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Banker DES MOINES APRIL, 1935 A re W e Going to Have IN F L A T IO N ? Page 7 Shall W e Have Politicians or Bankers Run the Federal Reserve System? Page 10 The Effect of the Proposed Public Utilities A c t of 1935 Page 15 ' The Value of Your Checking Account” https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Page 16 o4 Cedar Rapids Dank ¡s ^ llls s ll 111II61 $ ä ilUHBM»),: I null 1 S e r v ic in g T lK MERCHANTS 3| II HUM «¡HI lo iV a NATIONAL of Cedar Rapids endeavors to anticipate the needs of Correspondents for service beyond the routine of keeping up-to-the-minute business data, always ready for their imme diate use. M ay w e serve yo u ? MERCHANTS NATIONAL BANK O FFICERS Chairm an, Jam es E. H am ilto n ; P resid en t, S. E. C oquillette; Vice P re si dents, H. N. Boyson, Roy C. Folsom, M arv in R. Selden; Vice P re sid e n t and Cashier, M ark J. M yers; Vice P resid en t and T ru st Officer, George F. M iller; A ssistan t Cashiers, F red W. Sm ith, R. W. M a n a tt, L. W. B roulik, P e te r Bailey, R. D. B row n and O. A. K earney. Cedar Rapids https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Iowa 3 N o rth w estern Banker Des M oines The Oldest Fin an cial Jo u rn al West of the M ississippi A PR IL, 1935 N um ber 573 40th Year IN T H IS ISSUE P age Across the Desk from the Publisher........................................ Frontispiece—“Tulip Time in Holland” .................................... Are We Going to Have Inflation?.......... .. John A. Beattie The Nation’s Oldest Meat Packers.......................................... Service Charge C hart................................................................ Shall We Have Politicians or Bankers Run the Federal Reserve System?................................................ Clarence W. Fackler Brief News of Iowa Banks.................................. J. A. Sarazen Account Analysis Slide Rule...................................................... If Your Bank Is Robbed............................................................ The Effect of the Proposed Public Utilities Act of 1935 Upon Public Utilities Operating Companies.................................. “The Value of Your Checking Account” .......... Fred C. Atkins News and Views.............................................. Clifford De Puy How One Bank Made Its Bond Account Profitable.................. .....................................................................Vernon L. Grant A Good Life Insurance Man Must Be a Good Business Man .......................................................................H. B. Harpham South Dakota Bank News.................................................. Nebraska Bank News........................................................ Minnesota Bank News........................................................ North Dakota Bank News.................................................. Iowa Bank News................................................................. R. W . M O O R H E A D A sso cia te Publisher 10 12 13 14 15 16 17 23 33 37 39 41 43 45 C L IF F O R D D E PU Y Publisher H. H. H A Y N E S E ditor FR A N K P. SYM S V ice President 330 W e st 42nd Street Phone B ryant 9-5491 N ew York Member, Audit Bureau of Circulations 4 6 7 8 9 F. S. L E W IS Special R epresentative 511 E ssex B uild ing M inneapolis, Minn. T elephone, B ridgeport 2523 J. A. SA R A Z E N C irculation M anager Member, Financial Advertisers Association N o rth w estern B anker, published m onthly by th e De P u y P u b lish in g Company, Inc., a t 555 7th S tre e t, Des M oines, Iow a. Subscription, 50c p er copy, $3.00 p er year. E n te re d as second-class m a tte r a t th e Des M oines post office. C opyright, 1935. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 4 Marriner S. Eccles, the 42-year-old gover nor of the Federal Re serve Board, has put into writing just how the banking business of the country should be operated and it is known as the Banking Act of 1935. Even though there is no banking emergency ex isting today, thus allowing ample time to carefully discuss such a revolutionary piece of legislation, President Roosevelt and Governor Eccles believe that this ponderous banking bill should be passed at this session of Congress. One of the services featuring Washington news said, ‘‘ The administration banking bill will pass the House and after much delay and squabbling in the Senate, will probably pass, including most of the Eccles proposals for centralized control of banking by the Reserve Board. The opposition from bank ers is stiff, but bankers are not very influential at Washington these days.” The interesting point about this is that with the Federal Reserve System controlled at Washington, not only bankers, but manufacturers, wholesalers, retailers and every other kind of business organiza tion will have its credit requirements passed upon by politically dominated official's at Washington rather than the independent banks of the country which know the needs and requirements of their customers. I think that a great deal more time should be given to the study of this bill than is now being planned. Titles I and III have to do with amendments to present banking laws and clarifying changes in ex isting statutes and are not so objectionable as Title II which places in the control of the administration the complete management of the Federal Reserve System. If there is anyone who thinks that only bankers T itle I I o f the Banking Bill Should N o t P a s s Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 object to this bill here are the eight reasons why the American Liberty League, which is composed of some of the most influential and smartest business men in America, objects to Title II of the bill and believes it should not be passed because: 1. It provides for abdication by the Congress of its constitutional duty to regulate the value of money. 2. It delegates to the executive branch of the government unrestricted authority to control the volume of currency and credit without so much as declaring a policy. 3. It makes our monetary and banking structure subject to the whims of political influence. 4. It strengthens the President’s power over the Federal Reserve Board and makes it impossible for that agency or the Federal Reserve Banks to be independent. 5. It shifts to the Federal Reserve Board pow ers now exercised by the nonpolitical Federal Re serve Banks. 6. It destroys safeguards in present laws affect ing the use of currency and credit. 7. It facilitates inflation and offers no adequate means of checking tendencies in this direction. 8. It opens the door to unsafe banking. Business men of America know that banking credit is the life blood of industry and they also know that if that credit is to be politically con trolled as far as it relates to the Federal Reserve System and to member banks, then there is a real menace facing the business interests of this country. One of the leading newspapers of the East said: ‘‘Every patriotic citizen should make himself fa miliar with Title II of the Banking Bill and protest to his Congressman and to his Senator against the passage of this iniquitous measure.” I also suggest that you read the very excellent article in this issue of the N orthw estern B a n k e r , written escepially for us by Clarence W. Fackler, 5 II. L. Mencken, “ actually have the effontery to de nounce the banks for not making more loans. Loans to whom ? No man of any honesty wants to borrow money that he may never be able to pay back. And what assurance has any such man that, if he made a loan tomorrow and put the proceeds into his business, he would be able to pay it back? None whatever. He knows only too well that at any moment the young professors at Washington may put through a law taxing him out of existence or another handing over his business to prehensile labor leaders, or a third designed frankly to ruin him by setting up the government itself as his com petitor. ” And so I come back to the question as to when will we have a restoration of confidence? I do not know.' But I do know that the average banker and busi ness man has down deep in his heart an abiding faith and sincere belief in his own country and be lieves that somehow we will overcome the obstacles T u rn o v er o f It is not more money but which now prevent us from going forward into a it is the use or the turnover of M o n e y W i l l the money which we now have, new era of greatly improved business. It is my opinion that with five years of depres Bring Us which is needed in order to sion behind us and with an unfilled demand for P r o s p e r ity bring us prosperity. goods and services waiting to be satisfied, together This turnover or use of money will take place with the factor of obsolescense in machinery and just as soon as people have confidence in the busi equipment and with ample credit to finance any ness outlook and they will have confidence when necessary undertaking that we can and will go for monetary experiments are eliminated and constant ward in spite of the obstacles, the handicaps and the unnecessary reforms are abandoned. As one writer set-backs being caused by the administration. says, “ No government has ever done and never will do anything for a people that they cannot do much better for themselves. ’’ Banks Should I presume there is no To prove that piling up more money in the banks function of banking which W a t c h Th eir should is not the answer to our problem, a recent study be watched more care Bond Buying fully now than that of bond shows the following interesting figures: 1921 to 1929—Net demand deposits increased buying for the bank’s own account. 30 per cent. With banks loaded with money and with a small 1921 to 1929—Use of money or turnover increased local demand, there is the natural desire to get as 79 per cent. high a yield as possible from the purchase of securi 1929 to 1932—Net demand deposits decreased 30 ties. Herein lies the danger. per cent. The vice president of a large bank was in my 1929 to 1932—Use of money or turnover de office just the other day and said that they were creased 70 per cent. emphasizing this question with all of their corre Money must be put to work through enterprise spondent accounts because if banks become loaded and trade and this will only happen when confi with bonds at this time, which, although they may dence and cooperation are the watchword rather have a higher rate of yield, later on either default than fear and uncertainty. or depreciate in value, the ultimate loss to the One of these uncertainties which business men banks will be far greater than the temporary loss and bankers are facing is whether or not there will in return which would come from buying higher be any further devaluation of our currency. There grade bonds at a lower yield. has been no definite statement by the administra So I say—-be careful and buy only the high grade tion on this question. issues from well known and reliable investment “ Yet the quacks at Washington,” according to institutions. Ph.D., in which he points out the numerous dangers inherent in this proposed piece of legislation. Sixty-six leading economists attacked the propos als of the 1935 banking act. The economists, largely members of the Economists’ National Com mittee on Monetary Policy, pointed out dangers in the legislation. Their statement said: ‘‘The passage of such a measure will invite ulti mate disaster for this country. The new bill will throw the nation’s banking system into politics, provide for the conversion of illiquid assets into legal tender notes, make non-commercial paper eli gible for rediscount and broaden, unsoundly, the making of real estate loans by member banks.” Title II of the Banking Act of 1935 should not pass!—but it will pass unless real opposition is pre sented in the form of letters and telegrams to Sena tors and Congressmen before the administration steam roller does its usual work. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 6 V* • k -, ‘T U L IP TIME IN HOLLAND’ Copyright, by the Thomas D. Murphy Company, Red Oak, Iowa Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 7 A R E W E G O IN G TO HAVE infla" (Publisher’s Note— While attending a meeting of the Pittsburgh Rotary Club re cently, I was impressed with the very able discussion of “Inflation” given by John A. Beattie, president of John A. Beattie <& Company, investment counselors of Pittsburgh, that I ashed him for permis sion to publish his address in The N orth western B anker , believing that our read ers would appreciate the clear, concise analysis of this very important subject.) HAT is meant by the term “infla tionÍ” Webster defines it “as a disproportionate and relatively sharp and sudden increase in the quantity of money or credit, or both.” The two terms, inflation and deflation have been very loosely used. Let me amp lify Webster’s definition of inflation by stating further that due to a sharp and sudden increase in the quantity of money or credit, or both, and the resultant de crease in the value of money, there is a general rise in prices. In other words, the cheaper the dollar, the less it will buy. Deflation is anything that tends to slow up business or depress prices. Since most goods and services are not exchanged commonly for each other di rectly but through money, money has be come a standard of value. Therefore, let us picture inflation to mean the manipu lation or control of money to the end of decreasing its value. If its value is de creased, its purchasing power is lessened, price averages are raised and inflation en sues. If the value of money depreciates, unsound speculation follows. Commercial strangulation and ruin to many are the usual results. W H ea d ed fo r Inflation Yes! I believe we are headed for in creased inflation. The Administration seems committed to it. The abandonment of gold and its nationalization; revaluing of silver from 26 cents an ounce to 54 cents, with a policy approved by Congress where silver can be purchased up to $1.29 an ounce, the intention to raise commodity prices to 1926 levels; higher farm prices, many government relief and spending programs; pending bills providing for government loans to farms and home own ers; Jones bill for 2 per cent farm mort gage loans on small farms, Bankhead bill for more than a billion dollars to purchase small farms, the bill to give HOLC 1% billions new money to lend to distressed home owners, pending agitation for pay ment of bonus, an unbalanced budget, financing budget deficits through the me dium of banks, the trend towards a central bank and government control of the cur rency, as evidenced by the recent action of depriving National Banks of the circu lation privilege—all of these are infla tionary in character. There are two other pertinent reasons why inflation is inevitable. First, the cyclical reason, which is that inflation invariably follows deflation. Second, political—the Administration’s determi nation to raise prices. night. It comes gradually and as Messrs. Kiplinger & Shelton in their recent book “ Inflation Ahead”—“ Inflation is like filling a deflated balloon. It doesn’t rise until it has reached a certain stage of fullness. Then it tears upward. Like pumping up an air tank. Nothing hap pens until the pressure ceiling has been reached. Then the ceiling blows out. Our inflation will be sharply spectacular ONLY WHEN the volume of industrial production, now in the 80’s, reaches 100 and works above this level for several months. Then will come the big demand for credit.” “ U. S. seems to be going through a cycle like France. We have unbalanced government budgets, six years of them in evidence, 1931-36, with no end definitely in sight. Our government doesn’t have a strictly government central bank from which to borrow, but it controls the Fed eral Reserve System and borrows from thousands of banks, and the effect is pretty much the same. France spent for national rehabilitation and national se curity; United States is spending for unemployment relief. France didn’t re sort to the printing press to the extent that Germany did, and neither will the United States. France expanded note issues; United States is inflating Bank Credit. France was driven to a stage of inflation not originally contemplated. It came little by little, bit by bit, step by step. This is the way we seem to be going. The French never quite believed inflat'on could go as far as it finally went. ’ ’ Experience with inflation in other coun tries and other times, when examined with more care than is evident in this brief discussion, makes you think inevitably of one main big question—Can we control, hedge, limit, confine our own inflation? According to the best information avail able, we will really not begin to feel the big inflation push until possible the mid dle of 1936 or the early part of 1937. W hen? The next question is “ WHEN?” This is the most difficult question to answer because inflation does not come over What are its causes? How is it brought about f To date, we have evidenced—to a degree—that forces of inflation are in ac- |f So— W hen? W hat A rc Its Causes? How Does It Affect the Banker? How Does It Affect the Average Man? By JOHN A. BEATTIE President John A Beattie & Company Investment Counselors Benedum-Trees Building Pittsburgh, Pa. Its Causes Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 8 tion. We have higher commodity prices, our cost of living is advancing, business volume is increasing, stock and bond price averages have advanced, bank deposits are mounting higher and an enormous res ervoir of idle credit is facing us on all sides. At present, there seems no need for currency inflation, but credit inflation is continuing at a great pace. Currency in flation is more harmful than credit infla tion because as inflated money appears, prices soar. Everybody starts dumping money, turning it into something tangible. Since there is no “hard money,” except our legal coinage (alloys), there is the probability that the effort to get rid of money for goods may accelerate the ad vance of prices materially. As to the effects of inflation, let us refer to history. What is the historical record of infla tion? Historically, we all know society’s trouble with money dates back thousands of years and it is only necessary to re view a few historical facts in substantia tion of this. As far back as 96 A. D., the Emperor Nerva, in an effort to help the farmers, loaned them upwards of $100,000,000, the interest to be used for what we would term “relief purposes” to day. Over a period, the plan did not work out well, as the collection costs even tually cost more than the interest; there fore, you can see that fundamentally, a number of plans that are being tried to day were known to the Romans. After the Revolutionary War our coun try suffered severely from the issuance of paper money, issued by the Continental Congress and secured vaguely by public lands. By 1778, the Continental paper dollar was worth about 16 cents and by 1779 about 5 cents. Debts were easy enough to pay, if creditors could be in(Turn to page 18, please) The Nation’s Oldest Meat Packers Estabi is hed in England in 18 27— Opening American Headquarters in New York in 18 65— John Morrell & Company started packing operations at Ottumwa, Iowa, in 1877 The Jo h n M orrell P a c k in g P la n t in O ttum w a, Iow a NE OF IOWA’S leading industries is meat packing, and at Ottumwa, Iowa, is located a large modem packing plant of John Morrell & Com pany, the oldest firm now doing a meat packing business in the United States. John Morrell & Co. had a humble be ginning in the purchase at Bradford, England, by George Morrell, of a boat load of oranges from Spain. George Morrell was a wool comber by trade whose wife inherited a small amount of money, and after paying off the family debts, the balance was invested in the barge load of oranges such as were commonly found in the Bradford market place. The sale of these oranges resulted in a slight profit and the proceeds were reinvested, this procedure being repeated with a re sulting gradual development of a small business. Later on, provisions were added to the O Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 line and the active management of the firm was placed in the hands of George Morrell’s son, John. It is the latter’s name that the firm now bears. Having no children, John Morrell left his busi ness to four nephews and the manage ment of the firm has continued in the family ever since, with members of the fourth and fifth generations now in charge. One of the four nephew's was Thomas D. Foster who was actively in charge of the early development of the company’s business in America. The firm entered the American market by sending an agent to New York City in 1865 although head quarters of the business remained in England for many years after that date. Thomas D. Foster’s selection of Ottumwa, Iowa, as a site for a packing plant was traceable directly to the friendly interest displayed in him on his first voyage to this country by a fellow passenger, Capt. J. G. Hutchinson of Ottumwa, and in 1877, exactly fifty years after the found ing of the business, John Mon-ell & Co. began operations in Iowa. Continued growth of the business has resulted in two more Morrell packing plants, one at Sioux Falls, South Dakota, and another at Topeka, Kansas. The general offices of the company are located at Ottumwa. Morrell’s products are now sold in every state in the union as well as in many foreign countries and a con siderable proportion of this distribution emanates from the Ottumwa plant. Some of the principal products in the wide line offered by John Morrell & Co. include Morrell’s Pride Hams and Bacon and other smoked meats, smoked sausages, canned meats and lard; Yorkshire Farm fresh pork sausage, butter and mince meat; fresh pork, beef, veal, lamb and mutton. The company also is manu facturer of Red Heart Dog Food, now one of the leading brands on the American market. The location of the John Morrell & Co. plant at Ottumwa, Iowa, has meant much in the past fifty-eight years to Iowa, as it has served as a steady cash market for live stock over this entire period and has played an important part in making Iowa products well known to millions of people in the United States and abroad. ( This is the fourth of a series of articles on leading Iowa industries which have been published in The Northwestern Banker. Others will appear in future issues.) 9 S E R V IC E C H A R G E C H A R T Prepared to show the various service charges being applied by Iowa banks on checking accounts, especially base charges for certain balances, number of free checks allowed, and charge for extra checks over allowable number. Northwestern Banker readers are invited to send in their service charge schedules. Average Bal. Average Bal. Average Bal. Average Bal. Average Bal. Average Bal. from from from from from from $0 to $50 $50 to $100 $100 to $200 $200 to $300 $300 to $400 $400 to $500 Name Farmers St. Sav. Bk. Both B anks............ Both Banks......... Parkersburg St. Bk.. Most Banks...... Hartwick State Bk. .. Wilton Savings Bk. .. Iowa Falls St. Bk. ... Farmers State Bk. .... Most Banks............. Both Banks........... . Security Sav. Bank .. Goldfield State Bk. .. First State Bank..... First National Bk,... Both Banks............... Sheffield Sav. Bk...... State Bk. of Allison . All Banks.................. Security State Bk..... All Banks......... ........ M ajority Banks____ Both Banks___ ___ All Banks.................. All Bankg................. Farmington St. Bk. .. Mahaska St. Bk____ All Banks................. All Banks.................. Peoples Sav. Bk....... Both Banks.............. . All Banks.................. All Banks......... ......... Henry Co. Sav. Bank Both Banks.......... . Peoples T. & Sa. Bk. Both Banks.......... . Muscatine Bk. & Tr. Buffalo Sav. Bk..... Davenport Bk. & Tr. West Liberty St. Bk. Solon State Bank.... M t. Vernon B. & Tr. First National Bk.... Fairfax St. Sav. Bk... Most Banks_______ Watkins Sav. Bk...... Farmers Sav. Bank .. Both Banks_______ Both Banks____ ___ Town Independence.. Waterloo..... . Cedar Falls__ Parkersburg.... Hartwick____ W ilton........... Iowa Falls .... Dows.......... .... Fort Dodge . Eagle Grove.... Goldfield . . Belmond......... Thornton......... Hampton........ Sheffield........ Allison........... County Base Free Base Free Base Free Base Free Base Free Base Free Extra Charge Checks Charge Checks Charge Checks Charge Checks Charge Checks Charge Checks Checks Buchanan___ 500 Black Hawk.... Black Hawk ... 1000 Butler.............. *50 fé H ardin______ 500 Poweshiek....... 500 Muscatine 500 Harcfin Wright........... 500 W right______ Wright Wright Cerro Gordo.... Franklin.... ..... Franklin Butler Sac.................. Appanoose___ Allerton__ __ _ Wayne._____ Wapello........... Wayne....... ..... Creston__ __ Union Des Moines..... Polk................ Keokuk......... Farmington .... Van Buren___ Oskaloosa........ M ahaska____ Taylor__ ____ Davis............... Indianola...... Warren Fairfield.......... Jefferson_____ B urlington__ Des Moines .... Cedar Rapids Mt. P leasan t.. Henry____ __ Iowa City..... . Johnson.......... . Riverside...... Washington .... Lone Tree___ Johnson.......... . Muscatine___ Buffalo...... Davenport...... Scott......... ...... West Liberty Muscatine___ Solon............. . Johnson_____ Mt. Vernon..... Linn__ _____ Marion......... . I.in n . Fairfax............ Linn .......... .... Benton............ W atkins_____ Benton............ Victor.............. Iowa........... .... Grinnell__ __ Poweshiek___ Newton Jasper 5 . 0 500 500 10 5 10 5 10 10 10 1 Free (Í 500 500 0 5 cial A 0 0 0 15 15 15 Chec k for “ “ 0 0 0 25 20 20 0 35 0 25 Analy zed Each $10.00 Balan ce (i U “ (( it a (t u a u u u U ic u u it u 15 0 (( 20 40 40 20 30 30 'll 0 25 Al 40 *500 *500 *500 *500 *500 500 500 500 1000 500 500 500 500 500 500 500 500 500 500 500 5 5 500 0 750 500 0 1000 500 1 Free 10 5 10 10 5 15 10 5 5 5 250 250 500 7 5 10 0 250 250 5 0 500 1000 500 750 500 500 1000 5 6 10 10 7 16 10 10 0 0 500 1000 500 500 10 10 4 5 5 5 10 5 5 8 Acc ounts over $ 100 A nalyze d U u Chec k for 250 10 0 10 500 10 250 10 0 10 500 15 0 10 10 U u u 40 u Each $10.00 Balan ce 0 10 0 15 0 15 0 20 0 10 0 15 0 10 0 15 o 15 0 20 0 15 0 25 0 20 0 30 0 0 0 0 n 0 25 25 20 20 9^ 30 40 30 40 40 35 40 H 40 10 0 250 0 12 11 10 0 0 0 15 10 15 0 0 0 20 13 20 30 30 40 0 0 o 0 0 15 15 10 0 0 0 20 20 15 0 0 25 20 20 30 40 500 10 10 10 15 10 15 0 0 20 0 500 15 10 0 0 8 0 0 20 1 Che ck Eac h $10. 00 Bal ance 0 10 0 15 20 40 40 30 40 ,, *500 *500 *500 500 10 Over $50 U nusuall V Acti 5 0 5 0 1 Free Check for Ea ch $20. 0 15 0 20 0 500 10 0 15 1 Free U 0 6 0 15 f or Ext ra Che cks Un less U nusual 500 500 500 5 15 3 500 *No C harge Over $100 Analy zed 0 10 0 20 0 30 0 0 8 0 8 0 12 0 Over $50 U nusual lv Acti ve, A nalyze d 40 40 12 20 ve Acc ounts An a 1y zed 10 0 15 0 20 00 Ave rage B al ance 25 0 Analv zed Check for Ea ch $10. 00 Av. Bal. 40 30 30 30 40 U u u u ly Acti ve Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 45 30 U u u « u 10 5 o o 10 is Men tioned Elsew here 0 0 April 1935 . 10 SH A LL WE HAVE Politicians or Bankers Run the Federal Reserve System? (Editor’s Note—Although NO BA N K ING C R ISIS faces the country today, the Administration is asking Congress to pass the “Banking Bill of 1935,” which will revolutionize the hanking system of the United States, without allowing prop er time for debate and study of this hill. The hill places the Federal Reserve sys tem in the POLITICAL control of the President, to operate as he pleases—a procedure which is unsound in theory and would be worse in practice. Read carefully this excellent article by Clarence W. Fackler, Ph.D., which was written especially for The Northwestern Banker, and see for yourself what a “fool piece” of legislation this is in almost every particular.) EEMINGLY never weary of repre senting itself to be a jack of all trades, the Government is about to try its hand at the public control of com mercial banking—still a private business in the United States. But, not only does it believe itself to be more proficient than private interests in this domain, as in almost every other one, but it still seems unable to shake the idea that credit ex pansion is anything less than the pre cursor of industrial recovery. Anyone, however, who has cut his eyeteeth must surely realize by this time that the pro posed bill, while omitting all reference to a “ credit authority,” a “ central bank,” or the “ nationalization of credit,” could scarcely accomplish any more by the conspicuous insertion of these words in its provisions. Even a hasty reading of the proposal, which the administration has dubbed the “ Banking Act of 1935,” shows that to enable the politicians to dabble in banking, more radical changes in the country’s credit system have not been proposed in recent years by any responsible authority., And, because few of the new rules are constructive in any real sense of the word, there appears to be little or no desire to improve the present banking system.