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NUMBER 473 THIRTY-SECOND YEAR JA N U A R Y , 1 9 2 7 Leading Bankers See Another Year of Prosperity Little Elbert Becomes a Banker (Page 15) THE PHOTO BELOW: John W. O’Leary, vice president of the Chicago Trust Company, is this year presi dent of the V. S. Chamber of Commerce, and one of the youngest of the prominent men who have been given that honor. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis o THE '¿ « a * íí (EE* ■ fEifrt M S Bute rmwli rss; >■ iüi¡iif sekceee ¡¡imi* NORTHWESTERN o u n d e d in 1857— 68 years ago; and during this period through conservative, su b s ta n tia l b a n k in g T H E F I R S T NATIONAL has rendered an unexcelled service to correspondent banks in the west. F Sixty-eight years afford ample test and supply conclusive proof of the stability of any institution—particularly that of a bank. F. H. D A V IS P resid ent 1 BANKER January, 1927 Farm Loans REFINANCE YOUR LOANS N O W WHILE RATES ARE CHEAP WE ALSO MAKE CITY LOANS IN DES MOINES DAVENPORT, CEDAR RAPIDS, IOWA CITY CLINTON, BURLINGTON M id l a n d M o r t g a g e C o m p a n y CEDAR RAPIDS, IOWA c . T. K O U N TZ E V ice P res, and Chairman D E S M O IN E S OFFIC E 555 Seventh Street, Des M oines, Iowa. C E N T R A L IO W A OFFIC E C arroll, Io w a National 1 IBank of O m a h a 1 r I ^ H E D es Moines business of Iowa banks is invited. These banks are thorou gh ly equipped in every department. Valley National Bank F . C. W A P L E S , President IN G R A M B I X L E R . Vice President C L I F F O R D D E P U Y , Vice President R. S. S IN C L A I R , Vioe President R. J . S O E N E R , Secretary Treasurer R U S S E L L D. C O L E , Assistant Secretary R. H. M E M E I E R , Assistant Secretary P. T . W A P L E S , Manager Western Office S IO U X C I T Y serves one of America’s richest farming territories, and its commercial import ance in the W est makes a good banking connection in this city highly valuable. W e invite correspondence regarding our service to banks and bankers. AND Valley Savings Bank DES M O IN E S, IOW A V a lley Bank B uildin g E s t a b l i s h e d 1872 Combined Capital and Surplus $ 1 , 100 , 000.00 R . A . C R A W F O R D , P resident D. S. C H A M B E R L A IN , V ice P resid ent C. T. COLE, JR ., V ice P re s i dent W . E. B A R R E T T , Cashier JO H N H . G IN S B E R G , A sst. Cashier C. M. C O R N W E L L , A sst. Cashier The Northwestern Banker is the oldest banking publication west of the Missis sippi river— and was the first in America to join the Audit Burean of Circulations. It is the official publica tion of the South Dakota Bankers Asso ciation, the Iowa Farm Mortgage Bank ers Association, and the Iowa Bond Dealers Association. It must be used to cover Am erica’s richest agricultural territory. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SERVICE C O O P E R A T IO N R E A D E R C O N F ID E N C E TH E N O R TH W E STE R N B A N K E R DES MOINES G G G IOWA January, 1927 THE A F F I L I A T E D N O R TH W E STER N W I T H BANKER N O R T H W E S T E R N N A T I O N A L B A N K Our Representatives W ho Call Upon You Are Experienced Bond M en W h o are Primarily Interested in Being o f Service to Your Institution W H il l ia m enry A. D D. T President Vice-President urst, hrall, Choosing from the Current Offering List E L L managed banks and insurance companies realize fu lly the importance o f building up a strong reserve for the protection o f their depositors and clients. Because they do recognize this responsibility, such institutions can usually be depended upon to invest their funds in channels that seem to offer the smallest possible risk. W The problem of choosing from the large number o f offered every month is an extremely difficult one. N o man can take reasonable precaution by consulting institutions who accumulate information necessary for judging the investment investment securities is infallible, but he make it a business to value o f securities. W ith forty-four years o f financial experience, The Minnesota Loan and Trust Company is exceptionally well equipped to render just this service. W e suggest that you give us the opportunity o f helping you keep your investment structure in a sound dependable condition. Th e M N A T IV E S : in n e s o t a ^ L o a n & T r u s t 4 0 5 Marquette (C[T0 ) Minneapolis ST. P A U L — 360 Robert Street. ROCH ESTER— 1883 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 19^ Second Street S. W . Co DULUTH— 510 Alw orth B ldg. T II E 4 N O R TH W E ST E R N January, 1927 BANKE R Make use of this complete bank service I *The Bankers Monthly— The Mag azine for Bank Executives. Covers every phase of bank management and development, with helpful discussions of current financial and economic sub jects. $5 a year; single copies 50c. Send for introductory copy, free. *The Bankers Service Bulletin— A monthly magazine devoted to the problems of bank routine operation, equipment and supplies. Gives latest buying information. You *The Bankers Service Guide— How and Where to Buy. A conveniently indexed and permanently useful refer ence book. Cloth bound, $1 postpaid. wouldn’t risk a guess! Train your employees to the B L U E B O O K habit too How much trouble you save by a quick glance into your Rand McNally Bankers Directory! Make sure your employees fully appreciate this. They are secure beyond question when they rely upon the Blue Book. Twice a year this standard bank ing reference is completely and honestly brought up to date, with a painstaking care that costs added thousands of dollars. It is pub lished and distributed every March and September, closer to the date of its information than any other similar publication. In the majority of banks the country over, law firms, leading corporations and business houses of all kinds, you will find this directory subscribed for because it is the most reliable in the banking field. If you are not now using it, we shall be glad to supply complete details, as well as full information about Rand M cN ally’s bank ser vice— no obligation on your part. Banks by states, with statements, offi cers and correspondents; foreign banks; bank directors; bonded attorneys; com mercial laws of all states, condensed for easy reference; Federal Reserve System; postal rates; bankers’ associations; Nu merical System Bank Transit M ap; ex aminers; clearing houses; foreign currency; interest rates b y states; Farm Loan Sys tem; joint stock land banks; etc. These are but part of the daily service the Bankers Directory gives you. K ey to the Numerical System of the A. B. A.— Official publication of the American Bankers’ Association. Printed every other year, with regular six month supplements. 578 pages and introduction. Cloth bound, $2.50 postpaid. Banking and Business Ethics— An elementary manual of banking, written by W . E. Borden, practical banker, and Cyrus Lauron Hooper, well known educator. $1.35 postpaid. How Banks Increase Their Business — Just out. By G. Prather Knapp. A sound, informative discussion, based on years of experience in every phase of banking operation. Invaluable for bank and trust company executives. 326 pages, cloth, $5.00 postpaid. Maps for Bankers— Maps and atlases of every kind and description for use in bank development, distribution among customers and informational use inside bank, etc. *Advertising in these publications as well as in the Bankers Directory (Blue Book) reaches a responsive and responsible list of interested readers and buyers. Write for rate card. Member Audit Bureau of Circulations, Financial Advertisers Association, National Pub lishers Association. HAVE Y O U R S E C R E T A R Y M A IL TH IS Rand MÇNally & Company, Dept. Q -l 536 S. Clark Street, Chicago Please send complete information about the following checked (x) for your attention: Map Headquarters Dept. Q -l 536 S. Clark Street, Chicago Washington 270 Madison Avenue, New York San Francisco Los Angeles Largest Publishers of Banking Publications in the World Official Numbering Agent, American Bankers Association ESTABLISHED 1856 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ( ( ( ( ) ) ) ) Bankers Bankers Bankers Bankers Directory Monthly Service Bulletin Service Guide ) ) ) ) Key to A. B. A. System Banking and Business Ethics.. How Banks Increase The' Maps for Bankers January, 1927 THE N O R TH W E ST ER N BANKER r The most acceptable Personal Service a Bank can render to its Depositors, is that which assists, protects and guides them on their travels. X Is this one o f yowr Depositors? — If so, she will thank your Bank for an unexpected Personal Service on her travels abroad. Depositors’ good-will is the first interest o f all progressive banks. In securing it, in developing it, American banks today practice the fine art o f Personal Service. A notable branch o f this Service, one widely accepted and fully appreciated, is the personal care and protection banks now extend to their Depositors, on their travels abroad, through the Hand o f a Qreat Service. A t the important ports o f the world, at the railway stations o f foreign cities, wherever and whenever assistance is needed — your Depositors will always find this “ Helpful Hand ” o f the American Express Company. Their travel money is made safe against loss or theft— and the Hand o f a Qreat Service is assured them, to the full extent, when you sell them A m e r ic a n https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis E xpress T ravelers C heques 5 6 THE NORTHWESTERN BANKER January, 1927 ìà f lll|«|HlB|ll|B|ll|B|ll|B|llfHI|BHI|B|ll|B|ll|B|ll|B|ll|H|ll|M|ll|W|IIIHIIIIBIIIIBIIIIBHHWIIIIBIHI«lHI«llllBIIII»HIIHUII«llll»IIIIMHIIMIIIlBIIIIHIIII»IIIIMHI|W| IIIB IIIIH IIIIB IIII»llll«im B IIIIB IIIIMIHll N ORTH W ESTERN BANKER DES M O I N E S The Oldest Financial Journal W est o f the Mississippi T h ir t y - se c o n d Y C O N T E N T S FOR JA N U A R Y , 1927 ear N Page Across from the Publisher.... .........By Clifford DePuy 8 Frontispage .................... ;— ......................-..................... 10 473 um ber Page “ In This Issue” ...,........................................................... 11 Another Year of Prosperity..... ...................................... 13 Legal Department ............. 14 “ Little Elbert Becomes a Banker” By Roseoe Macy 15 The Hull Amendments........ ............................................ “ News and View s” ................................................. Early Days in North Dakota.......................................... Pioneer Days in Omaha......... ............... ......................... Iowa Banking History.................. The Guaranty Question....... ................. ...................... . School Savings Decision........................................ ....... Personal Paragraphs ................................... 32 Nebraska News............................................. ......... 71 Investment 37 Minnesota N ew s........ ................... 75 Insurance Section........................... 61 North Dakota News........ ...................................... 79 Bankers and Their Wants.................................... 68 Iowa News ..................................... 81 News ........................................................ 69 ‘ ‘ The Directors ’ Room ’ ’.................................... 98 South Dakota News........... .......... 69 Index to Advertisers............. .............................. 99 Section...... ....... 16 17 18 19 20 21 25 C opyright 1927, D eP u y P u b lish in g Co., Des M oines, Iow a DE PUY PUBLICATIONS AND THEIR TERRITORY N orthwestern B anker T rans -M ississippi B anker DES M O IN E S KANSAS M id-C ontinent B anker CITY I nsurance M agazine S A IN T LOUIS KANSAS CITY Underwriters R eview S outhwestern B ankers J ournal DES M O IN E S PORT W O R T H Iowa B a n k D irectory L ife I nsurance S elling DES M O IN E S ST. L O U IS THE NORTHWESTERN BANKER, Published by DeP uy P ublishing Co., I nc., Capital Stock, $100,000.00 555 Seventh Street, Des Moines. C lifford D e P u y , P u b lish er; G. A . S n id e r , A ssociate P u b lish er; R. W . M oo rh ea d , Editor. R e x V . L e n t z , A dvertising D irector. H . H . H a y n e s , A s s o c ia t e M a n a g e r . M i n n e a p o l is O f f i c e : Frank S. Lewis, 840 Lum ber E xchange Bldg., Phone Main 3865. C h ic a g o O f f i c e : W m . H. Maas, 1221 First N ational Bank Bldg., Phone Central 3591. S t . L ouis O f f i c e : Donald H. Clark, 408 Olive St., P hone Main 1342. K a n s a s C it y O f f i c e : Glen D. Mathews, 405 R idge Bldg., Phone H arrison 5857. F ort W o r t h , T e x a s , O f f i c e : Entered as second class matter at the Des Moines postoffice H. Lawson H etherw ick, 409 F . & M. Bank Bldg. Subscription Ra‘ es, S 3 .0 0 per year; 50 cents per copy Official P u b lica tion o f TH E SO U T H D A K O T A B A N K E R S A S S O C IA T IO N T H E IO W A F A R M M O R T G A G E A S S O C IA T IO N T H E IO W A BOND D E A L E R S A S S O C IA T IO N iiB iiiiB iiiiB | ii| B | ii| B | ii| B iii| B | ii| B | ii| B | ii| B | iiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iu iB )u iB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iiiiB iu iB iiiiB iiiiB iH iB iii a = lIlllB llllB lllIB llllB IIIIB IIIIB IIIIP IIIIB IIII B IIIIB II IlB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB llllB lM lB llllB llllB lin B Ìr https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 THE NORTHWESTERN 7 BANKER A c c o u n ts o f Io w a Banks and Bankers are solicited on our record o f Service and Security for over fifty-one years JCAPITAL ¿u4r,l*3000.000\ OFFICERS H om er A . M iller C lyde E. B renton H . T . B lack bu rn Geo. E . P earsall A lb ert J. R obertson J. R . Capps R . L . Chase, Jr. Jam es F . H art J. B urson Sherm an W . F ow ler P resident V ice P res. V ic e P res. V ice P res. V ic e P res. Cashier A sst. Cash. A sst. Cash. A sst. Cash. A sst. Cash DIRECTORS Geo. N. A yres H . T . B lack bu rn C lyde E. B renton H ow a rd J. Clark G ardner Cowles J. H . Cownie E. C. F in kb in e J. B. Green W m . C. H arbach F . H . Luthe M. M andelbaum H om er A . M iller Geo. E . P earsall R alph H . Plum b M. Shloss E. R . Stotts O. H . Thom pson G. M . V an Evera IowaNationalBank Des Moines Savings Bank and Trust Company ¿Iow a's Largest Bank - Des M oines - S ixth and W alnut https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 8 T IIB NORTHWESTERN BANKER January, 1927 ^Across the Desk from the Publisher T^v BRING the Yuletide season we have been thinking about “ Peace on Earth and Good W ill to Men.” I wonder how much real thought we give to the subject of “ Good W ill” in our every day business lives. When the Kansas City Star was sold a few months ago, the purchasers paid $10,000,000 for the Good W ill of the publica tion. Through long years of serv ice to the community in stand ing for the right things and of upholding courage ously policies which they believed were for the best interests of the community, the Kansas City Star established itself firmly and sincerely in the minds of its readers. Its subscribers believed in what it said. Its readers looked to it for guidance and help in civic and political matters. This influence of the Kansas City Star with its readers was figured by hard-headed business men as being worth $ 10,000,000. What is true of the Kansas City Star is also true of your bank. Every day if you are conducting yourself and your institution properly you are building Good Will. People come into your bank because they believe in you, appreciate your service and have confidence in the safety and stability of your organization. All of these things create Good Will. It is only when you do something which runs counter to good banking or good banking prac tice that you lose the Good W ill of your customers. The reason that the best bank stock frequently sells for more than its book value is because the purchasers believe that there is an element of Good W ill in the institution which makes the stock have an enhanced value over and above the actual book value. Keep adding to the Good AYill account of your bank during 1927 and you will be surprised how much your business will increase during the com ing year, remembering as one writer has put it that “ The biggest and best asset a business can have is https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis its Good Will. Good AYill never goes out of style, it never changes in face value. It is the indispensable, indestructible in terest in industry.” Confidence Building once asked a promi A A1AN nent newspaper publisher why it was that they always devoted so much space to ath letic events of all kinds. The publisher replied that it was because people everywhere are interested in read ing about the winners. The world is interested in people who succeed, whether it is in athletics or whether it is in business. In athletics it is not the man who comes in last in the hundred-yard dash who gets his name on the front page of the sporting section of the newspapers but it is the man who comes in first. It seems to us that it is time in the banking busi ness to analyze and examine the methods used by successful bankers, who are forging ahead month by month. It is true that in business as in athletics there are individual bankers who fall by the wayside, but today in every state throughout the middle and northwest, the percentage of good bankers, of suc cessful bankers, far out-numbers the unsuccessful and inefficient bankers. AYhat the bankers of this territory need today is to increase the confidence of the people of their communities in their banks. This idea of building confidence in the minds of the people was expressed most excellently by H. C. Craddick of Minneapolis, in a letter in which he said, “ It will require both time and money. A"es — and it will be well worth all it requires of both. Confidence cannot be purchased. It must be de served and earned. For five years the public has been losing confidence. It cannot be restored in a day, a week, nor a month. It will cost money. Cheap, willy-nilly, purposeless effort will not im- January, 1927 THE N O R TH W E ST E R N press, will not succeed. One ‘ ad’ or one ‘ letter’ will be nothing. A building must be built in this undertaking— day after day, week after week, with out cessation— the work must go on, go forward.” As we see it, it is time for bankers to do every thing they can to strengthen the confidence of the public in their institutions. It is also time for the citizens of our states to realize that the vast ma jority of banks are being successfully and intelli gently managed and are, therefore, deserving of their confidence. Shall W e Guarantee Part of the Deposits? E ARE in receipt of a letter from R. M. Moehn, President of the Commercial Savings Bank of Carroll, Iowa, in which he says, “ Why could not the bank guarantee 80 per cent of the de posits and let 20 per cent be the amount on which the depositor would run the risk. I believe if the depositors knew that 80 per cent of their deposits were safe that they would be willing to take a chance on the 20 per cent. You will remember that we had to take nearly that much of a loss on Liberty Bonds. They are still considered gilt edged and were repurchased by the same people who sold at a loss of nearly 20 per cent. Every investment carries with it some risk of loss and depreciation and I believe depositors would be willing to take some risk even on a bank deposit.” W In our opinion, the principle of the Guaranty of Bank Deposits is either sound or unsound. If it is sound, then we should guarantee all of the de posits, and not just 80 per cent of them. If it is unsound, then we should not guarantee any per cent of the deposits. T h e N o r th w e ste r n B a n k e r has endeavored to go very thoroughly into this subject of Guaranty of Bank Deposits. In its analysis of the situation in Nebraska, 60 per cent of all of the replies from the state banks warned other states not to adopt a Guaranty plan similar to the Nebraska law. How long would the successful and carefully managed clothing stores, hardware stores, drygoods stores, and every other successful business, remain in business if it had to pay the losses of the other stores in the same line of business? It is neither logical nor economically sound and has been so proven in every state where the Guaranty of Bank Deposits Law has been in effect. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKER The Business Outlook THIS issue of T h e N o r th w e s te r n B a n k e r there are several statements by prominent bank ers on the business outlook for 1927. These re ports all express a belief that 1927 will be a year of good business. They, of course, call attention to the fact that agriculture must be readjusted on a basis which will permit the farmer to sell his products at a price which will allow him a fair return on his investment. The trouble with the farmer now is that he sells his, products in an un protected market and buys in a protected market. I N The country as a whole, however, is in a very satisfactory financial condition. In referring to the outlook for 1927, the Harvard Economic Service says, ‘ ‘ Despite the present tendency toward curtail ment (which may again prove quite brief) there fore, we look forward to continuation of generally active business during the next half year. It is hardly probable that business will attain higher levels than those of the second half year of 1926. Indeed— so far as one can now see— a rapid tight ening of money rates, such as would cause a major decline in either security or commodity markets, is improbable during the whole of next year.” With the general business conditions in the country in as healthy a condition as they are and with ample credit with which to carry on business, there is no reason why we should not look cheer fully and hopefully into the new year. Choosing Your Customers V ERY bank has desirable and undesirable ac counts and customers. W . AY. Woodson, presi dent of the First National Bank of AYaeo, Texas, emphasizes the point that banks should be so careful in choosing their customers that their bank will have a reputation and an atmosphere which will be of the very best. E “ A bank has individuality— has personality— has character,” says Mr. Woodson. “ Its character is determined largely by the character of its clients,” he continues. “ Just as a lawyer or a physician is judged by his clients. In other words, the bank, like the individual, is known by the com pany it keeps.” 9 ARTHUR G. WEDGE Vice President, Minnesota Bankers Assn., President, First National Bank, Park Rapids, Minn. Arthur G. Wedge, this year vice president of the Minnesota State Bankers Association, was born in Albert Lea, educated there and started his banking career Avith a St. Paul bank. He left there to help organize the First State at Detroit, Minn., and Avas cashier and president of the institution. He later became vice president of the First National at Bemidji, and asso ciated banks. He went with the First National of Park Rapids in 1920, and is now president of that bank. He has been both treasurer and a member of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis THE COVER PHOTO IN THIS ISSUE John W. O’Leary, vice president of the Chicago Trust Company, whose pic ture appears on this month’s cover page, is one of the younger business men of the nation who has attained a command ing position. He is serving this year as president of the United States Chamber of Commerce, and last year served as vice president and a director of that Director— Committee of Fifteen. body. He has also served as president Director— Chicago Crime Commission. of the Chicago Association of Commerce, Director— Infant Welfare Society. for two terms. Board of Managers— Chicago Y. M. Mr. O’Leary is a Chicago native, born C. A. in 1875, and is a Cornell graduate. He Advisory Committee— Military Train has been vice president of the Chicago ing Camp Association. Trust since 1919. His list of business Director— Friendship Center. connections is very extensive and is as President— Board of Trustees, Oakland follows : M. E. Church. Director— Chicago Trust Company, Ar Advisory Committee—Boy Scouts of thur J. O’Leary & Son Co., Illinois Car America. and Mfg. Co., Advance Rumely Company, Advisorv Committee— Chicago Bovs’ Templeton, Kenly & Co., Ltd., Republic Club. Realty Mortgage Corporation, First En Member—American Institute of Elec glewood State Bank, Belden Manufactur trical Engineers. ing Co., G. A. Soden & Co. Northwestern Member— Cornell Society of Engineers. Terra Cotta Co. Chicago Crucible Co., Member— Cornell University Associa and Chicago Railways Company. tion of Chicago. Receiver— Michigan Avenue Trust Company. Treasurer—Republic Realty Mortgage PIONEER BANKING ARTICLES Corporation, National Metal Trades As sociation, Illinois Manufacturers Mutual Casualty Association, Associated Em The series of articles on early banking ployers of Illinois, Camp Roosevelt As days in the middle west by pioneer bank sociation, Industrial Club of Chicago. ers, is meeting with much approval Knollwood Club, Endowment Fund among N orthwestern B anker subscrib (Agard Deaconess Rest Home). ers. More o f this series is to be found in President and Director— Chamber of this issue on page 18. This magazine is Commerce of the United States. indebted to Secretary George Starring of Vice Chairman— National Industrial Conference Board. Vice Chairman— Citizens’ Committee A GOOD COMBINATION! to Enforce the Landis Award (Chicago). Says Cashier Yates E. Allen, of Chairman— Labor Policy Committee, the First National Bank of ChurChicago Association of Commerce. dan, Iowa: “ T he N orthwestern Member— Senior Council, Chicago As B anker and the Iowa Bank Direc sociation of Commerce. tory make a combination that can Vice President and Trustee—-Chicago not be equalled for several times Sunday Evening Club. the money. I wish you continued Member— National Guard Commission. success !” Trustee— Epworth Assembly. Trustee—Wesley Memorial Hospital. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the South Dakota Association for a bit of comment in one of his recent Associa tion bulletins in which he says: T he N orthwestern B anker has begun a series of articles depicting pioneer banking days in North and South Dakota, Iowa, Nebraska and Minnesota. Any bankers having oldtime photos of persons or early-day banks will do the profession a favor by making them available to all through that publication. A 200% DIVIDEND! The matter of dividends is of para mount interest to all of us, particularly in the banking profession. Hence it is with deep interest T he N orthwestern B anker acknowledges receipt of a letter from a subscriber who insists he received at least a 200 per cent dividend last year on his three-dollar N orthwestern B a n k er subscription. J. C. Brothers, cashier of the First Na tional Bank of Grand River, Iowa, is the man and he says: “ We want to advise you that we expect one of your last year’s editorials in T he N orthwestern B anker on ‘Reducing Interest Rates’ will net us between four and six hundred dollars in savings, since it induced us to reduce our interest rates on time deposits to 4 per cent. We like your magazine very much!” My Work Let me do my work from day to day In field or forest, desk or loom, In roaring market-place, or tranquil room. Let me but find it in my heart to say, When vagrant wishes beckon me astray, This is my work, my blessing, not my doom; Of all who live I am the one by whom This work can best be done in my own way, To suit my spirit and to prove my pow ers ; Then shall I cheerfully greet the labor ing hours And cheerful turn when the long shad ows fall At eventide to play, and love and rest, Because I know for me my work is best. — Henry Van Dyke. THE 12 NORTHWESTERN BAN K E R January, 1927 Plan N ew $15,000,000 Home The proposed new home of the State Bank of Chicago. INAL plans for the new $15,000,000 home of the State Bank of Chicago have been approved and actual con struction work has started. The building will require more than a year to build and when completed will be one of the most magnificent of LaSalle street’s financial institutions. In addition to the bank it will house the Chicago Stock Exchange, and a num ber of well-known firms already are en gaging space for their offices. Located at the southwest corner of La Salle and Monroe streets, on a lot 189 by 186 feet, the building will rise 272 feet from sidewalk to parapet. It will have 22 stories above the street level and three basements below. Pier caissons already are under way and specifications are be ing rapidly completed so that materials can be delivered rapidly. The conservatism and strength of the bank inspired the design of the building. The architecture is massive in outline and the surface treatment is one of dignified F https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis simplicity with all unnecessary ornamenta tion omitted. The architects are Graham, Anderson, Probst & White. The architectural elements are classic in feeling and are taken from the best examples of Greek and Roman architec ture with sufficient modification to prop erly adapt to modern office building re quirements. The base o f the building is of a monumental character without pilas ters or ornamental detail to a height of five stories. The main banking room en trance is in the center of the facade marked by a recessed portico. This por tico is composed of free standing Ionic columns forty-one feet high, supporting an entablature above. The material for the lower stories will be of granite or stone; for the upper stor ies brick and terra cotta or stone. Upon entering the main entrance be tween the Ionic columns, the spectator will find himself in a public lobby with a staircase ascending to the second floor where the banking room is located. Di rectly ahead in this room will be found the officers who have constant dealings with the bank’s customers. Adjoining are the consulting offices of the executive offi cers and the director’s room. The main banking room will be not able. The finish treatment will be of for eign marbles, relieved by fine ornamental bronze work. A series of arches will be the principal motive in the design of the room itself, with a lunetted ceiling, and lighted by a ceiling skylight of antique colored glass. Bank vaults and safety deposit vaults will be of the most modern design, repre senting the latest and best in bank-vault engineering. The safe deposit vaults, which will be located in the first basement, will be of 25,000-box capacity. There will be two massive doors to these vaults, one rectangular and one circular, both of special material, impenetrable from at tack with oxycutter torch, drill or explo sives. The safe deposit vaults will have ample lobbies, men’s and women’s wait ing rooms, committee and coupon rooms, which in their appointments will be thor oughly modern in every respect. The Chicago Stock Exchange will be on the second floor to the south of the banking room and will occupy an area approximately fifty-six by one hundred and sixty feet. The board room and pri vate offices will be appropriately treated in a finish of marble and bronze. The first floor of the building will have offices for brokers and other uses of high character. There will be an L-shaped arcade leading from Monroe street to La Salle street, fronting which will he addi tional shops. In the central portion of the ground floor the savings department of the bank will be located, making this department easily accessible to the bank ing public. The office building above the bank quarters will consist of eighteen stories. The elevator, corridor and office layouts of these office floors will constitute the last word in high-grade office building planning. There will be fourteen eleva tors of the most modern type. The cor ridors will be finished with marble floor and wainscot, and in every respect the high character of the banking quarters will be followed out in the office floors above. Advertising the Attack W ife to hubby who had stumbled over a chair in the dark trying to get into bed after a large evening: “ Is that you, Arthur?” “ Yesh, m’dear, if ’taint I ’m goin’ ’ply for a divorsche.” January, 1927 THE NORTHWESTERN BANKER 13 Leading Bankers See Another Year o f U. S. Prosperity Melvin A. Traylor, president, First Na tional Bank, Chicago: “ Banking, like all other branches of business, has had a prosperous year, Money rates on the whole have been low, but on the other hand the volume of busi ness has been great, and losses have been relatively few. Banking, like other busi nesses, is best oft’ when the turnover is large, even if the average profit is small. “ The trend of business during this last year has shown the impossibility of fore casting with accuracy the future. Most observers a year ago expected that by the end of the year we should be in a time of marked depression. Fortunately, these predictions did not come true, but it shows how easily even the most expert economist may be misled. Again we are hearing that for one reason or an other, largely owing to the situation in the automobile and the building indus tries, we shall be face to face with a recession next year. This may be so but as long as credit remains as plentiful as at present, and stocks as low as they are now, there is no reason to anticipate anything resembling a crisis in our affairs -—given fair crops and no untoward hap penings in the world outside of our own boundaries.” Arthur Reynolds, president, Continen tal and Commercial National Bank, Chi cago : “ The present year about to close has been an exceptionally prosperous one. and I believe that business will continue at a good level through most of 1927. Here and there in some lines there has been a moderate tapering off, but such let ups are small. My banks have a diversi fied clientele, with about 30,000 accounts. I take a personal interest in these ac counts, and naturally get a fair idea of the business trend as a result of their perusal. The statements I am receiving are excellent. While I do not look for any material shrinkage in business dur ing 1927, we could have some falling off and the year could still be called a good one. “ Manufacturing is going ahead at a good rate. The coal industry, of course, is better just now, and the textile trades are taking a turn for the better. “I am told that the automobile produc tion in 1926 will total 4,500,000 cars. This is remarkable. However, automo bile men, while expecting that 1927 will show a smaller production, nevertheless are figuring on a 4,000,000-car year. “ The prosperity of 1926 is largely the result of a big crop. Implement and farm https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis machinery manufacturers have had a big year. This is true of International Har vester and J. I. Case Threshing Machine Company. Many other concerns catering to agricultural requirements have benefitted. What the status of such indus tries will