where and to

24

BA N KERS’

C O N V E N T IO N .

whom does it look? What spirit is invoked to work out
the problem but the patriotic spirit of bankers? In this
glorious land that spirit has never been wanting from
the time that Robert Morris answered the call and fur­
nished Washington the means to win the battle of
Trenton, even down to the glorious, though bloody, field
of Santiago.
New Year s morning, 1777, Robert Morris went from
house to house in Philadelphia, rousing the people from
their beds to borrow money with which to relieve the
destitution of TVashington and his men, and early in the
day he sent $50,000 with the reassuring message
that “ whatever I can do shall be done for the good of
the service. If further supplies of money are necessary,
you may depend upon my exertions either in a public
or private capacity.”
Later on, when the public credit was at its lowest
ebb, and the public exigencies most pressing, a banking
institution was organized by a few patriotic citizens for
the sole purpose of sustaining the army, but no profits
whatever were to be derived from its operations by those
who had subscribed the £315,000 as its capital stock.
Growing out of this association, the Bank of North
America was organized by Morris and his associates,
who pledged their private fortunes to sustain the credit
of the bank, and through it were all future obligations
of the Government promptly met by the patriotic spirit
of these early bankers.
When, later, in 1812, the credit of the Government
was so low and doubt and distrust were so great that
it was impossible to float the bonds of the Government,
to enable it to defend itself for a second time against
the aggressions of England, Stephen Girard, the great
Philadelphia banker, came to its rescue and took millions
o f its securities, and re-established confidence and sus­
tained its credit to the end that we were enabled to
crush the enemy and once more enjoy the blessings and
prosperity of peace.
More than a third of a century later, in the war with
Mexico, the same spirit which had actuated Morris and
Girard enabled our soldiers to stack arms in front of the
halls of the Montezumas, and left us at the conclusion of
peace with a vast and rich domain added to our posses­
sions.
When grim-visaged war unrolled his wrinkled and
horrid front within our happy and prosperous land,
and threatened with destruction that for which so much
blood and treasure had been expended, the needs of the
Government were promptly met by the bankers of Amer­
ica in a spirit of lofty patriotism, and they gave ungrudg­
ingly of their gold for the promises of the nation, and
continued so to do, until, in an evil hour of expediency,
the then Secretary of the Treasury foisted upon the
country an emergency money which closed the doors to
the vaults of gold, and inaugurated a desperate game
of speculation, the evil fruits of which have not ceased
unto this day. But the patriotic spirit of American
bankers has not alone exhibited itself in times of na­
tional peril and distress, as the result of war, but has
shown its character and strength as well in the days of
peace.
Growing out of the conditions made possible by Sec­
retary Chase’s financial policy, there remained a danger­
ous residuum in 1894, and unfortunately still remains,
of about $500,000,000 of currency notes of the Govern­
ment for which gold may be demanded, but which, when
repurchased by the Government with gold, cannot be
retained or canceled by it.
Thus there were existing ills for which there was
no adequate remedy, causing the then Executive, and his
most excellent Secretary of the Treasury, to protect and
replenish the gold reserve by putting upon the market
$50,000,000 of bonds, authorized under the act of January
14,1875, and subsequently in November of the same year
to duplicate the issue, thus realizing to the treasury
more than $116,000,000 in gold; but in the same period of
time, through the processes of this greenback endless
chain, nearly $103,000,000 in gold was drawn from the




treasury, and within the succeeding sixty days more
than $69,000,000 additional gold was so withdrawn, and,
in the language of President Cleveland, “ These large
sums of gold were expended without any cancellation of
Government obligations, or in any permanent way bene­
fiting our people or improving our pecuniary situation.”
Thus confronted with serious conditions that were
fast tending to the destruction of our national credit,
and seriously affecting our financial standing at home
and abroad without the sustaining power and helpful­
ness of Congress to benefically enlarge the powers of
the Secretary of the Treasury in the premises, the Exec­
utive and Secretary were compelled, in order to protect
the country and its credit, to make still another bond
issue in February, 1895. These bonds were negotiated
at a premium to be allowed to the Government, so as to
fix the rate of interest upon the amount of gold real­
ized at 3% per cent, per annum; but actuated by a
spirit of patriotism, the bankers who were to become
the purchasers proposed to the Government that if they
would allay the suspicion and deprive the bonds of the
uncertainty as to the kind of money in which they
would be paid, and make them in terms, as everybodv
■ felt confident and sure that they would be in fact, pay­
able in gold, they would take the entire issue at 3 per
cent., thus saving to the Government by the terms of
the bonds, and the price to be paid therefor, $16,174,770;
but Congress, swayed by popular financial fanaticism,
refused consideration of the President’s very urgent
message imparting these facts and conditions, and thus
the Government by political demagogy was forced into
an enormous ultimate loss over the most earnest pro­
test o f a President and Secretary whose high character
and sound judgment have never been, and likely never
will be, surpassed in the history of this Government.
But now to the conditions that are present with us
and the developments that have been brought about by
the war, Which has been forced upon us as a rebuke to
our philanthropy, our protection of the helpless and the
feeding and care of the starving.
The present Secretary of the Treasury made a visit
to New York prior to the issuance of the bonds of the
Government, and, although the threatened dangers and
insecurities of war had caused the people o f the coun­
try to withdraw from the savings banks large balances,
and to hoard them, and in turn these saving banks had
called upon the commercial banks for their balances,
and money in New York was worth 6 per cent., fifteen
of the leading bankers of that great financial center
called in a body upon the Secretary and assured him of
their patriotic desire to see a 3 per cent, loan not only
floated at par, but, to enable him to make it a popular
loan without fear of its miscarriage, they agreed to take
the whole, or any part, of the $200,000,000 at par.
With this splendid financial backing the Secretary
issued his call for subscriptions to the bonds, and almost
immediately upon its announcement nearly double the
amount of the loan was subscribed for, that there might
be reassurance of the promises theretofore made, and
by this aid and assistance of the bankers the loan be­
came a popular one, and has been scattered all over the
country to those of moderate and small means, to the
exclusion of banks and bankers.
But the history of bankers with reference to this
loan does not end here. Out of thousands of letters re­
ceived at the Treasury Department, coming from almost
every bank in the United States, there was not a single
instance in which any bank sought to have commissions
paid to it for placing this loan, but on the contrary, the
universal expression was a desire to help the Govern­
ment, and to render any service that might be required
of them in connection therewith, free of all cost.
From the heights of Bunker Hill to the bloody crest
of San Juan, one spirit, animated by love of country, has
pervaded our soldiers, Whom no difficulty deterred'and
no dangers dismayed. Whilst our bankers in the most
trying moments maintained their courage, constancy
and confidence unshaken, always ready to uphold the

B A N K IN G
integrity of the country at every hazard. •The great
heart of the nation vibrating in sympathetic tones with
each patriotic breath, from the North, South, East and
West, feels no pang of sectional discord, but thrills
equally at the unexampled feat of that gallant son of
Vermont in far-off Manila Bay, and the daring selfdevotion of the intrepid son of Alabama in Santiago
Harbor. Swelling now in grateful recognition of the
glorious victory by land and sea achieved in Cuba, it
mourns the loss of the brave men who suffered and
died to spread the blessings of free government. Its
true heart cannot fail to recognize those who, unac­

25

SE C T IO N .

quainted with the stern and cruel physical facts of war
and unallured uy its glare and pomp, have ever stood
as a mighty bulwark sure and steadfast upon which
the Government could at all times depend for help and
succor in time of need.
Thu® unalterably fixed, like the sun in the center,
this country shall shine with unborrowed lustre, diffus­
ing its rays of light, liberty and progress on the nations
around us—
, „ „
Whilst o’ er us, one flag shall float,
One song ascend from every throat;
That flag, the banner of the free,
That song, the song of liberty.

The Bank Clerk.
By James T. H ayden , President Whitney National Bank, New Orleans.
Mr. President and Gentlemen:
I so thoroughly appreciate the energy, intelligence
and unselfish labor that has been given to this associa­
tion by its officers, that a request from them is almost
an order, and I am honored in being invited-to assist in
carrying out the programme which they have thought­
fully arranged.
The subject allotted is the “ Bank Clerk.” A long
and close intimacy with them individually and as a body
impresses me that the high esteem in which they are
held as citizens and builders up of the institutions of
which they are part has been justly earned, and I
wish I might convey to you my appreciation of their
value.
An overworked clerk ceases to be reliable, and when
it is found that an employee is nightly at his desk, work­
ing “ overtime,” one of two things is at once evident—
either he is incapable or overburdened. In either case
the remedy is plain, and prompt action should be taken
—he should be changed to a position that he would be
fully qualified to fill, or he should be relieved of an un­
just burden by an assistant.
I believe that many of the tragedies that have
wrecked the life and saddened the home of some poor
fellow who is supposed to have “ gone wrong ” might
find a solution in the fact that his weary hand and
jaded brain were from pure exhaustion incapable of
avoiding the error that led to disaster. Banks being
the depository of the people’s cash or securities, and the
dispensers of vast credits, are charged with a responsi­
bility that cannot be overestimated, and to properly
carry out their mission must be assisted by the highest
order of integrity, intelligence and ability—perhaps
above all they must originate and adhere to a carefully
devised system. Relatively, the responsibility. of the
clerk in the department is as great as that of his supe­
rior. We all know, when the daily balance is struck,
that an error in one department may throw the nicely
adjusted machinery of the bank out of gear, in which
event the vexatious checking of possibly the entire day’s
operations may be necessary. The bank clerk, by rea­
son of what is required of him, must possess (in addition
to the qualities of integrity, capacity and intelligence
mentioned) rapidity and almost unerring accuracy and
the power and inclination during working hours of cen­
tering every faculty on the work in hand. Coming into
contact, as he does, with all manner and condition of
men, he must intuitively know how to meet them. The
faculty of being courteous, impressing the bank’s client
with the idea that he is being treated with considera­
tion and that his wants are attended to expeditiously,
fairly and pleasantly, adds to the value and reputation
of the bank clerk—want of tact, hasty expressions, or a
disagreeable manner have, and will, close many a valu­
able account.
I think it will be conceded that in no branch of busi­
ness has the practical science of bookkeeping in all de­




tail been brought to greater perfection than in our
banks, and at the same time it is true that the keeping
of our accounts vary widely. Bookkeeping is really the
evolution of practical experience and intelligence. The
form will be that which is believed to insure the great­
est safety and accuracy, with the least labor, but all the
safeguards which are used, and checks which have been
devised, never have been, nor will be, effective, unless
an honest hand guides the pen which makes the entry.
In view of the vast sums that pass through the hands of
the clerks, and the rare, very rare, cases of betrayal of
trust, do you not agree that the bank clerk is entitled to
the high standard of commercial honor that he holds?
With no desire to disparage those engaged in the
various branches of trade or mercantile life, I believe
the bank clerk’s responsibilities decidedly exceed theirs.
Even that ever busy messenger, while folding his mail
with their important enclosures, realizes how much de­
pends upon the correctness of this simple work, for he
knows that a misdirected envelope may mean protest to
a correspondent.
The “ runner,” with his numerous bills, drafts and
bills of lading, is daily entrusted with a fortune; the
“ tellers,” receiving and distributing large sums, must
ever guard their desks with lynx-eyed vigilance, ready
to detect the scheming and fraudulent and correct the
errors of the careless or unbusiness-like; the “ note, ex­
change, collection and discount clerks ” can never be too
sure of the accuracy of their calculations, maturities, or
of the proper record and distribution of their entries;
the general and individual bookkeepers, upon whose
accuracy and honesty so much depends, absorbed in the
array of figures, often interrupted to verify some checks
or furnish a balance, must ever remember that an error
of one figure may result in serious loss.
Generally speaking, a bank can no more succeed
without full accord and confidence between the officers
and clerical force than can a Government with a divided
and wrangling Cabinet, or an army who mistrust their
officers, and sullenly or unwillingly obey their orders.
Indeed, I am tempted to go a little further, and claim
that the relations of bank officers and bank clerks
should be fraternal. Founded upon the rock of mutual
respect, recognizing the fact that mutual success de­
pends upon united effort, there should be a bond of
kindly feeling, that would make the officer as quick to
recognize the value and advance the interest of the
clerk, as the latter should be to be proud of and forward
the interest of the bank.
Mr. President, I had fully expected to have had the
pleasure of being with you to-day, and sincerely regret
that it is not possible, but after the business of the con­
vention is ended, and the social feature is in order, when
the viands have been removed and the glasses are
charged, may I ask the presiding officer to offer this
toast—“ To the advancement and happiness of our
friend, the bank clerk.”

26

BA N KERS’

C O N V E N T IO N .

Protection o f Bankers D ra fts .
By

-A r t h u r

C.

A

n derson.

Cashier St. Paul National Bank.

THREE-FOLD PROTECTION NEEDED.

This subject to be comprehensively treated must cover
three points:
First.—Protection against drafts wholly forged, both
as to blanks and filling.
Second.—Protection against the use of genuine
blanks surreptitiously obtained and then forged.
Third.—Protection against the raising of genuine
•drafts from a small sum to a larger one.
Of these three methods of fraud the first is the least
dangerous from the fact that it must pass the teller,
whose training dn handling money and bank paper has
rendered him expert in detecting the slightest variation
In the blank from that which he is accustomed to see,
and a second use of the forged blank is especially dan­
gerous, because the first use is liable to be known, and
•every banker be on his guard as to drafts purporting
to be issued by that particular bank.
A N OPEN DOOR TO FR A U D .

We readily see there would be but little use in devis­
ing a method to prevent the raising of genuine drafts
so long as any smooth-talking stranger can obtain
plenty of genuine blanks, absolutely uncanceled, from
aome of the steel plate houses and from a great many
•of the lithographers who are furnishing blanks to the
members o f this Association. And to-day this is pos­
sible. Sample sheets and the drawers full of uncanceled
blanks have not only been responsible for some very
heavy losses to banks, but have led to a vast deal of
misinformation on this topic. The lithographer who
has opened the door for frauds by his carelessness, when
the loss occurs is apt to set up the claim that the blanks
must have been forged; that they could not possibly
have been obtained from him, etc. I have repeatedly
investigated such statements only to find the blanks
genuine, and the people who could have furnished us
with good descriptions of the men who obtained the
blanks, withholding this information in trying to pro­
tect their own reputations. Do you think for one mo­
ment that the New York Stock Exchange would permit
such carelessness in handling blanks of securities listed
with them ? Have we not a right to demand the same
•care that they require ?
THÉ DANGER POIN T.

The point of danger in the matter of raised drafts, as
I see it, is that it is our common practice to use the
«ame set of blanks for our largest and smallest drafts;
the vignettes are the same, paper identical and numbers
consecutive—nothing, in short, about the blank to in­
dicate whether it Will be drawn for a dollar or for thou­
sands.
Some years ago the Government put out a two-dollar
greenback and a fifty, with the same Principal Figure.
They were withdrawn before the twos all became fifties!
They have not tried the experiment since.
There are some methods of protection by series of
blanks, but these methods are cumbersome and can
hardly be deemed practical for general use.
PROTECTIONS NOW IN USE.

Realizing as we do the danger of our present method,
we have tried by various means to protect against raising. Let us briefly consider these means and pass their
effectiveness in review.
First—The perforation, or cutting the amount for
which the draft is issued, from the paper. Such cuttings
have been filled up in numerous instances, the drafts al­
tered to the desired amount, and the figures to corre­
spond recut by the forger.
Second.—Safety Inks, so called, designed to resist the




action of acids and alkalies have been repeatedly put
upon the market, but no such ink, as far as I know,
has ever successfully challenged the world and proved
its title of “ safety.” In this connection I would men­
tion an ink designed to meet this want, which was pre­
pared by one of the leading ink manufacturers of this
country; it contained a carbon that neither acid nor the
ordinary bleaches would touch, and I have known good
chemists to fail in removing it from the paper, using
any chemicals which their experience would suggest,
but a damp sponge would wash it off, leaving scracely a
trace on the paper to show where it had been. This
manufacturer recalled the ink and wrote us that the ex­
perience of their chemists had shown that no ink could
be produced which could not also be overcome.
Third.—One other method may be called the “ Stub ”
method of protection, where there is a stub on the left
hand of the draft and words are printed across it: “ Void
if presented for a larger amount than is shown by
the marginal figures.” Where the draft is printed on
ordinary paper an expert can easily remove the entire
stub and affix a new one so nicely as to defy detection,
and then has the whole field to work on, as though there
had been no stub to overcome.
Fourth.—Is the method of daily mailing of advices of
drafts drawn by the banker to his correspondent, and
this method is defective in several ways. It involves
so much time in payment as to practically prohibit its
being generally adopted. Again, it protects only the
payer and affords no protection to any innocent inter­
mediary party. But the most important objection is that
it is not a thorough protection, in that a forger can buy a
draft for a small number of dollars, and also one for
the same number of thousands, alter the number of the
small draft to that o f the large, raise the amount from
dollars to thousands, and, when the alteration is com­
plete, get the genuine draft recashed by the issuing
bank, and put through the raised draft with the altered
number. The letter of advice then, instead of being a
protection to the payer, is really a trap to mislead him.
Fifth.—Papers with a tint worked on their surface,
commonly known as “ safety papers,” are considered
by many a sure protection against alteration. They are
not only not a protection, but the very fact of the tint
being on the surface of the paper has been utilized by at
least one gang of forgers to make alterations that would
have been visible on white paper, and then by a skillful
use of water colors to cover up their work. As between
any safety paper that I know of and a good white paper,
I should select the latter every time.
Sixth.—The last method of protection in use, to which
I shall refer, is printing or embossing the words “ under
a certain amount ” on the face of the draft.’
While I would not say dogmatically that no such
method can be devised that is effective, my experiments
and investigations point very clearly to the fact that
nothing can either be printed or written on paper that
cannot also be removed from it. I have here a device
used by a gang now in the Minnesota Penitentiary, for
altering paper. Its purpose seems to be to hold the
paper perfectly firm while it is being worked upon, and
it is particularly adapted to holding paper while the
print is being removed from its surface. It would also
serve the same use when paper is being cut, spliced or
worked down to a thin edge, to have a patch set into it;
and damp paper stretched in this clamp dries smooth.
V A L U E OF PRESENT PROTECTIONS.

You ask then, are all these methods worthless ? By
no means. The protection that one forger might find
it easy to alter would prove a stumbling block to
another, but singly or in combination they may be said

B A N K IN G
to have been “ weighed in the balances and found want­
ing.”
W E LOOK TO P A P E R FOR PROTECTION.

If we are to get genuine protection, a protection that
protects, I believe we must look for it below the sur­
face of the paper. This Government does not sell so
much as a one-cent postage stamp, but it bears water­
marked in the paper one of the initial letters of the
words: “ United States Post Office Department,” and
we know that the Bank of England notes, which are
seemingly so plain and simple in their make-up, rely
almost entirely for their protection on the watermarked
paper used. We may, therefore, well consider a protec­
tion that has this kind of an Anglo-American endorse­
ment.
TWO IM PO RTAN T FACTS.

Two facts are important to consider at this point:
First.—$30 may be said to be a maximum amount for
which drafts are bought for the purpose of alteration;
our principal danger does not, therefore, lie in our large
drafts.
Second—The Chicago Bank having the largest num­
ber of country correspondents and doing the largest com •
mercial business, after careful and repeated computa­
tions, has arrived at the fact that 96 per cent, of the
drafts which it pays, drawn on by its country banking
correspondents, are for five hundred dollars or under.
A D IV ISIO N OF LARGE AN D SM ALL D R A FTS SUGGESTED.

If we were to have our drafts printed as now, select­
ing such lettering, design, etc., as pleases us and gives
an individuality to the blanks of each, but divided into
two series, differing principally in the watermarking of
the paper, with possibly a slight difference in the size
and shade of paper (these latter differences more to pre­
vent using the wrong draft than because they are con­
sidered essential to protection), the draft to be used for
the smaller amounts to have the words “ Limit Five
Hundred Dollars ” watermarked into the paper, which
shall also have such further design worked all through
it as to render successful cutting and patching impos­
sible, we should at once remove the danger that lurks
in all small drafts being raised to a number of hundreds
or thousands. Our tellers would be relieved of the nerv­
ous strain incident to the constant dread lest, when re­
ports on accounts current come in, they will find they
have been paying drafts which were drawn for $15, $16
or $18 for hundreds instead of dollars.
W ATE R M A RK ED P A P E R ALON E M A Y NOT PROVE ENOUGH.

While it is believed that thus limiting our small
drafts to $500 (or other amount, if other amount is
thought to be better) is an improvement on the methods
now in use, this alone would not make a complete pro­
tection, for a man might buy a draft for say five dol­
lars, and successfully raise it to $500. It would be well,
therefore, to have coupons indicative of the hundreds
on the right hand end of the draft.
POSITION OF SIGNATURE IN D IC A T IV E OF THE SIZE OF THE
D R A FT.

If there is one thing on a draft that a forger usually
wishes to leave as he finds it, it is the signature. If,
then, the cashier, in signing, will each time see that his
signature is carried to the extreme right hand end of the
paper, we can readily see that this can be used as a
means for protection. The draft clerk in drawing a $5
draft would simply tear off all coupons indicative of
hundreds, and if the forger could reattach these coupons




2T

S E C T IO N .

to a skillfully prepared watermarked paper, so as to defy
detection, which we very much doubt, in order to rafsethe draft to $500 it would be necessary to carry the
signature from one-half an inch to an inch further to the
right, in order to bring it where it belongs for a draft for
$500.
We have gone thus into details as to the smaller
drafts, and of the large drafts we may simply state that
similar protection can be afforded to them. We believe
we have pointed out an impassable gulf, over which
the forger cannot go in raising small drafts to large ones.-.
One question must present itself, and that is, cannot
the watermarks be successfully counterfeited? I have
seen some attempts at counterfeiting watermarks, but
never anything that I thought was at all effective, and
the best answer I can give to this inquiry is to quote
from a recent letter to me from the Chief Cashier of the
Bank of England.
The Bank hold that their chief protection from forgery Is to
be found in the quality of the paper used in the making of
Bank Notes.
Of course Bank of England Notes are sometimes forged, but
the number has always been small. In one year only six came
to light, although sixteen millions of genuine notes went
through the hands of the public. Fifty would be much above
the average.
We have seen counterfeit watermarks of all the sorts de­
scribed by you, but the best counterfeits seen would never de­
ceive a real expert.
In conclusion, I think it well to tell you that the Bank o f
England never pay forgeries, and spare no expense in bringlng or attempting to bring forgers to justice.

If a forger finds it difficult now, when only a litho­
graphic stone and paper easily obtainable is needed to»
counterfeit a blank, it is manifest our adoption of such
paper would add immensely to his problem.
NEED OF GREAT CARE IN THE PRODUCTION A N D DISTRIB U ­
TION OF T H E P A P E R .

If this method of protection is to be effective against
forgery as well as raising, the protection of the paper in
its manufacture and in its distribution to the printers
must be under the charge of some such body as this as­
sociation. It should be manufactured for the association
only by such a paper mill as can demonstrate its ability
to manufacture what we want, and keep it safe as long
as the paper is in its hands, and it should be distributed
to only such plate printers and lithographers as shall be
under bond for its careful use, and liable for all uncan­
celed samples, and whose places of business shall be
open at all times for authorized inspection.
TH E PRESENT A F A V O R A B L E TIME FOR ACTION.

The Government, in its regulations for the imprinting
of the revenue stamps on drafts, is insisting on methods
of care in handling blanks, that, unfortunately, hereto­
fore has been too little looked to. No better time than
the present could be found for enforcing our claims to
this same careful handling of blanks for our use while
they are in the hands of manufacturers.
If this matter ends in a discussion only, it will, I
fear, be a mistake to ever have considered it in this pub­
lic way, and to have so frankly acknowledged our dan­
gers and present inadequate protection. But if, after
such discussion as may here take place, this matter be
referred to the Executive Council to be by them referred
to a commission for such further consideration and re­
port as the Council feels the subject demands, it may
result in shutting the doors as effectually to criminals
as our Protective Committee have been for years
shutting prison doors on criminals.

28

B A N K E R S ’ C O N V E N T IO N .

Thirty-seven Years m a Bank.
By E. H.

P ullen,

Vice-President Naticnal Bank of Republic.

Mr. President, Fellow Members of the American Bankers'
Association,:
Gentlemen: The title given to the address I am to de­
liver presupposes that I am to talk about the experience
and observations of some one who has been thirty-seven
years in a bank.
If that person is some one other than myself it would
be easy to be impersonal, but the natural conclusion is
that that person is the speaker himself, and admitting
this, two questions propound themselves to my consid­
eration.
First, what shall I say, and, second, how shall I say
what I propose without obtruding my personality on
your attention and being guilty of insufferable egotism ?
Others, though not many, may have served longer
and very probably more efficiently than the speaker.
Nevertheless, thirty-seven years is a long period of
service in a bank, and the same bank.
To give even a partial, condensed review of the ex­
perience and observations of so many years would con­
sume too much time and weary the hearers.
It would be superfluous to allude to the prominent
events that, during the long period from 1860 to 1898,
have affected finance and the banking business.
Those events are interwoven with history, easily ac­
cessible to the student and doubtless familiar to many,
if not all, of the bankers assembled here to-day.
Civil war, panics, suspension and resumption, legal
tenders, commonly known as greenbacks, large issues of
Government bonds for war purposes, organization of
banks under the National Bank act, the patriotic service
the banks rendered to the Government, silver purchases
materialized in a volume of silver certificates, all easily
absorbed in our monetary system without producing
financial indigestion—all these events and others of ap­
proximate prominence that transpired in that period
suggest themselves to your minds.
My banking life began when civil war was immi­
nent, and soon the clash of resounding arms was heard,
brother was arrayed against brother, and the fate of the
Union hung trembling in the balance for long, weary
years of fratricidal conflict.
To-day, thank God ! the Union is not only preserved,
but is indissoluble—we are united, battling side by side
for our national honor and the great cause of humanity,
and our hearts pulsate with a common love for our
country and our flag.
It is my purpose to draw a few deductions and les­
sons from an extended general experience and observa­
tion, not restricting myself to the narrow field of the
particular bank with which I have been connected, but
rather outside and independent of it.
There has been a gradual change in the methods of
clerical work in banks, and to-day’s methods are radi­
cally different.
The ledger, in those days, was generally a record of
all the details of each account. The correspondents’ re­
mittance letters were copied in the ledger and all cheeks
appeared to the debit, each one charged separately with
the number thereof and statements of account made in
the same way.
To-day each bank has a system of its own, condens­
ing and simplifying the work. The speaker knows of
banks in which the ledger is a condensed record. The
correspondents1foot their remittance letters, often con­
sisting of several sheets, and after the items are care­
fully compared and the footings verified the aggregates
are posted from the letters to the ledger, and the checks
drawn are debited in the aggregate.
The details of each acount appear in the monthly
or semi-monthly statements which are written up daily
by clerks other than the bookkeepers, and by these




statements the exchanges received through the Clear­
ing House and the afternoon work as well are proved.
These statements are carefully copied in letter press
before mailing, bound up monthly and constitute the
only and sufficient record of the detail of accounts.
The remittance letters, with their dates, appear on the
credit side of the statement on day of their receipt, and
checks on debit side, with number of each.
These debits and credits are made direct from the
original papers, and no intermediate books are used.
Thus a great saving in clerical labor and stationery
is effected.
The collection department is conducted in the same
way—no books o f record are kept of so-called foreign
items received either as cash or for collection.
The letters to correspondents in various parts of the
country to whom these items are transmitted are the
only record preserved, and duplicates written simul­
taneously with the originals are bound up daily.
Under this system each corresponding bank and each
depositor other than banks has a number which appears
in the margin of these letters indicating from whom
each item was received.
The number also appears on all letters and items re­
ceived from correspondents and on all checks drawn by
them. No passbooks of city customers are balanced,
but statements made up to the last day of each month,
inclusive, are rendered the following day.
Each account on the ledger and the statements
thereof are known by its number.
The same system extends through the various de­
partments of the bank, linking each to the other and
forming a chain.
This method effects a natural saving of time, labor
and expense, and is infinitely more satisfactory than the
ancient, cumbersome and circumlocutional system that
involved the duplication and triplication of labor and a
multiplicity of books.
The methods of conducting the routine work of banks
have in a large measure been revolutionized, simplified
and improved by the use of the typewriter, stenograph,
pnonograph and other modern inventions.
None of which, however, nor all of them combined,
can supersede faithful and competent clerks. Ma­
chinery cannot furnish brains, but brains can utilize
machinery.
You may adopt all the checks and safeguards that
human ingenuity can devise or long experience suggest
to prevent defalcations or fraud in the clerical force and
official staff, but after all, in the final analysis, the ques­
tion resolves itself into one of trust or faith.
With the introduction of the National Bank System
came almost simultaneously the payment of interest on
bank balances and sharp competition between financial
institutions to secure deposits.
In order to accomplish the latter result inducements
in the way of interest were offered to banks, and in re­
cent years the same offer has been made to attract, as
well, large individual and corporation deposits.
Prior to 1861 interest on balances was paid with rare
exceptions by banks, except banks of savings.
Banks at that time wisely and justly held that they
were organized to make money by the employment of
their capital and deposits, so that to buy deposits then
would have seriously reflected on the banks so doing
and impaired their credit.
Nevertheless, this pernicious practice, Instead of de­
creasing by reason of unfavorable experience, has grown
with the passing years, and bas become so fastened on
banking methods that it will require heroic measures to
dislodge it.
The results of this practice are clearly manifest in

B A N K IN G
tlio congestion of money, during protracted periods of
each year in the large cities, which it is impossible to
employ at even a saving rate, so that practically during
those periods large balances on which interest is paid
are a source of loss instead of profit.
Just as soon as a demand for money arises and op­
portunity is presented for its employment ^ remuner­
at
ative rates the balances are materially reduced.
In other words, when we cannot use the money
profitably we are flooded with it, and when we can use
it then it is largely withdrawn.
When we buy deposits at 2 per cent, per annum the
money costs us 2 2-3 per cent., and when we buy them at
1 y per cent, it costs us 2 per cent.
2
Taking the required reserve into consideration, de­
posits we purchase cost us just one-third more than the
rate we pay, not taking dnto account the expense in­
volved in the care of a large volume of business growing
•out of numerous accounts and interest bearing deposits.
Since the inauguration of this practice the legal rate
of interest has been reduced in various States. Rail­
road mortgage bonds bearing interest, respectively, at 4
and 3y2 per cent, are selling at a premium, real estate
mortgages for term of years at from 3 to 4y2 per cent.,
and the earning power of money at this time is certainly
not over 4 per cent.
With large purchased balances, banks, to employ the
money, frequently make investments that are more or
less speculative, or purchase large volumes of single
name paper from note brokers, which is attended with
at least a degree of risk.
When deposits are largely withdrawn by the banks
receiving interest, and withdrawn because they can use
their money more profitably at home, then contraction
succeeds expansion, with its inevitable hardships.
Towns of ten thousand inhabitants and over through­
out the country are invaded nowadays by the Eastern
note brokers and banks offering low rates to their mer­
chants, manufacturers and others, thus cutting seriously
into the business of local banks.
With increased facilities to borrow money at much
less than home rates, these merchants and others often
undertake business ventures out *of proportion to their
capital, and eventually realize to their sorrow that the
so-called cheap money has cost them very much more
than the rate, and that in order to save themselves they
have to fall back on their local banks for needed help.
Neither did old-fashioned banking include the fur­
nishing of capital to customers, but strictly confined ac­
commodation to the discounting of acceptable notes
given for value or secured by satisfactory collateral,
thfis restricting borrowers to well defined limits.
Within the then existing limitations no such ex­
tended, continuous investigation and rigid sifting of
credit were necessary as are imperatively demanded
to-day.
Accommodation paper was not favorably regarded,
and single name paper without security was not tol­
erated.
It is needless to emphasize the contrast presented in
banking practice at this time.
It did not include doing business in any branch at a
loss, with the idea of making a compensating profit in
another department, but its legitimate object was to
receive equitable returns for all services.
We beard but little in those days o f par points or re­
ceiving checks and drafts payable throughout the coun­
try at par, crediting them on the day Of receipt to the
customer’s account as cash, thus entering into balances
on which interest is paid.
The average aggregate amount of such items carried
by the New York City banks is at least twenty-five mil­
lions of dollars, as can be readily ascertained from their
reports to the Comptroller of the Currency opposite to
the item “ Due from banks.”
This large amount represents items payable through­
out the country that have been credited as cash, gen­
erally without deductions for exchange or time, to cor­




29

SE C T IO N .

respondents, and on which interest is allowed by inter
est paying banks.
It is true that these items are
charged to the collection accounts of the several banks
to which they are transmitted and that the aggrega e
can be deducted from gross deposits in making up the
reserve.
In many cases no exchange is charged by the collect_

iilA J A J.

.

1

_ _ _
_ _ _

.

/vf for*-

,

.

In towns where there is but one bank it charges w a
it deems proper, and in towns where there are several
banks they enter into an agreement as to exchange.
The time for remitting returns for these items runs
from three days to semi-monthly.
We love the country bankers—indeed, we love one
another, and bless the tie that binds our banking hearts
in one—
but they are the masters of the situation. We
dance to their music and pay the piper; we tumble over
one another to capture them and find ourselves !
Competition in business is its life within well defined
limits, but beyond these limits it is far from wise or
profitable.
If it were not for unwise competition no interest
would be paid on deposits by banks of discount, and col­
lections would not be made at a loss in exchange and
time.
In the days of old-fashioned banking it was consid­
ered very unprofessional, indeed disreputable, to inter­
fere with a neighbor’s business by soliciting his ac­
counts.
But nowadays it is openly, ostentatiously done, the
mails are crowded with circulars and letters from banks
offering various inducements to the correspondents and
customers of other institutions.
Indeed, it seems to be considered an evidence of
“ smartness,” of being up to date, of keeping “ well to
the front in the procession,” to interfere with a neigh­
bor’s business by soliciting and enticing his customers.
The Tenth Commandment is continuously and persist­
ently violated.
In addition to the mails, other instrumentalities are
employed in this crusade.
Representatives of banks are traveling over the land
after the fashion of commercial travelers or drummers,
and within two years parties have organized a business
whose object is to solicit bank accounts on commission.
The competition is narrowed in banking to a small
compass.
The price, or interest if you choose, that will be paid
for deposits, the extent of and rates for accommodation,
and the area of free territory—that is continually widen­
ing.
Beyond question, in a short time Santiago, Havana
Porto Rico, Honolulu and Manila will be added to the
par list.
Financial papers are superabundant. Each presses
for patronage and some offer as a bonus their influence
in procuring business, for which they keep men on the
road.
This custom of advertising banks is comparatively
new, but it is attaining large proportions, and it would
excite no surprise if the cards of banks were to appear
in the cars of various railroads.
It is possible that the tourist may yet see from the
car window as he travels through our country an in­
scription blazoned on the rocks and fences, side by side
with Carter’s Little Liver Pills, announcing that “ The
Notoriety National Bank solicits business.” Progressive
methods, if the contemplated progress is in the right
direction, are commendable, but aggressive methods
should be carefully considered, as at the best they are
questionable.
The expense of conducting banks has greatly in­
creased, growing larger by degrees and beautifully
more.
Many bank officers receive larger salaries than the
Secretary of the Treasury of the United States, and in
some cases double and treble.

30

B A N K E R S ’ C O N V E N T IO N .

It is pertinent to inquire whether the clerks have
shared proportionately and equitably in this increase.
In our recent magnificent victories on sea and land
the officers have been crowned with honors, but great
credit and,praise have been freely and justly given to
the men behind the guns.
So in banks whose business has been successful let us
not forget to give a fair share of the credit to the men
behind the desks handling millions of dollars and keep­
ing vast accounts with fidelity and accuracy.
I am impressed with some deductions drawn from
wide observation, indeed so profoundly impressed that
in my mind they have crystallized into maxims.
I will allude to a few.
First. No officer of a bank should consider it as his
personal property, arrogate to himself its control, or flattei himself that he is indispensable to its success.
He is merely a prominent part of the machinery that
runs the bank, and a large portion of the work has to be
performed by minor parts not so conspicuous as himself,
but relatively as important.
What is known as one-man power in the management
of a bank should be checked on its first manifestation.
Several notable instances in the past of the disastrous
result of the exercise of this assumed power in banks
can easily be recalled.
Directors of a bank assume a legal responsibility
when they qualify as such; they are obligated to direct
its affairs and cannot delegate their duties to the officers
they elect.
If they permit such officers to usurp their authority
they cannot escape the responsibility they assumed and
neglected.
Men who in the past were officers of banks and
thought themselves indispensable have passed away;
the banks survived, still live and prosper, and the men
are scarcely remembered.
This will be equally true in the future.
Occasionally we notice in bank advertisements the
president’s name in large type and the names of his asso­
ciate officers and directors printed in comparatively in­
significant letters.
Is this modest, and what justifies it?
Second. Officers of banks should not attempt to do
too much nor exact too much from others.
Bank officers, especially those who have been pro­
moted from the ranks, often make the mistake of con­
tinuing clerical work, giving undue attention to details,
and thereby neglecting the duties of their position, and
struggling to do both, official and clerical, break down,
collapse, and in some instances involve the bank in seri­
ous loss.
Clerks are employed to do this routine work and care
for the details of business, and a well arranged system
will place before the officers daily a condensed but suffi­
ciently comprehensive statement of the transactions of
the previous day.
Neither should officers of banks expect too much;
they know, or ought to know, how much work a man in
a given position can easily and accurately perform, and
any excess of labor imposed on a competent clerk is not
only unjust to him, but prejudicial to the interest of the
bank.
Third. The golden rule should be observed in the
treatment of subordinates.
To do this is profitable, and it can easily be done in
harmony with the preservation of proper discipline.
Do not be distrustful, suspicious and continually
fault finding. Sift your clerical force until it consists of
competent and faithful men.
No one is perfect, not even such exalted personages as
ourselves.
It is pleasant to see officers and clerks living and
working together as members of one family, co-operating
for the institution in which they feel and manifest an
interest and animated by sympathy and consideration
for each other.




We should shun selfishness as poison. Pay for serv­
ice what it is worth.
We are not called on for prodigal liberality, least o f
all for charity, but appeals do come to us tnat justice
recognizes, and could be favorably answered without ap­
preciably affecting the interests of stockholders, for whom
we act as trustees.
Some banks grant pensions to clerks who have served
them long and faithfully, and it seems reasonable to be­
lieve that such action redounds to the prosperity of the
institutions.
We like to have our salaries increased. Let us re­
member that “ there are others ” for whom it should be
our pleasant duty to care.
We like promotion. Let us advance our subordinates
consistently with their merits and qualifications when
the opportunity arises.
We appreciate sympathy in our personal sorrows and
anxieties. Let us be sympathetic in time of need with
those who labor jointly with us for a common interest.
A word of commendation for duty well performed is.
grateful to us and is equally so to those who serve us,
and it should and will give us joy to praise when it is
merited.
It is occasionally said that no man is entitled to
praise for doing his duty.
Victorious sailors and soldiers are to-day receiving
unstinted praise from a grateful nation for their faithful
performance of duty.
“ The soul is open to the charm of praise. There is
no joy beyond it, when the mind of him who hears it can
with honest pride confess it just and listen to its music.”
Surely we should accept and illustrate the lesson
taught in one of our Lord’s parables when He said to the
man who had only done his duty:
“ Well done, good and faithful servant.”
Fourth. Valuable time should not be wasted in con­
tinual worry or in unavailing regret over losses that are
irretrievable.
Losses which we fear may occur, disaster which we
have some reason to apprehend, naturally arouse anxiety
and stimulate effort to prevent, but the loss once made
should thereafter occasion no mental disturbance.
“ Things without all remedy
Should be done without regard—What’s done is done.”Fifth. We should not carry the bank home with us.
When our day’s work is completed and we start for
home, we should leave the bank just where it is located
and dismiss it from our minds absolutely.
Home should be our refuge from life’s troubles and
cares—it is our resting place, where we can refresh our­
selves with exhilarating domestic happiness.
We should enter our homes with happy hearts and
smiling faces. Our wives and children, if God has be­
stowed on us those priceless gifts, will welcome us with
love’s endearments.
Conversation, music, amusements, reading and social
intermingling with friends will fill our leisure with en­
joyment and recreate and fit us for the work of the mor­
row.
If we carry our cares and troubles home, a frowning
face, an abstracted or preoccupied manner, reticent and
irritable, and brood over our perplexities, home will soon *
cease to be home to us or to those who love us.
No cordial, affectionate welcome, the music is stilled,
the children’s voices hushed, and gloom with painful con­
straint settles like a dark cloud on the household.
No renovating sleep, “ tired nature’s sweet restorer,”
but fitful slumbers that are “ but a continuance of en­
during thought.”
Adversity is not exclusively the fruitful cause of care,
anxiety or perplexity.
Prosperity brings in its train a sea of troubles that
occasion as much worry as the other.
If anxieties from either source come to us officially
let us lock them up securely in the bank when we leave
it at the close of each day—to take them home with us

B A N K IN G
would accomplish no good, but, on the contrary, do seri­
ous and needless harm.
I regret that time will not permit me to dwell on other
important lessons taught by experience and observation,
especially those relating to officers engaging in outside
enterprises or speculating in securities, and also in re­
gard to the duties imposed by law on directors, and em­
phasize the lesson that they should have no preferences
in business, but receive the same treatment as is given
to depositors whose accounts are as valuable as their
own.
Finally, my brethren, let us avoid growing old. A
woman is as old as she says. A man is as old as he
feels.
Carefully preserve your feelings in your hearts and
minds and illustrate them in your lives.
Young men in these days age very rapidly. They
accumulate wisdom so fast that they stagger under its
weight and become prematurely old.
In our profession to-day are many old young men
who in activity and apparent age compare unfavorably
with our young old men. Do not understand me as

S E C T IO N .