- Indeed, it can more easily be demonstrated that the sponsors of the new bill, while professing to chasten those interests which they have riddiculed as “ money-changers,” are striving for centralized power to control the man- S Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 They still believe that business will re cover, if only credit is heaped higher upon the banking counters. They forget that sick horses are never cured simply by piling more hay in their mangers. And so they do not realize that in such a weakened condition, it is today impos sible for business to digest the growing volume of bank deposits, which the Gov ernment makes possible by its spending orgies. Instead of increasing bank credit, only to see its velocity decline, the ad ministration should first try to get busi ness on its feet again. For, like making more gold dollars by devaluation, and By CLARENCE W. FACKLER more paper dollars by purchasing silver, Assistant Professor of Economics New York University manufacturing more credit dollars by selling Government bonds is as ineffective as whistling jigs to a milestone. In addition to this misconception, ufacturing and use of bank credit. there is apparent throughout the bill a Politically astute, these strategists have strong adherence to erroneous principles no wish at the moment to start the mone regarding the conduct of central banks, tary printing presses, and so to earn for to the part that these institutions should themselves the badge of “ inflationists.” play in the control of money and credit, However, there is nothing in the new and to their fiscal relations with the banking bill that makes speculation, ex Federal Government. The main objec travagances, and financial misdemeanors tions, therefore, lie in the unqualified and impossible. People never seem to learn exclusive political control which is im that if such pottage is permitted to leave posed upon the Federal Reserve System, the commercial banking kitchens of any in the encouragement given to the use country, their unsavory odors are bound of short-time funds for long-time use, in the end to drive away many cash cus and in the reconstruction of the Federal tomers. But the political chefs do not Reserve Banks into non-liquid and into promise that the control of commercial what must eventually be unsafe insti banking by the Government will be any tutions. less nauseating. Neither do they guar B oard M em bers antee that it will be any more successful than the operation of the railroads dur From the argument that the expansion ing the World War, or any less expensive of bank credit might get out of hand, to the public than the Federal manage springs the motive for concentrating con ment of the postal system is today. They trol in the Federal Reserve Board, which only make clear that some of the old is to be, as now, subjected to political recipes will not be followed, and that (presidential) determination. Member greater reliance will be placed upon how ship on this board will require the ability the credit chowder tastes. Such de to formulate economic policies as well pendence upon the whims and human im as monetary ones. Supposedly, there pressions of political supervisors to con fore, any economist by name or by pro trol modern-day banking is bound to cre fession will qualify, who has spent ate skepticism. enough time cloistered in thought, orat ing before the microphone, or writing F aulty A rgum ents lengthy manuscripts on social planning. To begin with, the major premise ad One can only hope that the destinies of vanced by the proponents of more inten the country’s banking machinery are sive Federal control of banking is faulty. never subjected to the fancies of such The Author of This Article Explains in No Uncertain Terms W hat the Bankers of the United States Could Expect Should the "Banking Bill of 1935," As It Now Stands, Be Made a Law 11 dreamers. Of course, anyone who is at all familiar with the plans of the philos ophers at Washington these days are not surprised that this bill makes it possible for the President to appoint and retire the Reserve Board members at will. And, though the pension basis is not entirely clear, to retire board members at the age of 70 with an emolument will not pos sibly cause much alarm. But, one will be as amazed as the gaping rustic when he perceives that any governor of the board, who is appointed even for a day, after reaching the age of 65, is appar ently eligible for a $12,000 pension. Member banks in each district will still be able to choose their Class A and B directors. But their selections for the office of governor-chairman, and of vicegovernor must be approved politically. Two Class C directors, and a person to take over the duties of the Federal Re serve Agent, all appointed by the Re serve Board, will increase the Govern ment representatives in each bank from three to five. What is more important, however, is that through the politicallyapproved governors, responsible only to it, the Federal Reserve Board will be able to execute its decisions respecting re discount rates and open market policies without unnecessary delay. For, according to the bill, the Federal Reserve Banks will be compelled to in vest their funds only in ways approved by this board. They may, for example, be forced to buy Government securities or the obligations of recognized agencies of the Government. In this manner, ways and means are provided for the expansion of Government credit on fav orable terms, regardless of what rating it would deserve in a free market. This is a great deal like a gate-crasher telling the management of the entertainment where he will sit. D om in ate B anking System Once in its seat, the Federal Reserve Board will dominate the affairs of the entire banking system. Notice will be given at once that member banks may abandon their critical and careful scrut iny of loans. For the Board can decree, as could any monarch of old, that any asset is sound, even though it is not. Saleability and worth can be made sec ondary. Furthermore, by proclamation any maturity is satisfactory for purposes of rediscounting or sale to the Reserve Banks no matter how remote it may be. Even a twenty-year loan by a member bank in Oregon on Florida real estate, might be an extremely satisfactory risk. The extent to which short-time funds can thus be loaned for long-time ven tures, merely by the Reserve Board’s declaration of soundness is phenomenal. From the point of view of social security it is, however, most disheartening, for https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the lessons of the last decade are com pletely ignored. According to the pro visions of the bill, commercial banks will be permitted, in fact induced, to ex pand their mortgage banking business. Loans on real estate mortgages can be made up to an amount equivalent either to all of a bank’s capital and surplus, or to 60 per cent of its time deposits, whichever is the larger. But, this rais ing of the loan limits on real estate mort gages from 50 to 60 per cent of the time deposits, and from 25 to 100 per cent of the capital and surplus is not enough. The authors of the bill have raised the value of the real estate for lending pur poses from 50 to 75 per cent. And, as an additional incentive, they have ex empted loans for industrial purposes from these restrictions, if made in coop eration with the Reserve Banks or the Reconstruction Finance Corporation. On such terms as these, about four billion dollars in real estate loans could be made available at once. And, to throw the helve after the hatchet, stockholders in national banks after July 1, 1937, will be relieved from double liability. How foolish it is, then, to expect the commer cial banking system to be safer, and the countryside more secure! Bank C redit Under these circumstances, member banks will not be forced any longer to offer extremely liquid and high-grade business paper, or their own promissory notes with collateral in order to increase their legal reserves. Nor will their sales to the Reserve Banks be limited to Gov ernment securities and bankers’ accept ances. Member banks will, therefor, find it easier to obtain paper currency should depositors storm the gates for money. Even poorly managed institutions can stop bank runs quickly, if the Reserve Board in some way can for their benefit stretch its definition of sound assets. Whether any expansion in business or in real estate, once started, could be curbed before widespread distress ap peared is highly questionable. The Treas ury’s gold stocks in dollars are so large (from imports and devaluation) that havoc might be done long before a gold shortage would bring people to their senses and stop the boom. Very often has it been demonstrated that the encouragement and restriction of bank credit is extremely difficult, and so there is always the tendency for the amount of it to be either excessive or next to nothing. But such experience de creases the courage of the Administra tion not one whit. For, besides assum ing control over the open market opera tions and the rediscount rates of the Reserve Banks, the Reserve Board is granted the power by the bill to change the reserve requirements for member banks in any district or class of city. Obviously, higher rates in some places would attract funds from localities where returns were smaller, and thus restriction would be defeated. Undaunted as the ancient Perseus with the possibilities of such failures, the au thors of the bill, nevertheless, move for a reduction in the reserve requirements for Federal Reserve notes. If the bill is enacted into law, the Reserve Banks will need to keep hereafter only 40 per cent of their notes in gold certificates, instead of having to keep an additional 60 per cent in either eligible business paper and/or Government bonds. On this revised basis, from 20 to 25 billion dol lars of Federal Reserve notes can be issued. Obviously, should an over-ex tension of commercial bank credit occur, and runs begin on the member banks, the Reserve Banks will have plenty of paper currency to satisfy whatever de(Turn to page 28, please) 44T h e B a n k in g A ct o f 1 9 3 5 ru d e ly sh a tte rs an y b e lie fs th a t th e A d m in istra tio n has tu r n e d c o n se rv a tiv e . A s tu d y o f it reve a ls th a t an y o b je c tio n s w hich th e P r e s id e n t has h a d to a ic e n tra l b a n k ’ h ave been in n a m e o n ly . M o re o v e r, it is p la in th a t no a tte m p t has b een m a d e to g iv e th e b a n k in g p r o b le m th e c a re fu l s tu d y w hich it d e se rv e s. I n ste a d , th e e n tir e b a n k in g s y ste m is to be su b je c te d to th e w ish es o f th e P re sid e n t. T o g e th e r w ith his co lle a g u e s, he can e x p a n d e ith e r c u rre n c y o r c r e d it fo r th e G o v e rn m e n t’s use in so cial e x p e r im e n ta tio n . T o m a k e th is p o s s ib le , m a n y ru les o f so u n d b a n k in g h ave been e lim in a te d . H ow a n y A d m in is tr a tio n can b e so M a ch iavellian a n d so tw o -fa ced as to ta lk c o n c u rre n tly a b o u t im p r o v in g th e social se c u r ity o f th e N a tio n , is b e y o n d an y rea so n a b le p e r s o n ’s im a g in a tio n . C erta in ly w ith d isa ste r w r itte n on a lm o st e v e r y p a g e o f th e n ew b a n k in g b ill, it w o u ld b e b e tte r to ta lk less o f p la n n in g , a n d re s o r t to th e tria l a n d e r r o r m e th o d on all fr o n ts .” Northwestern Banker April 1935 12 Brief News of Iowa Banks UMBOLDT county has three banks, two at Humboldt and one at Renwick, and the following charges are made on checking accounts, which were adopted since the first of the year: A steady charge is made on all checking accounts of 50 cents per month. Two cents is also charged for every check drawn against the account. H THE CENTRAL STATE BANK, Mus catine, makes the following charges on checking accounts: Fifty cents per month on all checking accounts where two or more checks have been drawn. Three cents for each check written and 3 cents for each check depos ited to the account drawn on other banks. As a basis of analysis 4 per cent interest is figured on 80 per cent of the loanable baffince. THE VICTOR STATE BANK, Vic tor, have a minimum service charge of 50 cents per month on all checking accounts. Three cents is charged on each check drawn against the account and 3 cents for each out of town check deposited to the account. If fewer items are drawn or dedopsited to amount to 50 cents the 50 cent charge applies, if more items are deposited or drawn against the account to amount to more than 50, then the full amount is charged to the account. Illustration: 30 items at 3 cents each, 90 cents. CHAS. FRUSH, vice president, Farm ers State Bank, Jesup, spent the winter at Long Beach, California, and is expected back about the middle of April. THE BENTON COUNTY Savings Bank, Norway, is not a member of the F. D. I. C. and reports a steady increase in deposits ever since opening up after the national banking holiday. Deposits increased about $30,000 in the last year and now are around $230,000. THE WALCOTT TRUST & Savings Bank, Walcott, had a deposit gain of $100,000 in the last year and are now near ing the half million mark. Two and onehalf per cent interest is paid on deposits. By J. A. SARAZEN Field Reporter THE WEST LIBERTY State Bank, West Liberty, which opened as a new bank last June already have deposits of over $500,000. Capital is $50,000, surplus and undivided profits of $11,000. The rate of interest paid is 2y2 per cent. R. S. Kirkpatrick, formerly in receiver ship work in Iowa City, is vice president and cashier. OTTO G. OLSON, president, Citizens National Bank, Belle Plaine, says he be lieves in service charges only when not used to excess, His bank charges 50 cents on checking accounts which do not average over $50.00 per month. No charge is made for checks 'written. A charge is made of 3 cents on each out of the county check deposited to customers’ accounts. This bank was released from Senate File 111 March 19, 1934, with deposits of $266,000 and now are over $675,000 for a gain of around $400,000 during the past year. Two and one-half per cent interest is paid on deposits. THE FARMERS NATIONAL BANK, Webster City, discontinued accepting de posits on an interest bearing basis over a year ago. Officers say even though no more deposits are accepted on an interest bearing basis deposits continue to increase and we have shown an increase of about $300,000 in the last year. Total deposits are now around $1,000,000. AT MUSCATINE, the Muscatine Bank & Trust Company pays 2 per cent in terest on savings and six months’ C. D.’s and 2% per cent interest on 12 months’ C. D.’s. Restrictions are made on the maximum amount accepted from any one new depositor on an interest bearing basis which is $1,000. Maximum amount ac cepted in any one month on an interest bearing basis is $250.00 from any one depositor. THE NODAWAY Valley National Bank, Villisca, make the following service charges on checking accounts: Average balance of less than $100, 3 cents for each check written. Balances $100 to $250, 10 E. F. SORG-, cashier, Farmers State free checks, extra 3 cents each. Balances Savings Bank, Independence, reports a $250 to $500, 20 free checks, extra 3 cents very substantial increase in deposits since each. From $500 to $2,500, 25 free checks, last June when the bank moved into quar extra 3 cents each. ters formerly occupied by the Buchanan WATSON ENYART, who has been County National Bank. Deposits were then about $700,000 and today are about with the state banking department for sev eral years, joined the Jasper County Sav $1,500,000. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 ings Bank, Newton, as vice president March 1st. He will spend a great deal of his time taking care of the bank’s inter est on the outside. W. T. ROBINSON, formerly connected Avith the Citizens National Bank, Hamp ton, and more recently cashier of the Grinnell State Bank, affiliated himself with the Newton National Bank, as cashier, effec tive February 10, 1935. O. L. Karsten, formerly cashier, is now executive Auee president. A. J. WARNKE, deputy manager, IoAva Savings Bank, Marshalltown, said it is expected this bank will be released from Senate File 111 about the middle of April. THE TAMA STATE Bank, Tama, has capital structure of $20,000 common stock, $20,000 preferred and $28,000 sur plus and undivided profits. F. W. LINDAHL, formerly cashier of the Commercial Savings Bank, Marion, has accepted a position as assistant cash ier of the Center Point Walker Bank & Trust Company, and will spend most of his time at Walker as manager of that office. K e ith VaAvter, p re sid e n t, w ill noAv m ake h is home a t M ario n , h a v in g p u rch ased a hom e th ere a n d m oved fro m W a lk e r M arch 1st. OFFICERS NOW at the Grinnell State Bank are C. A. Frasier, president; A. J. Blakely, vice president, and IL. C. Mc Cleery, cashier. C. A. Frazier came from Osceola, Ne braska, about one year ago. II. C. McCleery, Avho has been assistant cashier for many years, was elected cash ier March 5, 1935, and succeeds W. T. Robertson. SERVICE CHARGES in effect on checking accounts at Fort Dodge are as follows: Maintenance charge, 25 cents; checks on self, none; clearing house items, 1 cent; items on reserve cities, 3 cents. O th er p o in ts : .01 to $9.99, 3 cents. $10.00 to $24.99, 4 c e n ts; $25.00 to $49.99, 5 c e n ts ; $50.00 to $99.00, 7 c e n ts ; $100.00 a n d over, p e r h u n d red , 8 cen ts; checks draAvn a g a in st account, 3 cents. As a basis of analysis, 5 per cent inter est is figured on 66 2/3 per cent of loan able balance. In other words, if sufficient balance is maintained, all above charges can be offset. 13 THE STATE BANK, Fort Dodge, has deposits of about $1,250,000 with cash and due from banks of about $850,000. The capital is $100,000 which is common stock. THE STATE NATIONAL Bank, Iowa Falls, which opened as a new bank May 24, 1933, now has deposits of about $600,000. This bank is not a member of the Federal Deposit Insurance Corporation. Time money here is less than $50,000 and savings accounts amount to only about $ 8 , 000 . THE FARMERS SAVINGS Bank, Danbury, make a charge of 50 cents per month to individuals on checking accounts which fall below $50.00 during the month and on which more than one check has been drawn. On merchants’ accounts a charge of $1.00 is made if the balance falls below $100.00. Three cents is charged deposi tors for each out of town check deposited to the account without the average balance is $500.00; in that case no charge is made. THE EXCHANGE STATE Bank, Col lins, allows one free check or one foreign item deposited to the account for each average balance of $10.00 maintained. Additional checks drawn or items depos ited are charged at the rate of 3 cents each if sufficient balance is not main tained to absorb these charges. Illustration: If balance is $50.00 dur ing the month and five checks are drawn and five foreign items deposited, the charge would be 15 cents on such an account. Merchants’ and business firms’ ac counts : Average daily balance, $0 to $49.99, base charge, 50 cents ; credit against charges, 40 cents; average daily balance, $50.00 to $199.99, base charge, 25 cents; credit against charges, 4 cents for each $10.00 ; average daily balance, $200.00 up, base charge, none ; credit against charges, 4 cents for each $10.00. Debits against the account are 4 cents each. AT TAMA, the Tama State Bank makes the following charges on checking ac counts : Accounts falling below $75.00, 50 cents base charge, five free checks and addi tional checks, 3 cents each. Accounts go ing below $50.00, 50 cents base charge and 3 cents for each check written. THE WRIGHT COUNTY Bankers Association was reorganized last month, with C. J. Birdsall, cashier, First National Bank, Clarion, as president, and O. G. Uhr, cashier, Security Savings Bank, Eagle Grove, as secretary. THE FIRST NATIONAL Bank, Clar ion, recently installed a Recordak ma chine to help preserve records and take care of the additional business coming into the bank. This makes about five of these machines in use in the state. THE MUSCATINE BANK and Trust Company recently adopted a charge of 5 cents per hundred on all transfer drafts on depositors who use accounts for that purpose only. No interest is allowed on THE POW ESHIEK COUNTY Sav ings Bank, Brooklyn, makes a service charge on cheeking accounts of 3 cents for each check drawn against the account and 3 cents for each out of town check de posited to the account. The only excep tion is when counter checks are used and in such cases no charge is made for cash ing them. THE FIRST STATE Bank, West Branch, has a service charge on checking accounts which is just a little different than anything I have found and according to F. L. Pearson, cashier, is working out very well. There is really a distinctly different service charge for individuals and an other for merchants. Other than mer chants’ accounts are handled as follows: Average balance under $50.00, 50 cents and 10 free checks allowed. Balances from $50.00 to $200.00, 25 cents, with one free check for each average balance of $10.00. Items in excess of the number in the schedule, 4 cents each. Each out of town check deposit to the account to be counted as checks drawn against the ac count. balances when making analysis. This charge is especially intended for chain stores and oil companies who make a deposit and immediately draw a draft for it. THE IOWA COUNTY Savings Bank, Marengo, is making a service charge of 50 cents on checking accounts falling un der $25.00 during the month. One free check is allowed for each average bal ance of $20.00 maintained and additional checks 3 cents each. THE ROWLEY SAYINGS Bank is using the $2.00 per year service charges on all checking accounts, payable 50 cents every three months. Five cents is also charged for each out of town check de posited to the account. THE GRINNELL STATE Bank makes a charge of 3 cents per item on all out of town checks deposited to customers’ ac counts regardless of the amount or days to clear. ALL BUT ONE bank in Hancock county has adopted the service charge on checking accounts of $2.00 per year. One dollar is deducted from the customer’s ac count every six months. Banks using this form of charge are as follows: State Savings Bank, Goodell; First National Bank, Klemme; Farmers State Bank, Kanawha; First State Bank, Britt. The Hancock National Bank, Gamer, did not come in on this service charge but instead has the float and activity charge. Britt and Kanawha also make a charge Account Analysis Slide Rule J. BARCLAY, of the First National *Bank of Mason City, Iowa, has per fected a system to analyze accounts which has proved most practical, and is a tre mendous time-saver. Mr. Barclay analyzes more than three thousand seven hundred accounts per month, just in his spare time. T Illustrated above is the slide mie, specially designed by Mr. Barclay, which he uses to make his analyses. Through the use of the rule, the analysis equation is reduced to simple terms of Balance, Float, and Activity. By setting the slides at those three factors, the rule gives the correct analysis of the account. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 14 on foreign items deposited to the account which is 5 cents up to $100.00 and 10 cents for items over $100.00 or fraction thereof. THE ROLFE STATE Bank, which opened as a new bank last fall, has de posits of about $130,000. Capital is $12,500, surplus $5,000. This bank does not accept deposits on an interest hearing basis and has no public funds. SOME BANKERS in Butler and Bre mer counties are keenly interested in adopting service charges. These two ad joining counties have done very little in the way of applying service charges and a number of bankers mentioned that they were going ahead and make their own setup very shortly. BOTH BANKS at Emmetsburg, the Central Savings Bank and the Iowa Trust & Savings Bank, which were organized in 1929, are running very close on total deposits and footings. Both banks have deposits of around $1,000,000. Capital structure is also nearly the same and reserves that both of these banks can be mighty proud of. Capital of the Cen tral Savings is $30,000, surplus $30,000 and undivided profits of $30,000. This bank paid its first dividend of 6 per cent last year. The Iowa Trust & Savings has capital of $25,000, surplus $50,000, and undi vided profits of $30,000. service charges here are not at all ex cessive. THE UNITED STATE Bank, Cedar Rapids, had a deposit gain of about $150,000 during the last year and deposits are now around $500,000. SERVICE CHARGES used by the Citi zens Savings Bank, Hanlontown, are as follows: to individuals, accounts averaging less than $50.00 are charged 50 cents. Business accounts, 10 cents each is charged for the first 15 foreign items deposited during the month and 5 cents for each additional. THE WALCOTT TRUST & Savings Bank made a profit of $5,600 last year which was added to the reserves; $1,500 was made from service charges alone and If Your Bank Is Robbed HE director of the Federal Bureau of Investigation of the United States Department of Justice makes the follow ing statement with regard to the proce dure to be followed in communicating with the field offices of the bureau in the event of a bank robbery: “The Federal Bureau of Investigation of the United States Department of Jus tice is charged with the duty of investi gating violations of the act approved by the President on May 18, 1934, making the robbery of national banks and member banks of the Federal Reserve System a Federal offense. Since the passage of this act the Federal Bureau of Investigation has been handicapped in the investigation of a number of bank robberies due to the delay of the bank in notifying the bu reau’s field office of the robbery. “The Federal Bureau of Investigation requests that, in the event a robbery should occur in your bank, immediately after notifying the local authorities thereof, you communicate by telephone or telegraph, collect, with the nearest field office of the bureau, giving that office at the earliest possible time all of the details of the rob bery which are available, including a de scription of the participants in the,rob bery, the make, color and model of any automobiles which may have been used by the robbers in making their getaway, to gether with the license numbers of such automobiles and the direction taken by the robbers in fleeing from the bank. In the event it has been observed that the robbers touched any objects in the bank or placed their hands on any furniture or other arti- T Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 cles, such places should be carefully guarded until an opportunity is afforded some competent person to endeavor to develop latent fingerprints which might be thereon. Articles, which may have been left behind by the robbers, should be pre served from promiscuous handling so that any fingerprints thereon will not be de stroyed. “Every member bank of the Federal Re serve System has been furnished with the telephone number of the nearest field office of the Federal Bureau of Investigation, and a list of the field offices of the bureau showing the office address and telephone number is attached. “It is the desire of the Federal Bureau of Investigation to cooperate with all banks to the fullest extent possible in an effort to identify and prosecute those guilty of bank robberies. Your coopera tion in promptly reporting to the nearest field office of the Federal Bureau of In vestigation will be greatly appreciated and will be of mutual advantage in these cases.” Field offices of the Bureau of Investiga tion with which middle western bankers can have quickest communication are: Chicago—1900 Bankers Bldg. Tel. Randolph 6226. Indianapolis—506 Fletcher Savings & Trust Bldg. Tel. Riley 5416. Kansas City—1616 Federal Reserve Bank Bldg. Tel. Victor 3113. Omaha—629 First National Bank Bldg. Tel. Atlantic 8644. St. Paul—232 Post Office Bldg. Tel. Garfield 7509. THE GOLDFIELD State Bank & Trust Company paid a 5 per cent dividend the past year. This bank pays 3 per cent interest on deposits, and is a member of the FDIC. THE FARMERS Savings Bank, Rock Falls, is not a member of the FDIC, pays 3 per cent on deposits. The capital is $10,000 and deposits $90,000. MOST BANKS in Hancock county have adopted the charge of $2.00 per year on all checking accounts. One dollar is deducted from the amount every six months. Banks using this form of service charge are as follows: State Savings Bank, Goodell; First National Bank, Klemme; First State Bank, Britt; Farmers State Bank, Kanawha. The Hancock County National Bank, Gamer, continued service charges already in effect, which includes float and activity. Britt and Kanawha also make a charge on foreign items deposited to the account of 5 cents each. THE F I R S T NATIONAL Bank, Thornton, makes the same charge to cus tomers as non-customers for cashing outof-town checks when the check contains more than one signature. This has stopped non-customers from taking for eign items to merchants for cashing. Your Radio Program T u n e in every Saturday even in g , 6 :4 5 to 7 :0 0 , on Station W H O , Des M oines, and hear th e F in a n c ia l News and Views fea tu re sponsored and presented b y T h e N o r th w e s te r n B a n ker, Des M oines. It w ill be to y o u r advantage to have yo u r custom ers listen to these program s, also. 15 The Effect of the Proposed Public Utilities A c t of 1935 Upon Public Utilities Operating Comp anies Memorandum prepared by COMMITTEE OF PUBLIC UTILITY EXECUTIVES Philip H. Gadsden, Chairman HIS BILL is not a “holding com pany bill.” It has been generally referred to by that term, but the term is misleading. It is really a bill designed to break down private opera tion of public utilities and lead to govern ment ownership. The bill consists of 178 pages of highly complicated and intricate provisions. It is one of the most drastic measures ever submitted to a United States Congress. Title I would eliminate the holding company within five years. By thus de stroying the financial support and the skilled central management of the hold ing company system, it would seriously weaken the operating companies. A previous memorandum discussed this phase of the bill and pointed out the ruinous effects which the elimination of the holding companies would have upon the millions of people who put their sav ings into public utility securities. This memorandum will consider only the pro visions of Title II in regard to operat ing companies, which are of even greater significance. T The very w id esp rea d p u b lic d is cussion w hich th e p ro p o sed P u blic U tilities B ill has aroused has cen tered alm ost en tirely on that p a rt of the b ill calling fo r th e elim in a tion of th e h olding com pany. D is astrous as this provision w ou ld be, it is of no greater significance than th e provisions of the bill relating to o peratin g com panies. Under these provisions a F ederal Bureau cracy w ou ld n ot only assume pow ers h ith erto exercised b y the states, bu t w o u ld so ex ten d these pow ers that th e y w ou ld con stitu te a con dition of G overnm ent M anagem ent w ith o u t resp on sibility. tional output, as measured in kilowatt hours. It gives the Commission more Title II can be analyzed as follows: power over the operating units than has 1. It makes the Federal Power Com ever been granted to a government com mission virtually the manager of the mission in connection with any industry, operating companies, thus nullify with the one exception of the temporarv ing the private initiative and inde government control over the railroads pendent management upon which during the war. American industry is based. These powers represent more than a 2. It directly interferes with the princi transfer of regulation from the states to ple of state rights and largely sets the federal government. In addition to aside the authority exercised by the the regulation of rates and services here tofore exercised by the state utilities com state public service commissions. 