be in 1927 will depend, of course, upon crop conditions in 1927. However, I expect 1927 to be a good year all around.” Ralph Van Vechten, president, State Bank of Chicago: “ The year 1926 was a record-breaking year, in which, generally speaking, rail road earnings and other corporate earn ings in most lines were quite extraordi nary. “ In looking ahead, we are prone to ex pect too much if we compare the new year with the old. On the other hand, there is nothing to justify a pessimistic view. “ Business, therefore, has a good mo mentum, which will carry it well into 1927. “ There has been a substantial decline in commodity prices since August, 1925, and this is still going on. If the reverse were true and commodity prices were rising, there would be an increased demand for credit, which would operate to put the brakes on business. A further decline in commodity prices, from the standpoint of volume and sales, would be beneficial but might result in narrower margins of profit. “ We are on a sound basis and there is no reason to question a continuation of good business well into the coming year.” Senator A. F. Dawson, president, First National Bank, Davenport: “ The year 1926 just drawing to a close will go down in business history as one of unusual pros perity in the business, industry and com merce of the nation at large. Practically every industry in the United States has been prosperous during the year with the single exception of agriculture, which has not yet completely recovered from the se vere depression of 1920 and 1921. “ The general business outlook through out the United States for 1927 is favor able to a continuation of the conditions that has prevailed during the year just passed and the indications are for a vol ume of business as great as during the past year. Underlying conditions are sound and no factor is visible now that warrants a feeling of pessimism for the future. “ Our midwestern region is entitled to share in the prosperity which other sec tions of the country are now enjoying and citizens of every class should be will ing to unite and get behind any sound plan that will place the basic industry of agriculture on a stable and profitable basis. I regard this as the most import ant task to be accomplished in the year just ahead of us. G-eorge Woodruff, president National Bank of Republic, Chicago : “ Present in dications are that business in 1927 should continue good. We will have easy money, good government, considerable building activity, a good export trade and industrial peace. Apparently we need only good agricultural conditions to make the picture a very satisfactory one.” Fred W. Thomas, vice president, First National Bank, Omaha: “ It is interesting to observe that a recent report to the federal reserve board shows that the principal banks in the leading cities have loans secured by stocks and bonds, ag gregating $5,300,000,000. This same re port also shows that the same banks ac tually owned $5,500,000,000 of bonds and securities. Banks throughout the coun try now consider it good business prud ence to own bonds equal to about onefourth of the amount of their deposits, same to be regarded as a liquid secondary reserve, thus affording additional safe guards to the depositing public. “ Looking forward, a good crop in 1927 would work wonders toward advancing the substantial progress already made in the readjustment of the middle west. It should be realized that much improve ment has been accomplished during the past three years, necessarily at quite a heavy cost. Practically all indices show that we may expect a continued, steady, gradual improvement in what has been termed a Certain but cautious prosperity.” Geo. M. Reynolds, chairman, Continen tal and Commercial National Bank, Chi cago : “ Building activity, iron and steel plant operation, railroad tonnage, mer chandise sales and bank clearings have all been on a high level during the year 1926. In some of these lines new peaks for all time have been established. “ While crops did not yield as abund antly and were not of as good quality as conditions early in the year promised would be the case, the purchasing power of the farmer will be very great in the aggregate. “ Taking the country as a whole, the past year has been so prosperous that the reasonable assumption is that pros( Continued on page 96) 14 THE NORTHWESTERN BANKER January, 1927 The Time Element in Presenting a Check HE requirements of modern busi ness demand quick transmission of funds. The check has become an almost universal method of payment of money in the trade centers. Oftentimes, some delay is had in presenting checks at the proper bank to be honored. When this situation arises, many legal ques tions come up as to the rights of the holder of the check, and possibly various other parties in whose hands it is passed through. The question of time in present ing a check is especially important. Will a short delay in the presentation of a check result in its being of no value ? T An Illustration This matter will now be discussed and explained through an ordinary business transaction, which is not an unusual oc currence. A paving contractor, referred to as Mr. Hewitt, completed a certain con tract for street work for the Fidelity Building Company in a western city. A final settlement for the work was made between the parties, and on January 11, 1924, the Fidelity Building Company gave Hewitt its check for $5,840.22, which was the amount agreed upon as to being the balance due. The settlement was made in Iveyville, in the office of the building company. Hewitt lived in another city. A check was drawn on the First State Bank, a banking institution at that time in the city of Iveyville. Before the check was presented, the First State Bank failed and had closed its doors. By arrange ment made by the State Bank Commis sioner, with another bank in the city of Iveyville, the depositors of the First State Bank were paid 40 per cent, but Hewitt refused to accept that amount in settlement of the check he held, and brought an action in court to secure the total amount of the check. The building company immediately tendered to Hewitt 40 per cent of the amount of the check, claiming that he was negligent in presenting his check at the bank. There were sufficient funds in the bank at the time the check was issued, and before the bank closed, to pay this check if it had been presented shortly after issued. The building com pany further claimed that if Hewitt had handled the check as he should have, it should have, and would have been pre sented for payment before the First State Bank closed its doors. On January 11th, the day the check was issued and delivered, was on Friday. According to the evidence presented in court, the cheek was delivered during https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis By the Legal Department Questions of interest to bankers are discussed in this department and any subscriber has the privi lege of writing for information and advice on legal subjects. If the inquiry can be definitely answered without the prepara tion of a brief, the answer will be given by our attorney free of charge. If, however, the inquiry in volves extensive research in a Law Library, and the preparation of a complete brief, The Northwest ern Banker will so notify the sub scriber and upon his instruction, we will ask our attorney to pre pare a brief of the case at a cost to the subscriber of only $10. The preparation of a brief is entirely optional with the subscriber. In writing for information, kindly enclose a 2-cent stamp for reply and address, “Legal Department,” care The Northwestern Banker, 555 Seventh St., Des Moines, Iowa. iiiiiiiiimiiiiiiiiiiiuiiiiiiitiitiiiiiiiiiiififiiitiiitiiiiiiiiiiitiiiiiiiiimiiiiiimiiiiiiiiiiiimiiiiiiiiiiiiiimiiiiiiiiiiiiiiiiii banking hours, and should have been presented that day. After Hewitt left the office of the building company, on the day the check was issued and delivered to him, it occurred to him that the check should have been for $5,851.24, instead of $5,840.22. With this in mind, he mailed the check back to the building company, suggest ing that what he considered an error be corrected. Hewitt went to his home in Ludwig the night of January 11th, the day the check was issued. But whether he mailed the check in Iveyville or Lud wig, he was not certain. Anyway, the check arrived at the office of the build ing company on Saturday, January 12th. Upon the receipt of the check by the building company, on the 12th of Janu ary, it immediately mailed it back to plaintiff at Ludwig, reminding him of $11.02, an item which, according to de fendant, was gone over in the settlement, and which was deducted by agreement. How It Originated The item mentioned had its origin in this way: December 13, 1923, the build ing company gave Hewitt a check for hauling rock. This included the $11.02 due one Berry, on the rock hauling. Hewitt did not pay Berry out of the $98.00, and he, Berry, came to the build ing company for his pay, and was paid by them. And when final settlement was made, on January 11th, this $11.02 Berry item was deducted from the amount due Hewitt, leaving a net balance as stated above. Plaintiff received the check back from the building company when he opened his mail in Ludwig, Monday morning, January 14th. Upon receipt of the check and the explanation, Hewitt, on the same day, deposited the check in the Ludwig National Bank, in Ludwig. The Ludwig bank forwarded it to the Union Naional Bank in Iveyville, and it was received by the Union National Bank on Tuesday morning, January 15th. The First State Bank failed to open for busi ness on the morning of the 15th, hence the check was not paid. The evidence presented to the court showed clearly that had the check been presented to the drawee bank at or prior to 4 o’clock p. m., on January 14th, it would have been paid, as the bank was a going concern until it closed at the usual closing hour on that day. I f Hewitt had taken the check to Ludwig with him, and deposited it in his bank, on Saturday, the 12th, it would have been, in the usual course of business, presented for payment on Monday, the 14th, and would have been paid. Where the payee to whom a check is delivered receives it in the same place where the bank on which it is drawn is located, it is his duty to present it to the drawee bank before the closing of banking hours on the next business day. It is a well-established rule of law that, in the absence of special circum stances, when the person receiving the check, and the bank on which it is drawn, are in the same place, it must be pre sented for payment the same day, or at least the next business day, after it is received. But where the check is pre sented on Saturday, the payee has un til the closing banking hours on Monday to present it. It is not necessary to pre sent it on the day it is received, except perhaps where the holder knows the bank is in a precarious condition. The General Rule The general rule is that a check should be presented within a reasonable time. A reasonable time, of course, depends on the circumstances of each particular case. The best-established rule is that where the payee receives a check in the place where the drawee bank is located, it is (Continued on page 55) THE January, 1927 NORTHWESTERN BANKER 15 Little Elbert Becomes a Banker B y Roscoe Macy OP just looked at me kinda funny when I ast him was he a big man. Then he ast me why I ast him that. So I told him I just wondered, and then pretty soon I told him how Benny Kline said his dad was the biggest man in town, and I just wanted to know if my pop was a big man, too. Then pop said, “ Well, if I ain’t a bigger man than ole Ad Kline I’ll eat my hat.” Finally, after he read his paper a while, pop ast me what I wanted to be when I growed up. So I told him I didn’t know. Then pop said, “ Do you want to he a banker, Elbert ?” so I told him, “ Yes, or else a lumber-yard man like Benny Kline’s dad.” So after a while I told pop how Benny Kline’s dad lets him go down to the lum ber yard Satterdays and sometimes after school. Pop just kinda grunted, but after while when I ast him could I go down to the bank with him Satterday he said maybe I could, so on Satterday I went down to the bank with pop. P Why “Pop” Laughed Finally after we got there pop told me to set down and not get in anybody’s way, and if I would watch him I would soon learn how to be a banker. So he kinda laughed. Then pretty soon a woman come in and sat down and pop said, “ Take a letter to A. R. Groom,” but she didn’t act like she was going to do it. So pop went on talking to her but she didn’t pay a bit of attention to him, but just went on making funny pictures in a little book. So pretty soon I went over there to see what she was making but she couldn’t draw worth a cent, but just made a lot of funny marks on the paper. So finally I said, “ Ain’t you going to mind my pop ?” So then she said, “ Huh?” and just looked at me kinda dumb, so I just looked at her mad as everything. So finally I said to pop, “ I’ll take the letter to that man if she won’t.” But instead of being ashamed or anything, she just laughed right out and said, “ Oh, is that it?” and pop he laughed too. So I didn’t know what to think. Then pretty soon the woman got up and left, and then a man come in and said, “ Well, Bert, how does she stack up this morning?” to pop. So then I thought surely pop would tell on her, about the way she didn’t mind him when he ast her to do things like taking letters to people, but pop just said, “Not so good, George. We’ve got to do something pretty soon to build up our deposits. Running down every day.” So I saw how they were talking about something else and I didn’t listen any more. Then I went over to where a woman was https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Little Elbert strikes a balance, his first day in the bank. running a funny kind of a machine, and putting sheets of paper in it and then changing her mind and taking them out again, so I ast her what she was doing and a few other questions. But pretty soon she sucked in a long breath and said I ’d better get away from there because something was going to drop if I didn’t. So I ast her what was going to drop, but she didn’t say anything, so I thought maybe I better get away before it dropped because she didn’t seem to know where it was going to drop and it might even drop on me. Elbert Wants to Help So then I picked my nose a while, till I saw where a man was wrapping up all kinds of money in little pieces of paper, so I went over there. Finally I ast him what he was doing, so he showed me how he could wrap up the money in these pieces of paper, and it would show on the outside how much money there was in the paper. So I ast him if I could do it, too, but he wouldn’t let me, and he wouldn’t give me a nickel, either, so finally I went away from there. Pretty soon I began to get hungry, and everybody went away except me and pop, and he said he would go to lunch as soon as Mr. Crandall got back. So just then the telephone rang, and pop answered it, and he said “ No, I can’t just now. I’m here alone,” but then he said, “ Wait a minute,” and he ast me could I stay there and watch things while he stepped into Bates’ store next door. So I said yes, and so he told the man all right he would be right over. Then he told me if any- 16 THE body came in, to say that he would be back in just a minute, and to tell them where he was if they couldn’t wait. So he went. Pretty soon a fellow came in, and he looked at me kinda funny, setting back there behind the counter, and he ast me where pop was. So I told him. Finally he said he would wait, so I ast him did he want to put in or take out. Then he looked at me kinda funny, and said he thought he would put in maybe. So I told him how pop would be awful glad of that, because he had told somebody named George that they would have to do some thing about their deposits pretty soon or they wouldn’t have any bank left. So this man just looked at me kinda dumb, and he acted awful fidgety. So then he N O R T H W E S T E RN BANKER said he guessed he wouldn’t wait for pop after all, and then he went out. An Easy Job Finally I noticed how that man that was wrapping up the money had forgot ten a lot of it, and I thought I would help him out, and then he would be sorry be cause he hadn’t given me a nickel. So I wrapped up a lot of it, and it was a lot of fun. I didn’t even have to count it, because it always showed right on the outside of the roll how much there was. So then I put it all in the vault, the way 1 had seen him do. Then in a minute pop came back and Mr. Crandall, too, so pop and me went out to lunch. So pretty soon we came January, 1927 back, and after while Benny Kline’s dad came in to see pop. So they stood there and talked a while. Finally I saw how pop had to look up to him, because he was taller than pop, so I said, “ Well, pop, I guess you’ll have to eat your hat, all right, because I don’t believe you are a bigger man than Mr. Kline, like you said you was, after all.” But then pop kinda kicked back at me, when he thought Mr. Kline wouldn’t see, so I thought I would talk about it some more after we got home that night. So finally when Mr. Kline went away, pop gave me some money and told me to go to a movie. He said not to come back till after four o’clock, so I didn’t get to learn any more about bank ing that day at all. Pleads for Hull Amendments ONGRESSMAN M O R T O N D. HULL (Republican, Illinois), in addressing a group of bankers, characterized as absurd a recent speech of Congressman Louis T. McFadden (Re publican, Pennsylvania), before the New York Board of Trade and Transportation as reported in the daily press. Mr. Hull pointed out that Mr. McFadden switched his position upon the branch-banking fea tures of the McFadden Bill six months ago when he espoused the Senate form of the bill in place of his own original House measure. The recent vote of the American Bankers Association referred to by Mr. McFadden was shown to be in conclusive as only 413 votes were cast for the extension of the territory in which branch-banking might be practiced, against 268 for limiting branch banking to its present boundaries, a small vote representing less than 1% per cent of the 27,700 banks of the country, especially insignificant as the convention was held in California, a state where there are over 600 branch banks. Mr. Hull re called that Mr. McFadden signed the Joint Conference Report on this bill in which the attempt was made, in order to extend future branch-banking privileges to the National banks of 28 cities of more than 100,000, to deny branch-banking re lief to National banks in 234 cities of 25,000 to 100,000. In concluding, Mr. Hull emphasized the fact that efforts to pass the McFadden Bill with this provi sion for the extension of branch bank ing into nonbranch banking states has caused the bill to be loaded like the oldfashioned omnibus bills with many fea tures not pertinent to its original pur poses. Mr. Hull’s address follows: “ My attention has been called to re ports in the daily press of a recent speech by Hon. Louis T. McFadden before the New York Board of Trade and Transpor tation. “ The statement is made that Mr. Mc C https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Fadden is now opposed to the Hull Amendments. This opposition is not a new or recent development. Mr. Mc Fadden accepted the Hull Amendments when they were offered during the 68th Congress and advocated their passage before the House of Representatives. The Senate committee considering the bill at that time also reported favorably upon this modification of the bill. When the McFadden Bill was introduced in the 69th Congress the Hull Amendments had been made an integral part of the bill— and Mr. McFadden sponsored and worked for their enactment, and they were passed by the House. Bill Was Changed “ Early this year the bill was changed by the Senate subcommittee to remove those restrictions upon the spread of branch banking represented by the Hull Amendments. Whe^i the House and Senate forms of the bill reached the Joint Conference Committee, Representative McFadden supported the Senate form of the bill—from which the Hull Amend ment restrictions which he had advocated for three years had been eliminated. “ The action of the American Bankers Association 1926 Convention in reversing its 1924 position unanimously favorable to the Hull Amendments, was included in his speech by Mr. McFadden as an other reason against their enactment. “ I was present in Los Angeles at the 1926 convention. The less Mr. McFad den says about that action the better. “ The branch-banking question was not on the original official program of the convention. At the close of the Tuesday morning general session of the conven tion a motion was passed—quickly and without debate—to hold an extra, unpro gramed meeting of the association Tues day evening. Official notice of this meet ing was not given to the newspapers un til nearly six o’clock— too late for publi cation in any newspapers which would appear before the convening of the meet ing. Until some time in the afternoon the association headquarters in the lobby of the Biltmore Hotel would not confirm the fact that the meeting was to be held and made no apparent effort to call the attention of delegates to this meeting about which they could not learn through the official programs or bulletins. “ At this special evening meeting, a resolution was introduced suggesting to Congress restrictions upon branch bank ing to be substituted for the Hull Amend ments—a vote for the resolution was a vote against the Hull Amendments. After a debate lasting from 8 :45 p. m. until some time after midnight, a total of 681 votes were cast. “ This vote is well characterized as ‘unsatisfactory and inconclusive’ by the Commercial and Financial Chronicle in its leading editorial, published four days later on October 9th, from which I quote: “ ‘In these circumstances it is unfortu nate that the outcome of the controersy should have been so unsatisfactory and inconclusive. “ ‘Nominally those in favor of the Mc Fadden Bill without the Hull Amend ments came out victorious. But note the size of the vote— 413 in favor to 268 against. Altogether a total of only 681 votes. Yet we are told that in point o f attendance this convention was the sec ond largest in the history of the asso ciation. The association last year had a membership of 21,493, which has since been increased, we understand, to 23,000. In the circumstances the result can hardly be regarded as any guide to Con gress. The same may be said with refer ence to the endorsement of the rider to the McFadden Bill, which provides for the extension of the charters of the Fed eral Reserve banks. The vote of a few paltry hundred on a question of such (Continued on page 56) January, 1927 T II E NORTHWESTERN BANKER 17 forms of relief contained in the McFad den Bill except those referring to branch banking Bill No. 3 contains the provisions of the McFadden Bill in regard to branch banking as passed by the House of Rep resentatives, embodying the Hull amend ments. Happy New Year! I know of no better way to express my New Year’s greeting to you than in the words of Edgar A. Guest, when he said : “ This 1 would like to be—just a bit finer, More of a smiler and less of a whiner, Just a bit quicker to stretch out my hand Helping another who’s struggling to stand, This is my prayer for the New Year to be, Lord, make a regular man out of me.” Congressman Dickinson believes that the present administration should either favor the McNary Farm Relief Bill or present new bill which will help to solve the farming situation. Mr. Dickinson puts it this way, “ Whenever a govern ment or a party finds that they cannot find a solution for the problems that face our people, then that party or that lead ership sooner or later has got to be dis credited and new leadership has got to be assumed.” Talk may be cheap but New York bank ers made $10,000,000 in ten days by pur chasing the Victor Talking Machine Com pany for $115 a share and selling it for $155 a share. It is understood that “ His Master’s Voice” now eminates from Wall Street. The high cost of the city government of Paris is indicated by the fact that the budget for 1927 is 2,394,000,000 francs or seven times the cost of operating the city government before the war. This repre sents a deficit for the city of Paris of 102,000,000 francs. The city council hopes to eliminate this deficit by increas ing the custom duties on articles enter ing the city, rather than increasing the present high taxes. If you want to get rich, buy good farm lands in any good agricultural state. This is a buyer’s market. Five years from now you can sell out and make enough money to retire for the rest of your life. Activity in the Iowa farm real estate market in the last thirty days is indi cated by the fact that one farm of 160 acres was sold for $194 an acre, another farm of 130 acres sold for $225 per acre, and this transaction was all on a cash basis. Another farm sold for $160 an acre, and another one for $250 an acre. The General Motors Corporation and https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the U. S. Steel Corporation, which have been fairly (?) successful as money makers and also in declaring stock divi dends, have both been pushed oft’ the map by the Union Fabric Company of Derby, Conn., which has declared a 3,900 per cent stock dividend. The company was established in 1887 with a capital stock of $9,000 and this is now being increased to $360,000. The company manufactures covered corset steels and radio parts. Bank robbers in Buffalo, Kansas, de cided that they would not disturb the community by blowing open the safe of the Buffalo State Bank within the city limits, so they took the safe and placed it on a truck and then drove out of town and had a “ safe opening” far from the angry mob. The U. S. Government reduced its pub lic debt approximately $1,179,000,000 in 1926. The government obligations at the beginning of this year were slightly over $19,000,000,000, with $200,000,000 in cash on hand. Taxpayers are interested to know that the annual interest paid out by the government has been reduced about $75,000,000. Dr. C. H. Crennan, noted economist of the Continental & Commercial Banks, in The Trend o f Business says : “ Good busi ness is in prospect for the first half of 1927. And this opinion can be stated with a feeling of assurance. It is based on current statistics. Business may be good throughout 1927. But the first half of the year is a foreseeable period, where as a prediction as to what is likely to hap pen during the entire year would be more of a guess than a statistical forecast. “ Money rates will be easy. And ample credit and easy money sustain business. They do not contract activity. “ The opinion that something like the usual seasonal variation in money at an easy level may be expected—this is one of the main reasons for expecting busi ness activity, good business, during the first half of' 1927. “ The story of money is the story of business. In this we have faith.” Representative Morton D. Hull has di vided the McFadden Bill into three parts so that each one may be voted upon sepa rately during the present session of Con gress. Bill No. 1 provides for renewal of the Federal Reserve System charter; Bill No. 2 grants to National banks all the A. J. Barak, agent for the National Fire Insurance Company of Pittsburgh, at Petersburg, Neb., calls our attention to a large advertisement which is being used in the local paper in his community entitled “ How Old is your Oldest Doctor Bill ?” The advertisement, while un signed, is no doubt sponsored by the Med ical profession as it emphasizes the point that the average individual pays the gro cer, the butcher, the baker, and the can dlestick maker first, and the doctor last. Any community, if it is to thrive and prosper, must have a high credit rating among its individual citizens. Deadbeats are parasites upon any community. W. C. D’Arcy, president of the D’Arcy Advertising Agency at St. Louis, believes firmly in the installment plan buying. In a recent address on this subject he said: “ The so-called ‘installment evil’ may ex ist for a few people who make fools of themselves by buying more than they can pay for, but that should not cause the system to be condemned. “ During one year in the United States, there is sold $6,750,000,000 worth of goods on time payments and from 10 to 40 per cent o f this amount is paid down in cash. The rest of the debt is liquid ated within one year, or eighteen months at the longest. “ Why is not this form of selling just as sound, from a credit standpoint, as any of the loans a banker makes? To anyone who asks, do you believe in in stallment plan selling? I reply: Do you believe in the United States? Do you believe in Liberty Bonds? Do you be lieve in land mortgages? The pi’inciple is the same.” Charles B. Mills, president of the Mid land National Bank and Trust Company, Minneapolis, sent me the following story of which he says he is not the author, but which he heartily endorses: “ When I used to tote nourishment to the swine, I noticed something you also have noticed if you are hog wise—the tendency of every pig is to get its feet into the trough. Keep that buttermilk and kitchen refuse clean as we would, the very minute it got into the trough some porker who didn’t stop to think or care where his hoofs had been last, rammed them into the food of all the rest. “ The rest said, ‘Well, it’s dirty now as it can get, so we’ll all try that, and fight it out.’ So they did. “ Ever see people do the same thing? (Continued on page 59) .18 THE NORTHWESTERN BANKER January. 1927 W hen North Dakota Banking Hours W ere from Sunrise to Midnight EMORY runs back a quarter of a century to a time when we are reminded by the then officers of the First National Bank of St. Paul who are still in active management of that in stitution of our standing order for the shipment of currency in the amount of $10,000 daily to our little $10,000 bank in Bottineau, and that we frequently wired for an additional shipment of $5,000 in currency. Mail schedules in those days required three days for transit items to and from St. Paul. In other words, three times the capital of the bank was con tinuously tied up in transit. Grain buy ers usually paid in currency. One of our customers started each morning with at least $2,000 in currency in his wallet and often replenished it during the day. He paid his butter and egg purchases and household expenses from the same wallet and it Avas never discoverable whether or how he separated the different classes of expenditure. He rarely issued checks in the purchase of grain. M No Banking Hours That Avas the time when Bottineau Avas the terminus o f the railroad and the banking area extended fo r fo r ty miles in most directions. B anking hours were not known. Farm ers came in tAventy, thirty or fo r ty miles w ith their ox or horse teams and had their shopping, trading and banking to do at night so they could get an early start f o r home in the m orn ing, and it was rarely the bank closed b e fo r e ele\Ten o ’clock or m idnight. Books were balanced the next day, if time could be fou n d fo r it, but frequ en tly ran tAvo days or m ore before balancing. B otti neau was then the third largest prim ary wheat market in the country, y ieldin g in Anlume to Edgeley, South Dakota, and Cando, North Dakota, only. M y sole assistant, who Avas payin g and receivin g teller, bookkeeper, ja n itor and messenger, one day allow ed the cash to run low. W e had a special shipm ent o f $5,000 due to reach R u gby that night, which Avould not reach B ottineau until the follow in g evening. In order to have cash fo r the next days’ business, it be came necessary fo r m y assistant to go to R ugby, fo r ty miles distant as the crow flies, Avhich was the usual route then— the road is fifty-tAvo miles by section line— and being fortified Avith the neces sary orders he obtained the $5,000 p a ck age o f currency from the postm aster at six o ’ clock the fo llo w in g m orning. T ying the package to the handlebars o f his b i cycle, he pedaled f o r Bottineau, arriving there about 10 o ’clock. N ever after that was the curren cy allow ed to run Ioav. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B y F. W . Cathro Bottineau, North Dakota For thirty years this bank remained officered by the same persons in the same relative positions— the same president, the same vice president, the same cashier, and the same assistant cashier, Avhich is thought to be a record in North Dakota for continuous bank service of the four principal officers of a bank. Mr. Neville, the assistant cashier, is now Avith the Northwestern Trust Company of Grand Forks. While our bank building was under construction Ave opened the bank for business in the rear of a general store, belonging to the president of the bank. An elderly lady from the Turtle Moun tains shortly thereafter made a deposit of some three or four hundred dollars. Some four or five months thereafter she came in and withdreAv her total deposit, which Avas laid out for her in currency. She looked at the money and shoved it back and said she didn’t Avant to take the money out; all she wanted to knoAv was whether she could get it. The de posit remained for several years there after, and upon her death was paid to her heirs. Left Wife in Charge During an absence, before I had an as sistant, I left my wife in charge. A stranger came in and tried to borrow a small amount from her, Avhich loan she refused to make. She didn’t like his looks. Next day he robbed a bank in Dunseith, about tAventy miles east of us, and Avas shot on the street in Dunseith by the citizens of that town before he was able to make his getaway. He had apparently concluded that our bank did not look attractive enough to rob and he passed us up in favor of Dunseith. NeArertheless my Avife’s hunch was justified. As I recall it now, the bandit’s body was brought back to Bottineau and buried there in the potter’s field. My main activity up to 1893 had been in the educational field, having served in many different capacities in that line in Dakota Territory and in the state of North Dakota for nine years. I had AAyritten most of the bills that had been enacted into the educational laws of the state and had prepared courses of study, teachers’ institute manuals, a complete system of blank forms for all depart ments, including all administrative de partments of the educational work, and in a general way had organized a uni form system of education throughout the neAv state. It had just shortly before been admitted to statehood. A change of administration let me out of the posi tion I Avas then holding, that of deputy superintendent of public instruction, and I Avas asked by my home neighbors to return to my home at Bottineau and to take on the organization of a new bank in which I Avas to hold the position of cashier. My intention had been to enter law and I was on the point of applying for admittance to the bar Avhen the op portunity occurred, as it seemed to me, to enter upon a paying job at once in place of having to go through several years of a starving period before I could hope to become established in the practice of laAv. Hence my reason for accepting the cashiership of the bank in 1893. My sal ary Avas fixed at $100 a month and that seemed adequate. My father, Avho Avas a stockholder in my bank and being well along in years, used the bank as his loafing place. He remarked to me, “ You seem to do a lot of things around here that you never get any pay for.” Service in those days was lived— not talked. Consequent on the panic of 1893, two bank failures in Minneapolis and Grand Forks Aviped out more than our entire capital. The directors of the bank were able to borrow on their personal respon sibility and temporarily Avithstood the loss so that the bank Avas alloAved to con tinue to operate. Thereafter the losses Avere made good through the earnings of the bank and a considerable surplus created and the capital increased, finally converting from a state bank into a na tional bank of double the minimum capi tal required by laAv. Organized County Association We cleared checks daily with the other bank in toAvn, paying or receiving the difference in currency. Suspicion of our competitor precluded any other course. This seemed wasteful and in the course of time I undertook, and carried through to a successful conclusion, the organiza tion of the Bottineau County Bankers Association, Avhich Avas the first bankers association in North Dakota, antedating by seA-eral years the North Dakota Bank ers Association, and it continued to be the only bankers association in North Dakota for several years. Through the medium of the county association the banks established exchange charges and other fees and made arrangements for clearance o f checks between- members that released considerable currency for other use or to build up reserves in the TAvin Cities or elseAArhere, and these re- January, 1927 T II E serves all brought an interest income. “ Get acquainted with your competitor; he may not be a bad fellow,” was the base on which was built up the original Bottineau County Bankers Association. Suspicion was dispelled, bankers found they had a community of interests, and a spirit of helpfulness prevailed. During the panic of 1907 a bank in a neighboring town had a shrinkage of re serve, so much so that the officers of the bank seriously considered closing. A meeting of the members of the Bottineau County Bankers Association was held at a hunting camp remote from any town, so that curiosity and suspicion among customers would not be aroused. The situation was canvassed and each bank in the county loaned $500, which was turned over to the writer, a trustee, who was then president of the Association, for the purpose of bolstering up the bank with the depleted reserve. In the fall the money was repaid with interest to the contributing banks, and today that bank N 0 R T II AV E S T E R N BANKER is one of the sound and solid banks of the county. The little $500 from each bank saved the situation and probably saved other banks, too, because it never became known that even one bank was in an embarrassing situation. In 1903 the writer had twenty promi nent bankers in the state unite with him in a call for a convention at which was organized the North Dakota Bankers Association. There had previously been a territorial asociation, known as the Dakota Bankers Association, organized in 1885, which is claimed to have been the first state or territorial bankers’ association in existence in the United States, but this association, after sev eral annual sessions, had gone out of existence about the time of admission to statehood. That is to say, North Dakota, or Dakota Territory, was the originator of State Bankers Associations. The banking field was free and open to any group of persons who could assem 19 ble the required capital, and formerly it was not necessary that the capital be paid in in cash— it might be paid in in bills receivable. There was no power vested in any officer, board or tribunal to refuse a charter. Revenues from col lateral lines of business, such a!s commis sion on real estate loans and sales, in surance, furnishing funds for the pur chase of grain, etc., were satisfactory and made the operation of a bank profitable and attractive. There were no cream checks. The income from lines that were not strictly banking would cover the offi cers’ salaries, and the strictly banking transactions would produce the dividends for the stockholders. Now, most of these side line activities are prohibited to na tional banks and have caused to be avail able to state banks. The tendency is to limit the activity of banks to strictly commercial banking lines, and to refuse the issuance o f charters where adequate banking facilities are available to the community. PIONEER D A Y S IN O M A H A - B A N K IN G Chas. Dunham, assistant cashier, and myself as messenger. The deposits in our bank at that time were less than $100,000.00. South Omaha Was “Tough” Y FIRST experience was with the Merchants National Bank of Omaha, in 1891, where I went to work, during my vacation, as a mes senger boy at $12.50 per month. This was what was paid by the Omaha banks at that time for messenger boys. Those who continued to work in permanent posi tions were then given $15.00 per month. In those days we had no electric cars or fast conveyances and it was necessary for the messenger boys to cover a good deal of ground during the day. I remem ber my route was about seven or eight miles north and south and about two miles east and west. Most of this terri tory had to be made every day. I remained with the Merchants, dur ing my vacation time, for a couple of years and in 1893 started as a messenger boy in this bank. There were three o f us here then, Mr. Mori arty, cashier; Mr. M https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis At that time South Omaha was con sidered pretty tough. As messenger, it was necessary for me to go up to Omaha two or three times a week and bring down currency and silver. I never had a companion to go with me to help carry this or to guard me. At times I would carry $10,000.00 or $15,000.00 in cur rency. The messengers from the other banks did the same thing. They had just built the trolley line between the two cities but it was necessary for us to walk two blocks, after getting off the car, with this money. No one ever paid any attention to us for in those days we very seldom heard of holdup men or bank robbers. The salaries paid in those days were not very high, the cashiers of the bank received from $125.00 to $150.00 per month, the assistant cashiers from $75.00 to $100.00 and the bookkeepers from $50.00 to $60.00. Each of us were able to save a little out of our salaries, owing to the small cost of living. In 1897 I was appointed bank examiner for the state of Nebraska. The late Dr. P. L. Hall, of Lincoln, was secretary of the banking board. This was just after the panic and the banks at that time were all feeling blue. During the four years we were in office there were about six banks taken over by the bank ing department. Our aim was to help all the banks and get their cooperation to improve and when we went out of office there were very few banks on the sick list. One noticeable feature regard ing the banks of Omaha is that we never had a failure of a national bank. I was elected assistant cashier here in 1901, cashier in 1910, vice president in 1911 and president in 1914. Thinking this might interest you, I am sending you a menu card of a dinner which was given by the banks of Omaha and South Omaha in September, 1907, with photographs of the officers o f the banks at that time. For some reason or other the South Omaha National did not turn in any of the faces of their officers. Out of this group of bankers the fol lowing are still in banks here in Omaha: C. T-. Kountze, Fred Davis, T. L. Davis, First National Bank; Fred Hamilton, B. H. Meile, Omaha National Bank; John 20 THE King, Janies Owen, Stock Yards National Bank; Frank Boyd, Omaha National Bank; Milton Barlow, United State Na tional; J. F. Goad, Jr., Packers National Bank. NORTHWESTERN BANKER The Merchants National Bank consoli dated with the Omaha National and two of its officers are with the Omaha Na tional. The Union Stock Yards National and South Omaha National consolidated January, 1927 in 1912 under the name of the Stock Yards National Bank. The Nebraska National wTas purchased by the First National about two years ago. Pioneer Banking Days in Iowa NE of the pioneer bankers of Iowa, known throughout the state, is Mr. Emmons Johnson, chairman of the board of the Leavitt & Johnson National Bank of Waterloo, Iowa. Mr. Johnson is now 92 years of age and his son, E. L. Johnson, has this to say regarding his father’s career: “ I recently found on his table, articles of partnership under which the banking firm of Johnson & Leavitt was founded at Waverly, Iowa, in 1864. It provided each partner should contribute $4,000 to the capital; Emmons Johnson should devote his entire time to the business and should receive $900 a year as full compensation; all gains and losses should be shared equally. In May, 1868, Mr. Johnson bought out Mr. Leavitt, but the name of Johnson & Leavitt was to continue to be the title of the bank and it was so con tinued until Mr. Johnson sold out the business in 1870. “ In 1870 Mr. Johnson came to Waterloo and the Waterloo firm became Leavitt, Johnson & Lusch. The business had been established in Waterloo by Mr. Leavitt in 1856 and in 1870 he was looked on as a veteran banker and an old pioneer set tler. Emmons Johnson sold the Waverly bank to the Rosenbaum Brothers, who afterwards became so prominent in the grain trade in Chicago. At that time they were in the clothing and grain business in Waverly and were Mr. Johnson’s best cus tomers. west—often a two-day haul for the farmer with a load of wheat. Cars were hard to get and it was Mr. Johnson’s custom to wire to Dubuque in the afternoon what cars of grain were going forward that night and to order currency against them. The bank at Dubuque had the bills of lad ing the next morning and the Waverly bank had the currency to pay out again the next day. Of course, this was only during the more active periods. Grain buying and shipping was an active and alluring business for everybody. The bankers charged one-fourth of 1 cent a bushel for “ figuring the wheat tickets” and paying out the cash. “ Perhaps I might add that the banks at Waverly had vicissitudes and changes of ownership. The Johnson & Leavitt Bank became the First National Bank. The original bookkeeper, Mr. Burr, was cashier for many years. Later Mr. John son bought the controlling interest in the First National Bank of Waverly, which he still holds and the bank is still run with an excess o f cash, liquid paper and marketable bonds.” O Guaranteed Assets “ In selling, Mr. Johnson guaranteed all the assets of the bank and was to take up in ninety days any unpaid or unacceptable paper. He was asked to take up but one note of $87. “Attached to the contract of sale is a balance sheet on which Mr. Johnson bought out Mr. Leavitt in May, 1868. It shows: Certificates of deposit.................... $21,000 Deposits on open account from in dividuals ..................................... 55,000 Capital and profits......................... 21,000 “ On the asset side it shows: Government bonds in the safe........$ 4,950 Cash in the safe............................. 23,800 Cash on deposit in New York and Chicago ....................................... 8,800 Government bonds deposited in New York and Chicago ............ 20,150 Bills receivable ............................. 18,500 Overdrafts ..................................... 20,500 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis EMMONS JOHNSON Office furniture............................... Real estate....................................... 1,900 4,600 “ The matter of overdrafts was following an old custom, still prevalent in some parts of Europe, of advancing credits by way of overdraft instead of notes. “ The real estate covered the office and five other parcels, but was discounted 11 or 12 per cent in the sale, which looks as though real estate had been an undesirable bank asset even then. Large Cash Balances “ With the small deposit the question arose why such large cash balances and $25,000 in government bonds should be car ried, which makes the total cash and gov ernment bonds $57,500 as against the de posit of about $77,000. Mr. Johnson said, ‘Well, that was the way I liked to run it and always did. I had government bonds in New York and Chicago because they were more available there, either to sell or borrow on. They were practically cash in hand, just as now. I seldom made a loan for more than ninety days.’ It required a good deal of self-restraint to run the bank this way when the lending rate was l 1/^ per cent a month. “ Waverly was the end of the railroad and grain was brought in there during the season for many miles north, east and Our Funny Ancestors A gentleman opened doors for ladies. And at dances wore gloves lest he soil his partner’s gown. And in drawing rooms juggled top hat, cane, gloves, bread and butter, cup of tea and conversation. And in the evening asked her father’s permission to sit in the parlor with daughter. And at dinner parties abstained from smoking until the ladies had left the table. That was back in the age, when in dancing, the feet were employed. Thank You, Mr. McPherrin! From Grant McPherrin, veteran president of the Central State Bank, of Des Moines, comes this word of commendation which is deeply ap preciated by the N orthwestern B anker staff: “ Allow me to con gratulate you upon the November issue of your magazine. It is a credit not only to you, but to the city of Des Moines and the bankers of Iowa.” THE January, 1927 NORTHWESTERN 21 BANKER A Laymans V iew o f the Bank Guaranty Question HAD thought perhaps it would be a good thing to give some facts and figures pertaining to the many bank failures in this state before beginning on the main topic, Bank Guarantee Laws. One who reads the newspapers these days might be led to believe that all of the banks in the state were on the verge of closing. However, this is far from the truth. The fact is that most of the so-called shaky banks have been closed and a number of those closing recently have been solvent. The closure was forced in many cases to protect the de positors with faith in the banks who did not withdraw their deposits. Psychology seems to have been the trouble in most of the recent cases. People’s nerves sud denly broke under the long strain of con tinuous failures and they lost confidence in all bankers. To offset this loss of confidence fol lowing two failures in their town, the officers of the Security National Bank at Milford, finding their deposits dwindling, called a mass meeting of depositors. The officers spoke to them at length, maintaining that the bank was solvent, but that it would have to close before long unless withdrawals ceased. Pledges were produced and signed by a number of the depositors, which provided that 25 per cent of the deposits be left in the bank for six months and 75 per cent for eighteen months. I A Novel Plan This plan attracted attention in north west Iowa, where there has been so many failures. Two weeks ago 19 banks in Palo Alto and Kossuth counties closed on the same day. Mass meetings were held in the towns and in rural schoolhouses. An organized canvass, similar to the ones that put the Liberty Loan drives over the top during the war were carried on for signers to the waivers. In Algona the business houses closed and everyone worked to secure signers. When 80 per cent of the depositors had signed the plan it was legal, and many of the banks were reopened at once, with a relief to the depositors as well as to the bankers. As long as there have been no fail ures in this immediate vicinity, it might be well to pictui’e just what a failure means to a community. Imagine, if you please, that suddenly you could not draw on your bank balance, and what is more you could never have a portion of it. People’s lives are changed. Many who would have weathered the financial crisis are ruined. Loans must be paid at once. The receiver starts many law- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B y James W . McCutcheon Editor “Mount Vernon Hawkey e-Herald” Mount Vernon, Iowa iiiiiiiiiiiiiiimiiiiiiiimiiiiiiiiiiiimiiiiiiiiiiiiiiiiiiiiuiiiiiiHiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiMiiiiiiiiiiiiiiiMimiii The article on this page is from an address recently made by Mr. McCutcheon, editor of the Mount Vernon, Iowa, “ Hawkey e-Her ald,” before the Rotary Club of Mount Vernon and Lisbon. It is an interesting view of proposed guaranty measures, by an editor who is also a director of a bank— E ditors Note. iiHiimmMiiiiiiiHimiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiitiiiiiimiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiuiii. suits. At Tama there were filed within a few weeks of the failure, fifty suits and the receiver says he is only nicely started. Aside from that the morale of the com munity is shattered and business is ex ceedingly poor. And then often there is a bitter feeling against officers of the bank, and you know what this means, es pecially in a comparatively small com munity. In some cases a town is left without banking facilities. Take Estherville, a town of 5,000 people, which formerly had four banks and now has none. However, one is in the process of organization and will be opened soon. The sheriff of Tama county says he is glad that he was defeated in reelection as he had had a sample of the work for the next year or two in serving papers on the unfortunate. Already families have lost their farms and others have judgments that will hold them down for years. With that as an introduction I will take up very briefly the guarantee law in each one of the eight states that passed one. Oklahoma was the first state to try such a law. Hers was passed in 1907 as a kickback from the panic of 1907. It provided for an assessment of two-fifths of 1 per cent of average daily deposits with authority vested in a banking board to levy special assessments. When first passed some of the state banks changed over to national banks. But as the ad vantage of advertising that they were a member of the guaranty fund became ap parent, they changed back to the state bank system. On March 1, 1920 there was a balance of $75,000 in the fund which would be wiped out by one failure. During No vember 1921 the Bank of Okmulgee failed with $1,700,000 in deposits. By this time the guaranty fund was over drawn $3,000,000 and the warrants with their 6 per cent interest took two-thirds of the annual assessment. This bank had been consolidated earlier in the year. Other bankers had protested this at the time, but the superintendent of bank ing made no effort to acquaint himself with the facts or to stop the consolida tion. The bank had loaned beyond the legal limit to individuals and on poor security. The law was repealed on March 31, 1923, with ten million in un paid obligations. Kansas Tried It Kansas was the next state, adopting an optional law in 1908. Assessments were one-twentieth of 1 per cent with four additional, making a total of onefourth of 1 per cent if the balance was below $500,000. It was wrecked by the failure of the American State Bank at Wichita with $4,600,000 deposits. The cashier had ruined this bank and robbed it of $1,650,000 besides making loans on unsecured oil notes. It is well to keep this case as well as the failure of the bank that wrecked the Oklahoma law, in mind. One bank also wrecked the Washington law. One hundred failures during the past five years left the fund with liabilities of four million while $300,000 is the max imum assessment. As the law was op tional the banks have withdrawn. Texas took up the law in 1910. It had the customary one-fourth of 1 per cent assessment, but one-fourth of this was deposited with the state treasurer and the balance was left on deposit with the member bank. When the fund reached $2,000,000 no assessments were to be made except in the case of new banks. When the fund approached that balance it was increased to $5,000,000. The fund saved losses to depositors of $10,000,000 up until 1924. Since that time the strong state banks have been withdrawing and the system is placing a heavy burden on the weak state banks that they cannot carry, according to a letter from Banking Commissioner Charles Austin. Nebraska was next, but I have left a discussion of her law until the last, as it is the nearest to a success o f any law. South Dakota climbed on the guarantee bank wagon in 1915 and jumped off after a disastrous ride following the many failures in 1921, ’22, ’23 and ’24. Everything was fine and there had only been three failures until 1921. January 1, 1926 the account was overdrawn $43,000,000 with $2,000 daily interest charges on the balance. Mississippi also tried the law in 1915. THE 22 Her assessment was the customary onefourth of 1 per cent of deposits. The latest figures I could obtain were that it was overdrawn $1,840,766 and that it would take seven years to pay out if there were no more failures which is un likely. North Dakota tried the law, but with her nonpartisan league experiences and lax supervision of banks on March 14, 1925, the account was overdrawn $86,000,000. You can draw your own con clusions as to its success. Washington was the last state to em bark on a guaranty fund experience. It happened that there were three bank fail ures in Seattle while the legislature was in session in 1917. It had to do some thing so it passed a law and pulled its teeth, making it optional. The assess ment was one-half of 1 per cent and it was administered by a board with the governor as an ex officio member. The Scandinavian-American Bank of Seattle failed with 15 million in deposits. The president of this bank had specu lated in Alaskan real estate. The bank had been interested in the AlaskanYukon exposition held a few years ago. It had also made large loans to ship building companies. The failure of a bank by the same name in Tacoma, al though the two were not connected finan cially, caused a run on the Seattle banks with the disastrous results mentioned. Eight per cent of their deposits was paid depositors before the banks with drew from the system as membership was voluntary. The law is still on the statute books. The Nebraska Law Now we take up the Nebraska law for more specific consideration. It was passed in 1909 with William Jennings Bryan as one of its main supporters. The law was held up in the courts until 1911 to test its constitutionality. Under the original law the fund was not collected but kept on deposit with the member banks as a liability and carried as a de posit on their balance sheets. All banks were closed when in trouble as there was no commission to take them over. In 1923 the law was changed and the guar anty fund commission created. It ad ministers the fund and provides for su pervision of banks. There are seven members, the governor appointing an active executive of a state bank in each one of the seven banking groups. They hold office for three years. Some of the adjectives used to de nounce the law in letters written by Ne braska bankers against the law in an swer to a questionnaire sent out by T he N orthwestern B anker , are dishonest, unsound, unfair, uneconomical, unjust and without merit. Some facts of the Nebraska situation, answers to the questionnaire, and reasons for and against the law have been com https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis N O R T H AV E S T E R N BANKER piled from the letters printed in T he N orthwestern B anker and will be given. Nebraska has a total of 893 banks with $284,000,000 in deposits. Since the law went into effect in 1911, there have been 154 bank failures, the vast majority since 1920. The Guaranty Fund has liquidated and taken the losses of 117 of the failing banks and is now operating 37 banks. Nebraska bankers have paid out of their pockets, throuh the Guaranty Fund a total of $14,000,000 since 1911. A total of about $14,000,000 has also been realized through liquidation of failed banks. The average loss per bank to the Fund has been about $130,000. The main reasons against the law are: 1. Good bankers are punished by the acts of poor ones. 2. Promotes poor banking. 3. Economic unsoundness. 4. Continual assessments. January, 1927 5. Places same rate of insurance on the good banker as on the poor one. 6. Depositors depend on the law rather than on the character of the men operat ing the bank. 7. The law created a boom in banking that caused more banks than were neces sary to be organized and they were often run by incompetent men. 8. The law has increased the deposits of a bank drawing 4 per cent to such an extent that it is hard to invest the money safely and make money for the bank and loaning at 8 per cent on open notes is apt to cause bad loans. 9. It is an attempt to create integrity by legislative act. The main reasons for the law are: 1. It stabilizes business. 2. Prevents runs. 3. Pays depositors in full. 4. Holds public confidence. 5. Bankers can spend their time look(Continued on page 24) Foreman Banks W ill Increase Capital HE board of directors of the Fore man Banks, Chicago, at their Decem ber meeting, decided to recommend to the stockholders that the capital stock of the Foreman National Bank, which carries with it ownership in the Fore man Trust and Savings Bank and the Foreman Securities Company, be in creased from 40,000 shares to 50,000 shares, the additional 10,000 shares to be offered to the present stockholders at $400 per share. The present dividend rate of $16 a share will be continued. The $4,000,000 derived from the sale of 10,000 additional shares will be divided in the following manner: $2,500,000 to the Foreman National Bank, which will give it a capital of $5,000,000, a surplus of $5,000,000, and undivided profits of over $1,000,000; $1,000,000 to the Fore man Trust and Savings Bank, which will give it a capital of $2,000,000, a surplus of $1,000,000, and the remaining $500,000 to the Foreman Securities Company. The plan will be submitted to the stock holders at their annual meeting on Janu ary 11,1927, and, if adopted, immediately thereafter rights for the new stock will be issued, calling for payment not later than January 27, 1927. T Profit to Stockholders Inasmuch as the present market value of the Foreman National Bank stock is $500 per share, the issuance of these rights constitutes a bonus. It is interesting to note the develop ment and progress of the Foreman Banks. It was founded in 1862 by Gerhard Fore man, one of our early pioneers, and in- corporated as a state bank in 1897 under the name of Foreman Bros. Banking Com pany, with deposits of less than a million dollars. At that time the bank had only three officers, Edwin G. Foreman, presi dent; Oscar G. Foreman, vice president, and George N. Neise, cashier. Its prog ress and growth was right in pace with that of the city, and on July 1, 1923, a further step forward was made by chang ing Foreman Bros. Banking Company to the Foreman National Bank and the Fore man Trust and Savings Bank. On Decmeber 24, 1924, the Forman Na tional Bank increased its capital stock from 30,000 shares to 40,000— the addi tional 10,000 shares being sold to the pub lic at $400 per share. This was a de cided change in policy as the stock had previously been held very closely. In disposing of the additional 10,000 shares, over 800 new stockholders were added, and the money secured from the sale of the stock was used in increasing the capi tal and surplus. $100,000,000 Resources Since that time the bank has continued its growth and its resources at the pres ent time exceed $100,000,000. The directors are Oscar G. Foreman, Carl Nyquist, Albert D. Lasker, William C. Cummings, Delos AY. Cooke, Edwin G. Foreman, Jr., John Hertz, George N. Neise, Charles A. McCulloch, Emil G. Seip, Joseph W. Cremin, Gerhard Fore man, John R. Thompson, Jr., Samuel Phillipson, Alfred K. Foreman, L. B. Patterson, Oscar G. Alaver and Harold E. Foreman. January, 1927 THE N O R TH W E ST ER N BANKER 23 I ! llllllllllllllllllllllllllllllllllllllllllllllll IIIIIIIIIIIIIIM IIIIIIIII COMPLETENESS selecting your Chicago corresponden^wecordially invite you to investigate those complete facilities of the Union Trust Company which have enabled it to serve many correspondents for ten, twenty, and even thirty years or longer. N I W ith a balanced organization of correspondent banks and private wires carefully built up over a long period of years, we welcome the opportunity to serve our correspondents in matters that require accurate credit information, intelligent collection handling, and rapid turnover of funds in transit. H arry A . W Frederick H. R a w s o n heeler President Chairman of the. Board C raig B. H a z l e w o o d V ice-President U N IO N T R U S T COMPANY C H IC A G O Offering the Seven Essentials o f a Banking Home SAFETY https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SPIRIT * EXPERIENCE - CALIBER * CONVENIENCE - COMPLETENESS PRESTIGE THE 24 A LAYMAN’S VIEW OF THE BANK GUARANTY LAW (Continued from page 22) ing after investments rather than convinc ing depositors that his bank is safe. Suggested Changes A number of good suggestions were made for changes in the Nebraska law; they follow : The law should be taken out of poli tics. The bankers should elect those who administer the fund as they have to make good the losses they ought to have control of the liquidation of failed banks. A charter for a new bank should not be granted unless there is a real need for this bank in its own community. More stringent loans are needed regu lating loans to individuals and in the ex amination of banks. Depositors who receive the benefit under the law should share in the expense. The rate of interest should be reduced to make up for the expense of the guar anty fund to the banks. The fund should only cover 85 per cent of the losses as the moral backing of the community in which a bank closed would be behind the receiver rather than against him as it is now in many cases. Kirk Griggs, secretary of the depart ment of Trade and Commerce, which in NORTHWESTERN BANKER cludes the bureau of banking, says that bankers who violate banking laws should be fined heavily and the fines be used to build up a guaranty fund. Under strict supervision he believes that this plan would work. In case it did not he sug gests state taxation to make up the losses not covered by the fines. Another suggestion, that may make for the correct guaranty law, there should be more strict banking laws and more strict enforcement of them than there is. There were only 10 per cent as many failures of national banks in Nebraska as state ones. It is the same story in nearly every state. The state banks must be admin istered as strictly as the national banks are. High-grade examiners, who know their business should be hired and their appointment should be kept out of poli tics. However, they should be responsible to some one, so their authority will not get away from them. As for state taxation to pay losses, that is taking the government too far into private business. It also would be special interest legislation. The latest plan of passing the burden on to the depositors also is not right. The same banker who has bitterly opposed the guaranty that places the burden on them because they have to suffer for the acts of poor bank ers, and many of the other reasons men tioned earlier in this talk, favors a law that shifts the burden to the depositor. A January, 1927 There is absolutely no consistency what ever to their stand. If they were sincere in their objections of the principle of the Nebraska guaranty law, they would not favor a law that placed the burden on the depositor but did not change the princi ples of the law other than that. The au dacious proposal has been made by W. E. G. Saunders of Emmetsburg that such a law should be mandatory. Passing the buck to the depositors if successfully passed in the legislature would amount to a reduction in the interest rate. With the competition of first mortgage real estate, bonds, government securities municipals and preferred stock in good reliable companies the banks would undoubtedly lose heavily in deposits. What is really needed is better bank ing laws and better bankers. The cause of the failures could be largely elim inated in this manner. Then with a system in which the bankers had full control as to liquidation of closed banks, appointment of examiners and super vision of the banks and control of banks admitted to the guaranty fund, the fail ures would be reduced to such an extent that the banks might not object to the small burden feeling that they were more than repaid by the advantages that would accrue to them under such a guaranty law. The correct guaranty law is coming and should be written in the not far distant future. Privilege— A Pleasure— and a Promise It has been the privilege— and the pleasure— of the F i delity Trust C om pany to cooperate with hundreds of lead ing banks during the past year. A n d the Officers of the Fidelity Trust C om pany have never lost sight of the fact that friendly helpfulness toward Correspondent Banks has put the Fidelity where it is— and that friendly helpfulness will carry it further. Our best expression o f appreciation for past business is our prom ise of future cooperation and assistance. Resources Over Fifty Million Dollars In the Center of Things Financial 120 Broadway https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tff Equitable Building January, 1927 THE NORTHWESTERN 25 BANKER Renders Important Decision HE recent reversal of Judge Kep ler’s decision in the matter of the penny banking system in Mason City, Iowa, by Justice Faville of the Iowa supreme court, has not only opened the way for the resumption of the system in the Mason City schools, but will affect scores of other systems throughout the state, some of which have been in opera tion for many years. In 1925 there Avere nearly 50,000 pupils enrolled in the sav ings system in 21 towns and cities in the state, the boys and girls systematically saving their money and depositing it un der the supervision of their teachers. The total deposits of school children in Iowa was in the neighborhood of 375,453, which amount brought an annual interest of $12,671. A total of 265 schools are now using the system in the state and not until the system was inaugurated in Mason City in 1923 was the plan questioned and the matter brought before a district court. T bank. The contract is between the school district and Thrift, Inc., who owned the copyrighted