31

speaking disparagingly of young men. One of the hap­
piest recollections of my banking life is that I was
graciously permitted to help young men to enter and ad­
vance in our profession.
Let us prolong our youth in feeling, activity, and, as
far as we can, in appearance, even to the Psalmist s
limit, three score years and ten, but we must not forget
that we cannot live forever.
The time will surely come when we shall be admon­
ished by nature that our working days are drawing to a
close.
To die in the harness confers no honor. Rather than
lag on the stage of life, it will be better to retire and
make room for others who are waiting to fill our places.
At the close of long service we are entitled to a holi-.
(jay—a rest—a surcease of labor and care.
We need not be idle; every moment can be wisely
and profitably employed—time will not be a burden,
but can be utilized so that it will constantly minister
to our happiness.
In the sunset of life we can rejoice in fragrant mem­
ories of the past and bright hopes of an enduring future.

The Country Banker.
By W. S. W itham , o f Atlanta, Ga.
Mr. President and Heroes of the War Tax :
I come to you fresh from the watermelon fields of
■Georgia to bring you greeting from the Georgia Bankers’
Association.
We have wondered why General Wheeler didn’t make
up his cavalry from the members of his Internal Rev­
enue Congress—for they are certainly good chargers. It
is not my fault that this address is to be unloaded upon
this august body. I am here by authority of your Pro­
gramme Committee, and beg to state that the invitation
has not cost me a cent—up to now.
As 1 look into the faces of these eminent financiers,
representing billions of dollars—by proxy and attempt
to tell them something new under the sun, after listen­
ing for three days to splendid addresses by men of re­
nown, I confess that I feel like a lost chord in this har­
mony of chin music. Therefore, in our sympathy for
each other, let us now learn that—
For every ill beneath the snn
There is a remedy or none;
If there be one, then try and find it—
If there be none, then never mind it.

Any lack of preparation on my part to-day is due to
the fact that I have been extremely busy trying to influ­
ence our depositors to go to the war and our borrowers
to stay at home. My ! how deep patriotism has struck
into this latter class. Again, following the example of
a large New York bank, I’ve been urging the surplus
help in our banks to go forth in the defense of their
country—and mine. They refuse to accept this three
years’ vacation in lieu of the customary two weeks, and
they reply :
Some may go to Philippines, and others go to Rome,
Some to Santiago, but we will stay at home.

I come, too, from the land of peace and plenty to
greet you in your prosperity—all of which is due to the
righteous war in which our country has been engaged—
I come to you from a State whose gold crop—cotton white like truth, soft like our native zephyrs, has never
once failed to cancel the annual obligations of our,
people.
Your committee has requested me to give you a syn­
opsis of the methods by which we have successfully or­
ganized and maintained 25 banks, located in small
country towns. Competition renders it well nigh impos­
sible to successfully conduct a city bank under our
strict rules and by-laws. I therefore speak to the Country
Banker and from personal experience.
A city banker said to me yesterday : “ How can a




man run 25 banks ? It is all I can do to run one.” I
told him it depended largely upon the capacity of the
man and also upon his faith in mankind. I believe there
are a great many men of brains and unquestionable in­
tegrity ready to hire. Along this line we have had no
trouble. When we began giving banking facilities to
rural districts, our critics were legion, and many friends
predicted disaster. That has all been changed by the
past ten years of unequaled success. I can cite to you a
number of corporations in the United States which suc­
cessfully run hundreds of branches. Does not the tele­
phone and the vestibule train of this electric age multiply
one's capacity f The fact is banking must take on pro­
gressive methods as well as other lines of business.
Theory is one thing, fact is another—the theory of
medicine is one thing, the practice of it another. Only
two people know the effect of a dose—the man who gives
it and the man who takes it. Castor oil is not given in
a tea cup now; it is capsuled. A 60 day bank note was
once the limit, but now a six months’ note sells as read­
ily. It is not unprofessional now for the banker to ad­
vertise his wares and drum for trade. It is not incon­
sistent with conservative banking to contract for the
future delivery of money as the merchant does for
goods. The severity of the panic of ’93 with its dis­
asters can never be repeated in this country, because of
the new methods of banking, and because the clearing
houses of money centers have a remedy for panics.
Across the face of a Grecian temple was written
these words : “ Know thyself.” Across the ledger of
every country banker I would write these w ords;
“ Know thy depositor.” It is all well enough to get In­
troduced to yourself now and then, but, fellow banker,
take my advice : Know thy depositor and know him
well. “ The study of mankind is man,” said Pope. I
don’t know what bank Mr. Pope was connected with,
but in this he spoke words of wisdom.
Speaking to you from the book of personal experi­
ence, I advise you, in starting a country bank, to locate
in a moral community with sufficient business to warrent your enterprise. In selecting a board of directors,
choose men of integrity and known business ability
rather than rich men with large commercial connections.
Choose men of character rather than men of reputation
—there is a difference. It is often the case that when
the reputation and character of the same man meet, it is
without recognition, and the now popular little song,
“ We Do Not Speak as We Pass By,” is apropos. Next
operate under a charter and always keep the law on

32

B A N K E R S ’ C O N V E N T IO N .

your side. Be an independent bank—not a branch. Be
liable only for your own debts, for Solomon, that an­
cient banker of Jerusalem, said : “ He that goeth surety
shall pay the same.”
Allow the cashier to hire all the help and hold him
responsible for their acts. Suggest that he do not hire
city boys when he can get country raised. The habits
of a man are expressed by the facial poles; the clothes
and manner of his associates tell their character. The
eyes and swagger of the dissipated always tell the em­
ployer everything, unless he is blind.

•

How can a man on limited pay
Charter a seat at a popular play,
And purchase cigars and tobacco, pray ?
He Can’t.
How can he sport an elegant tile,
Ask his dear friends to step out for a “ smile ” —
And stable a 2:40 a mile ?
He Can’t.
How can he claim his dear girl’s hand
And circle her finger with glittering band—
When his check-book’s so weak it scarce can stand ?
He Can’t.

Do not permit renewals and extensions of notes»
“ How can you prevent it ? ” asks one. As you are the
pioneer banker in the new town, do not begin i t ! A
man came into one of our banks to ask for an extension
on his note. He brought with him his wife and three
children (this was to influence the jury). The cashier
refused to grant the request and held up the great gold
seal of Georgia, saying: “ See that ? Will you force me
to protest your note ? ” “ My God ! ” the man ex­
claimed; “ what will become of my poor wife and chil­
dren ? ’’ The cashier told him it was three hours before
closing time. The man went out, got the money, paid
his note. It depends on how you bring ’em up. Never
ask a renewal or extension of your own payables. You
fixed the due date and signed it—meet it.
Deal liberally with your correspondent, “ tote fair ”
with him, and, my word for it, he will with you. As
our dealings have been largely with New York, I have
this to say: Never yet has a New York bank officer
gone back on his word to me, although we have dealt
with many of them for ten years, embracing two panics
and several tight fitting money periods. Learn a lesson
from this, country banker, and never allow your bank
to promise what it cannot certainly do.
Next, require that all obligations put upon your bank
be by the written consent of the Board of Directors and
the financial agent. Do not go into schemes—stick to
your last. Or, as another has said, “ Behold the postage
stamp, how it sticketh to one thing till it gets there.”
A banker once went in to boom real estate. To his sur­
prise real estate went down, and his bank went up. In
rhyme he tells the sad story:

Defalcations result from fast living and are often
due to the indifference of superior officers who do not
feel it incumbent upon them to look after the deport­
ment of their employees. Hear me, men of position and
influence, and remember that as you are stewards of the
stockholders in the bank you run, you are (whether you
accept the charge or not) also your brother’s keeper.
Bond the cashier in a guarantee company in an
amount equal to your capital stock. Charge the pre­
mium to expense account. Require the cashier to fur­
nish also a culpable negligence bond. Make him liable
Just about three years ago,
for all losses the bank sustains from overdrafts,allowed
I bought a lot and bought it low—
j
and from dealings with strangers. Limit the amount
The man that sold it told me so,
)
And he’s the one that ought to know.
’
of loans he may make to $50 each.
Fifteen thousand was the price;
!
Attached to all other notes in the bank should be the
He didn’t have to ask me twice—
!
borrower’s application, stating the amount desired, the
I paid it half in one big slice,
]
time and the security, all approved by the signatures of
And felt as rich as Calvin Brice.
1
And for the rest I gave my note.
a majority of the Board of Directors. Do not permit
And as my name I glibly wrote
any loans to be made to any one on single-name paper—
I had no thought no mor’n a goat
unless otherwise secured—no matter what the commer­
How big the load I’d have to tote.
Now I sit in silent gloom,
cial rating may be. Moral risk is your first consideration
Thinking of my awful doom;
in making loans. Character is always your best col­
I want to lie me in my tomb
lateral, and next to this consider the business capacity
Before we hit another- Boom.
of the borrower. Again, do not go away from home to
Next, I advise the country banker to have no par
do business.
points. One country bank received a letter asking for
In a town of one thousand population employ $15,000,
a list of his par points. He replied by sending a picture
capital, and that in cash. For a population of, say, 2,500 use
of Mephistopheles with the hand pointing downward.
$25,000. Keep out of larger towns if you want large
Another explained his change charges of 1 per cent, in
profits and contentment. Direct all your energies to the
this way: % per cent, for collection, % per cent, for ex­
protection of the stockholder, for he is the third and last
change and
per cent, for wear and tear on the money,
claimant to the assets of the bank. When he is safe, of
and added postage free. There will always be kickers,
course, the depositor and all other creditors are secure.
but you are not to get angry. Reason with them. Tell
To enforce these rules and to prevent a bank from be­
them that:
coming a “ one man bank ” or family concern, place a
De dry wedder breaks wid a big thunder-clap,
majority of the stock abroad and in the hands of people
For dare ain’t no drout what can las’ ;
who are in position to render some service.
De season what hoops up de cotton crap,
Employ as financial agent for your bank a man living
Likewise freshens up de gras.
in a‘ money center, and who is beyond all doubt a per­
During the Civil War, when everything in the South
son of integrity and strong financial connections. He
was high priced, a soldier called upon a Hebrew mer­
is to employ an expert accountant each year to examine
chant to buy a needle. It was priced $1.50. “ But,”
the affairs of the bank—not using the same examiner
said the soldier, “ ain’t that too high for just one
twice. For a plan of examinations I refer you to page
n eedle?” “ Mine frient,” said the Jew, “ you forgets
No. 1,185 of The American Banker, by Mr. A. W.
to cound de freit.” “ But Murphy next door only asks
Ehrarn, Detroit, Mich.
50 cents.” “ Yell, vy doan’t you buy from Murphy ? ”
Don’t borrow money of your own bank, for in case
“ He is out.” “ Veil, if I vas oud, I vill sell den fur
you fail it looks and feels better to owe the other fel­
foofty cent, too.” A man may be close and use a wart
low’s bank.
bn the back of his neck to save the price of a collar
- Pay only small dividends or none until your surplus
button; stop his watch at night to save wear and
equals or exceeds your capital. We began by paying 40
tear; tie lightning bugs to his bee-hive so that the bees
per cent, dividends, but we have learned better. Be
can see how to work at night, but lie’s a philanthropist
free to dismiss any employee at any time. Let faithful­
and a scholar to the man who kicks at
per cent, ex­
ness and ability insure a life job. The Methodists do this.
change charges of the country banker.
Who shall say that the faithful porter, the runner and
Lend your money to your regular customers, and do
the teller are not entitled to some credit for the splendid
not make a rule of buying commercial paper. It has
showing the president exhibits to his stockholders at
always been a queer thing to me that the city banker
their annual statement ?
will buy merchants’ paper at 3 per cent, in preference




B A N K IN G
to the rediscounts of a country bank at 5 per cent, and
6 per cent. A well managed country bank with a capi­
tal of $25,000 is entitled to the same credit basis as a
mercantile house having a rating of six times that
amount. The records show that 97 per cent, of the com­
mercial houses fail, while in some States (the State of
Georgia, for instance) not one country bank has failed
since the close of the Civil War. The bank’s note is
always accompanied with collateral; the merchant’s
note never. The bank is under State supervision and
bonded officers, the bank’s published statements are
made under oath; not so with commercial houses. The
bank’s assets belong to the creditors; not so with the
merchant when he fails. But like the Jew when he
went to join the First National Baptist Church. The
deacon, asking him “ Question No. 32,” said: “ And now,
Brother Frolicstien, are you sure you have got re­
ligion ? ” But before he could reply, a creditor in the
rear of the congregation rose and said: “ Don’t dake
heem in, fer uf hee’s got releegion it’s in hee’s vife’s
name.” Following these suggestions I guarantee that
yours will prove to be the unbreakable and frequent
dividend paying bank, having but one weak point, and
that the possible failure of the City Bank with which
you deposit.
Now in conclusion, though you forget all else I’ve
said, remember that nothing can take the place of
brains in the successful management of a bank. Re­
member that no amount of capital with brains can take
the place of that one qualification so essential and




S E C T IO N .

33

widely recognized as peculiar to bankers—integrity.
No bank can live without it. Birth and education do not
guarantee it. F. F. V. sometimes stands for “ Full
Fledged Vagabond.” Of the banker, it should be said
that his word is even better than his bond. The oldest
book in the world closes the biography of its hero with
these four words: “ He maintained his integrity.”
Choose rather a banquet of crumbs than* the luxuries
of ill-gotten gain.
Seneca, one who had traveled most, said: “ I have
seen everything and everything is nothing.” Caesar, a
man of greatest fame, said: “ This little urn will soon
hold all of him who to-day the world cannot contain.”
I have seen the millionaire carried out of his palatial
home in a small box that would fit the poorest of us.
Life is short, but character is long. The coin we handle
daily does not pass current in the Celestial Realm. We
can only be rich pro tern. So, young man from the coun­
try bank, be content. Live so as to render a good state­
ment of your own personal stewardship, and to find
yourself a stockholder in that Big Bank above which
shall pay dividends through all eternity. Then depart­
ing you may say:
Life, we’ve been long together
Through pleasant and through cloudy weather—
’ Tis hard to part when friends are dear—
Perhaps ’twill cost a sigh—a tear;
Then steal away, give little warning.
Choose thine own time.
Say not good-night, but in some brighter clime
Bid me “ Good-morning.”

Detailed Report of Proceedings.
TWENTY-FOURTH ANNUAL CONVENTION, HELD A T

FIRST D A T S MEETING.
Tuesday, August 23,

i 8q 8.

The President: The hour of ten o’clock having ar­
rived, by virtue of the authority reposed in my office, I
announce the Twenty-fourth Annual Convention of the
American Bankers’ Association now in session and
ready for business. The proceedings will be opened
with prayer by the Rev. Chancellor W. P. McDowell,
President of the Denver University.
[After prayer a motion was made to dispense with
the roll call, which was carried.]
The President: I have the pleasure now of introduc­
ing the Governor of the State of Colorado, the Honorable
Alva Adams, who will address us in words of welcome.
Address of Alva Adams, Governor of Colorado.
“ The bankers last year held their convention at
Detroit, convenient to a foreign land; to-day they give
a guarantee that confidence has been restored by meet­
ing in the center of the nation.
“ We welcome you to the land of gold and silver,
and what you may call financial heresies. It is true
we still believe in the money theories of St. John, the
only saint on the past roll of your association, but we
will not do violence to the rules of hospitality by inter­
fering with either your religion or politics. While we
may hope for your reformation, our prayers will be
silent and unspoken, but our welcome will be as ardent
and sincere as a great State can extend to the most im­
posing financial convention of the age.
“ There are no tears in our greeting; Colorado is
playing no dead march from Saul; we join every sec­
tion of our country in an anthem of prosperity and in
singing the ‘ Star Spangled Banner.’
' “ We look upon the best year in our history; more
dollars for our products, more mortgages canceled,
more glory than was ever before garnered in a single
year.
“ As we welcome you to our hearts and homes we
ask neither references, indorsers nor collateral. May
you manifest a living faith in reciprocity when we re­
turn your visit.
“ Colorado is young in years, but it has gathered
many prizes from the fields of achievement. While the
skies of the future are purpled with the prophecies of
a sublime destiny, our banking history is in its infancy,
our greatest banks and business houses are still guided
by those who founded them. We cannot refer or point
to the institutions of our fathers, for they are our own;
we did not fall heir to them, but built them. Others
may have more, but our little has come with the thrill
of personal victory, the joy that industry feels when
it masters the virgin wealth of new lands.
“ Before the panic there were thousands who felt
that they could manage finances better than the old
conservative fogies who directed our banks. Many put
their faith to the test. After the battle, in the midst
of scattered fortunes and broken lives, they realized
that they were as ill-fitted for the crucial periods of
banking as were Montejo and Gervera to meet the fleets
of Dewey and Schley.
LESSONS OF THE PA N IC .

“ The panic brought its lessons, not the least of
which was that banking is not based alone upon in­
spiration, that every real estate dealer, every farmer,
merchant, horse-trader, lawyer, is not a financial Na­
poleon.
“ In this region we also learned that equities in real
estate or stock in the only safe, certain and painless
rupture cure are, as collateral, upon a par with Spanish
honor. W e have learned that it is not well for banks




DENVER, AUGUST 23, 24 and 25.

to be hungry for business, that it is better to foster
tradespeople, merchants, manufacturers, legitimate
business enterprises at moderate rates of interest rather
than the promoters, the speculators who would con­
vert every farm into town lots and every village into
a phantom metropolis.
“ The banker of to-day does not need any warning
danger signals to avoid the leading citizens—the prom­
inent, enterprising, big man who is to transform the
old, push away the conservative men and methods,
and inaugurate a new, expanding day.
“ It is easy to be enterprising, public spirited on the
cash that has been accumulated by the sweat, callous
and sacrifice of others. Bankers are not now looking
for partners who furnish gray matter and maps as off­
sets for cash. They are not alchemists, not magicians,
they cannot make coin. There may be something
supernatural about a lottery or a game of craps, but in
banking there is no element of mystery—it is founded
on solid ground. Integrity, industry, common sense,
are the agencies of the banker’s power; when he de­
parts from these landmarks, when he hungers for busi­
ness and cashes the drafts made upon hope and pros­
pective findings of a hazelwood rod, he courts disaster.
Leiter sought a royal road to wealth. Thank God he
did not find it. Better a single wreck than the poison
and danger that would come from the success of a
collossal gamble in human food. The panic was an
object lesson that was not lost upon the American peo­
ple; this was manifested in the subscription to the
recent issue of Government bonds; the subscribers pre­
ferred the *beautiful simplicity ’ of the three per cents
to the glittering hazards of speculation.
“ I am glad that it was the citizen at large and not
bankers and syndicates that absorbed the bonds. Your
loss has been the gain of the nation, as every holder of
a bond becomes a stockholder in the Government; he
has a personal interest in the wise administration and
welfare of the country; he is a better citizen, more
loyal and patriotic. No man was ever an anarchist
that held a deed to an acre of land or had a share of
Government stock. Fortunate is our country that
every bond issued to pay for the war has remained at
home. The wisdom of Voltaire was never more clear
than when he said that ‘ a State that only owes itself
will never become impoverished, while its very indebt­
edness will become a new and powerful incentive to in­
dustry.’
POSTA L SAVINGS SYSTEM.

“ That there might be a close financial relationship
between the nation and its citizens, I would, if I were
Czar, order the immediate establishment of a postal
savings system. I would also make the United States
a guarantee for the deposits in National Banks. To se­
cure the Government against loss a general indemnity
fund would be created by a nominal tax against all
banks. The loss to depositors by National Banks since
the creation of the system has been less than 2 per
cent, of the present capital stock of the banks of our
country. The same small tax would pay all probable
losses to depositors for a generation; it would be in­
significant compared to the benefits. It would drive out
of business the old stocking, bureau drawer, cellar
banking. It would injure the safety deposit business,
but in return for these endurable calamities (?) we
would have an era of confidence that would prevent
panics and throw into the channels of active business
the entire volume of our money, instead of less than
half, as now. Of course, strict governmental inspec­
tion would be necessary; this should be required under
any system. It is not the law that is at fault in na­
tional banking, but its enforcement. From my inves­
tigation I am convinced that every bank that suspended

B A N K IN G
in 1893 in the West could charge their disaster to the
violation of the laws and instructions of the Treasury
Department. Hereafter more respect will be paid the
law. Membership in the same church or the same
poker club will not justify large overdrafts or excess
loans on spiritual collateral or second or third equities
in jack-rabbit additions. The day has passed when the
banker can be the backer and indorser of every wildcat
enterprise. The depositor will now hold him respon­
sible for his investments as well as his character. Like
the preacher, his life must be above suspicion. He can­
not play the part of the English aristocracy to the
schemes of Hooley. He cannot coquette with the banks
whose name recalls the ancient rulers of Egypt, nor in­
dulge in the other questionable amusements of the
electric hours. He must be a gentleman, but he can­
not be an all ’round sport and good fellow and retain
confidence.

SE C T IO N .

35

see from whence comes the gold and silver—the only
safe basis for a true monetary system.
“ You meet at an auspicious time. The valor of our
soldiers, the power and triumph of our navy has been
a strong nerve tonic to the American banker. He is
better prepared than a few months ago to meet the
responsibilities that face him. You stand at the open
door of a new era. From your ranks must come the
financial skill and genius that will shift the money cen­
ter of the globe from the Old to the New World; the
seat of power is to pass from the Orient to the Occi­
dent. Before you is a financial field as wide as the hori­
zon that bounded the dreams of Columbus. Like the
British sovereign, we shall soon see the emblems upon
American coin symbols of money through 180 degrees
of latitude and 360 degrees of longitude. As ambassa­
dors of that imperial industrial and financial destiny
we greet the bankers of America.”

QU ALIFICATION S OF B AN KERS.

“ Intelligent selfishness is a necessary quality in
banking. When you see a banker who is unselfish,
who is booming every public enterprise, who is a gen­
erous, liberal, everybody’s-friend sort of a man, take
my advice and put your money in some other bank.
The ancient bank of St. George, at Genoa, is the only
bank in history that has been able, without disaster,
to meddle in all affairs, to manage everything from a
bakery to a political caucus; from the building of mon­
asteries to the equipping of an army.
“ The community expects a high standard in its
bankers. So far reaching and disastrous are the re­
sults of bad banking that the people are justified in de­
manding that those who hold their funds shall be men
of integrity and character. By its very nature a bank
is a public institution—different from all other commer­
cial industrial concerns. A private bank is a misnomer
and ought not to be permitted by the law.
“ In the record of this association I notice that you
have established a ‘ bureau of education, to educate
people as to what is the true character and operation
of banks.’ As there is a widespread idea that banks
profit when others suffer it might be well to let the peo­
ple know that no other suffers so much from hard times
as the banker, and panic is a period of agony and dis­
aster to him—aside from this.
BAN KERS A N D EDITORS.

“ I fear you are too sensitive to criticism; I know
a banker is a valuable weapon in the denunciatory ar­
senal of the political orator, and is used instead of
Mephistopheles as a text by the campaign editor, but
you know they do not mean half they say or write. It
is like the measles or mumps, unpleasant but not seri­
ous. When we come to call upon you for an accom­
modation or to sell you a book or get a subscription
we always take off our hat; in fact, in personal con­
tact the community shows so much deference to the
bankers that the political editor and orator may be
necessary as a counter irritant, to keep them from
setting themselves up on too high a pedestal. You
might, if all sang your praise, be emulating the Pilgrim
fathers, who met and passed the following resolu­
tions: * Resolved, That the righteous shall inherit the
earth; resolved, that we are the righteous.’
“ The saints of old thought that pebbles in the shoe
and a hair shirt were necessary to keep the wicked
desires of men in subjection. Perhaps it is the divine
intention that in place of the hair shirts and pebbles
the Populist resolution and the Shylock caricature are
to be the agencies that are to keep you humble and con­
trite.
“ It is no doubt the Christian and benevolent design
of the Populist to crucify and mortify the proud spirit
of the banker so that he will feel so lowly and small
that he may easily pass through that Biblical symbol
of the rich man’s gateway to paradise—the needle’s eye.
“ In conclusion, we welcome you to our homes and
cities. Meet our people, go into the mining camps and




The Mayor’s Address.
The President announced that the Hon. T. S. McMurray, Mayor of the City of Denver, was unable to be pres­
ent and take the part assigned to him in the programme.
Address of Welcome by Joseph A. Thatcher,
President Denver Clearing; House.
Mr. Chairman, and Gentlemen of the American Bankers’
Association:
It is my pleasing duty on behalf of the Denver Clear­
ing House Association to extend to you a hearty wel­
come to this city. It has been our good fortune to have
many important conventions held here during the year;
but this one seems to me to be very different from all
the rest. If one did not know the purpose that brings
these delegates together, he might, in looking over them,
take it for some great church council assembled in our
midst. I see here no tumultuous political excitement, or
eager self-seeking partisans, with personal ambitions to
gratify, as are seen in political gatherings, nor have we
any learned doctors to enlighten us on the newest dis­
eases of the land, in language that paralyzes our under­
standing and threatens us with heart failure; nor yet,
do I see any resemblance to that busy, bustling, brilliant
scene, the Woman’s Great Biennial, or even to the W.
C. T. U.’s. But on a more careful survey of this large
assembly, I am impressed how like it is to the great
labor conventions that have been held throughout the
country, for it can be seen at a glance that here are
gathered the true representatives of the bone and sinew
—the brawn and muscle of the land. Still, as I said, this
convention is different from all the others, and in ad­
vance of them in this, its aims and objects are solely
philanthropic, the “ Greatest good to the greatest num­
ber,” etc. No one will question this for a moment. We
have three days’ hard labor before us. I would advise
getting to work early each day, say by 12 o’clock, in
order that we may have the afternoon and evening for
rest and recreation, and I would follow the safe old
adage, “ do nothing to-day which you can put off until
to-morrow.”
We all know how well this rule has
worked with those persistent borrowers (without col­
lateral), who must have the loan to-day. Your labors
will be comparatively brief, but arduous, and as some
slight reward, we, the citizens of Denver, invite you to
join us in such pastimes and hospitalities as have been
arranged or provided for by our entertainment com­
mittee. At this season of the year our usual amuse­
ments are limited; our theatres are closed, policy shops
closed up, and our policemen on a vacation; but ar­
rangements have been made whereby all. the churches
are to be kept open day and* night during your stay
among us, which, no doubt, will be duly appreciated.
We have not the age, nor wealth, perhaps, of many
cities which have entertained the American Bankers,
and we cannot do all that we desire to do for them, but
whatever we have is yours.
Denver bids you all a
generous welcome to her fair skies and salubrious cli­
mate, and all Colorado invites you to enter into each

36

B A N K E R S ’ C O N V E N T IO N .

city and hamlet and make it yours. These everlasting
mountains invite you to explore their beauty, their gran­
deur, and their riches. With rod and fly you may follow
the innumerable streams that flow out from their base
up to the rim of that perpetual snow that crowns their
rugged heights, and ensnare from the cool, clear, dash­
ing streams the speckled mountain trout, or the bold
and gamy rainbow.
“ Just at the dubious point where, with the pool, is
mixed the trembling stream, or where it boils around the
stone, or from the hollowed bank reverted plays in un­
dulating flow, there throw with eagerness the delusive
fly, and as you lead it round in artful curve, with eye
attentive, mark the springing game.”
Or you may go in palace cars to our natural parks
lying inside the first grand rocky range and there hunt
the antelope and black tailed deer; or, again, those who
would wish a still greater sensation than these sports
may give, can push beyond these parks and penetrate
the second range of wooded hills and there find the
kingly elk, the mountain lion and the grizzly bear.
But, perhaps, some of you care not for such sports
and would rather delve into the hidden riches of our
mountains and thereby learn the main sources of our
wealth by easy cars, then go to Cripple Creek or Aspen,
to Leadville or to Gilpin, and see the deep shafts and
long levels made by the skillful miner to yield the native
gold and silver ores, which, when treated, swell the na­
tions’ wealth. Our smelters, too, will bid you welcome
to their plants, where you may see and learn the intri­
cate and delicate way in which the values are obtained
from the crude ore, and then imagine if you can, the
boundless wealth hidden within these hills, whose con­
tinuous outflow alone would enrich the world.
There are, no doubt, mingled with these delegates
from the East, single young men and “ shady ” bache­
lors. Let me speak a word o f hope to you. If lack of
courage or excessive modesty has been the impediment
in your pathway to earthly bliss, why not come West ?
Why not come to Colorado, where you can have a show,
where woman suffrage makes the fair sex once our
superiors, now our equals,” a prize indeed above all esti­
mation ? Here a woman can attend the primaries and the
conventions, be elected a city father, serve upon a ju r j,
or hold any office, all of which we men despise, whilst
we can stay at home in quiet, attend the children and
draw her salary. Very convenient I assure you.
But no matter whether you follow my advice in any
of these things, let me express the wish that when you
do return to your homes in the East, and once again
take up the daily round of duties, so vast and important
to the financial welfare of the whole country, may you
be refreshed in mind and body by this visit to Colorado,
with enlightened and enlarged views concerning the
geography, the resources, and the possibilities of the
West, and may the knowledge you have gained and the
acquaintances you have made with the people of our
young commonwealth be both pleasant and profitable
and result in a broader, deeper and kindlier feeling each
for the other as the years go by.

State. (Applause.) Why, he would pass in Massachu­
setts. And as for the President of your Clearing House,
what shall I say? Do you really think- that he is a
banker; that he has anything to do with settling clear­
ings day by day? Why, he ought to be a poet. (Ap­
plause.)
I am reminded of a story of a party of scientists
who came out into this country from Washington. They
were under the guidance of an old army guide named
Joe. One day after having been skirmishing around
the country, coming back to the campfire at night, they
began to examine some little things they had picked up.
Joe thought he knew everything about this section of
the country, and seeing them with their heads together
intent upon their examination, he was curious and went
over to where they were and said: “ Gentlemen, what
is interesting you so much? ” They said: “ Why, look at
these petrefactions. Here is a petrified toad, and there
is a petrified fish, and here is a petrified leg of a bird.”
Joe said: “ Oh, that’s nothing; wait until to-morrow and
I will show you a whole field of corn waving backward
and forward in the sunshine, all petrified. Then I will
show you a running brook full of swimming fish, all
petrified. The next day I will take you to the edge of a
cañón where you may look down and see in -the depths
of the gulch a campfire, with Indians holding a war
dance, all petrified.” “ Well,” they said, “ that is very
remarkable; we never knew we were going to strike
such a country as this.” “ But that isn’t all,” said Joe.
I The next day I will take you to the foot of the cañón,
and you may look up and see the rocky heights a mile
high, and .the sky showing between like a little blue rib­
bon, and if you look sharp you will see a buffalo appar­
ently jumping from one of the cliffs to the other, all
petrified.” That was too much. “ Now stop,” said the
scientists to Joe; “ you may petrify your field of waving
•corn and your running brook and your dancing Indians,
but when it comes to petrifying a leaping buffalo, and
hanging him suspended in mid-air, we cannot stand
that.” , “ Why do you object to it? ” he said. | Don’t
you know,” they replied, “ that there is such a thing as
the law of gravitation, and that whatever goes up—even
the price of Colorado real estate—(Laughter)—must come
down, and that the law of gravity would bring that
buffalo down? ” “ Well,” said Joe, “ of course there is
the law of gravity, but don’t you see the law of gravity
is petrified, too.” (Prolonged laughter.) Now we have
been petrified in our astonishment by a great many
things since we came here—the magnificent, luscious
watermelons; did you ever taste anything like them ?
Why, if the Sultan of Turkey should taste one of them
he would order a refrigerator ship to bring over a sup­
ply for his harem. And this wonderful irrigation of these
magnificent fields, and this mysterious climate, and the
wonderful displays of nature in the garden of the gods
—all of these things petrify us, but the law of gravity of
our minds seems petrified when we strike such a level­
headed man as the Governor of the State of Colorado.
(Applause.)
Governor, when you get through being
Governor, come East and we have got a good bank wait­
ing for you. (Laughter and applause.)

Reply to the Addresses of Welcome by Joseph C.
Hendrix, President of Association,

Annual Address of President Hendrix.

Your Excellency and Air. President, I wish our sched­
ule permitted me to indulge my own feeling, and that
my ability seconded it, to fittingly respond to the wel­
come that you have extended to us. The simplest words
of our language after all are the best, and in behalf of
the American Bankers’ Association, the largest associa­
tion of bankers on the face of the globe, as well as the
oldest, I thank you. I would like to say more, but the
fact is, ladies and gentlemen, this high altitude upsets
one’s equilibrium, and the distance is so alluring and de­
ceptive that you are never quite sure just exactly where
you are going until after you have gotten accustomed to
your surroundings, but there has been nothing so aston­
ishing to me since my entrance into the State of Colo­
rado as to find such a level-headed Governor of the

Gentlemen of the American Bankers' Association :
Since our last annual gathering so many things have
occurred that it is difficult to choose which of them to
discuss. Indeed, the temptation is to maintain silence,
or, according to our business habit, to observe, to reflect,
to consider, and to say no more than is necessary. Cus­
tom, however, compels an opening address; but out of
the abundance of food for thought what shall one
select ? From the time we parted a year ago at Detroit
—all wondering at the commerce upon the great inland
seas of the North, and the future it betokened—until we
started to Denver to get rest and new ideas, we have
been busy men, and ours has been a busy country. We
have seen the fog of depression lift, the sunshine of pros­
perity come. We have seen the difficult problems and




B A N K IN G
acute conditions, which perplexed the learned and con­
fused the experienced, disappear as a fever leaves the
body, and the restless, active, progressive American
business spirit resume its old-time dominion. The Re­
public, which but a short time ago seemed to fill some
hearts with despair, has so unfolded its flag that the
sun cannot set upon it, and the whole world has in­
creased respect for the army and navy of the United
States. The spirit of sectionalism, that once threatened
to be a thorn in the flesh, has lost itself in the strife of
the South and the North, the East and the West—through
regulars and volunteers—to prove their fighting qualities
in honor of a common country and our kind of civiliza­
tion. The men who used to say that our country was
too large, our interests too varied, and our ability to
govern ourselves too uncertain, are now talking about an­
nexation, conquests, military governments, new fields
for commerce, and a new trade to follow our flag. It
has been a funeral year for a number of doctrines. The
commercial power of our nation has had an intense
awakening. The man behind the gun has done great
work, and the man behind the plow has broken the back
of our hard times, but the man in the factory is looming
up, and he has to be reckoned with. He can produce
more than home markets can consume, and he does not
purpose to stand idle for a part of the year if he can
help it.' We have become a great manufacturing nation,
and we have the Anglo-Saxon thirst for wide markets
growing upon us. Ship plates from Pennsylvania are
being used upon the Clyde. Steel rails are going to Aus­
tralia and Japan. The lowest bid to furnish Glasgow
with iron pipe and to build a steel bridge in Holland
was in each case from an American manufacturer. The
export of domestic manufactures has doubled in ten
years. The promise of experience—that the country
which can produce iron and steel at the lowest cost will
control and dominate the commerce of the world—is
awaiting us, now that Alabama is dictating the price of
pig iron and Pennsylvania is fixing the price of steel.
We hold now three of the winning cards in the game for
commercial greatness—iron, steel and coal. We have
long been the granary of the world; we now aspire to
be its workshop. Then we want to be its clearing
house.
We are told that here in Denver we are a “ mile high
in the sky.” It is then a good place as well as a good
time for a survey of things. This wonderful West en­
larges our vision. This clear air gives us command of
far-distant scenes. In this climate they say a man can
accomplish more work than in any other. Perhaps he
can think bigger thoughts. At any rate, as we look
round and see the wide-winged forces of good order, in­
dustry and enterprise sweeping over this land, and the
birds of ill-omen taking their flight; as we feel the
fresh, stirring breeze of a new era of prosperity, and
watch it sweep the cobwebs out of the brain and the
dust off the hearts of men; as we catch the song of har­
vest-home from the valley and see the fat cattle on the
hillside; as we see a new roof going on the church and
a fresh coat of paint glistening on the little red school
house, we bankers from Osceola, Kalamazoo, Mrall
street, Boston and ’way down in Maine, want to uncover
and thank God that this is all our country and that we
live in it at the dawn of a new century. We want to
testify that we believe in the United States of America,
internally, externally, eternally. The hard times are
over; popular discontent has vanished, and the great
North American chase for the dollar—first to get it,
then to spend it—is in full cry.
The only thing that we know with certainty about
hard times is that they at last come to an end. Our
most recent period of depression ended so suddenly that
we can hardly realize the why and wherefore of it. At
the* beginning of this year the music we all love began
once more. The first six months of 1898 has broken the
record. We have never seen such bank clearings, never
have had so many deposits and have never held so
much gold as in that period. The railroads have never




SE C T IO N .