3. It leaves competing municipal plants missions, the Federal Power Commission entirely free from any regulation would become practically the manager of whatsoever. the operating companies. The list of 4. It leads directly to nationalization powers is extraordinary. Let us sum of the entire electric and gas in marize them briefly under the following headings : dustry. (1) Control of Rates. Pow ers G iven to th e F ederal P ow er (2) Control of Properties and Manage C om m ission ment. C ontrol of Rates The bill would place under the Com mission’s authority the operating plants In the bill as introduced, the Commis which produce 91 per cent of the na- sion is given, in effect, control over all https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rates. In the hearings before the House Interstate Commerce Committee on March 12, 1935, one of the draftsmen of the bill stated that it was not intended to apply to local retail rates, and that the bill should be amended to make that clear. The Commission’s approval is required for all rate changes which are subject to its jurisdiction, and rate reductions may be made retroactive for two years, as to any complainant. The basis of valuation for rate making purposes is the “prudent” cost of the facilities involved. This is a newr idea. It rejects entirely the idea of “present fair value,” long established by the United States Supreme Court. The prudent” cost is to be determined by the Federal Power Commission in its own judgment, It is a vague term, un related to actual cost or to cost of re placement. It may be affected by hind sight or by foresight or by neither. The power of the federal courts to hear appeals from rulings of the Commission is íestricted by the bill. Courts would have to accept the Commission’s own record of earlier hearings as the sole basis for their consideration. This would block the1introduction of new arguments or new evidence or new facts. Moreover, the bill would require courts to accept the facts as determined by the Commission, if supported by evidence. The federal district courts, which normally determine the facts, are deprived of juris diction under this bill ; their normal fact finding role is absorbed by the Federal Power Commission. C ontrol of P ro perties and M anagem ent Innumerable court decisions have bar red state regulatory commissions from exercising powers of management. This precedent is overthrown by the pending bill which authorizes the Federal Power Commission to exercise detailed mana gerial authority. If anyone doubts that (Turn to page 28, please) Northwestern Banker April 1935 16 R a d io P r o g r a m Presented by the Northwestern Banker, Des Moines, Iowa "The V al ue of Your Checking Account77 P resented here is the tw elfth o f a series o f w eekly broadcasts sponsored by the D e P u y B anking and Insurance P ublications, p u t on th e air at 6 :4 5 to 7 :0 0 p. m . every Saturday evening over Station W H O , Des M oines. In this program o f M arch 2d, Ralph If . M oorhead, associate p u b lish er o f T h e N orthw estern B anker, Des M oines, and the C entral W estern B a n ker, Omaha, is interview ed by Francis R obinson, o f Station WH O . Featured in this broadcast is a discussion by Fred C. A tkin s, assistant cashier o f the B ankers T ru st C om pany, Des M oines, on “T he Value o f Y o u r C hecking A cco u n t” OBINSON: Do you think the aver age customer appreciates the value of his checking account? Moorhead: Unfortunately, no. Most of us take the checking privilege more or less for granted. But actually it’s of great value to the depositor and one of the broadest services your bank renders. Robinson: Well, can you tell me some thing about the advantage of a checking account ? Moorhead : There are many advantages in having a checking account. I believe our audience would like to have them ex plained by a competent banker. So, we’ve asked Fred C. Atkins, assistant cashier of the Bankers Trust Company, Des Moines, to discuss this subject with you tonight. May I introduce you to Mr. Atkins, who will be very glad to answer your questions as to “The Value of Your Checking Ac count.” Robinson : Thanks, Ralph—and good evening, Mr. Atkins. Atkins: Good evening, Mr. Robinson. Now what do you want to know about your checking account ? Robinson: Well, first of all, what is the real value of a checking account? Atkins: A checking account offers five advantages. First, it’s easier and safer to write checks than to carry large sums of money. Second, you understand that your cancelled check acts as a receipt, don’t you? Robinson: Yes—it’s a good receipt. Atkins: In the third place, your check stubs help you keep an accurate record of your expenditures. Fourth, a well man aged checking account improves your credit standing among people with whom you do business. Finally, your regular deposits in your checking account, build up your bank’s deposits and help the bank serve your community. Robinson: I had never thought of that angle. Now, here are some other ques tions: Just what is a bank check? R Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 Atkins: A check is an order drawn by a bank depositor directing his bank to pay a certain amount of money to a person named as payee, and charging the amount against the depositor’s account. Robinson: What is the difference be tween an ordinary check and a counter check? Atkins: A counter check is usually payable to self for cash. It’s for use only over the bank counter. You cash such a check by just filling out the amount and writing your signature. Robinson: Didn’t banks change the form of their counter checks a few years ago ? Atkins: Yes, they did, to exempt the customer from paying the two-cent fed eral bank check tax. Such checks were issued in receipt form and were non-negotiable. The check tax, by the way, was discontinued January 1st of this year. Robinson: Yes, so I understand. Now, Mr. Atkins, supposing I wish to issue a check but have mislaid my check book. Can I draw up any other form which will answer the purpose of a check? Atkins: Any order to pay, written in proper form, binds your bank to disburse that amount according to your wishes. A lumber dealer once wrote a check on a shingle. The shingle was negotiated for cash. Robinson: It’s a good thing he wasn’t a monument dealer. Atkins: Well, in any event, you should stick to your regular check form to avoid any difficulties. Robinson: Here’s my next question: How do you define a certified check? Atkins: A certified check is a custo mer’s check guaranteed by the bank. Robinson: Is it possible to stop pay ment on a certified check? Atkins: No, it’s impossible. When a bank certifies a check, it assumes legal re sponsibility for its payment and the mak er’s account is charged immediately just as though it had been cashed. Robinson: Tell me, please, what is the difference between a cashier’s check and a bank draft? Atkins: A cashier’s check is the bank’s own order to pay, no matter where the item is to be collected. On the other hand, a bank draft is a bank’s check payable against the issuing bank’s account in an other bank. It is, therefore, payable at the correspondent bank, usually located in another town or state. Robinson: What about the cost of handling checks? Is this a large item of expense to a bank? Atkins: Yes, it’s an expensive item. In the larger banks that handle thousands of checks daily, you’ll find several depart ments with many skilled employes who do nothing but handle checks. They must be equipped, also, with costly machinery to clear your checks promptly and effi ciently. Robinson: Does a bank keep a record of all checks deposited? Atkins: Oh, yes. Our records are so complete we can trace back to its source, any cheek we receive, even though the check may be lost. Robinson: I understand that in the larger cities, banks clear their checks through clearing houses. Can you tell me, what is a clearing house? Atkins: A clearing house is an organ ization of several banks in any city or locality to simplify the collection of checks drawn on each other. Robinson: Well, how is this done through a clearing house? Atkins: In a city with several banks and no clearing house, each bank must send a messenger to every other bank in the city to present checks for payment. In the larger towns, this would be a long and expensive process. Where you have a clearing house, messengers from each 17 bank meet at a specified hour, exchanging their checks and settling their differences by clearing house receipts. Robinson: I can see where this would save a lot of time and effort. Now, how did the clearing house idea originate? Atkins: Entirely by accident. Back in 1680, two messengers of banks in oppo site ends of London met in a tavern one day for a cup of coffee. They found the totals of their clearings were identical, so traded clearings and arranged to meet the following day. Other bank messengers took up this idea, meeting in the same tavern at the same time, to exchange clear ings. That’s the origin of the clearing house plan. Robinson: Does a bank on an average day, receive many checks that cannot be paid? Atkins: Unfortunately, yes. Many people either purposely or otherwise abuse the checking privilege. Robinson: What is the principal rea son for turning down a check? Atkins: Insufficient funds is the most common cause. Many customers are care less in keeping a record of their balances. On the other hand, some depositors just shut their eyes and write checks, fully aware that they have insufficient funds to cover them. This, of course, is in viola tion of the law. Robinson: Can you explain, please, what’s meant by an “overdraft?” Atkins: An overdraft occurs when a bank pays a check against insufficient funds, either by mistake or by previous agreement. Robinson: How do you handle over drafts? Atkins: The maker of the check is no tified at once. This is always an unpleas ant task for the bank. Invariably, the writer of the overdraft believes special attention should be given his case. The bank, however, must treat all depositors alike. Robinson: Mr. Atkins, how can pay ment be stopped on a check? Atkins: Notify the bank on which it is drawn that you wish payment stopped and it will be returned, marked “payment stopped.” Robinson: Do you have many “stop payment” requests? Atkins: Yes. The number of such re quests is almost unbelievable. Robinson: What is the usual cause for such requests? Atkins: Ordinarily it’s the loss of a check, either misplaced, lost in the mail or accidentally destroyed before it’s paid. Robinson: What should I do if I want to stop payment on a check ? Atkins: First, call at your bank and find out whether the check has been paid against your account. If it hasn’t been paid, then issue a stop payment order in (Turn to page 31, please) T HAVE JUST RETURNED FROM 1 A TWO MONTHS business trip through the East and during that time called on all of the larger banks and in surance companies from Chicago to the Atlantic coast. In all of my contacts I found only two executives who approved of the Roosevelt policies in toto. All of the others expressed the opinion that the administration is putting two much em phasis on REFORM and not enough on RECOVERY, but that in spite of ad ministration hurdles which are many and difficult, that the United States would continue to go forward in the months ahead. L A U R I TZ O. HAUGEN, assistant vice president of the City Bank Farmers Trust Company of New York, invited me to have lunch with him in the private dining room of the National City Bank while I was in New York. Mr. Haugen is the son of the late Congress man Haugen of Iowa, who was co-author of the McNary-Haugen bill. Larry Haugen is in constant touch with the political situation in Washington, giving especial attention to banking leg islation. hugh J ohnson proved to be a master debater when he poked his rhetorical pins in the fallacious economic baloons of Father Coughlin and Senator Long, and gave expression to his feelings by saying: “There’s less national harm in 100 of our worst gunmen than there is in these two political racketeers. I feel so strong ly on this subject that without any strings of any kind, I should like to pledge my self to fostering a non-partisan, non political nation-wide movement to exter minate the influence of this pair of politi cal termites.” G eneral ALKER D. HANNA, president of W. D. Hanna and Company, In vestment Bankers of Burlington, has been named Republican Committeeman from the First Congressional District of Iowa, subject to approval of the State Party Committee. Mr. Hanna has long been active in the affairs of the Republican Party in his district and the state and brings to his new position a thorough understand ing of the business and economic needs of his territory. W OW THAT THE INCOME TAX REPORTS have all been filed, I wish some of the literary-inclined braintrusters would rewrite the income tax blanks in common, ordinary, every-day, understandable English! Or perhaps I am wrong, but if so, will you kindly give me your interpretation of this “clear and concise” paragraph: “The surtax on any amount of surtax net income not shown in the table below is computed by adding to the surtax for the largest amount shown which is less than the income, the surtax upon the excess over that amount at the rate in dicated in the table.” N OME OF THE HARVARD BOYS don’t seem to think so much of DIC TATOR HITLER. At least the National Students League of Harvard University demanded that the wreath placed in Appleton Chapel in memory of Germany’s war dead be removed at once. The wreath bearing the swastika emblem was placed by BARON KURT VON TIPPELSKIRCH, German counsul general in Boston. The League’s protest said: “The Na tional Student League of Harvard Uni versity demands the immediate removal of the Nazi wreath in Appleton chapel. “That the friends and representatives of the Hitler government should dare to lay this swastika wreath in the name of peace at the precise moment when Hitler throwing aside all pretense, is arming his enslaved nation to the teeth is a fitting sign of the obscene hypocrisy which is typical of Fascist decay.” S N SPITE OF ALL THE VILIFICA TION which has been poured on the heads of the banking fraternity of the country, the experience with the R.F.C. has shown that the banks have paid back more of the money which they have bor rowed than any other group. Out of loans aggregating $1,800,000,000, bank ers have paid back $1,200,000,000. The railroads have been the poorest pay and out of $450,000,000 borrowed, they have only paid back $70,000,000. All of which is only additional proof that when the complete banking story of the last five years is written, it will show up a great deal better than many have anticipated. (Turn to page 41, please) Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 18 ARE W E GO IN G TO HAVE INFLATION? (Continued from page 8) duced or forced to take payment in cur us of countries, which checked their pe rency. Butter was selling at $12 a pound; riods of inflation and brought it, at least, tea at $90; coffee at $12, and flour over to a temporary standstill, but if it is the $1,500 a barrel. Hence the expression, will of the people to continue a prosperity, “Not worth a Continental.” which they do not realize is false, and the France went through a similar situation, Administration hasn’t the courage to halt when immediately following the French what they realize can only bring disaster, Revolution 400,000,000 francs were is will they listen to the voice of the people, sued, known as “Assignats,” deriving or court disaster? their name from the assignment of cer Today, most of us are not only debtors tain confiscated church properties, as se but creditors. We have debts in the way curity for the franc, and although the orig of mortgages, business and personal obli inal issue was 400,000,000, by the autumn gations and the popular opinion is that of the same year, 1790, an additional with inflation these debts will be paid in amount of 800,000,000 francs were issued a depreciated dollar, but don’t lose sight under a solemn promise that this would of the fact that savings, insurance policies be the last and by 1796, the total amount and all debts owing to us will be paid back outstanding had reached the staggering in the same depreciated dollars. This is sum of 45,000,000,000 francs. one reason why prices of tangible goods Coming down to a later date, you are rise so rapidly because immediately infla all familiar with what has recently hap tion becomes rampant, there is a mad pened in our own generation with France scramble to turn cash into something tang and Germany; particularly, Germany. I ible before the cash depreciates further. will touch on this very lightly as it is all The farmer would benefit materially as fresh in our memories. Suffice it to say, his income is derived from the price he that before the war, the total money in receives for his products and this would circulation in Germany had averaged keep apace and probably run ahead of his 6,000,000,000 marks. By 1924, after the living costs; whereas, the wage earner’s printing presses had been running, the compensation would lag behind. authorized circulation was 518 billions of Its C ontrol billions. No wonder that a box of matches sold for approximately 6 billion marks. We all know that many crimes have Please do not get the impression that I been committed by big business. But, it anticipate that we will ever have inflation is not good business to disrupt the entire in this country, either credit or currency, organization because one department has to an extent such as happened in Ger been mismanaged, particularly, at a time many, or even in France. But I wish to when the business is losing money and point out the greatest danger of inflation, there is a question about its future, and particularly currency, is that as money the executives are all discouraged. We decreases in value, prices rise, expenses have heard much about what can be done increase, more is required, and as require to control inflation. The ability to do this ments incrase, more is printed, each time will be in the hands of the government, at a lessened value. but can and will our government do it? Will we be able to regulate our actions Its Effect when everything appears prosperous? Was France able to do it from 1914-27, How will it affect the average man? Living costs will continue to rise but the when it had unbalanced budgets; large wage earner and the man with a fixed in government borrowings from her central come will not keep apace. That is evi banks, rehabilitation expenditures; panics denced by the fact that although com and crises ? The French people, nor the modity prices have advanced 33.6 per government were able to stop the mad cent, wages have only advanced a maxi rush to more and more inflation. This mum of 20 per cent. There is always a kept on until it ran itself out and confi lag. Business will prosper but it will be dence was again restored by revaluation a false prosperity, as it will not be main of the franc at about 20 per cent of its original value. tained. It is frequently said that once inflation By the time inflation is at a white heat, starts, you cannot stop it. This is not there is no doubt measures will be enacted true, for we have many examples before which should enable our government to Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 put on the brakes. The big problem is, “Will the brakes be applied?” Inflation is like a shot in the arm. It’s easy to take but hard to stop. When you become slowed down, another shot peps you up again and so it goes, until it becomes a habit. As shots of inflation are given, the public receives the pleasant effect and de mands more and more. Let me again point out that as history shows, the great danger of inflation is—can and will it be controlled ? If all these measures that tend toward inflation have been going on, you can rightly ask the question, “Why isn’t in flation more pronounced?” The answer is that there are presently many retard ants that act as brakes, chief of these be ing fear and uncertainty. If these two were removed, the vast reservoir of credit would be released and business men would avail themselves of credit opportunities and push ahead, once they had some idea where they were going. Methods by which individuals can coun teract the ill effect of inflation are as follows: Exchange money for commodi ties, real estate and common stocks. This, however, is not quite so simple as it sounds. While we believe commodity prices will continue to rise over the next few years, that industrial production will have a sharp advance, that real estate will revive and prices advance, that common stocks will perhaps double—there is the matter of what, when and how to do it? Personally, I don’t think we need in flation. There is such a back-log of busi ness requirements, built up over the last four or five years that if industry once could have confidence restored to the extent that it was not going to be legis lated out of business—in other words, if the government would let business alone, stop kicking it when it is down and defer a number of the panaceas until such time as normal forces have restored business to some degree of health, the necessity for artificial measures would cease. Threatened government ownership of railroads, the threat of government con trol of banking, the proposed Rayburn bill to eliminate holding companies—all of these are confidence disturbing factors. Don’t kill the patient; help him to get well and in an effort to help him, don’t give him Castor Oil for a broken leg. 19 A Letter That A Country Meat Packer Misht W rite To His Banker: D ear F red : I’m w ritin g you b eca u se w e’re b o th in terested in th e b u sin ess fu tu r e o f tow n s in th e Corn B elt— tow ns w ith p o p u la tio n s o f an yw here fr o m a few h u n d red up to a h u n d red th ou san d p e o p le . W e’re b oth in terested in the w elfa re o f fa rm ers w h o se trade h elp s k eep th ese tow ns alive. I w ant these fa rm ers to p ro sp er and to co n tin u e in th e b u sin ess o f ra isin g liv esto ck . Y ou w ant th em to p ro sp er b eca u se that m ean s p ro sp erity fo r the m en served by y o u r b an k . D u e largely to paved road s, truck tran sp ortation and o th er eco n o m ic fa c to r s, th e in terio r or d irect m ark ets have b een receiv in g m ore and m ore o f th e fa r m e r ’s liv esto ck b u sin ess— b u sin ess that fo r m e r ly w ent by rail to th e cen tra l m ark ets. F arm ers lik e to sell direct to th eir lo ca l m ark ets fo r a n u m b er o f very g o o d reason s, c h ie f a m o n g w h ich is the fa ct that they save c o n sid era b ly in m a rk etin g ex p en se, and elim in a te so m e o f th e risk s and lo sse s. As a resu lt, co u n try p a ck in g h o u ses h ave b een grow in g steadily. T h ey h ave b u ilt a d d itio n s to th eir p lan ts, fu rn ish ed m o re e m p lo y m en t, and have b eco m e an im p o rta n t fa cto r in the p ro sp erity o f m an y m od erate-sized Corn B elt tow ns. A few years ago, p a ck in g b o u ses located at th e big cen tral m ark ets d is co v ered that th ey w eren ’t g ettin g as m an y h o g s as fo rm erly . T h e cou n try p ack ers w ere in te r c e p tin g so m any h o g s at th eir sou rce that the cen tral m a rk et p a ck ers so m etim es fo u n d th em selv es short o f sla u g h ter su p p lies. T h ey im m ed ia tely w en t ou t in to th e cou n try to co m p ete fo r th e hogs. T h e resu lt was th at in stead o f the fa rm er h avin g to sh ip his liv esto ck lo n g d is tan ces to m a rk et, h e fo u n d that th e m arket had b een b rou gh t to h is farm gate. T od ay, h e h as n u m ero u s local o u tlets available to h im , and in cid en tally, h e h as co m p etitio n o f the k een est sort, righ t out in th e cou n try. R e m em b er, h e still has access to the cen tral m ark ets exactly as b e fo r e . Can you im a g in e a m o re d esira b le set-up fo r the fa rm er? T o illu stra te: T h e E x ten sio n S ervice o f Iow a State C ollege analyzed the record s o f an Iow a co o p era tiv e liv esto ck sh ip p in g asso cia tio n fo r the p eriod D ecem b er 1, 1 9 3 3 , to D ecem b er 1, 1 9 3 4 , and fo u n d that the m an ager o f this a sso cia tio n , by se llin g d irect to lo ca l o u tlets had n etted fo r h is patrons an average o f 13 cen ts p er h u n d red p o u n d s over the C hicago top fo r th e en tire p e r io d o n all classes and grades, all ex p en ses co n sid ered . I am n o t citin g this ex a m p le as p r o o f that th e lo ca l m ark ets alw ays offer the h ig h est net dollar. I do fe e l, h o w ev er, that th e fa v o ra b le e x p erien ces o f m an y w ho sell direct p ro v e that p ro d u cers sh o u ld b e le ft fr e e to select the m ark ets they lik e b est and that th e sa d d lin g o f red tape and con seq u en t a d d ition al e x p en se on direct m a rk etin g can n ot but react to the disad van tage o f p rod u cers. I su p p o se you are w o n d erin g w hy I am te llin g you th ese th in g s. W ell, h e r e ’s th e rea so n . In sp ite o f th ese facts and the m an y oth ers estab lish ed by th e B u reau o f A gricu ltu ral E co n o m ics o f th e U. S. D ep artm en t o f A gri cu ltu re, th ere is still c o n sid era b le d iscu ssio n about th is m atter o f direct m a rk etin g . K n o w in g that you lik e to k eep p o sted on such th in gs, I have p o in ted out a few o f th e fa cts in th is letter. N ow , if you w ou ld lik e to go in to the m atter m o re c o m p le te ly , d ro p a letter to th e A ssociation to M aintain F reed o m in L ivestock M ark etin g, 5 1 5 In su ran ce E xch an ge B ld g., D es M oin es, Iowa. T h ey w ill sen d yo u a sum m ary o f the th e recent rep ort on direct m ark etin g o f h o g s, b y th e D ep a rtm en t o f A gricu ltu re. I k n ow so m e o f the facts estab lish ed b y g o v ern m en t ex p erts w ill n o t o n ly in terest you but su rp rise you. V erv truly you rs, JOHN. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 20 Quarterly Dividend P RUDENT business men, careful not to take unneces sary risks, always observe the old adage: The board of directors of the GuarantyTrust Company of New York has de clared a dividend for the quarter ended March 31, 1935, of $3 per share, pay able on April 1, to stockholders of record March 8th. This represents a disbursement of $2,700,000 for the quarter. William C. Potter, chairman of the Company, in announcing the action of the board, stated that it was occasioned by the desire to adhere to a conservative disbursement policy following reduction in earnings due to low prevailing rates of interest, the continuing inactivity of security markets, and the lack of use by business of the superabundant bank credit avail able. Soaked Again “Never give your check to a stranger.’1 Thoughtful bankers avoid preventable delay and need The spending of $15,000 of Minnesota money, which amount was consumed in the trial several months ago of several officials of the Northwest Bancorp oration, and which resulted in an acquittal for the defendents, was just another way of “soaking the taxpayers,” according to W. A. Syreen, a representative of that state. The trial was held in Clay County, Minnesota, and a legislative bill originally call for $30,000 to reimburse the county for the cost of the trial. This amount was later reduced, however, to $2,700. less risk of loss by routing So W hat? their c u s t o m e r s’ checks through an institution widely and favorably known for its excellent collection facilities. ...THE... 1*111 LA HE M * l l IV NATIONAL BANK ORGANIZED 1803 PHILADELPHIA, PA. C apital, S u rp lu s and P r o fits________ $ 3 4 ,0 0 0 ,0 0 0 Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 R. S. Hecht, president of the American Bankers Association and chairman of the board of the Hibernia National Bank, New Orleans, announced the special com mittee of the Association which goes to Washington to confer with leaders of Con gress and Administration officials in re gard to changes in the proposed Bank ing Act of 1935. This committee consists of Rudolf S. Hecht, president American Bankers Asso ciation, and chairman of board Hibernia National Bank, New Orleans; Robert V. Fleming, first vice president American Bankers Association, and president Riggs National Bank, Washington, D. C.; Tom K. Smith, chairman of Committee on Banking Studies of the Association, and president Boatmen’s National Bank, St. Louis ; W. W. Aldrich, member of the Committee on Banking Studies of the Association and chairman of board Chase National Bank, New York City; Ronald Ransom, chairman of Federal Legislative Committee of the Association and execu tive vice president Fulton National Bank, Atlanta. On behalf of the Administrative Com mittee of the Association, Mr. Hecht is sued the following statement: “The Administrative Committee and the Executive Committee on Banking Studies of the American Bankers Asso ciation in joint session have made a care- 21 fui analysis and study of the proposed banking bill of 1935. While the com mittees realize that certain provisions of Title I of the pending bill affect adversely the larger banks, and that other provisions of the bill are not entirely acceptable to some of the (Federal Reserve) non-mem ber banks, they believe that the aims and purposes expressed in the provisions of Titles I and III of the bill are in the main in the public interest. Dividend The regular quarterly dividend of 45 cents per share has been declared on the capital stock of the Chemical Bank & Trust Company, payable April 1, 1935, to stockholders of record March 9, 1935. warranted share of current underlying equities securing outstanding bonds. It is unfortunate perhaps that banks resorted to purchases of bonds to keep themselves currently solvent, instead of following a policy of liquidation more in harmony with the best interests of bondholders generally. Thereby forces were set in motion which operated contrarily and high prices of bonds resulted, not so much because of the improved status of these banks but mostly because of the speculative opportunity for profit that was engendered. Though bonds bought by banks help them and assist liquidation, bonds resold elsewhere are an impediment since banks, obviously, must pay higher prices to acquire them. Bona fide investors whose bonds were disloged at lower prices now are dis gruntled, while others, influenced by the upward trend, apparently are disinclined to surrender bonds below par. Banks, when revenues are deficient and assets can not be liquidated productively, must obtain bonds for retirement at prices that offset, and when levels of bond prices are too high banks are checkmated; un less this condition is relieved by voluntary arrangement, as we construe the alter native likelihood, receiverships or con servatorships, in many cases, are indi cated. Book values of assets underlying each R. J. Friss and Company R. J. Friss & Co., Inc., Chicago, re cently completed a comprehensive survey and analysis of the assets and potential work-out of a representative Joint Stock Land Bank. According to information and figures derived, it is their conclusion that the prospect generally of the bonds of these banks being redeemed at Face Value, with interest, is contingent tvpon a policy of voluntary cooperation between management and bondholders. Underly ing assets can not be liquidated to the best advantage without careful handling; some are quick, some slow, many involve losses, and some are worthless. The busi ness of these banks, from making loans and issuing bonds, has changed into large refinancing, land selling and farm main tenance organizations, legally in the process of liquidation. Bondholders have a predominant claim upon the assets of these banks which can not be disregarded.Nevertheless, ab normal economic developments are affect ing bondholders adversely and while ar bitrary compromises do not appear necessary, intelligentsafeguards in the premises are incumbent. The fallacy of emergency measures enacted by Congress is that good loans of these banks are be ing lost to the inherent detriment of bond holders, and if and as farm values im prove other loans will be refinanced and property sold, leaving poor loans and un salable property as the likely inheritance of apathetic bondholders. Nor, in their opinion, do so-called Farm Relief Bills being introduced in Congress attempt to remedy inequalities. During the past year market prices of bonds have shown considerable advances and many bond holders are misled into the belief that their bonds now are worth par. To be lulled into this belief and retaining bonds, simply because no other investment yield ing a comparable return is obtainable, in effect makes it possible for bondhold ers who take advantage of the situation, marketwise, to obtain more than their ''G la d to See You! ” When our officers greet correspon dent customers, both formality and back-slapping familiarity are con spicuously absent. Forthright and friendly, our relations are the natu ral outgrowth of long acquaintance and shoulder-to-shoulder work on common banking problems. The First of Minneapolis has enjoyed the friendship and confidence of three generations of Ninth District bankers. Only superior service to correspondents could make and hold so many good and loyal friends. First N ational CoïpANYRUOfM inneapolis ciucili leni c l M. O. Grangaard, V. P. • AFFILIATED C. B. Brombach, A. C. • W. A. V olkm ann, A. C. • Bank Advisory Division, K. T. Martin • L. C. Vobayda WITH FIRST BANK STOCK J. J. M aloney, Rep. C O R P O R T I O N Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April Í935 22 $1,000 bond unit ($1,000 bond plus Notes Payable pro rata) govern the per cent at which assets must be sold to produce $1,000 for each $1,000 of debt principal. Concurrently, this factor must be com bined with the basic ratio the bank is deficient in earnings per each $1,000 bond unit. Capital stock liability, while assess able up to the par amount issued, is disregarded because of the questionability of collection, and only in receivership can enforcement be attempted. Technical ly, therefore, when bonds cannot be bought within the determined earning ratio price, in order for the bank to main tain solvency, the increment must be obsorbed in the price realized by them upon the sale of assets. Business Better Business is definitely better now than at this time last year. Practically every industry is increasing sales, earnings moderately higher profits. Complete figures for January show that the index of industrial production was at the high est January level since 1930. A G E N E R A L B A N K I N G SER VICE The fact remains, however, that in the view of many competent observers, funda mental conditions are unchanged, and all that is keeping us going is government spending. It is true that 10,000,000 men are out of work, are being supported by relief —about the same number that was un employed two years ago, when the great recovery drive started. That is the most ominous fact the country faces noAV. Dividend First Bank Stock Corporation, Min neapolis, announced that the regular semi annual dividend of 10 cents per share will be paid on April 1, to stockholders of record, March 20th. On the basis of 3,083,894 shares now outstanding in the hands of approximately 18,000 stock holders, this distribution will total $308,389. This is the twentieth consecutive dividend paid by the Corporation, the first seventeen of which were made on a quarterly basis and the balance semi annually. Nebraska Group Meetings The Spring Group Meetings of the Nebraska Bankers Association have been arranged as follows: April 22nd, Group 2 at Columbus. April 22nd, Group 3 at Norfolk. May 20th, Group 6 at Alliance. May 21st, Group 7 at Ogallala. May 22nd, Group 5 at Ord. May 23rd, Group 4 at Holdredge. May 24th, Group 1 at Lincoln. Special cars will be provided for the trip to make the meetings at Alliance, Ogallala, Ord, Holdredge, and Lincoln on five successive days. Reservations for this trip can be made with William B. Hughes, 420 Farnum Building, Omaha. C o d e Laws vs. Economic Laws COMMERCIAL H A TCH ERIES SUPPLY FIVE HUNDRED MILLION BABY CHICKS EACH YEAR TO THE FARMS OF AMERICA THE DROVERS BANKS SERVE MANY COMMERCIAL HATCHERIES THROUGH THEIR LOCAL BANKERS D rovers N ational Bank D rovers Trust &. Savings B ank U n io n S to c k Y ards - CHICAGO Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 The President has stressed the need for more adequately applying the fundamen tal principles of the anti-trust laws to NRA codes. Many of the codes have violated anti trust laws and the result has been either unjustified price gains, or the squeezing out of small businesses which could not survive, once the opportunity of offering lower prices was denied them. It seems to be an inescapable fact that efforts to eliminate the ancient laws of supply and demand are doomed to failure. Pays Dividend At the meeting held March 19th, of the board of directors of The Northern Trust Company of Chicago, the regular quar terly dividend of $4.50 was declared pay able April 1, 1935, to stockholders of record as of March 19, 1935. 