system. In carry ing out the system the use of some one or more banks is required. The school district did not contract with the bank, and by the terms of the resolution inaug urating the system in the public schools, Thrift, Inc., was required to secure some bank to act as depository without ex pense to the schools or to the pupils. The record shows that Thrift, Inc., en deavored to secure the appellee and other banks in Mason City as depositories and that they refused to act as such. “ The school corporation had nothing whatever to do with this contract. It was not a party to it in any \vay. All its resolution required Avas that Thrift, Inc., should provide that a bank should act as a depository and that the supplies for the carrying out of the system should be furnished Avithout expense to the pupils or the school corporation. “W e are of the opinion that the feature of the system Avhich required money to be deposited in an actual bank or banks Avhere interest accumulated on it, such bank or banks to be selected by Thrift, Inc., did not render the resolution of the board of directors in inaugurating the system of instruction an act beyond the legislative poAver conferred upon it and hence one Avhich the courts could enjoin. Not Compulsory “ As we understand the record, the pupils are not compelled to take part in Plaintiff’s Contention The plaintiff, the Security National Bank, contended the school board in plac ing the system in operation, had exceed ed its statutory authority and that the First National Bank which was made the depository, had violated the unfair competition regulations. Judge Clark granted temporary injunction while the final case was decided before Judge Kep ler, \\rhose decision has not been reversed by Justice Faville who said, “ We think it can not be denied under the record, that the instruction in thrift, as outlined and taught by the system adopted by the board of directors in this case comes properly and legally within the contem plation of a course of study. The teach ing of economy, self-denial and saving is by a definite and well-defined system or plan. It is, we think, clearly within the power of the board of directors of a school corporation to determine whether or not such a course of study shall be prescribed for the public schools of the corporation and whether it shall be main tained or not. “ The general assembly designated by legislature enactment that certain speci fied subjects shall be taught in the public schools, and has left the matter of deter mining and prescribing the courses of study as to all other matters within the power and discretion of the board of directors. Unless there be something in connection with the subject matter of this prescribed course that transcends and exceeds the power vested in the board of directors, the courts have no authority to interfere by injunction and restrain the action of the board. There is qo contract whatever between the school district and the appellant https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1927 7 5 o bankers of the Middle West we extend our sincere wishes for a most pleasant and profitable year, and it is our hope that we may be privileged to serve in ways that will accomplish most for those who entrust us with their business. THE STOCK YARDS NATIONAL BANK THE STOCK YARDS TRUST&SAVINGS BANK o f CHICAGO 26 T IIE A Specialized Service for Banks and NORTHWESTERN the system of thrift as taught. They are encouraged to do so. If they have no savings they have no use for a bank. If they want to ‘save on their own account’ without regard to the school or the Thrift system, and put their savings in a hank of their own choosing, there is nothing to prevent them from so doing. “ We are not called upon to pass upon the advisability or propriety of the inau guration of such a system in the public schools. We confine our ruling to the sole question, to wit: was the act of the board wholly illegal1? We hold that it was not. The penny banking system has the backing of the American Banker’s Asso which is the result of more than sixty years of experi THE FIRST NATIONAL B A N K OF CHICAGO THE FIRST TRUST and SAVING S BANK Complete facilities are pro vided for active and inac tive accounts, collections, bills of lading, investments and foreign e x c h a n g e transactions F R A N K O. W E T M O R E , Chairman M E L V IN A. T R A Y L O R , P resid en t Combined Resources Exceed $450,000,000 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 ciation and the deputy manager of the Association’s savings bank division has brought out that during the year which closed June 30, 1925, the number of re porting school savings systems has in creased from 683, which embraced 742 dis tricts, to 760, embracing 1,557 districts. The number of schools having savings system increased 11.9 per cent; the en rollment of pupils in district having school savings increased 24.3 per cent; pupil participation increased 28.3 per cent; deposits 506 per cent, and bank bal ance 516.8 per cent. Money is a social agency in its deepest sense and happy is the youth who comes to an early understanding of that fact. Predicts N ew Record on Travel Abroad Bankers ence is offered by BANKER HE winter of 1926-1927 will estab lish new high marks for steamship pleasure cruises, the number of pas sengers books and the amount of money to be spent by these anxious to see the world and to obtain short respites from the wintry blasts that most of the U. S. A. is heir to, according to figures just com piled by statisticians of the American Express Company. Frederick P. Small, president of the American Express Company, has just issued a statement showing that fiftyseven cruises by palatial ocean liners are scheduled to leave on tours ranging from eighteen days to four months during the coming winter under the auspices of steamship and tourist companies. Six of these steamships will make world voyages, twenty-four will sail for the Mediterranean, twenty-four others will visit the West Indies and three will go to South America and South Africa. “ This is a veritable armada o f pleasure ships, equal in tonnage to some of the navies of the world,” declared Mr. Small, in speaking of the elaborate plans that have been worked out during the last six months to take care of the tourists who have thus far booked. At the present rate there will be 24,100 bookings for the fifty-seven pleasure jaunts. These figures, the American Express Company’s official believes, may be greatly aug mented during the next few months. A conservative estimate made by experts of the American Express Company shows that approximately $25,000,000 will be spent by tourists for accommodations. This sum is exclusive of such personal items as tips, laundry, mineral water, wines or personal expenditures of the head of the family in providing “ just what is needed” for traveling. Accountants compiling figures of the various cruises submitted their approxi T mate totals to Mr. Small, covering all expenditures of the 24,100 globe trotters aboard the fifty-seven steamships and the grand total shows that $75,000,000 will change hands this winter. “ Looking back to 1919,” said Mr. Small, “ one ap preciates the tremendous strides made in the winter pleasure cruising end of the steamship business. The American Ex press Company in conjunction with Thomas Cook and Sons seven years ago undertook a hazardous adventure for that time, in sending the Cunarder “ Caronia” to the Mediterranean on the first large cruise of its kind after the war. It was a decided success, nevertheless, and since that momentous occasion the winter cruise business has been almost fabulous, with this season exceeding all previous records. “I am sanguine enough to predict that next year will show a still more decided increase. “ Save-to-Travel organizations have played a large part in diverting travel to the winter months,” declared the official of the American Express Company. “ The average man or woman before the inaugu ration of the winter cruises looked upon ocean trips as being confined to the months of July, August and September. An ocean trip meant to them a brief visit to Europe. Today people are no longer content with short vacations. They plan for months for the winter ocean trips and look forward to the dreary days o f December, January, February and March with pleasure, for, under the present scheme, most of the steamship companies and tourist agencies try to arrange the itinerary of their respective steamships so that the traveller will be able to dodge, if not all, most of the frigid weather of the new world and arrive back in the United States weeks after the ground hog fails to see its shadow.” January, 1927 T PI E N 0 R T II AV E S T E R N BANKER 27 « T W O N O T A B L E SAFEG UARD S FOR G u a r a n t e e d M o r t g a g e C o m pa n y GOLD BONDS Every M ortgage Is Guaranteed by a $52,000,000.00 C om pany Every Title Is Insured by a $30,000,000.00 Com pany The United States Fidelity and Guaranty C om pany Guarantees to Pay, A. Any and all such interest, within thirty (39) days after receiving notice of default. B. Any and all such principal, within six (6) months after receiving notice of default; and, in the interim, interest at the rate named in said mortgage or mortgages so in default, as the same shall accrue. The New York Title and Mortgage Company with capital funds in excess of $30,000,000 insures the titles of all properties securing these bonds, thus affording our investors additional safety through this title protection. The financial statement of the New York Title and Mortgage Company in dicates the strength of that institution. United States Fidelity and G uaranty Co . N ew Y ork T itle and M ortgage Company Condensed Statement October 31, 1926 Condensed Balance Sheet September 30, 1926 ASSETS Cash and Investments (Market Value) . . . . t................................................. $39,578,957.77 Baltimore, New York and Philadelphia Buildings.................................................. 2,916,308.61 Agents’ B a la n c e s..................................... 9,135,752.53 Due from Subscriptions, Bureaus, and under Re-insurance Treaties................ 706,442.04 Interest due and accrued.......................... 369,706.31 Miscellaneous.............................................. 127,171.85 ASSETS Cash............................................................... $2,902,605.08 Bonds and M ortgages............................... 20,861,525.10 Investments..._............................................ 13,910,895.52 Accounts Receivable.................................. 443,412.67 202,460.26 Net Interest due and accrued.................. $38,320,898.63 LIABILITIES LIABILITIES Cash Capital.............................................. $6,000,000.00 Surplus........................................................ 8,985,315.29 Funds held under Re-insurance Treaties. 935,776.69 Contingent Reserve................................... 500,000.00 Premium Reserves...................................... 16,426,360.41 Claim and Miscellaneous Reserves........ 19,986,886.72 C a p ita l............................. $12,000,000.00 S u r p lu s ........................... 14,000,000.00 Undivided P rofits......... 5,392,503.24 $31,392,503.24 1,874,264.04 Premiums and Fees Prepaid.................. Reserves........................................................ 1,534,060.62 Dividends Payable..................................... 595,000.00 Mortgages sold, not delivered................. 1,984,597.90 Agency Accounts........................................ 679,934.20 Current Accounts....................................... 260,538.63 $52,834,339.11 $38,329,898.63 $52,834,339.11 Investment Bankers, Banks and Bond Dealers are invited to correspond with us regarding a profitable affiliation for the distribution of these bonds. WHITE - PRICE - COMPANY BAKER BUILDING https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis MINNEAPOLIS THE 28 NORTHWESTERN January, 1927 BANKER Uniformity o f Banking Laws A BSOLUTE uniformity of banking laws in all the states would be impossible to secure, and unwise if secured; for one of the elements of strength in state banking laws is their peculiar adaptability to the special busi ness needs and conditions prevailing in the various states. Nevertheless it is generally agreed that there should be a high degree of uniformity as regards the fundamental principles of banking, bank organization, regulation and supervision. Gratifying progress has been made along this line, especially during the past two years, it is shown in a survey of the trend of bank legislation made by the State Bank Division of the American Bankers Association. The adoption of new banking codes y \ B y M . E. Holderness Chairman Public Relations Committee American Bankers Association during 1925 by the states of Oregon, Idaho, and Wyoming is a notable achieve ment within a single legislative year. Several other states contemplate a com plete revision of their banking laws at an early date. Montana, Texas and South Carolina have appointed banking code commissioners to study banking laws with a view of drafting new codes. In modernizing their banking laws, Oregon, Idaho and Wyoming drew upon the best banking experience in the coun try, and these codes represent the com bined judgment of as many bankers and Royal Union Life Insurance Company DES MOINES, IOWA Offers an unexcelled line of policy contracts. Our Juvenile policies, written on children as young as one day old, go in full benefit auto matically at age five without re-examination. Our special low r a t e policies to business and professional m e n a r e fast sellers. We w r i t e women on equal basis with men. Special agency openings are now available. Write W illiam Koch, Vice President and Field Manager. Royal Union Life Insurance Company Des Moines, Iowa A. C. TUCKER, President https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis others interested in the subject as it was possible to secure. I have attempted to summarize in the following only the broad general tenden cies of recently enacted bank legislation. Fourteen Trends A survey of new bank legislation enacted in the several states reflects a very definite trend in legislation toward: Increasing the minimum capital re quirements of banks to $25,000, thereby increasing their efficiency; Increasing the discretionary power of bank commissioners as to granting or denying charters for new banks, and au thorizing their making reasonable rules and regulations governing bank manage ment; Creation of banking boards to act in an advisory capacity with the state bank commissioner; Increasing the compensation of the bank commissioner and lengthening his term of office to four, five or six years, with power to appoint necessary deputies and examiners; Empowering bank commissioners to take complete charge of and to liquidate insolvent banks as distinguished from liquidation through the courts; Limiting or prohibiting an officer or director of a bank borrowing from his bank, unless his collateral is approved by a majority of the Board of Directors; Legislation providing for closer super vision and regulation of building and loan associations; Legalizing “ finance companies” , “ credit unions,” etc., and placing them under the supervision and regulation of the depart ment of banking; Legalizing and regulating “ depart mental banking;” Legislation providing for merger, con version or consolidation of banking in stitutions ; More equitable taxation of bank stock; Broadening the field for investment of funds of savings banks and trust com panies ; Legislation providing for reducing mandatory bank calls to three, and re ducing the number of examinations re quired by law annually to one examina tion; more frequent calls and examina tions optional with bank commissioner; Making issuance of worthless checks a misdemeanor with specific penalties. Guaranty of Deposits Interesting sidelights on so-called State , Guaranty of Deposit laws were revealed by the survey. Many bankers confessed their earnest advocacy of the plan fifteen or twenty years ago, but that they had repented in sack cloth and ashes, after the scheme had been put in the crucible January, 1927 THE of experience and tried out by the fires of adversity and found wanting. The plan was conceived in the troublous times of the nineties, born during the panicky era of 1907, and wrongly christened at the start, “ State Guaranty Plan/’ whereas it is not a guaranty but an insurance plan without the element of selective risk, and entirely dependent upon the sufficiency of the premiums paid. Ex perience has shown the premiums not sufficient, and the insured unable to afford higher premiums. Nevertheless, the plan proved so alluring to the uninitiated— so easy, so simple, so promising, that it reminds one of the allurement of the mirage of glistening waters and green trees which fascinates the tired and thirsty traveler in the desert, only to prove disappointing in the end. The consensus of opinion from all sections of the country is to the effect that the question of state guaranty of deposits is passing into eclipse so far as the extension of the idea is concerned, for, notwithstanding the fact that state guarantee laws were recommended last year by the governors of two states and were introduced in several other states, all such proposals were defeated. In general, the tendency regarding state guarantee laws appears distinctly retro gressive—several states looking toward the repeal of this legislation. During the past twenty years, eight states enacted guarantee laws, beginning with Oklahoma in 1907 and followed by Kansas in 1909, Texas in 1910, Nebraska in 1911, Mississippi in 1914, South Da kota in 1915, and North Dakota and Washington in 1917. Oklahoma rescinded her guaranty law three years ago, leaving a large unpaid deficit. Last year South Dakota repealed its state guaranty law and has referred the repeal to the people for ratification at the next general election. Texas has modified her law, on account of state banks changing into national banks to es cape the burden, so that they may choose between the guaranty system or a bond security plan. The Kansas State Guaranty law was rendered virtually innocuous by a deci sion of the Supreme Court on April 12th this year, wherein it held that the banks could not be held for assessment beyond the bonds deposited with the state. In other words, the decision means that a bank may withdraw from the guaranty fund any time it desires and escape pay ment of any assessments beyond for feiting the amount of bonds deposited with the state. It is reported that most of the banks plan to forfeit their bonds and withdraw from the guaranty fund, which means that the state will have a little more than $1,000,000 with which to pay more than $3,000,000 of outstanding guaranty certificates. Undoubtedly, the fundamental weak https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER ness of the guaranty of deposits plan is that it is an attempt to create integrity and financial ability by legislative fiat— it tends to penalize prudent banking and to encourage reckless practices by re ducing in the public mind, all bankers, honest and dishonest, efficient and in efficient, to one common level. Preventing Failures Bank failures are public calamities, and all agree that banks must be made safe by some feasible means, based on sound principles. Banking experience throughout the years has taught the lesson that the best safeguards of sound banking are: bank ing intelligence, plus unyielding integrity, supplemented by careful supervision. Supervision that prevents bank failures 29 is far more valuable to both depositors and stockholders than any plan of guar antee of liquidation after failure. The one is preventive in its nature, the other a post mortem process. As a preventive of bad banking and as an antidote for the guarantee panacea of the politician, I earnestly commend for your consideration and adoption, the Clearing House System of Examination. The clearing house associations in oper ation in several hundred cities towns and counties today constitute the chief line of defense against bad banking practice — they are the chief factors in bringing about reforms in banking laws, improve ment in banking methods and promotion of sound banking practices. The work of the clearing house association is today a great constructive force in American The Opening o f the J^ew York O ff ce o f a representative o f The National Bank o f the Republic o f Chi cago is another link in the " Republic’s” chain o f service. The new office is located at N o . i W a ll Street, and we cordially invite you to make it your headquarters while in N ew York City. 116 Features If you are not personally acquainted with the length and breadth ot "Republic” Service, you will be particularly interested in our new booklet— just off the press. It covers x 16 outstanding features o f our specialized service to correspondents— everything from our loan policy on down to the act o f making a hotel reservation for you in Chicago, N ew York or Paris. Merely write for a copy o f “ A Directory o f Services Rendered to Correspondents.” The National Bank o f the RE PUBLIC * • O P C H IC A G O • • J o h n A . L y n c h , Chairm an o f the B oa rd D a v i d R . F o r g a n , Vice-C hairm an G e o r g e W o o d r u f f , V ice-Chairm an H. E . O t t e , P resid en t © NBR 1926-13 THE N O R T H AN E S T E R N Throughout the Tear T h e officers and em ployes o f this institution, as in years g o n e by, recog n ize a dual oblig ation o f profit and o f service— to 3500 stockhold ers and 210,000 customers in all parts o f the U nited States <TheCONTINENTAL W COMMERCIAL BANKS C H IC A G O Reso u r ces H alf a Bil l io n —a n d more BANKER January, 1927 banking, and its value is no longer a matter of opinion for the results speak most eloquently for themselves. It is becoming more and more evident that the extension of clearing house work, including clearing house examina tions, is a great forward step in the so lution of the problem of protecting bank deposits. The plan has been in operation twenty years and thoroughly tested. The records show that no depositor has ever lost a dollar in a bank under the super vision of the clearing house examiner system. It has proven itself the best possible safeguard so far developed for keeping banks in prime condition, and for giving the public the best available assurance that the banker’s published statement is reasonably correct. The work of the clearing house examiner is continuous, not periodical, qualitative instead of quantitative and admirably supplements and coordinates the work of national and state examiners. A former comptroller of the currency has characterized the clearing house examiner system as “ in finitely superior to either state or Federal examinations,” and this is no reflection on either state or Federal examinations as plan and procedure is quite different. The plan is simple, economical, effective, and equally applicable to cities and coun try districts. May I bespeak your active interest in its further extension? The Clearing House Section of the American Bankers Association on request will gladly furnish full information and data and stands ready to assist in its installa tion. Declare Extra Dividend At the regular monthly meeting of the Directors of the Drovers National Bank of Chicago, held December 8, 1926, an extra dividend of 2 per cent was de clared payable to stockholders of record December 31st, in addition to the regular dividend of 2y 2 per cent. The Directors of the Drovers Trust & Savings Bank declared the regular div idend of 3 per cent and an extra div idend of 4 per cent payable to stock holders of record December 31st. In ad dition the Directors of the Drovers Trust & Savings Bank recommended an in crease in capital stock from $250,000 to $350,000, the increase of $100,000 to be distributed to the stockholders as a 40 per cent stock dividend, this distribu tion to be made to stockholders of rec ord January 11th. Where Sausages Grow Little Louis of Chicago was greatly impressed by her first motor ride through the country where vegetables, milk and eggs originate, she was told. Passing a marsh full of cattails, she exclaimed: “ Oh, look, daddy, that’s the place w'here the sausages grow.” https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis THE Jan uary, 1927 NORTHWESTERN BANKER 31 W h at It Means to Be A . B. A . President O BANKER can pass through the perience of being president of the American B a n k e r s Association without having very definite sentiments as to the meaning of that office. Ordinarily, I dare say, those who are privileged to look forward to holding it are imbued as they approach it chiefly with a sense of the high honor they are about to attain. But once they are actively at work the chief sensation pertains to the amount of real work and real service they are called up on to render— a realization, indeed, that lends an added weight and larger import ance to the honor of holding the office. Americans are inclined to under-rate achievement unless it is spectacular, and sometimes, perhaps, less than due recog nition of the real value of the associa tion’s services in the nation’s life results from the fact that it does not, and should not, operate along spectacular lines. But after one serves a term as its president, travels the hundreds of miles through many parts of the country necessary to permit him to address a great diversity o f state bankers’ associations, civic bod ies, business organizations, educational institutions, and other units in our varied social life, and witnesses the universal re spect in which the profession and the or ganization he represents are held, he knows that there must be some sound N B y Thomas B. McAdams President 1921 reason for the obvious prestige now en joyed by organized banking. The reason is clearly found in the power of organization represented by the American Bankers’ Association. This or ganization means the preparedness of one of the great businesses of the coun try to do that which is right as occasion demands. The nation knows that as long as the bankers are organized as they are in the American Bankers’ Association there can be no real tampering with the fundamentals of our currency and bank ing systems, despite all the talk that has arisen from time to time threatening a radical disruption of these basic eco nomic factors. Without an organization such as the American Bankers’ Associa tion the country might well feel a sense of insecurity at its lack of preparedness in case of need—at a lack of a concrete body of public opinion ready to lead the defense against any serious efforts to spread unsound financial policies in this country. I might go on at length and tell how the association is continually unspectacularly working on the side of better agri culture, sound business and banking. I Business and Financial Comment », (»»I'IRSrT^WSCONSWNATIONALBC.KKof Wjrr/XKôH,MV>Kbie\n<-offlwwrfAs g 8wad USINESS and Financial Comment, our monthly publication, giving a resume of business, both local and national, is sent regularly to a large mailing list which includes the names of individuals and firms located in all parts of the country. iiJ S îS w l V-'” : z <1k otJ. (Tits.Jbww Ixrmmg ws« tu» l)prn aa Hesitating in front of a suspiciouslooking stretch of mud the autoist was approached by a small boy. “ You can drive in if you want to mis ter,” said the young business man. “ Farmer Jones is waiting to haul you out for five dollars, but if you’ll give me a dollar I ’ll show you a good way around.” B ' ■ ' Unfair Competition This Bulletin? «»TWISOONSWTRCSTCOMPANY«<*! t** ^ PtftSTWISCONSINCOMPANY<¿wow»»<i) S S ir a :s “ could give many additional phases of what it means to be president of the as sociation— of the thousands of friend ships it brings, of the opportunities to watch the workings of the manifold ac tivities of the association and lend help ful advice and supervision from time to time as required; of the participation in earnest conference on subjects that fre quently make no great noise in the pub lic forums but nevertheless are fraught with significant possibilities for good or ill. I might dwell on all of these, for they all go to give the office its real sig nificance, but the outstanding impression that I retain from any incumbrency of it is the responsibility that rests on those who occupy it to maintain the solidarity, vitality and prestige of an organization whose potentialities for serving the pub lic welfare are so great and are of such definite value to the nation. From the favorable comments of well-known business men who have ample opportunity to compare it with other similar bulle tins, it would seem that the Comment, with its vivid and faith ful portrayal of the general trend of business, has come to be recognized as one of the best economic bulletins published. If you care to have your name placed on our mailing list to re ceive future issues of Business and Financial Comment, please send your request to our Commercial Service Department. First Wisconsin National Bank M il w a u k e e C apital and S u rp lu s Ten M illion D o lla rs https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T II E 32 NORTHWESTERN BANKER January, 1927 Personal Paragraphs The M easure o f a Bond H ouse I n v e s t m e n t and financial advice is the essence of what a bond house sells. * * * It is just as impor tant that such advice be intelligent as it is that it be sincere if the ends of sound investing are to be attained. * * * The bond house that is well-managed grows and prospers in direct proportion to its per formance with respect to the advisory function. This is “ The Measure of a Bond House.” First Illinois C om pany BONUS FOR INVESTM EN T M IL W A U K E E ST. LO U IS AURORA DAVENPORT U nion Savings Bank Bldg. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The Fergus Falls National Bank of Fergus Falls, Minnesota, is to be com plimented on its splendid advertising of its good statement in local news papers. The statement is not only attrac tive in layout, but the figures are attrac tive in showing loans and discounts of $756,560, deposits of $1,999,805, and “ quick assets” of $2,288,546. F. H. Sisson, vice president of the Guaranty Trust Company, New York, at tending the second midcontinent fidu ciary conference of the American Bankres Association in Omaha recently, said, “ Prosperity is not foolproof. It needs sound financing and sound management to maintain it. The American people have the highest purchasing power in their history. Even the farmer will make more in 1926 than in 1925, judging by this year’s crop estimates.” John G. Lonsdale, president of the Na tional Bank of Commerce, St. Louis, has been reelected a class A director of the St. Louis Federal Reserve Bank. “Herb” Joesting, renowned All-Ameri can full back, has taken a part-time posi tion in the savings department of a Min neapolis bank. * CHICAGO M. E. Tate, vice president and cashier of the Security State Bank of Keokuk, Iowa, and chairman of the Committee on Public Education of the Iowa Bankers Association, announces a series of talks prepared to assist in an educational movement for ■the purpose of reflecting the larger prosperity of each community and the state as a whole in the benefits of banking and sound finance. The talks are available for high schools, grammar schools, civic clubs, etc., and it is ex pected many members of the Association will take advantage of securing the pa pers in order to help present banking as it should be presented to the different classes. David R. Forgan, vice chairman of the National Bank of the Republic, told members of the Milwaukee Bond Club recently that the only way America can collect the debts owed her by her former allies is to loan those nations the money with which to repay us. “ I don’t believe any debts, public or private, should be cancelled,” Mr. Forgan asserted. “ Our present civilization rests on the sanctity of contracts, particularly money con tracts, and cancellation is too closely akin to repudiation.” Mr. Forgan stated that to effect repay ment the United States must assume the attitude toward the allies of a creditor dealing with his best customers and that our procedure must be to help them back on their feet so they will be in position to pay. Charles Nagel, of St. Louis, former sec retary of Commerce and Labor in the Cabinet of President Taft, has accepted chairmanship of the “ Business Men’s Commission on Agriculture,” which com mittee will make an intensive study of the agricultural situation in this country with a view to formulating a “ national program for cooperation of all economic groups in protecting the permanent na tional interest in a sound and prosperous agriculture.” J. Scofield Rowe, president of the Metropolitan Casualty Insurance Com pany, in a bulletin recently issued by the Forgery Prevention Bureau, spon sored by the company, states that the new trend in forgery methods is indi cated by a decrease in the percentage of losses due to check alterations, and an increase in signature and indorsement forgeries. The use of mechanical pro tective devices, according to Mr. Rowe, has brought the drop in check alterations, while the proper care by check users to prevent their signatures and checks from falling into the hands of criminals should reduce the forgeries of names. George Woodruff, vice chairman of the National Bank of the Republic, Chicago, recently addressed the Milwaukee Bond Club and discussed the future of the bond market, the foreign situation and the problems confronting bankers as re sult of the downward trend of interest rates. Fred L. Gray, president of the Fred L. Gray Insurance Company of Minne apolis, died recently at the age of sixty. Mr. Gray had been ill for seven months, following a trip around the world. He was known as an expert on casualty in surance, and was at one time president of the National Association of Insurance Agents. Congressman Otis Wingo, senior mem ber of the House Banking and Currency Committee, recently declared before the annual meeting of the Cook County Real Estate Board in Chicago, that the re newal of the Federal Reserve charter was only a “ stalking horse” provision at- January, 1927 THE tached to the McFadden Bill to distract attention from its branch-banking fea tures, referring to the vote against the Hull amendments by branch-bank man agers at the American Bankers Associa tion convention in Los Angeles as a “ pa rade of the wooden soldiers.” Mr. Wingo pointed out efforts to confuse the Mc Fadden Bill, introduced and passed in the House, including the Hull amend ments, which would stop the spread of branch banking into nonbranch-bank states, with the bill as amended into a branch-bank measure of opposite effect in the Senate. Aubrey Kenneth Ormsby Cochrane of the Union Trust Company, with Mrs. Cochrane, visited Merrie Old England during the holidays. We are sure Mr. Cochrane added much to the merriment there— as he does to group meetings and conventions on this side of the water. The Live Stock National Bank of South Omaha recently received the following letter from Vienna, relative to their cal endar : “ May I again apply to you for the same favor which you were good enough to grant me every year, viz., to favor me with two copies of your good wall calen dars for the coming year? Same has been of inestimable value, not only to me and my staff, but in some degree also to your famous establishment, as the calen dar, being conspicuously placed in our office, generally attracts the notice of traveling Americans calling on us. Your calendar has become quite indispensable and we have got so fond of and used to same that its absence would be a real loss for us.” The letter is signed by F. Kellner, man ager of the White Star Line. NORTHWESTERN Lucius Teter, president of the Chicago Trust Company, recently presented LeRoy A. Mershon, secretary of the trust company division of the American Bank er’s Association, with a beautiful watch in honor of his tenth year of service in the organization. Philip D. Armour, first vice president and a director of Armour & Co., and Geo. Getz, chairman of the Globe Coal, Eureka Coal & Dock and U. S. Distributing com panies, have been elected members of the board of the Continental & Commercial National Bank. Frederick H. Rawson, chairman of the Hugh McClearn of Duluth has been ap pointed a member of the Minnesota Com mission of the Great Lakes-St. Lawrence Tidewater Association, to succeed A. H. Comstock. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 33 Union Trust Co., Chicago, has just re turned from a cruise through the Panama Canal, accompanied by Mrs. Rawson. Pierre Jay has accepted an appoint ment by the Reparations Commission as the American member of the Transfer Committee under the Dawes plan, resign ing his post as chairman and Federal Re serve agent of the Federal Reserve Bank of New York, which position he has held since 1914. Edward W. Decker, president of the Northwestern National Bank of Minne apolis, predicts that next year agriculture will have one of the best years in his- THE FOREM AN BANKS FOUNDED 1862 I We William R. Dawes, vice president of the Central Trust Company of Illinois, and president of the Chicago Association of Commerce, recently spoke before the Minneapolis Civic and Commerce Asso ciation on “ Inland Waterways and the Middle West.” Mr. Dawes has been an ardent exponent of the development of inland waterways for many years. Dwight W. Morrow, partner of J. P. Morgan & Company, stated in the Janu ary issue of Foreign Affairs, that the average small investor in the United States buys half of the foreign loans sold here, and that nearly 85 per cent of for eign bond purchasers take lots of 5,000 or less, buying the securities because of their safety in principal and the size of the interest yield. BANKER invite y ou r business on a 6 4 -y e a r record o f co n tinuous grow th. We are fu lly equipped to serve y o u in every banking function. % The Foreman National Bank The Foreman Trust and Savings Bank La Salle and Washington Sts. Chicago Combined Resources Exceed One Hundred Million Dollars 34 THE NORTHWESTERN BANKE R January, 1927 tory as respects soil conditions and that the general business situation in the northwest, as elsewhere, will be normal in 1927. Pa r a p h r a s e d Pr o v e r b s T ru st Y o u r B usiness to a B u sy Bank ■ Our Transit and C ollection D ep a rtm en ts in c o n tin u o u s operation handle over 15 0 ,0 0 0 separate item s every day. T h is great v olu m e is received from a diversified and exacting clientele of nationally k n o w n b a n k s , f i r m s , and c o r p o r ations (three-quarters of our $ 2 0 0 , 0 0 0 , 0 0 0 d e p o sits are from “ In d ivid u al” accounts) and necessitates that w e avail ourselves o f the best in per sonnel, equipm ent, system , and co llectio n facilities. O ur correspondents thus enjoy unusual advantages both in the service w e are prepared to render and the business w e can send to them . THE P H IL A D E L P H IA -G IR A R D N A T IO N A L BAN K PHILADELPHIA, PA. Capital, Surplus and Profits . . . $28,000,000 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Geo. B. Caldwell, former vice president of the Continental and Commercial Bank of Chicago, has been elected to the vice presidency of the United States Bond & Mortgage Corporation. Col. C. F. Mudgett, cashier of the First National Bank of Valley City, has been appointed United States marshal for the district of North Dakota, succeeding Jas. F. Shea. William J. Rathje, president of the Mid-City Trust & Savings Bank, has been elected president of the Chicago and Cook County Bankers’ Association; Eugene E. Ford, president of the Ken wood National, vice president; Emil Smrz of the Kaspar- American State Bank, treasurer, and E. N. Baty was re elected secretary. William J. Lauderback, a director of the First National Bank of Chicago, re cently died, following an attack of pneu monia. Mr. Lauderback had extensive railroad holdings. Alfred P. Sloan, Jr., president of Gen eral Motors, announces the purchase from the Metropolitan Life Ins. Co., of the largest group life insurance policy ever issued in point of number of lives in sured. General Motors has more than 100,000 employes who are covered by the policy for $1,000 each after they have been on the pay roll three months. The original amount of insurance will exceed $100,000,000. The insurance is payable at death to a designated beneficiary, or in event of total and permanent disability before age 60, to the insured in 20 equal installments. The plan is cooperative, the employes and General Motors sharing the cost. Robt. E. McGregor, vice president of the Northwestern National Bank of Min neapolis, has been elected to the board of directors of the Minneapolis Y. M. C. A. Jas. B. Beals has been appointed resi dent manager of Kalman & Co., Minne apolis. Mr. Beals was formerly with the Harris Trust & Savings Bank of Chicago. G. L. Ohrstrom of New York has be come a director of the Peoples Light & Power Corporation, the managing com pany for public utilities of the W. B. Foshay Co. Mr. Ohrstrom is president of George L. Ohrstrom & Co., resigning some time ago as vice president in charge of the New York office of P. W. Chap man & Co., Inc., to organize his own company. January, 1927 THE N O R TH W E ST ER N E. L. Johnson, president of the First National Bank of Waverly, Iowa, has been reelected a class A director of Group 3 of the Chicago Federal Reserve Bank, to serve three years, beginning January 1, 1927. The Breda Savings Bank of Breda, Iowa, has been publishing its statement in simple and attractive form in local papers as follow s: “ The reserve of any bank is like the reserve of any army. We have 92,000 men who are out in front. We have 55,000 men hid from the enemy. We have 225,000 men loaned to Uncle Sam and the market price right now on these bonds would pay us a premium of better than $2,000 of we wanted to sell them.” Railroad Efficiency The Bureau of Railway Economics re cently stated that there was improvement in virtually every factor or measure of operating efficiency among the railroads. The principal economic factors underly ing the continued improvement from 1921-1926 appear to be capital expendi tures of more than $5,000,000,000, greater cooperation of shippers, and a more ef fective utilization of a greatly improved railway plant. The principal achievements, as outlined by the Bureau, for the first nine months of this year, include an increase of 18.5 per cent in total freight traffic as com pared with the average of the correspond ing period for the previous five years. This traffic was also substantially greater than for each of the preceding five years breaking all records for the first nine months of any year. However, passenger traffic for the first nine months of this year decreased slightly less than 1 per cent as compared with the corresponding period last year. At the same time the number of freight locomotives owned de creased 3.6 per cent, while average trac tive power gained 10 per cent, and there was a reduction of 26 per cent in the number of engines needing repairs. In view of this increased efficiency, it is significant to note that Class “ I ” rail roads were reported to have had 79,016 surplus freight cars in good repair and immediately available for sevice on Oc tober 23, 1926. Before the war, a car shortage wTas almost always the case at this time. As a result of the considerable gain in freight traffic and the small loss in pas senger traffic during the first nine months of 1926, total operating revenues gained 7 per cent over the five-year period and 5 per cent over last year.— From Bond Briefs, Union Trust Co., Chicago. “ Conceit may puff a man up, but never prop him up.” https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 35 BANKER .Assets Seven VYiillion ^Dollars E W Y E A R ’ S has been welcorned through the ages as the occasion when we turn the page of time and look forward with the resolve of high achievement to the next chapter of our lives. N The City National has faith in Iowa, in the character of its citizenship, the wealth of its re sources, and in its future. The City National has grown with Iowa’ s growth through 56 success ful years, working always in clos est alliance with those whose toil and thought have brought pros perity. Always it has regarded the rendering of banking service as a privilege as well as a business and the building up of its adjoin ing territory as the surest means of building up the bank. The accounts of banks invited. D IR E C T O R S A N D O F F IC E R S ALFRED G. SMITH, Chairman ALFRED C. SMITH, President G. L. CURTIS. Vice President President, Curtis Companies, Inc. G. W. DULANY, JR., President, Eclipse Lumber Co. President, Climax Engineering Co. H. W. SEAMAN, Inland Waterways Advisory Committee M. J, GABRIEL, President Gabriel Lumber & Fuel Co. J. PETERSON, J. O. SHAFF, Farmer and Live Stock Dealer B. M. JACOBSEN, E. J. CURTIS, Vice President Curtis Bros. & Co. C. A. ARMSTRONG, Pres. C. F. Curtis Company, Inc. W. R. SMITH, General Manager Clinton Com Syrup Refining Co. A. P. BRYANT, Manager of Operations Clinton Com Syrup Refining Co. F. H. VAN ALLEN, V. P. and Sec’y. J. D. Van Allen & Son Inc. H. S. TOWLE, V. P. and Treas. Towle & Hypes Co. O. P. PETTY, Cashier J. H. NISSEN, Assistant Cashier H. G. KRAMER, Assistant Cashier Established. 1870 City National Bank C L IN T O N IO W A 36 T II E N O R T H AV E S T E R N BA NK ER January, 1927 The Dangers o f Free Service O LINE of business has come to feature the matter of service and to develop so highly, because of peculiar competitive conditions, so great a variety of free services as has banking in the United States. Other lines en deavor, in this respect, to follow sound business practice and to secure a fair re turn for service rendered but the banker has apparently interpreted this move ment as synonymous with rendering free services of various kinds. Service to the public is one thing, but free service is another, and it is time that the banker realizes this fact. Numerous burdens have been added to the banker during the past two generations for which he has never received adequate compensa tion. N B y M . J. Grettenberg In earlier periods banking was largely restricted to the purely deposit and loan function of the business and was of a much simpler character than it is today. Changes have apparently come about so gradually that bankers themselves have been slow to realize them. As the bank check came into general use new demands and problems were placed upon the banker. As these developed, the expenses of doing a banking business increased rapidly. Strange as it may seem it is neverthe less a fact that except for an increase in the volume of business, the banker has received no commensurate reward for IM P L IC IT Y , convenience and dignity are the essential virtues of this new Fisher Built Bank Interior of the Geneva State Bank at Geneva, Illinois. Every detail has been car ried out completely to attain most pleasing and efficient banking quarters. S https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the enlarged and more extensive service he has been compelled to render. In this respect, however, the banker has no one but himself to blame. He was slow in realizing the changes that were occurring and loath to recognize them. One has only to mention such a matter as the de velopment of the modern analysis de partment of a bank to illustrate this point. Such a thing as analyzing each individual account from the profit and loss standpoint is still relatively new and not universally used. In almost every branch of the banking business this same backward, narrow, ultraconservative t e n d e n c y has been manifest. It is something of a paradox that the banker who is constantly in touch, either directly or indirectly, with January, 1927 T II E the modern up-to-date methods of busi ness should be so slow in applying these methods to his own business. As a gen eral thing, the banker is usually advo cating to his customers sound accounting methods, urging them to conduct their business on a profitable basis, to discon tinue unprofitable operations, to avoid cutthroat competition, and yet he is among the last to apply these precepts to his own business. It is high time that the bankers of this country should take cognizance of con ditions in their own business. Despite the fact that banking is a fundamental industry, and on the whole has been keeping pace with the natural growth of the country, ably and capably meeting the many financial and credit require ments of business, it nevertheless has, in recent years, been operating at an everdecreasing rate of return. It would appear high time for the bankers to make a careful investigation of the causes which underlie the existing depression in their own business and be gin taking measures to correct the situa tion. If they would give careful and serious consideration to the policies and business methods which they have been pursuing in recent years, they would soon find a solution of their present unsatis factory earning status. Such an intro spective study would show, among other things, the following fa cts: First, that the banker has misinter preted the word “ service.” So far as the fundamental importance of the modern business conception of service is con cerned, no issue can be taken. However, it is equally certain that sound and satis factory service is not based upon its be ing necessarily free. We do not have to question the great benefit which lias come from an emphasis upon service, but we must be careful not to overemphasize any temporary benefits to the public which may accrue at the expense of per manent welfare. Second, when there was ushered in this new day of service as the watchword in business, it brought with it the virus of salesmanship, advertising, emphasis upon the volume of business or quantity of business rather than the quality. The banking business became subjected to all kinds of high-pressure salesmanship with a high degree of competition among the various banking institutions which not only has resulted in many kinds of evils and weaknesses in the conduct of particular banks, but, what is of equal importance, it has made cooperation among the banks difficult and therefore the opportunity for rendering real per manent service, through the conduct of the business on a high plane, has become difficult. Third, competition in American bank ing has reached a point where it may be properly inquired whether some of the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis N 0 R T II W E S T E R N BA N K E R 37 T his Letter Was W ritten b y a Salesman \ V ,V> --------------------IN V E S T M E N T BANKERS OMAHANEBRASKA D E S M O IN E S .IO W A . D U B U Q U E ,IO W A 219 SECURITIES BLDG. B .& IB U IL D IK O Da v e n p o r t ,I o EIB9T l í S a BAKSBEDG. w a . PU TN AM BLDO , GEO.WHITE, Pres. B.AJPHILLIPS.V.Pres. ROBT. ALEXANDER S. G. GLASPELL WALTER E. VIETH Mr, Country Banker, Anywhere, U, S, A, Dear Sir: The bonds sold by The White-Fhillips Com pany, would be equally as safe, conservative, and desirable, if sold by any other investment oompanyproviding, of oourse, that the same care and atten tion were given to the examination of the security; the stability thereof; the legality, and the other details incident to preparing the securities for the market. Hence, the bonds themselves are not the dominant factor, but rather the personnel of officers and employees of the Company and the service which they render the investing public, are the outstanding dominant factors of their success. The "White-Phillips Company endeavors to render to eaoh client a distinctly individual in vestment service as best fits the need of the par ticular client. It stands ready at all possible times to supply a market for its securities. The utmost possible oare and attention is given to all phases of a security prior to offering to the-public. The salesman need have no compunction in offering his olient any security on the offering list, A mutual striving for a common goal among the offioers of the company, together with an interest iri the welfare of each employee, provides a common desire of cooperation in all departments, and makes it possible to render such service to their olients. For these reasons, I enjoy selling The White-Phillips Company's bonds. Sincerely, c,o. a p e t i t e l A 'V E S T M E N T ------ ° B A N K E R S oDUBUQUE, IOWA D A V E N P O R T , IO W A OMAHA, NEBRASKA B. & I. Building First N at’l Bank Bldg. Bankers Reserve L ife Bldg. DES MOINES, IOWA CHICAGO, ILLINOIS 219 Securities Bldg. 137 S. La Salle St. THE 38 Cities Service Company Securities F or B ank Investm ent A ssured Safety Assets O ver $ 6 0 9 ,0 0 0 ,0 0 0 Q uick M arketability T h ro u g h a C onsistently Steady N ational D em an d Note and Bond Listings sent weekly upon request S E C U R IT IE S D E P A R T M E N T 1*0 W A L L ST.' BRANCHES IO W A principal emu D IV IS IO N A L O FFIC E S Des M oines 318 L ib erty B uildin g S iou x C ity 507 F rancis B uildin g Cedar R apids 1129 M erchants N ational Bank D avenport 721 F irst N ational Bank B uilding https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER results, disguised in the name of service to the public, should not be frankly faced and inquiry made whether they are logi cal or a valuable adjunct to modern com mercial banking. The importance of this is at once, manifest when we take into consideration the fact that there are ap proximately 30,000 competing banks in this country. The number of banks has grown largely under the mistaken belief that the business is highly profitable. As a consequence, during the past quarter of a century, with the rapid growth in pop ulation and industrial development, there have been organized thousands of banks which probably never should have been organized. Had it not been for the in tensive competition, many of the prac tices and the various classes of service which are now rendered by banks would not have developed. While much can undoubtedly be said in defense of com petition, there are limits to its benefits. As a matter of fact a study of history shows that where competition is keen it invariably develops into the cutthroat type, and when such a policy persists for any length of time, the public, who at first believes it is being benefited, finds that it, too, is a loser. This type of com petition has undoubtedly developed among bankers in many sections. What has been the result of all this competition? Useless duplication in many kinds of banking service. Every bank maintains that it is interested in thrift and savings. Are there many il lustrations in the United States where the banks of any large city join in a pub lic campaign to inculcate thrift? In stead of that each bank spends large sums in advertising savings for them selves. Another effect of the excessive com petition in banking is illustrated in the case of interest on deposits. Practically thirty-five cents out of every dollar of gross income of banks is now paid as in terest on deposits. Practically every commercial bank has innumerable ac counts without which it would be much better off. Then, too, competition has expressed itself in offering all kinds of services un til the modern bank in the large metro politan districts has become something like a department store, except that in stead of selling service it gives it free. Banks now keep securities and collect coupons free, maintain travel bureaus, supply free check books and render a dozen and one kinds of services which have no inherent place in sound commer cial banking service. Not only has the competition expressed itself in these various detailed ways, but what is even worse, from the standpoint of public welfare, it has frequently ex pressed itself in the poor granting of credit. Many banks are so afraid that they will lose a patron, or so fearful that January, 1927 they will not get one in competition with some other bank that they are ready to grant credit when even reasonably good banking would dictate that the loan should not be made, that the account should not be taken on, or that the ac count should be forced out of the bank. The public is not served in any true sense or in any final end by encouraging or permitting the excessive cut-throat competition that has gone on in banking, for in banking, just as in any other kind of business, when competition goes be yond certain bounds, it leads to poor business conduct, inefficient business or ganization and final loss to the public. Sooner or later, as in other lines of business, sanity must assert itself and the dictates of reason will prevail, with the result that many present-day services now rendered by banks will be eliminated as unessential and injurious to the bank ing business. Take on Additional Space The Foreman Banks of Chicago have taken on additional space by acquiring the entire main floor of the Andrews Building, which adjoins the bank to the west on Washington street, an entrance having been made connecting the new banking room with their present quar ters. This additional space measures 60 by 180, the largest part of which will be occupied by the Real Estate Loan De partment. Business was not disrupted during the moving, and the new room was opened Monday morning, December 6th. Perhaps no person can be a poet, or can even enjoy poetry, without a certain unsoundness of mind, if anything which gives so much pleasure can be called un soundness. . . Truth, indeed, is essen tial to poetry, but it is the truth of mad ness. The reasonings are just, but the premises are false. After the first sup positions have been made, everything ought to be consistent, but those first sup positions require a degree of credulity which almost amounts to a partial and temporary derangement of the intellect. — Macaulay. Budging Budgets A unt: “ But your fiance has such a small income, dear. How are you going to live on it ?” Annette (brightly) : “ Oh,we’re going to economize. “ W e’re going to do with out such a lot of things that Geoffrey really needs.”— London Gazette. An Awkward Admission A man of the world had slipped and fallen on the icy sidewalk. A deacon of the church came along and remarked quite solemnly, “ The wicked standeth in a slippery place.” “ I see they do, but I can’t,” replied the fallen man, trying to arise. THE January, 1927 NORTHWESTERN BANKER 39 Eight Billion Investment NE of the most remarkable social and industrial phenomena of re cent years is the large and con tinual growth of the number of invest ors and potential investors in this coun try, and the consequent spread of the ownership of our large business enter prises to ever-widening circles of security holders. America, since the intensive drives of the Liberty Loan campaigns, has become a nation of investors. In the period prior to the World war, it was not unusual for promoters of business and in dustrial enterprises in need of financing to seek capital abroad. Today such a course is not even considered. The Lib erty Loan drives, the practice of selling securities on the installment plan, the customer-and-employe-ownership c a mpaigns of our industries and public util ities, and what is equally important, the unprecedented surplus of capital neces sarily seeking investment— all these have tended to create within our borders an army of investors capable of absorbing in new securities at present about 7 or 8 billion dollars per annum. Today more than 16 per cent of the population of this country is financially interested in the well-being of our public and private corporations and those of foreign securities. Such a statement is subject to proof. According to recent figures issued by the Treasury Depart ment, there are some $3,725,885,000 in registered Treasury and Liberty bonds outstanding, involving over 1,885,850 in dividual holders with an average hold ing of $1,800. In addition there are out standing at this time more than $12,360,000,000 of government coupon bonds, which treasury officials estimate to be in the hands of not less than 11,000,000 sep arate holders. These figures do not in clude prewar long-term bonds nor short term government securities. O P robab ly a better picture o f tent to Avhich the investor has a com m on figure in this coun try gained fro m a glance at a fe w https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis the ex becom e can be results B y Alden H. Little Executive Sec’y Investment Bankers Association o f America. iiiiiiiimiiimiiiiiiiiiiiiiiiiiiiiiiiiiiiiiimiiiiiiiiiiiiiiiiiiMiiiiiiimiiiiiiiiiiimiiiiiimmiimiimmiiiiiiiimniiiuiiii W e have oft-repeated phrase, “ There is safety in numbers . ” It has an especial truth in this application. As investing be comes a mass rather than a class activity it needs must becom e a safer and more suitable activity!” 1111111111111111111111111n111111111111111111111..... . of the employe-ownership and customerownership movements which have swept across America with startling rapidity in the last few years. There is hardly a large corporation in the United States today which does not number a substan tial percentage of its customers and em ployes among its stock and bond holders. The United States Steel Company, for example, one of the two-billion-dollar corporations in the world, has sold more than 1,140,800 shares of common stock to its employes in the last eight years. The American Telephone and Telegraph Com pany has 56,920 employes holding stock at present, and over 165,500 employes who are still paying for stock and are not yet stockholders of record. Nearly 20,000 employes of the Pennsylvania railroad hold stock in that road. At the end of 1925, more than 22,500 employes of the Bethlehem Steel Corporation had paid in full or were paying for some 65,000 shares of that company’s stock, and in the last year 38,473 employes sub scribed for over 75,500 shares of the preferred stock of the same corporation. In the last five years twelve thousand employes of the Standard Oil Company of California and over fifteen thousand employes of the Standard Oil Company of New Jersey have acquired the stocks of their respective employers. In hun dreds of other corporations throughout the country the employe-ownership plan has proved proportionately fruitful in bringing about a wider distribution of securities. The system of customer-ownership, which up to the present has been con fined almost solely to electric, gas, rail way and telephone companies, has also familiarized bonds and stocks to mil lions of men and women. At the end of 1924, 208 electric light and power com panies reported nearly 950,000 stock holders obtained through the customerownership plan. Similar success has at tended the efforts of gas companies, tele phone companies and electric railways in the distribution of their securities. It is commonly estimated that today there are more than 2,500,000 stock and bond holders of public utilities. All of the foregoing, however, does not include the hundreds of thousands who hold the obligations of our states and their vast number of political subdivis ions ; it does not include the stockholders in our railroads who are estimated to number 864,600, or more than the whole population of any one of fifteen states. It does not include more than hastily the indeterminable number of bondholders and stockholders in our some 320,000 cor porations, nor does it consider the thou sands who have placed over $10,000,000,000 in foreign government and foreign corporation securities, and many billions more into real estate mortgages at home. The exact number of investors in this country cannot be determined. But if only the very incomplete figures that are available are summed up, after making allowance for overlapping, we can quick ly and confidently say that there has been brought into reckoning a very large body of our people. What have been the effects of this step of the American masses into the security market1? In the first place, it has given the public a greater appreciation of the true worth of sound investments, thus adding to the stability of communities. Certainly, a great step forward is made in 40 THE economic and financial well-being when the masses of the people, by the physical possession of pieces of paper, realize the values peculiar to intangible wealth. Further, by providing greater sources of capital for business enterprise, this en trance of millions into the market has enabled corporations to secure capital more advantageously. This fact, in turn, means more continued employment for labor, and a greater share of the profits of industry for all the people. Then, too, the interest of such a wide number of our people in corporate well being constitutes a tremendous force for the stability of industry. The growth of employe-ownership of stock has changed N O R T H AY E S T E R N BANKER the attitude of labor toward corporation profits, minimized the strike hazard, and provided industry with a more contented, conscientious and prosperous group of workers. Moreover, the widespread dis tribution of the ownership of our utili ties, railroads, and industries has erected a bulwark against public antipathy and destructive legislation, both major risks. And, on the other hand, it has had a ten dency to force all corporations to a fre quent publication of more detailed re ports of earnings and expenses, by which the changing worth of their securities may be more closely followed. Today there are probably fewer corporate se crets and mysteries than ever before in T h ere A r e Safe In vestm en ts,T oo,"O n the A ir ” Jazz tunes and sermons • • • • cooking recipes and market quotations • • • • bed-time stories January, 1927 the history of this great industrial era. All of these facts are, to a great extent, the outgrowth of this interesting phe nomena of recent years, and all of them are playing a part in a better protection of the interests of bondholders and share holders. It may be noted also that, as a result of this spreading ownership of securities, there has developed a great concern for the interests of the small investor. This solicitation for his rights is reflected in the increasing efficiency of public regu lation boards, such as state utility com missions, Blue-Sky commissions, various Federal commissions, and in the activ ities of business organizations, such as the Investment Bankers Association of America and its special departments to combat fraud and to supply dependable information to the public. This organ ized activity, designed to protect legiti mate business and the investing public, also includes the work of some forty better business bureaus, the New York Stock Exchange and the nation’s press. As a result the small investor is better protected today than ever before, and there is every reason to believe that he will continue to receive solicitous care at the hands of every organization whose activities in any way touch his interests. W e have an oft-repeated adage : “ There is safety in numbers.” It has an especial truth in this application. As investing becomes a mass rather than a class activ ity, it needs must become a safer and more suitable activity. Today this activ ity is worthy of the confidence which it involves. In this age of financial co ordination, brought about by the wide spread interest in corporate activity, the accumulation of capital and its employ ment in productive enterprise or govern ment are assured safeguards by those very factors which have made so great an accumulation and the wider employ ment of capital possible. and the speech o f a President • • • • all borne New Berlin Office on the wings o f ether to listening millions • • • • broadcasted by the power o f Electricity. The amazing growth of the radio industry has added unlooked-for revenue to Electric Power and Light Companies. Broadcasting calls for continued use of electricity. Batteries of receiving sets must be charged with it. The widespread popularity of this new form of entertainment is doing its part toward making Electric Power and Light Bonds, more than ever before, the ideal investment. E S T A B L IS H E D INVESTMENT Bank Floor NEW YORK 1912 SECURITIES . 