37

carried so much freight. Three-fourths of all the
staples were higher on July 1 than they were the year
before. The monesrcirculation in the past year increased
$197,400,000, and most of it was gold. The per capita
circulation increased $2.17 for 74,522,000 people. Two
great harvests have been cashed, and through the car
windows coming here we saw a third getting ready.
Less than 5 per cent, of the railroad mileage, out of 20
per cent, in 1894, remains in hands of receivers. Geor­
gia has sold her peach crop for $2,000,000, and is await­
ing the returns from the watermelons. And this is but
half the story.
This is* the twenty-fourth annual convention of the
American Bankers’ Association. We have 3,350 mem-%
bers, representing an investment of more than a billion
dollars in the business of banking and the custody of
more than four billions of dollars of deposits. It is thfe
oldest and the largest association of bankers in the
world. When it was organized our country was on a
paper basis. The first resolution of the American
Bankers’ Association sought to hasten the day “ when
every promise of our government to pay a dollar
should be honestly redeemed in coin.” That day came.
Since the resumption of specie payments our govern­
ment has redeemed over $500,000,000 of its demand
notes and paid more than $1,300,000,000 of its bonded
debt in gold. Then, as now, the question of currency
was “ the conundrum of the period.” The struggle was
to get to a specie basis. The bankers of the first conven­
tion talked about the retirement of the greenbacks, tak­
ing the government out of the banking business, and
the war tax; and nearly a quarter of a century later we
face the same questions. We may appear to have
traveled in a circle, but in truth we have made excur­
sions in experimental finance, and are at the point of
departure, having confirmed, in the meantime, some of
the political economy of the rest of the world. Our na­
tion has been called the greatest experimental labora­
tory in finance the world has ever seen, but a period of
more exact and scientific thought upon money and bank­
ing questions is at hand. Public opinion has been clari­
fied, and it is evidently settling down to a purpose to
bring our financial system to the eminence we have
justly won in commerce, agriculture and manufactur­
ing.
But no matter what may be said of our methods in
domestic finance, the effective financial power shown by
our nation in honestly redeeming its obligations in gold
leaves no doubt anywhere of our ability. We have been
too busy in this country, perhaps, to study economic
questions. They have been forced upon us by hard ex­
perience. We have had the lessons and our country has
profited by them. The political campaign of 1896 was a
great educator. Both sides of the question then at issue
were presented with unusual skill. The popular discus­
sion went to the very foundation of the money question.
As a result there is a clearer notion of a standard of
value than ever before, and a better understanding of
the difference between a standard by which we may
measure values and a currency by which values may be
transferred.
In the past year there has been much discussion of a
reform of our credit currency system. This discus­
sion has reached a stage of great interest to us
all. It presents definitely a question of national policy,
very old in history, as to whether the nation shall
reserve to itself the power to issue credit cur­
rency, or whether that, power shall be devolved upon
banks. Every nation that becomes involved in a paper
issue struggles to get free from it. Our paper currency
is an unpaid debt of the Civil War, and in retaining it in
our financial system we have had an object lesson, for
many years, presenting its benefits and its evils. These
may be weighed one against the other. Any currency
system which develops evil must have a better reason to
exist than that it is an economical form of national debt.
Like an egg, it is good or bad. In this period of low in­
terest-rates, the burden of an interest-charge would be

38

B A N K E R S ’ convention.

light compared to the interference with the profits of
money brokers will have to keep us company. The ques­
business that a period of distrust involves. We are all
tion is far above that level. Under the intelligent guid­
familiar with the recurring troubles of our currency sys­
ance of the Monetary Commission appointed by the In­
tem. We have seen the Government credit currency
dianapolis Monetary Convention, a measure has been
menacing financial order, exposing the Treasury to runs
evolved, which has been modified and reported to the
upon its gold, tangling up the affairs of State with pri­
House of Representatives by the Committee on Banking
vate business interests, and confusing a central author­
and Currency. This bill satisfies many objections made
ity, which deals with consumption, by forcing it to exer­
by conservative bankers. It deserves your careful con­
cise a function that is but half developed unless it is re­
sideration. Many objections will be made to certain fea­
lated to production and distribution. Our government,
tures of it, for it contains new and even radical provis­
we all feel, should, in its finances, be perfectly defended,
sions, but though you disapprove of some of the details,
independent of demand obligations, without responsi­
the general purpose of the bill should be recognized, and
bility to its citizens in their own financial affairs, and
should be supported. It is at least a point about which
aloof from complications in the currency situation. It is
the disturbed and distracted opinions on the currency
a|jmatter of perfecting defenses. We have seen how
question may center, and perhaps begin to crystallize
swiftly a war cloud may develop and burst with fury.
We are in a transition state in our financial affairs. We
An exposed treasury is a point of weakness. Other na­
can well afford to take short steps, even though the
tions have found that out, and for that reason, one
footing is difficult, if we feel that ( ve are facing toward
\
after the other has housed its currency affairs under the
solid ground and a straight path.
roof of some strong bank, so that the government might
It is no easy task to create a bank currency system
be free to act in its diplomacy, its finances, its politics or
to fit seventy millions of people, distributed over an area
its wars, without involving the affairs of every one of its
of three millions of square miles, and to meet the diverse
citizens. The issue of credit notes to circulate as cur­
needs of different parts of our country, and to have the
rency, is a privilege either reserved to the government,
system administered under national control through
as at present in our history, with a severe penalty for
many thousand corporate banks. Our complex mone­
any private issue, or conferred upon banks, because they
tary situation adds to the obstacles to be overcome. We
are more closely related to the three great departments
should do all in our power, by counsel and suggestion,
of business production, distribution and consumption.
to perfect the meritorious measure now pending, and to
The safety and uniformity of a currency based upon
encourage the prevailing sentiment it represents. We
bank assets is not open to question. It is a matter of
have more interest in a currency system suitable to
regulation.
our needs as a nation, and our position among the ad­
When this Association met in Baltimore in 1894, the
vanced nations, than we have in any profit that may
bankers of that city, under the auspices of its clearing
come through issuing a currency based upon bank as­
house association, presented a plan known since as the
sets. We have, as an Association, steadily resisted the
Baltimore plan, which has appeared in modified form in
repeal of the 10 per cent, tax on State bank issues. We
most of the subsequent schemes for currency reform.
have uniformly contended for that monetary legislation
1 his has been called the bankers’ plan, but it was merely
which we believe to be for the best interests of our
a theorem in banking, based upon the experience of
country. We have no interests as bankers to contend
England, Scotland, Canada, and upon the facts de­
for, against the common interest of every citizen. Our
veloped under our State and National banking systems.
country is ready, in all branches of its industry, for the
The principle of a currency based upon bank assets and
new period now dawning, and out of the ferment there
secured by a first lien, double liability of shareholders,
will, in natural order, be evolved a system of finance
and by a 5 per cent, guarantee fund, was then proposed
worthy of the destiny to which, as a nation, we seem to
for public discussion. The fact was made very plain,
be committed.. The cloud over the dollar of the United
that if our national bank circulation had not been secured
States, so faint in the sunshine of prosperity, but
by government bonds, an annual tax on circulation of
threatening in time of storm, will pass away, and we
one-fifth of one per cent, from the beginning would have
have faith that financial greatness will keep its his­
met all losses resulting to note holders, without any lien
toric step with commercial supremacy.
upon assets, and that an annual tax on circulation of
The healthful reaction in the tone of the popular
3-100 of 1 per cent, would have reimbursed the Govern­
mind has apparently released the banker of the United
ment for any loss on account of the circulation of failed
States from his political pillory, and we may note a
national banks, if it had had nothing but the assets of
clearer popular conception of the use of a bank in the
the failed national banks to look to.
round of common life. It has been a seed time of pri­
It is often remarked that the bankers of this country
mary truths. Banks would not exist if the people did not
show no great interest in bank-credit currency plans;
want them. The best kind of people require them; the
that they stated the Baltimore theorem as they might
worst kind have none. While law governs them, regu­
have stated an abstract proposition, and that they then
lates them and inspects them for the common good, it
left the field of activity to lawyers, editors, professors,
does not compel anyone to deposit in them, borrow
writers on political economy, and to business men of
money from them or use them in any way. If they are
public spirit. Undoubtedly a conservative feeling exists
not wanted in any community, they can be abolished
among bankers upon this subject. It reflects the tradi­
without the aid of law or politics. They are a tool of
tions of our business in this country coming down from
civilized society. They would exist if our standard of
inflation periods of the past. In a banking system com­
value were like the Rock of Ages, or if it fluctuated
posed of so many units, each one conducted for itself
every hour. They would handle any form of currency
with the zeal and enterprise native to our soil, there is
which was current money with the merchant—from red
presented the problem of the proper use of the privilege
feathers to minted coin.
of issuing currency, without the danger of that bank­
It is characteristic of the American mind that it
note inflation which swells like a balloon, and sooner or
punctures its own fallacies. The banker in the abstract,
later collapses. Where the privilege is devolved upon
who has been so pursued in political discussions, has
a great central bank holding government revenues, or
been found to be the banker in the concrete, who has
large banks with branches, the issue of credit currency
duties and ways of life as simple as those of the vil­
notes comes under skillful and informed direction
lage lawyer, doctor, preacher or teacher. He is society’s
With us, the system must be executed by numerous
treasurer, a practical business expert, a clearing agent
small and scattered banks. The great improvement in
of the purchases and sales in a community, a dispenser
every department of finance, however, renders impos­
of credit, an underwriter of every loan he makes, a
sible the recurrence of the old days of “ wild cat ” and
partner with all his debtors, and a guarantor to all his
“ red d o g ” currency, and we may dismiss from our
depositors. The value of the banker’s assets is so re­
minds the idea, that under any future currency system,
lated to the -welfare of the community with which he




B A N K IN G
deals that he seeks in every way to promote its highest
interests. He spends his time deep down in the affairs
of common life. He is at the nerve center of industry
and feels every pulsation of the life about him. His
strength is in the depth of faculties that involve patience,
courage, self-reliance, decision of character, keenness of
insight and sagacity in judgment. His business is all
of the workaday world, and is one long dead-pull upon
talent, caution and perseverance.
It is said that the banker is one of the creditor class
—a high priest in the Sanhedrim of creditors. He is a
creditor and he is a debtor. He tries harder to increase
his debts than the most energetic borrower. He owes
in more directions than any customer. He owes for his
capital. He owes for his surplus. He owes for his undi­
vided profits. He owes for collection items, less as large
a fraction as the business will stand, and he owes for all
his deposits. His stockholders give him time to pay
them their money. The collection items are paid
promptly for siifflcient consideration. If there is no
consideration, the money is kept until the par point is
reached, and that takes time. The deposits are due on
demand, and it is the good banker’s pride to increase
them daily. If there is a conflict between the creditor
class and the debtor class, the banker must either be
neutral or follow modern instances and rapidly change
his party. He can usually hold his own as a creditor, if,
as a debtor, his class enjoys its full privileges. When he
ceases to be a debtor he does not hold much of a rank
as a creditor. Therefore, as between the debtor and cred­
itor, he tries to be a bi-partisan. But debtor he is, and
prefers to be at the bottom, for then creditor he may
freely become.
Is banking a trade or a profession ? That depends
upon the banker. The man who worms along in a nar­
row groove gets a fixed vision and a contracted brain,
and becomes a shopkeeper of money. To one of wider
view, the function takes on the dignity of a profession.
The field of usefulness is wide. The range of activity
is great. To analyze accounts, to read markets, to un­
derstand aright the tides and the cross currents in the
habits of money, to judge human nature, to detect the
approaching financial storm, to guess the crisis in its
passage, to arrange maturities, to sharply define com­
mercial credits, to fortify against speculative borrow­
ings, to steer clear of real estate, to stubbornly hold as­
sets at the melting point against the temptation of fixed
or slow investments, to remember that the best as well
as the worst market has a to-morrow, to know the pay­
ing value of a goodly amount of cash, to be able to give
his duty the benefit of every doubt, and to have the cour­
age not to take more than the ordinary risks of business,
is to know a banker’s primer. Success in banking re­
quires time, patience and unending industry. Years of
driblets make a surplus. One loss eats up the result of
a multitude of transactions, and draws in its train days
and even nights of care. The banker who never makes
a loss may exist, but his existence is doubtful, and his
education is incomplete. Moreover, he never has had
the pleasure of seeing the dead come to life out of the
musty corner of the portfolio of protested bills.
It is harder to make banking pay than most people
think. The tendency of our profits to diminish is the
natural incident of the competition of loanable capital,
and must be reckoned with as a factor in the future of
our business. The net earnings on the money invested
in banking, in capital and surplus, does not exceed, as a
whole, 6 per cent. The net earnings in the year ended
5
.Tune 30th, 1897, on the capital and surplus of the national
banks, were 5.4 per cent., and in twenty-eight years the
average net earnings on the capital and surplus of the
national banks have been 7.8 per cent. Since the begin­
ning of the national bank system 5,095 banks have been
organized, of which 3,617 are in operation. There have
been only 368 failures among national banks in thirty
years, so that more than a thousand banks have liqui­
dated and paid all claims, the inference being that they
could not make the business pay.




S E C T IO N .

39

We might as well make public confession that we are
agents of the money power. That money power is
lodged not in the hands of a few, but in the splendid
body of common people composing the Republic of the
United States. The national banks are owned by 281,225 shareholders. Of these 101,944 are women. The av­
erage investment of each shareholder is $2,250. Over 60
per cent, of the shareholders of national banks own ten
shares or less. The State bank statistics would prob­
ably show a more scattered ownership. The number of
depositors runs into the millions. There is no syndicate
so strong as to dictate the policy of the banks of this
country, or to interfere with the dealings between a
bank and its regular customer.
We often hear that there is a lack of banking facili­
ties in certain parts of our country. As bankers we
should know about this, and explain the reason. There
is no doubt of the fact, but there is a twin fact to it,
which is, that where banking facilities do not exist, con­
ditions for profitable banking do not exist. The com­
plaint comes from agricultural regions. Here the crops
that require money are planted at the same time, and
they are marketed at about the same time. The custom­
ers of a bank would deposit money at a time when there
was no demand for it, and withdraw it when loans were
needed. A bank must profitably employ its funds all the
year, or banking will not pay expenses. Small banks
are not the remedy. They cannot exist where industry
is not diversified to some degree, so that money may be
kept out in the different seasons. In Canada the branch
bank system meets the want, and it would do so in this
country, giving a better distribution of loanable capital
and an interest rate more nearly uniform.
One of the lessons derived from our last period of
trade depression is, that bankers must reduce credits to
a more scientific basis, and get into close and accurate
touch with the affairs of dealers. The credit men of
mercantile houses, who give credit in goods as we give
credit in money, have organized in a national associa­
tion, to bring about greater accuracy in information and
uniformity in statement. We have seen how men can
conduct their business with eyes shut to the changes go­
ing on about them. They do not begin in time to adjust
themselves to economic changes. Their mistake is ap­
parent when it is too late. Who can ever estimate the
revolution, in the business of individuals, caused by the
popular use of the bicycle ? It changed fashions, af­
fected habits of life, and worked damage to many trades,
so that men confronted losses from an unexpected cause
without doing anything to hurt their credit, in the or­
dinary sense. Every banker is interested in promoting
the use of uniform credit statements. The mercantile
agencies are seeking to improve their service, and we can
do much to assist them. We have to go into partner­
ship with every man to whom we extend credit. Our
interest return is always small, compared to the money
advanced. We have a right to full information intelli­
gently presented. If dispensers of merchandise credits
insist upon statements, the dispensers of money credits,
whose return is much smaller, should do the same. The
influence of this Association should be freely given to
the movement of the National Credit Men’s Association,
to have merchants file detailed statements with the mer­
cantile agencies, and to have the latter indicate in their
reports whether or not ratings are based on such state­
ments.
Every banker has his eye on the enormous gold pro­
duction of the world, in which Colorado is taking such
a commanding position in this country. From figures
at hand it appears that the world’s gold production for
1897 was $240,000,000, coinage value, and that in less
than ten years the annual yield has doubled, and is now
greater than the combined production of both gold and
silver was ten years ago. If the increase continues we
have a bigger question than we now appreciate. The
estimate of the gold production for 1898, based on the
large returns already in, is $275,000,000. The gold pro­
duction of Colorado last year placed her first in the list

40

B A N K E R S ’ C O N V E N T IO N .

of gold-producing States. Her gold product this year
will probably exceed in value the silver product of 1890,
the year the Sherman law was passed.
The money stock of gold on January 1st, 1894, in the
whole world was $3,965,900,000—the supply accumulated
since gold began to be used as money. The five years’
production since, including the estimate for 1898, will, on
January 1st, 1899, be $1,097,000,000, coinage value, or 27
per cent, of the accumulated gold money stock of the
world as it stood just five years before. Of course, a
large amount of the annual product of the gold is used
by the industrial arts; but, making full allowance for
this, the fact remains that the money stock of gold has
increased more than 20 per cent, in five years.
In the past we have devoted our conventions for the
most part to listening to learned economic essays. Our
members traveled far, and sat silent to listen. They
went away with a mass of arguments and facts and
statistics to digest, and many of them never came back.
In recent years we have sought to draw upon the experience, practical thought and philosophy of our own
members—in short, to develop home talent—and we are
much better satisfied. We are practical bankers, deal­
ing with conditions as they are; and never expect to
be ideal bankers dealing with conditions as they might
be. This business-like tendency in our Association’s af­
fairs has met with hearty approval. We hope, in this
convention, that the individual member who has any
Question bothering his brain will make a demand draft
upon us all. We are here to help one another all we can;
to discuss practical questions; to get up a cross-fire of
Question and answer upon points of law and practice;
and to get the benefit of many minds.
One of the practical efforts of this Association is the
work of its Protective Committee in making a common
cause for all its members against bank criminals. The
policy is well understood—especially by those who are
expert enough in burglary, forgery and swindling
methods to be dangerous—and the little metal sign,
Member American Bankers’ Association,” has come to
have a dread meaning to the criminal class. A few figuies will tell more than many words : Only one member
of this Association has lost money through burglary
since February, 1895. The loss to members through
burglars and sneak thieves since the protective policy
was perfected has been $8,875. The loss to non-mem­
bers, so far as reported, exceeds $200,000.
^ e have another practical purpose in the hands of
an efficient committee—that is, to get uniform laws in all
the States on commercial paper. For many years we
have been working to abolish days of grace; and al­
though the end of this effort is not yet in sight,’ we have
made satisfactory progress.
Grace is now eliminated from custom in :
California,
Maryland,
Oregon,
Colorado,
Massachusetts,
Pennsylvania,
Connecticut,
Montana,
Utah,
Hist, of Columbia, New Jersey,
Vermont,
Florida,
New York,
Virginia,
Idaho,
North Dakota,
Wisconsin.
Illinois,
Ohio,
Grace is allowed on sight drafts only in :
Maine,
New Hampshire, Rhode Island.
Grace is generally allowed in :
Alabama,
Kentucky,
North Carolina,
Arizona,
Louisiana,
Oklahoma Ter’y,
Arkansas,
Michigan,
South Carolina,
Delaware,
Minnesota,
South Dakota,
Georgia,
Mississippi,
Tennessee,
Indiana.
Missouri,
Texas,
Indian Terrirory, Nebraska,
Washington,
Iowa,
Nevada,
West Virginia.
Kansas,
New Mexico,
Wyoming.
The confusion of statutes in the different States has
long been perplexing to business men. As clearing
agents of the merchant and manufacturer, bankers
come directly in contact with these conflicting laws. It




is a long and tedious task to reconcile the differing State
policies; but this Association has, I hope, an endless
career; and if a steady purpose energetically promoted
should give consistency and uniformity to the laws of
the different States affecting negotiable instruments, the
result would be of lasting benefit.
There is clearly a demand for practical results from
all bankers’ associations. The closer contact of bankers
in group or State meetings has given point and vitality
to banking talent. Questions of common interest are
opened out for discussion, and are dealt with in crisp,
concise language. Bankers are trained to get at the
practical end of a problem. As a class they show much
resource, skill and ability in doing so. The tendency in
the associations of the various States is to do something.
There has been a controversy with the express com­
panies about rates on money packages. The plan of
using the registered mail, with an insurance policy
against loss, was energetically promoted in the various
associations, and the express rates have come down.
The express money-order has also received attention;
and in Georgia, in Texas, in Arkansas, and also in Can­
ada, the banks, through their associations, have gone
practically to work to meet the competition by a system
of reciprocal drafts. The clearing-house idea in interior
districts is under discussion. The ever-present burden
of bank taxation is being handled with more energy;
credit-information plans are being talked about; and
while the war-revenue tax is operative, there is a new
topic to absorb much attention. There are numerous
State questions, involving obsolete commercial practice
—some of them relics of legislation when banking was
in its crude infancy—which, if practically stated and en­
ergetically pursued, could be remedied.
As bank profits decrease, and we all see that tend­
ency as the interest rates get lower, a higher range of
skill will be required in our business. Just as much
close, hard study is being given to business to-day as to
any profession. Lord Eldon chose the stupidest man in
London for his banker, and was sorry he could not find
one more stupid, but that was a long time ago. It used
to be said that if a man could tell the difference be­
tween a mortgage and a bill of exchange he could go
into the banking business. We have found out in this
country the costliness of fhe experiment of running a
bank as a side occupation to another business. We have
to be attentive to every detail to get a good result. A
bank either goes ahead or falls behind; it will not run
itself. Then, too, bankers, like other successful business
men, must study the economic aspects of things about
them. These are becoming more complex as civilization
advances. The hundred hands of Science are mixing in
business all of the time, replacing the old with the new.
An adjustment to one set of conditions is scarcely made
before a new set of conditions begins to develop. The tide
flows in, and the rocks in the channel are lost to sight;
but they do not cease to exist. We cease to think and
to talk about them. When the ebbtide runs they reappear.
It is our business as bankers to keep our charts corrected
to date and to watch the tides. Elusive, subtle, evasive
and perplexing as the principles governing the financial
affairs of the world are, they nevertheless work with '
the certainty of any law of nature. It is our duty to
study the business affairs of our country, to isolate and
search out to the roots the complex economic phenom­
ena, and to tell the story as simply as we can. What
better forum is there for this than a bankers’ convention V
Report of Secretary.
N e w Y o r k , August 15, 1898.
American Bankers' Association, New York :
Gentlemen.—I have the honor to submit the following
comparative report for the fiscal years of 1897 and 1898:
1897.
Cash balance membership account August 31,
1897, including $37,920 of drafts subject to payment ................................ ............................ . $46,524.37
Members joining from September 1, 1896, to Sep­
tember 1, 1897....................................................
i

B A N K IN G
2,850
¡Paid members September 1, 1897........................
-Annual membership dues paid for year ending
August 31, 1897..................................................$39,745.40
1898.
•Cash balance membership account
August 15, 1898..............................$20,521.83
Drafts deposited for next year’s dues
subject to payment........................ 44,765r00—$65.286.81
¡Members joining from September 1, 1897, to
August 15, 1898............................... .. •...........
773.00
3,385.00
Paid members August 15, 1898...........................
Annual membership dues paid from September
1, 3897, to August 15, 1898.............................. $46,166.67
Total dues paid during year ending August 31,
1897 .............................................................. . • 39,745.40
Being an increase of....... .............................. $6,421.27
.$35,000 was transferred, as per order of the
Executive Council, from membership to protect­
ive fund account, and the treasurer holds
$34,000 Government bonds, market value of
which i s ............................................................ $15,750.00
There were 238 members lost from failure, liquidation
and withdrawal from the association, decreasing the
membership at the beginning of the fiscal year t o ... 2,612
¡Many letters have been written and circular letters have
been sent from this office to every bank, trust com­
pany and private banker in the country. This, with
the help of the local officers of the association, has
resulted in a gain of 773 members, who joined from
September 1, 1897, to August 15, 1898, making a net
gain over last year’s totalmembership o f.................. 535
The roll now embraces 3,385 members, with
combined capital and surplus o f . .................$1,049,639,003
With combined deposits.......... ...................... 3,840,709,491
T o ta l....... ................................................. $4,890,348,494
These figures do not include the capital and deposits of
:362 members who are private bankers, and make no state­
ments.
The association is not only steadily increasing in num­
bers. but in practical and far reaching benefit to its mem­
bers and the country at large. Part of this progress is owing
to the fact that at present not a single discord mars the
:s1eady beat or harmony of our advancing steps. This has
allowed the officers throughout the country, by united
•efforts, to place the American Bankers’ Association on a
¡higher plane than it has ever reached before.
Very respectfully,
J ames R. B ranch , Secretary.
[We omit the report of the Treasurer and also the re­
port of the Auditing Committee.]
Report of Protective Committee,
The Protective Committee begs to submit the follow­
ing report for the third year of the work committed to
¡its care by the Executive Council:
Balance on hand per Treasurer’s Re­
port, August 1, 1897................................ $3,002.31
.Appropriated by the Executive Council.... 15,000.00
¡Received refund, March, 1898, expenses ad­
vanced ..........................................., .........
293.12
$18,295.43
Paid account expenses, 1896-1897................
Paid account expenses, 1897-1898................

$432.68
16,212.91

Total Receipts................................................ $18,295.43
Total Expenditures....................................... 16,645.59
Balance August 1, 1898................................

$16,645.59

$1,649.84

The work of the Protective Committee in its policy
■and detail is now Avell known to the members of the
American Bankers’ Association, and it does not seem
necessary to repeat what has been stated at the pre­
vious conventions. The success of our effort has been
dteyond anything which could have been reasonably ex­
pected at the beginning, and the appreciation of the pro­
tective feature of the Asociation, as a practical return
for the annual fee, has been shown by the noteworthy
Increase in the membership. The paid membership of
the Association in 1894-1895, as rendered at the Atlanta
•Convention, October, 1895, showed 1,711 members, a
smaller membership than that of the previous year. At
that convention the Protective Committee rendered its




S E C T IO N .

41

first report, and gave widespread notice of what it was
undertaking to do for the banks that joined the Associa­
tion. Steady increase has followed in the membership
from that time until this convention, as is shown by the
following figures:
Paid membership of the Association 1894-1895....................
«
•
<
“
1895-1896.................... 2,188
«
“
“
1896-1897......... .2,813
*
<
«
“
1897-1898.................... 3,350

Starting out to throw a line of protection around the
members of the American Bankers’ Association, the
Protective Committee secured the services of the Pink­
erton National Detective Agency, and instructed it to
get information in respect to the movements of all the
professional bank criminals known to the police of the
various cities, and to give to those who were known to
follow the occupation of swindling or robbing banks dis­
tinct warning that the Association had entered upon a
crusade against them fot the protection of its members,
and that, under the rules laid down, no crime would be
compromised or condoned, and no expense spared to
punish criminals to the full extent of the law. The out­
come of the protective policy during the time it has been
actively conducted by the Association is shown in the
following statements:
1. From May 1, 1895, to August 1, 1898, members
of the American Bankers’ Association suffered by
burglars, robbers and sneak thieves, a total loss of.
$8,875.00
2. From May 1, 1895, to August 1, 1898, banks
non-members of the Association suffered, in the
same way, reported losses of over............................. $200,000.00
3. So far as can be ascertained there is but one organized
band of professional criminals now operating on the banks of
this country, and up to this time it has not attacked a mem­
ber of the Association.
4. In the past year, the only burglary committed on a mem­
ber of the Association since February, 1895, occurred at Boelus,
Neb., October 5, 1897. Otis Anselon and Otto Warwick were
arrested for this burglary, and have been sentenced to three
years and six months’ and eight years’ imprisonment, respec­
tively.

A most significant contrast, aptly illustrating the
comparative immunity enjoyed by the members of the
American Bankers’ Association from burglars and the
like, is found in the fact that early in 1895, before the
purpose and power of the new organization were thor­
oughly realized and its influence established, members
lost heavily. A comparison of the total reported losses
shows that:
In the four months from January 1 to May 1,
1895, members lost by burglars and robbers.............. $23,706.00
In the twenty-seven months from May 1, 1895, to
August 1, 1898, members lost by burglars and rob­
bers ....................................... ......................................... $8,875.00

The above figures do not include losses suffered by
members through forgeries. Statistics in respect to
these are difficult to obtain. The broad effect of the
protective feature is shown by the fact that in 1894,
before this Association began the protective work, the
banks of the United States lost $229,261 from burglary
and forgery, and that in the year ending August, 1898,
the members of this Association lost through burglary
$1,400, and through forgeries of all kinds, amateur and
professional, less than $15,000.
The Committee has, during the year, made an im­
portant demonstration to the professional bank crim­
inals, which it is confident will not be forgotten, in ac­
complishing the extradition from London, England, of
Charles Fisher. Fisher is an habitual thief and forger,
notorious on two continents. He is credited with origi­
nating, in this country,the scheme of rifling letter boxes,
altering the stolen checks and presenting them at the
banks, and has organized a number of bands for this
kind of work. In 1895 he was arrested at Baltimore
and transferred to Cincinnati, charged with attempting
to pass at the First National Bank a check which he
had raised from $15 to $1,500. He escaped in Novem­
ber, 1895, and made his way to London, England, where
he was located in May, 1897, by the detective agents of
the Association. He was transferred to Cincinnati by
the American Bankers’ Association and the banks of

42

B A N K E R S ’ C O N V E N T IO N .

Cincinnati, and on December 18 pleaded guilty and was
sentenced to three and one-half years’ imprisonment.
The Committee takes pleasure in reporting the arrest
and conviction of Alonzo J. Whiteman, formerly State
Senator of Minnesota, whose tendency to bank swind­
ling has for a long time given the Committee concern.
Whiteman had been director of a bank and was familiar
with the detail of banking practice. In May, 1895, he
was arrested in New York and transferred to San Fran­
cisco on requisition from California, charged with forg­
ing and passing a check for $500. He was convicted
and sentenced to nine years’ imprisonment, but secured
a new trial which resulted in his discharge f r o m cus­
tody November 9, 1896. On March 6, 1897, the agents
of the Association accomplished his arrest in New York
for swindling a New York bank out of $580 on a fraudu­
lent check, but he managed to escape conviction owing
to conflicting evidence. On July 9, 1898, at Chicago, I 111
he was sentenced to one year’s imprisonment and a fine
of $2,000 as a result of the efforts of the agents of the
Association, who accomplished his identification as the
man who, early in June, 1898, had swindled the Grand
Pacific Hotel Company with a fraudulent cashier’s
draft of the Lawrence National Bank, Lawrence, Kan­
sas, on the First National Bank of New York for $250.
A supply of blank cashier drafts, secured from a New
York lithographer, was found in Whiteman’s possession.
We have referred, heretofore, to the work of the Com­
mittee in breaking up the important forgery band headed
by Charles Becker and James Cregan, and to their trial
in San Francisco, where, in 1896, both Becker and Cre­
gan were convicted and were sentenced to imprisonment
for life. After two years of contention in the courts, a de­
cision has been rendered in favor of Becker and Cregan,
setting aside their conviction and ordering a new trial.
The Committee is prepared to continue the prosecution
of these dangerous criminals, and it will do so.
Four special circulars have been issued during the
past year, as follows:
On November 23, 1897, a special circular was issued
to the banks and police departments throughout the
United States with a view to causing the arrest of W.
H. Geer, who had swindled a member of the Association
at Salt Lake City, Utah, and was then operating exten­
sively with bogus certified checks. Almost immediately
Geer went into hiding and ceased operations for a time.
Later he renewed work and was arrested by the officials
at Richmond, Va., charged with obtaining money under
false pietenses, and was sentenced to sixteen months in
the county jail. Warrants for further prosecution have
been secured and lodged pending the expiration of his
sentence.
On November 26, 1891 , a special circular was issued
to the Chicago banks, warning members of the Associa­
tion of suspicious certificates of deposit which were
being floated by a private bank in Indiana and disposed
o f by agents in Chicago. Several Chicago merchants
were swindled by this paper, but the warning appears
to have prevented loss to the banks.
On January 11, 1898, a special circular was issued to
the banks throughout the United States in order to ac­
complish the arrest of T. J. Hogan and two accomplices,
then engaged in swindling banks with checks stolen
from the mail and altered. Hogan was arrested at Co­
lumbus, O., February 14, 1898, and on the 17th
James Wallace and Frank Baxter were arrested at Chi­
cago. Early in June the men were sentenced to five
years each in the Columbus, O., penitentiary.
On February 15, 1898, a special circular was issued
through sections of the West offering a reward for infor­
mation leading to the arrest of Dr. S. T. McClung, alias
Geo. O. West, who had been defrauding Colorado banks
with worthless checks bearing the forged indorsements
of local physicians. He was arrested at Leadville, Col.,
on May 15, through the vigilance of the officers of thé
Carbonate National Bank, and was identified from a
copy of the circular forwarded by the agents of the




Association. On August 3, 1898, McClung pleaded guilty
and was returned to jail pending sentence.
Since August 1, 1897, forty-seven circulars of General
Information have been issued as warning bulletins to
members of the Association, giving brief accounts o f
the methods of active swindlers. These have been ac­
companied by twenty-four photographs and descrip­
tions.
The prosecution of the protective work during the
year has involved the consideration of two thousand re­
ports, letters, etc., relating to the operations of crimi­
nals in every section of the country, and has exempli­
fied more clearly than ever the fact heretofore noted in
our reports, that the more dangerous and expert crimi­
nals have shown a disposition to avoid the banks which
are members of this Association, and the Committee has
had to deal with the common grade of swindler, whose
bungling work very shortly ends in his arrest.
F o r g e r s a n d S w i n d l e r s .—The agents of the Associa­
tion have generally investigated and reported on the
operations of criminals, involving over four hundred
cases of forgeries and swindles during the year ending
August 1, 1898. Of seventy-eight criminals who swin­
dled, or attempted to swindle, members of the Associa­
tion since August 1, 1897, thirty-three have been placed
under arrest and twenty-five have been convicted.
B u r g l a r s a n d T h i e v e s .—The figures revised by our
latest reports show that during the year ending August
1, 1898, forty-three banks not members of the Associa­
tion have been attacked by depredators and suffered a
total loss of $90,150. During the same period members
of the Association lost $2,400. In one instance, as stated
above, $1,400 were taken by burglars, who, in conse­
quence thereof, were arrested and are now serving sen­
tences of three and one-half and eight years respectively,
in the other case a man who entered the bank ostensibly
to make telephone repairs walked off with an unguarded
package of $1,000.
The Protective Committee has consummated during
the past year a contract with its detective agency on fair
and liberal terms, approved and ratified by the Execu­
tive Council. Under the terms of the contract the
agency has agreed to provide the following service:
“ To keep themselves informed as thoroughly as pos­
sible as to the methods and movements of those who
make a business of swindling or robbing banks, such as
forgers, bank sneaks, burglars, bank confidence men, pre­
senters of forged paper and letter box thieves.
“ To keep members of the Association informed,
from time to time, at least once every three months, of
such general facts as may warn them as to men and
methods and stimulate their vigilance.
“ To send to members such photographs of bank
criminals as may be deemed useful, and to provide them
with facsimiles of specimens of the hand-writing o f
forgers or swindlers who are systematically at work.
“ To seek, by correspondence or personal interview
with the proper authorities, to have such criminals ap­
prehended, securely incarcerated and indicted, and re­
leased only on sufficient and reliable bail. To seek, by
like means, to have such persons successfully prosecuted,
and after conviction to oppose all petitions for their
pardon.
“ To secure, by like means, further prosecution and
punishment of such criminals for other known crimes
which they may have committed.”
In accordance with the terms of the contract requir­
ing the detective agency to keep members posted, a
series of information bulletins, beginning with the issue
of August, 1898, has been designed by the Protective
Committee, to convey to members from time to time
items of information culled from the mass of matter continually piling up in the files. These bulletins will con­
tain pictures and descriptions of active criminals. Each
issue should be carefully preserved. With the first issue
of the pamphlet was sent a little book entitled “ The
Confidential Book of the Protective Committee,” which

B A N K IN G
discusses in a general way the methods of professional
criminals, and furnishes precautionary advice and in­
structions.
Following is the detailed Financial Statement of Pro­
tective Committee from close of fiscal year July 31, 1897,
to August 1, 1898:
RECEIPTS.
Balance on hand August 1, 1897....................................
Appropriated by Executive Council................ ...........
Refunded March, 1 8 9 8 ............................................ .

$3,002.31
15,000.00
293.12
$18,295.43

EXPENDITURES.

Paid Pinkerton, expense incurred prior to August 1,
1897 ...............................
$432.68
Paid Pinkerton, expense incurred August 1, 1897,
to August 1, 1898.... ......................................... ........ 14,636.96
Salary and expenses, Clerk to Protective Commit­
tee ..............................................................................
1,437.20
Paid Stewart & Co., 1,000 Aluminum Plates......... ..
120.00
Paid American BankNote Co., 500 Printed S lip s....
3 .75
Petty C a s h ....................................................................
15.00
Balance August 1, 1898..................................................
1,649.8-1
$18,295.43

The Committee desires to repeat the recommendation
heretofore made, that members should use the greatest
caution in the employment of printers and lithographers,
and that they should insist upon care on the part of
those whom they employ in disposing of surplus blank
checks and drafts.
In conclusion the Committee begs to express its sin­
cere thanks to all members of the Association who,
when called upon, have endeavored to facilitate the con­
duct of the work involved in the protective feature.
Appended hereto is a copy of the annual report of the
detective agency employed by the Association.
Respectfully submitted,
P
A

r o t e c t iv e

m e r ic a n

B

C o m m it t e e ,

an kers’

A

s s o c ia t io n .

[This committee is composed of three members,
whose names are not made public.—E d .]
Report of the Executive Council by Alvah
Trowbridge.
Mr. President, Ladies and Gentlemen.—Those of you
who are not habitual attendants at our meetings are
learning to-day something of thè character and aims of
the American Bankers’ Association. From the necessi­
ties of a quarter of a century ago came this organization,
which was then only a dim prophecy of what it would
be to-day. Bankers then thought there were great ques­
tions to be decided. So we think now. Great arguments
have followed, great principles have been discussed, and
the platforms of our conventions have resounded with
the eloquence of masters in oratory. What have we
settled? This: that bankers generally are good men and
true; that better acquaintance begets confidence in one
another, and confidence has led us to join in better
methods, and the better methods have tended to increase
our business and decrease our risks. During the first
eighteen years of the association we were discussing
the larger problems of finance and gaining a little in
membership until wè reached 1,500. In the next four
years we added to this until we had 1,900 members.
Our present membership is 3.385. What has done this?
Our discussions? No, but our confidence in each other
and the manliness of man. We have taught ourselves to
live and let live, and that in union there is strength.
We have not achieved great things in the way of poli­
tics, but we have done a work for which every member
is proud and thankful. We have put in practice the
Golden Rule. Safe makers tell you that burglars can
break every make of safe but theirs. Manufacturers of
patent safety papers and books tell you that forgers can
get ahead of you on every pattern and form except
theirs. But I tell you that the Protective Committee
of the American Bankers’ Association is better than
them all. (Applause.) As you have heard from the re­
port of the Protective Committee, during the last three




43

SE C T IO N .

years our membership has been practically exempt
from losses, while bankers outside the Association have
lost through rascals nearly two hundred thousand dol­
lars in the same time. You may say, Why do not all
bankers join this Association ? Why don’t every man in­
sure his life? Why don’t every child learn to swim?
Let every member send to the Secretary the names of
three new members before he leaves this convention, and
the thing is done. (Applause.) The great additions to
our membership in the last three years are mostly due
to the very efficient work of our Secretary, who, having
a wide acquaintance among bankers, has used his efforts
and his own strong personality for the Association.
When the war broke out he became infected with the
patriotic spirit and enlisted in the army. This is him
here (pointing to the Secretary). The Executive Coun­
cil being also patriotic granted him leave of absence,
and he is now Major of the Seventh U. S. Volunteers.
The work of his office is well done and is in good order.
c o m m it t e e

to

m eet

n a t io n a l

a s s o c ia t io n

of

f r e ig h t

AGENTS.

Alvah Trowbridge, of New York City: Mr. President
and Gentlemen.—A meeting of the Executive Council
was held last evening at Brown’s Palace Hotel, at
which some business was considered, which, as Chair­
man of the Council, I was directed to present to the
convention to-day. The first was a communication from
the National Association of Freight Agents, under date
of August 12th, 1898, requesting us to appoint a com­
mittee to meet a similar committee from their asso­
ciation. The letter explains the reason for asking the
appointment of the committee, and I will state what
it is. They request that a committee from us meet their
committee for the purpose of conferring relative to the
establishment of a more convenient system of bank
traffic in connection with freight shipments.
A motion that such a committee be appointed was
adopted.
CONGRESS REQUESTED TO A P P O IN T COMMITTEE TO E XA M IN E
THE F IN A N C IA L SYSTEM OF CUBA, ETC.

Alvah Trowbridge: The Executive Council recom­
mend the passage of the following resolution:
Resolved, That the American Bankers’ Association earnestly
favors the appointment under the authority of Congress of a
Commission to study the financial system in Cuba, Porto Rico,
the Philippine Islands and the Hawaiian Islands, and to report
upon the subject of what special banking legislation is needed
to facilitate commerce in any new territory which the United
States may acquire.

The resolution was adopted.
STAN DARD FORM FOR W AREHOUSE RECEIPTS.

Alvah Trowbridge: The Executive Council recom­
mend the adoption of the following resolution:
Resolved, That a Committee be appointed to consider and re­
port upon the advisability of a bankers’ standard form for
warehouse receipts and bills of lading.

The resolution was adopted.
RATES B Y SURETY COMPANIES.

Alvah Trowbridge: The Executive Council recom­
mend the adoption of the following resolution:
Resolved, That a Committee of this Association be appointed
to inquire into the rates charged by surety companies for surety
bonds, and to recommend a standard form of policy, and to con­
sider any plan or plans that may be submitted.

The resolution was adopted.
CONGRATULATIONS TO PRESIDEN T M’ K IN L E Y .

Alvah Trowbridge: The Executive Council also
recommend the adoption by the Convention of' a suit­
able resolution to be transmitted to the President of
the United States congratulating him and the Army
and Navy on the successful termination of the war with
Spain.
The President: A resolution in the proper shape will
be presented to the Convention for its consideration
later.

U

B A N K E R S ’ C O N V E N T IO N .