23 Bonds and Investm ents How O ne Bank Made Its Bo n d A T IS readily apparent that the govern mental plan of easy money will con tinue for an undeterminate period. Perhaps its most distinct effect is felt in the need of banks for investment media. Where previously, bank reserves, both primary and secondary, ranged between 20 and 35 per cent of deposits, they now are 50 to 70 per cent of deposits. De posits, although rising more slowly now, continue to rise, whereas loans are being liquidated. Interest on deposits has been lowered, which makes investment of excess funds in high grade short term issues pos sible. A yield of 1% per cent is attractive when funds costing little, except safety of principal, are available. Such situations seem to be the salvation for banks at the moment. The effect on the bond market, however, is marked by the persistence of prime quality obligations to hold their top prices in face of continued meager earn ings and business improvement. Standard Statistics report that, “The primary motivating force behind this in sistent investment demand . . . is unques tionably the huge and still growing total of idle funds pressing for employment.” At the same time private refinancing in cases where existing bond issues can be called, continues to shrink the existing supply of investment issues while federal securities regulations choke off public fi nancing of new credit issues. A recent article in Barrons entitled, “Are Bonds Too High?” points out that, while there are reasons to believe that a protracted era of low yields is at hand, still arguments for an evacuation of high levels are sound enough to assure only the uncertainty of the length of time which these levels are held. This outlook creates a problem of investment even more com- I ccoun t Pr o By VERNON L. GRANT Manager Trading Department McMurray, H ill & Company Des Moines plicated than bankers have heretofore faced. Many banks, having been able to eliminate speculative issues from their portfolio, are anxious to solve this new problem intelligently. Never was there a better example of the statement: Banks are necessarily forced, by the very nature of their busi ness, to invest when bonds are high and to liquidate when bonds are cheap. The bond portfolio today must be converted into cash—thence to the note case tomor row. But the business expansion which occasions this profitable conversion also occasions competition for capital, reduc ing money rates. Even normally, then, in telligent investment in bond portfolio goes hand in hand with the basis for profitable operation of a commercial bank. I use, in the following study, as an example, in pointing out the factors that my associates and myself believe must be considered in the formulation of an ac count containing the essence of safe, prof itable use of reserve funds in the bond portfolio today, the actual figures taken from a report of recent date of the ac count of one bank which we believe has been ideally designed. We have been in strumental, having had full cooperation by the bank’s management, in directing the investment of the reserves. The first consideration in designing the bond portfolio is its size. Normally the account will be 2 to 2% times the capital funds of the bank. The type of business the bank does will dictate this considera tion. If the majority of its loans are of a E X H IB IT NO. 3 (H ( 2) $53,000 51,000 53,000 60,000 15,000 8,000 AAA AA A B 1+ B1 f it a b l e Cost P a r V alue 20.9% M unicipal O bligations ....................................... ................. 20.5% 22.0 In d u s tria l M ortgages ........................................ ................. 21.7 23.4 E quipm ent T ru st C ertificates............................ ................. 22.6 23.8 B ailro ad Issues, U nd erlie.................................. ................. 25.6 6.7 U nderlying P u b lic U tility Issu es................... .... ............ 6.6 3.2 T erm inal M ortgages ...................................... . ................. 3.0 P ar % Cost % $ 54,306.00--23.2% $ 52,000—22.8% 137,949.40--59.0 136,000— 58.5 26,628.64— 11.3 25,500— 11.0 15,000— 6.4 11,484.50-- 4.5 5,000— 2.1 4,425.00-- 1.7 V E R N O N L. G R A N T commercial nature the normal relative size of the bond portfolio may fluctuate be tween 2 and 3 times capital funds. In times such as the current period, an excess bond account may be set up containing short term issues of extreme liquidity. It is, we believe, of great importance, to concentrate the funds in short maturi ties. Maturity diversification and a high quality of investment will lend equal strength and stability to the bond port folio. The bank whose account is used as an example showing practical application of these considerations has the approximate balance sheet totals, as shown in Exhibit No. 1. E X H IB IT NO. 1 A SSETS Cash .................................................... $ Bonds (M unicipal, C orporation, Ex. G overnm ents) ...................... Loans and D iscounts......................... O ther A ssets ..................................... 233,500 700,000 142,500 $1,675,000 L IA B IL IT IE S C apital and S urplus...........................$ 175,000 D eposits ................................................ 1,500.00 $1,675,000 The ratio of the bond account is less than 1% times capital funds and this is reflected by the large amount of cash on hand which totals 40 per cent of deposits and 3.42 capital funds. Further exten sion of this account, however, is being de signed along the lines herein set forth. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 600,000 April 1935 24 “AHEAD OF THE PARADE” —with Iowa's O N L Y Complete Bond P rivate W i r e Service T h a t’s w h y Iow a bankers call P olk -P eterson C orpo ration w hen th ey w an t com plete, prom pt trading serv ice. P o lk -P eterso n ’s direct n ationw ide, private w ire service g iv es Iow a bankers the only direct, specialized bond w ire in Iow a (co v erin g stock s as w e ll). T his w ire sy stem w as the pioneer bond w ire to the Iow a m arket. P olk -P eterso n Corporation w as approxi m ately tw o years “ahead of the parade” in furnishing this service to Iow a bankers. T h is w ire is still the only nationw ide sy stem com in g in to Iow a on w hich bonds have priority, and in addition is a direct wire to the N ew York Stock E xch an ge. T h is is still the only w ire by w hich in vestm en t bankers, w hich are the real m arket for bonds, can be reached d irectly in all princi pal financial centers of the U n ited States. P olk -P eterso n “ahead of the parade” in the w ire s y s tem m ay be depended upon to be “ahead of the parade” in other phases of in v estm en t service. In addition to com plete trading facilities, P o lk -P eterson m aintains a sales staff con stan tly coverin g Iow a and w orking out of con ven ien tly located branch offices. F acilities of a com plete analytical and legal depart m ent are also available to Iow a bankers. DIRECT PRIVATE WIRES TO L et us sh ow you how w e can ob tain the secu rities you need at the sort of prices you w ant to pay, as w ell as better prices for w hat you w an t to sell. P h on e or wire orders at our exp en se, at any tim e. N e w Y o rk C hicago San F ran cisco B o sto n A tla n ta B a ltim o re B uffalo C levela n d D e n v er D e tr o it K a n sa s C ity L in co ln L o s A n g eles M in n ea p o lis Omaha P h ila d elp h ia P ittsb u rg h P o rtla n d , O re. S t. L o u is S e a ttle W ash in gton POLK-PETERSON CORPORATION INVESTMENT SECURITIES D es M oines B uilding, Telephone 3-3245 and all other principal financial markets. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis D es M oines B ran ch Offices in Sioux C ity , O ttu m w a , W a terlo o , D a v e n p o rt April 1935 The bond account of $233,500 has an average maturity of two and one-half years. Further 77 per cent of the total amount matures prior to, or on, June, 1937. By this sort of maturity diversifi cation, in excellent proportion, protection against either a higher or lower level of money rate is afforded. Inasmuch as the outlook for medium grade issues has not been clear, because of their dependency on individual improve ment of business or future clarity of gov ernmental policies only a very small pro portion of issues having a rating lower than “A” have a place in this account. Less than 2 per cent of the bonds matur ing on or before June 1, 1937, have a rat ing lower than “A.” The rating on one issue maturing serially each year to 1937 is B1+ ; this rating being accorded because of the small size of the issue rather than for lack of other investment qualities. Less than 10 per cent of the entire account has a lower than “A” rating, all of these being rated B1+. Some of these issues rep resent investment prior to the depression for which no reason can be seen for im mediate liquidaiton. The important fac tor is to keep the proportion of medium grade issues to total group low and to carefully analyze these for weakness. From the standpoint of diversification this account contains a coordination of industry and maturity diversification which is most efficient. The Municipal and Equipment Trust issues appear to be relatively higher in price than are the In dustrial, Public Utility and Railroad groups. Thus the shortest term maturities are made up principally of the higher priced group—Municipals and Equipment Trust obligations. Approximately 50 per cent of the $46,500 bonds maturing in 1935 are Municipals or Equipments car rying an “A l” rating; over two-thirds of the $74,000 bonds maturing in 1936 are of those two groups. Exhibit No. 2 is a schedule showing the above mentioned factors in this account: 1935 $20,000 5.000 2.000 19,500 E X H IB IT NO. 2 R ailroad ..............................A l E quipm ent T rust ................ A l I n d u s tr i a l............................... B 1 + M unicipal ............................A—-Al $16,500 1936 $10,000 33.000 11.000 20.000 or 20 p er cent of to ta l $74,000 1937 $ 6,000 5,000 18.000 10.000 R ailro ad ..............................A l E quipm ent T ru st .................A l—A l In d u s tria l .........................B l-|---- A l M unicipal ......................... A—A l or .32 p e r cent of to ta l M unicipal ............................ A— A l E quipm ent .......................... A l In d u stria l - .......................... A—A l P ublic U tility ...................... AAA $39,000 1938 $ 2,000 20,000 5,000 or 13 p er cent of to ta l $27,000 or 12 per cent of to ta l M unicipal ......................... A l R ailro ad ..............................A l—A l E quipm ent T r u s t ................ A l 25 1939 $ 7,000 T erm inal .............................. AAA 10,000 In d u s tria l .............................A l m illllllllllllllllllllllllllllllllllllllllllllllllllllllllllll $17,000 1940 $ 5,000 5,000 % p $10,000 1941 $ 5,000 1945 $ 5,000 1948 $ 5,000 1949 $ 5,000 III! or .08 per cent of to ta l R a ilr o a d .................. .......... B ld ---- A l In d u s tria l ............................. or .05 per cent of to ta l E quipm ent T r u s t ................ A l or .03 per cent of to ta l Public U tility ....................A l or .03 per cent of to ta l = In d u s tria i ............................ B1 or .02 per cent of to ta l == GOVERNMENT M UNICIPAL RAILROAD PUBLIC UTILITY INDUSTRIAL B D A v N n V Q ==§ ^ R a ilro a d ................................. B 1 + or .02 per cent of to ta l Exhibit No. 3 shows percentage diver sification (1) as to industry, with both the percentage of par value to total par = = and of cost to total cost, (2) Rating di versification percentages. It will be seen that the proportion of medium grade bonds are even more insignificant from a cost ~ = percentage standpoint. Following is enumerated the figures of = = each group making up the total port folio : MUNICIPAL GROUP—Total amount, $47,500 par value; average cost is 103.246 :=== per $1,000; average yield, 1.95 per cent; average maturity, using the option date, is one year and one month. The issues === making up this group are: $35,000 county obligations within the state, $11,000 city obligations of other states all having rat ings of “A” or “Aa.” — EQUIPMENT TRUST GROUP—To tal amount, $53,000 par value; average cost is 103.94 per $1,000; average yield is 2.20; average maturity is two years and two months. All issues in this group = carry a rating of “Aa” or “AAA.” INDUSTRIAL GROUP—It is a mat ter of record that the mortgages of in = dustrial concerns fluctuate more marketwise than underlying mortgages of utili ties or railroad companies. For this rea son it is imperative that either the indus trial bonds be secured by a wide margin of asset value as well as strong trust in = denture provisions which provide for ade quate sinking funds and/or a wide mar gin of earnings as measured by earnings to interest charges ratios. The following industries are represented in this group: (1) Publications, (2) Steel manufactur ing, (3) Electrical manufacturing, (4) 1 = Pood industry, (5) Investment trust. Average par value, $51,000; average price per $1,000 is 101.50; average yield is 4.60; average maturity is three years and z nine months. Only $5,000 par value of this group carry a “B l” rating, the rest = being “A” to “AA.” PUBLIC UTILITY UNDERLYING MORTGAGES—Without going deeply in to the public utility question, we feel that the belief held generally by investment Whom Does Your Bank Consult? A periodical conference w ith our organization is a means of keeping inform ed of changing conditions affecting the bond investm ent of your Bank. = -- == In our COMPLETE INVESTM ENT SERVICE you w ill find particularly valuable == 1. The m any years experience of our personnel in Iowa Bank investm ents. = == T ’"" 2. Private wires covering all principal financial markets. == 3. An analytical departm ent augmented by a library of financial statistics. We invite you to consult w ith us on your Bank’s === investments. t t :; jgtSR-O Um .SCTO »!, 'w D avenport Bank Bldg. Kenwood 783 = _____ :■ Davenport, Iowa = 111lllllllllllllllllllilllli https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis == III! Northwestern Banker April 1935 26 counsel for our large institutions is well founded. They have expressed the belief that senior obligations of operating utility companies, particularly those whose in come is derived in the large by distribu tion of electric power, light and gas, rather than by the manufacture of it, whose in vestment is reasonable and earnings rea sonably stable, whose rates are normal and whose auditing principles sound, are not going to be influenced harmfully by gov ernmental efforts to regulate holding company operations. These conditions fit in a general way the issues in this ac count: Total par value, $15,000; average cost per $1,000 par is 102.68 ; average yield is 3.15 per cent; average maturity five years. Ratings on $10,000 is “AAA” on $5,000 is “Aa.” UNDERLYING RAILROAD IS SUES—In normal periods it has been readily assumed that the senior obliga tions of railroad and utility companies were more stable than any other group be cause of the large amount of physical property pledged under the mortgage. In the last analysis, however, the security of principal depends on earnings. This statement has been proven during the four years of deflation we have witnessed. Further, it would be proven during an inflationary period due to the rapidity of rise in cost versus the slower rise in serv ice rates. It is necessary to choose issues in this g’roup with care. In this account cash funds have been invested on important sections, of the stronger rail systems; which issues were outstanding in relatively small amounts and which as further secur ity are guaranteed by the parent company. Usually these are issues of long standing and their past records can be scruti nized. Further, issues of medium-short maturities with good ratings were re quired. Some issues in this group were acquired through exchange of other issues of other industry not so well rated or se cured. This accounts for a slightly larger percentage of par value to total par value of the account. In selecting the medium grade rails it has been the policy to choose those with a strong mortgage position and a brightening earnings future. Total par value of this group is $60,000; average cost per $1,000 is 94.75; average yield is 6.20 per cent; and average maturity is three years and six months. Ratings for the group are $10,000 “A l,” $40,000 “A l,” and $10,000 “B l.” TERMINAL ISSUES—Total par value $7,000; average cost per 100 is 104%; average yield is 2.90 per cent; average maturity is four years and three months. Rating “AAA.” The total account has total par value of $233,500; average price per 100 of 100.83; average yield of 4.25 per cent; average maturity of two years and six months. Iowa Municipal Bonds W e specialise in Iowa Municipal Bonds, and are always ready to make firm bids on any issues. Write for Current List of Attractive Offerings Direct private wire connection with principal markets through the Boettcher-Newton &z Company system. Prompt execution of orders on listed and unlisted securities. J A C K L E Y 6? C O M P A N Y INVESTM ENT SECURITIES 210-11 EQUITABLE BLDG. DES MOINES Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 PHONE 3-5181 $ i 2 , 4 3 4 : 0 0 0 Primary Road Refunding Bonds — obligations of th e issuing IOWA COUNTIES R IM A RY roads in Iowa are constructed by the counties under State supervision. Bonds for financing the costs are direct and general obligations of the respective issuing counties but the State Primary Road Fund is annually budgeted so that allotments from it are made each year by the State to the several counties and used by them to pay the annual principal and interest re quirements of the bonds. P The Primary Road Fund, supported by gasoline taxes, and motor vehicle fees, averaged in the fiveyear period 1930-1934, $16,340,044.42 according to reports from the Iowa State H ighw ay Commis sion, and in 1934 amounted to $14,513,823.07. It is officially reported by the Commission that when and if, during the next few years, the refinancing plan authorized by the General Assem bly of Iowa is fully carried out, the annual requirements for principal and interest of all presently existing Primary Road indebtedness of all the counties in the State will be between $8,000,000 and $8,250,000. Exempt from all present Federal Income Taxation and, in the opinion of the Attorney-General of Iowa, exempt from the Iowa State Income Tax; also exempt from Personal Property Taxation in the State of Iowa and eligible, in our opinion, as security for Postal Savings Deposits. $ 423,000 306.000 244.000 763.000 453.000 1,240,000 360.000 656.000 638.000 185.000 320.000 490.000 Black Hawk, (Waterloo) 2’s 1936-44 Carroll, (Carroll) 2’s 1936-44 Clarke, (Osceola) 2 M ’s 1936-44 Clinton, (Clinton) 2 M ’s 1939-49 Des Moines, (Burlington) 214’s 1936-48 Dubuque, (Dubuque) 2 M ’s 1936-48 Hamilton, (Webster City) 2 %’s 1946-49 Harrison, (Logan) 214’s 1936-48 Jackson, (Maquoketa) 214’s 1936-49 Jasper, (Newton) 2’s 1936-44 Kossuth, (Algona) 2’s 1938-45 Lee, (Fort Madison) 2 ! 4 ’s 1936-49 $ 880,000 300.000 855.000 200.000 491.000 765.000 353.000 375.000 491.000 473.000 858.000 315.000 Linn, (Cedar Rapids) 2 M ’s 1943-49 Lucas, (Chariton) 2 ! 4 ’s 1936-48 Mahaska, (Oskaloosa) 2 M ’s 1936-49 Muscatine, (Muscatine) 2 M ’s 1944-49 O’Brien, (Primghar) 2’s 1936-45 Page, (Clarinda) 2 M ’s 1936-49 Polk, (Des Moines) 2 M ’s 1946-49 Wapello, (Ottumwa) 214’s 1936-49 Washington, (Washington) 2 M ’s 1936-49 Webster, (Fort Dodge) 2 M ’s 1946-49 Winneshiek, (Decorah) 2 M ’s 1936-49 Woodbury, (Sioux City) l M ’s 1936-43 Prices and descriptive circular w ill be supplied upon request. HALSEY, S T U A R T & CO. INCO RPO RA TED 201 SO U TH LA SALLE STR EET C HICAGO , N E W T E L E P H O N E STAte 3900 Y O R K A N D O T H E R P R IN C IP A L C IT IE S T hese bonds are offered w hen, as, and if issued and received by us and subject to approval of le g a lity by M essrs, Chapman & Cutler, attorneys, w hose opinion w ill be furnished upon delivery. D e livery of definitive bonds expected about M ay 1, 1935. The inform ation con tained herein has been carefu lly com piled from sources considered reliable and, w h ile not guaranteed as to com pleteness or accuracy, w e b eliev e it to be correct as of th is date. The above is offered for sale in Iowa to banks, savin gs in stitu tion s, trust com panies, insur ance com panies, corporations, or dealers in secu rities, A pril 1, 1935. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 28 Shall W e Have Politicians or Bankers? n ~ 7 Personal S upervision • Every individual security our clients own receives our personal supervision. Our complete facilities function constantly, not for the purpose of trading your securities but to find for you sounder values at equal or better prices. Your account, as a client of this firm, is constantly surveyed and reviewed. When any change in the status of one of your securities is discovered, you are i n f o r m e d instantly by the most rapid means of communication available. ★ ★ ★ W e Have No Securities fo r Sale ★ ★ ★ C o n su lt SHEA & CO. IN C . 3 9 S o u th L aSalle St. T e le p h o n e C en tra l 8232 C H IC A G O Iowa Representative C . L. K lu ss Telephone 4-3095 A Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DES MOINES April 1935 (Continued from page 11) mand there is for it. What would hap pen if the purchasing power of this money fell so low that depositors re fused the currency, is too remote to he of any concern to the champions of this bill. One R edeem ing Feature The most redeeming feature of the entire bill is found in the requirement that all commercial banks, who are mem bers of the FDIC, must join the Reserve System by July 1, 1937. This not only makes for uniformity, but in an emer gency prevents state officials from call ing separate state holidays one by one so as to precipitate a national crisis. Under Title I of the bill, banks must pay premiums on their total deposits, even though accounts are only insured up to $5,000. While this provision works a hardship on the larger institutions, because they must pay high premiums and receive a relatively smaller protec tion on their large deposits, they feel that the better regulation of the smaller banks ultimately will offer some con solation. The bill rudely shatters any beliefs that the Administration has turned con servative. A study of it reveals that any objections which the President has had to a “ central bank’’ have been in name only. Moreover, it is plain that no at tempt has been made to give the bank ing problem the careful study which it deserves. Instead, the entire banking system is to be subjected to the wishes of the President. Together with his col leagues, he can expand either currency or credit for the Government’s use in social experimentation. To make this possible, many rules of sound banking have been eliminated. How any Admin istration can be so Machiavellian and so two-faced as to talk concurrently about improving the social security of the Na tion, is beyond any reasonable person’s imagination. Certainly with disaster written on almost every page of the new banking bill, it would be better to talk less of planning, and resort to the trial and error method on all fronts. All of these provisions, and many others which would extend this article beyond a reasonable length, indicate that the responsibilities of the new political money-changers are just as tremendous as those which have, heretofore, fallen upon the shoulders of the private cashkeepers. But, as long as loans by com mercial banks do not expand beyond the ability of borrowers to pay, and the loans on corporate securities, mortgages, com mercial paper, and Government bonds do not get sadly out of proportion to one another, no difficulties will be experi enced. Nevertheless, there is no reason to suppose that the commercial banking system in general will be improved greatly because of any particular fea tures of this bill. The business of a local merchant is certainly not improved by the impressed rules of racketeers, who demand the privileges of partners with out incurring any of the risks. Poor management may still be the source of many financial headaches. To dodge the pitfalls of a former day, the new supervisors must avoid large and unbalanced loans, and must maintain equilibrium throughout the banking structure. Private management hesitated in the past because of the chance of los ing large profits. Political management may, also, hesitate under the new bill because of the risk of losing popularity. The truth is that financial bonfires can be lighted by supervisors of either sort. On the eve of passing the new banking bill, then, the toast of the politicians may very well b e: “ The Money-changers are dead! Long live the Money changers ! ’ ’ The Effect of the Proposed Public Utilities A ct of 1935 (Continued from page 15) this hill is an attack against private man agement and operation, lie need only glance at the following summary. Here is what the Commission can do: The Commission has authority to order: (a) The making of additions, extensions and improvements to and changes in facilities, irrespective of whether the utility is able to obtain the funds required. (b) M a k i n g interconnections w i t h others; use of facilities by others; use of facilities of others; sale to, purchase from, transmission for, exchange with, other persons; all on terms and conditions pre scribed by the Federal Power Commission. The “others” may be other utilities, in dustries, etc., but governmental power de velopments are presumably the principal objective of these provisions. This provision would permit a govern ment power project to use a utility’s own facilities for competition with it at any point in the utility’s system. The Commission’s approval is required fo r: (a) All additions or extensions to facil ities, acquisitions of facilities, receipt of energy from a new source. (b) Abandonment of any facility or service, except for routine retirements. This will prevent an intrastate company from terminating the Commission’s juris- 29 diction by abandoning an interconnection with an interstate system. (c) Sale, lease or encumbrance of any property. (d) Merger or consolidation. (e) Acquisition of securities of another utility. (This, furthermore, would make the utility company a holding company, and bring it under Title I of the Bill.) And finally the Commission has power to determine: (a) Operating and business practices. This might include labor policies, pension plans, salary schedules, purchasing poli cies, etc. (b) Methods of production, transmis sion and supply. (c) Supervision over all contracts and arrangements made with operating com panies in regard to services (legal, finan cial, engineering, and so on), sales, and construction. When you get through this list of pow ers, there is practically nothing left to the company itself. The Commission