29 South La Salle Street C H I C A G O Telephone Randolph 6380 SAN FRANCISCO https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOSTON The National Bank of Commerce in New York announces the opening of the office of a representative in Berlin at Unter den Linden 39. Air. Gustaf Brunkman will be the Bank’s representative. He has been its representative in Scandinavia and Cen tral Europe for a number of years. His office in Berlin will keep informed on financial and economic conditions, and will keep in close touch with the Bank’s many and important correspondents in Germany, Sweden, Norway, Denmark, Czechoslovakia, Austria, Hungary, Po land, Jugo-Slavia and Greece. Representatives’ offices are also main tained by the Bank at London, which serves England, Scotland, Ireland and Holland, and at Paris, for France, Switzerland, Belgium, Italy, Spain and Portugal. January, 1927 THE NORTHWESTERN 41 BANKER Present Tendencies in the Bond Market HERE do all of the bonds go ? is a question that has been fre quently asked duing the past year. Dealers themselves viewing the un precedented output of securities during the year, and the ready absorption almost immediately following, have, at times, expressed equal wonderment. The total volume of financing, including both stocks and bonds, in the United States during the present year, according to present estimates will aggregate no less than $7,000,000,000— the largest figure in all history, excluding the period of Gov ernment war financing. All of this, of course, was not new capital, approxi mately 12 per cent being for refunding purposes. W Many Factors To find an answer for the question asked above, one must consider the many factors that have been at work over a several-year period to create the seem ingly inexhaustible supply of surplus funds that has been evident throughout the year. Primarily, of course, it is due to the generally prosperous business sit uation which has now continued for sev eral years, resulting in a wage scale al lowing many people a larger surplus over living requirements than ever before— much of which has gone into the invest ment market, directly or indirectly. A corollary of this situation has been the ever-widening appreciation of the merits of sound investment securities, starting, in many cases, with the pur chases of Liberty Loan Bonds, and devel oping from the widespread educational effort attending the large increase in se curity distributing organizations, Avith their largely increased sales forces, and broader and more intelligently directed advertising efforts. Another factor of no small importance in the increased de mand for sound securities has been the diminution in output of fraudvdent and highly promotional securities— also the result, in part, of increased educational effort guiding the investing public toward more intelligent selection of securities—and to well-conceived legislation aimed at curbing the activities of the Blue Sky vender. Figures are lacking as to the volume of unsound securities, but it ap peal's safe to say that despite the pros perous conditions that have for some time prevailed, A\Thich would ordinarily result in a large outpouring of such se curities, the volume during recent years appears to have shown an actual decline. Such departures as the legalizing of public utility bonds in certain of the New England states; the creation of the Farm Loan System (thereby diverting consid erable sums from the mortgage field to the bond market) ; the activity in build- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis words, is now tied up in inventories than ever before, thus releasing it for other purposes, partly for investment. This is due, in part, to the so-called “ hand-tomouth buying” so prevalent among both manufacturers and merchandisers, re sulting, in a measure, from greater con servatism on their part— an outgrowth of the postwar deflation period— and also to the vastly improved transportation facili ties which make it possible to get orders quickly from the jobbing centers. The lower interest rates which have prevailed during recent years have also been a fac- B y C. W . Sills Vice President, Halsey, Stuart & Co. ing and the attending growth in the real estate bond field are also factors contrib uting to the present-day large supply and demand for investment bonds. The tre mendous growth in saAÛngs deposits throughout the country; the vast increase in life insurance (much of which goes in directly into the bond market) have had their influence. The change in market ing and merchandising methods has also been a factor— less money, in other Good Securities for Banks and their Customers Name o f Security R ate M aturity Price To Tield About 5 1947 9 6 .7 5 5 -2 .5 % 6 /2 19 36 IOO 6 .5 0 <Jo 5 1956 96 5 -2 5 % 5 1956 97 5 .2 0 f o 5 1931 9 9 .5 0 5 .1 0 ojo 5 1955 9 6 .5 0 5-23 % Cb'le Copper Company 2 0 - Y e a r G o ld D eb en tu res Ulen & Company, 1 0 - Y e a r S. F . S ecu red C o n v e rtib le G o ld N o te s G ulf States Utilities Company F ir s t M o r tg a g e a n d R efu n d in g G o ld Bon ds , Series A Illinois Power and Light Corporation F ir s t a n d R efu n d in g M o r t g a g e G o ld Bon ds , Series C, 3 0 - Y e a r Public Service Company o f North ern Illinois D eb en tu res , Series o f 1926 Virginia Electric and Power Com pany, F ir s t a n d R efu n d in g M o r tg a g e G o ld Bon ds , Series A Subject to prior sale and change in price. Mitchell, Hutchins will be glad to give you more detailed information regarding these securities either by correspondence or in personal interview. J iiilc I ld lJ fu lc iu n s IL L IN O IS M ERCH AN TS C P BANK BJ C ch ~ J BUILDING C h ica g o £co R R E S P O N D E N T S • OF • BOSTON K ID D E R , P E A B O D Y • NEW YORK • • & CO. 1 J O F F IC E R S W . E D W IN S T A N L E Y , P R E S ID E N T W IL L IA M H. J A M E S C . H U T C H IN S , V IC E P R E S I D E N T M IT C H E L L , SE C R E T A R Y RO B E RT A . G A R D N E R , TREASU RER 42 THE tor in releasing some funds for invest ment; that is, many organizations have been able to refund at considerably lower figures, thereby reducing their fixed charges. Investment Abroad Improvement abroad has also had its effect. In the first place, broader view point of the American investor has made him willing to purchase the bonds of for eign countries and industries— a class of securities which previously he was a bit wary of, due to his own unfamiliarity with them. This improvement abroad has recently had another effect affecting demand, in that some foreign corpora tions and municipalities are now finding it possible and desirable to repurchase NORTHWESTERN their own issues for the purpose of cut ting down their debts. As for the more immediate causes of the unprecedented financing of 1926, first consideration should, perhaps, be given to the easy money situation that has pre vailed throughout the year, enabling cor porations to borrow on favorable terms, and which has lead to steadily strength ening bond prices. It is a fact, of course, that investors are more inclined to buy on a rising than on a falling market, and the past year has proven no exception to that rule. The lower trend of commodity prices during the past year has also had its effect on the price level, as the dollar buys more, the price of bonds naturally moves the other Avay. The continued re- BONDS Standard Oil Company o f New York 25-year Debentures Due 1951, yielding 4 .65% --------and short term notes o f conservative character to meet the needs o f banks, insti tutions and private investors. A complete list o f current offer ings will be sent upon request. Central Illinois Public Service Co. IstMtg. &. Ref. Gold Bonds Due 1956, yielding 5 .20% Central West Public Service Co. Convertible Debentures Due 1936, yielding 6 .35% McGraw Electric Company 3-year Secured Gold Notes Due 1929, yielding 6 .50% De W olf & C ompany, inc. Investment Bonds M IL W A U K E E https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKER - Established 1889 C H IC A G O January, 1927 duction of Government debt throughout the year, and the possibility of further tax relief in the form of reductions or refunds are factors which have a bearing perhaps more on the price level of securi ties than the output. The Outlook for the New Year Whether or not the existing favorable market will continue into the new year is not so much debated as how long it will continue, for opinion pretty generally agrees that, as far as it is safe to predict, present conditions promise to prevail in both industrial and investment circles. Any diminution in the output of securi ties would, of course, prove an important factor in fixing the trend of prices, for, with the supply of surplus funds main tained at somewhat its present level, and the output of securities decreased, there would naturally be a further upward swing in bond prices. Investment bank ers, for several years past, have been fearful that the supply of new offerings might slow up somewhat, but that even tuality has not as yet materialized, and there seems no serious reason for believ ing that it Avill during the new year. If business should slow down, that might decrease the new offerings, the necessity for expansion of industry being cur tailed, and considerable funds now em ployed in industry being released for in vestment. There appears no present rea son for anticipating that this will hap pen, however. There is the possibility that the building industry \AThich has con tributed so largely both to general busi ness prosperity, and to the output of se curities, may show recession during the new year. There is also the possibility that certain foreign countries which have had to look to us for financing dur ing their period of reconstruction, and have now attained more stable conditions, will be able to do more of their own financing, thus cutting off a source of supply. There still remain, however, many foreign countries which have need of our help, and from them we can ex pect a considerable volume of financing, assuming our willingness to meet their demands. Railroad Financing Railroad financing during the past three years has been in declining volume, aggregating less during the present year than the year preceding, which, in turn, showed a decline over the year before, this despite the fact that earnings have shown rather steady improvement and have been particularly good during the present year. The railroads are, of course, doing very little expanding, and, for the most part, are probably not seri ously in need of additional financing. Their capital structure, however, in many instances, is someAvhat unbalanced, in terest-bearing securities forming too pre- January, 1927 THE ponderant a part of the whole. There appears little probability, therefore, of any considerable increase in interestbearing financing from the railroad field, though unquestionably certain of the car riers would welcome an opportunity to do more stock financing. Whether or not they would be able to do that is, of course, problematical, though with the continuance of present earnings it ap pears not unreasonable to anticipate that they may be able to do this at a not dis tant date. It is interesting to note that in this connection, during 1926, stock financing on the part of railroads was al most negligible; in fact, at the time of writing it aggregated only a little more than $10,000,000. One of the most inter esting developments of the year in the railroad field was the inauguration, by the Interstate Commerce Commission, of competitive bidding among banking in stitutions for new equipment offerings. This is a practice now firmly established in the field of municipal financing, with which equipments are somewhat compar able in point of ease of appraisement, security, and market distribution. NORTHWESTERN BANKER increased demand from this source will offset the lessened demand from the switch in the opposite direction. In the other field of tax-exempt securi ties— that is, farm loan bonds— there does not appear any reason to anticipate an increase in output. In fact, there may be even further recession from this year’s figures Avhich in themselves are consider ably lower than the high level established during 1922 and 1923. The emission of such bonds, of course, depends on condi tions in agriculture, which, during recent years have, as is common knowledge, been none too favorable. In other words, the farmer ordinarily borrows in periods of prosperity, for the purpose of acquiring additional land, new equipment, or the erection of additional buildings. With agriculture somewhat depressed, there is 43 a corresponding let-up in the demand for these improvements and expansions, and, therefore, a smaller volume of Farm Loan bonds. There has been some criticism of the Joint Stock Land Bank System re cently, though the fact remains that they are serving an important need, and while, as would be expected in the very consid erable volume of loans negotiated by these banks since their inception some ten years ago, there have been some de faults, and individual banks have not shown a uniformly profitable record, the relatively few foreclosures that have oc curred have not in any sense impaired the intrinsic merits or permanence of the sys tem, nor the credit standing of conserva tively managed banks. It is significant of the greater familiarity with the invest ment merits of Farm Loan bonds that May Decline In the tax-exempt field there is the possibilty of some decline in the output of securities. Domestic municipals, for in stance, during the past three years, have remained on about the same volume level — incidentally at the highest point in his tory. Most of the demand for public works, resulting from deferment of such activities during the war period, have now been met, and there is undoubtedly a growing feeling on the part of taxpay ers that the tax burden should not be materially increased for improvements other than those contributing directly to the welfare or increased valuation of the communities affected. As the Federal tax burden is reduced from year to year, there is, moreover, some diversion in the demand for tax exempts to taxable bonds resulting from the fact that many who, in the high tax area, were forced by their tax liability to the purchase of tax-ex empt bonds, are now finding it advanta geous to switch to the taxable field. In sofar as the large output of municipal bonds was, therefore, a reflection of the active demand for tax-exempt bonds to avoid a heavy taxation, it is not unrea sonable to expect that there will be some curtailment in the supply. Incidentally, in this connection, the present price level of municipal bonds has not reflected the same advance, over the past four-year jmriod, as that registered in most other classifications. As a result, some pur chasers who previously confined their in vestments to taxable issues can now pur chase tax-exempts and obtain a net yield closely comparable to what they would obtain from high-grade corporation is sues. It is improbable, however, that the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis S OME o f the values behind in vestment bonds are tangible, others are intangible; some values are more certain than others. The soundness o f any issue can be de termined only by gathering and sifting all the facts. Bonds good enough to receive the National City recommenda tion must be good enough to with stand rigid tests developed through our wide experience in many fields. T he National City Company National City Bank Building, New York Offices in more than 5 0 leading cities throughout the world BONDS . SHORT TERM NOTES • ACCEPTAN CES THE 44 they sold during the current year at the highest price since the inception of the system in 1916. Public Utility Financing Perhaps the most interesting classifi cation— and by a wide margin the largest during the current year— is the public utilities. The total volume of public util ity financing for the year will aggregate no less than $2,000,000,000, or over 28 per cent of the estimated total. During the year, 4y2 per cent public utility bonds on the part of some of the large companies made their first appearance, and comment has already been made about their accept ance for savings bank investments in cer NORTHWESTERN tain of the New England states. Very re cently two important and extremely fa vorable decisions were rendered by the Supreme Court of the United States. One of these held the law prescribing $1.00 per 1,000 feet as the maximum rate for gas in New York City invalid because confiscatory. The other affirmed the de cision of the District Court of Indiana enjoining the public service commission of that state from fixing the water rates of an Indianapolis company at so low a figure as to be allegedly confiscatory. Important rulings were given in the lat ter decision having to do with the deter mination of fair values, one ruling being that unless there was a marked trend of BROKAW AN D 105 South C O M P A N Y La S a ll e Street, C hicago Direct Wire to Edward B. Smith & Co. New York • Philadelphia General Trading D epartm ent Specializing in Packing H ouse, Canadian, Equipm ent T ru st and Pacific Coast Securities. Special Bond Service to Banks IOWA REPRESENTATIVES: Edward J. Kelly and Maurice F. Leahy https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKE R January, 1927 prices, upward or downward, present valuations were to be taken as a fair measure of the value of the physical ele ments of the property. From the stand point of supply of utility offerings there appears no reason to anticipate any marked curtailment of output, for, de spite the huge growth of the industry during recent years, the demand for the services of public utilities continues un abated due to the ever-increasing uses to which gas and electricity are being put, and in part, of course, to the normal in crease in population. The electric railways during the year showed considerable improvement and the financing done in connection with that industry, while not large, will prob ably exceed by a slight margin that done in any previous year since the war. There is a growing recognition of the fact that in the large metropolitan cen ters the electric railways have a perma nent place as the most economical agency for mass transportation which it seems will inevitably lead to the solution of some of the electric railway's’ other prob lems, principally that growing out of in adequate franchises. It appears not un reasonable, therefore, to anticipate a fur ther increase in the output of bonds of such companies. With all indications pointing toward a continuation of the present favorable business situation, it is not unreasonable to anticipate the extension, well into the new year, of the generally propitious con ditions which now characterize the mar ket for investment securities. There ap pears little doubt, moreover, that for some time to come money rates are going to continue easy, which together with the possibility of further reduction in commodity prices, may find reflection in further strengthening in the general level of bond prices. Buys Investment Company An important business transaction whereby the Newton Improvement Com pany was sold to the First National Com pany, Inc., of Newton, Iowa, took place recently. The First National Company, Inc., has for its officers, principal officers and stockholders of the First National Bank, while the ownership of the Newton Improvement Company rested principally in Frank P. Ross of Chicago, head of the Jewell Tea Company, and with F. L. Maytag, washing machine magnate, an officer of the Jasper County Savings Bank. The Newton Improvement Company took over the loan and abstract business of H. B. Allfree several months ago and conducted it under the management of S. J. Pooley, formerly a Grinnell banker. The First National Company is a newly organized concern with L. A. Russell as president; Senator A. H. Bergman, vice president ; M. G. Addicks, treasurer and secretary and F. L. Drake, manager. January, 1927 T HE N O R T H W B S T ERN BANKER 45 Examining Municipal Bonds to be 5 per cent bonds. This involved only T HAS been the experience of the B y Russell Gartley writer in the twelve years in which he a moderate premium so that Avhen it was A. C. Allyn & Co., Chicago has been connected with the municipal attempted to deliver 6 per cent bonds which figured a premium of over 25 per bond business that one cannot take any thing for granted when it comes to the poses, or for self-sustaining properties, as cent, the bonds Avere properly rejected. examination of municipal bonds. Indeed Avater or electric light plants, are more 4. That the place of payment in the the question of legality alone is of such im marketable than ditch or irrigation bonds. bonds and coupons is as contemplated. portance that most bankers will accept the 3. That the rate of interest is correct. Sometimes bonds thought to be payable in opinion on municipal bonds of only a few There is the case of a bond house that a financial center, such as New York or nationally known law firms specializing in bought a block of forty-year bonds on a Chicago, are actually payable at the office this branch of the law. 4.60 per cent basis understanding them of the treasurer of the municipality. The function of the bond attorney is to see that: 1. The constitutional and statutory debt and tax limits of the state are not violated. 2. The purpose for which the bonds are to be issued is a lawful and authorized purpose. 3. The meetings at which the various proceedings are taken are duly called and legally conducted. 4. Election notices are posted and pub lished for the time and in the manner re quired by law. 5. Ballots state the question to be voted W E have prepared a Folder containing a upon in such a manner that the intention diversified and comprehensive list ot bonds of the voter can be readily determined. for January Investment. The securities are Elections have been held where the voter selected from issues which we have underwritten was asked to place a cross (X ) in the either singly or with associates or from those in square opposite the proposition on which which we have acted as a participating distribu he wished to vote, in substantially the tor. The list is designed to meet the needs of following form : I F o r the bon d s........................... |Yes □ Against the bonds..................|No □ Under such circumstances the voter could not vote against the bonds and the election was void. 6. The constitutionality of the law un der which it is sought to issue the bonds is beyond question. 7. When necessary, the Attorney Gen eral of the state has approved the bonds. 8. W hen necessary, the waiver o f the Board to Avhich the bonds must be ten dered has been obtained. banks and every type of individual investor. INCLUDED IN THIS LIST ARE: Public Utility Bonds W ater—electric light and power—gas Yielding from 4.95 to 7.10 Per Cent Corporate Building Bonds Secured by first mortgages on some of the most important office buildings of New York and Chicago In other words, the bond attorney checks all the elements Avhich go to es tablish the validity of the bonds. Yielding from 5.35 to 6.45 Per Cent Responsibilities of Banker Obligations of foreign countries and industrial corporations But the banker also has some respon sibility in seeing that the bonds are in proper shape before he is justified in taking them up and paying for them. He must make a physical examination of each and every bond and coupon, and satisfy himself: 1. That the bonds are issued by the m unicipality whose bonds he has p u r chased. Often a purchase is made Avith the understanding that it is a fu ll county bond but delivery attempted o f a bond issued by a subdivision o f the same county. 2. That the purpose fo r Avhich the bonds Avere issued is the same as that mentioned in the purchase agreement. The purpose is im portant in determining the value o f a bond, and bonds issued fo r school pur- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Miscellaneous Bonds Yielding from 6 to 7.15 Per Cent Any of these securities may be purchased now for delivery on or before January 15th, 1927 Write for Folder A P .W .C H A P M A N e C a i N C 170 W . Monroe St. CHICAGO 42 Cedar Street NEW YORK THE 46 Many investors will not purchase bonds payable locally. 5. That the denominations are as speci fied in the contract of purchase. Munici pal bonds of odd denominations, or of de nominations of less than $1,000, ordi narily are not readily disposed of. 6. That the bonds are all properly signed and sealed. Care must be exer cised to see that the signatures on the bonds and coupons are identified by proper certificate, executed by a bank offi cial who knows the persons signing the bonds and is familiar with their signa tures. The bank’s seal should be affixed to the certificate identifying the signa tures as should the seal of the munici NORTHWESTERN BANKER pality. The seal on the bonds must be the official seal of the municipality and not merely the seal of one of the officials, as mayor’s seal, city clerk’s seal, etc. Must Watch All Details 7. That the numbers of the bonds de livered conform to the numbers specified in the legal opinion. This is especially important where an issue of bonds is de livered in several blocks at different times. 8. That the coupons are all properly numbered, have the proper due dates, place of payment and are properly signed either by actual or facsimile signatures as specified in the transcript, and that each bond has the proper number of coupons. Banks Buy and Recommend WollenbergerBonds HE active customer list of W ollenber^er & Co. includes many banks and investment bouses that regularly purchase W ollenberger First Mort^a^e Real Estate Gold Bonds for their clients as well as for the investment of their own funds. T Several of our recent offerings are leg>al investment for national banks. W ollenberger bonds yield the attractive return of 6 H%, and occasionally 7%. T hey are safe beyond question. N o in vestor in W ollenberger bonds has ever lost a dollar of interest or principal or been obliged to wait a single day for the payment of principal or interest when due. On request we shall he glad to send you our Plan o f Cooperation with banks and invest ment dealers who sell Wollenberger bonds. WOLLENBERGER & CO. Investment BanKers 105 S o . L a S a tie S tr e e t CHICAGO Forty-two https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Years of Investment Banking January, 1927 9. That the legal opinion accompany ing the bonds is signed by the bond attor ney specified, and, if a certified copy of the opinion is submitted, that it is duly signed and sealed by a notary public. Very often the notary’s seal is inadver tently omitted. The date of expiration of the notary’s commission should also ap pear on his certificate. 10. That the legal opinion covers an executed bond. This means that the at torney has compared the form of the exe cuted bond with the form of bond pre scribed in the transcript, and has found it to be correct; and that the delivery papers and bonds are properly executed and that there is no litigation pending or threatened. 11. That certificates on the backs of the bonds are all signed and sealed, if the certificate mention a seal. Very often a certificate appears on a bond which is not necessary in order to make it legal but if a certificate appears on a bond it should be executed even though such certificate is superfluous. It is hard to explain to an investor that an unsigned certificate on a bond is not essential. 12. That, in case the banker is super intending the preparation of the bonds, printer’s proofs are carefully checked and the blank bonds when ready for signature are carefully examined before being sub mitted to the municipal officials for execu tion. From the foregoing it is evident that the banker cannot merely assume that everything is in proper shape but he must prove it to himself. It has been aptly said that the banker in order to protect his client must first protect himself. Additional Safeguards One of the notable developments in the bond and investment field in recent years, is the growth of guaranteed bonds. This has been particularly noticeable in the field of guaranteed mortgage bonds. The White-Price Company, of Minneapolis, is one of the companies which has thrown such safeguards about its securities that every mortgage is guaranteed and every title is insured. Its mortgages are guar anteed by the United States Fidelity and Guaranty Company, a $52,000,000 con cern, and its titles are insured by the New York Title and Mortgage Company, a $30,000,000 concern. Pays Deposit Allotment The first allotment on the 55 per cent of deposits left at reorganization last winter, was paid off last month by the Security State Bank of Beresford, So. Dak., and other payments will be made when certificates of deposit mature. It is expected that a ten per cent payment on holdings of the remaining 45 per cent will be paid shortly after the first of the year. THE January, 1927 NORTHWESTERN 47 BANKER Advertising as a Factor in the Distribution o f Securities T IS not our purpose here to consider advertising in the abstract— the merits of which are very generally conceded by thinking men—but rather to consider its application to a particular problem— the distribution of investment securities. In this there is not the same unanimity of favorable opinion as there is concern ing the general effectiveness of advertis ing as a sales adjunct. It is not uncommon to find the invest ment banker quite willing to concede the important place of advertising in the gen eral scheme of things, though indifferent, perhaps skeptical about its application to his own field. The same individual whose food, apparel, and whole mode of living is influenced perhaps more than he real izes, by advertising; who often sits on the board of directors of manufacturing or industrial concerns whose distribution is directly dependent upon advertising; who, when given the opportunity of pur chasing the issues of organizations the names and products of which have been thoroughly established by advertising, not only welcomes the opportunity but fre quently pays more for these securities than for those of another company whose physical assets and earnings are the equivalent of the others, but whose name is unknown because of failure to make use of the advertising appeal so effec tively utilized by the former—despite these tributes, conscious or unconscious, to the effectiveness of advertising in other fields, he maintains a lukewarm attitude, perhaps even an adverse one, to the whole hearted application of the same sales agency to his own business. I Are Bonds “Different” ? “ The bond business is different,” it is very commonly said. “ The only way to sell bonds is to go out and sell them,” comments another. “ The bond business is a profession, and as such does not lend itself to advertising,” comments a third. “ I have tried it and it doesn’t work,” adds another with considerable finality. These comments are made in all good faith. Those responsible for them believe them thoroughly. Are they well founded? Is it true that a medium that has proved its effectiveness in almost every other line, one to which the President of the United States in a recent address attributes no inconsiderable part of the present pros perity of the nation, is not applicable to the problems of securities distribution? To answer that question there must be some agreement as to just what our prob lems are. Most of us, I believe, would agree that they are primarily problems of distribution. For the moment some deal- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis that the securities-distributing machinery of the country is primarily concerned with selling more bonds, and selling them more economically. With the margin of profit smaller, as is always the case in a period of active demand, distributors, to main tain their accustomed profits, must do one or both of two things—increase volume or decrease selling costs. That is without doubt the major problem of the business. B y A . E. Bryson Vice President, Halsey, Stuart & Co. Address delivered before the Chicago Financial Advertisers, Decem ber 14, 1926 ers may say that the problem of distrib uting bonds is not so difficult as the prob lem of obtaining them. That, if true, is of course only a temporary situation. By and large, there can be no question but Protective Equity E UNDERW RITE issues of desirable se curities and participate in the A major underwritings. main consideration in the selection of underlying securi ties by this house is that these should be protected by sufficient negotiable equity to cover the entire amount principal and interest. of W h en this condition has been met, we do not hesitate to recom mend the securities. A List o f Current Offerings will be m ailed upon request BARTLETT & G O R D O N IN C O R P O R A T E D First N a tio n a l B a n k B uilding, C hicago First Wisconsin National Bank Building, Milwaukee 48 THE There are of course other problems; for instance, there is the problem already al luded to—now acute with some dealers and always present to a degree—the problem of obtaining good securities with which to meet the demand. There is always the problem of personnel, perhaps more dif ficult in our line than in almost any other —the problem of recruiting good men to our organizations and of maintaining their spirit and morale when once enlisted in our forces. There is the problem of keep ing our customers in the face of the keen competition that now exists. Can adver tising assist in the solution of these prob lems ? The Major Problem Let us consider the major problem first — that of selling more bonds and selling them more economically. I suppose the sales job in our field (in fact in any field) may be reduced to this: (1) Finding the NORTHWESTERN buyer, (2) selling him, (3) keeping him sold. All of these steps can of course be accomplished without the aid of ad vertising—in fact, are being so met by a good many securities organizations; at least without the aid of really effective and well-conceived advertising. But while it can, and is being done, it is time-con suming and costly. It means substantially that the salesman has the whole sales job on his own shoulders. He must, in effect, ring doorbells and depend on the law of averages to locate his prospects; he must assume the laborious job, having found his prospect, of selling him from the ground up—that is, on the advantages of invest ing, on the merits of bonds in contrast to other forms of investment; he must sell his house, his own type of bonds, himselfand his own individual offerings—and then he must keep them sold. I f he has remarkable powers of resistance and per severance, and if he lives long enough In conveying our N a n f e a r ( S m f t t u js w e take occasion to express appreciation for the cordiality w ith w hich w e have been received since establishing our Iowa office. The year 19 2 7 finds us equipped better than ever to serve the needs o f Iow a investors and w e shall welcom e an opportunity to place our facilities at your disposal. L. H. DAVIS, Resident Manager Telephone: Market 315 526 Liberty Bldg., Des Moines The Brown- WICHITA BANKER er Company January, 1927 he eventually becomes a successful bond salesman. What does the salesman do under these circumstances— in fact, what is he in structed to do? Does he go out to the highways and byways to locate new buy ers? No, he goes to the Social Register, the Directory of Directors, the lists of big stockholders, in short, to consistent big buyers—the same field, probably the same names that everybody else in the business is already working on. It is easier, he figures, to win away the other fellow’s customers than to go out and locate and develop new ones. The result of this, which is standard procedure with most bond houses, is that a certain small sec tor of our population are somewhat over whelmed with sales solicitations, while in other sectors the bond salesman is still something o f a rarity. Suppose in this small circle A does not succeed in per suading B’s customer to give him his busi ness, at the same time C is perhaps suc cessfully stealing away A ’s customers, so what’s the use— a lot of selling effort has been expended and little or no new busi ness created. Isn’t that one reason for the high cost of bond selling? Just so much business can be had from this “ bull’seye” market, yet, most of us are directing the big end of our sales and advertising appeals to it. But, you may say, with all the du plicated effort in this field, it is no more costly, considering the larger