Report of the Committee on Uniform Laws,
Some twenty years ago as I was sitting in the
House of Representatives of the Illinois Legislature
walching its closing hours, a member who had never
spoken during the entire session, arose to address the
House. As he was a new speaker, every one was im­
mediately on the qui vive to hear what he had to say,
and I confess his speech made such an impression on
my mind that I have not forgotten it to this day. He
said: “ Mi. Speaker, I am a farmer. I used to get the
newspaper and sit on my porch and read with great
awe of the proceedings of the Illinois Legislature. I
made up my mind I would try and become a member
of that august body. I succeeded in that ambition. I
have been here the entire session. Have never inflicted
you with a speech. Have always voted ‘ Yea ’ or
*Nay.’ Have watched with great interest the method
of making laws, and I have come to the conclusion
chat the making of laws is like the making of sausages
—
the less you know about the process, the more you
respect the result.”
Your Committee on Uniform Laws has been before
many Legislatures the past winter, and we think after
this experience that our farmer friend was mistaken
in his estimate of legislation. We have found that the
ruling minds of a legislative body are a careful, pains­
taking, studious set of men, who are anxious to make
the best laws possible for the government of the people.
Sometimes a selfish interest will override this best
judgment by methods which will carry the Legislature
off its feet, but in the long run that error will be cor­
rected and a true judgment will be rendered.
The Negotiable Instrument Law which we are en­
deavoring to have passed is very fortunate in having
been tried for sixteen years in Great Britain and all its
colonies, in having been indorsed by experts in law in
thirty of the States of the Union. Indeed, it has been
subjected to all the criticism which the best minds in
che legal profession could bring to bear, and yet has
come out unscathed. In spite of this we find in every
Legislature some wise man who wishes to offer some
amendment. They cannot comprehend the fact that
we are arriving at uniformity in all the States. One
prominent banker sent us a long opinion given by his
attorney upon the law. We made a careful examina­
tion of this opinion, and found the attorney was en­
deavoring to make this uniform law correspond to
the laws of the State in which he lived. Much opposi­
tion has been expressed to the law because it abolishes
days of grace, and astonishing to say this opposition
manifests itself more strongly in the New England
States than anywhere else. This was astonishing to
your committee, as we had always regarded this sec­
tion of the Union as the most progressive in matters of
financial legislation. That long arguments should be
made against the abolishing of sucn a relic of stage
coach days in a country covered with railroads is a
marvel indeed. We are pleased to say, however, that
this opposition did not come from either the bankers
or the lawyers. The number of States holding sessions
of their Legislatures last winter was few in compari­
son to the whoie number. The only States in which
we did any work were Maryland, Massachusetts, Ohio,
Virginia and Georgia. In Maryland, by the vigilant
work of Hon. Lawrence B. Kemp, the assistance of
the American Bar Association and the Maryland
Bankers’ Association, the law was passed, and Mary­
land was enrolled on the Roll of Honor.
In Massachusetts, there being no Bankers’ Associa­
tion, the American Bar Association took the initiative
in introducing the law. The want of a Bankers’ Assueiation was seriously felt, as we had no auxiliary
by which the bankers of the State could be rallied to
the support of the measure. In this dilemma your com­
mittee appealed to H. L. Burrage, Vice-President of the
American Bankeis’ Association, and we found in him




a tower of strength. Without his assistance the law
could not have been passed. The opposition to the
passage of the bill was simply because it abolished days
of grace on sight drafts. We are happy to say the wise
men of the State were not seriously affected by this op­
position, after they were shown the true value of this
feature of the law.
In Ohio we introduced the bill, and our Mr. Griffith
gave it his individual attention, and used every exer­
tion to have it passed. At this session, however, poli­
tics was the ruling idea, and business had to yield.
We have made decided steps forward, however, in hav­
ing had the bill referred to a commission on uniform
laws to report to the Legislature which meets in 1900.
It is confidently expected by Mr. Griffith that the bill
will then be enacted into a law.
Virginia has also placed herself on the Roll of
Honor, The bill was introduced, and through the in­
defatigable work of our Mr. Hardy it was passed. The
American Bar Association and the Virginia Bankers’
Association were in hearty accord, and gave him much
■valuable assistance.
Georgia had but a short session of the Legislatu e,
but our friends worked with good will. Mr. G. Gunby
Jordan, Vice-President of the American Bankers’ As­
sociation, took active charge, and through his efforts
good progress was made. The bill was referred to a
commission, of which W. S. Witham, member of this
association, is a member, and we confidently look for­
ward to final passage through his valuable assistance.
The Legislature of Iowa met this winter, and your
committee made efforts to have the law introduced
there, but the Iowa Bankers’ Association, after fully
discussing the matter, decided the time was not pro­
pitious for its passage. Therefore no action was taken.
It is confidently believed, however, by the officials of
the Iowa Association that at the next session of the
Legislature the law can be successfully pushed.
In Kentucky, also, the Bankers’ Association thought
it inadvisable, under the peculiar condition of politics
in The Legislature at that time, to introduce the bill, so
it was postponed until the next session of the Legis­
lature.
The bill was introduced into Congress as pertain­
ing to the District of Columbia, and has passed the
House of Representatives; has been acted on by a
committee of the Senate and reported favorably. It is
now on the calendar, and will undoubtedly be passed
the coming winter.
The task of attempting to pass this law in all the
States is one of Herculean proportions, but from the
experience of the past, winter your committee believes
it can be brought to a successful issue. It cannot be
done without the enthusiastic support of all the bank­
ers in all the States. Any indifference on their part
begets indifference in the members of the Legislatures.
Let me whisper a secret in your ears. All you have to
do to pus-s this law in all the States is to overcome the
indifference of the members of the Legislature. Give
us ten men in every Legislature who are enthusiastic
in support of any good bill, and we will guarantee that
that bill is enac ed into a law. We therefore ask the
bankers of the States I name hereafter to get them­
selves enthused for the passage of the best law in its
line that has ever been before a Legislature. See the
members of th3 Legislature; inject enthusiasm into
them; get their minds saturated with the idea of the
good they will be doing to their constituents, and we be­
lieve before the close of this century this law will be
on the statute books of almost all the States of the
Union.
The following States hold session of the Legislature
during the ensuing winter, and in all of them we hope
the bill will be introduced and brought to a successful
passage:

B A N K IN G
Alabama,
Arkansas,
California,
Delaware,
Florida,
Idaho,
Illinois,
Indiana,
Kansas,
Maine,

Michigan,
Minnesota,
Missouri,
Montana,
Nebraska,
Nevada,
New Hampshire,
North Carolina,
North Dakota,
Oregon,
Wyoming.

Pennsylvania,
Rhode Island,
South Carolina,
South Dakota,
Tennessee,
Texas,
Vermont,
Washington,
West Virginia,
Wisconsin,

The Roll of Honor being the States in which
Negotiable Instrument Law is now in force bears
following names:
Massachusetts,
New York,
Connecticut,
Virginia.
Colorado,
Maryland,
All honor to Colorado, one of the youngest of
States, but evidently one of the most progressive.
In conclusion, we believe our association is to be
greatly encouraged and congratulated upon the first
year’s results of the work of your committee. We
worked in five States only. The law was passed in
three, and good progress made in the other two. There
was no failure in any State. Should such results follow
our work of the coming winter, we will have the law
enacted in all the principal States in the Union. The
remaining work will be easy.
As a final word, we again ask the members of the as­
sociation to give us their enthuhiastic help the coming
winter, and we are prepared to promise the best of re­
sults, with such support.
Respectfully submitted.
F

rank

C.

J.

G

Cald w

W . T

racy

r if f it h
ell

H

,

,

ardy

,

Committee.
John T. Dismukes, of St. Augustine, Fla.: I would
ask the gentleman to add Florida to the list that he
has read, as spch a law as he speaks of was passed
by the last Legislature.
George Q. Cannon, Salt Lake City, Utah: I noticed
in the list pf States in which the Legislatures meet
the coming winter that the Stdte of Utah is omitted,
and I simply desire to call attention to the fact that our
Legislature will meet this winter.
The report was on motion of Peter White, of Mar­
quette, Mich., received with thanks, and the committee
continued in its work.
IN MEMORY OF W IL L IA M H. RHAW N .

The President: We will now hear from Mr. M. M.
White, of Cincinnati, Ohio, in respect to the memory
of a former President of this Association, a man whose
face we all miss upon this occasion, William H. Rhawn,
of Philadelphia, Pa.
M. M. White, of Cincinnati, Ohio: It has been dele­
gated to me, gentlemen, to prepare a suitable minute
as a memorial to the late William Henry Rhawn, of
Philadelphia. While it is a sad duty to perform, yet
at the same time it is proper that we should put some
testimonial upon our minutes with reference to one
who has served this Association faithfully and ably
year after year, with only the omission of a single
meeting in the twenty-four years of our existence. I
traveled with Mr. Rhawn from the Atlantic to the
Pacific, and he inducted me into the office of President
of this Association in 1894, and on this occasion I al­
most fancy that he is in our midst because it seems to
me that if there is any connection between the beyond
and the present, the kindly face of William Henry
Rhawn is looking down upon our deliberations and
watching them in the spirit as he did in the flesh. I
have prepared this paper, which I will now read.
IN MEMORIAM.
W IL L IA M H E N R Y R H A W N .

The most important contribation which any community
makes to the w
rorld is the character and influence of its emi­
nent men.




45

SE C T IO N .

The recent death of William Henry Itbawn, which occurred
on the 27th day of June, 1898, aged sixty-six, removes from the
list of membership one among the few who have been identified
with the American Bankers’ Association since its organization
in 1875. He has been a delegate and present at every Conven­
tion since 1875, with exception of 1883. He was a member of
Executive Council from 1878 to 1888, and again from 1893 to
1896, and served as President for the year 1892 and 1893.
The significance of every human life is the character which
it has maintained, that part which remains and by its com­
pleteness and perfection leaves the deepest sense of loss to
the world when the man himself passes away.
The career of cur departed friend and associate illustrates
the solid underlying principles of industry, integrity and fidelity
united with superior endowments, and the courage under all
circumstances to follow, regardless of popularity, the path of
justice and right as it was outlined to his clear perception. He
was remarkably unselfish, ever sacrificing time, talent and
strength for others, and in so doing did not accumulate a for­
tune to be counted in dollars and cents. As an unselfish, pub­
lic-spirited citizen among those interested in good works and
practical reforms, moving among the best element of kindred
spirits in Philadelphia, where he lived all his life, his example
and labors will long continue to be felt by those he loved and
delighted to serve. Jn his early manhood his attention was
directed to financial affairs, and becoming identified with bank­
ing he entered upon his chosen career, and being possessed of
enlarged and comprehensive views and studious habits he soon
mastered the intricate mechanism of a bank as well as its man­
agement, and during thirty-two years was President of the
National Bank of the P.opublic, Philadelphia, and retired when
the bank ceased business, paying every depositor in full with­
out any delay, and during its entire career under Mr, Rhawn’s
charge not a shadow ever rested on the bank or on the personal
or official character of its President.
M e n m a y d ie, b u t t h e w o r k g o e s on, a n d as t h e n a m e o f ou r
d e p a r t e d fr ie n d m a y fo r e v e r d isa p p e a r f r o m t h e m in u te s o f o u r
A s s o c ia tio n , y e t h is k in d ly p re s e n ce , n o m o re t o b e w it h us as
w e a n n u a lly g a th e r to g e t h e r , is in d e lib ly s ta m p e d o n m e m o r y s
t a b le t u n til w e s h a ll la y d o w n t h e c a r e s o f life , a n d h a p p y sh a ll
w e b e t o le a v e s o fr a g r a n t m e m o r ie s as W illia m H e n r y R h a w n ,
t h e la rg e -m in d e d , c le a n -h a n d e d C h ris tia n m an .

The minute was adopted unanimously.
GREETING TO ABSENT MEMBERS.

John Farson, of Chicago, 111.: Mr. President, I think
perhaps at this time it would be wise to pause a moment
and place a flower in the paths of the living. As I have
looked about this Convention I have missed the kindly
faces of two of our members who have invariably been
present to cheer us with their words and aid us with
their wisdom. I refer to Mr. N. B. Van Slyke, of Madi­
son, Wis., and Mr. Eugene Pullen, of New York City,
both of whom I understand are unable to be present
with us on account of illness, and I move that the Secre­
tary be instructed to send a telegram of greeting to each
of these gentlemen and also expressing the hope of this
Convention for their speedy recovery to health.
The motion was adopted.
Report of Committee on Uses of Banks.
(BUREAU OF EDUCATION )

The Committee on Uses of Banks, which was directed
to continue its work by the convention last year, begs to
make the following report:
OBJECT

OF THE

COMMITTEE.

This Committee was appointed by the Executive
Council at a regular meeting in March, 1897. It was
continued in force at the Detroit Convention by vote of
the Association. Its object was, and is, to distribute
information as to the uses of banks in order to over­
come the great ignorance and the great prejudice con­
cerning banks, and to disarm the blind hostility that
grows out of lack of knowledge of what the banker is
and what he does.
FIR ST STEP.

The Committee decided as a first step to issue a pam­
phlet for general distribution.
After obtaining through correspondence the views of
prominent bankers throughout the country as to what
should be contained in the first pamphlet to be issued
by the Committee a pamphlet was prepared under the
title of “ What is a Bank?” Copies of this pamphlet
were sent to 10,000 banks throughout the United States,
with a letter to each, asking for expressions of opinion

46

B A N K E R S ’ C O N V E N T IO N .

as to its adaptability to the purpose for which it was
prepared to instruct the people of the United States as
to the uses and purposes of banks. Enclosed with each
letter was a postal card upon which the person or insti­
tution receiving the letter was requested to order such
a number of the pamphlets as they would personally see
to the distribution of, where they would do the most
good. The letter itself was as follows:
CIRCU LAR LE TTER .

D e a r Si r :

The undersigned Committee has in charge the work of dis­
tributing proper information as to the uses of a bank, the
object being to do away with the present hostility which exists
against banks among the Ignorant or misinformed part of
our population.
The Committee proposes to send out a pamphlet—a proof
of which is enclosed—which is intended to set forth in the
simplest manner possible the work which a bank does in the
community.
Please read this carefully.
This book is Intended as a primer—the facts stated are ele­
mentary and not in dispute; and the manner of stating them
is intended to be so clear that all can understand.
The Committee desires your earnest co-operation in placing
these pamphlets in the hands, not so much of your own bank
customers as in those of individuals (laborers, mechanics,
farmers and others), who have been misled upon this ques­
tion or else have never been informed. We suggest that you
make a list of the firms, etc., who do business with you, and
who employ a large or small number of people—that you ascer­
tain whether these employers will on any certain pay day see
personally that one of these pamphlets is placed in the hand of
each employee. If your dealings are with the farming com­
munity, we would like to have you personally attend to the
placing of one of the pamphlets with each of this class of voters
in your vicinity. It is the desire of the Committee that none
of the pamphlets be wasted, as is sometimes the case when
such matter is given out to tellers or clerks for distribution.
The Committee desires to know whether you will undertake
this work with us. Will you give it your personal attention ?
And if so, how many of these pamphlets (without cost to you
for the pamphlets) will you use in the way intended.
Kindly reply promptly on enclosed postal card.
The importance of the education of the people on this great
question will appeal to you at once. We desire your earnest
personal co-operation, believing that every convert made to the
Indisputable truth will aid in the future, in a safe solution of
the great questions now in process of adjustment in the United
States.
Signed,
C o m m it t e e

o n U se s
A m e r ic a n

Ban ks,
B a n k e r s ’ A s s o c ia t io n .

of

A GRAND RESPONSE.

The response to this letter was quick and almost
overwhelming as to orders for the pamphlet. The re­
plies came from about 5,000 banks from every State
in the Union, and the orders aggregated nearly a million
and a quarter copies, and were usually accompanied by
some remarks as to the plan. Nearly all replies were
favorable to the work, and the vast majority of banks
replying expressed a willingness to co-operate in the
work of the Committee. These expressions, written out
in type, cover 500 pages. They are mainly aggressively
affirmative, and many evidence much enthusiasm in the
work and decided satisfaction because of its undertak­
ing by the Association.
It is impossible to give an adequate idea in a few
words of this sentiment, but some of the remarks are
quoted below:
SOME OF THE R EPLIES.

Something of this kind is needed.
This pamphlet will go far toward supplying the need!
The best I ever saw. Plain and comprehensive and'
ought to be in the hands of every voter.”
M i s s i s s i p p i .— “ Clear and to the point.”
V i r g i n i a .— “ What has long been needed for the edu­
cation of the masses along this special line.”
I n d i a n a .— “ The distribution will prove a splendid
thing for bankers in general.”
A r k a n s a s .—“ Believe it will fill a long felt want of
the country bank.”
T e n n e s s e e .— “ Think great good can be accomplished
in this way. Have long felt the need of some means of
reaching this class of people.”
K e n t u c k y .— “ The public need this very document.”
C a l i f o r n i a .— “ Believe the work undertaken by your
committee will result in great benefit to banking institu­
tions.”
T exas —“ This pamphlet is a good thing for any
country.”
C a l if o r n

ia

.—“




A r k a n s a s .— “ I will personally attend to the distribu­
tion of these pamphlets to farmers. I think they are fine
and will do much good. Am pleased to know you are
doing such good work.”
M i c h i g a n (Detroit).—“ Nine of our customers, employ­
ing a large number of hands (1,730 in all), have agreed
to distribute the pamphlet among their employees.”
M i c h i g a n (Ft. Austin).—“ Ought to be in the hands
of every family.”
O h i o (W. Lebanon).—“ Think this is a good move.”
M i n n e s o t a (Duluth).—“ One hundred to men work­
ing in saw mills.”
N e b r a s k a (Decatur).—“ The truth simply expressed,
so that any child can understand.”
N . D a k o t a .— “ Just what is needed in this section of
the country.”
M i n n e s o t a (Canby).—Asks for copies in German and
Scandinavian.
T e x a s (Santa Anna).—“ A move in the right direc­
tion.”
T e x a s .— “ An excellent plan. A good work. Must be
kept up.”
I l l i n o i s (Equality).—“ Have been looking for some­
thing like it for the past five years.”
A l a b a m a .— “ People need this kind of education.”
K a n s a s (Syracuse).—“ A most laudable enterprise, of
especial advantage to Western bankers.”
K a n s a s (Baxter Springs).—“ Will take pains to place
them where they will do the most good, and thank the
association for the privilege.”
Maryland (Frostburg).—“ A splendid idea, and we
heartily approve of it.”
O h i o .— “ Shall have my personal attention and will
do everything in my power to aid your committee.”
N. D a k o t a .—“ Will tend to remove prejudice against
banks. Pleased to co-operate.”
O k l a h o m a T.—“ Our dealings are almost entirely
with farmers. Send them along. This is one of the best
moves I have had brought to my notice.”
W e s t e r n O h i o .—“ Have commenced business here
only a few weeks. Pamphlet is just what we need.”
I o w a (Waukon).—“ I am pleased with the work.”
K a n s a s (Moline).—“ Will attend to personally, as I
think it is a grand thing.”
W i s c o n s i n .—“ Will do great good to our farming com­
munity here.”
N. D a k o t a .— “ Will give it personal, prompt atten­
tion.”
O h i o (Seville).—“ Have an intelligent community who
will appreciate the work. Have desired a condensed
statement of this kind for a long time.”
T e n n e s s e e (Tullahoma).—“ Send them to us. What
we need in this country.”
M i s s i s s i p p i (Magnolia).—“ We will be benefited by
this work.”
I owa —“ A great work and a right move. Will give
it personal attention.”
W i s c o n s i n (Kewanee).—“ Just what we need.”
K e n t u c k y (Princeton).—“ This is just what I have
been looking for for a long time. Have to deal almost
entirely with farming community who do not under­
stand the banking business.”
ACTION OF THE E XE CU TIV E COMMITTEE.

These but faintly convey an idea of the various ex­
pressions of approval and co-operation Which came to
the Committee from all parts of the country upon re­
ceipt of its circular letters.
The Committee made a report of its work to the Ex­
ecutive Council on March 24, and the Executive Council
decided that on account of the magnitude of the work it
did not feel authorized to undertake the task of carry­
ing on and continuing the work of the Committee, as it
promised to grow to such vast proportions, the orders
for the first pamphlet being so general and for such
large numbers, and that only a beginning.
Your Committee then prepared and sent out a letter
addressed to each person or institution which had placed
an order with the Committee for the pamphlet, advising
them that the Courier Company, Buffalo, N. Y., had
agreed to supply the pamphlet at the rate of $1.00 per
100 (about cost), enclosing a postal card upon which
they could give an order for such a number of the pam­
phlets as they could use. Copy of second letter follows:
t

SECOND LE TTER.

D e a r Si r :

Referring to the circular letter of this Committee, dated
February 23d last, which accompanied the proof of the pam­
phlet “ What is a Bank ” we have to report that the orders re­
ceived for the pamphlet aggregated about a million and a quar­
ter copies, nearly 5,000 banks having offered to take and per-

B A N K IN G
sonally distribute copies, the orders being for from 25 copies
to 10,000 copies each.
A meeting of the Executive Council of the American Bank­
ers’ Association was held March 24th, and the matter was
brought before them. The final decision was that the work
was so great that they did not feel warranted in undertaking
it at this time, as the education would have to be continued,
this pamphlet being only a beginning, and the undertaking
seemed to them so large and important. The Committee there­
fore regret that they are prevented from carrying on the
project, at least for the present.
On account of the interest manifested by a large majority
o f the banks of the country, the Committee dislike to abandon
the matter altogether. The work will, however, have to go on
without being conducted by the American Bankers’ Associa­
tion.
The printers of the pamphlet, the Courier Company,
Buffalo, N. Y., have offered to furnish it, providing they receive
orders aggregating a large number, at $1.00 per 100, and believ­
ing, on account of the many favorable expressions received,
that many of the banks would like to take up the work on their
own account, we have written this letter, enclosing a postal
-card, on which an order may be sent to the printers, if you de­
sire, on this basis.
The Committee will carefully supervise the delivery.
Signed,
C o m m it t e e

on

Use s

of

Ban ks.

S E C T IO N ,

47

est nonsense as to the enormous profits that would ac­
crue to the banks through the issue of notes based on
the new bonds, and these statements are believed by
probably ninety-nine per cent, of the people who read
them. All these willful misrepresentations should be
met and answered promptly, and this cannot be done un­
less it is made somebody’s business to do it. There is
no people in the world who are so ready to recognize
right and justice as the American people. It is folly to
leave them in ignorance and any longer to allow this
prejudice to flourish.
A G REAT O PPO RTU N ITY.

Gentlemen, you have before you to-day a momentous
question. Will you begin now at the end of this century
to right the wrongs which have oppressed the men of
your calling for fifty years, or will you supinely, weakly
drop this task because it seems so great, and fall back
into the trenches? If you do, you have not learned the
glorious lessons which our brave soldiers taught us be­
fore Santiago.
W

THE B AN K S W ILLIN G TO P A Y .

The Courier Company have since then received orders
which have exhausted an edition of 100,000, and are now
filling orders from another edition, orders still continu­
ing to come. These orders have been received from all
parts of the United States, and some of the banks have
placed a second order.
The fact that the banks of this country are willing to
p a y for the privilege of distributing educational matter
-of this character is convincing evidence of the desirabil­
ity of the Association’s undertaking this great work.
B AN KIN G C A P IT A L U N JU STLY TB EATED.

For many years in the United States a most unjust
prejudice has existed against banks, and it is quite gen­
erally recognized that this prejudice against capital em­
ployed in banking does not exist against capital em­
ployed in other lines of business.
The large insurance companies, with assets aggregat­
ing hundreds of millions of dollars, are not made the
target of the political archer, as are the banks. This is
probably due to the fact that the people have a better
knowledge, generally, of insurance and its advantages
to the people than they have of the banking business.
Where there is one man who keeps an account in a com­
mercial bank there are probably a thousand who are
members of the various fraternal orders, and are thus
interested in and understand the principles of insurance,
nnd it is for this reason that insurance does not meet the
obstacles that banking does, and is not attacked by
demagogues. If this is true of insurance it would also be
true of banking under similar circumstances.
EDUCATION ONLY BEM EDY.

The only thing to do is to educate the people so that
they will understand that, like the insurance business,
the banking business is a decided advantage to the peo­
ple generally, and that any injury done to banks is re­
flected back upon the people themselves, in the way of
curtailment of loans, high rates of interest, general sup­
pression of enterprise and consequent loss to all classes.
When the people understand these things as they under­
stand other lines of business, prejudice will disappear.
The existence of this prejudice has been no fault of the
banks themselves, as far as their daily operations are
concerned, which are of the greatest possible benefit to
every class in the community.
W HERE B AN KERS A R E A T F A U L T .

The fault has been that the bankers have not hereto­
fore taken up the task of educating the people. The
most absurd statements in regard to the special privi­
leges of bankers are allowed to go unanswered and are
generally accepted by the people as true. Ever since
the late bond issue the papers which favor Government
paper money and free silver have been full of the wild­




m

. C. C o r n w

ell,

J. L o w r y ,
H a r v e y J. H o l l i s t e r ,
Committee on Uses of Banks, American Bankers’
Association.
R

obert

Action of Convention on Report.
A motion was made that the same Committee be
continued, with instructions to pursue the work another
year.
William S. Witham, of Georgia, said:
Mr. President, I would like to second that motion in
a one-minute speech. The subject of the Committee’s
work is a modest little pamphlet which I hold in my
hand, and which is no doubt familiar to all of you. The
widespread prejudice against our business, aided by
legislation and by politicians, needs just such work as
this, and we need just such a committee as we have had.
If I wanted to change the name of that little book, I
would call it “ The Prejudice Killer.” (Laughter and ap­
plause.) It is so valuable that one of the sehool com­
missioners in one of the counties where I am engaged
in business, proposed to make it a text book in the pub­
lic schools. (Laughter.) I want to confess that being
well acquainted with the people in the counties where
I do business, they are not all as smart as Benjamin
Franklin. Perhaps it is a good thing for me that they
are not. I heartily endorse the motion of the gentleman
from Michigan, to continue the present Committee, with
power.
The motion was carried.
IN MEMORY OF THOMAS S. R ID G W A Y .

«

Walker Hill, of St. Louis, Mo. : Since out last meeting
we have lost a member of the Executive Council, and I
was appointed one of the Committee to draw the fol­
lowing resolution, which I now present and move the
adoption of:
THOMAS S. RIDGWAY.

Whereas, In the providence of God, Mr. Thomas S. Ridgway,
of Shawneetown, 111., departed this life on the 17th of Novem­
ber, we, his fellow members of the Executive Council of the
American Bankers’ Association, desire to placé on record our
appreciation of the loss this Association has sustained in the
death of our deceased friend and associate councilman; there­
fore, be it
Resolved, That in the death of Mr. Ridgway our Council has
lost a faithful and valued member, ever ready and diligent in
the discharge of all duties incident to membership, and we shall
miss the benefit of his wise counsel and helpful hand. As a
friend he was unselfish, kindly and obliging, sympathetic,
warm in his attachments and ever ready to lend a helping hand
to those in trouble.
To his family we extend our heartfelt sympathy.
Resolved, That the Secretary of this Association enter this
preamble and resolutions on the records, and send a copy to
the family of the deceased.
(Signed)
W a l k e r H il l ,
F. W . H ayes,
Ca m p b e l l .

A. G.

The minute was adopted.
The Convention then adjourned until Wednesday
morning.

48

B A N K E R S ’ C O N V E N T IO N .

SECOND DAY'S PROCEEDINGS.

,

Wednesday August 24th, 1898.
After prayer the Secretary reported the names of the
gentlemen who had been selected by the various delega­
tions to compose the Nominating Committee.
Call of States.
The President: The next business in order is the
Call of States. As the Secretary calls the names of the
States some delegate from the State is to rise and state
as briefly as possible the general condition of banking
in the State; the briefer the better, the more about
banking the better, and the less about politics the better
than all.
ALABAMA.
J. W. Whiting, People’s Bank of Mobile:
Mr. President and Gentlemen of the Convention.—Either the
altitude of Denver or the hospitality of its people has had some
effect on the gray matter in my head, or something else, but I
kind of feel as if there were cobwebs there this morning. Per­
haps it is a little too early to talk. I am loaded with statistics,
but I do not propose to bore you with them.
Business generally in Alabama is prospering. Beginning
with the Northern tier, called the Huntsville District, the
crops have been magnificent and the bankers have gathered in
the advances they made from it. Coming down to the mineral
districts, , called the Birmingham District, business matters
there have very much improved. A few years ago they had an
Immense boom there, and later a more immense collapse. The
banks were seriously affected, because loans had been made on
boom paper that was never collected, but by energy, by econ­
omy and good management, those banks have recovered from
that depression, and some are now paying dividends. So far
as mineral matters are concerned, you stated yesterday, Mr.
President, in your address, that Alabama made iron cheaper
than any place on the globe, but that Pennsylvania made the
steel. Now I beg to say that we are now erecting in the min­
eral district of Alabama a steel plant, and I give notice to
Pennsylvania that we will very soon undersell her in steel prod­
ucts. Our cotton industry flourishes, and generally the State
has a brighter outlook than ever, despite the handicap to
Mobile by shallow water. This, however, has been remedied
by the general Government, and we have twenty-three feet of
water at our walls. We export to Bremen, Liverpool and all
nations save Spain. Exports have increased a large per cent,
in recent years. In Mobile new enterprises have started and
the city is proud of her Southern hospitality—open to Denver
and the world.
ARIZONA.
M. B. Hazelton, Bank of Arizona, Prescott:
In order to impress on friends the good time I am having I’ll
omit the greater part of my speech. Three prominent bankers
delegated me to say that never was Arizona in better shape.
Railroads, cattle, mining and banking are all thriving. For
two years we have done so, and I think we have enjoyed pros­
perity without precedent for two years.
ARKANSAS.
A. H. Johnson, of the Bank of Helena, Arkansas:
A few years ago, Mr. President, the people in our town used
to say, “ We want banks here where we can draw money out,”
but I am happy to say that to-day they are calling for banks
where they can deposit their money.
All the Arkansas people who are here in Denver are de­
lighted with Denver and with Colorado, and I think I can say
that we will make it our watering place in the future.
CALIFORNIA. (No response.)
COLORADO.
Joseph A. Thatcher, President of the Denver Clearing House:
Mr. President and Gentlemen.—We were up a little late our­
selves last night, and being busy preparing for your coming
here, I do not think any one in the State thought of making
the slightest preparation to respond for Colorado on this call of
the States. Certainly I am not prepared for it. However, I
will say what I can. It has been supposed we produce simply
gold and silver—probably too much silver. I want to say we
have extensive coal business, agriculture forging ahead, and a
rapidly growing cattle business. As for fruits—it will surprise
you—but we export much to European ports, and everything is
on the increase. At no time in her history have the mines of
Colorado been in better condition. May the prosperity con­
tinue. Thanking you all again, I say welcome.
William S. Witham, of Georgia:
Gentlemen, Colorado is too big and of too much importance
to pass with one little short speech like that, though it did
come from so eminent a man as the President of the Denver
Clearing House. I would not attempt to speak of so big a thing
as Colorado, which took a contribution from France, and from
Mexico, and from Texas, to make it up. lientlemen, it is the
only State in the Union of whose soldiery the commander has
said: “ Every man is a hero.”




I will say just this one word about the center of Colorado,,
and that is Denver. I have met bankers all over the country
with big heads and big feet, but these bankers all have onecomplaint—the big heart. And not the least thing that can besaid about Colorado is this—that out at Cripple Creek an old
negro woman had the misfortune, or the fortune, to lose her
husband. She went out in search for him, and finally she found
him, and she made it hot for him, and thus we have that popu­
lar ballad called “ A Hot Time in the Old Town To-night.” I
wish we could sing that. Let us try.

[No sooner had the invitation been given by Mr. Witham,
than a lady in one of the boxes sang the first verse of this
popular song, and the audience, urged by Mr. Witham, who
stood up in a box and led in the singing, joined in thé
chorus amid great applause.]
The President: If the chair is not vigilant, this Conven­
tion win be taken out of its hands. I have had a number
of applications from gentlemen who wanted to speak for
Colorado. Colorado has been spoken for now, and she
speaks for herself.
CONNECTICUT.
A. H. Dayton, of Naugatuck, Conn. :
Mr. President and Gentlemen of the American Bankers’ As­
sociation.—This is the first Convention of this Association that
I have ever attended, and I feel somewhat diffident about risingto respond on this call of the States, but I cannot let Connecti­
cut go by without being heard from.
Our State is prosperous, and the people are happy. What
farmers we have are plowing the same old fields, and pick­
ing out the same stones that their fathers and grandfathersdid a couple of hundred years ago. Our manufactures have
grown from little shops to large establishments, and I am glad
to say that to-day they are all busy and apparently prospering.
The only trouble is with our banks. They are flush with money,
but we have not the chance to loan our funds as we should
like to. It is an unfortunate condition of affairs, but never­
theless it is a fact. However, we are trying to keep our money
safé. We are among those of whom the President spoke yes­
terday, when he said that our education resembles fate.
I
think, sir, that our education is complete in this respect.
DELAWARE. (No response.)
DISTRICT OF COLUMBIA. (No response.)
FLORIDA.
John T. Dismukes, of St. Augustine, Fla.:
Gentlemen, I simply want to give you a single quotation,
from Lowell:
“ Blest is he who has nothing to say.”
I must say, however, that any gentlemen of this Convention
who come to Florida will never regret it; we will give them a
good time, and we will present each delegate with an alligator
and at least one mosquito.
GEORGIA.
Mr. Hilyer, of Macon:
Mr. President, the Georgia delegation selected Mr. Joseph
S. Davis, of Albany, Ga., to reply to this call of the States.
He is very much indisposed this morning, suffering from a sore
throat, and as he had prepared a speech here, he asked me to
read it for him, and I will now proceed to do so.
Joseph S. Davis, of Albany, Ga.:
It is my pleasure to report that conditions in Georgia are
both healthful and hopeful. Every one manning her many in­
dustries is on the alert, and all sails are spread to catch the
boom expected to follow in the wake of the victorious war and
glorious peace won by our nation.
Georgia’s varied industries are prospering fairly and her
banks generally are of the highest credit and worthy the fullest
measure of confidence. They fulfill the obligations recognized
in the reciprocal relations sustained by bank and community,
supplying the need of customers if they do not gratify their
wishes. The varied interests of the State—mining, manufactur­
ing, commercial and agricultural—furnish a fine field for the
profitable employment of capital, and her bankers lend with
the assurance that the products of industry abundantly war­
rant the confident expectation of payment, at maturity.
Agriculture, which is the foundation of all prosperity, is the
predominant interest in our State, and Georgia’s husbandmen
have realized the promise to Noah, that there should always
be a seedtime and a harvest.
When we left the State the fruitmen were enjoying the re­
sults of a profitable season, and the corn in tasselated caps
stood in serried columns, guarding the country against an in­
vasion by famine, while our cotton fields, blooming more beau­
tifully than the rose gardens of Italy, gave promise of an abun­
dant yield. For a century Georgia’s gold fields have been
yielding their precious metal, and the marble industry has de­
veloped so marvelously within the past few years as to place
the State second in its production in the Union. My friend,
Captain Lowry, who is my mentor on this occasion, desired me
to present some statistics, but, unlike Josh Billings, I am no
statistician, as statistics do not ooze from me like attar of roses
from the otter.
There is a mercantile truism, “ A thing well bought is half
sold,” that Georgia bankers have paraphrased into “ A loan

B A N K IN G
rightly made to the proper party is already collected,” and
while losses are small, and are growing beautifully less, it can
yet be confidently asserted, applying the test of our honored
President, that the education of most of the bankers of Georgia
is already complete. In Georgia this summer gold was so plen­
tiful, or rather, I should say, formed so large a proportion of
cash on hand, that our banks paid it out oyer the counter in
cashing checks, which served as an object lesson, enforcing the
wisdom of the people in adopting the gold standard. If it be
true, as politicians claim, that the adoption of the gold stand­
ard was the imposition of a cross upon the country, it is well
to consider the saying, worthy of all acceptation, “ No cross,
no crown; ” and having voluntarily assumed the cross, the
country is now ready to wear the crown of a golden prosperity,
which, like coming events, casts its shadow before.
ID4.HO. (No response.)
ILLINOIS.
Mr. Robertson, of Rockford:
The delegate from our State is unable to be here this morn­
ing, but he furnished me with a few memoranda from which
to make some kind of a response. Business in Illinois is fairly
good with our banks, but the great plethora of money has at
times led us to feel some little sympathy with that individual—
I can hardly dignify him by the name of.banker—who had
been ill for a week or so, and when he came down 'to business
again his associates were congratulating him on his recovery,
and he said, “ Yes, I am better, but what is the use of living
when money is only worth 3 per cent.? ”
Our past experience has instilled such caution into the
minds of our bankers that it is now felt that the average
paper which we hold to-day is much better than usual, and
more easy to be collected. The Illinois Bankers’ Association
is prospering in the membership and in the effectiveness of its
work, and it expects to obtain this year the enactment by the
Legislature of the Uniform Negotiable Instruments law, which
has been adopted in many of the States through the efforts of
the American Bar Association.
John Farson, of Chicsgo:
May God bless the great Commonwealth of Illinois ! We of
Chicago, you know, are very modest. We think New York,
which turns out such men as our worthy President, Is a great
State; we think Georgia, which turns out such men as Robert
J. Lowry, is a great State; we think Colorado, which turns out
such men as Joseph A. Thatcher, is a great State; we think
Michigan, which turns out such men as George A. Russell, is
a great State. But when all these men unite and say that Chi­
cago is the greatest city in the Union, why, gentlemen, we
must needs think it true. I am glad to bring to you this morn­
ing greetings from the city of Chicago and from the State of
Illinois. We have been depressed, but with the help of our
President and the boys behind the guns, the State of Illinois
believes it will be not far from the head when the march begins
down the road of prosperity.
INDIANA. (No response.)
IOWA.
Mr. Hines, of the Farmers’ and Mechanics’ .Savings Bank of
Iowa:
In the absence of our Vice-President, I will say briefly that
the 1,062 banks that we had in our State last year are still
there. Of these over 400 belong to the Iowa State Association,
which shows that the banks are taking an active interest in the
Association. As to our vast agricultural resources, why, gentle­
men, we have the greatest agricultural resources you ever saw,
and not only that, but we have great mining resources, espe­
cially coal mining. As to our manufacturing industries, they
are increasing continually, as are also our commercial indus­
tries. I would say, gentlemen, that Iowa produces splendid
cattle and sound hogs, sound corn and grain, sound men and
women, and Iowa will always be for sound money. And finally,
the people of Iowa have of late gone very extensively into the
war with Spain, because we have sent a good many men to the
front to lick the Spaniards, and the rest of us are staying be­
hind to lick the revenue stamps.
INDIAN TERRITORY. (No response.)
KANSAS.
P. I. Bonebrake, of the Central National Bank of Topeka,
Kansas:
Mr. President.—Our Secretary has requested that we respond
to the call of States orally. I presume he did this because he
wanted us to be brief. In the interest of brevity I have written
a few brief remarks.
In 1804 to 1807 Lieutenant Zebulon Pike explored the coun­
try west of the Missouri River. He perpetuated his name by
giving it to a giant peak which you will all see before you re­
turn home. He had a poor opinion of the country explored, as
he reported as follows: “ From this immense plain may be de­
rived one great advantage to the United States—namely, the
restriction of population to certain limits, and thereby a con­
tinuation of the Union. They will be constrained to limit them­
selves to the borders of the Missouri and Mississippi, while
they leave these plains, incapable of cultivation, to the wan­
dering aborigines of the country.” The North American Review
declared that “ the Missouri River was the termination of an




49

S E C T IO N .

ocean desert one thousand miles in breadth, which could only
be traversed by caravans of camels, and was a final barrier to
population, commerce or agriculture.” Morse, in his “ Univer­
sal Geography,” said: “ All settlers who go beyond the Missis­
sippi River will be forever lost to the United States.” Compare
these prophecies with the facts of to-day. As I write there are
six millions of intelligent and enterprising citizens occupying
the territory which the prophets said must remain in the hands
of the “ wandering aborigines of the country,” unfit for cul­
tivation. To-day fifteen thousand citizen soldiers and marines
of the territory west of the Missouri River that was to be
“ forever” lost to the United States—that territory fit only for the
“ habitation of the aborigines ” —are upholding the American
flag on the ocean and the isles of the sea.
Mr. President, neither the explorer, political writer nor the
geographer can tell the results of the enterprise of the American
citizen. Forty years ago the p’ ace where we stand to-day was
the home of the red man, the hunter and the prospector. To­
day this city, with its population of over one hundred thousand,
its churches, school houses, libraries, railroads and other Im­
provements of the highest order, is a fitting example of the
country and its people west of the Missouri which were to be
“ forever lost to the Union.”
But I must confine myself to Kansas. It is part of that
land that is incapable of cultivation. Last year, 1897, she
marketed $136,355,000 worth of productions of the farm, or­
chards, live stock and poultry. To this may be added a total
production of coal, lead, zinc, salt and smelting products of
the value of $26,990,000; making a grand total of $163,345,000
for one year for Kansas. Our mining industries are yet in their
infancy.
The total value of all precious metals produced in the United
States in the year 1897 amounted to $142,853,000, being $23,000,000 less in value than the productions of the farms and mines
of Kansas for the same year. For any period of ten years our
average productions will equal any State in the Union per acre
or per capita. Ten years ago investments in Kansas were so
popular that our people’s heads were turned. We built too
many railroads, school houses, water works, court houses, elec­
tric plants, business blocks, etc. Almost every city and village
had all these. In all these things we kept pace with States one
hundred years old. In a word, we lived too fast, and as a re­
sult a reaction came, and we went to the low water mark.
But for live years past we are on the up grade, paying our
debts and utilizing our resources. Financially we are all right.
The State has no State debt, and in the period just named more
than half our municipal and mortgage debt has been paid.
Where the debt has matured and not been paid, in many in­
stances the mortgage or municipal debt has been refunded at
from 4 to 5 per cent, interest.
We have just harvested an immense wheat crop, and if we
only had another Joe Leiter to corner the wheat our people
would be out of debt in a year. Our National banks show an
average reserve of 33.69 in the report of July 14 last, and the
reserve is larger than over before. We have an excellent State
Bank law, ably administered. Unfortunately for the banking
interests, the rate of interest has decreased in proportion to the
prosperity of the State. The interest rates have gone down
from 8 and 9 per cent, to 6 and 8 per cent. The harvest time
for Kansas bankers is spring and fall. At those times the live
stock men borrow to carry their cattle, sheep and hogs for the
spring and fall markets. To those unfamiliar with the live
stock business of the West, this interest is not appreciated.
One little city in Kansas of 40,000 people (Kansas City, Kan.)
handled in 1897 6,444,000 head of live stock, of a value of $110,520,000.
Kansas was best described by Senator Hoar, of Massachu­
setts. In a speech in the United States Senate, speaking of
Kansas, he said: “ There is not another instance on the face
of the earth, unless it be in some neighboring American State,
where a territory has grown up in forty-two years containing
such a population, such wealth, such value of agricultural
lands, such vast agricultural products. I should like to know
if there is another instance of such prosperity.”
It is due to Kansas flour, beef, mutton, poultry and eggs that
these Eastern brethren look so sleek and well fed. With peace
and open doors for trade with Porto Rico, Cuba, Hawaii and
the Philippines, added to our present commerce, we see no rea­
son why the whole country should not have a long period of
prosperity.
In conclusion I desire to say that the delegation from our
State here numbers twenty-five members. (Applause.)