does not have jurisdiction over the “facili ties for the retail distribution of electric energy.” However, since all production and transmission facilities, as well as methods of production, accounting prac tices, security issues, etc., are under the Commission’s control, this exception seems immaterial. In view of this it is fantastic to speak of the pending legislation as of a “holding company bill” alone. It affects the oper ating companies vitally and destructively. We own and offer, subject to prior sale and change in prices: Iowa Primary Road Refunding Bonds P o ttaw attam ie C ounty 2 f^% D ue 1946 to 1949 Inc. A dair C ounty 2 f^ % D ue 1940 to 1949 Inc. Union C ounty 2 f^ % D ue 1940 to 1949 Inc. W ayne C ounty 2 f^ % D ue 1936 to 1949 Inc. T aylor C ounty 2% % D ue 1946 to 1949 Inc. $100,000.00 100,000.00 137,000.00 119,000.00 45,000.00 Price to yield .50% to 2.45% according to m atu rity Descriptive circulars furnished upon request. Shaw, McDermott & Sparks W — 1 ■ i Ki r nPDODATr n Investment- Securities 307 E Q U IT A B L E BLD G . P H O N E 3-6119 DES MOINES W hat H appen s to th e State C om m issions ? The answer to this question is that, even if the bill is amended so as not to apply to local retail rates, the state commissions will be left with practically no function at all. Regulation of interstate rates ap parently involves regulation of all pro duction, transmission, etc., since jurisdic tion over these matters is expressly con ferred on the Commission. However, the regulation of local retail rates also in volves regulation of production and trans mission. Is there, then, to be dual and conflicting regulation between the Com mission and the states? This was at tempted when the federal government first started regulating railroads, but soon became intolerable to the companies and the commissions. The final result was complete displacement of state regulation. Similar results may be expected in the public utility industry should this bill be passed. Under such conditions, state commis sions, to the extent that they survive at all, could be only minor and unimportant bureaus dominated by the Federal Power Commission. The preceding analysis of the powers of the Federal Power Commission reduces to an absurdity the statement in the bill The not-so-tired business man He saves energy. He uses modern aids. He turns many times daily to the telephone, using its power to put him in the right place at the right time. With Sequence Calling Service, one executive recently "covered” re gional sales supervisors in 49 cities in exactly four hours! That typifies the ease with which Bell System Telephone services help to get things done. Bell Telephone System Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 30 Iowa Primary Road Bonds We own and offer the new prim ary road refunding bonds. Maturities, 1936 to 1949. Inquiries solicited. Circulars upon request. W.D. Hanna and Company BURLINGTON WATERLOO — CEDAR RAPIDS — DES MOINES SIOUX CITY — WASHINGTON G M AC SHORT T E R M JIOTES available in limited amounts upon request G ener al M otors A cceptance C o rpor atio n Executive Office - B roadway at 57 th S treet - Hew Tor\, H- T. OFFICES IN PRINCIPAL CITIES Investment Securities Scott McIntyre & Company M erchants N ational Bank Bldg. Cedar Rapids Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 that nothing in it “shall be construed to impair or diminish the power of the state commissions.” It is, therefore, not surprising that on March 8, 1935, one state public service commission (Georgia) made the follow ing statement: “We have concluded that the provisions of the Rayburn Bill as introduced, vitally encroach upon the power of state com missions to regulate the production, trans mission, and sale of electric energy.” G overnm ent O w nership As has been stated, the provisions con cerning operating companies in the bill apply to 91 per cent of the electric power and gas industry. Under these conditions, it is difficult to believe that the industry will be able to survive as a privately op erated enterprise. The obvious intent of the bill seems to be not to regulate the industry, but to force it into the hands of the government. It should be noted that, after providing for the elimination of holding companies and after establishing control over operating companies, the bill specifically contemplates the breaking up of existing utility systems and their re organization under a plan to be formu lated in Washington. The government’s road to ownership of the utilities is not difficult to chart. Here is what would happen : It builds a power plant, charging most of the investment to reclamation or flood control and exempt ing it from taxation. It provides federal funds through PWA or otherwise for dis tribution facilities and sets up government holding companies, like the Tennessee Valley Authority, to handle production and sale of electricity. (Note that the government uses holding companies, even while it attempts to prohibit them among privately operated utilities.) It then has the power to use the facilities for this governmentally produced power, at any terms which the government may pre scribe. And it places the private compa nies, after separating them from holding companies, under restrictions from which the government is free. Under these conditions competition is a mockery. Under these conditions pri vate utilities could not survive. D'o the American people want govern ment ownership ? Is it desired by the millions of individuals who have invested a total of twelve billion dollars in public utility securities? Is it in accord with American economic principles? The public utility companies do not oppose fair regulation. The abuses charged against certain utilities would seem to have been corrected by the Fed eral Securities Act of 1933 and the Securi ties and Exchange Act of 1934. If any abuses remain, they should be corrected by appropriate legislation. But this bill is not a regulatory bill. It 31 is a bill to destroy an existing system and to substitute a government-operated in dustry. Not only the public utilities will suffer but all industry; not only the ten million public utility investors but all the people. "The Value of Your Checking Account" (Continued from page 17) writing. You should then issue a dupli cate check. Robinson : Suppose the original check is found and returned to me. What should I do then? Atkins: Notify your bank that the check has been located, so they can re lease your stop payment request. Then destroy the original cheek. Robinson: Aside from losing a check, are there any other reasons for stopping payment on checks? Atkins: Yes, breach of contract, mis understanding or dissatisfaction on serv ices or merchandise for which a check has been given, are frequent causes. Some thoughtless people even write checks to get rid of persistent salesmen, then tele phone their bank to stop payment on the checks. Robinson: Is this a safe practice for the depositor? Atkins: Emphatically, n o ! If the check falls into the hands of an innocent third party the maker of the check must pay it even though the bank returns it marked “payment stopped.” Robinson: Well, what happens if a “stop payment” request is made and the bank pays the check by mistake? Atkins: No business in the world, Mr. Robinson, keeps better or more accurate records than banking. We are custo dians, not of our own money, but of the depositor’s money. Our clerical errors are few, indeed. If, however, a bank by mis take pays a check on which payment was stopped, some adjustment is usually worked out with the customer. Robinson : Can you illustrate this point for our listeners? Atkins: Yes, here’s an example. A woman customer issued a check for a rug which was to be cleaned before delivery. It was delivered, but hadn’t been cleaned as agreed. The buyer stopped payment on her check, but the bank paid it by mis take. Robinson : Well, how was this adjusted? Atkins: That was easy to settle. The bank had the rug cleaned at its own ex pense and everyone was happy. Robinson: I issued a check recently to a man who tried to cash it at my own bank. A few minutes later he came back saying the bank had refused to cash it for him. Now, why was he turned down? I had Money For Yourself C That is the basic thought back of The State Bond and Mortgage Company’s reserve fund plan. (I For twenty years this company has been engaged exclu sively in the business of building cash reserves for individuals and businesses. A logical and common-sense plan has been developed through these years of experience which is safe, profitable and efficient. (T The company is particularly proud of its record of having promptly met every obligation to its customers throughout its entire lifetime. The State Bond &Mortgage Co. N e w U lm , M in n . D e s M o in e s , I o w a . Our complete banking facilities in sure out-of-town banks and bankers prompt, efficient and economical handling of ac counts in Chicago —we invite you to use our facilities. C it y N AN« TRUST 2 0 8 S O U T H atio nal COMPANY LA S A L L E B ank of C h i c a g o S T R E E T Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 32 funds to cover the check, and the bank knew my signature. Atkins : Well, of course, the bank knew you had funds to cover the check and that your signature was genuine. However, they probably had no way of knowing that this man was the man to whom you had issued the check. He might have lost it en route, some other man might have found and presented the check. Robinson : Would the bank have been liable if it paid the money to the wrong man? Atkins: Yes, indeed. The bank must always make sure it’s paying the amount of the check to the proper individual. Robinson : Our time is about up. Now, F here’s one more question. I phoned my bank the other day to get the amount of my balance. The bank asked me a lot of questions before giving me this figure. Now, why was this “cross-examination” necessary? Atkins: The bank must identify you in order to protect both yourself and the bank. The amount of your balance is a confidential matter. You don’t want some one else to phone your bank and find out the amount of your balance, do you? Robinson: No, I don’t want my face to be red! And I can see where you’re protecting me. Atkins: That’s the idea, Mr. Robinson. Such rules and regulations are all pri- r ie n d l in e s s . . . A 45-YEAR OLD TRADITION 1889 £ 1935 Today, as throughout the years since 1889, custom ers at The N orthern Trust Com pany find that their problem s receive friendly, individual treatm ent. marily for the depositor’s benefit. They improve our service to you, as a part of your checking account privilege, and in crease the great value of your checking account. Robinson : Thank you, Mr. Atkins, for this fine information. How to Aid the Railroads Government could take the nation a long step toward recovery through one relatively simple act—aiding the rail roads. Government could provide such aid in a number of practical ways. It could pass legislation whereby all carriers would be taxed and regulated on an equitable basis, and thus establish a transport pol icy that would treat all fairly. It could make grade crossing elimina tion a part of public works, for which billions are being spent. The railroads are absolutely unable to meet such ex pense. It is primary in the interest of the public, not the railroads, and should be paid for with public funds. Inasmuch as the elimination of grade crossings would employ a great deal of labor, would stimulate heavy industries, advance safety and otherwise benefit all the people, it fits perfectly the principles laid down for public works expenditures. Government could credit the railroads with at least part of the tremendous sums they have been forced to spend for valua tion proceedings which have produced little or no useful information. This work was started in the public interest, not the railroad interest, and should be paid for by the public. Here are specific suggestions for grant ing justice to our greatest single industry which, normally, provides more jobs and purchasing power than any other. They should be given immediate consideration by law makers. From the standpoint o f a correspondent this per So That's the W ay O f It sonal attention, w ith efficient handling o f all routine A traveler was questioning Rastus about his home town. “How many people live in this town?” he wanted to know. “’Bout four thousand people, suh. It’s been that way for forty years.” “You mean to tell me that there were four thousand people here forty years ago, and only four thousand now? Haven’t any people moved in—any ba bies been born here?” “Yes, suh, babies been born, but eve’y time a baby is born, somebody leaves town.” m atters, has been c o n sid ered m o st desirable by many conservative banks throu g h o u t the country. Inquiries are cordially invited from other out-oftow n banks seeking a Chicago connection. THE NO RTH ERN TRUST COMPANY N O R T H W E S T C O R N E R LASALLE A N D M O N R O E ST R E ET S Disturbing CHICAGO ★ Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ★ April 1935 Hi—I didn’t sleep well, the shade was up. Heck—Why didn’t you pull it down? Hi—It was across the street. 33 In su ra n ce A Good Life Insurance Man m u s t be a GOOD BUSINESS MAN After more than ten years experience in the life insurance business, I am thor oughly convinced of one definite truth— a good life insurance man must, first of all, be a good business man. In other words, you cannot persistently be a poor business man and a good life insurance man as well. Since 3.929 all insurance periodicals have been filled with the constant ad monition to exercise time control, pre selection of prospects, program selling, package selling and a dozen other plans, all dominated with the thought that you can finally make good life insurance men out of a group containing a high percentage of poor business men. Five P oints To further analyze this proposition just what need a man do in the life ii surance business to be considered a good business man? Listing these points in the order of their importance I would say about as follows: 1. He first should have accurate fi nancial records to show whether or not he is making money. 2. He must have accurate records of policyholders, prospects and possible new contacts. 3. He must have a definite plan by which to follow up the points mentioned above and so definitely be able to sell life insurance to these people. 4. He must correlate all his activities whether at work or at play so that finally they have some definite benefit in at least the ultimate sale of life insurance. 5. He must have a definitely good mental attitude; in other words, he should act like a good business man and a success ful life underwriter, both in his personal affairs, his personal life insurance pro gram and his association with business men in all other lines so as to earn the respect of, not only his clients, but his business associates as well. It seems to me that life insurance com panies in selling agents on this business have over emphasized the philosophical and altruistic side of the life insurance By H. B. HARPHAM General Agent Reliance Life Insurance Company Akron, Ohio business, forgetting that a good life in surance man can be neither philosophical nor altruistic in the absence of sufficient production to enable him to earn a fair and decent living. So today, we hear from every side that it will be necessary to revise the agency system, remunera tion of agents and what not so as to re habilitate the insurance sales field in an effort to make admittedly poor business men successful business men. is that they have no plan, either good or bad. After all the only thing I know better than anyone else about the life insurance business is how I should operate my own personal affairs and the plans which I use to personally sell my clients. Rough and T u m ble During the first two years in business I simply went at it rough and tumble, using the argument that life insurance being a good thing, you should have more of it. Finally it became obvious that a more definite program of my own was necessary in order to organize myself and keep organized, so as to sell a profit T ryin g to Sell able volume of life insurance year in and In this effort to do the impossible the year out. With this thought in mind the plan companies have been selling lip service to the salesmen and the salesmen in turn of selling a life program from a protec have been selling lip service to the pros tion, and a financial standpoint as well, pect. By this I mean that thousands of seemed most logical for my particular agents who can’t operate their own affairs type of sales ability. So, too, it looked successfully have been trying to tell the like better judgment—that rather than general public how they should operate sell large policies I should try and de velop permanent clients, selling whatever successfully. To prove the fallacy of this you need they could safely buy, with the idea that only inquire into the average life in many sales over a period of time would surance agents’ personal set-up to find be better than a few temporary large that at heart he is considerable of a hypo sales. As a consequence we now have a crite and consequently is not competent very wide distribution of clients in all to advise the average business man in lines of business and the safety of this his personal or business affairs. plan is borne out by the fact that since Would it not be wiser and more to the the depression there has been a loss of point if life insurance companies gen only 10 per cent of the business which was erally focused their attention on the points in force at that time, and my total busi mentioned above. After all, they will ness in force has increased each year. largely determine whether or not the The safety factors of a plan of this kind prospective agent is a good business man are obvious for the greater the distribu and certainly if he finds it impossible to tion in any business the smaller chance of follow out such a simple set of rules he loss, whereas larger policyholders are cannot hope to produce a satisfactory harder to sell, harder to keep sold, and the volume, or permanently stay in the life reasonable lapsation and mortality expe insurance business. rience will cut down one’s renewals not The things which I am about to say only materially but usually very rapidly in this discussion will not, I hope, be in as well. I have rather studiously avoided terpreted as the conversation of an egotis+ business insurance for the same reasons for after all it is likely that my plan could and while I have naturally sold some of it not be used identically by many other I have tried to sell only where the future life insurance men. But, as stated above of the business looked secure. the trouble with most life insurance men Instead of trying to make the sale of Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 34 life insurance a high pressure affair or a complicated mental process, it’s my idea to make it appear a very simple thing and a simple decision for the prospect to make. Everyone admits that when we approach a man to buy life insurance he imme diately gets tied up in a mental knot and as a consequence we are likely to spend most of our time trying to untie the knot with little chance to actually make a sale. N WN L Steps U P A G ood Listener to Its Second Half-Century ★ 1934 W as a Y ear o f G A IN in E very R esp ect ★ E stablish ed 1885 * H igh est in history. We Know How to Work With Iowa Banks Iowa National’s president, himself, is a former Iowa banker. No wonder this strictly Iowa company so fully understands the needs of its banker agents, and can offer such close, effective cooperation. We have been serving Iowa people for 18 years, and our financial rating is one of the strongest—$201 of assets for every $100 of liabilities.* Before you make a connection for the new year, let us explain our agency proposition in full. W rite *U. S. R eview — Southern U nderw riter rating. C. Ed Beman, P r e s id e n t Fire— L ig h tn in g — T orn ad o— A uto Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 IO W A N A T IO N A L FIRE INSURANCE CO M PA N Y C. ED BEMAN, PRESIDENT D E S M O IN E S , 1A . Another thing I have learned is that most of the time I should be a good lis tener rather than a good talker, in other words, really give the prospect an op portunity to buy instead of literally try ing to push him into a sale. To illustrate this point we hear a great deal about the psychological moment when you should get out the application and just what you should say to precipitate a sale. After trying all of these plans my experience has been that whenever the prospect is actually sold, signing the ap plication is really a minor matter and you don’t have to use any subterfuge or freak selling in order to get a decision. I conscientiously try to impress upon the prospect that I am only asking him to do something I am actually doing myself, pointing out that it is really he and his family I am concerned about, since that sale, or a number of sales, is not neces sarily the answer for me. Another point: I never try to sell on the first interview, assuring a new pros pect that it is only my desire to make his acquaintance and determine whether or not there is a need for insurance and fur ther if there is some common ground on which we may meet which might ulti mately lead to a sale and a permanent cus tomer. In fact, I always assure them that I have no idea of trying to sell them life insurance unless I know intimately of their affairs, for without an intimate knowl edge of these family and business affairs I can be of no assistance in helping ar rive at a solution of their life’s plans. At all times and in all phases of my sales effort I try very definitely to con vey the impression to the prospect that it makes no serious difference to me whether he buys of me or not or whether he buys now or later, since we have a good serv ice to sell with good reasons for him to buy. After all, if he can’t appreciate these facts, perhaps there is no point where we can finally do business. It seems that too many times life in surance men are in the position of need ing an immediate order and consequently they unconsciously convey to the prospect the idea that after all this talk of his in terests, it is really the life insurance sales man’s own interests which dominate his action. G ood A d vice In maintaining a desirable service with intelligent advice on matters pertaining to 35 his personal and business affairs, it is al ways brought to the prospect’s attention that after talking to 25,000 men I am competent to give him good advice, be cause after all, a cross section of what these 25,000 people do under any given circumstance or condition is something he can gainfully use himself, and I am after all, only the medium of interpreting this experience. To put this another way, I rather like to feel that instead of selling life insur ance I am really helping my clients to buy judiciously and with the best possible future results. During the first seven months of 1933, when business was perhaps the hardest to get in my experience, most of my time was spent in the office counselling with clients, friends and prospects who seemed to need advice as to just what they should do, not only on life insurance but on other subjects as well. When the business situation finally cleared up late in the summer and life insurance began to come back I imme diately began to get a substantial busi ness return so that in 1934 with some what less direct effort it has been pos sible to sell a total of seventy cases with paid premiums for ten months totalling $26,250. This convinces me that people like to have you treat them as you personally would like to be treated were the situa tion reversed, since there are probably few things which the average man buys about which he is so totally uninformed as the purchase of his life insurance. Over $ 100,000.00 Assets are UP for the Western Mutual Fire Insurance Company. Likewise, there is a continued steady increase in the amount of insurance written and in the number of agencies contributing to this fine record. Western Mutual’s healthy growth is a reflection of the confidence of its agency force. Western Mutual, first of all, provides fire, windstorm, automobile casualty, and kindred lines of insurance at sound, money-saving rates. It backs this savings with the promptest kind of service— service which makes friends of policyholders and more business for the agencies servicing these same property owners. Western Mutual agents are a carefully chosen group of conscientious underwriters. If you would like to join this select body of insurance men—or if you would like to know more about this sound, growing company-—just write the home office at Des Moines. T he T eleph on e Another thing, for the past year and one-half I have regularly used the tele phone in soliciting appointments, feeling that if we cannot sell a man an inter view on the phone our chances for selling him life insurance are almost zero. In following this procedure you eliminate needless footwork and whenever you do sell an interview you obviously have a better chance to make a sale. This use of the telephone is not only confined to policyholders but strangers, referred pros pects, and casual acquaintances as well. During the past two years and against the natural trend toward investment in surance—most of my efforts have been confined to the sale of protection life in surance, feeling that perhaps we have gone too far on the side of investments, notwithstanding the fact that I was the first man with Reliance Life to sell insur ance with life income and pioneered its sale in our city. Here again, I think, is one of the diffi culties with all insurance salesmen. We tend to follow the line of least resistance so that during the past few years, with financial matters concerning so many peo- Ask to be placed on the mailing list for “Contact,” Western MutuaVs prize winning insurance publication. L W ESTERN MUTUAL FIRE INSURANCE c€(jynpcunLf 1008 HUBBELL BLDG. D E S M O IN E S ,IO W A Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 36 pie we have frequently made the easy sale rather than the right sale. Socialism vs. Rugged Individualism Furthermore it is my impression that insurance men generally should get back to the fundamentals of life insurance which involve the protection of one’s fam ily on a definite program, mainly for their benefit. If we will but do these simpler things, it seems to me with life insurance as an institution occupying such a preferred position in the minds of the public, our future production records will be entirely satisfactory for both ourselves and our companies. From a practical standpoint, Paul Smith, financial editor of the San Fran cisco Chronicle, sums up the political aspects of the crusade against the public utility industry, in a masterly manner. His comment was inspired by the de mand for $750,000 of tax funds to in vestigate the American Telephone and Telegraph Company. In part, he said: “The writer does not care whether any particular utility is ‘right’ or ‘wrong.’ That some holding companies may be ‘bad’ and some ‘good,’ he does not doubt. C O R R ES P O N D EN T i O FFICERS A . G . Sam, President C. L . Fredricksen, Vice-President M . A . Wilson, Cashier W . G . Nelson, Asst. Cashier W . C. Schenk, Asst. Cashier 11 Si oux C i t i When we become your correspondent bank, we handle your account as we think you would handle it, in our place. Backed by forty years of experience in Iowa, Nebraska, South Dakota an d M innesota. That some rate structures may be ‘fair’ and some ‘unfair,’ he readily admits. That some utility managements may be ‘smart’ and some ‘dumb,’ some ‘honest’ and some ‘dishonest,’ he believes not only possible but among the facts of life. . . Those things are beside the point. . . “The fact remains that a definite, de structive campaign has been launched against the public utility industry. Some of the campaign is open and above board, some subtle and insidious, like certain phases of certain PWA grants to com munities and states. The attack has been mapped out, pushed, promoted, energized and pressed in New Deal headquarters, Washington, D. C. There is no use dodging the issue. . . “If 10,000,000 utility investors and all utility managements want to wave the white flag and surrender their economic position, that is their business. . . “But even if peace at any price is their desire, they are not going to get it from the politicians today. This public utility thing is stock in trade to a large share of present-day politicians. Peace would liquidate one of their stocks in trade. “As soon as one sector quiets down, they will attack another. Their scouting force will find, somehow, enough Indians in the brush to ‘justify’ each new attack in the public eye. It is war and, like other forms of warfare, will bring stupidly uneconomic costs. “There will be the cost of unnecessary construction; public competition with private enterprises; gradual socialization; growing taxes to fill the gaps of ineffici ent political operation and, worst of all, perhaps, the cost of depreciation in the value of securities held by hundreds of thousands of small investors. . . “And the scene will not change while millions of voters sweetly accept political indictment of the public utilities.” Mr. Smith speaks frankly, but the sit uation justifies it. The present campaign is unfair, unnecessary and unAmerican. The seeds of destruction of private en terprise that are being sown, will sprout in other places to the infinite damage of other industries, unless the political util ity baiters are stopped by an informed public revolt against demagoguery that is promoting socialism instead of rugged individualism. Correct Live Stock National Bank S i o u x C i t y , I o wa " T H E B A N K Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 AT THE Y A R D S " Professor: Can you give me an ex ample of a commercial appliance used in ancient times? Student: Yes, sir, the loose leaf system used in the Garden of Eden. “How did you stop your husband from staying out late?” “When he came in I called out, ‘Is that you, Jack?’ His name is Robert.” 