The President: There is nothing the matter with Kan­
sas.
KENTUCKY.
Thomas S. Long, of the First National Bank of Hopkinsville,
Kentucky:
In response to the demands for a report from my State, I
beg to submit the following:
Kentucky has within her own borders sufficient resources to
make herself independent of the world. My limited knowledge
of the various industries, as well as the time allotted for these
reports, prevents a complete review of all of her interests,
and I trust that this Convention will pardon what might, under
other circumstances, seem sectional, when I call attention
to the principal industries of the southwest portion of the

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B A N K E R S ’ C O N V E N T IO N .

State. Coming as I do from the first wheat growing county In
© State, and the largest tobacco producing county in the
world, you will not wonder, when I name these as our chief
products. There are many others of scarcely less importance,
such as corn, and all Kentuckians love corn bread—and since
I have been here I have heard it suggested In a quiet way (as
slanderous as It may seem) that some love corn extract—oats,
bay, cattle and horses. Our hills abound In iron and coal, and
the whole State from center to circumference is filled with
high-minded Christian women, the fairest and grandest that
the sunlight of heaven ever shown upon. This last statement
I am prepared to substantiate by the specimen I brought with
me.
We have had seasonable weather, and the crops are un­
usually fine. Our bank vaults are groaning with the yellow
metal, with an Increased deposit account of 35 per cent, during
the past twelve months. With the principles of the Republican
platform of 1896 on our banner, we hope to keep pace with
the wealthy, hospitable and wonderful State of Colorado.
Allow me in conclusion to call attention to our charitable
Institutions, and the large sums given annually for the spread
and support of the gospel of Christ, telling as they do of our
fidelity to a crucified Saviour. May we all hear the words of
the wise man when he tells us to “ Honor the Lord with all thy
substance and with the first fruits of all their increase; so
shalt thy barns be filled with plenty and thy presses burst
forth with new wine.”
LOUISIANA.
G. W. Bolton, of Alexandria, La.:
In order to understand the conditions of Louisiana, remem­
ber how we suffered under the conditions of the late war. Yet
sixteen or eighteen years ago we started upward and have con­
tinued gradually ever since. As far as my knowledge goes, the
banks in New Orleans are in a satisfactory condition, paying
dividends. Outside the city of New Orleans there were not
any organized banks, but now there are fifty-nine, with a com­
bined capital of over $6,000,000. All of them are healthy and
paying dividends.
MAINE. (No response.)
MARYLAND.
Mr. Hannan, of the Second National Bank, Cumberland:
Mr. President, Ladies and Gentlemen, I am very glad to
be in this very hospitable' and beautiful city to-day. In regard
to Maryland, I can only say that it is well with us. Our banks
have plenty of money, and there is a fair demand. We are
among the States who have passed the bill abolishing days of
grace. We also have passed the uniform law requested by this
Association.
Providence has been good to us. We have plenty of canvas
back ducks, fine fish, and all the good things that come from
the soil, and we are thankful that the oysters are yet born
without legs.
MASSACHUSETTS.
Mr. Burridge, of the Third National Bank, Boston:
I regret very much that there Is not present to-day some
member from Massachusetts with larger experience than my­
self, to respond for such an important State, but having come
over two thousand miles to attend this Convention, I shall not
let the opportunity pass without saying a word. We have a
general Idea of the vastness and beauty of the West, but my
trip out here was a revelation. Massachusetts Is a manufac­
turing State, and has been depressed, but we are prepared to
take advantage of the prosperity to come after the war We
expect to regain our old position-that of the first shipping port
In the United States.
MICHIGAN.

The President: There is only one man that can respond
for Michigan, and that is the gentleman we all fell in love
with last year at Detroit—the original discoverer of Michi­
gan—Mr. Peter White, of Marquette.
Peter White, of Marquette, Mich.:
I had been conjuring up something about Colorado. I hoped
to pack up and move here to drink in this air that is worth
more to the square inch than that anywhere in the world
It goes without saying that Michigan is prosperous. The ag­
ricultural Industry equals any other, and we produce more
Iron than any State. Everybody is happy.
MINNESOTA.
Mr. Ross, of Blue Earth City, Minn.:
I expected to hear from Mr. Anderson. He is the man who
ought to respond for Minnesota. It is not necessary for me to
make any extended remarks. The State that can produce such
men as William Windom and Cushman K. Davis is all right.
This is the first Convention of the American Bankers’ Associa­
tion that I have ever attended, and I am somewhat in the con­
dition of the old maid, who said she was sorry she had missed
so many of the good things of life.
MISSISSIPPI.
Mr. Russell, of Meridian, Miss.:
Unlike the Georgian, I have not a sore throat, but a sore
head (gesticulating to depict a swollen head). Mississippi is
young, but we have thousands of acres of untouched timber,
and one-third is cotton producing. We hope to be second this
year—Texas being first. Our people are more prosperous than




ever before. Our deposits are annually increasing. The people
have learned economy since 1865, and profit by the knowledge.
Our agricultural interest is thriving, and I know we are gen­
erally better off, because I belong to that class that floats
paper. Proper security is sure to get money.
MISSOURI.
J. P. Huston, of Marshall, Mo.:
I regret that our State comes so late on the list, but it would
never do to go home without staking off a claim here. We have
three and one-quarter million people, mostly colonels. We have
been in the Union since 1821, the report to the contrary not­
withstanding.
Twenty years ago we had a bonded debt of
$20,000,000, which has been reduced to $4,000,000. Our lead and
zinc products equal the aggregate debt of the counties, and the
property value in the State would have wiped out the national
debt in 1865. Banks are thriving. Nearly all have idle money,
but prospects are bright for an extended business this fall.
The corn crop Is the foremost of the Union. Missouri is
first in production of zinc, and second only to Colorado in lead
output.
MONTANA. (No response.)
NEBRASKA.
H. W. Yates, President of the Nebraska National Bank, of
Omaha:
Mr. President, Ladies and Gentlemen.—I do not have the
head of the gentleman from Mississippi, but I am afraid I do
have a little of the sore throat.
Last year the State of Nebraska came to the front with a
corn crop of two hundred and forty-seven million bushels, the
leading figures of the year, and a wheat crop of twenty-seven
million bushels, which put her near the head of the list in
wheat producing States.
The products in our banks have increased during the last
year from $33,000,000 to $41,000,000.
Now we want you all to come to Omaha when you leave
here, and visit our Exposition. It Is a great success—second
only to the Chicago Exposition. I would like to round up as
many of you as I can, and have you stop off there next week,
and for that purpose the delegation from Nebraska has a regis­
ter in the office of the Secretary, on the eighth floor of the
Brown Palace Hotel, and we wish every delegate who can stop
off at Omaha to put his name in that book, and the day he ex­
pects to be in Omaha, and we will promise him a good time.
NEW MEXICO.
W. H. Byers, of New Mexico:
Mr. President, and Gentlemen, I can only say that there is
no part of the United States that can compare with New
Mexico. Why, if the people of the United States were as much
in search of health as they are in search of the almighty dollar,
the State of New Mexico would not hold all of the people who
would come there.
As to our agriculture, I can simply point you to the ex­
hibit we made at the Chicago Exposition. In fruit, we are not
behind California—indeed, our fruit is so fine that we have
none to ship; we eat it all up ourselves.
As to cattle, horses and sheep, they can be raised cheaper in
New Mexico than anywhere else.
Our mining interests are
growing very rapidly. There is a steady production, and they
are coming to the front.
If any members of this Association can come and visit us,
you may be sure of a hearty welcome to our land of promise,
sunshine and health.
NEW YORK.
Bradford Rhodes, of Mamaroneck, N. Y.:
Mr. President, and Gentlemen o f this Convention.—I will
only say a word on behalf of the Empire State. The President
of the Association, in his speech yesterday, spoke about the
Clearing House of the World, which he expected would shortly
be located there. Now, after hearing from Mr. Yates, I should
think it would probably be located in Omaha. We have heard so
much about the State of Colorado in these last two days, that
I did not know but we would like to have it located in Denver.
Your gallant Seventh Regiment is stationed at Montauk Point,
in New York State, and our commissionary there will feed them
well, I can assure you, and they are fraternizing with the gal­
lant Seventy-first Regiment of New York. We trust they will
stay with us all summer, and by and by, when this flag of ours
shall float over the entire world, we trust, and the Nicaragua
Canal is built, we believe that Denver will be the center of
the entire world.
NORTH CAROLINA.
Joseph G. Brown, President of the Citizens’ National Bank,
Raleigh, N. C.:
I am very glad to bring North Carolina’s greeting to this As­
sociation, and to report her crop prospects and her business
outlook as good. One of the city papers, in noting my arrival,
referred to me as hailing from the “ Turpentine State,” and
correctly so. In the old geographies, North Carolina’s chief prod­
ucts were put down as “ tar, pitch and turpentine.” The good
old State still abounds in these useful commodities, and, until this
day, the average North Carolinan glories in the name of “ TarHeel.” Our great misfortune has been that many of our best
men were not sufficiently tarred to make them stick at home.
Opening opportunities have lured them into other States, where

B A N K IN G
their intelligent skill and their resistless energies have, in
many cases, won for them both fame and fortune. But a better
spirit possesses us in this good year of grace. Our people have
been awakened to the value of their inheritance. Their eyes
have been opened to see their own land flowing with milk and
honey. The railroad, engineered by native skill, has penetrated
our mountain fastnesses, and revealed to an astonished world
our beautiful “ Land of the Sky.” Vanderbilt looked the world
over for a spot of unrivaled beauty, and found it only under
our genial skies—and there, upon our glorious Western high­
lands,
“ Where Nature has shed o’er the scene
Her rarest of crystal and brightest of green,”
he has poured out his millions, until a perfect wonderland has
been developed, and in the midst of it, his magnificent palace,
worth a trip across the continent to behold. I will not claim,
Mr. President, that we have the best and fairest land on earth;
but if old Father Abraham and his shrewd nephew, Lot, when
they came to the parting of their ways, in their journey to the
land of promise, had been permitted to stand upon one of our
lofty Western eminences, where their broadened vision might
have rested upon our fertile fields, methinks the discerning eye
of the young man would have sparkled with delight, and he
would have lost no time in turning his steps toward that goodly
land and in pitching his tents there rather than in the beautiful
valleys along the banks of the Jordan, although these, the in­
spired writer tells us, appeared “ even as the garden of the
Lord.”
Nature has indeed been very lavish in her gifts, and with
open hand has scattered her treasures all around us. In our
forests is found an infinite variety of wood. Our flora is
varied and beautiful. Our quarries furnish the best qualities of
granite and marble, and our mines are rich with valuable ores
and glittering gems. In our natural resources we present as
great a variety as any State in this Union. But, for long years,
it has been our custom to ship all this raw material to other
sections, to have the imprint of some one else’s intelligence
placed upon it—and then to bliy it back at its enhanced value.
To-day, however, under the inspiration of the new spirit that
has breathed upon us, our own brain is directing and our own
trained hands are giving to these things shape and symmetry
and value, and thus adding many fold to our material wealth.
Upon our luxuriant pastures the finest cattle are grazing.
From our rich gardens we are furnishing the tables of our less
favored Northern neighbors with early vegetables and small
fruits. The brightest tobacco is indigenous to our soil, and our
manufacturers have encircled the world with their golden belt,
and, with their product, are now supplying the leading nations
of the earth and the far-off isles of the sea. In cotton milling
we have long had prominence. With more than a million spin­
dles, 25,000 looms and 1,400 knitting machines, we are weaving
Into beautiful and useful fabric 50,000 more bales of cotton
than our State produces annually. Our labor Is desirable and
cheap, and the most cordial relations exist between the owners
and the operatives. Fuel is inexpensive and close at hand. Our
magnificent water power equals three and a half million horse­
power. Our cotton staple is excellent, and grows luxuriantly
and abundantly all around our mills. These advantages have
attracted Eastern capitalists, and they are now adding their
means to our own accumulations, until It begins to look like
the music of the mill will soon be heard from every hillside—
but there is room and welcome for all.
Activity along these industrial lines has stimulated trade
and quickened all business life, and, we believe, is purifying .
our political atmosphere. The banks have, of course, not failed
to reap their share of the accruing benefits—so that even dur­
ing the periods of financial depression they have been able to
make good dividends and, at the same time, add satisfactory
sums to their surplus for the protection of depositors.
Our State Association recently held its second annual ses­
sion. It is young, but vigorous and lusty, and gives promise of
much usefulness. Our State banks are under wise supervision—
our laws being, in many respects, similar to the national bank­
ing laws.
The record of the banks for the past year shows increased
capital, strengthened surplus and growing deposits. Whilst
our banks are ever alert, and always endeavor to keep pace
with the spirit of the times, yet they cling to the old conserva­
tive ways, attaching more importance to safety than to volume
of business or increase of profits.
And finally, Mr. President, in that chiefest of all products,
beautiful women, in which, judging from all reports, every
State abounds—we do much more abound. They are as abun­
dant as is the beautiful golden rod that bedecks the wide
stretches of land over which we come to this beautiful city of
Denver. And they are all young—they never grow old In our
climate—and pretty—yes, “ the fairest among ten thousand
and altogether lovely.”
And let me say, too, our men are brave and chivalrous—loyal
to their State, loyal to the old flag, and, as has been gloriously
shown during the recent war, ready to lay down their lives
upon their Country’s altar whenever such sacrifice is needed.
But, Mr. President, they esteem it a prouder duty to live for
their Country, that, in the onward march of nations, they may
help her to win those greater victories, the victories of peace,
which bless her people and make them happy and prosperous.




SE C T IO N .

51
OHIO.

The President: Ohio will be responded to by Mr. M. M.
White, President of the First National Bank of Cincinnati,
and an ex-President of this Association.
M. M. White, of Cincinnati:
The sunshine and rains from heaven have fallen on the hills
and valleys of the State of Ohio, and we have abundant crops
of everything to gladden the heart of man. We are happy and
making rapid progress in education, culture and refinement.
Our poorhouses are comparatively few, and luxuries are not
confined to the rich, but scattered through the State. We are
glad that Ohio is the home of our President. We have few
strikes, showing a prosperous and contented people.
OKLAHOMA.
Mr. ------- , Assistant Cashier of the Citizens’ National Bank
of El Reno:
There is a quotation from James Whitcomb Riley which says
that—
“ If you think nothin’, just keep on, •
But be sure and don’t say it, or you’re gone.”
Now I have not prepared any speech, but I don’t want to
let this opportunity go without saying a word. Down in Okla­
homa we have been living too fast, but we had to do so if we
were ever going to catch up with the old part of the country.
We have found that success in banking lies only in membership
in the American Bankers’ Association.
As to all that has been said here about crops and so on, let
me just say that in Oklahoma we can raise anything that
can be raised anywhere in this land. Our chief industry is the
raising of cattle.
OREGON. (No response.)
PENNSYLVANIA.
William Hackett, Cashier Easton National Bank, Easton:
Mr. President and Ladies and Gentlemen.—Pennsylvania
has always occupied a leading position in certain lines of
manufacture and in the cultivation of its rich agricultural
lands, but the opening up of new fields of enterprise, the devel­
opment of resources of new sections of the country and the
competition in our markets of the products of the rich fields of
the West have somewhat interfered with these sources of rev­
enue which added so largely to our wealth and gave employ­
ment to so many thousands of our people. Of course, the peo­
ple of Pennsylvania have also been confronted with the diffi­
cult questions between capital and labor, by the discussion of
the numerous social and economic questions which are yet
waiting for solution. Yet in spite of all these obstacles Penn­
sylvania to-day has most favorable conditions and looks for­
ward to an era of abundant prosperity in the future. With her
800 banks and an aggregate of deposits running up into the
millions, a State with a most complete railroad system, with
wise legislation, a uniform method of conducting the banking
business, with her vast deposits of coal and iron and slate,
with her hundreds of miles of canals, and her immense manu­
facturing interests, I think the thirty-eight delegates from
Pennsylvania, who are here in attendance at this Convention,
will join me in testifying that our State is able to report prog­
ress and the brightest hopes for the future. (Applause.)
Pennsylvania feels a deep interest in this Centennial State.
Colorado, you know, was born the very year that the Centen­
nial Exposition was held in Philadelphia, when the people of
this entire country celebrated there the anniversary of the one
hundredth year of our national independence; and the people
of Pennsylvania—a State which by its position and its imports
has been called the keystone of the arch of the Federal Gov­
ernment—feel a deep interest in this Centennial State not alone
on account of its marvelous resources but because it Is a com­
monwealth that was born in 1876, and I can assure you that
though we are hundreds of miles apart geographically we are
near together at heart. (Applause.)
RHODE ISLAND. (No response.)
SOUTH CAROLINA. (No response.)
SOUTH DAKOTA.
W. A. McKay, of Madison:
Mr. President and Gentlemen.—I have good reports to bring
in from the land of reputed cyclones and blizzards. Could you
see the seas of grain you would be enlightened. We have
40,000,000 bushels of wheat this year. Notice our mines, dairy
products, etc. Contentment is with us. Populism is dead. We
do not know what fail means.
I am going back to tell the bankers what a magnificent re­
ception the people of Denver have given us, and I want to say
to the members of this Convention that if time should ever
bring a meeting of this Association in South Dakota, we prom­
ise you that if you wiil come to Madison we will give you a
royal time, one and all.
TENNESSEE.
To the President of the American Bankers’ Association, Denverr
Col.:
D ear Si r .—Contrary to my hopes and expectations, I find
that it will be impossible for me to participate this year in th e

52

B A N K E R S ’ C O N V E N T IO N .

deliberations and pleasures of the annual Convention at Denver,
and as Vice-President of the Association for Tennessee, what
report I can present of the financial conditions of the old Vol­
unteer State must be orief and less satisfactory than I could
wish. Since our Convention one year ago, the banking interests
of Tennessee have undergone no material changes, no failures
were reported, and only a few new organizations have been
effected. The State Association is in a prosperous condition, ow­
ing largely to the ability and great efficiency of our well-known
• Secretary, Colonel John W. Faxon, who is a “ wheel horse ” in
everything he undertakes. In banking circles the past year has
witnessed a great change in the personnel of officers of many
of our leading banks, those in Nashville and Memphis particu­
larly, and while some of the “ old stagers ” like Colonel
Gwynne, Judge Latham and this writer, have dropped out of
the field of action, new and well equipped men have stepped
into their places, and the bosom of the financial sea has shown
no disturbing billows. A great effort is being made to induce
immigration to our State from all sections of the country, and
in the presentation of our rich and limitless undeveloped re­
sources the master hand and pen of that well-known banker,
Hon. Herman Justi, Is particularly conspicuous. We think
that no State in the Union offers more advantages to the farm­
er, mechanic or manufacturer than Tennessee, and it will be
only a question of time when the tide of emigration will set
southward, and a new era of prosperity come to this section as
a reward for the efforts of those who have seen and profited
by the opportunities now presented. The recent war with
Spain, in which every State of our glorious Union nobly dis­
charged its duty, has practically effaced all sectional lines and
partisan animosities, and good citizens from every part of this
grand nati m—and, if you like, Nation spelled with a capital N—
will be cordially welcomed to Tennessee, and from neighbor
and new-found friend receive the right hand of fellowship.
Greatly regretting my inability to attend this year’s Con­
vention and partake of the “ feast of reason and flow of soul ”
—to say nothing of the Rocky Mountain aqua pura which will
doubtless be provided for the many unfortunate bankers who
last year failed to make its acquaintance in Walkerville, I am,
Mr. President,
Very respectfully yours,
C. F . M . N i l e s ,

Vice-President for Tennessee.
TEXAS.
M. Lasker, President Island City Savings Bank, of Gal­
veston : *
Mr. President, Ladies and Gentlemen.—Texas a few years
ago was known mainly as a producer of cotton and long horn
cattle. We still lead in cotton, but the long horns have been
improved upon and we raise better stock, and the exclusive
production of cotton has given way under the low prices to a
diversification of crops, which has resulted in bettering the
condition of our farmers generally, as well as bringing to our
merchants and bankers an increase of business.
In common with the most of the West we have suffered
from a “ busted ” boom. In addition, we have suffered from a
severe drought. Two good crops have put the farmers of that
section in as good a fix now as that of the farmers in any part
of the Union, I think.
Mortgages are rapidly disappearing. New homes are loom­
ing up, and all our people are prosperous and happy. Dollar
wheat has proved the fallacy that- Lombard Street and Wall
Street dictate the price, and the farmer to-day knows better.
During the last campaign it was said that the United States
must not attempt to set up a financial system because that had
been established by England, which was reason enough why
we should let it alone. But, gentlemen, the war with Spain
has taught us better. Our people know that we have no better
friend than England, and we are all convinced that to the
Anglo-Saxon race belongs the mission to liberate the world.
Thus we start into the future with great hopes, and while we
feel proud of the great development that has taken place in the
last few years, still we are prouder than all to-day of the fact
that we have as large a stock of patriotism for the Stars and
Stripes as any people in the United States. (Applause.) With
the exception of the State of Georgia we have always furnished
the largest Democratic vote, but we have as great a stock of
admiration for the Executive of this Nation, who has with
modest dignity presided while we are being glorified before the
whole world, as the people of any State; we are proud that our
Democracy does not keep us from vieing with you in admiring
such a President.
UTAH.
G. Q. Cannon, of Zion’s Savings Bank and Trust Company
Salt Lake City;
On behalf of the State of Utah I would say that our progress
at the present time is commensurate with that of the other
States that have been represented here. We have the honor of
being the youngest State; and with Pennsylvania, the Keystone
State, and Colorado, the Centennial State, our sons have up­
held the honor of the American flag at Manila, standing side
by side.
In Utah our crops are good. Prices have been uniformly
good. We raise large quantities of live stock, particularly
sheep. The value of our wool as compared with two years ago
has nearly doubled.




Our mining industries are also in a prosperous condition.
We have one of the largest cyanide mills in the world for the
treatment of gold ore.
I have laid upon the Secretary’s desk an invitation for the
delegates and guests at this Convention to visit Salt Lake City.
I hope it will be generally accepted, and that you gentlemen
from the East especially, after having traveled so far, will not
be content to go home without crossing the Rockies.
VERMONT. (No response.)
VIRGINIA.

The President: Virginia will be responded to by Mr. W.
G. Elliott, President of the Atlantic Coast Line.
Mr. Elliott:
This is really a surprise that I should be called upon for the
State of Virginia—not that I was not given sufficient notice
that it was desired I should do so, but from the fact that I
had so recently urged them to let me off. I assured them there
was better material in the Virginia delegation to select from,
and I went so far as to say that I had been down to see that
gentleman on Broadway who it was said could write speeches
to ask him to write me one to make to-day, and he said: “ My
dear sir, I am head over heels in the work of writing speeches
for the delegates from the other States. I have exhausted all
the material; what can I say for Virginia ? ” So I was left to
sympathize with my friend who expressed his regret that he
came so far down on the list that there was nothing left for
him to claim. Virginia simply desires to report that she is
enjoying an era of prosperity from the mountain» to the sea­
shore. She has those oysters that are born without legs, which
have been claimed by Maryland. She has an oyster mine on her
eastern coast, the Chesapeake Bay, where we get the terrapin
and the crab and the no-legged oyster, and everything good to
eat, including the canvasback duck, and when I heard one of
the speakers talking about all they had in his State I felt sorry
for him that he hadn’t been to Virginia. He had one advantage
of me, however, in that he was able to bear testimony as to
the quality of the water in Michigan, in referring to Kentucky
whisky. I am afraid that I am too much like one of our
citizens who went to Congress and undertook to settle a col­
ony at Hampton Roads. He brought a committee down there
to investigate. When they asked him about the people in the
neighborhood he said, “ Why, they are the F. F. V.’s.” “ How
about your churches? ” “ Why, they have been building them
since 1640.” “ Any school houses? ” “ Why, you will strike
them every half mile. We have every advantage in the world.
A healthy location; no malaria; mosquitoes can’t live here.”
“ How about the water? ” they said. “ Great Heavens ! ” he
replied, “ you’ve got me now. I have been living here forty
years, and I never tasted it.” In that respect the gentleman
from Michigan has the decided advantage of me, because the
hat which I brought here, which was a pretty large one when
I arrived, I find to be too small to-day.
I am glad, Mr. President, that you told these gentlemen that
I was not a banker. I have had a great deal to do with banks
as a borrower, but this is the first time in my life that I ever
undertook to address so many men collectively that could certify
checks. It has been my custom to take them off singly and to
hear them say: “ That is all right. I will put it to your
credit.”
In conclusion, allow me to say that it is left for me to claim
for Virginia simply all that has been claimed for these newer
States and to add about 10 per cent, for age. Before I sit
down I want to express the gratification Virginia feels at the
glowing reports that have been made to-day by many of her
children. We are glad to see you are all prosperous and happy.
We are glad to see that each one of these States that was
ceded to the Union by Virginia is a little better than the other.
Virginia still remains proud of her past; she is contented with
her present, and most hopeful for her future.
WASHINGTON. (No response.)
WEST VIRGINIA. (No response.)
WISCONSIN.
C. F. Usley, of Milwaukee:
Gentlemen, you have heard the glories of most all the States
in the Union pictured to you in eloquent words. But words do
not do justice to the variety of the industries and the products
of Wisconsin, and I therefore intend to leave them all to your
Imagination. I simply ask that you will give full play to your
fancies in order to do Wisconsin justice.
WYOMING.
Henry G. Hay, Stock Growers’ National Bank, Cheyenne:
Mr. President and Gentlemen.—I had a speech prepared in
my mind, but I have been waiting so long until my turn came
to speak that I have forgotten about nine-tenths of it.
We have been pleased at the great unanimity of this Con­
vention on two subjects: one is the safety of our institutions
at home, and the other is the total condition of collapse of her
representatives in Denver.
Now, while Wyoming is perhaps too young to be in that kind
of company, still we are with you on both propositions.
I can say one thing that has not been said for the other
States. In Wyoming we have the largest number and the great-

B A N K IN G
est field of undeveloped resources of any State in the Union.
I could talk to you, too, for an hour, and give you statistics about
our developed resources, such as coal, iron, oil—all furnishing
a safe field for Investment. I can assure you that our loans
and base of securities were never heavier and better generally
than they are now. Our small per capita and bank statements
speak for themselves. Our resources are of a character that
require capital to develop them, and there is no safer place in
the Union for investments to-day. (Applause).

S E C T IO N .

53

the heroic conduct of your Wood and your Roosevelt lead­
ing their Rough Riders, God bless them, but shall we not
glory in that old Confederate veteran, General Joe
Wheeler ? And if he did say at Santiago, “ Come on,
boys, don’t you see the Yankees—I mean the damned
Spaniards—are running,” heaven forgave him for the oath,
I think, in consideration of this mingling of the old blood
with the new.
Robert J. Lowry, of Atlanta:
The President: Gentlemen, this finishes the most inter­
Mr. President: Banks are business civilizers. They are
esting Call of the States that we have ever had, and I
conservative, they set the example for honest, correct prin­
beg to thank you for the services you have rendered in this
ciples as the rule of conduct. Show me a town or city
respect.
where the banks are successful, and I will show you a
“ Patriotic Spirit of Bankers."
thrifty community, labor getting steady employment, and
The President: The next topic on the programme is the
everybody satisfied and doing well. The banks and the
“ Patriotic Spirit of Bankers,” and I have the pleasure of
people have common interest; consequently the old ideas
introducing to you Mr. J. D. Powers, the President of the
that banks only prosper when times are hard, and all other
First National Bank of Owensboro, Ky., who will open
occupations lag, is fast disappearing. They thrive or suffer
the discussion of the subject.
together. Banks are not only conservative, but promoters
[Mr. Powers’ address will be found on pages 23 to 25 of
of prosperity, by extending help to legitimate enterprises
this S u p p l e m e n t . ]
calculated to enlarge the trade and general welfare of the
C. A. Pugsley, of Peekskill, N. Y.:
community, which, in turn, increase the business and success
It seems eminently fitting that following these admirable
of the banks. These facts are sweeping away another
patriotic addresses, which have touched a. responsive
old idea—that the banking business tends to selfishness.
chord in all our hearts, that the committee appointed by
Being at the fountain head and basis of a people’s pros­
the Executive Council to prepare a congratulatory message
perity and interwoven with all the elements of public prog­
to the President of the United States should make their re­
ress, the bank of necessity is vitally interested, and the
port. All sections of our great country are to be congratu­
banker thereby warmly enlisted, in all that makes for the
lated upon the result of the war. As one has said, upon
glory and the honor, the weal, the aggrandizement and ex­
what it has gained above all its losses, this land may well
pansion of the country. And what is patriotism but this
felicitate itself. Its renewed and augmented union, its
—fidelity and devotion to the great interests which build up
proud development of military strength, such as even the
one’s country in all directions ? It is, therefore, no mat­
warrior empires envy, its enlarged humanitarian horizon
ter of surprise that bankers are, and always have been,
and range of interetsts, are all benefits of the highest order
patriots. It is not only their interest to be so, but it is
to this nation, as has been expressed here to-day by the
the natural tendency of their business to make them so.
•delegates from Maine to Texas. We rejoice that through
In times of war, from our earliest history, the banker has
the cool judgment of President McKinley, and the mag­
been a prime factor in the support of the Government, as
nificent work of our army and navy, the pathway has been
evidenced by the examples of those grand patriots, finan­
so quickly hewn for the radiant footsteps of the Angel of
ciers and bankers, Alexander Hamilton and Robert Mor­
Peace.
ris, in the American Revolution. When Robert Morris
CONGRATULATIONS TO PRESIDEN T M ’K IN LE Y.
gave his services freely to his country, and came to the help
of the Continental Congress by pledging his personal credit
I have the honor to submit for the approval of the Con­
for over a million of dollars to procure army supplies, he
vention this message:
illustrated that spirit of patriotism which has animated and
To the President, "Washington, D. O.:
dominated American bankers in every period of our na­
The American Bankers’ Association, in its twenty-fourth
tional existence.
annual Convention, assembled at Denver, Colorado, represent­
ing banks of every State and Territory, begs most heartily to
Every one knows how nobly the banks, North and
■congratulate the President of our beloved Republic upon the
South, responded to the call for money for carrying on
•successful conduct of the war, and the brilliant achievements
the Civil War. We opened our vaults to the Govern­
of our army and navy, and the prospect of peace.
ment, saying in effect: “ All we have is yours; use it for the
I move you, sir, that this message be sent to the Presi­
country’s good.” But our dissention is a thing of the
dent of the United States, signed by the President of this
past, thank God ! We now live and fight under the same
Association.
old flag, knowing no North, South, East or West, but one
W. L. Royal, of Virginia:
common country for us all, as completely demonstrated
In behalf of the South I beg leave to second the adop­
by the present war with Spain. Among the reunited ele­
tion of this resolution. I have no right to speak for the
ments battling under this common flag and for this common
South, perhaps, but I can speak for Virginia, and I can
country, banks and bankers have again given notable il­
«peak for the Confederate soldier, for I wore the gray
lustration of their exalted patriotism. When the Govern­
from the beginning to the end of the war. And, sir, I
ment called for subscription for bonds to raise money to
want to say to this Convention, pass that resolution, and I
conduct the war, from banks and bankers in every sec­
want the President of the United States to understand that
tion came a response sufficient to furnish over and over
Tie has the hearty support of the Confederate soldier in
again the amount required. Likewise, if my allotted time
the course he has pursued in this war with Spain. For a
permitted, it could be shown that in our soldier ranks are
Tong time, gentlemen, the people of the North did not
many from the banking circles of the country.
understand the Confederate soldier in respect to the Union
But “ Peace has her victories, no less renowned than
and that flag. We fought out our fight like men, feeling
war.” Patriotism is equally prevalent and equally great
At the end that we had nothing to be ashamed of, but that
in times of peace as in times of war. In national crises,
we had a glorious record to point to. We laid down our
who come more promptly to the aid of Government and
arms when overcome by superior forces with the pledge of
people than bank and bankers, wherever there is need
■our sacred army that we abandoned the cause for which we
of financial aid to sustain the national credit ? They are
Tiad fought, and we were just as loyal and true to that
conspicuous in the advancement of all great movements
pledge as we had ever been to our cause while we were
for national, State and municipal progress. And here I
fighting for it. Now the North is learning that the Con­
may add this thought, there is no truer patriotism than ex­
federate soldier looks upon these United States as his
hibited in bearing cheerfully and honestly a just share of
country and upon that flag as his flag, for which he is
the burdens of government. The State and municipality
'ready to lay down his life. Sir, I rejoice that this Spanish
get every cent of tax the banks are liable to pay; there is
war came, for it has given us the opportunity to demon­
no shirking, no shipping securities to other points to avoid
strate to our fellow-citizens of the United States that the
taxation, but they pay patriotically their lull tax on capi­
issues of the past are ended, and that we of the South
tal and surplus, and frequently on undivided profits. I
have set our faces toward the future for all time. The
believe I can say without fear of successful contradiction
past was to us but glorious memory—a memory, neverthe­
that if all other corporations and persons in other avoca­
less—and for the future it was to be the union of our
tions paid their taxes in the same honest way that the
States. You are justly proud of your Miles, your Samp­
bankers do, that the tax rate would not be over one-third
son, and we are proud of our Fitzhugh Lee, our Wheeler
of what it now is. It may be further added that in every
and the others who have shown the world that the Con­
community, among the most public spirited citizens,
federate soldier looks upon this entire land as his coun­
contribution of time, talent and means, we always find the
try, and is ready to shed his blood for it. You exult in
bankers.




54

B A N K E R S ’ C O N V E N T IO N .

And now through the efforts of all classes of our people,
a wider national life opens before us. In the past, we have
been keeping time, and splendid time, to the music of na­
tional progress. We have added a new note to the “ drum­
beat around the world.” We have shown a patriotism that
can go beyond love of ourselves and take in our neighbors
—a patriotism willing to engage in struggle, not for na­
tional glory or domain, but for humanity, and the uplift­
ing of humanity—pure and simple. The growing fellow­
ship of the Anglo-Saxon peoples will carry us into the
great work of controlling and uplifting the world. In this
enlarged sphere of endeavor, in welding the nations of the
world together, in the onward march of a peaceful progress,
there are oceans to be joined by waterways, continents
to be tied together by cables, nations to be united by in­
ternational railways, and other great things to be done, re­
quiring mighty outlay of money and brain; and we may be
sure, as in the past so in this glorious future ahead of us,
banks and bankers will do their part, and do it well.
The President: Gentlemen of the Convention, the ques­
tion is on the adoption of the message prepared by Mr.
Pugsley for transmission to the President of the United
States.
The motion was adopted.
“ The Bank Clerk.*’— Thirty-seven Years in a
“
Bank.”
The President: In the absence of Mr. James T. Hayden,
President of the Whitney National Bank, of New Orleans,
his paper on “ The Bank Clerk ” will not be read at this
time, but will be printed in the minutes of the Convention.
The same rule will apply to the paper by Mr. E. H. Pul­
len, of New York, on “ Thirty-seven Years in a Bank.”
We regret very much the absence of the gentlemen, but
inasmuch as the time is so short, and we have so much to
do, we cannot read the papers, though you will all have an
opportunity to read them in the published report of our pro­
ceedings.
[Mr. Hayden’s paper will be found on page 25 of this
S u p p l e m e n t . Mr. Pullen’s paper o n pages 28 to 31. ]
COMMITTEE ON EDU CATION CONTINUED.

The President: The Chairman of the Executive Council
has a brief report to make.
Alvah Trowbridge, of New York:
I desire to report that the Executive Council recommends
the adoption by the Association of the resolution proposed
by Mr. Peter White, of Marquette, Mich., that the Com­
mittee on Education be continued, with power to act, under
the control of the Executive Council, if Mr. White will ac­
cept that proviso to his resolution as an amendment to it.
Mr. White accepted the amendment, and the report and
resolution was adopted.
Mr. Russell, of Mississippi:
Mr. President, I have a resolution in respect to this same
subject, which I think will be acceptable to the Convention,
as follows:
Resolved, That this Convention hereby recommends and
authorizes that such appropriation be made by the Executive
Council as is necessary to carry on the work of the Committee
on Education.

The resolution was adopted.
“ Practical Safeguards Against Check-Raising,”
The President: The next item on the programme will be
a paper, entitled “ Practical Safeguards Against CheckRaising,” and the discussion will be opened by Mr. A. C
Anderson, Cashier of the St. Paul National Bank, St. Paul'
Minn.
[Mr. Anderson’s paper will be found on pages 26 to 27
of this S u p p l e m e n t . ]
L. F. Potter, Citizens’ State Bank, Oakland, Iowa:
It seems to me that the paper just read is of so much im­
portance and the suggestions contained in it so good that
special notice should be taken of it. I therefore move that
it be referred to the Executive Council for such action in
regard to it as they may deem proper.
The motion was carried.
Fred. Heinz, Farmers’ and Mechanics’ Savings Bank,
Davenport, Iowa:
. In connection with this matter, I beg leave to also sub­
mit to the Executive Council a form and style of check
which I have here.
The President: Hand it up to the Secretary, and it will
.be referred to the Executive Council.
The Convention adjourned to Thursday, August 25, 1898,
at 10 a.m.




THIRD DAY'S PROCEEDINGS.
Thursday August 25th 1898.

,

,

The President: Gentlemen, the hour of 10 o’clock having
arrived, the third and last day’s session of the Twentyfourth Annual Convention of the American Bankers’ Asso­
ciation is declared to be open and ready for business.
After prayer, the President announced that the report
of the Committee on Nominations would be made later in
the day.
“ The Need of Banking Facilities in Rural
Districts.”
The next topic on the programme is “ Uniform Laws for
Holidays as well as Days of Grace.” The discussion to be
opened by Mr. George M. Reynolds, Cashier of the Conti­
nental Bank of Chicago, 1 1 Mr. Reynolds does not ap­
1.
pear to be in the house at this moment, and his paper will
be presented later if there is time for it.
Therefore, we will pass to the next topic on the pro­
gramme, “ The Need of Banking Facilities in Rural Dis­
tricts,” the discussion of which will be opened by Mr. Wil­
liam L. Roy all, of Richmond, Ya.
[ M r . R o y a l l ’ s p a p e r w i l l b e found on p a g e s 18 to 21 of
t h is S u p p l e m e n t .]