37 dend of 10 per cent or $11,804.70, mak ing total of 45 per cent paid. State Bank of Carpenter, Carpenter, dividend of 2 per cent or $962.72, making total of 22 per cent paid. South Dakota Bank News Officers South Dakota Bankers Association 1935 Convention P resid en t......................... L. M. Larsen Wessington Springs Vice President.Geo. 0. Fullinweider Huron L. M. LARSEN President Executive M anager. Geo. A. Starring Huron Makes Fine Record Dan H. Otis, director of the Agricul tural Commission of the American Bank ers Association, says that the Agricultur al Committee of the South Dakota Bank ers Association scored a rating of 995 out of a possible 1,000 points for the ac tivities of the year 1934. Chairman W. S. Given, the members of his committee, and the County Key Bankers of the state are to be congratulated for this excellent record due to their cooperation in putting across a valuable agricultural program under adverse circumstances. The missing 5 points which would have given a perfect rating were due to the fact that there was not a full attendance of officers and committee members at the annual conference with representa tives of the State College and the Agri cultural Commission of the American Bankers Association. The committee on agriculture held its annual meeting in Brookings on March 8. Those present included 9 bankers and committee members, 45 county agents and representatives of State College and the Extension Service. W. S. Given, chairman of the Commit tee on Agriculture of the South Dakota Bankers Association, opened the meeting by greeting the county agents present and thanking the members of the College staff and Mr. Otis who had made this meeting possible. Director Otis spoke twice. In the after noon he gave a general talk on agricul ture. He stated that difference in farm success is largely a question of farm man agement. It is advisable to give atten tion to those investments on farms that will give the greatest returns. The bank ers should carefully study this in making loans. Secretary Resigns After twenty-seven years as private secretary to R. J. Mann of the Clark County National Bank, Clark, Miss Anna Artz has resigned her position and will take an extended vacation, spending part of the time in her home and Aberdeen, and will spend some time visiting with GEORGE A. STARRING E xecutive Manager relatives in Hoven. Miss Artz has held this secretarial position continuously since her graduation from business col lege except for a few months in 1922 when she made a tour of Europe. Awards Revolver The Protective Committee of the South Dakota Bankers Association recently pre sented a 38 Colt police revolver to D. A. Woodbum, city marshall at Rock Rapids, Iowa, in appreciation for his ser vices in apprehending the bandit who robbed the Farmers State Bank of Flandreau. The presentation was made by chairman D. V. Meyhaus of Sioux Falls. New Bank The State Banking Department has recently granted a charter for a new bank in Watertown, S. Dak., under the title of Codington County Bank. The hank will have a capital stock of $50,000.00 with $5,000.00 surplus. Incor porators include the directors of The Old ham National Bank, namely; K. N. Folsland, Geo. C. Jorgensen, J. A. Nelson, Hans Hanson, N. P. Lund and F. F. Phillippi. Also Harmon Kopperud of Lake Preston and Joe Matthews of Lans ing, Mich. Dividends Frank R. Strain, South Dakota hank ing superintendent, announced recently that dividends totaling $53,600 are being paid to creditors of six closed state hanks. The dividends are: Bi-Metallic Bank, Colome, final dividend of $3,458.42 or 1.4 per cent, making total of 8.4 per cent paid to creditors. Bank of Bijou Hills, Bijou Hills, final dividend of $57.50 or three-fourths of one per cent, making total of 10.75 per cent paid. Fanners and Merchants bank, Willow Lake, first dividend of $10,939.35 or 7 per cent. Bank of Hot Springs, Hot Springs, dividend of $25,629.82 or 5 per cent, mak ing total of 35 per cent paid. Harding County Bank, Buffalo, divi Plans for the 1935 Convention are get ting under way to make this event equal to the best efforts of previous years. The general program will be about as follows : May 22—Golf tournament in the after noon at Sioux Falls Country Club. Smoker in the evening. May 23—Morning and afternoon ses sions. Banquet in the evening. May 24—Morning session. Adjourn ment at noon. Prominent among the speakers will be representatives of the American Bankers Association, Federal Deposit Insurance Corporation, Farm Credit Administra tion, Reconstruction Finance Corpora tion, U. S. Department of Justice, and some prominent South Dakotans. Legislation The following bills, touching directly or indirectly on banking, have been passed by the South Dakota legislature, the ses sions of which closed recently : SE N A TE B IL L S S. B. 10. K idnapping— M akes k id n a p p in g p u n ish ab le b y life im p riso n m e n t. S. B. 12. Fural Credit L o a n s— R ep e a ls S ection 17 of C h a p te r 187 of S e ssio n L aw s of 1927 an d C h a p te r 169 of S ession L aw s of 1933. P ro v id e s m e th o d of sale s of la n d s a c q u ire d u n d e r R u ra l C re d it A ct a n d /o r u n d e r th e L a n d S e ttle m e n t A ct. S. B. 24. C redit U nion s— A u th o riz e s o rg a n iz a tio n of c re d it un io n s. S. B. 36. T axation— P ro v id e s ta x on n e t in come a n d r e ta il sales, som ew hat s im ila r to Iow a p la n , a n d re p la c e s g ross incom e ta x on J u ly 1 st. (S ee p rin te d law fo r c o rp o ra tio n n e t incom e d e d u c tio n s .) S p ecial b u lle tin la te r giv in g in te r p r e ta tio n of D ire c to r of T a x a tio n a n d of o u r A sso c ia tio n C ounsel. S. B. 39 and S. B. 63. B ank E xam ination— C om panion h ills re q u irin g e x am in atio n of s ta te h a n k s a t le a st once in each c a le n d a r y e a r (in s te a d of tw ic e ). S. B. 53. School a n d P u b lic L a n d s — P ro v id e s 2 0 -y e a r p a y m e n t p la n to enable c o u n tie s to p a y o b lig a tio n s to d e p a rtm e n t of school a n d p u b lic la n d s. S. B. 55. B ank E xam ination— P e rm its ex change of e x a m in a tio n of S ta te B a n k s b y B a n k in g D e p a rtm e n t a n d P D IC an d F e d e ra l R eserv e B o ard a n d ex ch an g e of re p o rts . S. B. 61. School D istr ict B onds— P e rm its m e th o d of re fu n d in g b y school d is tric ts a t low er r a te of in te re s t. (E m e rg e n cy .) S. B. 64. C apital Stock Im pairm ent— P ro v id e s th a t c a p ita l s to ck of s ta te b a n k is n o t im p a ire d w hen its c a p ita l n o te s o r d e b e n tu re s re p re s e n te d b y cash o r sound a ss e ts exceed th e im p a irm e n t. S. B. 91. State P lan n in g Board c re a te d to m ake in v e stig a tio n s co v erin g th e n a tu r a l and h u m a n re s o u rc e s of th e s ta te a n d to fo rm u la te p la n s fo r th e ir c o n se rv a tio n a n d d e velopm ent. S. B. 109. F oreign P eace Officers a re given sam e a u th o rity a s local police w hile e ngaged in th e ir d u tie s in th is s ta te . (E m e rg e n c y .) S. B. 110. A uthority fo r F D lC — A u th o riz e s F D IC to liq u id a te closed s ta te b a n k s w hose d e p o sits a re in s u re d th e re u n d e r; p ro v id e s f o r su b ro g a tio n of F D IC to r ig h ts of closed h a n k s ; a u th o riz e s S u p e rin te n d e n t of B a n k s to b o rro w fro m F D IC an d pledge a ss e ts of closed h a n k s th e re for, etc. S. B. 111. A uthorizes State banks to becom e m em bers of F D IC a n d issu a n c e of c a p ita l n o tes or d e b e n tu re s. S. B. 112. N otice of D ishonor— -E lim inates re q u ire m e n t th a t h a n k m u st give no tice of d is h o n o r on checks n o t h o n o re d a cc o u n t of d elay in p re s e n ta tio n . See L e g is la tiv e B u lle tin No. 9. M akes o u r law u n ifo rm w ith o th e r s ta te s . S. B. 115. B uild ing and Loan a sso c ia tio n s p e r m itte d to in s u re in F e d e ra l S av in g s an d L oan In s u ra n c e C o rp o ra tio n s a n d in s u re th e ir m o rt gages in F H A . Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 38 S. B. 116. B u ild in g and Loan a ss o c ia tio n s p e r m itte d to c o n v ert to F e d e ra l S a v in g s a n d L o an A sso ciatio n s. S. B. 120. E xtension W o rk —-A u th o rize s co u n ty a g ric u ltu ra l e x te n sio n w o rk . D iv o rces E x te n sion fro m C ou n ty F a rm B u re au . S. B. 138. C hattel M o rtg a g es— P e rm its r e g is te r of deeds to d e stro y c h a tte l m o rtg ag e s, b ills of sale .o r c o n d itio n a l sales c o n tra c ts a f te r th e y have b een on file fo r 12 y e a rs. S. B. 161 and S. B. 162— C la rify law re ta x a tio n of sh a re s of s to ck u n d e r m oneys a n d c re d its ta x . S. B. 164. Securities C ommission F ees Sched ule re v is e d b y a d d in g fo llo w in g fees to S ectio n 18, C h a p te r 206 of 1927 S essio n L a w s : (5 ) On a p p lic a tio n fo r re in s ta te m e n ts of r e g is tra tio n , $ 10.00. (6 ) E x te n s io n of re g is tra tio n , $1.00. (7 ) B o n d filin g fee, 50 cen ts. (8 ) A n n u a l re p o rt filing fee, $1.00. (9 ) Q u a rte rly r e p o rt filing fee, 25 cen ts. S. B. 166. D epartm ent of J u stice c re a te d w ith com p lete law e n fo rc e m e n t set-up. Too long to re v ie w h e re , b u t co m p ares fa v o ra b ly w ith c o n s ta b u la r y sy ste m of e a s te rn s ta te s . In co m e m ay n o t p e rm it a ll a c tiv itie s p ro v id e d in th e la w fo r few y e a rs. S. B. 170 to S. B. 178. P u b lic W orks p ro je c ts re q u e ste d b y F e d e ra l G o vernm ent. A ll a re em er gency m e a su re s c re a tin g S ta te B o a rd of P u b lic W e lfa re ; S o u th D a k o ta E le c tric C o rp o ra tio n ; C ity Im p ro v em en t A u th o ritie s fo r w a te r, sew age, gas a n d pow er, etc. H O U SE B IL L S H. B. 20— P ro v id e s a tw o -y e a r m o ra to riu m on m o rtg ag e fo rec lo su re s, m o rtg a g o r to p a y all o r a re a so n a b le p a r t of incom e or r e n ta l v alu e to w a rd s in s u ra n c e , ta x e s, etc. (E m e rg e n cy .) H. B. 23— E n a b le s b a n k s to q u a lify fo r m a k in g F H A loans. (E m e rg e n cy .) H. B. 27— P r o h ib its re c o rd in g of m o rtg ag e s w h en m o rtg a g o r w aiv es a n y of th e specified legal e x em p tions. H. B. 51. E xten sion of Corporate E xisten ce of b a n k s an d o th e r c o rp o ra tio n s p ro v id e d fo r u n d e r c e rta in re s tric tio n s . (E m e rg e n c y .) H. B. 60— G ives g o v e rn m e n t lo a n in g a gencies cro p lie n on cro p s g row n fro m g o v e rn m e n t s u p p lied seed. (E m e rg e n cy .) H . B. 75. . B ank Offices— S ta te b a n k s p e r m it te d to open offices in b a n k le ss tow ns. Sam e p r iv ilege to n a tio n a l b a n k s if a llow ed b y F e d e ra l law . D oes n o t a u th o riz e b ra n c h b a n k in g . HE M EA SU RE OF VA LU E of a C IT Y C O R R E S P O N D E N T is its ability and desire to serve. The facilities of this bank are com plete for the prompt handling of any bu siness. W e would like to prove both our ab ility and desire to serve you in Sioux City. H. B. 80 an d H . J. R. No. 5——E x e m p ts S ta te b a n k s s to c k h o ld e rs fro m double lia b ility if a n d w hen C ongress m ak es sam e p ro v is io n fo r n a tio n a l b a n k s. M u st be v o te d u p o n in 1936 ele ctio n , as H . J . R. 5 p ro v id e s fo r C o n stitu tio n a l am e n d m en t. H. B. 109. D eficiency Judgm ent L aw am ended so a s n o t to a p p ly w ith re s p e c t to g o v e rn m e n t lo a n in g a gencies. (E m e rg e n cy .) H. B. 111. G uardians—-A u th o rize s g u a rd ia n s to m o rtg ag e h o m e stea d s of w a rd s u n d e r c e rta in co n d itio n s. (E m e rg e n c y .) H. B. 126. S tate Seed D epartm ent c re a te d . E n d o rse d b y o u r a g ric u ltu ra l com m ittee. (E m e r g en cy .) , H . B. 144. F id e lity B onds on b a n k officers re q u ire d in s te a d of s u re ty com pany bonds. H. B. 165. A ction on D efau lt u n d e r s u re ty or fid e lity b onds re a u ire d to be h eld in c o u n ty w here indem nified re sid e s. H. B. 212. U niform P isto l Law, w ith slig h t am e n d m en ts. A Logical Government Undertaking In his address to Congress on proposed public works for the current year, the President laid down certain broad prin ciples on which he wished the program to be based. Among them were: That projects be determined on the basis of the amount of direct labor they would pro vide; that the highest possible percentage of the money spent go into pay envelopes; that the work produce things that would be of definite public usefulness; that the projects be of a type that would not com pete with private endeavor. Few public works projects could better fit those principles than grade-crossing eilmination. The great bulk of every dol lar spent would go to labor, both on the job and in heavy industries — paint, cement steel, etc. — providing necessary supplies. No private business would be harmed. And the public would not only receive the boom of stimulated purchasing power, but would be benefited in another vastly important field—safety. Thousands of people have been killed at grade crossings; each year brings its heavy toll. Only a small proportion of the thousands of existing crossings are adequately protected. Past campaigns to eliminate crossings have produced some results—but lack of funds has brought such work almost to, a stop. Your Radio Program F IRST N A T IO N A L IN S I O U X Cl TV B A N K A . S. Hanford, President Frederick R. Jones, V ic e Pres. Fritz Fritzson, Cashier Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 T u n e in every Saturday even in g , 6 :4 5 to 7 :0 0 , on S ta tio n W H O , Des M oines, and hear th e F in a n c ia l News and Vieivs fea tu re sponsored and p resen ted by T h e N o r th w e s te r n B a n ker? Des M oines. It will be to yo u r advantage to have y o u r custom ers listen to these program s, also. 39 Another Check-up N e b ra ska Bank N ew s Officers Nebraska Bankers Association OTTO K O TO U C P re s id e n t P r e s id e n t............................O tto K otouc H u m b o ld t C h airm an E x ecu tiv e C ouncil.......... ................................... J . M. Sorensen K im ball T r e a s u r e r .................F re d W . Thom as Omaha S e c re ta ry ................. W m. B. H ughes Omaha Banker Dies Chas. Cook, well known Spencer banker and resident until the last few years, passed away at the home of his son, Dean, at Beaver Dam, Wisconsin. He is survived by three sons and two daughters: Renard E. of Wausaw, Lucian L. of Spencer, Dean C. of Beaver Dam, Wisconsin, Mrs. Charles C. Morgan of Omaha, and Emma V. Cook of Battle Creek, Michigan. He is also survived by two brothers, Wesley of Omaha and Ed win of Beaver D’am. Burial was made at Blair, Nebraska, former home of the Cook family, before moving to Spencer. Depository A resolution designating the First Na tional Bank of the city of Randolph, a de pository for city funds, providing for a service charge on any deposits carried therein and providing for the security of any deposits made therein, was passed re cently by the Randolph city council. WM. B. H U G H E S Secretary of Gwyer Yates, chairman, J. T. Stewart III, C. J. Flowers, E. H. Spetman and M. F. Barlow. The two principal convention business sessions will be held in the Brandeis theater. Delegates classified as to char acter of their work will hold individual group meetings. Convention delegates, elected on a membership basis, will come from the 229 chapters. One principal speaker will be Rudolph S. Hecht, president of the American Bankers Association, and chairman of the board of directors of the Hibernia Na tional Bank of New Orleans. Chief Counsel Franz C. Radke was recently reap pointed chief counsel for the state bank ing department by governor R. L. Coch ran. He will continue to receive a salary of $3,500 per year. Radke once served as private secretary to former governor Charles W. Bryan. Paid in Full Work of H. A. Tunnell, an officer, di rector and stockholder of the defunct State Bank of Logan county at Gandy, has brought depositors there one hundred cents on the dollar for funds on deposit at the time the bank failed. Tunnell turned over to the receiver a first mortgage for $16,000, which was $9,300 more than his stockholder’s liability. This contribution of $9,300 plus funds secured from the Reconstruction Finance Corporation made the 100 per cent pay-out possible. The final payment of 35 per cent, amounting to $22,500 was recently announced by the state banking department. A . I. B. Convention Richard W. Hall, national secretary of the American Institute of Banking, in Omaha recently to arrange for the na tional convention, said he expected at least twelve hundred delegates to attend the convention to be held June 10th to 14th inclusive. Hill was in Omaha conferring with the local arrangements committee, consisting https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The fact that about $150,000 was ap propriated from the state treasury and spent less than five years ago on an in vestigation of bank failures and the op erations of the old guaranty fund com mission was apparently forgotten by Ne braska senators as they voted, over the protest of a few of their number, to pro vide $20,000 more for an audit of the banking department covering the period since 1930. This new probe is in reality to be a checkup on the banking administration during the Bryan regime. The bill au thorizing it and making the appropriation is H. R. 392, already passed by the lower chamber. Auditor Price is to have charge of the investigation which will require employment of some extra accountants by his office. Senators Stewart and Sullivan tried vainly to have the amount cut down to $10,000. The bill was advanced to third reading with the larger sum included. It specifies that the finding of the auditor and his assistants shall be reported to the next legislature. New Home The Mason State Bank has moved into its new and permanent home, having pur chased the building formerly occupied and owned by the Mason City Banking Com pany. This is one of the finest and best equip ped business buildings in Custer county. The building is equipped with modern and up-to-date furniture and fixtures, with all safety appliances and protective features against gangsters and robbers, and has ample room for the accommoda tion of patrons. Returns to Work Chas. E. Wood, who has been ill, has returned to his duties at the Bank of Talmage. He has been suffering with an ailment to his feet and limbs, but is much im proved at the present time. In Bank Fritz Stevens of Hartington began his new duties as an employee at the Bank of Hartington recently. He was formerly employed at the People’s store in H art ington. Direct Contact with the Livestock Industry Enables Us to Give Efficient Service to Our Custom ers LIVE STOCK NATIONAL BANK O M A H A Northwestern Banker April 1935 40 Reduce Payroll Deposits Gain Administrative personnel in the Ne braska banking department has been re duced from 109 people at the close of 1934 to 101 in February, and the total payroll has been cut from $17,298 per month to $15,530 during the process of its reorganization under Governor Coch ran’s direction, since Ben Saunders took charge as superintendent. Each of the four divisions in the de partment is being run now at less outlay for salaries than it was during the pre vious regime. Governor Cochran says that some further changes in personnel will be made from time to time. Throughout 1934 the DeLay National Bank, Norfolk, one of Nebraska’s leading financial institutions, enjoyed an increase in business and number of customers, which on Jan. 1 showed a gain of $62,000 in deposits alone. Deposits on Jan. 1, 1933, amounted to $1,200,000, and on the same date this year they totaled $1,822,000. January also brought about an addi tional increase in the bank’s business, the number of accounts and deposits, and offi cers of the institution are confident 1935 will be another year of progress for Nor folk and its trade territory. 1863 1935 experi XenceHEofaccumulated The First National Bank of Chicago covers more than seventy years. The Divisional Organization since 1905 has developed direct contacts between officers of the bank and its customers. Correspondent banks have found the relationships under the plan both pleasant and profitable. The First National Bank o f Chicago Charter Number Eight Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 This strong financial institution is op erated under the personal direction of J. J. DeLay, preesident, who has been in the banking business more than thirty years in the middlewest. Officers and directors of this bank are President DeLay, Paul Zutz, cashier; A. H. Steffen, O. W. Gladem and Harry At kinson, assistant cashiers; Otto Becken bauer, W. O. Eichelberger, W. G. Flint, Dr. A. E. Gadbois, H. F. Thenhaus, all of Norfolk, and A. R, Olson, Beresford, di rectors. Bank Position The resignation of Louis Murdock as deputy county treasurer has been an nounced and was effective March 15. Mr. Murdock will accept a position in the Washington County bank of Blair, left vacant when John Davis resigned. Mr. Davis, who resigned his job at the local bank about March 18, has been a resident of Blair for about a year and a half. Dies in Osceola S. A. Snider, 71, president of the First National Bank of Osceola for many years, died after a long illness. He also was prominent in public life, having served as mayor of Osceola six years and once as deputy county clerk. Snider was born in Canada and lived here since shortly after the turn of the century. Surviving are his widow, three daughters and a son. Self Help Is Best Help It is forecast that the government is going to make a change in its policy toward agriculture. It will have less to say about what the farmer should do and not do—and will leave more up to the farmer himself. Progressive American farmers will wel come that change. And they will also welcome the chance it will give them to show the stuff they are made of. Farmers face great problems—and the only way they will ever be satisfactorily solved is by the efforts and work of the farmers them selves. Even if government, by fiat, could make all rosy in the agricultural world, it would be of small worth if the farmer became a financial and mental dependent in the process. Today several millions of farmers are banded together in cooperative associa tions, handling dairy products, cotton, walnuts, wheat and other goods. The co-ops are controlled by the farmers— they reflect faim sentiment and farm am bitions. They represent real private initiative through collective action that doesn’t ask for favors, that doesn’t depend for existence on government, and that gets results. Cooperatives are the best weapons the farmer could have for fight ing depression. 41 Minnesota Bank News Officers Minnesota Bankers Association D. J . FO U Q U E T T E President P r e s id e n t............................D . J. Fouquette St. Cloud Vice P r e s id e n t............... W m. N. Joh n so n M inneapolis T r e a s u r e r .............................. O luf G a n d ru d B enson S e c re ta ry ................. W illiam D u n can , J r . M ankato W IL L IA M D U NCAN, J r . S ecretary To California Bank Moved A hundred members of the Minneapolis banking fraternity last month gave a testimonial farewell dinner in honor of Evan M. Johnson, assistant controller of the First National Bank & Trust Com pany, and L. L. D. Stark, trust officer of the Midland National Bank & Trust Company. Mr. Johnson and Mr. Stark are leaving the Minneapolis institutions with which they have been connected for several years. Mr. Stark has taken a position with a bank in California. Steps have been taken with the state banking department for the removal of the State Bank of Verdi in Pipestone county to Comfrev. E. H. Tams is cash ier of the bank. The bank will open in Comfrey with a capital stock of $20,000, with $4,000 sur plus. Comfrey has been without a bank since the First State Bank closed June 16, 1932. Bank Raided Burglars raided the First National Bank of Lake Lillian recently, set fire to the building to cover their tracks and destroy clues, and escaped with about $ 1, 000 . The burglary was discovered when E. J. Strom, who lives across the street, sawTsmoke coming from the building. The flames were extinguished with loss con fined to a few hundred dollars damage. Enlarges Quarters Enlarging of quarters in the Wolvin building for the Duluth Morris Plan bank, with the institution occupying the addi tional First street frontage now occupied by a barber shop, is now under way. A building permit for $4,000 for the altera tions has been issued. Dies in Chatfield M. D. Balsiner, 51, vice president of the First State Bank of Chatfield, died sud denly of a heart attack there recently. To Establish Bank A. E. Hoese, of New Germany, and M. A. Bell, of Minneapolis, have ap plied to the State Banking Department for a charter permitting them to establish a bank in Glencoe, to be known as the Security State Bank of Glencoe. Both applicants are experienced bank ers. Mr. Hoese has conducted the State Bank of New Germany for 15 years, and for five years prior to that time was asso ciated with the bank at Zap, North Da kota. M. A. Bell was cashier of the State Bank of Plato for 30 years, which was liquidated in January, 1933, paying all depositors in full. Since that time, Mr. Bell has been associated with the Recon struction Finance Corporation. Banker Dies R. T. Amel, president of the First Na tional bank of Alden, died recently of heart trouble. He had been president of the bank 10 years. Surviving are his widow, two daughters, Lois, student at St. Catherine’s college at St. Paul, Dolores, at home, and a son, Earl, student at the University of Minnesota. Cashier Retires New Cashier Arnold Kindseth of Kenyon has been engaged as cashier of the Security State Bank of Bemidji to succeed H. B. Swen son, deceased, it was learned recently. Mr. Kindseth took over his duties last month. He was formerly assistant cash ier of the Kenyon State Bank which merged with the Citizens State Bank in 1932. Wesley E. Steele, connected with the Security State Bank of Ellendale for 20 County Meeting years, and prominent in community activi A meeting of the Clay-Wilkin County ties, has retired from his position as cash Bankers Association was held in Moor ier because of poor health. E. Olson of head. The meeting was called to order St. Paul succeeds him. by president Geo. E. Buscher. The committee on constitution and by laws submitted a proposed form which was read to the members by secretary I. C. Larsen of Breckenridge. President Buscher named the following committees, to serve until the next annual meeting of the association, or until such time as the next administration may name new committees: 1. Educational Committee—Oscar Rusness, chairman; Halbert Shirley, Melvin Hanson. 2. Agricultural Committee — O s c a r Bamess, chairman; M. A. Anderson, Geo. Wastvedt. 3. Banking Practice and Ethics—D. G. Johnson, chairman; Peter Erickson, Law rence Paulson. 4. Legislative Committee—Phillip M. Boll, chairman; L. L. Olson, Theo. Gun derson. News and Views (Continued from page 17) WANT TO AGAIN EXPRESS MY PERSONAL APPRECIATION for the hundreds of letters which are pour ing into our office from bankers who are telling us of the fine radio programs which we are presenting each Saturday night over WHO, from 6:45 to 7:00, Central Standard Time. Here are two letters which are typical of the many which we have received. One banker writes: “Permit me to say that it is with plea sure that I listen to the weekly broadcasts of the DE PUY PUBLICATIONS. This is getting information to the people in a new way on everyday banking problems. I congratulate you and may the good work go on.” Another banker writes: “Want you to know how much I enjoy the weekly program that you sponsor on Saturday evening. The one last week was especially interesting to me and am anxious to receive the next N o r t h w e s t e r n B a n k e r so that I will have those fig ures that you gave. I think that it is very interesting data and gives us an idea of how we are doing financially.” I HEN I WAS IN CHICAGO re cently, after my two months’ in the East, I had the pleasure of being in vited to luncheon with some of the Officers of the Federal Reserve Bank as the guest of GEORGE J. SCHALLER, governor. I must confess that the food which they served me in their private dining room compared most favorably with any of the hor d’oeuvres, crepe suzettes or caviar which I inhaled in such high class restaur ants as Childs and Thompsons in Phila delphia, Boston, New York and Balti more. Other officers who joined us at the luncheon were EUGENE M. STEVENS, Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 42 Federal Reserve agent; C. S. YOUNG, assistant Federal Reserve agent; and C. R. McKAY, deputy governor. OM R. WATTS, president of the People’s Trust & Savings Bank of Grand Junction, and for many years an active official in the Iowa Bankers Asso WAS INTERESTED in reading the ciation, has reason to be proud of the annual report of the Directors of 100 per cent liquidation of the Citizens the AMERICAN TELEPHONE AND Bank of his city, which he managed for TELEGRAPH COMPANY, and noted many years, and which he placed in volun that there are 13,458,000 Bell telephones tary liquidation on March 13, 1933, fol in service. There are 675,000 stockholders in the Company, of whom 379,000 are lowing the bank holiday. I will venture women and 100,000 or more are Bell sys to say that many depositors in the tem employes. No stockholder owns as Citizens Bank had investments which did much as 1 per cent of the stock outstand not turn out to be worth one hundred ing and the average holding per stock cents on the dollar, as did their deposits holder is only 28 shares. in this hank. T I S IN C E YOU U N D O U BTED LY PLA N A D V E R T IS IN G FO R Y O U R W HY NOT CH O O SE SO M E BANK TH E DALE CLARK, president of the .Omaha National Bank, is not “up in the air” but he is “on the air” Avith a radio program for his institution which takes place every Sunday afternoon at 5:00 p. m. over station KOIL. The pro grams are electrical transcriptions of in terviews with prominent and successful business men by John B. Kennedy, noted editor and lecturer. In addition to this part of the program, musical numbers are furnished by the Metropolitan Sym phony Orchestra. In commenting on these radio pro grams, Mr. Clark had this to say: “We have long felt that a bank could properly attempt to disseminate informa tion which would do more than merely advertise its own services. We believe that its influence could be exerted to har ness public unrest with sane ambition, and to promote a more constructive atti tude toward business in general.” W K IN D The Public Demands Calendars Are a Necessity but the public has come to depend on the advertiser for them. WO of my esteemed fellow publishers, have written me letters recently con gratulating us on the excellent issues of the N orthwestern B anker which we have been producing and for these kind words from my contemporaries I express sincere thanks. Here are the letters : “I have just read the N orthwestern B anker from cover to cover. Probably in a few years you will be able to pub lish even a better journal than this issue, but I do not know how you are going to do it because that is just about as well balanced a publication as there could be. GEORGE P. EDWARDS, Editor and Publisher, Coast Banker and Pacific Bank, San Fran cisco.” And J. C. SCARBORO, Associate Editor of the Mountain States Bank of Denver, Colorado, had this to say : “I want to take this opportunity to congratulate you on the splendid March issue of the N orthwestern B anker .” T W hy not take advantage of this method of winning good will? More bank ers are doing this very thing TESSE H. JONES, chairman of the J Reconstruction Finance Corporation, DROP US A LINE ON WE’LL [SEND YOU A S E R I E S [ OF LARGE ■ FREE O F YOUR LETTERHEAD ■ CALEN D AR LEDGER AND A BLOTTERS! C H A R G E ! T H E TH 0 S . D. M URPHY CO. RED OAK, IOWA The Birthplace o f Art Calendars Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 has made Uncle Sam “the gas man of St. Louis” by seizing control of the Pub lic Utilities Securities Corporation and ousting its board of directors who were formerly headed by Harley L. Clarke. “All that the country needs now is a thorough spirit of cooperation. And when I say ‘cooperation’ I mean a condition in which government does not attack business and business does not attack the govern ment.”—Silas H. Strawn, United States Chamber of Commerce. It’s just as much a deception of the pub lic to have something GOOD for them and NOT tell them, as it is to have something BAD for them and tell them it is GOOD. tio n s to m ake loans u n d e r th e F e d e ra l H o u sin g A ct, u n d e r b o th T itle s I an d I I , a n d a u th o riz e s th e c h a rg in g of in te r e s t on such loans a t th e r a te p ro v id e d in th e F e d e ra l act. E m erg en c y m e a su re . S. B. 132 re c o n ciles s ta te b a n k in g law s w ith th e F e d e ra l d e p o sit in s u ra n c e ; a u th o riz e s in v e s t Officers North Dakota Bankers Association m e n t in sto c k of th e F e d e ra l D e p o sit In s u ra n c e C o rp o ra tio n ; a n d gives to s ta te b a n k s th e rig h t to re ceiv e p o s ta l sav in g s d e p o sits, an d to ta k e P resid en t............................................................................. F. D . McCartney a n y a n d all a c tio n n e c e s sa ry to p ro c u re th e d e O akes p o sit of th e sam e. E m erg en c y m e a su re . S. B. 133 v a lid a te s th e issu a n c e of d e b e n tu re s, a n d a u th o riz e s th e issu a n c e of p re fe rr e d stock, b y Vice P resid en t...................................................................................Guy Cook b a n k s, a nd p ro v id e s th a t p re fe rr e d sto ck m ay he Carrington in c lu d e d in d e te rm in in g th e c a p ita l s tru c tu re , a n d in re d u c tio n of com m on sto ck . I t also p r o v ides fo r no double lia b ility on such p re fe rr e d T reasurer................................................................................... W . E. Tooley stock. T he S ta te E x a m in e r h a s m ailed to a ll Minot s ta te b a n k s copies of 132 a n d 133, a n d th e se b ills should be re a d c arefu lly . T h ey a re b o th S e c re ta ry .................................................................................... C. C. W attam F. D . M c Ca r t n e y e m ergency m easu res, a n d effective a t once. Fargo P resid en t S. B. 134 am ends th e la w fixing c a p ita l r e q u ire m e n ts fo r s ta te b a n k s, an d w as p ro p o se d by th e . S ta te E x a m in e r’s office fo r th e p u rp o se of a s s is tin g in m oving sm all b a n k s fro m one p o in t to a n o th e r. E ffective J u ly 1st. . 37 am en d s th e law w ith re fe re n c e to th e W. J. JOHNSTON, formerly cashier, p roSh..B ib itio n a g a in s t c o rp o ra tio n fa rm in g , an d a u th o riz e s th e ta k in g of a deed in s a tis fa c tio n of has been elected vice president to succeed ROBERT P. ROSCOE lias been elected a n y m o rtg ag e, lien, o r o th e r e n cu m b ra n ce ow ned th e c o rp o ra tio n on such re a l e sta te . E m e r director of the Farmers & Merchants Otto Bremer, who has resigned as vice by gency m e a su re . president of the Farmers & Merchants S. B. 114 o u tlin e s an d sim plifies th e p ro c e d u re State Bank of Dickey, succeeding C. E. for_ re fin a n c in g of e x istin g in d e b te d n e s s of m u Larson who has passed away. James State Bank, Fordville. J. E. Bannerman, n ic ip a litie s. E m erg en c y m easu re. B. 26 a u th o riz e s th e sc a lin g dow n a n d d is Waldie succeeds Mr. Larson as vice pres formerly assistant cashier, succeeds Mr. c o uS.n tin te r e s t on loans of th e Johnston as cashier. Mr. Bannerman suc B o ard ofg Uofn ivpearss tityduea n dinSchool L a n d s. E ffective ident. J u ly 1st. ceeds Mr. Bremer as director. S. B. 143 ra is e s a lte rn a te e x em p tio n s to $1500 fo r m a rrie d m en a n d $150 fo r sin g le m en. PAUL W ISHEK has been elected di S. B. 233 lim its th e re n e w al of c h a tte l m o rt H. J. VORACHEK, formerly assistant gages, a n d p ro v id e s th a t a n y c h a tte l m o rtg ag e rector of the Farmers State Bank of Zeea n d a n y re n e w a l th e re o f sh all becom e void and cashier, has been elected cashier of the land to succeed Adam J. Hezel, who cancelled of re c o rd a g a in s t a ll p e rso n s a t th e end Citizens State Bank of Lankin, succeed of six y e a rs fro m th e d a te of filing of th e o rig in a l passed away recently. m o rtg ag e . E m erg en c y m e a su re . W h e th e r th is ing 0. A. Bygland, who has resigned. a p p lie s to a n y m o rtg ag e s h e re to fo re ta k e n , is v e ry q u e stio n ab le . MAURICE W. CHAPEK has accepted S. B. 297 p ro v id e s fo r th e c an c e lla tio n of crop m o rtg ag e s w hich have been filed m ore th a n th re e a position as bookkeeper of the Farmers y e ars, e x ce p t w h e re giv en fo r th e p u rc h a se p ric e Theodore Serr of Mandan has resigned of l a n d ; an d fo r th e c an c e lla tio n a n d d isch a rg e State Bank of Anamoose. by th e re g is te r of deeds of a n y w ritte n a g re em en t his post as cashier of the First National re la tin g to p e rs o n a l p ro p e rty o th e r th a n c h a tte l m ag e s th re e y e a rs a f te r such in s tru m e n t by E. T. CARLEY, formerly cashier, has Bank there to accept a position as district itso rtg te rm s h a s e x p ire d or te rm in a te d . E ffective J u ly 1st. been elected president of The Casselton supervisor of field collections and field H. B. 3 fixes th e le g a l r a te of in te re s t a t 4 State Bank, succeeding J. E. Car ley, who work in 19 North Dakota counties for the p e r cen t. E ffective J u ly 1 st. H . B. 100 fixes th e r a te of in te r e s t on ju d g has resigned. Julia Brekke, formerly Federal Home Owners Loan Corporation. m ents a t 4 p e r cen t. E ffective J u ly 1st. H . B. 107 defines u s u ry a n d fixes th e c o n tra c t Serr has a wide acquaintance through assistant cashier of that institution, has ra te of in te re s t a t 7 p e r cen t. E ffective J u ly 1st. been elected cashier, and Glenmore out the territory he is to supervise. In T h is b ill w as in tro d u c e d a t 4 p e r cent, p a sse d th e o u se a t 6 p e r cent, an d fin ally p a sse d a t 7 p e r addition he has had several years of expe Hcent, Jahnke is now assistant cashier. a f te r th re e c o n feren ce co m m ittees of th e rience in supervising field and collection H ouse a n d S e n a te h a d a tte m p te d to g e t to g e th e r on it. T he H ouse in s is te d on 6 p e r cent, th e WM. BAHM has been elected president work. He was formerly a field man for S e n a te on 7 p e r cent. H. B. v id e s f o r th e e sta b lis h m e n t of of the Stockmens State Bank, Medora, the bank and has served as cashier for c re d it u n io86n s puro n d e r th e su p e rv isio n of th e B a n k in g D e p a rtm e n t. T h is law is sim ila r to th e p ro succeeding Matilda J. Parker, who passed several years. n s of th e F e d e ra l a c t a n d re g u la tio n s c o v er No one has as yet been named to fill vinisio away recently. Mrs. Anna Pederson suc g th e sam e s u b je c t. E ffective J u ly 1st. H. B. 299 re q u ire s c h a tte l sales to be h e ld on his place as cashier. ceeds Mrs. Parker as director. th e p lace w h e re th e p ro p e rty is located, a n d am ends th e 1933 law to p ro v id e fo r p u b lic a tio n of n o tic e in th e official n e w sp a p e r in s te a d of leg al GAIL HERNETT, formerly assistant n e w sp a p e r. I n th e d iscu ssio n on th is b ill it w as p o in te d o u t th a t th e o rig in a l hill, C h a p te r 206 of cashier of the Farmers State Bank of e 1933 S essio n L aw s, w as in v a lid b y re a so n of Almost a complete change in officers th irr e g u la r ity in its passag e, a n d th is law am en d in g Zeeland, has been elected cashier to fill has been made by the German State of th e 1933 s ta tu te is lik e w ise said to be ineffective the vacancy caused by the death of Adam ca u se of th e in v a lid ity of th e o rig in a l a ct. Beulah, North Dakota. Frank E. Mar be E ffective J u ly 1st. J. Hezel. 72 re q u ire s th e in v e stm e n t of t r u s t fu n d s shall is the new president; Emil V. Sla by Hex. B. ecu to rs, a d m in is tra to rs , a n d g u a rd ia n s only vick, cashier; and D. L. Waggoner, assist a f te r specific a u th o riz a tio n b y th e p ro b a te co u rt. F. E. MARSHALL has been elected ant cashier. L. F. Tennne, vice president, E m erg en c y m easu re. B. 287 p ro v id e s fo r su g a r b e e t p ro d u c tio n president of the German State Bank, Beu was re-elected. Mr. Slavick has been with lie H. n co v erin g c ash a d v an c e s, m a te ria l, or serv ices fu rn is h th e p ro d u c tio n of su g a r b e ets. E f lah. Emil V. Slavick has been elected the Citizens State of Belfield for the last fe c tiv e eJdu lyin 1st. H . B. 126 p ro v id e s th a t a ll crop a nd g ra in , cashier of the institution, succeeding F. 12 years and D. L. Waggoner was con th re s h e d an d u n th re s h e d , ra is e d b y th e 0. Gentz, who has resigned. Dana Wag nected with the Farmers State of Dickin bd oe th b to r on n o t to exceed 160 a c re s in one tr a c t occupied b y th e d e b to r, e ith e r as o w ner or te n a n t, goner succeeds B. Aanderud as assistant son for a year and a half. a s h is hom estead, m ay be claim ed as exem pt. T h is law does n o t affect seed, fa rm labor, th re s h e r, or cashier. la n d lo rd liens, a nd if th e d e b to r claim s th e crop as ex em p t he c an n o t a v ail h im se lf of a n y a d d i tio n a l or a lte rn a te exem p tio n s. E ffective J u ly 1st. ROSA JOHNSTON has been elected H . B. 292 p ro v id e s fo r th e issu a n c e of b onds The following is a report on legislation fo r th e p u rc h a se of o u ts ta n d in g sp ec ia l im p ro v e director and vice president of the Forest m en t w a rra n ts b e fo re or a f te r m a tu rity , b u t n o t River State Bank, succeeding Evans M. passed at the recent session of the North to exceed 60 p e r c en t of th e p a r v alu e a nd a c Dakota legislature, which should be of c ru e d in te re s t. E m erg en c y m e a su re . Scott, who passed away recently. TAX L EG ISLA TIO N particular interest to bankers: H. B. 48 p ro v id e s th a t p e rs o n a l p ro p e rty ta x e s S. B. 23 p ro v id e s fo r a le g a l m o ra to riu m on re a l levied fo r th e y e a r 1934 a n d p rio r y e a rs m ay he MARTIN PETERSON, formerly vice e s ta te m o rtg ag e s, la n d c o n tra c ts, an d r e n ta l can celled u p o n p a y m e n t of th e follo w in g am o u n ts : a g re em en ts, a n d p ro v id e s fo r th e su p e rv isio n of 1930 a n d p rio r y e ars, u pon p a y m e n t of 40 p e r president, has been elected president of m o ra to riu m p ro v isio n s by th e d is tr ic t c o u rts c e n t of o rig in a l ta x ; fo r 1931, u p o n p a y m e n t of the Bank of Steele to fill the vacancy w ith rig h t of a p p e a l to th e S u p rem e C ourt. E m e r 50 p e r c e n t of th e o rig in a l ta x ; fo r 1932, u pon g en cy m e a su re . p a y m e n t o f 60 p e r c e n t of th e o rig in a l ta x ; fo r caused by the death of Alex Stern. S. B. 128 a u th o riz e s b a n k s a n d o th e r in s titu (T u rn to page 50, please) North Dakota Bank News Brief News Cashier Resigns New Officers Legislation Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April Í935 44 The facilities of this hank are at the command of conservative firms and individuals STATEMENT OF C O N D I T I O N OFFICERS E. P. Adler........................ President V. O. Figge....Executive Vice Pres. Herman Staak.......................Cashier A. H. Hiegel..............Asst. Cashier Fred Gruenwald........Asst. Cashier * * * J. M. Hutchinson.........Trust Officer H. W. Braack.....Asst. Trust Officer March 4 , 1 9 3 5 ASSETS Cash on H and and in R e serve B a n k s _____________$ 4 ,5 5 4 ,7 8 5 .9 4 U n ited States G overnm ent S e c u r it ie s _______________ 9 ,0 0 8 .2 8 5 .4 6 Iowa Road and M unicipal B on d s __________________ 2 ,0 3 7 ,3 4 2 .6 2 L oans and D isco u n ts______ F ed eral R eserve B an k Stock F ed eral D ep osit Insurance C orporation F u n d _____ F u rn itu re and F ix tu r e s____ O v e r d r a f t s ________________ DIRECTORS E. P. Adler Pres. Lee Syndicate Newspapers V. O. Figge Executive Vice President J. L. Hecht French and Hecht, Inc. Jos. S. Kimmel Pres. Republic Electric Co. Frederick H. Lamb Physician H. E. Littig Vice Pres. Peoples Light Co. H. O. Seiffert H. O. Seiffert Lumber Co. Herman Staak Cashier Kuno H. Struck Physician Karl P. Teske Teske Milling Co. T. J. Walsh Walsh Construction Co. C. D. Waterman Lane and Waterman 1 5 ,6 0 0 ,4 1 4 .0 2 3 ,7 5 6 ,2 5 7 .9 9 3 0 .0 0 0 .0 0 2 5 ,2 2 4 .7 7 1 6 ,5 5 3 .1 1 1 ,5 6 6 .0 0 $ 1 9 ,4 3 0 ,0 1 5 .8 9 LIABILITIES C a p it a l____________________ S u r p l u s and U ndivided P r o f i t s __________________ R eserve fo r Interest, T axes, C o n t in g e n c ie s __________ D E P O S I T S ________________ $ 6 0 0 ,0 0 0 .0 0 5 1 7 ,1 7 9 .2 8 2 2 6 ,7 5 6 .5 8 1 8 ,0 8 6 ,0 8 0 .0 3 $ 1 9 ,4 3 0 ,0 1 5 .8 9 DAVEN PORT BANK AND T R U S T Ä ^ C O M P A N Y iliembet Jedexat Rmacavu Sypctern - DAVENPORT, IOWA Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 45 To Panora Iowa Bank N ew s Officers Iowa Bankers Association P resid en t......................... Frank Welch Cedar Rapids V ice P r e s id e n t.. . Clarence A . Diehl D es Moines FR A N K W ELCH President T reasurer............... M ax von Schrader Ottumwa Secretary.......................Frank W arner Des Moines FRANK W A RNER Secretary Lester King, who has been employed for the past twelve years as clerk and as sistant cashier at the Adel State Bank, and who has been working as clerk in the Dallas County State Bank since the latter came into existence, has resigned his po sition and accepted one with the Guthrie County State Bank at Panora. Mr. King has been named as manager of the Panora bank. Mrs. King will join him in the new location as soon as they can find a suitable house. Dies in Boone More Checks Check transactions through banks of eight major Iowa cities showed an 18 per cent gain for the week which ended March 20th, as compared with the corresponding week of 1934. The total volume was $41,867,000 com pared with a total of $35,510,000 for the like week a year ago. The gain was $6,357,000. Every reporting city partici pated in the gain, although Des Moines accounted for nearly half the total. Check transactions are one of the gen erally accepted business indicators. Added Duties Cashier George A. Guyan of Spencer, former Rock Rapids man, has been given new responsibilities in the Farmers Trust and Savings Bank of Spencer. He will share with vice president Leon A. Witter the duties formerly the responsibility of Clarence W. Bittinger, assistant vice pres ident, who is leaving the bank. Two addi tional employes will be added to the bank’s personnel. Paid ¡n Full A final dividend payment of 25 per cent has been made to depositors of the Citi zens Bank of Grand Junction. Since 75 per cent had already been paid, this divi dend will reimburse depositors in full, ac cording to the receiver, O. G. Clause. The Citizens Bank was operated as a private banking institution by T. R. Watts. Following the banking holidays two years ago Mr. Watts chose to liqui date his bank rather than continue through a period of uncertain conditions, and a voluntary receivership was made March 13, 1933. It was announced at that time that the bank’s assets were ample to cover its de posits, and a fine record has been made in bringing about a prompt liquidation with out causing inconvenience to the com munity. Mr. Watts has been engaged in the banking business at Grand Junction for thirty years. He recently purchased stock in the Peoples Trust and Savings Bank and after a reorganization of that institu tion was made he became its president. Buy Toy Bank A deal was completed recently when local men purchased the interests in the First National Bank, Paullina, of James F. Toy of Sioux City, resulting in the bank now being completely owned by home men. Following the special meeting which was attended by officers and direc tors of the bank, Albert H. Meyer was elected the new president; Adolph Fintel, vice president; C. G. Kislingbury, cash ier; and the following men as directors: W. A. Blaesser, J. T. Cousin, John Gin ger, Wm. Hellmann, H. J. Hibbing, and O. J. Strampe. The officers are also mem bers of the board. C. E. Rice, 78, banker in Boone for many years, died unexpectedly last month of heart disease. His widow, a son and daughter survive. Capp s Makes Address Experimentation and reform don’t mix with recovery, J. Roy Capps, cashier of the Central National Bank and Trust Com pany, Des Moines, told members of the Des Moines Engineers club at a recent meeting. “Industry is still afraid of fluctuation of the dollar and is therefore holding back on expansion of business. It is not going to run any risk until there is stability,” Mr. Capps said. Mr. Capps declared that nations where experimentation had been kept at a mini mum and mediums of exchange had not been “doctored” had experienced a better In Grundy Center rate of recovery than the United States. I. T. Parkhurst, from Frederick, South Dakota, has arrived in Grundy Center and entered upon his duties as vice president 100 Percent and one of the active managers of the It became known last month that the Farmers Savings Bank, a position to closed Farmers & Merchants State Bank which he was elected by the board of direc of Marion would pay out 10 per cent, tors at their meeting in February. when Judge F. O. Ellison in district court Mr. Parkhurst has had 22 years’ expe set March 15th as the date for hearing on rience in the banking business. the application of the state banking de partment to pay a final dividend of 5 per cent to the depositors of the closed insti New Cashier tution. The 5 per cent dividend would Melvin Arendt, Delta Young man who has been working at the Gibson Savings bring the total paid to the one hundred Bank the past year, has been employed as per cent mark, previous payments of fifty, cashier of the bank to fill the vacancy twenty-five, ten and ten having been made. caused by the resignation of Harvey Pauli who has accepted a position in the Winterset bank. Mr. Arendt has had con Cashier Resigns C. W. Bittinger, cashier of the Farmers siderable banking experience. Trust & Savings Bank, Spencer, for many years, and more recently promoted to an Cashier at Walker assistant vice presidency, has announced Frank W. Lindahl, of Coggon, a resi his resignation to take effect April 1st. dent of Marion until a few months ago, The banker stated he had purchased the and formerly cashier of the Commercial insurance business of the Farmers Trust & Savings Bank there, has been appointed Savings Bank and would operate it as his cashier of the Walker office of the Center own business, severing all connection with Point-Walker Trust and Savings Bank, the bank. according to an announcement of Keith He expects to lease office space on the Vawter, president of the bank." He suc second floor of the bank building. In ceeds H. E. McDonald in the position addition to the insurance business, he will who has resigned. also handle automobile finance loans. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 46 Killed in Accident Secretary Harold M. Edwards, 40, former cash ier of the First Trust and Savings Com pany at Oxford, was killed recently while walking on U. S. highway No. 30, five miles east of Cedar Rapids. Mr. Edwards, Federal Land Bank ap praiser, was driving to Cedar Rapids when his automobile ran out of gasoline. He started walking to a filling station when he was struck by a car driven by James Krueger of near Cedar Rapids. The latter took Mr. Edwards to a hos pital in Cedar Rapids but he died en route. Miss Lide Pearson of Slayton, Minne sota, is working in the Sheffield Savings Bank as secretary to E. F. Oberg. Miss Pearson was associated with Mr. Oberg in bank work in Minnesota. Miss Elea nor Lees, who was formerly bookkeeper for the Hansell Savings Bank, has been serving in the same capacity there since the new bank opened recently. Mr. Robinson was cashier of the Citi zens National Bank at Hampton, Iowa, for 13 years and was cashier of the State Bank at Grinnell during the last year. He succeeds 0. L. Karsten, named exec utive vice president of the Newton bank. M. G. Addicks, an employe of the bank for many years, has been named assistant cashier. New Quarters New Cashier Walter T. Robinson of Grinned, Iowa, has assumed his duties as cashier of the Newton National Bank. The Rock Rapids State Bank is now located in its new building, at the north west corner of the intersection of Main and Story streets, property purchased recently. Bank equipment was moved to the new location recently, and the bank opened for business in quarters that 11 years ago housed the Iowa Savings Bank, which suspended operations in Julv, 1924. Named Cashier O FFICERS O FFICERS E. L. M ILLER Chairman of the Board „ J. .H. NISSEN Cashier & Assistant Trust Officer W. A. ANDERSON President E. JOHANNSEN Assistant Cashier MILO J. GABRIEL Vice President H. M. OLNEY Assistant Cashier O. P. PETTY Vice President and Trust Officer F. E. CONOVER Assistant Cashier H. G. KRAM ER Vice President F. H. HAMANN Assistant Cashier A. R. THURN Vice President R. A. W. LATIMER Comptroller Clinton County’s Largest Bank T JLHE aim of the City National Bank is to give full, personal, and attentive service to its correspondent accounts. Our complete facilities, and the recognition we give to the increased importance of investment problems, provide a sound basis for satisfactory service to our customers. The City National Bank CLINTON, IOWA D I RE CT O RS W. A. ANDERSON President C. A. ARMSTRONG President C. F. Curtis Company, Inc. A. A. BENTLEY President Fidelity Life Association Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis O. D. COLLIS President The Collis Co. G. L. CURTIS President Curtis Companies. Inc. MILO J. GABRIEL Vice President President Gabriel Lumber & Fuel Co. April 1935 E. L. M ILLER Attorney F. H. VAN ALLEN President J. D. Van Allen & Son, Inc. F. J. WARD Vice President and General Manager Eclipse Lumber Co. G. E. WILSON Pres. Clinton Bridge Works Hugh McCleery was elected cashier of the Grinnell State Bank recently. Mr. McCleery has many friends in Grinnell who rejoice in his advancement to the position of cashier. Mr. McCleery came to Grinnell years ago and took a position in the old Grin nell Savings Bank under S. J. Pooley, who was president. Later he went to the Citizens National Bank while Carl Child was cashier. For three years he was in the bank of the Fidelity and Sav ings of Marshalltown. When he first started out in the bank ing business he was with the Laurel bank known as the Peoples Savings and worked in that institution for three years. In 1926 he graduated from Grin nell college. When the Grinnell State Bank was organized he allied himself with this institution, serving under J. E. Bach. At Coon Rapids J. E. Howe of St. Charles, Minnesota, formerly employed by the First National Bank there, started to work recently for the Iowa Savings Bank, Coon Rapids, replacing Frank Clayburg who has gone to Atlantic. Steele Recovering Condition of Harrison ’ Steele, presi dent of Steeles’ Bank, Cherokee, who was injured when his horse threw him, was reported “much better.” Unable to move after his horse fal tered on federal highway No. 59, threw him and fell over backwards on him, Steele was found 30 minutes after the accident by Dale Dick, farm boy, who sum moned Claude Davis to the rescue. Davis brought Steele to his home, where medical aid was immediately summoned. It was feared at first that he was suffer- 47 ing internal injuries. Later reports, how ever, were that Steele was badly bruised and suffering from shock and exposure. A gain comparative to Muscatine’s was also reported for Davenport where the totals this year were $3,384,000 as op posed to $3,177,000 in 1934. stantly at the first sign of danger—and from many different stations in the bank. Assistant Cashier Heads Clearing House Install G a s System V. O. Figge, executive vice president of the Davenport Bank & Trust Company, was elected president of the Quad-City Clearing House Association at the annual meeting held last month. I. S. White of the State Bank of Rock Representatives of the Chemical Arms Corporation were in Rock Rapids recently and installed a protective system in the Rock Rapids State Bank, a system that is said to make hold-ups unpleasant and unprofitable. The new protective system consists of a number of tear gas guns installed at strategic points in the bank. All of these guns are connected with a number of push buttons, and they can be discharged in- At the regular monthly meeting of the directors of the Pocahontas State Bank, L. E. Eckerson of Fonda was elected as sistant cashier. In the employ of the James F. Toy banking system for the past 15 years, Mr. Eckerson comes to his new position with high recommendations. As soon as a suitable home can be ob tained, Mr. Eckerson will move his fam ily to Pocahontas. His family is resid ing in Fonda at present. D IR E C T O R S B. F. KAUFFMAN S. C. PIDGEON R. R. ROLLINS PAUL BEER President Vice President Assistant Cashier President, The Flynn Dairy Co. DR. O. J. FAY HENRY FRANICEL Surgeon Treasurer, Younker Bros. We are proud o f the increasing list of J. G. GAMBLE J. W. HOWELL Vice President, Warfield-Pratt-Howell Co. F. W. HUBBELL Vice-Pres.-Treas., Equitable Life Ins. Company of Iowa J. W. HUBBELL Iowa bankers w ho have Attorney Vice President, F. M. Hubbell Son & Co. S. L. SHEUERMAN V. O. F IG G E Island was elected vice president of the association and K. L. Vernon, of the Rock Island Bank & Trust Company, secretarytreasurer. H. E. Otte, president of the Moline National Bank, is the retiring president. The clearing house committee is composed of H. E. Otte, G. Herbert Pemberton and B. H. Ryan. Figge and Otte are ex-officio members. More Checks Check transactions through Muscatine banks in the week ending March 6th showed an increase of $63,000 over the same week in 1933, a recent report of the Chicago Federal Reserve Bank showed. Figures for the week this year were reported at $564,000 as compared with $501,000 a year ago. An increase of 31.2 per cent in eight major cities of Iowa was included in the report. Transactions for the week ending March 6, 1935, totaled $48,810,000, as compared to $37,189,000 for the corres ponding week last year. chosen this bank to look after th e ir Des M oines Pres., Sheuerman Brothers, Inc. JOHN D. SHULER Pres., Shuler Coal Co. L. B. BARTHOLOMEW Trust Officer business. O T H E R O F F IC E R S C. W. MESMER Vice President C. II. STEPHENSON Cashier F. S. LOCKWOOD Secretary F. C. ATKINS Assistant Cashier WM. ELLISON Assistant Cashier A. F. ERICKSON Assistant Cashier L. NEVIN LEE Assistant Cashier L. W. WALLETT Assistant Secretary B A N K ER S TRU ST C O . ----------- DES MOINES = = = = = Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 48 Time Lock To Organize The Farmers Savings Bank, Keota, has installed a new safe with delayed time lock, electrically operated, that cannot be opened within less than 15 minutes after plugging in. This safe is used during business hours only, and at night the bank’s cash is kept in the heavy time lock safe, as usual. According to Cashier Walter Stoutner, the bank’s safety measures now meet all the requirements for full coverage burg lary insurance, and with the more general use of this type of safe, the rates of in surance will be reduced and daytime bank holdups discouraged. The organization of the State Bank of Wapello was given decided impetus when E. L. Penniston of Carson, Iowa, met with a committee of farmers and business men of this community and plans made to open an active campaign to complete the incorporation. New Bank Ed Winne of Rock Rapids, formerly of Humboldt, is heading a project to open a new bank at Laurens, Pocahontas county. The town of Laurens has been without a bank for some time. The new organization is to be known as the Laur ens State Bank and will have a $25,000 capital with $5,000 surplus. It will be open for business about the first of April in the former First National Bank build ing which the organization has purchased. State Banks Protest An outbreak of protest in the banking field was disclosed recently in high official quarters, which said that many small state banks are vigorously criticizing the pres ent law compelling them to join the fed eral reserve system by July 1, 1937, in order to retain deposit insurance. The amended banking act of 1933 which created the Federal Deposit Insurance Corporation, says state banks not mem bers of the reserve system will lose the privilege of insurance after July 1, 1937. They contend they would be forced out of business through inability to compete with banks in which deposits were insured. Des Moines Fifth City Prompt Correspondent Service For Northeastern Iowa T his o rg a n iz atio n m a in ta in s effi cien t facilities to re n d e r satisfacto ry service on all y o u r N o rth e a ste rn Iow a business. A n extensive list of c o rre sp o n d e n t b an k s in th is te r rito ry assures th e q u ick h a n d lin g of all tra n sac tio n s. Your Account Is Invited The NATI ONAL BANK o f WATERLOO V Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 Des Moines is the fifth city in the sev enth federal reserve district in point of importance as a financial and business center. Figures on check transactions through banks of the district, as published by the Chicago Federal Reserve Bank, show that only four cities in the district surpass the Iowa capital in check volume. Check transactions through banks, it is generally agreed by financial authorities, are the best single business barometer available. Financial activity also is re flected accurately by check volume. Chicago, Illinois, second largest city and banking center of the country, ranks first in the seventh district, with Detroit, Mich igan, second; Milwaukee, Wisconsin, third; Indianapolis, Indiana, fourth, and Des Moines, fifth. Another Dividend The directors of the Farmers & Stock Growers Savings Bank, Tennant, have declared a dividend of 1 per cent for the benefit of all holders of trust certificates, this dividend available March 20, 1935. This is the second dividend paid by the bank since being released May 16, 1934. The first dividend was for 20 per cent, paid June 20, 1934. President Dies Frank G. Ray, 83, president of the State Bank of Vinton, died at the univer sity hospital at Iowa City recently. Mr. Ray was president of the State Bank for 25 years and also was president of the Iowa Canning Company. He is survived by two children, Earl Ray of Boston, Massachusetts, and Mrs. John Knapp of Boone. 