W. W. Wood, President National Bank of Commerce of
Kansas City, Mo.:
Mr. President and Gentlemen of the Convention.—I have
listened with much interest to this address, and I, from my
standpoint, condemn it first to last. I think the whole prin­
ciple of the address is placed upon a sandy foundation. In
the West we have had our experience with the issue of local
notes by local banks. Of course, I cannot speak for Vir­
ginia, but in Missouri, Kentucky and Indiana we have had
such experiences that we never again want to see the local
bank issuing currency.
However, Mr. President, I cannot undertake in the few
minutes which can possibly be allowed me to answer the
gentleman. I have some other facts which I wish to pre­
sent for the consideration of this Convention in the direction
of the subject indicated—the need of banking facilities for
country districts. I should not undertake to offer any re­
marks, for I am not accustomed to public speaking, were it
not for the fact that if there is anything in the world I do
know it is the need of the rural districts for banking facili­
ties, because I have myself been a country banker for
many years, and besides in the last twenty years I have not
only been intimately associated with the country bankers
of the West, but I have been largely interested with them.
Banking in this section of the country is well developed.
Indeed, it is not confined to any particular section of the
country. In the city you have larger banks, larger capital
and larger business, but in the West we have the smaller
institutions. Commerce and banking have in all times
moved side by side, and it will always be so, because no
considerable degree of commerce can be done without some
kind of a banking system. Banking is an auxiliary to com­
merce. In the city you have the larger commerce, and con­
sequently you need the larger banks. In the West we have
a commerce not so extensive or diversified, but it is a com­
merce all the same, and we need a banking system. True,
we have one now, but it does not meet the needs of the sit­
uation, and I will show you what I mean by that.
On the surface of this question it would be reasonable to
conclude that the rural districts do not have banking facili­
ties now. Gentlemen, that is not true; they have banking
facilities, but they do not meet the requirements of the
situation, and they can be improved very much.
In the West there are many so-called banks—speaking
now particularly of Missouri, Kansas and Nebraska—and
in some parts of these States you cannot go ten miles with­
out running across a sign J Bank ” over an unpretentious
*
doorway. The result is that competition is excessive. The
capital is necessarily small, because the business is small.
The deposits are small, and larger capital is not justifiable.
This small capital and the small proximity of these banks
is what has led to abuses and excesses.
One abuse that exists in the big cities, gentlemen, that
I would like to say something about, is the paying of inter­
est on balances. According to my ideas, a commercial bank
is not expected to pay interest. On the other hand, it should
collect interest. I believe the deposits would not be materi­
ally diminished if all interest charges were dispensed with,
and we in the West cannot bring about this improvement
until the people of New York have set us the example. Par­
don this digression.
We have too many banks in the rural districts, I say.
It is not numbers that we want, but it is a better system.

B A N K IN G
Neither do we need to allow the country banks to issue a
currency. I think that would be a very hazardous experi­
ment. I believe the proper thing to do is to encourage the
larger banks and allow them to absorb the little banks in
the smaller towns as branches. Let me give you an illus­
tration from Kansas—because they are my neighbors and
my friends; in fact, we live off of Kansas—(cries of “ That’s
right ”)—three-fourths of our out-of-town business comes
from the State of Kansas, and there is no State in the
Union that has been more abused by the small individual
banker than Kansas. Yet because of abuses reformations
have been made, and to-day Kansas has a good banking
law and a good bank supervisor, and its banks are in as
good a state as in any other State in the Union. Take
Sumner County, Kan., for example, with 30,000 population.
In Wellington, the county seat, there are two or three wellmanaged banks. Go five miles out in any direction, and
you will strike a country bank, in a village where there is a
population of two hundred people, perhaps, with a capital
of $5,000. Now, that is one of the abuses that I referred
to. I would encourage the larger banks in the cities to
establish branches in the smaller towns. Every one of
these little banks should be a branch of the banks in the
county seat, provided those banks want branches—if they
do not, then the Bank of Commerce of Kansas City would
take them in. It would be safer for the banks and safer
for the community, if such a system were inaugurated.
Then the branch bank would have the strength of the
mother bank, and in my opinion failures would be almost
impossible. Again, it would equalize the supply of money.
Now, for another illustration, let us go to the Empire State.
Take the City National Bank of New York, which is the
big bank of this nation. Now, a plethora of money always
means the reverse condition so far as loans are concerned.
I am told that oftentimes for months, in New York City,
the large banks buy paper at 2 and 3 per cent, per annum.
Why? Because they are paying interest to the country
banks at 1% and 2 cents, and they are compelled
to buy paper at low rates in order to make the ex­
penses incurred, and possibly to make some little profit
themselves. But if they were not paying interest on these
balances they could afford to do differently. Understand,
gentlemen, when I keep my account in New York I want
interest if other people get it, but if you will all agree to pay
no interest to anybody you will benefit me and the entire
country. This interest question is a hobby of mine, and
whenever I undertake to say anything I am apt to drift
off into it. Now, take the City National of New York, with
its million of deposits, buying paper at 2 and 3 per cent, a
month----The President: You mean 2 or 3 per cent, a year.
Mr. Wood: I beg your pardon. Two and three per cent,
a year is what I mean. The 2 and 3 per cent.f*-month ap­
plies to the cross-roads banks. Now, suppose the City
National Bank had branches. The money would be dis­
tributed, because you would draw from one section of the
country to supply the needs of another section. Suppose
the City National Bank had a branch bank at Beaumont,
Texas, and the City National Bank, overflowing with
money, and buying paper, as I say, at 2 and 3 per cent, a
month----The President: There you are again, doctor. You mean
a year (laughter).
Mr. Wood: You see, gentlemen, I have made that mis­
take again, because my words run faster than my thoughts.
If the City National Bank had a branch bank at Beaumont,
Texas, in a new country and an undeveloped country,
where they needed a great deal of money, and had a man
there whom they knew and could give instructions how to
handle the business, instead of taking paper at 2 per cent,
a year they could afford to take it at 6 and 8 per cent, a
year from the Beaumont bank, and thereby benefit Beau­
mont and New York alike. Again, suppose the City Na­
tional Bank had a branch at Cripple Creek. They would
use the money from Cripple Creek—where I understand
they are taking out lots of it every day—to supply the
needs of Beaumont, where they want the money to help de­
velop the country. Some one might argue that it cannot
be done under the present system of banking, but if there
were branches of the City National Bank in these places it
could be done.
This is no new idea, gentlemen. I am no undue expan­
sionist. and possibly what I say will not be acceptable to
many in this Convention who class themselves as old
fogies, because they might fear the branch bank would dry
up the fountain, for you know there are some people who




S E C T IO N .

55

want to put their arms out around their business every day.
If that is your system, then this branch bank system
would not suit you. But let me tell you, this branch bank
system prevails in many parts of the world. In London
you cannot go ten squares without finding a branch of the
Union Bank of London. They understand that in order to
advance commerce you must give it every possible facility.
The Bank of France has branches everywhere. In Canada
the same thing is true. Why, a single bank in Montreal
will have branches from Vancouver to the mouth of the St.
Lawrence. They practice it in these countries successfully,
and we never hear of bank failures. I believe if we in­
augurate the system in this country it would almost do
away entirely with bank failures.
This same principle is practiced in trade. It is illus­
trated in the large department stores in our cities, where
you can buy anything from a paper of needles to a second­
hand pulpit, and from a dress to a grindstone. They are
not only conveniences to the community, but they are profits
to the community as well. It is in effect a home bank with
branches. The department store of to-day is successful.
Why not make the banks equally successful?
Mr. Bonebrake, of Kansas:
Mr. President and Gentlemen.—I want to apologize for
Dr. Wood’s slip of tongue. He was a banker in Kansas
long years ago, and he was accustomed to say 2 and 3 per
cent, a month then.
I want to differ from Mr. Royall, of Virginia, in refer­
ence to the deposits of the rural banks, so far as what he
says applies to the State of Kansas. I hold in my hand a
statement from the State Bank Commissioner, which shows
that on the 9th of March, in 1897, the deposits of State
banks (which are in the country as a rule) amounted to
$15,955,000; they had in cash and sight exchange $6,656,000, or about 43 per cent. The last report, of April 19,
1898, showing that they had twenty-two million of deposits
and ten million in cash and sight exchange, in round num­
bers—a fraction over 46 per cent. Our National banks,
which are in the cities, had about 34 per cent., while the
country banks had 46 per cent. Again, as to the number
of banks, we have in Kansas 383 State banks and 116 Na­
tional banks. We have 106 counties, which is an average
of five banks per county. The country banks, I may add,
are owned largely by the farmers, and the depositors are
farmers.
John P. Branch, of Richmond, Va.:
While I cannot agree with the speech of my townsman,
I have my own views in regard to this. We all know that
our profits are made out of our deposits. The bank I have
the honor to represent has increased its funds a thousand
fold, and of course we are doing what we can to increase
these deposits still further. Of course our city banks recog­
nize that if we have these country banks as branches, the
deposits will go to the counties and to the townships, instead
of to the cities. Perhaps that is one reason why some of us
oppose these small banks. I am in favor of the branch
banks, yet at the same time they have their drawbacks.
It requires a great deal of work to look after the home
bank, and it would require much more to look after the
branch bank. We would have to send a stockholder out to
run it, because you could not expect a simple paid employee
to look after it as well as a man who had an interest in the
bank. Besides, the man who runs the branch bank must be
one who is acquainted with the people in the locality, and
knows who is responsible and who is not. The complaint has
been made that the city banks get all the money and the coun­
try banks do not get any of it, and they say, why should not
the country have the same privilege. A man comes from
the country to your big bank in the city, and wants to get
money to move his crop. You do not know him, and he has
to go out and look up an endorser, and he has to pay for it
in one way or another. Unless we give this man the facili­
ties that we give our own merchants, this question of the
currency will never end. I see no reason why a country
bank will not have the same right to issue currency that a
city bank has. There are plenty of ways in which the notes
could be secured—whether by Government bonds or State
bonds. The question is not by what bank is the note issued,
but the question is what is the security behind it. I say
without fear of contradiction that any note issued by «.
country Dana can be maae just as good as a note issued by
a Wall Street bank. It is not necessary for me to go into
details as to the way in which it can be done. You all know
them. Why, a great many bankers carry on business with­
out any circulation. In fact, there are only about two
hundred and twenty millions of circulation for all the banks.

56

B A N K E R S ’ C O N V E N T IO N .

Let us give these country banks a chance, so that when a
man goes to his country bank and wants to borrow money
to move his crops he can get the money.
Mr. Wood: At the expense of making myself tiresome,
let me answer Mr. Bonebrake. From what he said yester­
day about his Kansas town, I was prepared to believe that
he regarded his town in the rural districts, and consequently
I had no reference, to him in mind whatever.
As to the gentleman who has just spoken, my remarks
were, of course, in the crude. I did not pretend that objec­
tions could not be found to the branch bank system. My
idea was to express a thought for you gentlemen to reflect
upon. It needs concentration of thought to evolve a plan
to make it effective. The gentleman is shooting at a differ­
ent mark entirely from what I am. I was talking about
the rural districts, where there are very small towns and
where they cannot afford a National bank nor a large cap­
ital, and oftentimes they have to go away to get money, be­
cause they cannot get it at home, whereas under the branch
bank system they would be acquainted with the manager
of the branch bank, and he would know their responsibility,
and they would be able to get the money at home.
Mr. Cannon, of Salt Lake City, Utah:
I would like to ask the gentleman a question. I under­
stand his position to be that he is an admirer of the Can­
adian bank system, and I also understand that he is op­
posed to the issuance of currency, or circulating notes. I
would like to ask what his objection is to the circulating
system as conducted by the Canadian banks?
Mr. Wood: The gentleman misunderstands my position.
I am not opposed to banks, large or small, city or rural,
issuing currency, but I want it issued on a very solid basis,
and if a rural bank can issue it on the same basis that a
city bank does, and can give the same security, why, let it do
so. That will be satisfactory. It is a question of security
only.
“ Uniform Laws for Holidays as Well as Days of
Grace.”
The President: We will now recur to the subject which
was to be opened up for discussion by Mr. George M. Reyn­
olds, of Chicago. I take great pleasure in introducing to
you Mr. Reynolds.
[Mr. Reynolds’ address will be found on pages 15 to 18
o f this S upplem en t .]
Frank W. Tracy, of Springfield, 111.:
I am very much obliged to Mr. Reynolds for his very ex­
cellent paper, but I think he overlooks the fact that there
is a remedy already—namely, the Negotiable Instruments
law, which has been presented to this Convention for adop­
tion, and which we have asked the members of this Associa­
tion to press upon the different States. It provides that in
all States the maturity of paper coming due on a holiday,
shall be on the day succeeding the holiday, without describ­
ing the nature of the holiday, because the uniform law can­
not provide for the holidays, as they are naturally local,
except in the case of a National holiday.
I wished to state this to the Convention so that you will
know that Mr. Reynolds is right in his argument, but that
the remedy is already in your hands.
“ Banking as it Relates to industrial Develop­
ment ”
The President: We will now proceed to the next topic
on the programme, which is “ Banking As It Relates to In­
dustrial Development.” The discussion will be opened by
Mr. John W. Faxon, Cashier of the First National Bank, of
Chattanooga, Tenn.
[Mr. Faxon’s address will be found on pages 21 to 23
o f this S upplem en t .]
“ The Coyntry Banker.”
The President: Ladies and Gentlemen, we have now
come to the last subject on the programme, and, as the
good things are saved for the finality of a feast, what you
are to receive will be as luscious as a Georgia peach, or a
North Carolina watermelon, which next to the products of
Colorado, are the finest things on earth. A man, who is
the president of one bank, always speaks briefly; a man, who
is the president of twenty-three banks, speaks longer and says
more. I beg to introduce to you Mr. W. S. Witham, the
president of twenty-three banks down in Georgia, who
will speak to us on the subject: “ The Country Banker.”
[Mr. Witham’s speech will be found on pages 31 to 33
o f this S u pplem en t .]
Mr. Ingersoll, of Iowa:
Mr. President, with your permission, I would like to ask
Mr. Witham a question for information. He says that a




bank should never extend or renew paper. Now the ques­
tion I want to ask him is this: Suppose your note is give»
in a manufacturing community, where you had a large
manufacturing establishment, which necessarily depended
on the banks for the loan. Your rules, you say, do not per­
mit you to make loans for a longer period than ninety days.
New suppose that corporation had a certain line of credit,
and their paper comes to you. How do you expect the com­
pany to continue business and pay you off ?
Mr. Witham: Which company—the corporation that is
running the mill ?
Mr. Ingersoll: Yes, sir.
Mr. Witham: I am not responsible for the way they run
their business. Let me ask you what locality are you from,
my brother ?
Mr. Ingersoll: Iowa. '
Mr. Witham: Well, who are you ? Are you the first
man that opened a bank in your town ?
Mr. Ingersoll: No, sir.
Mr. Witham: Then you are not a pioneer banker, and!
you cannot teach the old people new tricks.
Nominations of Officers.
The President: Gentlemen, we will now receive the re­
port of the Committee on Nominations, which will be pre­
sented by Mr. Lowry, its chairman.
Robert J. Lowry, of Atlanta, Ga.:
Mr. President, and Gentlemen of the American Bank­
ers’ Association.—The Nominating Committee, chosen by
the delegations from the various States, under Section 2 of
Article 3 of y Constitution, hereby nominate to the Asso­
the
ciation the following list of officers for the ensuing year:
For President—George H. Russell, President of the State
Savings Bank of Detroit.
For First Vice-President—Walker Hill, President of the
American .Exchange Bank of St. Louis'.
For Vice-Presidents (by States):
ics’ National Bank, Balti­
Alabama—J. W. Whiting,
President People’s Bank, Mo­ more.
Massachusetts—A lfr e d
L.
bile.
Ripley, Vice-President Na­
Arizona—H.
W. Emery,
Cashier Consolidated National tional Hide and Leather
Bank, Boston.
Bank, Little Rock.
Michigan—P e te r
W h ite,
California—F.
C. Howes,
First
National
Cashier Los Angeles National President
Bank, Marquette.
Bank.
Minnesota—G. G. Thorne*
Colorado—J.
A. Hayes,
Cashier Northwestern Na­
President
First
National
tional Bank, Minneapolis.
Bank, Colorado Springs.
Mississippi—G.
D.
Able,
Connecticut—G. A. Lewis,
President Naugatuck Nation­ Cashier National Bank of
Water Valley.
al Bank.
Missouri—F. P. Neal, ViceDelaware—P^ es ton Lea,
Union
National
President
Union National President
Bank, Kansas City.
Bank, Wilmington.
Montana—E. B. Wevrick,
District of Columbia—Geo.
H. B. White, Cashier Nation­ Cashier First National Bank,
al Metropolitan Bank, Wash­ Butte.
Nebraska—Charles S. Miller,
ington.
Florida—John T. Desmutes, Cashier Farmers’ State Bank,
President
First
National Fairmount.
New
Hampshire—W.
F.
Bank, St. Augustine.
Georgia—L. P. Hillyer, Cash­ Thayer, President First Na­
ier American National Bank,
tional Bank, Concord.
Macon.
New Jersey—Nathan Haines*
Idaho—H. N. Coffin, Cash­ Cashier Mechanics’ National
ier First National Bank, Chi­ Bank, Burlington^
cago.
New Mexico—W. S. S tick ­
Illinois—G. D. Boulton, Sec­ ler, Cashier Bank of Com­
ond Vice-President First Na­ merce, Albuquerque.
tional Bank, Chicago.
New York—W. H. Rainey,
Indiana—A.
G.
Lupton, Cashier National Union Bank,
Cashier Blackford
County Kinderhook.
Bank, Hartford City.
North Carolina—James M.
Miller, Jr., Cashier Mer­
Iowa—George E. Pearsall,
Cashier
Citizens’ National chants and Farmers’ National
Bank, Charlotte.
Bank, Des Moines.
Indian Territory—W.
A.
North Dakota—W. C. MeWade, President Bank of
Fadden, Cashier Fargo Na­
tional Bank, Fargo.
Marlow, Marlow.
Kansas—Calvin Hood, Pres­
Ohio—C. E. Miles, Preslident Emporia National Bank. den First National Bank,
Kentucky—Fayette Hewitt, Findlay.
President
State
National
Oklahoma—J. H. Wheeler,
Bank, Frankfort.
President Bank of Commerce*.
Louisiana—G. W. Bolton, Oklahoma City.
President Rapids Bank, Alex­
Oregon—C.
H.
Canfield*.
andria.
President Oregon City Na­
Maine—A. G. Rogers, Treas­ tional Bank.
urer Maine Savings Bank,
Pennsylvania—Wm. HackPortland.
ett, Cashier Easton National
Maryland—J. D. Wheeler, Bank, Easton, Pa.
Cashier Drovers and Mechan­
Rhode Island—H. J. Wells*

B A N K IN G
President Rhode Island Hos­
pital Trust Company, Provi­
dence.
South Carolina—J. A. Brock,
President Bank of Anderson.
South Dakota—D. F. MacKay, of Daly & MacKay,
Madison.
Tennessee—F. O.
Watts,
Cashier First National Bank,
Nashville.
Texas—T. J. Grace, Presi­
dent
Galveston
National
Bank.
Utah—L. S. Hills, President
Deseret National Bank, Salt
Lake.
Vermont—W. Bailey, Presi­
dent Rutland Savings Bank.

Virginia—Alexander Hamil­
ton, Vice-President Peters­
burg Savings and Insurance
Company.
Washington—J. G. M. Rich­
ards, President Spokane and
Eastern Trust Company, Spo­
kane.
West Virginia—T. M. Jackson, President Traders’ Na­
tional Bank, Clarksburg.
Wisconsin—W. K. Coffin,
Cashier Eau Claire National
Bank.
Wyoming—G.
H.
Goble,
Cashier Rock Springs Na­
tional Bank.
Hawaii—S. M. Damon, Bish­
op & Co., Honolulu.

Nominations for the Executive Council proposed by
State Conventions:
Charles R. Hannan, Cashier
Citizens’ State Bank, Coun­
cil Bluffs, Iowa.
Homer W. McCoy, Second
Vice-President Merchants’ Na­
tional Bank, Peoria, 111.
S. R. Shoemaker, Cashier
First National Bank, Hunt­
ington, Pa.

R. McCurdy, President First
National Bank, Youngstown,
Ohio.
A. P. Wooldridge, President
City National Bank, Austin,
Texas.

The President: The question is now on the election of
President of the American Bankers’ Association, and the
gentleman put in nomination is Mr. George H. Russell, of
Detroit, Mich.
M. M. White, of Cincinnati, Ohio:
Mr. President, I move that the nomination of Mr. Rus­
sell be confirmed by this Convention.
John Farson, of Chicago, 111.:
In seconding this nomination, I am very glad the Com­
mittee have given us this splendid man from Detroit. His
election means the healing of any differences that may have
been engendered last year. I am also glad that Mr. Walker
Hill, of St. Louis, has been nominated for Vice-President.
At St. Louis, we had presented to us the man who presides
over us with such dignity—the best President this Associa­
tion has ever had—and so the nomination of Mr. Hill means
the burying of any differences that may have been en­
gendered at that Convention.
I hope that our elections in the future may be conducted
with the same kindly spirit that prevails here to-day.
M. M. White: May I add to my motion, Mr. President,
that the Secretary be directed to cast the vote of this Asso­
ciation for Mr. Russell for President ?
The President: The motion having been restated by Mr.
White, it now becomes the question before the house.
Mr. Tracy: I believe we did have a little scrap at De­
troit, last year, but since then we have had time to think
about it, and I am now heartily glad to second the nomina­
tion of Mr. Russell.
The President: Gentlemen, the question is on the mo­
tion of Mr. White, that the Secretary be instructed to cast
the ballot of this Association for the election of George
H. Russell as President of the Association for the ensuing
year. The by-laws provide that the election shall be by bal­
lot, unless otherwise ordered.
The motion was carried.
The Secretary: I cast the ballot of the Association for
George H. Russell for President for the ensuing year.
The President: The Chair takes great pleasure in declar­
ing that Mr. George H. Russell, of Detroit, Mich., is here­
by elected President of the American Bankers’ Association
for the ensuing year.
The question is now on the election of First Vice-Presi­
dent.
Alvah Trowbridge, of New York:
It gives me very great pleasure to second the nomination
of Mr. Walker Hill, of St. Louis, for First Vice-President.
On motion of Mr. Elliott, of Virginia, the Secretary cast
the ballot of the Association for Mr. Hill.
The President: The question is now upon the election
of the Vice-Presidents for the various States. The Chair
asks unanimous consent to declare elected the gentlemen
nominated by the Committee on Nominations. Is there




S E C T IO N .

57

any obiection ? There seems to ~e none, and the Chair
declares the gentlemen nominated for Vice-Presidents of
the American Bankers’ Association for the ensuing year tc
be duly elected.
The question is on the nominations made by the Com
mittee on Nominations on the recommendations of the dele­
gates from the various States Associations for members
of the Executive Council.
The Secretary will read their names.
The Secretary (reading): Breckinridge Jones, First
Vice-President Mississippi Valley Trust Company, St.
Louis; J. C. Mitchell, Cashier Denver National Bank;
J. C. Brown, President Citizens’ National Bank, Raleigh,
N. C.; H. L. Burrage, Cashier Third National Bank, Bos­
ton, Mass.; Bradford Rhodes, President Mamaroneck
Bank, Mamaroneck, N. Y.
Fred. Heinz, of Davenport, Iowa: I move that the Sec­
retary be directed to east one ballot for the five gentlemen
named.
The motion was carried.
TH ANKS TO BAN KERS OF DENVER.

M. M. White, or Cincinnati, Ohio: I desire to offer the
following resolution:
Resolved, That the hearty thanks of the American Bankers’
Association be, and the same hereby are, tendered to the bank­
ers of the city of Denver and all those who have co-operated
with them for the cordial hospitality extended to visiting
bankers, and \fe assure them that we shall ever hold in pleas­
ant and grateful remembrance the obligation imposed upon us
as we depart to our distant homes.

The resolution was adopted by a rising vote.
PRESENT TO PRESIDENT HENDRIX.

J. B. Finley, of Monongahela, Pa.:
Gentlemen, three years ago this Convention placed at
the head of its Protective Committee the gentleman who has
served us for the past year as our President, and the work
accomplished by that committee under his leadership has
increased the membership of this Association more than
anything else since its organization.
And now in behalf of the American Bankers’ Associa­
tion, Mr. President, I present to you this handsome cutglass vase, elaborately trimmed with silver.
The President: Sir, I thank you for this tribute, which I
hardly feel I deserve. If in the three years of my official
connection with this Association I deserve a tithe of what
you have said, I shall pass into the ranks as a private in
this Association with only pleasant recollections and with
my gratitude awakened for the many kindnesses that have
been showered upon me.
THE NEW OFFICERS.

Gentlemen, I now present to you the newly elected
President, George H. Russell.
President Russell: I beg you to believe, gentlemen, that
there lurks in this large frame faith in God, a great belief
in man, some tender sentiment, and an emotion that your
kindness has deeply stirred. I am somewhat embarrassed
to fall into the line of succession with the President you
have had, but I will try and meet your approval in the work
that is before me.
The President: I now present to you the First VicePresident-elect, Walker Hill.
Vice-President Hill: Gentlemen, I appreciate deeply the
great honor you have conferred upon me, and I would be
false to every feeling of a true man if I did not heartily
and sincerely say, I thank you.
President Russell: Gentlemen, if it is your pleasure, I
now declare the Twenty-fourth Annual Convention of the
American Bankers’ Association adjourned.
Adjourned sine die.
Executive Council.
Immediately after the close of the Convention the Ex­
ecutive Council met and organized for the new year by
re-electing Alvah Trowbridge, of New York, Chairman, and
James R. Branch, of New York, Secretary.
Mr. Walker Hill, of St, Louis, having been elected VicePresident of the Association, the Council elected Mr.
George M. Reynolds, of Chicago, Treasurer of the Asso­
ciation.

A merican B ankers ' A ssociation ,
Second Annual Meeting, Held in the City of Denver, August 24, J898.
INDEX TO TRUST COMPANY PROCEEDJNGS.
- Pages 58 to 63
Pages 63 to 67
- Pages 67 to 68
Pages 68 to 69

Trust Companies as Transfer Agents, As Trustee Under Will,
Trust Companies as Guardians,
As Assignee and Receiver, -

Trustee Under Private Agreement,
As Executors and Administrators,
Detailed Proceedings,
President Jeffery's Address, -

- Pages 70 to 71
Pages 71 to 72
- Pages 73 to 74
Pages 73 to 74

Duties and Liabilities o f Trust Companies A ctin g as Transfer
Agents and Registrars.
By

F e l ix

R ackem ann,

Counsel for Old Colony Trust Company, Boston.

It will be the object of this paper to present and dis­
cuss as far as possible, in lay rather than technical
form and terms, some of the more important questions
which arise in connection with the legal relations as­
sumed by Banks or Trust Companies in acting as
Transfer Agents or Registrars of the stock of other cor­
porations, and in this discussion both the duties and the
liabilities considered will be such as the law implies
from the fact of the relationship and independently of
any special contracts.
In any one of probably the great majority of cases
the relationship results from a simple vote of the Board
of Directors of a stock company to the general effect
that a certain Trust Company be appointed Transfer
Agent or Registrar, as the case may be, or that some
officer of- the Stock Company be authorized or directed
to arrange with the Trust Company for its service as
such, in which case there might follow a short formal
letter from such officer, and a reply.
Therefore, in the cases now to be considered, at any
rate, we presuppose merely that the Stock Company has
authorized the Trust Company to act, and that the Trust
Company has undertaken in fact to act, and we are to
see what duties the Trust Company has impliedly under­
taken to perform and with what responsibilities or lia­
bilities.
Let us first, however, subdivide our subject some­
what, so that we may, as far as possible, consider con­
cise questions.
Transfer Agency is quite different from Stock Regis­
tration. We therefore consider the subject of Transfer
Agency by itself.
The practice of having transfer agencies, although
older than that of registration, is comparatively mod­
ern, and the' legal status of the transfer agent to-day
is one which has resulted rather from practice and
business requirement than from the acts of legislators
or the decisions of judges. The Statute Law of the
country probably makes no allusion to such agencies,
the Courts have decided very little respecting them and
legal principles alone must guide to right conclusions.
First, as to T h e L e g a l R e l a t i o n s e x i s t i n g b e t w e e n
the

T

Stock

ru st

Com

Com pany

as

T

ran sfer

A

gent

and

the

pany.

There is certainly the relation of Principal and Agent.
The Company may transfer its own stock. Probably
the greater number of all the corporations do so. But
the appointment of a Transfer Agent is, as between




the two companies, just what the name implies—viz.,
the creation of an agency.
That corporations may lawfully appoint agents is
a sound general proposition, and we shall assume for
present purposes that such corporations as are now
customarily acting as transfer agents may lawfully do
so within their corporate powers.
Then what is the scope of the agency ?
Generally speaking, the scope can be measured by
the purpose; that is to say, if you answer the questions,
“ Why was a Transfer Agent desired ? ” “ For what pur­
pose was the agent chosen ? ” you have stated the scope
of the agency. It is an agency, with expressed or im­
plied powers broad enough to accomplish the purpose.
By implication of law the power of the agent or scope
of the agency is just as broad and full as reasonably
necessary to enable the agent to accomplish the object
of his appointment.
Probably no safer general rule, nor one more simple
in application, can be given here. This, of course, as­
sumes that the directions and authority are not speci­
fied in detail and thac there is no special contract.
The law of agency cannot be regarded, however, as
if there were but two parties, the principal and the
agent. There is a third element to be reckoned with—
viz., the innocent outsider.
A merchant puts a man in charge as agent to sell
his goods. If the agent be so put in general charge and
so held out by the merchant to the public, he may clearly
exceed his authority, he may break his express written
contract with his employer, and yet the innocent pur­
chaser from the agent gets a good title.
Thus the power of an agent may be one thing by
distinct contract as between himself and his principal,
and quite another and larger thing as between the prin­
cipal and the third person. A special contract may limit
the form or but not necessarily the latter.
If a general agency may be assumed, all the powers
of a general agent may at the same time be assumed.
The public would not otherwise be properly or reason­
ably protected.
So it doubtless is with Transfer Agencies. As be­
tween the Transfer Agent and its corporate principal
the special contract governs if there be one, and the
implied contract if there be none expressed, but whether
the contract as between the principal and agent be ex­
press or implied, if the Transfer Agent is held out by
the principal, or allowed in the general course of busi-

TRUST COMPANY S E C T IO N .
ness to act as Transfer Agent, the public, if without
notice or knowledge of limitations upon the power,
would Lave a right to assume that the agent bad full
authority to do any and all things which properly
formed part of the functional duty of a transfer agent.
As to the relations between the Transfer Agent and
the Stock Company, there is little doubt or question.
The Transfer Agent is put in charge of the transfer
department of the company, and either by contract or
implication of law assumes the duty of seeing that
the work of the department is properly and lawfully
conducted. The law would doubtless decide that the
Bank or Trust Company in soliciting and accepting such
duties impliedly held itself out to the Stock Company as
qualified by knowledge and experience to perform the
duties properly and would hold the agent voluntarily
undertaking such a work to a faithful and reasonably
Intelligent performance.
It is, of course, beyond the scope of this paper to dis­
cuss the detail of stock transfer law. Full text books
have been written on this subject without in any de­
gree exhausting the law applicable, and without answer­
ing hundreds of the questions wnich may and constantly
do arise. Much of the law of stock transfers is matter
of individual State statue or code provision, more rests
on the decisions of the various State Courts and some
points probably rest merely on established practice.
All persons, however, are conclusively presumed to
know the law, however much lawyers or judges, sitting
upon the same or different benches, may differ about it,
and generally speaking it is one part of the duty of the
Transfer Agent to constantly apply the true construc­
tion of the law to all the transfer work in hand.
On the other hand, let us ask, What is to happen if
the Transfer Agent passes some case without properly
applying the true legal principle and loss follows to the
Company ?
It would seem generally safe to say that the Trans­
fer Agent will remain free of any liability to its princi­
pal for damage or loss so long as the agent is guilty of
no negligence. In other words, in any given case
answer the question whether in the sight of the law the
agent has or has not been negligent and you have an­
swered the question whether it is or is not liable to the
company, its principal.
Perhaps this brings us to the dangerous and prac­
tically unanswerable question: “ What is negligence ? ”
Again, text books in two and three volumes have failed
to exhaust this subject. But from a practical point of
view it is reasonably safe to say that a Bank or Trust
Company acting as Transfer Agent, would be held by
the Courts to have assumed to possess a high degree
of skill and general qualification for the performance
of its duties and would be somewhat strictly held to the
constant exercise of such skill and knowledge. If the
agent exercises such skill and applies such superior
knowledge as it has thus assumed to have it can hardly
be negligent, though a mistake be in fact made.
It is the same general law which is applied in other
cases.
Lawyers and surgeons hold themselves out as com­
petent and learned and skillful. Should either make a
mistake arising from failure to properly apply some
settled principle of his profession he would be negligent.
On the other hand, either might advise or act according
to his best judgment in respect of some doubtful or un­
settled point, and though in the end proved wrong would
not be guilty of negligence.
So with the Transfer Agent. He is not an insurer
and is not to be held to infallibility. He must, however,
be cautious and vigilant.
For an honest mistake in a matter where the law was
unsettled and, in the absence of judicial determination,
fairly open to different opinions as to true construction,
it is hardly conceivable that the Transfer Agent could
be liable to the company, but here again may arise the
question—Was the law doubtful ? Was more than one
construction fairly possible ?



59

It may be safely ventured that the legal duties under­
taken by Transfer Agents and the risk of loss incurred
is but in part appreciated by most financial and business
men.
The law as to stock transfers is full of sharp turns
and technical rules and distinctions, and with a great
many of the large corporations of to-day matters are
further complicated by the fact that the company is
subject to the laws of more than one State. It is not
infrequent to find a corporation chartered in one State
and doing business in several, or perhaps chartered in
several (our large railroad systems, for example), with
a transfer agency, perhaps in one of the States or per­
haps in an entirely different State.
What law is to govern the transfers in such cases ?
Or take, for example, the case o f New Jersey. The
Statute Law of New Jersey provides that an officer of
every New Jersey company must reside in the State,
and that a record of the stockholders must be kept at
the office of the company in New Jersey. What results
may not happen in such a case to a non-resident trans­
fer agent depending for its protection upon the trans­
fer of stock made on its books as complete ?
Between two States there is often a conflict of laws.
Which is to govern ?
Again, the holding of corporate stocks in all kinds of
fiduciary capacities has probably largely increased in
modern times, and the Transfer Agent is required to
pass upon and deal with cases of wills, trusts and guard­
ianships in its own and in other States. Powers of
attorney, assignments for creditors in insolvency and
bankruptcy, and all the possibilities of attachment which
under the laws of many States may be effected by the
service of process on any officer or agent of the Stock
Company, whether known in the transfer office or not,
only add new elements of danger.
As to all these matters the agent must exercise the
care and skill spoken of. The compensation of the agent
should in all cases enable him to consult freely with ex­
perienced counsel, and reference of all doubtful cases
to some trained adviser should be the unhesitating prac­
tice.
Stock can be properly transferred only when the out­
standing certificate is in proper and legal form surren­
dered by the true owner for transfer. The person offer­
ing the certificate for surrender is often not the regis­
tered owner.
Thus the Transfer Agent must know that the right
and title has lawfully passed to the person offering the
surrender. In this connection it must be borne in mind
that a stock certificate is not a negotiable instrument,
and it may be added that the provisions of the United
States War Revenue bill which went into force July 1,
1898, have a considerable bearing on this passage of title,
because a transaction apparently in all other respects
perfect may be entirely invalid owing to the omission
qf the proper stamps. So if the Transfer Agent has
either notice or knowledge that any transaction affect­
ing the title to shares offered for transfer has not paid
its proper stamp tax, it proceeds at its risk, for the .title
may fail and the transfer prove unauthorized.
It is of course beyond the limits of this paper to dis­
cuss this War Revenue bill in any detail.
Title to stock and transfer thereof, of course, de­
pends upon genuineness of signatures, and here again
the agent can hardly be too watchful.
Another point remains to be considered as between
the agent and the company.
For a wrongful refusal to transfer, though honest,
the Stock Company may be made liable to suit for con­
version, and this even though the transfer agent exer­
cised only an apparently reasonable caution in its re­
fusal. If the law finally holds the refusal wrong, this
conversion liability of the Stock Company results.
While the agent properly acts cautiously it must not,
to protect itself, run too much risk of causing greater
or more certain loss upon its principal.
And this leads to one other suggestion. It some-

60

B A N K E R S ’ C O N V E N T IO N .

times happens that bonds or agreements of indemnity
are taken in doubtful cases. Such bonds often afford a
happy solution of the difficulty. They should always be
made to protect the Stock Company and not the Trans­
fer Agent alone, for there may well be a liability of the
Stock Company for conversion when the agent would
be acquitted of any negligence.
Before leaving this branch of our discussion as to the
relation between the Stock Company and its Transfer
Agent, it may be added that, as between the two, the
agent may ordinarily, with safety, take and follow the
instructions of its principal, from which it follows that
in case of doubt as to corect practice or the true meas­
ure of caution to be observed, the agent may without
risk of further liability to the principal seek and follow
such instructions as the principal may give.
Stock Companies like to have their securities popular
and readily dealt with and transferred. Transfer
Agents have no interest in this consideration. The
Stock Company may be willing on this account to take
some risk which the agent ought not to take or be ex­
pected to take, with liability for consequences. The
risk in such case should be assumed by the Stock Com­
pany and the agent relieved by explicit instructions.
But as' stated, these instructions bear only upon the
relations between the principal and agent. The in­
nocent outsider is not affected thereby, and this brings
us to the next branch of our inquiry—viz.:
THE TRAN SFER AGENT AND THE SHAREHO LDER.

There seems to be a popular notion that when some
Bank or Trust Company puts its name in any form or
for any purpose on a stock certificate it must be good,
and that in some way and to some extent the agent has
indorsed it as good.
It was recently seriously argued in a Massachusetts
court that Harvard College, which had taken a horse to
board at its Bussey Farm, was on account of its high
character and reputation chargeable with an appreciably
higher degree of care in the treatment of the animal
than would be expected of the ordinary bailee for hire.
A similar notion (if not unprincipled, at least lacking
in principle) exists regarding Transfer Agents.
It is doubtless true that the appearance of a Bank or
Trust Company as Transfer Agent on a stock certificate
adds to the impression made in the market. The signa­
ture of such an institution is popularly given a signifi­
cance which the signature of an unknown clerk would not
have. But it is equally true that the name of some man
of high character and reputation as president of a com­
pany strengthens the company and adds to the impres­
sion made.
Surely it cannot be that when a man of even the
highest character and reputation signs a stock certifi­
cate as president of the company he assumes on ac­
count of his known character and prominence, or on
account of his incidental financial reputation, any
greater legal liability in the act than would be assumed
by the humblest clerk suddenly raised to the saine posi­
tion and signing his name in the same way.
That the public may be impressed with or influenced
by the prominence or character of an agent cannot of
Itself effect any difference whatever in the legal rela­
tions of the agent to the members of the public.
There seems to be no ground whatever in the law for
thinking that a Trust Company, acting as Transfer
Agent, sustains toward the shareholder of the Stock
Company any different legal relations than would exist
between the shareholder and a small salaried clerk in
the office of the company signing the same certificate as
“ Transfer Clerk.”
The history of the modern practice of having promi­
nent financial institutions act as such agents, in itself
indicates that there should be no distinction. Formerly
stock certificates were issued from the office of the com­
pany direct, and bore, if anything in addition to the sig­
nature of the president and secretary, at most, the sig­
nature of some clerk entitled “ Transfer Clerk.”



It was never suggested that such Transfer Clerk
“ represented ” anything or was legally liable to anybody,
so he conducted himself honestly. But experience
showed that it was often inconvenient for the company
to do its own transfer work; that the stock transactions
were often carried on far from any corporate offices;
that the officers of the company could not be always
present to sign certificates as called for; that the invest
ing public could not be kept waiting indefinitely, and
that it was unsafe for the officers to leave signed cer­
tificates in the possession of ordinary clerks. The stock
exchanges, too, in order to guard against frauds, began
to insist that there should, in the case of all listed
securities, be an approved person or corporation as
Transfer Agent. The whole object, therefore, was to
meet the public demand without placing too much re­
liance upon comparatively unknown and financially irre
sponsible employees.
It would make no difference in the law whether the
clerk under the old practice had signed himself Clerk or
Agent. The only changes made under the modern system
are that the word “ Agent ” has displaced the word
“ Clerk,” and financial institutions of character and
reputation have displaced the individual unfamed clerks.
That this position is not universally conceded to be
correct the writer is fully aware, but careful study has
failed to reveal any basis in the law for the idea that
the mere signature of a Trust Company upon a stock
certificate over the words “ Transfer Agent ” creates
any contractual liability whatever to the shareholder.
The argument to the contrary must rest upon the
theory that the signature of the Transfer Agent is to be
treated as an authentication by one who has contracted
with the company and impliedly undertaken with each
investor that only true and perfect instruments shall be
authenticated, and although it must be admitted that the
agent’s signature is required on the instrument, yet it
must at the same time be remembered that the object of
the added signature has not been to gain added authen­
ticity. The necessity for the agency led to the signature.
It was not the desire for the signature as an authentica­
tion which led to the agency.
A railroad ticket is not good until the agent has put
his office stamp and date upon the back. Thus the Rail­
road guards itself against the wholesale theft of its
tickets. If a ticket prove bad and be rejected, would it
be claimed by any one that the agent was individually
liable because he had “ authenticated ” the ticket, oi
personally represented anything whatever about it in
the act of stamping it ?
It is not easy to see any distinction between the two
cases.
It may be argued that the real purposes and objects of
the agency cannot control and that the investing public
is not bound to know and appreciate these contributing
causes, but may assume from the methods of doing busi­
ness that the Transfer Agent is employed to authenti­
cate and holds itself out as authenticating officer.
To such suggestions, if made, it may only be replied
that the argument assumes too much and is not sound.
The public has no right to assume the scope of an
agency to be beyond what fully and fairly appears to be
the object, purpose and intent, and neither the words
“ transfer agent ” nor the part played by the transfer
agent justify any conclusions that the agent is under­
taking any individual responsibility to the shareholder.
That there is no implied contract relation is indicated
also by the fact that the Transfer Agent individually
owes the shareholder no duty to transfer his shares at
all.
The agent might flatly refuse to transfer shares, and
there would result no claim upon him. The claim would
be against the principal, and though the agent might, of
course, be liable to the principal he would not be directly
liable to the shareholder.
The establishment in law of any such liability would
work havoc with present business methods, affecting
enormous interests, and as between such results and the

TRU ST

CO M PANY

almost sentimental object of protecting the individual
investor, the courts should not hesitate.
Of course there maybe acts of a Transfer Agent from
which a direct liability would follow to a shareholder.
The agent may be party to some fraudulent scheme, he
may carelessly or wrongfully destroy or mutilate a cer­
tificate, he may make delivery of a certificate to the
wrong person, or may appropriate or lose or carelessly
suffer or permit wrong dealing with a certificate left for
transfer or a new certificate ready for delivery, for all
of which he would or might doubtless sustain a direct
liability to the person injured, but this liability would
be in tort, it would be based on a wrong, not a contract,
and would not depend in the least for its proof in law
upon the fact that the Trusf Company signed as “ Trans­
fer Agent ” or was such.
It must not be forgotten, however, that we are refer­
ring at present only to those cases where there is merely
the signature of the Trust Company, and the words
“ Transfer Agent.” It may well be that the addition of
some very simple and harmless sounding words will
lead to very important, further and different results.
It has been held in at least two cases * that the exe­
cution of an instrument under the word “ counter­
signed” was equivalent to a direct and positive repre­
sentation not only that each original signature was gen­
uine, but that every legal formality essential to the full
legal effect of the instrument had been duly observed
and performed, the Court in one case using this lan­
guage:
It is very clear that under the regulations adopted by the
defendant and pursuing the mode of procedure which it pre­
scribed, the final act in the issue of a certificate of stock was
performed by Its Secretary and Transfer Agent and that when
he countersigned it and affixed the corporate seal and delivered
it with the intent that it might be negotiated it must be re­
garded, so long as it remained outstanding, as a continued
affirmation by the defendant that it had been lawfully issued
and that all the conditions precedent upon which the right to
issue it depended had been duly observed. Such is the effect
necessarily implied in the act of countersigning. This word
has a well-defined meaning both in the law and in the lexicon.
To countersign an instrument is to sign what has already been
signed by a superior, to authenticate by an additional signa­
ture.
When, therefore, the defendant’s secretary and transfer
agent countersigned and sold this certificate and put it in cir­
culation, he declared in the most formal manner that it had
been properly executed by the defendant and that every essen­
tial requirement of law and of the by-laws had been performed
to make it the binding act of the company.

And in still another ease ** where a Transfer Agent
had issued excess of stocks, the court says of the certifi­
cate which came to the plaintiffs:
The paper came to them accredited by the genuine signatures
of the officers and countersigned and registered by the Central
Trust Company registrar, whose duty it was to guard against
unauthorized or fraudulent issues of stock. These signatures
carried with them, to strangers at least, the very highest assur­
ance of the genuine character of the security.

In this latter case, however, it was the Stock Com­
pany and not the Transfer Agent which was made de­
fendant in the suit and held responsible.
That the word “ countersigned ” would be held by
our courts generally to any such guaranty equivalent
may perhaps be doubted, but the fact that the use of
the word has been treated by the courts as importing a
guaranty while no case appears to the contrary, should
in itself forbid the use of the word by Banks and Trust
Companies except in the rarest, clearest and most ex­
ceptional cases.
The use of the word “ Registered ” also should be
most carefully considered.
The extensive significance given by the Courts to the
word “ countersigned ” was probably far beyond any­
thing intended by financial men up to the time, and it
is not safe to predict the interpretation which the
Courts may put upon the word “ Registered ” when
some case of hardship arises and the tribunal finds
* People vs. Brie, 43 Hun. (N. Y.), 317.
231FIfth AVe" BaDk V8‘ 42nd St” CtC” Railroad Co-> 137 N. Y.,
* * Jarvis vs. Manhattan Co., 148 N. Y., 441.




S E C T IO N .

61

itself free to decide that the word imported a repre­
sentation or guaranty of genuineness or validity and
misled some innocent and trusting investor.
We must not leave this branch of our subject without
a word as to the results, which, of course, may follow,
first, in the case where the Transfer Agent directly in­
terests itself in the sale or “ floating ” of securities, and,
second, in the case where there is found to be any ele­
ment of bad faith, scheming or combination of any kind
to accomplish an unlawful or improper end.
We spend no time in discussing this latter branch of
the case, beyond remarking that of course a Transfer
Agent must answer for his tortious acts like the indi­
vidual. He answers as an individual, however, and not
as agent. In connection with the former it is perhaps
only necessary to add that any direct or joint personal
interest or effort of the agent in an enterprise outside
the strict scope of the agency may easily lead to the
ranking of the Agent as a principal so far as the pub­
lic is concerned, with many or all resulting liabilities.
We take up next in the order of our discussion the
consideration of
THE DUTIES AND LIABILITIES OF “ REGISTRARS,” SOCALLED, OF CORPORATE SECURITIES.

Here again we find little or nothing in the way of
statute, legal decision or even written discussion of the
matter to aid us in formulating the principles or limits
of possible duties and liabilities. The practice of stock
registration has been a purely commercial growth, and
we can perhaps hardly do more than to take the practice
as at present established and, applying general legal
principles, endeavor to discover and formulate the legal
bearings.
The practice of having stock certificates signed by a
Registrar in addition to the Transfer Agent resulted
from the disclosures in 1863 of what are known as the
“ Schuyler Frauds.”
Robert Schuyler was the president of the New York
& New Haven Railroad Company. He was constituted
also transfer agent. His firm was also engaged as stock
brokers. The opportunity was thus offered to him to
issue stock in excess of the lawful limit.
The temptation proved too great, and in the subse­
quent litigation it appeared that Schuyler had at one
time issued thousands of shares of New York & New
Haven stock in excess of the lawful limit.
Something of the history and detail of fact as to this
rather celebrated case may be gathered from the report
of the case (New York & New Haven R. R. Co. v. Schuy­
ler et al., 34 N. Y. 30, 81).
This scandal and some others which came to light at
about the same time caused several stocks which had
been prominent in the New York markets to be stricken
from the Stock Exchange list, and in January, 1869, the
Exchange adopted a regulation or by-law requiring that
the shares of all active stocks should be registered at
some agency approved by the Exchange.
The requirements of this rule were shortly satisfied
by practically all the large corporations the stocks of
which were active at the time. The Erie Railroad was
the single marked exception. That road refused to
comply, and its stock was stricken from the N. Y. Ex­
change list in February, 1869.
Though not perhaps essential to this discussion, it is
an interesting fact that the so-called “ National Stock
Exchange,” organized in the interest of the Erie road as
a method of resisting this new rule, survived only until
September, 1869, when, upon application and compliance
with the rule, the Erie stock was again entered upon the
regular lists.
Some substantial equivalent of this regulation has
existed in the case of the New York Stock Exchange
since 1869, and Article 20 of the present constitution pro­
vides as follows :
S e c t io n 1. The Stock Exchange will not call or deal In any
active speculative stocks of any company a registry of whose
stock Is not kept In some responsible bank, trust company or
other satisfactory agency and which shall not give public notice

62

B A N K E R S ’ C O N V E N T IO N .

at the time of establishing such registry of the number of
shares so entrusted to be registered.
When the capital stock of the company is increased through
conversion of convertible bonds already listed, said company
shall immediately give notice thereof to the Exchange, and
such increase of stock may be added at once to the list. But
the registrar shall not register such increase of stock until
notice shall have been received from the Exchange that it has
been added to the list.
After the stock has been placed upon the list any change
in the certificate must receive the consent of the committee on
stock list.

We thus see that frauds, corporate scandals and pos­
sibilities of further frauds led to the establishment of
stock exchange rules to protect against the possibility of
similar frauds, at any rate in the cases of all active,
listed stocks, and it was this rule of the stock exchange
in New York which gave rise, at least in this country, to
the practice of stock registration.
Transfer agency of stocks had existed for years prior
to 1869, but it had been found that even with transfer
agents gigantic frauds were still possible, and the “ reg­
istrar ” was provided as an additional protection against
similar frauds.
The stock exchange in its first rule, perhaps advisedly,
but more probably without special design, used the word
“ registered.” The corporations subject to this rule and
desiring to meet its requirements naturally adopted the
use of a word following that of the rule as closely as
might be. Some designation of the person or corpora­
tion performing the act of registration was necessary,
and the word “ Registrar ” was adopted as such designa­
tion.
So far as is known it is only quite recently that it has
been suggested that the word “Registrar ” might be held
by the courts to have a significance, as between the cor­
poration adopting such designation and the investing
public, far beyond any original intent. It was recently
learned that certain very prominent stock brokers in the
Bast understood and believed that this word “ Reg­
istrar ” might properly be taken, to some extent at least,
by the investing public as the equivalent of “ guarantor.”
In other words, these brokers certainly understood that
the “ Registrar ” who, as such, signed a certificate of
stock, thereby distinctly represented to any person there­
after dealing with the certificate many things beside the
fact that the certificate was within the stated issue.
The discovery of such an understanding on the part
of such men has led many trust companies to a serious
consideration of possibilities, and it is certainly a mat­
ter fairly calling for consideration, because a popular
notion or conviction, though erroneous, is yet quite apt
to have its natural effect upon the judicial mind, and if
in the popular acceptance of the financial world “ Reg­
istrar ” means more than is or ought to be intended by
or understood from it, that in itself is perhaps a suffi­
cient reason for avoiding its further use, at least until
the courts have put a true and limited construction
upon it.
It is clear that the only object of the new stock ex­
change rule of 1869 was to guard against the chance or
possibility of over issue by having some financial institutution of character in position to exercise a check upon
the Transfer Agent.
Under the former practice the Transfer Agent alone
might perpetrate enormous frauds. Under the rule of
1869 the Transfer Agent and the Registrar must com­
bine with fraudulent intent.
The danger of over issue was, therefore, the single oper­
ating cause. To guard against such danger was the sin­
gle object of the stock exchange rule, and of the subse­
quent practice adopted in compliance with that rule.
If all this were understood by the courts, and the
more or less prevalent notion of a deeper significance
could be entirely ignored, it would seem fairly reason­
able to expect but one legal construction of the word
“ Registrar; ” but as has been said, in view of the opin­
ion which to some extent exists “ on the street ” as to
this word; in view of the fact that it has not been con­
strued, and in view of the apparently increasing popular




idea that prosperous corporations must be liable in all
cases to unfortunate individuals, the use of the word
“ Registrar ” should wisely be discouraged.
What can be substituted for it ?
To answer this question we must again consider ex­
actly what the “ Registrar ” is, not in law, but in fact
as intended by the arrangements made between itself
and the stock company.
The “ Registrar ” so called, is, in reality, a salaried
agent of the stock company with the single duty, at any
rate as between itself and the stock company, of sign­
ing in the capacity of registrar the stock certificates as
issued from time to time by the Stock Company or its
Transfer Agent, but never in excess of the stated
capital.
In practice the Registrar keeps its registry list, and
as stock is transferred by the company or its Transfer
Agent it receives in each case the old certificate as sur­
rendered and the new certificate as prepared to take its
place, it compares the two, it notes upon its registry list
the surrender and cancellation of the old and the issue
of the new in substitution, and it thereupon identifies
the new certificate by its signature upon its face as a
part of a stated authorized issue.
It is submitted that the designation “ Agent to Reg­
ister Transfers ” would be safer and more correctly
expressive of actual facts and intentions than the word
“ Registrar.”
The registrar is an agent of the issuing company, it is
an agent to make a registry, and it would seem to be
some gain to have the fact of this agency relationship to
the issuing company made unquestionably clear, be­
cause, if the registrar be an agent of the principal and
so designated, it would not be natural or reasonable for
anybody to assume that he was a guaranteeing agent
for any purpose.
The language of the stock exchange rule, together
with the settled practice of so many past years, makes
it perhaps difficult at the present time to entirely aban­
don the word “ Registrar ” and all words made from it.
The stock markets are suspicious of any changes or in­
novations, and the corporations dislike to have differ­
ences with the brokers. It would be well if registrars of
stock might be permitted to indorse upon the certificates
exactly what they do undertake and are to be respon­
sible for, including, if desired, in their statement that
they represented and were to be liable for nothing else.
Such an indorsement, however, would doubtless cause
a stock certificate to be practically unmarketable.
If the registrar of stock, by the registration, makes a
continuing representation to the public that the stock is
valid or lawful and properly issued, or even within the
authorized limit, the Registrar is, of course, concerned
to know that each transfer is properly made, and not
merely that a former stock certificate is mutilated in
the process known as cancellation. Because it may
well be that a stock certificate, mutilated in cancellation
to the satisfaction of the most fastidious, would still re­
main as matter of law a perfectly valid stock certifi­
cate upon which the shareholder named therein would
continue to have all original rights and claims.
It is not the mutilation of a stock certificate which
ends its life as such, but only its lawful cancellation in
accordance with an authority and direction lawfully
given by the true owner.
Should the transfer agent, therefore, accept an old
certificate and “ punch” it in cancellation without the
authority properly given by the true owner it would not
be cancelled and any stock certificate put out by the
transfer agent in its place would be an over issue, and
the Registrar, in signing the new certificate would be
registering over-issue stock.
Thus it will be seen that the risk assumed by a reg­
istrar in cases where the issuing stock company is its
own transfer agent is, perhaps, considerably greater
than in those cases where there be a trust company or
other financial institution of high standing acting as
transfer agent.

TRU ST

CO M PANY

In one case* at least the word “ Registered ” in con­
nection with stock has been construed by the court.
The statute of Alabama provides that stock transfers
“ must be made or registered on the books of the Com­
pany ” to be in all respects complete.
In the case above cited it was contended that regis­
tration meant copying or recording in haec verba. It was
held, however, that a memorandum or statement of the
transfer upon the books or stub of the original certifi­
cate satisfied the statute.
Much of what, has been said in discussing the rela­
tions of the Transfer Agent to the outsider applies also
to the Registrar, and the reader can make such appli­
cation without further comment.
In general it would seem to be reasonably clear that
the extent of the practice of stock transfer and regis­
tration at the present time and its constant growth, and
the almost incalculable liabilities which are to follow if
signatures upon stock certificates by transfer agents and
agents to register transfers are to be given any legal sig­
nificance as independent guaranties or representations
to the public, makes it proper for the financial institu­
tions undertaking such duties to advise well among
* Fisher et al. vs. Jones 82 Ala. 117.

S E C T IO N .

63T

themselves, and with their combined power and influ­
ence so finally establish and determine the practice«
that expressions only shall be used which fully and un­
equivocally state the exact positions intended to be
taken by them, whether as agents for transfer or regis­
tration, to all persons who may be concerned with the
certificate itself. If transfer agents and Registrars are
to be holden as in any sense guarantors against general
losses and disappointments they must be compensated
accordingly, for their own reasonable business protec­
tion. Such compensation would work a revolution in
our methods of stock transfer.
If it be true that any considerable portion of the In­
vesting public do place in the signatures of well known
trust companies upon stock securities more confidence
than the actual words or legal relations warrant, and if
it be true that the presence of such signatures leads in­
vestors to dispense with proper care in examining into
the securities which they purchase, such conditions,
however little foundation they may have in law, yet af­
ford some claim upon and reason why prominent finan­
cial institutions should exercise considerable caution not
only to save themselves from legal liability, but for the
maintenance of the high reputations which only the
most careful dealing and methods make possible.

Trust Companies as Trustees Under a W ill.
By W. E. Fisse, Counsel Lincoln Trust Company, St. Louis.
Trust companies are a distinctively American institu­
tion. No trace of the existence or operation of associa­
tions of this character is to be found in either the
general or the legal literature of foreign countries.
Here they constitute an important factor in our civiliza­
tion, both in an economic and a social aspect.
Our
singularity in this regard, coupled with the further fact
that trust companies have been established and are
successfully maintained in every part of the country, is
significant of the operation of favoring influences that
spring from the essential and peculiar genius of our
people. It would be interesting to inquire into and de­
velop the nature of these influences, and to find the ex­
planation for our singularity, but time forbids such an
excursion. Perhaps at some future meeting of this asso­
ciation this investigation may be exhaustively pursued.
The theme of this paper embraces very much of
what has already been said by others concerning trust
companies in the relation of executor, administrator,
guardian or committee of minors and other incompetent
persons, assignee, receiver and trustee under contractual
arrangements. What has been said it is unnecessary to
repeat, nor need further reference be made to these ob­
servations except to note, in passing, that whatever advantags attend the employment of a corporate agent in
any of these varied functions, with respect either to the
circumstances of security for the funds of the estate,
integrity in administration, promptness in the dispatch
of business, unbroken continuity in management pos­
sible because these companies are beyond the accident
of interruption by sickness and death, and also in re­
spect of the application to the particular business, of the
extensive information, resources and specially trained
skill that characterizes this specialty, as it characterizes
every other specialty followed as a profession, as well
as the other general incidental and attendant advantages
growing out of the nature of the corporate organization,
are all present in the case of an appointment as trustee
under a will, as fully and completely as in the case of an
appointment to any of the other offices that have been
mentioned.
In other and important respects, however, the func­
tion of the company in this relation of trustee under a
will may be differentiated from its function as trustee
in any other capacity. An appointment as trustee to




execute the directions of a testator, contained in his
last will and testament, and thereby to continue the
dominion of the owner over his property indefinitely
beyond the period of his own life, with the special ob­
ject of preserving that property intact, and of increasing
it and using it as he might himself employ it, for the
best advantage of his family and dependents, is at
once an office of the highest responsibility and a mark
of the greatest confidence which one man can confide
to another. In no other aspect of its operations does the
company enter so fully into the family life of a com­
munity, nor is its action otherwise ever characterized by
so much of the human and personal quality and senti­
ment as in this case.
Several recent instances of the testamentary disposi­
tion of estates, notably the wills of the elder Vander­
bilt and of his son, of Mr. Robert Garrett, and, still
more recently, the will of the late George M. Pullman,
have furnished illustrations of the disposition of testa­
tors to preserve their estates intact after their death,
under proper arrangements to provide out of this estate
for all those who are fair objects of their bounty, in
substantially the same manner as they might themselves
do if living and preserved the capacity to control their
property. These instances of testamentary disposition
have attracted attention because of the conspicuous
eminence of the testators, but the tendency and disposi­
tion noticed in these cases is not by any means confined
to the class of the very wealthy. Every lawyer of much
practice in the drafting of wills is familiar with the fact
that an equally strong inclination to dispose of their prop­
erty in like manner prevails among those of moderate
means. Indeed.it maybe truly said that testamentary dis­
positions divide themselves into two great classes: first,,
those which dispose of the entire estate in favor of the
wife, absolutely, to the exclusion of children except se
far as it is expected that a sense of duty on the part o f
the wife and her affection for the children will lead her
to deal justly with them; and, second, those that pro­
vide for the management of the estate through the
medium of a trust created in the will.
The marked tendency to adopt schemes of testament­
ary disposition Whereby the donees are restrained of the
full dominion over the property given to them, marks an
important change in our habits as compared with an

64

B A N K E R S ’ C O N V E N T IO N .

earlier period, and perhaps is also part of that evolution
already spoken of which has produced the Trust Com­
pany institution.
The extensive variety of arrangements for the man­
agement and disposition of an estate that are possible to
be effected through the medium of a trust, the readily
flexible nature of this medium, and its adaptability to
be changed according to varying conditions and circum­
stances, make it an exceedingly attractive device, and
render it possible for a testator to exactly accomplish
his will, no matter what that may be.
The creation of a trust, however, necessarily involves
the selection of a trustee. A testator, therefore, revolv­
ing in his mind a plan for the disposition of his estate in
trust, is immediately called to the performance of what
is at once the most delicate as well as the most impor­
tant choice that he is required to make at any period in
his life. Moreover, the election once made, and having
finally become operative* has immediately become ir­
revocable by him. The testator may therefore well
hesitate and ponder long before determining his choice.
Of the weakness of a trust administered by an individ­
ual trustee he must become quickly conscious. If he be
a man of affairs, the probability is that at some time or
other he has himself acted in the capacity of trustee to
gratify the desire of some near friend, and that he has
thus through his own experience become aware how
onerous and burdensome are these fiduciary duties to
one whose occupations otherwise fully engage his time,
and how likely it is that such offices will be neglected on
account of the interfering obligations of one’s own
affairs. Or perhaps he knows the history of the estate
of some other friend that has suffered from the indiffer­
ent or negligent or perhaps dishonest handling of some
trustee who at the time he assumed the duty stood as
well and apparently deserved confidence as fully as any
man open to be selected by himself. If his information
concerning trust matters is very extensive, he has prob­
ably become thoroughly convinced that indemnity bonds
furnish exceedingly poor protection to estates, and con­
stitute a very inadequate substitute for faithful and
skillful administration.
But even if his experience
be less wide, he cannot help but be alive to the fact that,
however wise and prudent may be his original choice
of an individual as trustee, and however proper may be
the conduct of the trustee whom he may originally se­
lect, many accidents may happen, chiefly the ever pres­
ent peril of death, whereby the estate will be transferred
from these competent hands into the custody and con­
trol of some other person whose selection he cannot
either foresee or largely control. Perhaps, while re­
volving the matter in his mind the thought may occur to
him that the evil of employing an individual trustee
may be overcome by the selection of several persons as
trustees, but either his own knowledge or competent
advice will quickly convince him that there is no ad­
vantage in this resource, but rather an increase of diffi­
culty, since the multiplication of trustees is in fact no
more than the division of one brain, so to speak, into
several parts, involving the necessity of bringing to­
gether the separated parts and combining them into
harmonious impulse before any action is possible. He
will quickly come to appreciate, therefore, that in mul­
tiplication of trustees there is merely an aggravation of
the evils incident to the appointment of an individual to
the office.
Considerations of this character justify the creation
o f corporations to assume these trust duties, and the se­
lection of a corporation as trustee at once relieves the
testator from the danger to his estate due to the matters
pointed out. The advantages that attend the selection
o f a corporate trustee, especially to perform trusts cre­
ated in wills, are, however, not wholly the negative or
passive advantages attributable to the corporation be­
cause of its artificial character, but there are other ad­
vantages of a positive nature which are powerful to give
the corporate trustee unquestioned advantages over an
individual acting in the like capacity. These advantages




are especially marked in the case of those trust arrange­
ments that have for their object the accumulation of a
fund for some specific purpose; the protection of daugh­
ters from the wiles and arts of spendthrift husbands, or
of sons pursued by importunate creditors, and similar
family arrangements. The employment of a corporate
trustee is also of particularly marked advantage in those
instances where the necessity of the testator’s situation
requires that, he shall give to the trustee a wide discre­
tion as to the alienation or conversion of his property, or
with respect to the time or necessity of making pay­
ments to particular persons.
Experience has shown, too, that in another condition
the employment of the corporate trustee is of exceeding­
ly great advantage—namely, in those cases where the
condition of the testator’s business demands frequent
and large advances of money in order to preserve it in
its integrity, and practically requires for its manage­
ment the same daily care and attention that he has been
accustomed to give to it. Scarcely any individual can
be found who is able to command sufficient resources to
make the advances that are requisite for this purpose,
and to give it the necessary attention. Another condi­
tion where the advantage of the corporate trustee over
that of an individual is unquestionable, is in the case
frequently occurring where the estate is invested wholly
in stocks or securities of some corporate enterprise and
constitutes the controlling interest in that enterprise.
The disadvantages of breaking up this control by a
division of the estate are apparent.
The foregoing considerations, influential in the mind
of a testator in making selection of a trustee, and that
serve to indicate the advantage of a corporate trustee
over an individual, also serve to point out a broad dis­
tinction between the office of trustee under a will and
most other trust appointments. Generally speaking, it
is the principal duty of a trustee administering a trust
created otherwise than by testamentary arrangement to
get into its custody and to divide property either in
kind or in money after the conversion of this property.
True, a committee or guardian for an infant or lunatic
or other incompetent has to a certain degree the duty to
conserve thè estate.
Nevertheless, in each of these
cases the distribution of the entire estate is the ultimate
end of the trust. In the case, however, of a trustee
under a will, the leading duty is the conservation o f the
estate and its increase by investment and through the
accumulation of surplus income, and there is generally
no duty to make distribution except so far as this duty
is annexed to the management of the accruing income.
It is the contemplation of the duties required of testa­
mentary trustees that demonstrates most conclusively
the advantages of corporate agents over individuals,
particularly in the management of trusts of testament­
ary creation.
The first duty of such a trustee, of course, is the duty
to collect the estate. It is true that so far as the ma­
chinery of courts is required to accomplish the task, this
machinery is as equally and completely available to an
individual trustee as it is to a corporation acting as
trustee; but the least experience in the management of
business affairs leads to the prompt conviction that the
poorest of all methods to compel payment that can be
adopted is a resort to litigation. The expense and vex­
atious delays, the abundant opportunities for disposing
of property pending the litigation so as to defeat the
final judgment, and other considerations that readily
come up in the mind, all attest the advantages of em­
ploying personal influence, personal strength and per­
sonal skill along other lines to accomplish the end of
collection. In this respect a Trust Company has an
infinite advantage over any individual. It is an organi­
zation powerful beyond the strength of any man. It
is an entity whose strength is felt and recognized
throughout the community. It is, moreover, an entity
whose force is concentrated, and whose energy is always
and constantly available to be fully and effectively
exerted. This power of the Trust Company is silently

TRU ST

CO M PAN Y

■effective to enforce demands proceeding from it that in
the case of an individual would be ignored or slighted
or contested. Men, however, do not enter upon contests
till after they have measured the strength of their an­
tagonists, and the general strength of Trust Companies
is rated so far above that of individuals that settlements
and payments become easy in its case that in the case
o f an iindividual claimant would be doubtful or delayed.
Closely connected with this conception of the strength
o f a Trust Company, and actively co-operating wifh it to
make the company successful in its demands, wl^ere an
individual would not be successful, is another influence
—namely, the activity of the Trust Company in its other
departments, particularly its banking or lending depart­
ment. Its resources and its activity in this direction
raise a disposition to gain its favor for possible occasions
in the future, and thus in its ability to touch at once
the springs of fear and favor, the Trust Company is
possessed of advantages which no individual can possi­
bly exert. This advantage 'spoken of is not one that
arises merely out of the possession or employment of
large capital. The ample resources at its command con­
tribute, no doubt, to the strength of the corporation, but
no individual, even though he commanded capital great­
ly in excess of the capital at the command of a Trust
Company, could exercise the strength which it puts
forth, because this strength arises out of its organiza­
tion and the concentration within that organization of
the power and strength of many men.
In respect of their capacity to discharge the duty of
investing moneys of a trust estate, Trust Companies act­
ing as trustee have an equal or greater advantage over
individuals exercising the like office. The investment
of money constitutes a principal part of the business
which a Trust Company is organized to conduct. To
the profits arising out of these investments the stock­
holders look for their own dividends. The company
has command of large sums of money, consisting of its
capital and its accumulated deposits. It is, therefore,
resorted to by persons who are willing to pay a price
for the use of its capital, aud since it is out of the neces­
sities of this class that securities for investment are
created. Trust Companies become; the sources where in­
vestment securities are created. Through the operations
of their daily business in what may, for the present, be
called their own business, they are constantly supplied
with securities suitable for the investment of trust
funds. Indeed, it is hardly too njuch to say that the
principal part of the investment of Trust Companies, at
least those of them that have connected with their busi­
ness a highly organized trust department, are usually
made with a view to the use of these securities in sup­
plying the want of investments for trust estates.
Estates in the hands of the corporation can therefore be
always supplied with investments as promptly as the
necessity of the case may require. .There is no interval
of waiting, no delay, no interim of unearning rest. No
individual can possibly keep himself supplied in advance
with securities proper to be used by the trust estate,
and therefore in his case there must be frequent and
successive periods during which the fund, or a portion
of it, remains idle while waiting the discovery of a
proper investment.
The nature of the investments proper for the em­
ployment of trust funds are controlled, of course, by the
ordinary rules of law, whether the management of the
trust be in the hands of an individual or a corporation.
In this respect, therefore, the corporation stands on the
same plane with individuals. The individual has no
advantage whatever. But in respect of the opportunity
to get investments, and especially in the selection of
investments, the organization of the Trust Company
supplies facilities which no individual can command.
We need not enlarge upon the superior skill in the
art of investing money which those yeho make the exer­
cise of this art their daily business acquire over others
who are called to this duty only occasionally. Nor do
we need at present to enlarge either upon the instru­




SE C T IO N .

65

mentalities which a Trust Company accumulates and
employs in determining the quality of security offered to
it for loans of money. Neither will any time be spent
in pointing out the attitude which Trust Company officers
habitually occupy toward applicants for loans, nor can
time be taken to point out the influence of the Trust
Company’s ever ready “ No,” as contrasted with the
ordinary disposition of individuals to grant what some
one else asks as a favor, especially where it does not
involve the employment of one’s own money. But if we
can imagine an individual possessed of equal skill and
equal information and resources for acquiring informa­
tion with regard to securities, in respect o'f its ability to
resist importunities to make investments that business
judgment does not commend, the Trust Company has
an advantage over individuals which should determine
the selection of the corporation to exercise the trust
offices, even if other argument was wanting. In such
cases as are here spoken of, the impersonal character of
a Trust Company is of immeasurable advantage, and is
a circumstance of immeasurable security to all the
trusts committed to its charge. An individual called to
decide whether to grant or refuse application for a loan
must always meet and deal with the applicant face to
face. A Trust Company officer, even though he pos­
sessed no more than the average strength of character,
when he finds himself weakening always has a ready re­
source at hand. If he would evade importunities, or
excuse his own action, the invisible committee is always
within reach as either a haven of refuge or a court of
last resort. This invisible committee, with whom the
applicant seldom or never comes in contact, is a tower
of refuge and strength not available under other cir­
cumstances.
It may be said that since trust companies deal in and
freely sell securities, any individual trustee by applica­
tion to a Trust Company may obtain these same securi­
ties which if the estate were in its charge would other­
wise be diverted by it to the trust estate; but if this
statement be accepted as true, in its fullest measure,
it does not weigh against the statement of our proposi­
tion that in the investment of trust funds corporations
have advantages over individuals acting as trustees,
because the very fact that individual trustees do find it
to their interest to resort to trust companies for the pur­
pose of being supplied with investments for trust funds
in their hands is a confession of the superior advantages
which Trust Companies have for making investments of
this character, and constitutes an admission of our entire
argument.
Attention may be called to another circumstance
favoring the employment of corporate trustees, espe­
cially in the administration of trusts created by will.
It is lamentably true of individuals that they exercise
less care and caution in dealing with other people’s
affairs than they do in the case of their own transac­
tions. This lack of care and prudence may not rise to
the point of actionable negligence, nor amount to willful
misconduct on the part of the trustee, and yet the con­
sequences to the estate may be exceedingly harmful.
I think there can be no doubt that, in the aggregate, the
lack of care and caution to the degree that the trustee
would have exercised in his own affairs, has worked
losses both in number and amount greater than the
number and amount of losses attributable to the dis­
honesty of the trustee in the management of the trust
estate. It is a conviction that constantly grows in the
mind of every professional man having to deal with this
field of business, that carelessness in a trustee is infi­
nitely more to be dreaded than the lack of honesty or
integrity on his part.
In the case of estates managed by corporate trustees
it is impossible that they should suffer because of any
discrimination due to the fact that the funds belong to
some one other than itself. With these corporations
there can be no clashing of selfish and representative
interests, as in the case of individuals. The interest of
a Trust Company is always and invariably representa-

66

BA N KERS’

ti ve. We speak familiarly of investments made by
Trust Companies of their own funds, afterward trans­
ferred to trust estates in their charge, but this is inac­
curate language, for in truth Trust Companies never have
any funds of their own. Every cent of money which
they handle in any department of their business is the
money of other people. Investments made in the inter­
est of their stockholders, of the capital of the company,
investments of the accumulated deposits, are all trust
transactions of nearly the same rank as trust engage­
ments arising out of contracts or wills. Thus through
all of its operations in every department the Trust
Company acts as an agent, is always exercising the
duties and bearing the responsibilities of an agent, and
is during every instant conscious of the obligation to
account for its every action.
The visitatorial power
exercised by the State contributes something, though
slightly, to the enlargement of this consciousness. It
is a sort of professional instinct, akin to the professional
instinct of good faith which actuates the lawyer in the
practice of his profession, and it affects every subordi­
nate in the service of the Trust Company as fully and in
the same manner as the spirit of patriotism and loyalty
to the flag permeates every portion of an army till it
reaches even the most inconspicuous private in the
ranks. The Trust Company is therefore constantly alert
and alive to its duty in the handling of trust moneys,
and that carelessness or indifference often noted in the
case of individuals is impossible from the nature of
its organization, and the discipline which is enforced be­
cause of this organization.
But if we regard the interest of a Trust Company as
in any respect separate from the interests of the trust
estates committed to its charge, we find that in the in­
vestment of money for these estates its position is exact­
ly the reverse of the position of an individual engaged in
the exercise of a like duty. The very opposite influences
are operative in its first investment of money, because
generally these first investments are not made with the
idea of immediately appropriating them to any particu­
lar trust estate, but with the idea of gaining a safe and
profitable investment for the capital or other funds of
the company itself. If, therefore, there is at any time
any opportunity or occasion to discriminate between
funds which it handles as trustee and those funds which
belong to itself, an advantage accrues to the trust estates
out of its operations, instead of a disadvantage, as in the
case of an individual.
Another influence of considerable importance, and
one that works also oppositely to the selfish interest of
an individual handling trust moneys, is the spirit of com­
petition with other companies. The rivalry of companies
extends not only to the securing of business, but it
reaches the management of business committed to their
charge, because out of that management reputation is
gained, and the opportunity to secure business is very
largely dependent upon the nature of the reputation
which a company enjoys. A good reputation is acquired
only by accomplishing good results in the management
of estates that they have taken into their charge. In
one way or another the action of Trust Companies in
respect of this management becomes known, and in a
greater or less circle of people becomes the subject of
active discussion. The information is, however, not con­
fined to this circle. The results gained are compared
with the accomplishments of the same company in other
cases, and with the accomplishments of other companies
in similar cases. This rivalry, altogether lacking in the
case of an individual trustee, is a constant spur to the
corporate trustee, urging it to the very best possible
performance, and does not permit, as in the case of an
individual, a disposition to tolerate only such perform­
ance as will serve to carry the trustee past the threshold
of a court without censure.
There are other matters respecting this ability of the
corporation to discharge this duty of investing the
moneys of a trust estate, which it would be interesting
to -discuss, but so much time has already been devoted




C O N V E N T IO N .
to that feature that it is necessary to hurry on to other
topics.
The advantage of a corporate trustee in respect of its
ability and disposition to discharge the important duty
of keeping an account of the trust estate, is conspicuous
and important. Every lawyer of experience will testify
to the fact that in practice among individuals this duty
to account is less satisfactorily discharged by trustees
than possibly any other function of their office. It is
usually regarded as an onerous duty. Not uncommonly
the items of account are so infrequent that their entry
does not form any part of a routine of business, and the
account is not otherwise kept than in the form of hur­
ried memoranda, which when taken up for use have
become so dulled that their actual significance is no
longer thoroughly understood. In a Trust Company,
however, the organization is sufficient, and the necessity
of the business demands and compels the constant and
daily contemporaneous record of all transactions, and
thus such a company is at all times obliged to keep as a
part of its own business a true account of the trust mat­
ters in its charge, and is at all times prepared to render
a prompt and complete account of these trust matters.
In the administration of trusts that provide for the
accumulation of portions, or for purposes of income, or
for distribution of net income, this superiority of the
Trust Company is of exceedingly great practical advan­
tage, and I have yet to meet a person familiar with the
corporate and the individual method who has not ex­
tolled the practices and advantages of the Trust Com­
pany in this respect.
In its dealings with members of a testator’s family,
or others interested in the estate, a Trust Company
again has advantages over an individual attributable to
its impersonal quality and entire freedom from family
or personal interests and entanglements. It is perfectly
wonderful what impracticable schemes for setting up
sons in business or otherwise promoting the fancied in­
terests of favored persons are enthusiastically embraced
and eloquently argued by mothers and other members of
the family. Equally wonderful is the ingenuity that is
frequently shown in devising measures for breaking
down the restraints that are imposed by a will. Any in­
dividual who as trustee opposes these vicious and injuri­
ous designs and who resolutely insists upon strictly
carrying out the testator’s intentions, is sure tp become
exceedingly unpopular and soon comes to be rated as a
very mean man. Fortunate indeed is his fate if he
escapes the suspicion or charge of sinister motive.
Few men will long endure a bombardment of this
sort, and the conflict is frequently terminated by the
resignation of the trustee, which leaves the way open
to the appointment of some one more pliable in tempera­
ment, whose yielding often leads to the total perversion
of the trust and not seldom to the loss of the entire
fund.
Trust Companies, while not exempt from assaults of
this character, are in fact more seldom approached, and
when approached the advances are made in different
temper.
The absence of that degree of familiarity
which usually obtains in the case of an individual trus­
tee makes all approach hesitating, and the absence of
any ground for expecting sympathy paves the way for
a probable refusal and makes the acceptance of the re­
fusal easier. It is always felt that the officer of the com­
pany first approached is of limited authority, and when
he takes recourse behind the governing board, not only
is his action approved, but the decision of the final board
when communicated is likely to be acquiesced in.
The value of this immunity from the effects of per­
sonal influence and familiar association and of the defer­
ence generally accorded to a corporation is difficult to
estimate, but that it is a very great protection to de­
pendents, both against their own imaginations and also
against the effect of designing blandishments, is appre­
ciated by all those who have come in contact with this
aspect of human nature.
We have now somewhat hastily discussed some of the

TRU ST

CO M PAN Y

principal advantages which recommend the appointment
o f Trust Companies as trustees under wills in preference
to individuals. If the occasion permitted it, we might
cite still other features of advantage, but this paper is
already so extensive that a reasonable regard for your
patience commands a halt.
Before concluding, however, let it be said that this
recital of the advantages of a corporate agent over an
individual trustee is not designed as an indictment of
individual trustees, broadly and as a class, either for
ignorance, incapacity, want of loyalty or lack of integ­
rity. No such contention is made, but it is contended

SE C T IO N .

67

that Trust Companies command all the excellent qualities
of men in at least equal measure with individuals, and
that added to these individual excellences are positive
advantages referable to their corporate organization
and discipline which individuals do not possess and can­
not possibly acquire.
A Trust Company is, in fact, an organization which
reduces to a systematic science the business of man­
aging trusts, and out of this reduction flows and inev­
itably must follow the same superiority over individual
effort that we find invariably to exist in every other field
of human labor where individuals engage against cor­
porations.

The Trust Company as Guardian o f M inors and
Incompetent Persons.
By

A

nton

G.

H

odenpyl

of the Michigan Trust Company, Grand Rapids.