49 Effects of Dollar Devaluation The Administration’s recent decision to use part of the gold “profit” dervied from the reduction in the gold content of the dollar for the retirement of government obligations eligible as security for national bank notes, has once again directed at tention to the actual results and possible future consequences of devaluation, states the Guaranty Trust Company of New York in the current issue of The Guaranty Survey, its monthly review of business and financial conditions in the United States and abroad. “It is a little more than a year since legal devaluation took place,” The Survey continues. “In view of recent develop ments, as well as of the importance that was attached to this step when it was taken, the sweeping benefits that were ex pected by those who advocated this expedi ent, and the disasters that were predicted by those who opposed it—to say nothing of the fact that the President still has author ity to devalue further at his discretion— the reduction of the gold content of the dollar is still a subject of lively current interest. “The devaluation of the dollar was one of the most drastic expedients resorted to by the present Administration. The ques tion as to what the step has accomplished thus far is unusually significant in that the answer may throw some light on the possibility of controlling prices by mone tary management and of expanding for eign markets for American goods by the process of cheapening currency. “However, a fair appraisal of the bene fits derived from devaluation cannot be made unless the events preceding this step are taken into consideration, because devaluation was merely a formal recog nition of a situation that had already been precipitated. First, domestic gold pay ments were suspended at the time of the banking crisis and were not restored. Second, gold exports were prohibited ex cept under special license by the Treasury. Third, the ‘gold clause’ was outlawed by Congress. Fourth, the President trans mitted to the economic conference at Lon don a message that precluded any possi bility of immediate international currency stabilization. Finally, in a radio address to the nation on October 22, 1933, Presi dent Roosevelt announced his intention of authorizing the Reconstruction Finance Corporation to purchase newly mined domestic gold at prices to be determined by the Administration and also to buy and sell gold in the world market. Under this plan gold was purchased on the in ternational market at prices well above its legal value in respect to the dollar. ful actions on dollar exchange was such that, by the time devaluation was officially effected a few months later, dollar ex change had already been driven close to the parities that were established by de valuation, and most of the immediate pos sible influences of a cheaper dollar on domestic prices and exchange had already been felt. As far as the practical effect is concerned, it is depreciation that is thus far the active force. The sponsors of the policy believed that, as a result of this depreciation, there would be a prompt readjustment of prices and that the vol- ume of business would respond quickly to the higher price level. It is true that an advance in business activity and a fair degree of rise in domestic prices took place during the period when the inflationary influence was most pronounced in the late spring and early summer of 1933. But, in view of the recessions that followed in the volume of business and the general trend of prices (except for agricultural prices, which have been raised by other artificial means), the results have certainly not been anything like what the advocates of depreciation appeared to promise. Foreign E xchange and P rice M ovem ents “The weakening effect of these success Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 50 H igher Prices A n O b jective “By what reasoning- it was believed that the cheapening of dollar exchange on foreign markets would result in a prompt proportional rise in domestic commodity prices is somewhat puzzling. In the case of international commodities, it is clear that fluctuations in exchange rates must result in price changes either in the ex porting or importing countries, or in both. These changes are gradually communi cated to other prices: first, to sensitive basic commodities; then to other commod ities; and, finally, to wages, real estate values, and other elements in the general level of values. In the end, the entire price structure adjusts itself to the lower gold value of the currency. But this re adjustment may take many years and can not be regarded as an immediate and auto matic effect of a change in the price of gold. “Judged by official statements, it is apparent that the success or failure of de SALESMEN WANTED Well known Iowa investment firm, established fifteen years, has opportunity for salesmen. Experience desirable, but un necessary. T e r r i t o r y , Des Moines and western I o w a . Leads furnished. Write stating age, experience and qualifications. Give refer ences. Address, 3229, Northwestern Banker, 555 Seventh Street, Des Moines, Iowa. valuation should rightly be measured pri marily by its effect on domestic com modity prices, and, in turn, on business recovery. Although, as has just been seen, the exchange value of gold currencies in terms of the dollar has increased, during the period of depreciation as a whole, by approximately the amount of devaluation, the advance in wholesale commodity pi ices has been much smaller; and the increase in business activity has certainly fallen far short of what the advocates of depre ciation predicted. It is uncertain, more over, to what extent the advances in prices and business activity are the result of de preciation and to what extent they are due to other causes. “Although there may be some doubt re garding the extent of the influence of dollar depreciation on domestic prices and business, it had a very pronounced effect on international capital movements. For several months after the new Administra tion came into office, a fear of inflation led to a large-scale movement of Ameri can capital to foreign financial markets. After October, 1933, when the President authorized the gold operations on inter national markets, it appeared more and more clear that devaluation was contem plated. When it was announced that the dollar had been stabilized, at least for the time being, at approximately 59 per cent of its former parity, much of this Amer ican capital was brought back to the United States, while many foreigners, in the belief that the new dollars was sounder than their own currencies, in vested their funds in this country. So vast was the movement of money to the United States that, for some time follow ing devaluation, dollar quotations re mained above the new parity in terms of the principal foreign currencies. “While there was some concern regard ing the possible use that the Government might make of the profit gold and some fear that the latter might eventually be used in a manner that would permit it to serve as a basis of unwarranted currency and credit expansion, a step which would undoubtedly be inflationary, the fact that devaluation ended the Government’s heavy purchases of gold and defined within narrow limits the degree of the contem plated devaluation had a strengthening influence on confidence in business quar ters at a time when such influence was badly needed. “From the business point of view, the chief practical objection to the policy of depreciation is not that it has failed to exert an influence on prices, but that, first, the uncertainties engendered by the policy have tended to impede business recovery, and, second, the carrying of devaluation to such a low point has so expanded the monetary base that the way is opened for an ultimate rise in prices far beyond any thing that the sponsors of the policy orig inally intended. “This situation points to the necessity of adopting whatever measures are con structive to control the inflationary base and of keeping government expenditures within reasonable limits in order to re move the temptation to make use of that base.” Legislation (Continued from page 43) 1933, u p o n p a y m e n t of 70 p e r c en t of th e o rig in a l ta x ; fo r 1934, u p o n p a y m e n t of 100 p e r c e n t of o rig in a l ta x . T h is is a n e m ergency m e a su re . H. B. 76 re -e n a c ts C h a p te r 264 of th e S ession L aw s of 1933, a n d e x te n d s th e tim e fo r th e is s u ance of ta x deeds to he is su e d to th e c o u n ty u n til th e 3 1 st d a y of D ecem ber, 1937. S. B. 82 p ro v id e s th a t a t a n y tim e a f te r a ny la n d w as b id in a t ta x sale fo r th e c o u n ty , an d w hile such la n d re m a in s u n re d e em ed , th e c o u n ty a u d ito r m a y a ss ig n th e ta x c ertific a te to a n y p e rso n u p o n p a y m e n t of th e a m o u n t due on ta x sale p lu s su b se q u e n t d e lin q u e n t ta x e s, w ith in te r e s t a t th e r a te of % of 1 p e r c en t p e r m onth. E ffective J u ly 1st. S. B. 262 e x te n d s th e tim e in w hich re d e m p tio n m ay be m ade fro m ta x sales, tw o y e a rs fro m an d THE PEOPLES SAVINGS BANK Cedar Rapids, Iowa offers co n g r a tu la tio n s to th e N orth w estern B an k er as sp o n so r o f th e w eek ly b road cast “ FINANCIAL NEW S A N D V IE W S” ov er S tation W H O . FRANK C. W ELCH, P r e sid e n t. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 51 a f te r th e d a te of th e p a ssa g e an d a p p ro v a l of th is a ct, a n d e x te n d s th e tim e in w h ich th e h o ld e r of a ta x sale c e rtific a te m ay a p p ly fo r ta x deed, to a p e rio d of 10 y e a rs fro m an d a fte r th e d a te of su ch c e rtific a te , a n d p ro v id e s th a t th e h o ld e r of su ch ta x c ertific a te s h all be e n title d to collect in te r e s t th e re u p o n a t th e sam e r a te of in te re s t a s p ro v id e d in th e c ertific a te d u rin g th e p e rio d of th is e x te n sio n . S. B. 313 is th e re ta il sale s ta x m e a su re , p ro v id in g fo r a re ta il sales ta x on g ro ss re c e ip ts fro m r e ta il sale s of 2 p e r c en t on a ll ta n g ib le p e rs o n a l p ro p e rty c o n sis tin g of goods, w a re s an d m e rc h a n d ise , e x ce p t as p ro v id e d in th e act. H. B. 265 can cels all in te re s t a n d p e n a lty on re a l e s ta te ta x e s fo r 1933 an d p rio r y e a rs on all la n d b id in b y th e co u n ty , if p a id on o r b e fo re D ecem b er 31, 1935. I t is n o t k n o w n a t th is w ritin g a s to w h e th e r th e b ill, a s p a sse d , e lim in a te d sp ec ia l a ss e ss m e n ts o r n o t. T h e b ill b e com es effective J u ly 1st. S. B. 258 p ro v id e s fo r th e su p e rv isio n of t r u s t e s ta te s b y th e d is tr ic t c o u rts, a n d e n ac ts in to law th e ru le s s u b s ta n tia lly as la id dow n b y th e S u p re m e C o u rt. I t also fixes th e fees w h ich m ay be c h a rg e d b y th e tru s te e in th e e v en t th a t no p ro v isio n is m ade fo r su ch fees in th e tr u s t' a g re e m en t. T h is b ill h a s n o t y e t b e en sig n ed by th e G ov ern o r. “I would look upon all this as an im portant duty and responsibility of a bank executive and as a definite and \raluable contribution to business recovery and the firm re-establishment of business confi dence.” À . I. B. Convention The thirty-third annual convention of the American Institute of Banking Sec tion of the American Bankers Association will be held in Omaha, Nebraska, June 10 to 14, as announced by Richard W. Hill, national secretary of the institute. One of the outstanding features of the convention Avili be the ninth annual na tional public speaking contest for the A. P. Griannini Educational EndoAvment Prizes. The subject for this year will be, “The Bank’s Service to the Community.” The leaders of the departmental sessions of the convention, as announced by Mr. Hill, will be: “Audits and Accounting,” Chester W. Hoyt, Auditor NeAV York State National Bank, Albany, N oav York; “Bank Admin istration,” Frank R. Alvord, Ance Presi dent and Cashier Citizens National Trust & Savings Bank of Los Angeles, Los Angeles, California; “Business Develop ment and Advertising,” Thomas J. Kiphart, Manager of Publicity Department The Fifth Third Union Trust Company, "If I W ere An Iowa Banker" Recognizing the value to bankers of the radio programs sponsored and presented by the N o r t h w e s t e r n B a n k e r every Saturday from 6 :45 to 7 :00 p. m. over Station WHO, Des Moines, H. B. Craddick, president of Craddick Service, crea tors and producers of financial advertis ing, in Minneapolis, recently mailed the folloiving letter to all Iowa banks: “If I ivere every banker in Iowa . . . I would add a postscript to my bank’s neAvspaper advertisements each week, as follows: “Tune in on Station WHO at 6 :45 Sat urday evenings for information of value to your own business affairs. “And I would write Clifford De Puy, publisher of the N o r t h w e s t e r n B a n k e r , to thank him for the wonderful service he is rendering all banks in Iowa and other states and give him my assuranc of whole hearted cooperation. “For De Puy’s weekly broadcasts are sponsored and presented more effectively, and more impressively than any bank or group of banks could do individually or collectively. “Then I would take advantage of the D’e Puy weekly broadcasts by using the very best advertising for my own bank to be obtained. I would seek and find adver tising that Avould give me the three vitally important factors of successful advertis ing for my individual bank—viz.: News interest, educational information, solici tation of profitable business. And I Avould advertise my own bank. “I would lay out a modest plan whereby the bank’s customers Avould be reached with advertising messages prepared espe cially for them. I would give them in formation which they, in turn, would pass on to their friends and associates. I would have something to say to the men and Avomen of the bank’s staff every Aveek or so-—that Avould assist and train them to more efficient service for their OAvn ad vancement and for the bank’s advance ment. Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 52 Cincinnati, Ohio; “Credits,” David M. Sweet, Assistant Vice President City Na tional Bank & Trust Company, Chicago, Illinois. “Deposit Functions,” F. W. Thomas, Vice President The First National Bank of Omaha, Omaha, Nebraska, J. F. Mc Dermott, Vice President The First Na tional Bank of Omaha, Omaha, Nebraska ; “Investments and Investment Banking,” William A. Ten Eick, Jr., Assistant Cashier The Chase National Bank of the City of New York, New York, N. Y. ; “Savings Banking,” H. H. Reinhard, Vice President Mercantile-Commerce Bank and Trust Company, St. Louis, Missouri; “Trust Functions,” Walter E. Bruns, HOTEL* Trust Officer Bank of America National Trust and Savings Association, Fresno, California. Agriculture Looks Forward There is a growing feeling on the part of unprejudiced authorities that the Fed eral government’s farm relief program has been a relative failure, in the light of the great hopes that were held out for it when it was inaugurated. This feeling seems to be shared, to an extent, by high government officials, who are planning changes in the program whereby the government will act less in an administrative capacity and more as an advisor to the farmer. The upshot of this is that the farmer himself must redouble his efforts to solve his own problems, and smooth his own road. It would be a poor thing indeed if American agriculture came to depend on government as a great white father to which it could turn for aid in any crisis, real or imagined. Government should ob viously give all possible aid and support to agriculture, as it does to other groups —but it should take extreme care that the farmer, does not become a ward of the state in the process. Certain groups of farmers, totaling hundreds of thousands, are and have been working their way out of depression through organized, cooperative action. They have banded together in great coop erative organizations, whose purpose is to make production and distributing machin ery more efficient, and to increase agricul ture’s bargaining power. These farmers are self reliant, awake to conditions—in brief, they are individualists, cooperating with other individualists to achieve a com mon aim. That typifies the kind of “farm PROTECT AGAINST AN i EARLY MORNING RAID ! A REAL I t is e s s e n t ia l t h a t a lo n g e r t h a n a 3 0 m in u te d e l a y p e r io d b e u s e d t o d i s c o u r a g e t h e E a r l y M o r n in g H o ld u p s . BARGAIN T h e Y a l e V a r i a b l e D e la y e d P e r io d T im e lo c k c a n b e v a r i e d t o m e e t e a c h B a n k e r 's in d iv id u a l r e q u ir e m e n t s . IN . t h is m o d e r n U n d e r w r it e r ' s t h ir t y d a y fr e e t r ia l. COMFORT a p p ro v e d L e t us e x p la in o u r p la n o f d e m o n s t r a t in g H o ld u p e q u ip m e n t in y o u r o w n bank on a S o ld b y F. E. D A V E N P O R T & C O M P A N Y Official Experts for Iowa Bankers Association W hen in O m ah a, enjoy th e F o n te n e lle ’s a tm o s p h ere of g e n ia l h o sp i ta lity . I t is O m a h a ’s o u ts ta n d in g h o tel, u n q u e stio n a b ly th e c e n te r of th in g s. H e re you w ill find all th e serv ice, c o u r te sy and c o m fo rt th a t have m ade E p p ley H o te ls fam o u s ev ery w h ere. I f you w a n t a b a rg a in in co m fo rt, s ta y a t th e F o n te n e lle . T h e re are tw o lu x u rio u s d in in g room s w h ere you w ill find e x c e lle n t food a t sen sib le p ric e s. EPPLEY HOTELS CO. OMAHA, NEBRASK A MRS. JAMES G. SUMMITT th ro u g h h er a ssociation w ith m zo m *2 os > https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis extends to you a continuation of the Southern Hospitality on the High Seas so well exemplified by her late husband’s —James G. Summitt— services as former Purser of the S. S. Leviathan and S. S. Manhattan. It will be her pleasure to arrange your Steamship, Hotel and Foreign Railroad accommodations for you. 598 M ADISON AVENUE NEW YORK CITY, N. Y. ★ Northwestern Banker FREWHALL-POPE TRAVEL SERVICE April 1935 53 relief” that, in the long run, will really produce desirable and permanent results. Public Power Plants Decline Public Utilities Fortnightly reports that there were 3,014 municipally owned elec tric plants in this country in 1922; 2,198 in 1927, and 1,802 in 1932. Even though power usage has increased in most years since, the roster of municipal plants stead ily declines. Apparently a good many cities and towns have found political ownership and operation expensive, wasteful or inefficient —a fact that is of particular significance at this time, when proposals to put units of government into the electric business are even more numerous than usual. More Taxes— Higher Taxes The increasing gravity of the tax prob lem is well illustrated in a recent survey made by the National Industrial Confer ence Board. During the past four years, according to its findings, the public debt has in creased at a more rapid rate than at any time in our history, save the two war years. The debt—federal, state and local—is now in excess of $47,000,000,000. Total tax collections, on the other hand, are at a lower level than in 1930, in spite of the numerous new taxes created by government in the years since then. Most of the money now being spent by the gov ernment does not come out of its income, but is represented by borrowings against the future. The board says that the mar gin between tax collections and public ex penditures is now about $6,000,000,000, of which $4,000,000,000 is reflected in ris ing indebtedness. The other $2,000,000,000 is made up by non-tax governmental re ceipts, such as earnings of general de partments, assessments, fines, etc. To give still another illustration, the cost of debt service—interest and retire ment of maturing bonds—in a late year for all units of government combined, amounted to 16.5 per cent of gross ex penditures, and almost 30 per cent of total tax collections. There are the figures, and they require little comment. The gap between income and outgo is steadily widening with the inevitable result of more taxes and higher taxes—at the expense of employment, home building and industrial expansion. 1935 CONVENTION CALENDAR April 14-17. Mid-winter meeting execu tive council of A. B. A., Augusta, Georgia. May 7-8. Oklahoma Bankers Assn., Biltmore Hotel, Oklahoma City. May 14-15. Missouri Bankers Assn., Elms Hotel, Excelsior Springs. May 16-17. Kansas Bankers Assn., To peka. May 17-18. New Mexico Bankers Assn., Roswell. May 20-21. Illinois Bankers Assn., Or lando Hotel, Decatur. May 22-24. South Dakota Bankers Assn., Sioux Falls. June 10-14. American Institute of Bank ing, Omaha. i A A G ood Combination “I see this medicine is good for man or beast.” “Yes,” said the druggist. “Gimme a bottle. I believe that is the right combination to help my husband.” Another nice thing about being a baldheaded man is that in order to get ready to receive unexpected callers all he has to do is to straighten his necktie. Bankers’ W ants This department of The Northwest ern Banker is at your service. A charge of five cents per word is made for all insertions. In answer ing key numbers, please enclose postage for forwarding purposes. Position Wanted: 22 years’ practical banking experience in Iowa. 47 years of age. Married. Excellent references. Small investment if necessary. Address Northwestern Banker. No. 3226. 2-3-4. Position Wanted: In Iowa, Minnesota or Wisconsin, as executive, cashier or assistant cashier, by German banker with 30 years’ experience. Specialized in con veyancing, probating estates and exam ining abstracts. Will take stock and help organize new bank. Address Northwest ern Banker. No. 3228. 3. Andex <Jo ¿A dvertisers A m e r ic a n T e l e p h o n e & T e l e g r a p h . . . 29 A s s o c i a t i o n to M a in t a in [F r e e d o m in L i v e s t o c k M a r k e t i n g .............................. 19 June 19-20. Minnesota Bankers Assn., Minneapolis. June 24-26. Wisconsin Bankers Assn., Lawsonia Country Club, Green Lake. June 24-26. Michigan Bankers Assn., Lansing. Sept. 9-11. Financial Advertisers Assn., Atlantic City. November 11-14. American Bankers Assn., Roosevelt Hotel, New Orleans. I o w a - D e s M o in e s N a t i o n a l B a n k . . . . 56 I o w a G u a r a n t e e M o r t g a g e C o r p ......... 31 I o w a N a t io n a l F i r e I n s u r a n c e C o .. . . 34 J B J a c k l e y & C o....................................................... 26 B a n k e r s T r u s t C o ............................................. 47 L, C L iv e S t o c k N a t i o n a l B a n k , O m a h a . . . 39 L iv e S t o c k N a t i o n a l B a n k , S i o u x C it y 36 C e n t r a l N a t i o n a l B a n k & T r u s t C o .. . 49 C it y N a t i o n a l B a n k , C l i n t o n .................. 46 C it y N a t i o n a l B a n k & T r u s t C o ............ 31 C u r t is H o t e l ................. 53 M M e r c h a n t s N a t i o n a l B a n k .......................... 2 T h o s . D . M u r p h y C o .......................................... 42 n N D a v e n p o r t B a n k & T r. C o., D a v e n p o r t. I o w a ..................................................... 44 F . E . D a v e n p o r t & C o ................................... 52 D r o v e r s B a n k s ( A lie n - C e n t u r y P h o t o s ) ............................................................. 22 N a t i o n a l B a n k o f W a t e r l o o .................... 48 N o r t h e r n T r u s t C o ............................................ 32 N o r t h w e s t e r n N a t io n a l L if e I n s . C o .. 34 E E p p le y H o t e l s ................................................... 52 F ir s t N a tio n a l F ir s t N a tio n a l F ir s t N a tio n a l F r e w h a ll-P o p e 27 30 C h a r le s E . W a l t e r s C o ............................. 39 W e s t e r n M u tu a l F i r e I n s . C o ................... 35 W H O ........................................................................... 55 G G e n e r a l M o to r s A c c e p ta n c e C o r p .... 50 21 24 25 30 29 28 31 W H H a l s e y , S t u a r t & C o ..................................... W . D . H a n n a & C o .......................................... P 30 B a n k , C h i c a g o ............... 40 B a n k , M i n n e a p o l i s . . . 20 B a n k , S io u x C i t y .......... 38 T r a v e l S e r v i c e ............... 52 $ 2 .5 0 in the city’s finest hotel. O O m a h a N a t i o n a l B a n k ................................... 51 P e o p l e s S a v i n g s B a n k , C e d a r R a p id s P h i l a d e l p h i a N a t io n a l B a n k .................. P o l k - P e t e r s o n C o r p .......................................... P r ie s t e r , Q u a il & C u n d y , I n c ................... S S c o t t , M c I n t y r e & C o ....................................... S h a w , M c D e r m o t t & S p a r k s ...................... S h e a & C o ................................................................ S t a t e B o n d & M o r t g a g e C o ........................ P N ow — A room with private hath Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 54 Taught By Experience Also Breweries “Judge,” cried the prisoner in the dock, “have I got to be tried by a woman jury?” “Be quiet,” whispered his counsel. “I won’t be quiet! Judge, I can’t even fool my own wife, let alone twelve strange women. I ’m guilty.” Inquiring Visitor: “To what do you attribute your long life, uncle?” Oldest Inhabitant: “Well, I don’t rightly know. Several of them patent medicine companies is bargaining with me now.” Not So Good Mother: “Elmer, I had a frank dis cussion with our daughter today about the facts of life.” D ad: “Well, did you learn anything new ?” Summer Boarder: What a beautiful view that is! Farmer: Well, p’r a p s ’tis ! But if you had to plow that view, harrow it, culti vate it, hoe it, mow it, fence it, and pay taxes on it, how would it look? “Are you positive that the defendant was drunk?” asked the judge. “No doubt,” growled the policeman. “Why are you so certain?” “Well,” responded the officer, “I saw him put a penny in the patrol box at Broad and High, then look up at the clock on the Presbyterian church and shout ‘Gwad, I ’ve lost 14 pounds!” A newly created papa received the glad tidings in a telegram: “Hazel gave birth to a little girl this morning, both doing well.” On the message was a sticker reading: “When you want a boy call Western Union.” Judge: “You are called as a witness of the quarrel between your friend and his wife. Were you present at the be ginning of the trouble ?” Witness: “Yes, sir. I was the best man at the wedding.” Once upon a time a man got up early one Sunday morning to let the iceman in, and not being able to find his bath robe he slipped on his wife’s kimono. When he opened the door he was greeted by a nice big kiss by the iceman. And the only way he could figure it out was that the iceman’s wife had a kimono just like the one he had on. Pastor Jones: “Brethren, we mus’ do something to remedy de status quo.” Deacon: “Brother Jones, Avhat am de status quo?” Pastor: “D’at, brother, am Latin for de mess we’s in.” Northwestern Banker https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis April 1935 Doctor: “I would advise you, madam, to take frequent baths, get plenty of fresh air, and dress in cool clothes.” Patient’s Husband (an hour later) : “What did the doctor say?” W ife: “He said I ought to go to Palm Beach and then to the mountains; also, that I must get some new light gowns at once.” Lawyer (to colored prisoner) : “Well, Rastus, so you want me to defend you? Have you any money?” Rastus: “No, suh, I hain’t got no money, but I got 1922 model Fo’d cah.” Lawyer: “Well, you can raise some money on that. Now let’s see—just what do they accuse you of stealing?” Rastus: “A 1922 Fo’d cah.” He: “I guess you’ve been out with worse looking fellows than I am, haven’t you?” No answer. He: “I say, I guess you’ve been out with worse looking fellows than I am, haven’t you?” She: “I heard you the first time. I was just trying to think.” Gentleman (at police station) : “Could I see the man who was arrested for rob bing our house last night?” Desk Sargeant: “This is very irregular. Why do you want to see him?” Gentleman: “I don’t mind telling you. I only want to ask him how he got in the house without awakening my wife.” Bobby: “Mamma, what is a secondstory man?” Mother: “Your father’s one. If I don’t believe his first story, he always has an other one ready.” Mr. Murphy was taking his first flight in an airplane. The pilot was taking him over Dallas, and when they were about 3,000 feet up, the plane suddenly went into a nose-dive. “Ha, ha,” laughed the pilot as he righted the plane. “Half of the people down there thought we were falling.” “Sure,” said Murphy, “and 50 per cent of the people up here thought so, too.” He was telling her about the members of the football team. “Now there’s John son,” said he, “in a few weeks he will be our best man.” And then she lisped, “Oh, Jack, this is so sudden !” Judge: “So you broke an umbrella over your husband’s head. What have you to say ?” Woman: “It was an accident, your honor.” Judge: “How could it be an accident?” Woman: “Well, I had no intention of breaking the umbrella.” “You said you had taken the Presi dent’s advice and put in your order for a new auto—why don’t you get it ?” “I ’m waiting for his next advice as to how I ’m going to pay for it.” “Well, Mrs. Joyner,” said the minister, “so your poor husband has joined the Great Majority?” “Oh, don’t say that, sir,” said Mrs. Joyner. “I ’m sure he was not as bad as that.” A man got a set of store teeth. He went to a dentist and said, “What can be the matter? Ever since I got these teeth I can’t keep from talking.” The dentist looked at them and he asked him where he got them, and he said he got them from a mail order house. “No wonder, you got a woman’s set of false teeth.” We were recently told of the sad case of a Scotchman who had become engaged to a girl who got so fat he wanted to break off the engagement. But the girl couldn’t get the ring off, so he had to marry her. “Oh, Fred, the baby has swallowed the matches. What shall I do?” “Here, use my cigarette lighter.” Only a Few Days Left (but still plenty of time) for YOU to WIN $25.00 . . . just w rite a le tte r o f n o t m o re th a n 2 0 0 w ords on “ W hy In s u r ance C om panies Should A dvertise hy R a d io '’ ; . . . m ail y o u r e n try to In su ran ce Contest, Radio Station W HO, Des M oines, Iowa, b e fo re m idnight A pril 12, 1 9 3 5 ; . . . w rite as m any letters as you lik e; he sure to in clu d e y o u r nam e and address with each le tte r; . . . decision o f the judges m u st be accepted as final and all letters becom e th e p ro p e rty of Radio Station W H O ; * . . in case of a tie du p licate prizes will he aw arded, and « . . the prizes are $ 2 5 .0 0 fo r the best letter, $ 1 5 .0 0 fo r th e sec ond best letter, $ 5 .0 0 fo r th e th ird best letter, an d $ 1 .0 0 each fo r the fo u rth to eighth best letters. 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M a la n d , M a n a g e r https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis P h o n e 3-7147 Depository for Reserves Safe-Keeping of Securities L Prompt &l a Collections Trust Services L Government and U ■Municipal Bonds for Investment Credit Information Hanks and Bankers o f Iowa Are In vited to M ake Lise o f All o f These Services IO W A -D E S M O IN ES N A T IO N A L B A N K & TRUST C O M P A N Y https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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