When acting as guardian of minors or incompetent
persons, the extent and nature of the duties of a Trust
Company are wide and almost unlimited, particularly
if the guardianship extends to the person, as well as the
estate, of the ward, as is frequent in Michigan.
Trust companies may be appointed as guardians of
the estates:
Of minors;
Of insane persons;
Of mentally incompetent persons; i. e., those whose
incapacity to care for themselves arises from ex­
treme old age, mental infirmity or other causes;
Of spendthrifts; that is, those who by excessive
drinking, gaming, idleness or debauchery of any
kind spend or waste their property, exposing
themselves or their families to want and suffer­
ing;
Of intemperate persons; that is, habitual drunk­
ards.
In Michigan trust companies may also be appointed
guardian of the person of the wards before enumerated.
The usual complaint against individual guardians is
that they mingle their own funds with the trust funds,
neglect the affairs of the trust .when occupied with their
own business, often make poor investments because of
unfamiliarity with this class of business, and fail to
make proper accounting to the court. They themselves
and tUpir bondsmen may become financially irrespon­
sible. They may die and a successor become necessary,
thereby causing confusion. They may not be accessible
when wanted or needed; they may permit their feelings
or near relationship to bias their judgment. It is also
true that acting as guardian, especially of insane or in­
temperate persons, or spendthrifts, is anything but an
agreeable task for relatives. In such cases, trust com­
panies are especially available, and their officers, by ex­
perience, learn to handle these complicated trusts with
greater benefit to such persons and their estates.
Trust companies fill all the requirements of a guard­
ian of both person and estate. Their officers are usually
men of mature experience, and of broad culture and edu­
cation, who are competent to pass upon all questions of
training, accomplishments, education, and all matters
pertaining to the person of the ward. Their daily ex­
perience in caring for the person and property interests
of minors, insane, intemperate, mentally incompetent
persons and spendthrifts, fits them to solve all of the
difficult problems which arise, with greater skill and
economy than is exercised by the average individual
guardian, who meets such problems for the first time.
The Trust Company always keeps the property of
each trust separate from its own. The title to invest­
ments is taken in the name of the trust; it never neglects
the interests of its ward, because its sole occupation is
to look after the trusts committed to it. Its officers are
skilled in the investment o f funds, and they have un­




usual facilities for selecting good investments. Under
their management the chances of loss through poor se­
curities are reduced to a minimum. It is the business
of the Trust Company to be familiar with the laws regu­
lating the character of investments which guardians are
permitted to make. It accounts regularly to the court
appointing it as guardian, and its accounts are clear
and easily understood. It is itself always financially
secure and responsible. It never dies, and the same pol­
icy continuously controls the estate. It is always in its
office, always accessible; ready at any moment to de­
liver the property belonging to its ward.
It is impartial, for the reason that it has no personal
interest in doing anything but that which is best for
the person and estate of its ward.
A guardian of the estate has duties to perform which
are scarcely less difficult and important than those of a
guardian of the person. He must be a fit person to
make investments, protect them after they are made, be
skilled in the management of all kinds of real and per­
sonal property, hold the expenditures for the support
and education of his ward, and for the care of the prop­
erty, within the income from the estate. He must not
mingle trust funds with his own property, must not
become absorbed in his own affairs to the detriment of
his duties as guardian.
The duty of the Trust Company, as guardian of the
estate, is to conserve with care the property of its ward.
An infant under legal age cannot be consulted as to
investments, or as to the disposition of his property.
The whole responsibility rests with the guardian, and
the Trust Company must have in mind the fact that it is
accountable for its acts to its ward, when he becomes of
legal age, many of these acts having been performed
long before the final settlement. Bach move must be so
made that it will bear close scrutiny long years after
the transaction has been closed, when all business con­
ditions may have been very materially altered. The
minor in the mean time has had no voice in the manage­
ment of his estate, but he is entitled to demand his prop­
erty intact. It therefore follows that the Trust Com­
pany must exercise the very highest degree of business
ability and judgment in the management of this class of
trust.
It often happens that the estate of a ward includes
investments in active business enterprises, in partner­
ships, or in industrial stocks. Very frequently these in­
vestments yield handsome returns, but they are not of
the class in which any guardian would invest trust
funds. They are subject to the vicissitudes of business,
to incompetent management on the part of others, to
losses through bad debts, and, in times of financial de­
pression, to great shrinkage in value and income. In
such cases it has always been our practice to convert
this class of investments into money, and to re-invest
the funds in absolutely safe securities, though the in-

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BA N KERS’

come may temporarily be somewhat reduced by the
transaction. The whole situation should, however, be
carefully presented to the court, and nothing undertaken
without its direction.
A guardian of the person is called upon to supervise
the training, habits, education, accomplishments and
maintenance of the minor, and must provide suitable
treatment, attendance and care for the insane, mentally
incompetent, intemperate and spendthrift, all of which
involves much thought and study of the character and
antecedents of the ward, an understanding of his pecul­
iarities, a knowledge of schools and asylums, and insti­
tutions for the care of the insane and intemperate, the
personal faculty of controlling wayward children and
regulating their habits, a familiarity with instruction in
music and other accomplishments, and a wide experi­
ence in all matters pertaining to the home training and
education of minors and the care of unfortunates.
In caring for an estate, as guardian of a minor or in­
competent person, the Trust Company official acts in a
business capacity, but in caring for the person of the
company’s ward he finds it necessary to put himself
wholly in sympathy with the minor, and to consider all
the interests of the child as though he were the father
or near relative, planning, long years in advance, the
education of the child, so that when the guardianship is
terminated, the minor may be able to take the position
in life to which he or she is entitled. It is necessary to
study the temperament of the minor, to estimate the ca­
pacity, to judge as nearly as possible what education
and what mode of living will produce the best results
in each particular case.
The difficult part of all this is, that while the official
may conscientiously plan for the benefit of his ward,
the ward frequently has ideas at variance with those
of the guardian. No doubt all trust companies who act
in the capacity of guardian of the person have had un­
usual experiences. It has frequently happened that
wards of the Michigan Trust Company, who have small
estates, demand the most extravagant expenditures.
Many of this class wish to be sent to college, to the sea­
shore, wish pianos purchased for them, ask for various
other expenditures in large sums, wholly out of propor­
tion to the means at the command of the guardian. These
requests, however, must be examined carefully, and

C O N V E N T IO N .
passed upon as though the Trust Company were the
parent of the child.
It has sometimes been our experience that children
with ample incomes, for whom we have planned proper
education, flatly decline to attend boarding school, to
study languages or music, or do other things which we
regard for their good. It is then necessary to show them
that our plans have been carefully thought out, and are
right, that they are for their best interests, and, if fol­
lowed, that the minors will be better able to take the
position in life as men and women to which their birth
and means entitle them. This can usually be accom­
plished by gaining the confidence of the child, but it
sometimes happens, in cases of refractory boys particu­
larly, that force is necessary. Then we do not hesitate
to deliver them to such institution of learning as we
deem best fitted for them.
One peculiar case from our experience, and I am
done. Some years ago we were guardian of the person
and estate of a young and handsome widow of nineteen,
who became infatuated with a man already married
and the father of two children. Briefly, he proposed an
elopement, which, of course, would have resulted in the
moral destruction of our ward. Argument and persua­
sion were of no avail. She knew it was wrong, but
could not resist the wiles of the destroyer. Argument
with the man was met with defiance on his part. There
was no legal method by which we could separate the
couple. A father under such circumstances would have
thrashed the man in the case. We regarded ourselves
as standing in the position of a father to the woman, but
naturally did not care to do the thrashing, so we em­
ployed a man to take this off our hands, and he did this
work very thoroughly and according to the contract.
The young woman was at the station at the time, ready
to start with her lover, but through our intervention he
was not in presentable condition, and failed to join her.
Our act was illegal. We should not have taken the law
in our own hands, but unless we did it the woman would
have been ruined for life. We have always been satis­
fied that we were justified in the act. The sequel is that
the young woman married a very estimable gentleman,
and now lives happily several thousand miles away
from the exciting scene, and I may add that she feels
very grateful to the guardian for its illegal act, per­
formed in her behalf.

The Superiority o f Trust Companies to Individuals as
Assignee and Receiver.
By

Jo h n

H.

H

o l l id a y ,

President Union Trust Company of Indianapolis.

The functions of an assignee and a receiver, while
sometimes identical, usually differ widely. The assignee
is appointed for the definite purpose of closing a busi­
ness that has failed. A deed of assignment is a con­
fession of insolvency, and the duty of the assignee is
simply to make all that is possible out of the assets and
distribute the estate among the creditors. Both as­
signee and receiver, however, are governed by the same
principles, and for the present purpose the greater in­
cludes the lesser.
It is in the broader range of a receivership that the
qualifications of the Trust Company for valuable serv­
ice find their greatest expression and effect. A receiver­
ship does not imply insolvency necessarily. It may mean
only temporary embarrassment in a concern caught in the
stress of hard times, or handicapped by unwise invest­
ment of capital. It may arise from the differences of
partners, or from hostility to a particular management,
or opposition to a certain line of policy, or from a score
of other causes. The business may be a profitable one;
it may be one which only needs good management to
place it upon a paying basis again; it may be one which
requires reorganization and the delicate adjustment of
conflicting interests. It may be, and often is, one which




requires the operation of a plant for a longer or shorter
period, resulting in the payment of its debts or in its
sale. Acting under the authority of a Court, which
usually defers to the judgment and determination of the
receiver, this functionary (and in a lesser degree the
assignee), to do his work in the most efficient manner,
must have certain qualifications. No individual has all
of these; rarely does he combine many of them, and
sometimes he has none. The well-equipped Trust Com­
pany has all of them.
The Trust Company is permanent and responsible.
This means much. The individual may have the requi­
site knowledge and force for the successful execution
of his trust; he may have the business well in hand, but
death may come and destroy his work. He may hold
a trust for years, apparently managing it honestly, and
yet absorb or dissipate its assets and become a bank­
rupt, able to pay nothing. He may be a thief and give
occasion for the wits to apply the proverb as to the equal
guilt of a receiver.
But the Trust Company is not likely to be any of
these; at least it never has been, for so far as I can learn
no Trust Company in this country has defaulted in its
capacity of trustee. The few instances of companies

TRU ST

CO M PANY

failing, have not involved the trust estates committed to
their charge, and the percentage of those failures, as
compared to the whole number of companies, is so small
as to excite wonder. This fact speaks volumes for the
high plane of care and integrity on which the business
is conducted. Being permanent and always responsible
the Trust Company offers the creditors of an em­
barrassed or failing business a positive assurance of
safety from death or defalcation.
The Trust Company represents organized experience
and ability. The individual may have experience and
ability also, but generally speaking he has but one case,
and in many phases of management, especially in legal
matters, must rely upon assistance. The well-equipped
Trust Company has had many cases, and as all knowl­
edge fits aptly in at some time and place, its accumula­
tion of experience is sure to give it a great advantage.
It knows rules and precedents. It is a professional and
has had the essential training. More than this, it is not
one man, but several, perhaps many. It has the wisdom
of multiplied counsel. It has a resource of successful
men versed in varied lines of business, whose consensus
of opinion upon a given subject or policy is more likely
to be sound in nine cases out of ten than an individual’s,
no matter how favored. It has the services of experts
at its command. It has a wide acquaintance and busi­
ness connection, with their manifold advantages. It is
far more likely to have the power of selecting the best
instruments and organizing forces that distinguishes
the competent general than the average individual. It
is not likely to be swayed by friendship or dislike. Its
many men are almost certain to act dispassionately and
upon reason.
The Trust Company has financial power. In many
receiverships the absence of working capital has been
the reason for seeking that channel of relief. In an in­
stance under my own supervision, a manufacturing
concern had a large and profitable business. Its presi­
dent was ambitious, and saw that by removing to the
gas belt he could reduce the cost of his product very
materially. In building a new factory at the place se­
lected, he found that many improvements could be made
by which work could be done with greater convenience
and economy, and the output increased. He carried out
his ideas, until more than the whole capital was tied up
in the plant. At first, the concern’s credit being good, it
had little trouble in borrowing the working capital, but
soon hard times came along, the banks began to draw in
and demand payment. He found himself with a firstclass factory full of orders for delivery in a few months,
and yet unable to produce the goods because he had not
the means to pay for labor, interest and material. To
borrow money was impossible. There was no recourse
but a receivership. He wisely selected a Trust Com­
pany. That institution furnished all the money required
and carried on the business at a profit, which has nearly
paid the debts and eventually will turn the concern back
to its owners with enhanced capital and credit. An in­
dividual receiver might have operated the factory as
well as the Trust Company has done, but under the cir­
cumstances he could not have raised the necessary
money upon receiver’s certificates or otherwise. The
works would have stopped, the creditors would have
been paid probably, but the interest of the stockholders
would have been wiped out.
In another case a manufacturing concern was hope­
lessly involved, and was being sunk under a load of in
terest and costs. The Trust Company advanced a large
sum, arranged a composition with the creditors, and put
the establishment upon its feet again. An individual
would have been powerless in this case. I could mul­
tiply instances if necessary, but many must suggest
themselves to you. The Trust Company, in the posses­
sion and control of large amounts of capital, depends
upon no resources other than its own, needs no negotia­
tion or delay. It is prepared to act promptly. An in­
dividual may have to wait for months and then be un­
able to procure funds. This power alone gives it an




S E C T IO N .

69

incalculably valuable superiority in ail cases of financial
illness where careful nursing is needed.
The Trust Company can conduct its business more
economically than the individual, and with more
celerity. Its knowledge has been paid for already, and
it does not have to consult an attorney at every step, as
an individual usually does. The attorney’s fees in such
cases are often as large as those of the receivers or
assignees who do the work, being regulated by the op­
portunity and not by the amount of service given.
Where litigation is not necessary, the Trust Company
can save a large proportion of legal expense. Its ad­
vances of money cause large savings in cash purchases
and discounts. It can afford to charge less for its serv­
ices than the individual. Its familiarity with forms
and methods, and its general knowledge of business
enables it to move rapidly, taking “ short cuts,” just as
the trained mind and hand can move more quickly and
with more effect in all the business of the world. An in­
dividual will often drag an assignment or receivership
along for the profit in it, but it is the Trust Company’s
interest to close it as soon as possible and satisfy those
chiefly concerned—the creditors.
This brings me to the last point of superiority that I
shall claim, which is the business standing of the Trust
Company, the respect in which it is held. Controlled, as
a rule, by men of large reputation in the community,
both for integrity and ability, it has a standard to live
up to and a reputation to maintain. As a powerful
financial institution, it commands a respect which facili­
tates the transaction of business. Debtors pay more at­
tention to its demands than they would to those of an
individual. They wish to maintain their credit. In clos­
ing a mercantile estate under assignment, my own Com­
pany collected nearly 90 per cent, of outstanding claims
scattered through four States, a result which astonished
an experienced merchant in the same line, who said the
firm itself could not have got over 75 per cent. And this
was done without suit in any instance. The Trust Com­
pany has a reputation to maintain, and it is its interest
to do the business in hand as quickly and efficiently as
possible, for the better its reputation for skillful manage­
ment the more business will it get.
To sum up, the Trust Company is superior to the in­
dividual in the capacity of assignee and receiver, be­
cause
1. It is permanent and responsibly.
2. It represents organized ability and experience.
3. It has financial strength.
4. It works more economically and quickly.
5. It has standing and commands respect.
These are great elements of superiority, and if prop­
erly used, will inevitably secure all of this character of
business to the Trust Companies when selection is de­
termined on business principles. Possibly there are com­
panies which do not use them, and cannot claim theiradvantages, but it is their own fault if they do not. I
cannot think there are many such. The very reason for
the existence of Trust Companies precludes it. They are
formed for the execution of the most sacred duties that
can be imposed by man. The care of the property and
welfare of the helpless and dependent, the widow and'
orphan, the feeble and ignorant ones, who are such easy
prey for the unscrupulous, is part of their mission. To
carry out the wishes of the dead, who put faith in the
Company, and entrusted their dearest interests to it foryears, in the belief that it always would be true and
honest; to meet the expectations of the living, who en­
trust their property to it in full confidence that it al­
ways will be faithful and capable. This demands a con­
scientiousness and thoroughness which must always
serve as a high ideal and inspiring stimulus to rightminded men. It is the highest form of business yet de­
vised, and its name, indicative of its being, is the foun­
dation principle of civilization, the corner stone o f'
society. And the men who do a trust business must be
worthy of it, and let nothing be lacking in principle ormethod.

70

BA N KERS’

C O N V E N T IO N .

The Trust Company as Trustee Under Private Agreement.
By

A

rthur

H

eurtley,

Secretary Northern Trust Company, Chicago.

Of all the duties undertaken by a trust company,
Why is a trust company better fitted to act as a
that of acting as Trustee under private agreement cov­
trustee under private agreement than an individual ?
ers the widest field, and presents, more than any other
There are so many reasons that I hardly know just
class of business, perplexing and intricate problems,
where to begin. It offers stability. At the last meeting
requiring most careful handling in order to bring them
of the Trust Company Section, it was stated that there
to a successful termination. In almost every other ca­
had never been a failure of a trust company. Its
pacity in which a trust company is called upon to act,
charter is usually either perpetual, or for a very long
it is subject to and governed by orders issued by courts
term of years, and though its officers will be changed
of competent jurisdiction; the limit of discretionary
in the course of time the policy of the company is car­
power is clearly defined; but when it acts as trustee
ried on by their successors, who are trained to follow
under an agreement entered into by private arrange­
in their footsteps. This factor of stability affords to
ment, and not controlled by any decree of court, its
the person creating the trust a certainty that his
powers are limited only by the terms of the agreement,
wishes will be earried out by the company in whose
and it is usually given the fullest liberty of action.
hands he has placed his affairs, and that continuity of
Almost the entire business of a trust company, apart
action and policy will be maintained during the life
from the trusts it holds subject to order of court, can
of the trust. Its office is also apt to be more perma­
be placed under the heading, “ Trusts Under Private
nent than that of an individual, and it can be found there
Agreement.” As registrar and transfer agent, the
at any time during business hours. It seldom resigns
Trust Company stands as a safeguard between the
and never dies. It does not go away for a long vaca­
officers of corporations and their shareholders. As
tion, and is not troubled with illness. It is prepared to
trustee under trust deeds it is called upon frequently
transact its business every business day of the year.
to face many difficult questions relating to the man­
In short, it is entirely free from the ills to which flesh
agement of large corporate interests, and occupies a
is heir, as becomes a body of corporate without a soul.
place that nothing else can fill, in the reorganizations
It also offers security that is far greater than can be
that have been so popular during the past few years.
given by an individual trustee. It is possessed of ample
As trustee under agreements covering the proceeds of
capital. Under the laws of the State it is obliged to
life insurance policies, the Trust Company has opened
file at different periods statements of its condition, and
a field of business hitherto untouched, for many of
is subject to examination by officers from the State
the insurance companies do not write policies which al­
Auditor’s office or Banking Department. Its officers
low stated payments to beneficiaries, and the Trust
and directors are generally men of wide experience in
Company, by this form of agreement made with the
business affairs, men whose names are well known in
policy holder, supplies the needed facilities for carrying
the business world, and whose connection with the
out the wishes of the person desiring to create the trust.
company insures the wise and faithful administration
As agent, it is called upon to manage and care for
of the interests intrusted to its care. In many of the
property of all kinds, real, personal and mixed, some
States trust companies are compelled to deposit with
of it being decidedly in the latter category, while as
the State approved securities amounting in some
trustee under declarations of trust, it has in its charge
instances to one-half of the capital stock of the com­
matters that often require the utmost care and skill in
pany, as an additional security for the faithful perform­
their management, and unlimited patience on the part
ance of its duties as trustee. It also keeps the assets
of its officers , in dealing with the beneficiaries. Most
of the various trusteeships separate and apart, both
of you have had experience with the client, generally
from each other and its own assets.
a woman, who comes to your office, either when you
It also insures experience in the handling of trusts
are busily engaged in work at your desk, or have just
widely differing in character. A well organized trust
made up your mind to go to lunch, and sits down with
company is many sided. As above stated, its officers
a firm resolve to spend an hour or so in your sanctum.
and directors being men whose business training has
She generally requires long explanations of all that has
been along many lines, they are therefore fully com­
transpired since her last visit, and after you have
petent to advise upon matters in connection with the
wearily repeated the twice told tale, goes away, only to
trusts that require just this varied knowledge. Of the
write you a letter the next day, asking again the same
Trust Company, it may be truly said “ Of many one ”
questions.
is made, for all work together as a harmonious whole.
There are some who, by reason of inexperience in
Being organized for doing a particular line of busi­
handling business matters, desire to be relieved of the
ness, the closest attention ean be paid to all of the
burden and anxiety attendant upon the care of prop­
many details of the matters in its keeping/ Its office
erty; others who, by reason of ill-health, are prevented
force is carefully chosen, and its work systematized.
from giving their attention to their affairs, or who, by
It is able by its facilities for the rapid handling of
the onward march of time, feel their capacity to trans­
business to accomplish the maximum of result with
act business waning and wish to be relieved of the
the minimum of labor, and with the least amount of
burden and rest. To these, the Trust Company comes
expense to the beneficiaries of the various trusts. It
as a friend in need; by an agreement they can trans­
is also in a position to secure the best class of invest­
fer the burden to the Trust Company with the cer­
ments, and to obtain accurate information regarding
tainty that it can always be relied upon; that it will
all classes of securities. Having often large amounts
carefully guard their interests, and so enable them to
of money to invest, it is enabled to purchase securi­
live free from care and anxiety.
ties at the best possible terms, thus effecting a direct
In Eastern cities, where trust companies have ex­
saving to the trust for which the investments are made.
isted for many years, the advantages they possess
The nature of its business gives it a large experience
over the individual as trustee under private agreement
in legal matters, and it is therefore well equipped from
are well understood by the business community, but
this standpoint to handle trusteeships under private
here in the West they are of more recent origin, and
agreement.
we are obliged to make a continuous campaign of edu­
I have endeavored to state some of the advantages
cation. This is gradually producing results, as the very
possessed by a trust company over the individual for
satisfactory growth of our Western trust companies
acting as trustee under private agreement. May I
shows.
venture for a moment to turn to the reverse side of



TRU ST

CO M PANY

the picture. The individual trustee is subject to the
many “ changes and chances of this mortal life ” that
do not fall to the lot of the Trust Company. He may
be absent from the city when his presence might be
most necessary. He is apt to be taken ill, and to die,
often throwing the affairs of the trust into dire con­
fusion. He may become insolvent, and thus jeopardize
the safety of the trust estate; indeed, the usual result
in such a case is the entire disappearance of the trust
fund, and if thè bankrupt trustee has given a bond, it
is too often the case that the bondsmen escape all lia­
bility under it through some legal technicality.
Individual trustees are prone to mix up the affairs
of their trust with their own; the result, as a rule, being
far from satisfactory.
If the individual trustee be a man of affairs, he will
have his own business to look after, thus making it
impossible for him to give the time to the trust that it
should receive.
In regard to investments, the individual trustee is
seldom in a position to render a trust as satisfactory
service as a trust company. He is not in a position

S E C T IO N .

71

to purchase at as reasonable prices. He is not as apt
to keep in touch with the financial world, and invest­
ments with him are liable to be matter of individual
judgment or made under the advice of some friend
who has a “ sure thing.” The office force of the average
individual trustee is not calculated to inspire confidence
in the correct handling and management of a trust, as
it is usually not well equipped for such work. Through
inexperience or carelessness, an individual trustee often
proves very expensive to a trust, and can be regarded
as somewhat in the light of a luxury. To. sum it up
briefly, the individual does not and cannot offer as
trustee under private agreement the stability, secur­
ity and experience that is afforded by a trust com­
pany, and, as the years go by, these facts are becom­
ing more and more plain to the people. The Trust Com­
panies are here to stay. They occupy a place in the
business and financial world that nothing else can fill;
and the gratitude of those whose interests they are
guarding so faithfully, the rapid increase in their busi­
ness from year to year attests the value of the service
tht-j render, and the appreciation thereof by the com­
munity at large.

The Trust Company as Executor and Administrator.
By F. B.

Gibson ,

Secretary International Trust Company, Denver.

In the assignment of this subject to me, the Commit­
tee in charge of the Trust Company Section have per­
haps intended no reflection upon one of the chief re­
sources of this State, although they have evidently
overlooked the fact that in this life-giving, health-preserving climate, the administration of estates would
hardly be a leading branch of the business of the com­
pany which I represent.
A V N A E .
D A T G S

It is becoming more and more apparent that the ad­
ministration of estates is drifting into the hands of
Trust Companies, and their fitness for such duties is
becoming daily more evident. None among their varied
offices is more sacred. None brings the Trust Company
into more confidential relations with its clients; and I
am persuaded that no service that a Trust Company
renders has proved more satisfactory, or more manifest­
ly for the benefit of the community in which it exists.
Men who have devoted their lives to securing a
competence for their families are beginning to realize
that it is quite as important to preserve the results of
their labors to their wives and children as it is to ac­
quire that competence in the first place.
Large estates are sometimes frittered away and
wholly lost by reason of incompetent or unfaithful man­
agement on the part of administrators and executors.
Too often administrators are appointed whose service
proves to be, not as Lord Bacon’s maxim expresses it,
“ for the relief of man’s estate,” but rather for relieving
man of his estate. The court records afford many mel­
ancholy examples of this fact. How large a proportion
of all the estates administered upon by individuals suf­
fer either from mismanagement, dishonesty, incompe­
tency or extravagance. I know not where else you will
find such a lack of orderly, systematic, faithful atten­
tion to business principles in the management of prop­
erty. These are facts well known to all of you, and I
am sure that a vast improvement can and will be made
by Trust Companies in this field.
We need not look far for the reason why Trust Com­
panies are the best administrators. They have large
capital and a constantly increasing surplus; their in­
vestments are conservative and secure; no sort of specu­
lation enters into their business affairs; fidelity and con-’
servatism are cardinal principles governing all their
acts, and their officers are trained and experienced in
the discharge of their duties. These elements united
must commend the Trust Company for the work herein




discussed. The wide experience of intelligent officers
in the handling of investments, their familiarity with
all forms of probate law, with the law of descent and
distribution, their financial connections and opportuni­
ties for advantageous disposition of the property com­
ing into their hands, reduces the loss to estates through
administration to the minimum, and renders it possible
to produce more from the property of the decedent than
can be done by any individual administrator, unless he
be a man of commanding business capacity and unusual
fidelity to his trust.
D T S A D R S O S IL IE .
U IE
N
E P N IB IT S

The duties and responsibilities of an executor or an
administrator are many and important. Briefly they
are, faithfully to secure the assets of the decedent, and
to preserve them for the benefit of the heirs; to protect
and pay creditors, and to distribute the property as the
will directs, or as the law provides. The administrator
or executor is thus, at the same time, the representative
of the deceased and the agent of the living. What posi­
tion could be more confidential in its character, what
more sacred in its relations? Neither the family physi­
cian nor the minister of the gospel can stand in a more
sacred relation of trust and confidence to the family
than the Trust Company, having in its charge the prop­
erty of the dead, designed for the support of those who
are left behind.
The formal duties of administration under the laws
of the various States are substantially the same. T h e(
qualification before the court, the advertisement for
claims, the filing of inventory, the setting apart of the
widow’s allowance, passing upon the claims, the selling
of property where required, the payment of debts, the
final accounting, the distribution of the estate, and the
discharge of the executor or administrator, are invari­
able steps through which the management of such trusts
must pass. Many of these duties in ordinary estates are
chiefly clerical. This does not mean that they are unim­
portant. On the contrary, efficiency and promptness in
this routine wrork is both highly desirable in itself, and
generally certain to prevent confusion and misunder­
standings in the future.
The indifference of the average individual adminis­
trator to the mandatory provisions of the statutes in
regard to reports, appraisements and such details, too
frequently results in confusion and trouble. I count it
not one of the least recommendations for the selection
of a Trust Company in matters of administration that

72

B A N K E R S ’ C O N V E N T IO N .

the records of the court are sure to be full, exact and
■definite. No one can misunderstand what was done
with the property of the decedent, nor be in darkness
as to any of the details in the management of the estate.
One of the most important services that the Trust
■Company as executor or administrator may render is in
the preservation of the property, where the debts are
large and pressing. The estate may consist of equities
-or of mortgaged property which may require the outlay
■of large sums of money for its preservation, or to pre­
vent the sacrifice of the assets by sale in a declining
market. Money for this purpose may not be easily se­
cured from parties unfamiliar with the condition of the
■estate and uncertain of the honesty and fidelity of the
legal representative of the decedent. But where the
estate is controlled by a Trust Company, it may not in­
frequently render the greatest service by temporary
cash advances to avoid such sacrifice. I might cite to
.you an example of a successful Trust Company whose
prosperity is largely due to the reputation which it
gained by the skillful management of its first estate,
which at the time was practically insolvent, but which
was so protected by wise management as to leave a very
large sum for the heirs. I could refer to a similar in­
stance in the experience of our own Company, of a valu­
able and extensive agency business, which through im­
mediate cash settlements advanced by the executor was
preserved, and ultimately this business—the fruits of a
lifetime of labor—was disposed of, and a handsome
profit realized for the benefit of the estate. These are
■only examples of a situation which has doubtless con­
fronted all of you in your experiences, and I count it one
o f the great advantages offered by a Trust Company
that it is frequently able to furnish such financial assist­
ance in time of need.
H W T IS B S N S
O
H
U I E S M Y B
A
E D V L P D
E E O E .

How shall we demonstrate to the public the superior­
ity of the Trust Company over the individual for these
important duties? While I believe that judicious adver­
tising has its place, yet the best advertisement is the
successful management of every trust. One estate suc­
cessfully and economically administered to the satisfac­
tion of those connected with it is sure to be a strong in­
ducement for others to commit their trusts into the same
hands.
In many estates, where probate fees are discretion­




ary, we must realize that the beneficiaries often cannot
comprehend the great amount of detail necessary to the
successful management of the estate, nor can they esti­
mate fully the benefits to be derived from efficient ad­
ministration. In such cases we shall oftentimes have
to be satisfied with a compensation inadequate to the
service rendered. It is needless to say that the Trust
Company must be thoroughly equipped, not only for its
clerical duties, but for ordinary legal requirements as
well. It must have an efficient officer skilled in the prep­
aration of simple legal documents, for which either a
nominal charge must be made, or the service rendered
without any charge whatever. In fact, it must be thor­
oughly equipped to discharge all the duties imposed
upon it with promptness, economy and fidelity, that the
estate may be speedily and successfully administered
upon, instead of lingering in the courts while the assets
are absorbed in fees, expenses and commissions.
T E I P R A C
H
M O T N E O S L C I G O E
F E E TN
N ’S E E U O .
X C T R

In many States the right of administration is con­
ferred upon the widow or relatives by statute. If they
fail to exercise the privilege, it may be claimed by a
creditor. Usually there is some one among relatives,
friends or creditors, ready to assume the duties for the
compensation allowed—some one, however limited his
qualifications and however free from a realization of the
responsibilities imposed upon him—who is willing to
undertake the trust.
This is a risk every man takes who dies without
making a will. The prudent man, however, will insure
the disposition of his property by naming his own ex-r
ecutor. He will not trust his estate, and the support
of his family, to the inexperience of his wife, to the in­
competency of a friend or relative, or to the creditor
whose only interest is to collect his claim. But, antici­
pating these perils, he provides against them by having
his will most carefully drawn by experienced counsel,
and intrusts his estate to a Trust Company managed by
those whose integrity he knows, and on whose business
ability he can rely, to make the most out of the property
he leaves. In so far as he can provide for all the con­
tingencies of the future, he has done so. Nothing is left
to uncertainty, speculation or chance. He is thus re­
lieved of great apprehensions and misgivings by the
knowledge that after his decease his property and estate
will be safely, intelligently and economically managed
by an efficient and responsible Trust Company.

Detailed Report of Proceedings,
SECOND ANNUAL MEETING TRUST COMPANY SECTION, HELD A T
The Trust Company Section of the American
Bankers’ Association met at the Denver Club, Denver,
Colorado, Wednesday, August 24th, 1898, in its second
annual session.
In the absence of Chairman Francis S. Bangs, of
New York, who was kept at home by illness, the meet­
ing was called to order by Breckinridge Jones, of St.
Louis, the Chairman of the Executive Committee.
E. T. Jeffery, of the International Trust Company of
Denver, delivered an address of welcome.
Address of Welcome by Edward T. Jeffery,
A D e t r o t e I t r a io a T u t C m a y D n e , a d P e i e t
ir c o
f h ne n t n l r s
o p n , e v r n
r sd n
D n e & R G a d R ilr a C m a y
e v r
io r n e a o d o p n .

Mr. Chairman and Gentlemen:
The unmerited honor has been accorded me by con­
fiding friends of extending to you on their behalf a
welcome to our city and our State. You have doubtless
observed that the most pleasurable undertakings are
often the most difficult to perform, especially when they
are prompted by generous impulses and must find ex­
pression in words instead of deeds. It is my province
to endeavor to convey to you the profound pleasure, the
hearty friendship, the high esteem that move us to take
your hands in ours and welcome you to the Capitol City
of the Centennial State. Here our hearts and doors are
thrown wide open to you. Here a generous hospitality
has been awaiting you, less glittering perhaps than
older communities might havfe offered, but so broad
and true and kindly that you will feel joint ownership
with us in all we possess while you honor us with your
companionship. Many of you have journeyed long
distances, have traversed in coming here the greatest
continuous stretches of fertile and cultivated lands in
the civilized world, and have seen the vast, the thickly
settled and the resourceful valley between the Alleghany
and the Rocky Mountains. You have thus had before
you and have studied the greatest object lesson a free
and enlightened people can present to a world wide
humanity at the close of an illustrious century; a suc­
cession of noble cities, prosperous towns, thriving vil­
lages and cultivated fields from the Atlantic Coast to
the foothills of the giant ranges whose shadows fringe
our city when the setting sun, as if reluctant to leave
so fair a scene, bathes their lofty summits in liquid light
while he sinks to his nightly rest in the bosom of the
western ocean. I have never passed through the mag­
nificent domain to the east of us without being in­
tensely impressed with the innate strength, the re­
sources, the capacity, the intelligence, the progressive­
ness and the glorious future o f this Republic of ours.
A study of the two thousand miles that lie to the east of
the continental divide must perforce make an en­
thusiastic patriot out of any ordinary citizen, even
though an unkind fate has veiled his eyes to the other
half of the Republic, that indispensable half that lies
west of the lofty summits dividing the waters of the
Atlantic from those of the Pacific.
But I am here to welcome you, to say words of good­
will and hospitality and friendship, and you must pardon
me for this brief digression about our loved country now
happily passing from the throes and agonies of war to
“ fruitful strifes and rivalries of peace.” We welcome
you to our Mountain State ! You stand within and
scarcely one hunderd miles from two of the boundary
lines of the great Province of Louisiana ceded to the
United States by France in 1803. You are in a State
but twenty-two years old, a State young and vigorous,
gifted by kind nature with resources so varied, so rich
and so accessible as to be of incalculable value in
rounding out the future of the nation and contributing
to her wealth and power. You are in a State that al­




DENVER, AUGUST 24.

ready leads her sisters in production of gold and silver,,
and has but just commenced, as it were, to unearth these
precious treasures. In this Iron Age the State that wel­
comes you lays at your feet mountains of iron, and bidsyou inspect her furnaces and factories where the crudeores are converted into finished products equal in qual­
ity to those made in any other State. In this Age of
Steam she points out to you her inexhaustible measures
of coal, of all grades and classes, from anthracite equal
to Pennsylvania, coking coal equal to West Virginia, and
steam coal equal to Cumberland, down to the lowest
grades of lignite "¡hat are of use to man. In this Elec­
trical Age she directs you, with excusable celerity, to>
her needed copper ores, and in this age of general utility
she begs to conduct you to her field of natural oil, her
deposits of lead and zinc bearing ores and to her bed»
of onyx, marble, granite, sandstone and limestone, all
generous in quantity and unrivaled in quality. TheState that welcomes you will unfold her wonderful pano­
rama of stately hills and rugged, time-worn rocks; o f
mighty mountain ranges, awe-inspiring and grand, and
of peaceful valleys, verdant and fruitful and quiet save
for the music of their crystal strecms; of dark cafionsand gorges and rifts in gigantic rocks which rise straight
and strong and awful in their sublimity from the foam­
ing torrents that have worn their way through time im­
memorial into the narrow, tortuous channels that limit
them and speed them in their courses to the sea.
Colorado will present to you melons and peachesthat will melt in your mouths, apples that would again
tempt old Mother Eve, even more strongly than the one
she impulsively reached for six thousand years ago, and
potatoes that would resurrect old Saint Patrick, if he
caught their inviting odor as they come from the ovenscontrolled, like all else within the State, by our lovely
and lovable, our independent and capable, our tender
and sympathetic, our true and noble women. Colorado1
has had her vicissitudes; her people have passed through
trying times. The panic of 1893 plunged us to great
depths, and encircled us with formidable barriers. Out
of and above and beyond these we have struggled until
our business horizon has broadened more than ever. W e
have learned lasting lessons in economy, and thrift, and
good citizenship, and we are confident to-day of a future
that will recompense us for all our troubles and our
toils.
We do not welcome you because our State has un­
paralleled natural resources, although we like to speak
of them; nor because of her sublime physical character­
istics; nor because of her pleasant valleys and her
fruitful fields. We welcome you because you are our
brethren from various parts of this broad land, intent
with us in building and strengthening, by lawful meansand in honest ways, our financial, commercial, indus­
trial, mining and agricultural interests. The accumu­
lated wealth of our country is mainly the accumulated
labor of her people. We welcome you because we want
you to see us as we are, patriotic, industrious, thought­
ful, honorable and self-respecting. We welcome you be­
cause we want you to see our cities, towns and villages,
our thoroughfares and public buildings, our businessedifices and family homes, our churches, colleges and
schools. To these we point with pardonable pride, know­
ing full well that they are evidence of our achieve­
ments, and that they will indicate to you our hopes and
aspirations. And to Denver, our Capitol City, we bid
you thrice welcome. Our hearts go out to you in friend­
ship and hospitality. We pray that you will have inter­
esting and instructive interchange of opinions on the
important subjects that are to come before your con­
vention, and that your leisure hours will be gladdened
by our azure skies and our genial and exhilarating moun-

74

B A N K E R S ’ C O N V E N T IO N .

tain air. Our success in contributing to your enjoyment
will be the measure of our happiness.
Papers and Addresses.
Papers were read on the following subjects:
“ The Duties and Liabilities of Trust Companies Act­
ing as Transfer Agents and Registrars,” by Felix Rackemann, of Counsel for Old Colony Trust Company, Bos­
ton.
“ Trust Companies as Trustees Under a Will,” by W.
E. Fisse, Counsel of Lincoln Trust Company, St. Louis.
“ The Trust Company as Guardian of Minors and In­
competent Persons,” by Anton G. Hodenpyl, Secretary
Michigan Trust Company, Grand Rapids.
“ The Superiority of Trust Companies to Individuals
as Assignee and Receiver,” by John H. Holliday, Presi­
dent Union Trust Company, of Indianapolis.
“ The Trust Company as Trustee Under Private
Agreement,” by Arthur Heurtley, Secretary Northern
Trust Company, Chicago.
“ The Trust Company as Executor and Adminis­

trator,” by F. B. Gibson, Secretary International Trust
Company, Denver.
[All these papers will be found reported in full on the
pages immediately preceding.]
ELECTION OF OFFICERS.

The following officers were elected for the ensuing
year:
Chairman, Breckinridge Jones, Mississippi Valley
Trust Conpany, St. Louis, Mo.; Vice-Chairman, Otto
Bannard^ Continental Trust Company, New York;
Chairman Executive Committee, Anton G. Hodenpyl,
Michigan Trust Company, Grand Rapids; Secretary,
Arthur Heurtley, Northern Trust Company, Chicago;
members Executive Committee, to serve for three years,
Otto Bannard, Continental Trust Company, New York;
Frank R. Gibson, International Trust Company, Denver;
Arthur Heurtley, Northern Trust Company, Chicago; to
serve one year, in place of Breckinridge Jones, resigned,
John H. Holliday, Union Trust Company, Indianapolis.
Adjourned.

PENN MUTUAL LIFE INSURANCE COMPANY
OF PH ILAD ELPH IA, PA.
G ro ss A s s e ts
S u r p lu s
-

-

The P enn is purely M utual.

$ > 3 2 ,2 1 8 ,0 3 1 2 5 .
3 ,9 4 4 ,8 7 6 6 0 .

Insurance is furnished at exact cost.

and expense—have all been highly favorable in this company.
able

Its factors—mortality, interest

All policies are absolutely N on -F orfeit-

for reserve value, the latter being applied to “ E xtension ” or to “ Paid - up ” as may be desired.

Its policies are free from technicalities and become I ncontestable for any cause after Two years.
Cash and loan values after three years.

HARRY F. W E S T , President.
G O K. J H S N Vc - r sd n .
E .
O N O , i ePe i e t
N W H M R M n g r L a D p.
,
A E .
a a e
o n e t




H N Y C B O N S c a dT e s r r
E R
. R W , e ’y n
r a ue.
H C L P C TT M n g r o A e ce .
. . IP IN O
,
a a e f g n i s

J S E J B R E . A tu r .
E S
. A K R
c ay
H H H L O E L A s S c a dT e s
.
.
A L W L , s ’t e ’y n
r a .