unit of sale, than the development of the “ fringe” market where the selling job is admittedly hardly less difficult. In the sophisticated group we merely have to sell ourselves and our goods, in competition with other dealers. In the other field we have to undertake a tedious educational job, and besides meet the equally difficult competi tion of the general merchandising market. The surplus of this class is not so large but that they must sometimes decide be tween the desires of the moment in the form of alluring and well-advertised things— automobiles, trips abroad, coun try club memberships, etc., things which every normal human being naturally wants -—and those of the future which, at best, are somewhat ephemeral and hard to grasp. The prospect in this field is ad mittedly harder to locate, and the selling problem is perhaps more involved. By and large, however, it is probably no more difficult or costly than in the other class, and it has this great advantage— once you have sold your prospect you have created something, a new buyer; you have wid ened the market for securities and as sisted to that extent in reducing further distributing costs. KAN SAS The “Fringe” Market C h icago K a n sa s C ity https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis D etroit O m aha D allas Los A n geles S t. P a u l T o p ek a By this “ fringe” market I do not mean the $100 buyers—that is, the wage earner, who, aware of his insecure future, stints and saves, yet in all probability will never be anything other than a $100 buyer. It January, 1927 T HE is doubtful if lie can ever be a profitable customer, and there is a very real question, moreover, whether he ought not, in view o f his limited surplus, put his money in the savings bank rather than into bonds. Nor do I mean the man who can buy only a $500 bond now and then, but who will never buy anything more. Unless he gives promise of developing into a larger buyer, and unless advertising can do prac tically the whole selling job, even he can hardly be a profitable prospect—at least not under present profit margins. I have in mind when I refer to this outer mar ket that considerable section of our popu lation who are earning substantial salaries, who have a surplus over reasonable liv ing requirements, but who, driven by the great American quest of “ things,” con sume most of their current income with out sufficient thought as to how their stand ard of living is to be maintained in the period of lessened personal income that must some day follow, the family, in short, that is investing nothing at all or perhaps $1,000 a year when they should be invest ing $5,000, or $5,000 when they should invest $10,000. It is in this field that advertising can be most effective. Without advertising support, salesmen find it a difficult market to cultivate profitably. With advertising, it represents our greatest opportunity for widening our market and cutting our sell ing costs. Much of our present advertis ing is ineffective in this field—the offer ing advertisement, for instance, which is such a favorite with most investment ad vertisers—whether the solemn syndicate ad, or the stereotyped card offering— leaves him cold if, in fact, he even sees it, which I very much doubt. Our im pressive lists of securities, our prating about how old we are, how honest we have been, and how respectable our ancestors, fail to register. He needs, primarily, to be convinced of the importance of invest ing— of conserving for future needs, a larger part of his present income. Re member, we are in competition for his dollars with the fellow who has something that will satisfy an immediate craving in his heart— and the new Rip Roarin’ Eight, the Sunset-Club-on-the-Ridge, the De Luxe-Round-the-World-Tour; we’re in competition with the life insurance agent who by the way, is doing a good job of selling estates instead of insurance pol icies; we are in competition with the real estate agent who is selling him a much fancier house than he needs; we are in competition with the multiplicity of new things which individually may not amount to much but collectively cut deep inroads into the average man’s income. I f we are to make a real advertising impression on this great market the po tentialities of which, despite the huge in crease in number of buyers and output of securities over the last few years, are relatively untouched, we must do some thing more than merely talk in terms of https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis N O R TH W E ST E R N 49 BANKER Must Sell Investment Program specific offerings with their first liens, net incomes, legal opinions, and whatnot; we must dislodge these people from their feeling of false security. Maybe they are earning $25,000 a year, but what good is it doing them if they are only building up a standard of living, departure from which must inevitably be made sometime without a property accumulation suf ficient to replace their personal earnings; when they get sick, get old, or get fired— all of which are not remote possibilities. We must sell them on the necessity of a second income; we must sell them an in vestment program; we must appeal to their pride; to their love of family; to their plain common sense. All this can be done without in any way reflecting on the established ethics, dig nity, or conservatism of the business. The banks have done it and suffered nothing more alarming than large increases in business. Alert insurance companies are doing it with the results already com mented on. Some of the bond houses are doing it, and it is significant that those who are doing it best are the ones who are more than maintaining their places in the sun. I f volume is to be increased and sell ing costs cut, it must be done by increas ing the number of buyers, or increasing A Short Term Note Yielding 6 % General Power and Light Company 6% Gold Notes Dated July 1, 1926 Due July 1, 1927 The General Power and Light Company owns and operates, either directly or through sub' sidiaries, public utility properties in various parts o f the west and middle west, serving prosperous communities having a population estimated to be in excess o f 85,000 people. These notes are secured, in the opinion o f coun sel, by a first mortgage on all the properties o f the company in Kentucky and by deposit with the trustee of capital stocks o f the North ern Michigan Public Service Company, A ri zona Edison Company, Western States U tili ties Company and Southern Edison Company. Earnings applicable to interest charges are show ing a substantial growth and are more than three times interest requirements on these notes. W e offer these notes as a well-secured short term investment for banksPrice 100 and Interest To Yield 6 % "§T R U E -W E B B BEORN D& (3 , IN V E S T M E N T S 231 S. LA S A L L E ST. B O ST O N CHICAGO PH O N E, C E N T R A L 6556 C E D A R R A P ID S THE 50 the capacity of those already buying. The largest opportunity for both of these de velopments is in the class of substantial income receivers, who, according to income tax statistics, have no commensurate property accumulation. They are men at an age in life when they are susceptible to an advertising appeal; they can be lo cated, educated, and largely persuaded by the right kind of investment advertisers, leaving to the salesman a far less difficult task than if he were to attempt the whole job without advertising support. Let us turn briefly to the other prob lems of the business and the part that advertising has in their solution. There is no doubt but that good advertising does attract good men. There are hundreds of young fellows in the colleges today who have made up their minds to go into the bond business. They are scanning your advertising, perhaps more carefully than even some of your prospective investors. Whether they come your way or another’s depends somewhat on the relative alert ness, stability, and progressiveness of the two institutions as reflected in the adver tising. And, can there be any doubt but that consistent, informative, progress-re vealing advertising has its reflex on our present organizations? Statler, it is said, advertises primarily for this result— to create pride in the institution, to make the individual feel the responsibility of his job, be it only the dishwasher or the scrub woman. Good advertising commits us to NORTHWESTERN standards which the conscientious employe will hesitate to violate. It creates a well knownness that gratifies the natural de sire we all have to be connected with movements or organizations that are highly regarded. If you will admit that advertising can increase volume, decrease selling costs, at tract and hold good men, can there be any doubt but that it also influences the buy ing and credit sides of the business? With competitive bidding long established in the municipal field, being tested in the rail road equipment field, and even suggested in others; with competition for desirable issues as keen as the competition for the investors’ business, can there be any doubt but that the house that can really distrib ute most economically, because most thor oughly, will, in the end, be favored by borrowers seeking an outlet for their se curities ? I wish I had the time to give more con cretely the methods as well as the theory of advertising as a factor in bond distri bution. I should like to pay my further respects to some of the traditional prac tices which now pass for advertising in the investment field; I should like to dis cuss the necessity for plan, continuity, co ordination with sales effort; I should like to air my pet theory that advertising will never become an important factor in bond distribution, until it is taken more se riously by the heads of the business and intrusted in hands as competent and. ex High Grade Short Term Investments Rate General Furniture Company • 6Js D ue Yield 1928 6 .00 % Associates Investment Co. . . . 6 s 1929 635% Continental Tank Car Corp. . . 6 s 1929 6 .00 % General Necessities Corp. . . . 6 s 1928 5.75% Circulars on Request H o a g l a n d , A l l u m & (6 . Established 1909— Incorporated 14 S. La Salle St. CHICAGO BANKER 34 Pine St. N E W YORK January, 1927 perienced in advertising technique as is expected of specialists in any other branch of the bond business. But time will not permit. Meeting the Argument Let me close by meeting directly the standard arguments which have stood in the way of wider and more intelligent use of advertising in bond distribution. I have little tolerance for those who say the bond business is different. Every busi ness is 'different, but, fundamentally, they all get back to a selling job. Selling is perhaps 90 per cent education of the pros pect to the uses and merits of the product in competition with other or like prod ucts. Advertising can do most of the ed ucating, thought it should never be thought of in the bond business as a substitute for the salesman, but, rather, as a very ef fective supplement to his efforts. Those who condemn investment advertising be cause it did not work for them will prob ably find it was due to wrong methods, rather than with the agency itself. All selling is wasteful— direct selling as well as advertising. Yet, because individual salesmen sometimes fail, we do not con demn selling—we set about to improve it. And that is what is needed in the field of bond advertising. Those who con demn advertising as out of keeping with the dignity of the profession are, to my mind, associating dignity with dullness and do-nothingness. A man can be dig nified and at the same time alert, inter esting, and progressive— the bond house can be the same. There are few businesses, in my opin ion, that need good advertising more than ours. Where the market for any product is somewhat restricted; where the prod uct itself is none too well understood; where large amounts are involved in the purchase of the commodity, and where the commodity itself satisfies no immediate desires on the part of the purchaser but must often be made by sacrificing those desires, the selling job must always be a difficult one. The more difficult the sales job, the more important advertising, prop erly conceived, becomes. Because of the logic of the situation, good advertising must become an increasingly important factor in bond distribution. Those or ganizations which recognize this fact soon will have just that much advantage over their slower moving competitors who, in time, must also come to it. Heads Bond Club Herbert A. Abernethy, of Kalman and Co., St. Paul, was elected president, and Eugene B. Hanson, of Lane, Piper and Jaffray, Inc., Minneapolis, was elected vice president of the Twin City Bond Club, at the annual meeting of that or ganization held last month. Great pleasures are much less fre quent than great pains.—Hume. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 T HE N 0 R T H AV E S T E R N BANKER 51 Belgian Recovery A survey of Belgium prepared for the American Section of the International Chamber of Commerce concludes, “It is clear that recovery from much of the de struction of the war is an accomplished fact. Not only has the physical devasta tion of the war been rebuilt, but the en tire economic life of the country has been gradually rehabilitated and in very many directions has all but attained, and in some lines exceeded, prewar strength. Reconstruction has been along new lines and under modern methods, and it is probable that the country as a whole, at the close of 1925, was in reality of greater economic capacity than it was in 1914.” The statistics available for comparison with prewar conditions seems to bear out, as far as they go, the historical repu tation of the Belgians as an energetic peojjle. Blast furnaces destroyed during the war have been rebuilt, and maximum capacity in the iron and steel industry has increased some 20 per cent as com pared with prewar capacity. During the war, 1,366 miles of railway track and 1,419 bridges were destroyed. All of these have been reconstructed. Coal and glass production had surpassed prewar output by the end of 1923. Increased efficiency of labor, consolidations of re lated units, reductions of costs, and other economies have been an important char acteristic of Belgian industrial life since the war. As a result of its policy of in creased taxation and reduced expendi tures, considerable progress toward bud get equilibrium has been made. Upon the basis of actual receipts and expendi tures for the first eight months of the current year, it is thought that the coun try will be able to meet 1926 current ex penditures by means of current income. The most recent development was the sale of $100,000,000 of bonds to stabilize the currency. The Belga, a new mone tary unit to be used for foreign trans actions, has been introduced. Currency stabilization and economic rehabilitation seem to have gone a long way toward placing Belgium on a thoroughly sound financial basis.— From Bond Briefs, Union Trust Co., Chicago. Slight Error Mr. Goldberg: “ Did you know that Sam made $50,000 in Chicago in a week ?” Mr. Cohen: “ I don’t believe it.” Goldberg, calling over his friend AA7olf : “ Isn’t it true that Sam made $50,000 in Chicago in a week?” AATolf: “ Sure it’s true, but it’s wrong in four places: it wasn’t Chicago, it was Toledo. It wasn’t a week, it was a year. It wasn’t $50,000, it was $5,000, and he didn’t make it, he lost it.” These are the times that try men’s souls.— Paine. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis H ig h -G ra d e Investm ents Coupe Coupon C entral States P ow er & L igh t C orp________________ ____ _________ - . 55 1i 4 / 2s P u b lic S ervice of N orthern I llin o is ............. ......................................5s ...,5s C hicago, R o ck Island & P acific Ry,.._...................... .......................... 4s C anadian P a cific R y. C o.......................... ........................................... . . . A y 2 Chile C opper C om pany___ __________ _____ _______________ S — 55s Southern C aliforn ia E d ison C o________________ ...1 __________...5s gs Standard Oil o f N ew Y o r k ........... ..................... .......................... ........... - A4Vi/„2 s W estern U n ion T elegraph C o......................... ............... _........ 5S A rkansas P ow er & L igh t C o_________ ___ _____ _____.......... ............,-.5 5S s Interstate P u b lic S ervice C o......................................... ................ __5 s P otom ac E d ison C o................................... .................................. T T " "T .5 s T exas P ow er & L igh t C o.......................................__...................... 5S ...5s --4%_ D es M oines J oin t S tock L and B an k............ ................... ................ — A V 28 Great N orthern R ailw a y C om pany..... ..................... .................. ........- A4 Vy 2s 2s Due 1927 1928 1931 1934 1946 1947 1951 1951 1951 1956 1956 1956 1956 1965 1976 Y ield 5 .5 0 % 6. 1 0 % 5 .1 0 % 5 .1 2 % 4 .7 5 % 5 .2 5 % 5 .1 0 % 4 .6 5 % 4 .9 5 % 5 .2 5 % 5 .2 5 % 5 .2 0 % 5 .2 0 % 4 .4 0 % 4 .8 0 % W rite fo r fu ll d escrip tiv e circulars. lars. QUAIL € Bvc BONDS FOR INVESTMENT First National Bank Bldg. DAVENPORT, IOWA 29 South La Salle S« CHICAGO B ond S a lesm a n or B anker W a n te d P rom in en t Iow a investm en t house w ith old and established reputation in distributing and originat ing diversified list of high grade bonds, n ow has an attractive opening for one or m ore good bond sales m en. M en offering developed clientele of Iow a banks and investors, or w ith successful banking ex perience in Iow a, w ill be preferred. Successful ap plicants m u st be m en of integrity, capable of earn ing for th em selves at least $4,000 a year. O ur salesm en kn ow of this advertisem ent. A p p lication s, stating references and experience, should be m ade im m ediately through Fairall & C o m pany, A d v e rtisin g A g e n c y , C om m o n w ea lth B ld g ., D es M o in es. ( A ll com m u nication s w ill be held in strict confidence.) Nineteen twenty-seven with its opportunities and possibilities is before us. The purchase of proper securities, whether for secondary reserve or the resale to cus tomers, has a distinct bearing on your prosperity for the coming year. It will pay you to investigate Illinois Special Improvement Bonds They will bear the strictest scrutiny, and are offered to you with the highest recommendations. W e will be glad to furnish detailed information upon request. H. I. FOSKETT BONDS SHENANDOAH iq w A THE 52 N O R TH W E ST E R N F. A. A. Mid-year Meeting The mid-year conference of the Finan cial Advertisers Association will be held in New Orleans March 10, 11, and 12, 1927. This conference will be attended by officers, directors and Association representatives on the National Adver tising Commission. One of the matters of business that will come before this conference will be the selection of the 1927 convention city and the dates of that meeting. A New Book U R broad list o f sound, wellsecured bonds is suited to the re quirements o f c o n s e r v a tiv e investors whose main consid erations in buying are s a fe t y o f p r i n c i p a l and a steady, depend able income. S e n d fo r i t Chkago Trust Company JohnW O'Leary 'P resident V ic e J. P . B U R L IN G H A M P r e sid e n t That American business is keenly interested in Germany’s progress is indi cated by the close observation given to conditions in that country by every American business man who visits it. “ Germany is surely and rapidly re suming a leading position in the world’s trade and commerce,” is the conclusion of Herman Hachmeister, vice president of the George M. Forman & Company, who recently returned from a two months’ business tour of Europe. Comparing the Germany of today with that of a year and a half ago, Mr. Hackmeister continues, “ Early in 1925, on my last previous visit, I found every where a feeling o f gloom and discourage ment. Today, that has been replaced on every hand by an air of energetic activity. “ Admittance to the League of Nations has created new hope and courage; the German people feel that they are again one of the leading nations of the world. “ In the meantime, Herr Stresemann, M a n ager Send for latest descriptive booklet. AmericanBond&MokigageGa Established 1 9 0 4 Capital and Surplus Over $ 9 ,0 0 0 ,0 0 0 IOWA OFFICES: C H IC A G O https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Finds Germany Prospering The management of the Company is the same as that under which it was organized. Its officers are specialized experts in the mortgage field, whose experience extends over periods as long as forty years. In its President, M r W illia m J. Moore, we have the benefit of the knowledge and ex perienced one of the country’s recognized author ities on mortgage investments. V ice-President BOND DEPARTMENT J. W . M A R S H A L L “ The Stock Market” is the name of a new book by Charles A. Dice, Ph. D., Professor of Business Organization, Col lege of Commerce and Journalism, Ohio State University; and consultant on in vestment and financial problems. What every business man who invests, trades, or finances a business should know about the securities market is just what “ makes the market go.” He should see what forces move the prices of stocks up and down—the pitfalls to avoid, the opportunities to seize. He should know as nearly as possible, how to detect long time swings and when and where the market is likely to break, whether this or that stock is logically the right one to buy or sell—and why. That is what “ The Stock Market” gives— it provides a really reliable out line of the strategy of market operation and a clear-cut explanation of the eco nomic function of the money market. Concrete discussions of current mar ket practices illustrate the methods used by successful traders and operators— it shows how tape readers and chart readers interpret the market, and discusses the principles involved; it explains the tech nique of puts, calls, spreads, straddles. The routine of transfers is made clear; conversion of securities is analyzed, the factors in “ manipulation” of the stock market shown. The mechanism of brok ers’ loans, call and time-loan rates, the effect of interest rates on security prices are explained. Stock price averages; a lucid commentary on the Dow Theory; a description of the different systems of forecasting stock prices and trends ; and a thorough-going discussion of methods employed in rating securities, make this a handbook that will be of value to every one who is interested in, or affected by, the “ ups” and “ downs” of the securities market. The publishers are A. W. Shaw Com pany, Chicago. Specialised and Experienced Management % Lucius Teter January, 1927 BANKER O ver thirty Incorporated DAVENPORT D E S M O IN E S C E D A R R A P ID S other cities. NEW YO R K January, 1927 THE German Foreign Minister, who is pri marily responsible for the amiable solu tion of Germany’s foreign problems, is proving himself a man of the hour. He has succeeded in bringing home to the German people that only by concentrated effort and by making the best of exist ing conditions, can Germany’s difficul ties be solved. “ The new spirit has accomplished vast changes within the past year. Railroad trains are now crowded, unemployment has decreased by fully 25 per cent, and business failures are markedly fewer in number. Through consolidations, the large industries are solving the problem of economical production and distribu tion. The Dye trust and the FrenchGerman-Belgian Steel trust are oustanding examples of the tendency toward cooperation for the common good.” Monetary values have been effectively stabilized, Mr. Hackmeister reports, by adoption of the new Gold Mark. “ In twelve months’ time bank deposits have increased $2,500,000,000. Savings deposits have grown from practically nothing at the inflation period to $500,000,000 at the end of April, 1926. German corpo ration stocks show increasing values— a 100 per cent increase in market prices being not unusual during the past year. Short term or call money in Germany today commands an interest rate of only 5i/2 per cent. It is anticipated that German mortgage banks will drop their interest rates to 7 per cent with the turn of the year. “ Germany acknowledges its obligations under the Dawes Plan and is disposed to meet them without further quibbling. Its determination now is to get on its feet; and this it is accomplishing in a way that indicates a quick return to stability, both economic and govern mental.” NORTHWESTERN BANKER 53 The Bankers BondHouse Specializing in bonds for bank investm ent. Current recommendations sent upon request. W. D. HANNA & COMPANY (Successors to H anna-Shreves C o.) B o n d s fo r In v e stm e n t Burlington, Iowa Waterloo Muscatine Lincoln A . J. B o ld t y C om p a n y PUTNAM BUILDING DAVENPORT BONDS FOR C O N S E R V A T IV E IN V E S T M E N T Lawrence Stern a n d Company 231 South LaSalle Street • Chicago s BOARD W IL L IA M OF DIRECTORS W R I G L E Y , J R ., Chairman of the Board of W illia m W rigley Jr. Company P eck 8C R ock w ood In vestm en t Securities J O H N R . T H O M P S O N , Chairman o f the Boaid of John R . T hom pson Company ALBERT D . LASKER, Chairman of the Board of Lord & Thom as and Logan STU YVESAN T PEABODY, C H A R L E S A . M c C U L L O C H , President Continental and Commercial Bank Building - CH ICA G O Y ellow Truck & Coach Manufacturing C o. H E R B E R T L . S T E R N , President of Balaban & Katz Corporation A L F R E D E T T L I N G E R , V ice President President of Peabody Coal Company o f T h e Parmelee Company J O H N H E R T Z , Chairman of the Board of J O S E P H J. R I C E , Vice President L A W R E N C E S T E R N , President T h is com p an y conducts a general securities business, originating and participating in high-grade investm ent issues and devoting Milwaukee - Railway Exch. Bldg. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis special attention to first m ortgage real estate bon d s T IIE 54 N O R T H W E S T E R N BANKER January, 1927 Cutting Nation’s Check Bill Koeppe, Langston, Loper & Co. 3 9 South La Salle Street C H IC A G O Specialists in Joint Stock Land Bank Securities Distributors of High Qrade Bonds A Complete Investment Service Commercial Paper and Bonds N V .V V .V .V V .V .V .V .V .W .V .V .V .V C lients o f this firm are able to obtain from one source the type o f security best suited to their current condition and need. V .S S V .V .V .V .V .V .V .V V .V .V A V .V L A N E , R O LO SO N & CO., Inc. 209 South La Salle Street, Chicago LANE, PIPER & JAFFRAY, Inc. M in n e a p o lis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis S t. P a u l R ochester M a n k a to Fargo Twenty-five million dollars a year is be ing cut off the nation’s bill for bank checks, drafts and vouchers through elimi nating by simplification a large amount of previously wasted effort and materials caused by a multitude of styles and sizes. This estimate was presented at a meeting of the standing committee representing bankers, lithographers and other busi nesses interested in the handling of large volumes of cheeks held at the Department of Commerce in Washington to review the results of the first eight months since check standardization was put into effect by agreement in March, 1926, it was an nounced recently by Frank W. Simmonds of the Clearing House Section, American Bankers Association, one of the leading factors in the movement. It was reported that nation-wide ad herence to the sizes and forms of bank checks, notes, drafts and similar instru ments recommended by the committee had been developed during the year. Alex ander Dunbar, chairman of the commit tee, stated that experience showed the specified forms had proved popular among bank customers. E. R. Woodson, repre senting the Railway Accounting Officers Association, said that the railroads of the country were unanimously behind the movement which meant tremendous sav ings in printing and handling the hun dreds of millions of checks issued annually by them. It was also reported that one lithographic house producing more than 250 million checks a year had found that 97 per cent of its orders prescribed the types endorsed by the committee. More than a hundred clearing houses in all parts of the country have officially en dorsed the standard forms. Also the Fed eral Reserve Board, it was reported, has given its endorsement to the present pro gram and is transmitting the specifications to the various Federal Reserve Banks for their information and guidance. In view of the success of the plan the committee reaffirmed its recommendations previously isgued through the Bureau of Standards of the Department of Com merce. These specified that bank drafts, certificates of deposit, cashier’s checks, special or individual checks, customer’s drafts, notes, trade acceptances, voucher checks, collateral notes, special notes when folded, and other similar instruments be uniformly 3%x8% inches; that deposit slips be 3%x6% inches or multiples of 6% inches; customer’s checks and counter checks, 3 l-lôxSy^ inches; pocket checks, 2%x64i inches; and end stub for pocket checks when not interleaved, including binding margin, 23/^x2y8 inches. It was also recommended that advertis ing matter, pictures and such extraneous detail be omitted so far as possible from the face of checks and that wherever it was felt necessary to show trade-marks, insignia, or other display they should January, 1927 THE appear in the upper left-hand corner of checks and not encroach upon the space for payee’s name or other essential fea tures. Standardized arrangements for the essential entries were also specified so that all such data will appear near the right-hand end of checks in order to facilitate their handling in transit de partments and clearing houses. Those present at the meeting were Alexander Dunbar, representing the Clearing House Section, American Bank ers Association; W. L. Chandler, Na tional Association of Purchasing Agents ; William P. Gildea, Association of Bank and Commercial Stationers; Frank W. Simmonds, American Bankers Associa tion; Nathan B. Williams, National Asso ciation of Manufacturers; E. R. Woodson, Railway Accounting Officers Asso ciation, and H. R. Colwell and A. B. Galt of the Division of Simplified Practice, Department of Commerce. Ten Years of Service At a meeting of the Committee on Costs and Charges of the Trust Company Division of the American Bankers’ Asso ciation, which was held last month in the Assembly Room of the Illinois Mer chants Bank, LeRoy A. Mershon, secre tary of the division, was presented with a beautiful watch by Lucius Teter, presi dent of the Chicago Trust Company, for having completed his tenth year of faith ful service to the organization. THE TIME ELEMENT IN PRESENT ING A CHECK (Continued from page 14) his duty to present it not later than the closing of banking hours on the follow ing business day. Had Hewitt observed this duty, the check would have been presented and paid. W here the holder of a check does nol present it within a reasonable time, and the drawee bank fails before the check is presented, the drawee of the check will be discharged from liability thereon. The building company was discharged from liability to the extent of the loss which it sustained as the result of the delay in presentment. Hewitt contended in court that when he mailed the check back to the building company, on Saturday, January 12th, it would be implied that he should have a reasonable time after again receiving it in which to present it. In other words, it is contended by mailing the check back to Hewitt, it was, in effect, reissued, and that the situation should be considered the same as it would be had Hewitt never received the check prior to Mon day morning, January 14th, when he opened his mail in Ludwig. If that theory be adopted, then Hewitt would not be considered to be at fault; because after receiving the check on the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis N O R TH W E ST E R N BANKER 14th, he presented it with due diligence and in the usual way that presentation is made. But such theory should not be adojffed. Hewitt received this check, in the first instance, in the city of Iveyville, on January 11th, and the First State Bank was located in the same city. Suppose plaintiff had put the check in his pocket and had forgotten about it, and carried it until Monday, the 14th, when he deposited it in Ludwig, could it be said that in such case he had been negligent? We hardly think so. In stead of carrying the check in his pocket, Hewitt, because he had forgotten that the Berry item was adjusted in the settle ment, mailed the check back to the de- 55 mendant, and by so doing, due to his own forgetfulness, and his own negli gence, delayed presentation. In the supposed case the check was for the time forgotten. In the case here Hewitt for got about the Berry item. The drawee could not certainly be at fault in the one case any more than in the other. Added to Bank Force Miss Mary Wray of Elkhorn, Ne braska, was added to the Plateau State Bank force recently. Miss Wray is a graduate of the Seward High School and of the Van Sant School of Business in Omaha. W h y Foreign M o r t g a g e Bank Bonds? Because o f their excellent records dating back in some cases for three-quarters o f a century, Foreign M ortgage Bank Bonds have been considered in Europe one o f the prime securities for trust and savings banks, ranking just under government obli gations and ahead o f the securities o f states and municipalities. Prior to 1 9 1 3 more than five billion dollars o f this class o f securities w ere held abroad. Foreign M ortgage Bank Bonds are n o w coming into the Am erican market and bankers and trust officers are urged to familiarise themselves w ith this type o f investment. W e have prepared an interesting booklet on “ T h e Development o f the M ortgage Bank,” w hich w e should be pleased to send you w ith our com pliments. BA KER, KELLOGG & CO., Inc. A Specialized Service in Foreign Securities for B A N K S and DEALERS 111 W est M onroe Street C H IC A G O NEW YORK LON DON Telephone Randolph C415 D E T R O IT B U E N O S A IR E S THE 56 NORTHWESTERN BANKER January, 1927 PLEADS FOR HULL AMENDMENTS (Continued from page 16) great importance and which ought to be treated as a separate measure, cannot be considered of the least significance or value as a gauge of public sentiment on the subject.’ Not Representative Vote REAL SERVICE T o serve our clients to their entire satisfaction is our constant aim and ambition. Stanley-Henderson Company Farm Mortgage Bankers 207-214 Higley Bldg. Cedar Rapids, Iowa What They Say T h e fo llo w in g is w hat M r. Spiecker, cashier o f the First T ru st & Savings B ank o f R em sen, Iow a, says: 44W e have the latest IO W A B A N K DIR ECTO R Y placed so it is easily accessible at all times, and al ways consider it the handiest directory we have. 44W e thank you for remembering us with the latest edition.” The Iowa Bank Directory Published Semi-annually by TH E N O R TH W ESTE R N B A N K E R Clifford DePuy, Publisher https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis DES MOINES, IO W A * “ The Chronicle might have gone fur ther and mentioned that there are 27,700 banks in the country, so that the vote against the Hull Amendments does not even represent l x/2 Per cent of the banks. It might have added that in California alone, where the convention was held, and within one night’s ride of Los Angeles, there are over six hundred bank branches, each of which is entitled to a vote upon payment of a nominal sum, much less than individual bank member ship fees. “ The total vote against the Hull Amendments only equals about twothirds of the number of branch banks in California! In fact, eight of the great banking groups of California have more branches than the total vote cast against the Hull Amendments, so that this vote could and may have been cast by less than 3-100 of 1 per cent of the country’s banks. “ Certain other statements quoted from Mr. McFadden’s speech deserve atten tion. The Hull Amendments do not, as he charges, interfere with any state pass ing any law it chooses. “ Except to equalize branch-banking privileges between National and State banks in territory where State banks now engage in this practice, branch banking is not primarily a bone of con tention between State banks and Na tional banks, but between large banks and small banks. “ In the states where branch banking is permitted there are 16,484 banks, of which 735 have engaged in branch bank ing— or about 4% per cent. These 735 banks operate 2,572 branches, so that 4V2 per cent of the banks in branch-bank territory operate 200 per cent of the banking facilities of those states. Eighty per cent of branch banking is done in six states where it has consider ably more than doubled in the past five years. “ If branch banking were to extend to the entire country in the same ratio we might expect to find about 1,200 banks engaged in branch banking as against 26,500 operating as independent units. “ In the twenty-six states where the state banking laws do not permit branch banking, one important factor is un questionably the fact that National banks cannot now take advantage of legisla tion permitting State banks to operate branches. “In each of these nonbranch-banking states, the l 1/^ per cent of banks which January, 1927 THE might desire to change the State law to enable them to engage in branch bank ing represent the powerful financial in terests which might be expected to wield the most influence with the State legis lature. Part of this 4 ^ per cent are State banks and part are National. Their interests with respect to branch banking are now opposed, and their in fluence balanced. “ Should the McFadden Bill be enacted without the Hull Amendments, their in terests would no longer be opposed. As soon as State banks received branch banking privileges, National banks could likewise automatically open branches. The combined influence of these powerful State and National banks, brought to bear upon State legislature, is frankly feared by a majority of the small banks now serving their respective communi ties with sympathy and understanding. “ To pass the McFadden Bill without the Hull Amendments is to place an in centive before every large National bank in nonbranch-banking territory to use its influence to change the existing State antibranch-banking law. In my opinion this would be ‘Congressional interfer ence’ and neither ‘veiled’ nor ‘indirect’ as Mr. McFadden says. “ Next Mr. McFadden says that the purpose of his bill is ‘to legislate for Na tional banks—not for one, nor two, nor a hundred, but for all of them according to their needs * * * in the larger cities with populations over 25,000, in those states where State banks enjoy the branch-banking privilege * * * Na tional banks should be granted limited branch-banking privileges to meet the competition of State banks that have branches.’ “ On one hand why does Mr. McFadden seek to legislate for all the National banks and then limit their branch-bank ing privileges to cities of 25,000 or more populations, and in other ways? “ And on the other hand, why did Mr. McFadden sign the Joint Conference Re port raising this minimum population limit from 25,000 to 100,000 if he is try ing to benefit all the National banks? As the bill was reported by the Joint Con ference Committee it would extend branch-banking privileges to National banks of only 44 cities, with more than 100,000 population, and deny it in the 234 cities of population between 25,000 and 100,000 as well as in all smaller cities ? “ Mr. McFadden’s next point is that the Hull Amendments cause the McFadden Bill to grant branch-banking privileges in certain states and not in others. In his paragraph from which I quoted above, is the best answer to this objec tion : ‘National banks should be granted limited branch-banking privileges to meet the competition of State banks that have branches’—not that may or might sometime be expected to have branches. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER 57 The Midland Bank offers exceptional facilities for the transaction of banking business of every description. 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D E S M O IN E S , IO W A 58 THE “ The next point raised is that ‘if Con gress ties the hands of any considerable number of National banks in nonbranch banking states—first, State banks would work for branch-banking laws—second, National banks would quickly become State banks in order to take advantage o f the State branch-banking laws.’ “ Statement Absurd” “ This statement is absurd. The Hull Amendments do not Tie any hands’— they only perpetuate the status quo in the nonbranch-banking states—they con tinue the branch-bank situation in these states as it is and as it has always been — and none of the dire predictions of Mr. McFadden has either threatened or come to pass. An analysis by Senator Reed, of Missouri, showed that the transfers of banks from National to State charters NORTH W ESTE R N was approximately equal in branch bank ing and nonbranch-banking territory, proving that the branch-banking privi lege was not a controlling influence in such transfers. “ Mr. McFadden’s statement continues : ‘The Hull Amendments will not work, they will not check branch banking but on the other hand will tend to encourage branch banking in the states where it does not exist.’ “ Then why do the avowed supporters of branch banking oppose the Hull Amendments with every open and covert weapon in their arsenal, if they will ‘en courage the spread of branch banking into nonbranch-banking territory V “ Why did the legislative opponents of the Hull Amendments, including Mr. Mc Fadden, in the Joint Conference Com mittee report, deny equality of branch G eneral M otors A cceptance Corporation Executive Offices: 2 5 0 W e st 5 7 th Street, N e w Y o r k City Z fH E obligations of this institution are select ed as appropriate and sound mediums for short term investment by a large banking clientele. They may be obtained in convenient denomina tions and suitable maturities. D IRECTO RS Alfred H. Swayne,. .Chairman —- Vice President, General Motors Corporation Curtis C. Cooper. . . President Albert L . Deane. . . Vice President Pierre S. duPont. . . Chairman, General Motors Corporation and E. I. duPont de Nemours & Co. Lammot duPont. . .Finance Committee, General Motors Corporation. O. H. P. LaFarge. .General Motors Corporation Seward Prosser. . . .Chairman, Bankers Trust Company New York John J . Raskob. . . .C h airm a n , F in a n ce C om m ittee, General Motors Corporation Alfred P. Sloan, Jr. President, General Motors Corporation John J .Schumann, Jr. Vice President Donald M . Spaidal. Vice President https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKER January, 1927 banking competition to the National banks of 141 cities of between 25,000 and 100.000 population in branch-banking territory where these National banks are now actually suffering from existing State branch-banking competition, in order to extend to the National banks of 28 cities of over 100,000 in nonbranch banking territory a permission at some future time to compete with some pos sible future State branch-banking compe tition. “ Why— unless it is their purpose to en courage the entering wedge of branch banking into the nonbranch-banking territory at any cost and by any maneuv ering ? “ Fortunate it is, since Mr. McFadden has reversed his position on the Hull Amendments, that the House of Repre sentatives has instructed him, with its other members of the Joint Conference Committee, to adhere, in their negotia tions in Committee, to the bill contain ing the Hull Amendments as passed by the House. “ The McFadden Bill has become an old-fashioned omnibus bill as a result of the efforts of various interests to secure its jrassage without the Hull Amend ments. Even the renewal of the charter of the Federal Reserve Bank System, years hence, has been included— a meas ure which, by itself, would be passed without delay almost as a matter of rou tine. “ All of the McFadden Bill’s meritor ious and undisputed advantages to the 8.000 National banks of the country are being held up by an attempt to squeeze through that part of the law which will encourage influential large National and State bankers of 26 states to work on their State legislatures for an entering wedge of branch banking in nonbranch banking territory where now no branch banking competition exists, and where, by the enactment of the Hull Amend ments, it is not likely that it will ever exist.” Is Publicity Chairman J. K. Waibel, advertising counsel for the Continental and Commercial Na tional Banks of Chicago, has been chosen as national publicity chairman of the Financial Advertisers Association. Mr. Waibel joined the advertising staff of the Continental and Commercial National in 1919 and in January of 1926 was made the senior official in charge. He has been an active member of the F. A. A. Up-to-Date He came home and, as they say in the movies, found his wife sewing on a tiny garment. “ My dear, my dear!” he cried. “ Don’t be silly,” she replied. “ This is my new dinner gown.” — Judge. January, 1927 THE “InEWS AND VIEW S” (Continued from page 17) They complain that printed matter is lacking in truthfulness, yet they go around dropping language as carelessly as if none of it meant anything. “ They put their feet into the trough of human life and dirty up everything within reach. They say it is a shame such and such a girl has been talked about the way she has, when nine cases out of ten that is the first time some of those present ever heard that that girl had been talked about— '“ Somebody whispers that a bank is shaky. Everybody who has money in that bank knowTs the destructiveness of a bank Tun’ and then they fall over each other to be the first to start it—feet in the trough. “ In fact, a close study of pigs will give one a very keen insight into human nature.” A prominent daily newspaper in dis cussing the subject of bank protection says: “ The way to prevent bank failures is not to guarantee deposits but to sub ject banks to frequent and thorough ex amination.” With this statement I am in hearty accord. The first thing to make this possible, however, will have to be an additional appropriation by the various state legislatures so that the banking departments can hire more bank exam iners and pay all of them better salaries. Good bank examiners after they have worked a year or so can usually sell their services to city banks for a much larger remuneration than they are receiving from the banking departments. I f the states are to keep competent men as bank examiners they will have to compete in salaries with the large financial institu tions. NORTH W ESTERN last session of the present congress by wearing a taffeta skull cap. The senator has a good head of hair but fears drafts will give him cold. He is all wrong in bundling up his head. That is one way to catch, not avoid, a cold. I f he only knew it he might go bare to his wishbone ha bitually, if he began in summer, without danger. Light dress is best. People usu ally catch cold from getting too warm. Agricultural scientists at Pennsylvania State College are trying to solve a cow mystery. Milk has a large vitamin B con tent and continues to show it when the cow is put on a diet from which that vita min is absent. So Jessie, a Holstein heifer, has had cut into the first and largest of her four stomachs a little door, through which portions of her meals may be removed in order to learn how her vita (E h e (E h mt 59 min B is manufactured. The operation is described as having been harmless and painless, leaving Jessie cheerful and con tented. Breaking the Ice The young lover was very bashful. Turning to the girl beside him on the sofa he asked: “ Does your brother like cheese ?” She answered with a smile: “ I haven’t a brother.” Dead silence for another spell. Then he said : “ I f—if you had a brother do you think he’d—he’d like cheese?” A Cow Mystery They have been at a great feast of languages and stolen the scraps.—Shakespeare. Give the author his due, and gain my self praise by reading him.— Selden. R a t i o n a l i B a n k of tlte (Cito of polo 3§orlv 57 B R O A D W A Y Capital . . . $ 40,000,000.00 Surplus and Profits . 36,764,122.23 Deposits (June 30, 1926) 813,425,869.65 O F F IC E R S AUBERT H. WIGGIN C h a ir m a n of th e B oa rd GATES W. McGARRAH C h a ir m a n Milton O. Johnson, manager of the Analytical Department of the First Illi nois Company, calls my attention to a statement which appeared in this depart ment in our December issue. Mr. John son says: “ I notice in your ‘News & Views of the Banking World’ that you make the comment on Mr. Babson’s prediction of a downward trend of commodity prices during the coming year as follow s: ‘Dur ing the past twenty-five years, the trend of commodity prices has been upward.’ “ As a matter of fact, the tpend of com modity prices has been downward since March of 1925 and very clearly down ward since December of that year, as a great many business men and bankers are quite aware of because of the major influence exercised by prices upon profits.” BANKER JOHN McHTJGH o f th e E x ec u tiv e C o m m itte e P r e sid e n t ROBERT L. CLARKSON V ic e C h a ir m a n V ic e SAMUEL H. MILLER CARL J. SOHMIDLAPP REEVE SCHLEY SHERRILL SMITH of th e B oard P r e sid e n ts ALFRED C. ANDREWS ROBERT I. BARR GEORGE E. W ARREN GEORGE D. GRAVES FRANK O. ROE HENRY OLLESHEIMER V ic e P r e sid e n t and H ARRY H. POND SAMUEL S. CAMPBELL W ILLIAM E. LAKE M. G. B. W HELPLEY C a sh ie r W ILLIAM P. HOLLY S econ d V ic e P resid en ts ALEXAND ER S. WEBB FREDERICK W. GEHLE GEORGE W. SIMMONS EDWIN A. LEE GEORGE H. SAYLOR M. HADDEN HOWELL ALFRED W. HUDSON JAMES L. MILLER WILLIAM E. PURDY JOSEPH C. ROVENSKY BENJAMIN E. SMYTHE JOSEPH PULVERMACHER LEON H. JOHNSTON FRANKLIN H. GATES ARTHUR M. AIKEN C o m p tr o lle r THOMAS RITCHIE Novel Headdress Senator Simmons of North Carolina di versified the scenery at the opening of the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Foreign and T rust D epartm en t F acilities THE 60 NORTHWESTERN BANKER January, 1927 Iowa bankers should do business with this strong Iowa company, which has gained a country-wide reputation as a “ National Institution of Service.” The Federal Surety Company is managed by experi enced underwriters, and has from its conception built for STRENGTH rather than size. Backed by Federal Service, these lines are written— Accident and Health, Automobile, Burglary, Plate Glass, Public Liability and Workmen’s Compensation Insurance, and Surety Bonds. FEDERAL SURETY C A S U A L T Y IN S U R A N C E COM PANY S U R E T Y BON DS W. L. T A Y LO R , Vice President and General Manager HOME OFFICE DAVENPORT, IO W A W hen your customers have contracts payable in N ew Y ork funds S UCH York occasions call for the services o f a N e w correspondent w ith wide com m ercial ex perience. T h e Seaboard is chiefly a com m ercial bank. Its varied experiences cover many years. TH E SEABOARD N A T I O N A L BANK o f the City o f N ew York MA I N o f f i c e s : b r o a d https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis and beaver streets January, 1927 THE NORTHWESTERN BANKER ^llf)llil|jffraili'llJUIlJlllffA^I))!W(llllllKa^|||!ll||||||l||ffitai||||||||||||||^CM||||||||||H p Ij 61 [|lj= I N S U R A N C E S E C T IO N S TÏÏIÎlIlMlIlHjllTllftlliMlIlllllMnifflllllBaMlIlliM The Romance Back o f Insurance ET us see if our business, regardless of frank but premature views, is not just a little tinged with the atmos phere that only “ The Knights of the Round Table” breathed. I Who were the bellweathers of financial relief rushing to San Francisco after its memorable conflagration but the adjusters of leading fire companies! What event in modern business can be compared with the valiant last stand of such companies? They paid their losses willingly until their reserves were entirely depleted. Wasn’t it, in a business sense, akin to the Pass of Hermopylae or Custer’s Last Stand in the Little Big Horn? From an economic point of view, what is more dramatic than the saving of the good name and good will of a state-wide known banking institution? The imme diate payment by a conscientious fidelity and surety company of a noticeable amount due to an embezzlement loss, thus rehabilitating the bank, calming the local financial waters, preserving, in many in stances, the backbone of our country, the life-long savings of the man who works by the sweat of his brow. I could tell our debutante friend that incidents such as these have their counterparts in the nickof-time rescue of the trussed heroine from the midnight express and other like soul searing climaxes of the melodramas of the late ’90’s. A young married couple on Long Island put the savings of a lifetime into a home as an initial payment not so long ago. Things went well until the guard rail on the steps leading to the rear porch broke. The milk man was leaning on it. He went with the rail. He was severely injured. Suit was brought for $25,000 but happily the head of the household had forearmed himself with a general liability policy. It may be true that the adjusters of the carrying company did not gallop up on prancing horses nor did they doff their plumed hats. They were, in the vernacu lar, “there with the stuff.” Another Example Last year a man and wife lost their lives in an automobile accident. Their only child, five years old, was left an orphan. A will had previously been made by the father. It provided for the appointment of an executor and the conversion of the entire estate into good bonds. This Avas https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis B y John L, M ee Vice President and Superintendent of Agencies, National Surety Co. ( A d d ress b e fo r e R e g io n a l A g e n ts C o n fe r e n c e ) done. The bonds were placed in a safe deposit box of the local bank. Three months later a well equipped band of yeggmen ripped open the safe de posit boxes, stole the bonds, the majority of which were unregistered. The execu tor, however, had foreseen such contin gency. He had purchased safe deposit box protection. The loss was paid promptly and in full. This child was thereby saved from being a dependent or a possible candidate for the almshouse. Perhaps the payment of this loss was not accompanied by a fanfare of trum pets but the saving of the orphan’s in heritance was, to him in particular, a pro tection in his time of need just as great, just as significant, in a relative and eco nomic way, as any thrilling rescue pic tured in any of our best sellers. Like instances in connection with life insurance, health and accident policies and compensation and in every form of coverage could be multiplied by the thou sands. That debutante I spoke about low ered my pride so quickly I doubt whether I really brought forth a good mumble. I hope she reads this article. I met a very pleasing and intelligent debutante the other day and she asked me my business. “ Insurance,” I said, ex pecting to see a look of awe come over her. I was disappointed. “ What an unromantic business,” she retorted. That made me wonder if all insurance people are “ hard-boiled”—if the insur- President Lincoln’s A d vice A recent issue of the New York L ife Bulletin has the following story for the life insurance salesman: ‘"February 12th marks the day when, in a one-room cabin with a dirt floor, home-made furniture, no doors, no windows, and none of the many presentday conveniences that we accept as necessities, a boy baby was born of poor parents, and through his own efforts and against great obstacles grew in wis dom until he saved this Nation for us and has since become the hero, not of America alone, but of the world. His is one of the great characters belong ing to the Ages. ‘‘A story is told of him that bears a moral for all insurance men. A friend, named Johnson, who was continually borrowing money from him, finally, as a last resort, concluded to appeal to Lincoln for funds to move from Illinois into Missouri, and the following reply fits very closely our own business. “ ‘Y ou are not lazy,’ wrote Lincoln, ‘and still you are an idler. I doubt whether, since I saw you, you have done a good whole day’s work in any one day. Y ou do not very much dislike to work, and yet you do not work very much, merely because it does not seem to you that you could get much fo r it. This habit o f uselessly wasting time is the Avhole difficulty. . . . W hat can you do in Missouri better than here? Is the land any richer? Can you there, any more than here, raise corn and wheat and oats without w ork? W ill any body there, any m ore than here, do your work fo r y o u ? I f you intend to go to Avork, there is no better place than right where you are. I f you do not in tend to go to Avork, you cannot get along anywhere. . . . D o not mis understand this letter. I do not write it in any unkindness. I write it in order, i f possible, to get you to face the truth, Avhich truth is, you are destitute because you idle away your time. Y ou r thousand pretences fo r not getting along better are all nonsense. They deceive nobody but yourself. Go to work, is the only cure fo r your case.’ ” Mr. Lincoln s advice was sound. The man who puts in eight hours of good solid labor every day is the man who gets ahead. H e’ll be so bloomin’ busy that he won’t have time to look for other pastures. THE 62 N 0 R T IT AY E S T E E N BANKER ance business is so prosaic. Let us see if that is true. Looking at it coldly, I think one of the most important factors in business is to have protection available when it is really needed. Were it not for that, business would deteriorate into a close-mouthed, grasping, selfish, narrow farce—every one for himself only—no one imbued with that broader, mountain-moving spirit that is now so typical of American business. If business concerns were required to continually divide their energies between the always-present competitor and the ever-present possibility of conflagration, catastrophe or the workings of a peculiar quirk in the mind of a trust employe resulting in the embezzlement of thousands of dollars without any protection, that in deed would be repressive to development. Declare Dividend B ack o f No r th w e ste r n Na t i o n a l A Strong Board o f Directors A. F. PILLSBURY h e name of Pillsbury is so closely linked with T Minneapolis and the progress of this great milling, center that it is very proper that the Northwestern National Life should have a representative of that family and the milling industry on its Board of Di rectors. A. F. Pillsbury is secretary and treasurer of the Pillsbury Flour Mills Com pany; vice president of the Minneapolis Mill Company; vice president of the St. An thony Falls Water Power Company, and a director of the First National Bank of Minneapolis, the Minneapolis Trust C o m p a n y , and the Farmers and Mechanics Sav ings Bank. He was born in Minneapolis in 1869, and has been connected with the Pills bury Flour Mills and other Pillsbury interests throughout his entire business career. He has been a Director of North western National Life since 1924. T h is is N u m b e r 7 o f a ser ie s of n in e a d v e r tis e m e n ts on th e B o a r d o f D i r e c to r s o f N o r th w e s te r n N a tio n a l L i f e . E ach m em ber has b een e m in e n tly su cc ess f u l in b u s i n e s s a n d e a c h is in c l o s e t o u c h w i t h t h e a f fa irs o f th e C o m p a n y , and ta k e s an a c tiv e p a rt in th e m a n agem ent cf th e Com pany, N O R TH W ESTER N N A T IO N A L L IF E INSURANCE CO. O.J.Armld.Pies. M in n e a p o lis https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Directors of Aetna Life Insurance Company have declared the regular quar terly dividend of 3 per cent, payable Jan uary 1st to stockholders of record De cember 11th. Aetna Casualty & Surety will also pay 3 per cent, January 1st, to stockholders of record December 11th. Revokes Licenses Einar Barfod, insurance commissioner of Pennsylvania, has revoked the licenses of thirteen fraternal insurance institu tions including three Illinois organiza tions— the Modern Woodmen of America, Rock Island, Independent Western Star Order, Chicago, and the Holy Family So ciety of the U. S. A., Joliet. In addition, the commissioner has notified the Polish Alma Mater of the U. S. A., with head quarters in Chicago, that unless valuation reports are filed with the department by January, 1927 the end of the year showing it to be 100 per cent solvent, the license for 1927 will not be renewed. The commissioner charges high expenditures for salaries, high percentage of lapses, excessive cost of management and failure to attend hearings on citations as among the causes for revocation. He asserted that the Modern Woodmen of America was only 55 per cent solvent. War Risk Not Exempt War risk insurance payments are not exempt from collateral inheritance after the beneficiaries have died, John A7. Wicklnnd, chief examiner of the Iowa state inheritance tax department, an nounced recently. He bases his view on the recent decision to that effect by Judge D. M. Anderson of Albia, in which the facts were as follow s: The parents of Murrell W. Starns, world war veteran, received monthly pay ments upon his policy until their death. Then a brother took a cash settlement in lump sum for $7,136, the unpaid balance of a $10,000 policy. The state sued to collect collateral inheritance tax and Judge Anderson upheld the state’s con tention, saying, “ The government ex empts the benefits of war risk insurance so long as they are paid to the benefi ciaries but does not undertake any ex emption after the beneficiaries have passed away.” The case has not as yet been appealed to the Iowa supreme court for further consideration. AVho cannot be crushed by a plot.—Shakespeare. Pleasure may perfect us as truly as prayer.—-Charming. A g en t Creates Confidence Does it pay an agent to underwrite his business? W e recently received the following letter from one of our agents in AVest Texas: “ I wired you today as follow s:--- ‘ AVire me declination applica tion renewal American Central------ . Very dilapidated.’ “ Air.------ is brakeman on the------ Railroad and was very desir ous that his policy be renewed, and after making the inspection today, I find that the barn is not worth over $10, and the dwelling has never been painted, the porch is rotten, window lights are knocked out all around, and I do not care to handle it. Air.-----expects me to take care of it for him, and I wanted your telegram to help me out of the difficulty. I could not conscientiously recom mend the physical aspect of this risk.” Our agent had acquired this risk in buying out another agency. This is not the first time this agent has acted on his own initia tive. On several occasions he has discovered changed circumstances we did not know of, informing us of the situation and asking us to order cancellation. The result of his vigilance is that we never have to cancel or question a risk from him.— Cravens, Dargan & Co., Plouston, Texas. January, 1927 THE ONE-DAY RECORD VOLUME SHOWS FINE RENEWALS Does the business that is placed on the books by the underwriters who have made world’s records for one-day pro duction stay on the books'? Both agents and companies are vitally interested in this question and it is being answered. On the 29th day of September, 1925, Guy W. Peabody, of Sedalia, Mo., rep resenting the Royal Union Life of Des Moines, set a world’s record for single day production when he wrote the as tounding total of 115 applications, of which seven were declined, leaving 108. The 108 delivered policies represented $139,000 of insurance. An audit of the Royal Union books made this month, shows that out of the 108 policies placed by Mr. Peabody, sev enty-six have been renewed for the sec ond year’s premium and thirty-two have lapsed. Out of the thirty-two that have lapsed, eight or ten have moved away from Sedalia, and the seventy-six re maining represent $103,000 of insurance. Hence, this represents a 70.37 per cent renewal for volume, and, in the opinion of Royal Union Life officers, is a remark able record. NORTHWESTERN BANKER 63 Merchants Life Appointments Agency Vice President F. A. Ferguson of the Merchants Life of Des Moines, an nounces that H. E. Moen, of Minneapolis, has been made agency manager for Min nesota and North Dakota, with head quarters at the company’s branch office in Minneapolis. Mr. Moen is known as a very successful personal producer and organizer. A. N. Lynne becomes assist ant manager for Minnesota and North Dakota. Carl J. Fust continues with the company as agency manager for Minne sota, only, with headquarters in the Min neapolis branch office. Announce Essay Contest A leader in the development of the life insurance trust and general cooperation with life insurance men, the Union Trust Company of Detroit has announced its fourth annual scholarship essay contest, the subject this year being “ The Family Budget— What It Is and What It Does.” This year’s contest will again tie up the subject of life insurance, which arouses much interest throughout Michigan. F if teen former contestants are now attend ing college as winners of these $1,000 scholarships. Becomes Branch Manager Frank W. Haverstick has recently be come manager of the Des Moines branch of the Travelers, handling casualty lines. His appointment to manager succeeds that of Mr. McLaughlin, who has been transferred to the Milwaukee branch. Leaves Northwestern Life Effective January 1st, Charles R. Gard ner, vice president of the Northwestern Life of Omaha, becomes managing direc tor of the Knights of Ak-Sar-Ben and the Ak-Sar-Ben Exposition Company, and severs his connection with the North western at that time. Thomas F. Bourke, Royal Union Life Insurance Company DES MOINES, IOWA Offers a n unexcelled line o f policy contracts. Practices Own Teaching Harry J. Passno, fingerprint expert of the Iowa Bureau of Investigation, prac tices what he preaches. Recently when the Bankers Life of Iowa received Passno’s signature on an new $7,000 policy, together with his check for the first premium, they discovered his thumb print neatly placed on the policy. He 'advised them that he adopts this means of absolute identification on all of his valuable papers. Our Juvenile policies, written on children as young as one day old, go in full benefit auto m atically at age five without re-examination. Goes with Tenant Agency Our special low r a t e policies to business and professional m e n a r e Sam Simonsen has gone with the F. A. Tennant insurance agency in Sioux City,'general agents for the Penn Mutual Life. fast sellers. Making New Records Seventy-six million in new insurance paid for this year will be the new record established by the Phoenix Mutual Life of Hartford when it closes its books on December 31st. The amount becomes more significant when it is known that the company has but forty-two agencies with a total of 465 agents, making the average production of the force $170,000 for the year, with $5,000 in premiums. All Phoenix Mutual men are obliged to take a training course before they can solicit business, and, with the exception of a few not yet enrolled, every man on the force is a graduate of their school. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Royal Union L ife Building, Cor. 7th and Grand Avenue, D es Moines, Iowa W e w r i t e women on ilequal basis with men. Special agency openings are now available. Write W illiam Koch, Vice President and Field Manager. Royal Union Life Insurance Company Des Moines Iowa A. C. TUCKER, President THE 64 recently elected a vice president of the company, will assume Mr. Gardners’ duties. Is Reappointed M. M. Deming, of Des Moines, Iowa, state manager for the American Central Life of Indianapolis, has been reap pointed field assistant to the president of the National Association of Life Under writers. In this capacity Mr. Deming has been instrumental in the formation of several new Iowa life underwriters as sociations, of which Ottumwa is the latest and biggest. ^ NORTHWESTERN BANKER Will Meet in Chicago The sixteenth annual conference of the National Safety Congress will be held at the Stevens Hotel in Chicago from September 26th to 30th, inclusive, next year, according to an announcement by W. H. Cameron, managing director of the National Safety Council, following a meeting of its executive committee. The fact that the gathering will be held in Chicago should attract 6,000 ac cident preventionists from all over the country, said Mr. Cameron. At least 5,000 persons attended the Detroit con gress last month and next year’s conven tion is expected to be the greatest in the history of the institution. January, 1927 Abandoned Easy-Payment Plan The Bankers Life of Iowa announces that after January 1, 1927, the easy-payment plan of life insurance and savings will be abandoned as unsatisfactory, due to heavy lapses. Royal Union Promotion Earl G. Mercer, who will be remem bered as president of the Kansas City Underwriters Association in 1925 when Kansas City was host to the National As sociation Convention, has been promoted bv the Royal Union Life Insurance Com pany. Mr. Mercer has been cashier of the Royal Union’s branch office at Kansas City for many years. He and his family leave for Des Moines immediately where he joins the company’s home office staff. The promotion is to be effective January 1st. Heads Connecticut in Nebraska The Connecticut General Life Insur ance Co. has appointed Paul Stewart gen eral agent at Omaha. Mr. Stewart got his first business experience in a coun try bank, rising from runner to assist ant cashier. Nine years ago he turned to insurance and joined the Travelers. Much of his time and effort during the following years was spent in the field, developing and working new territory in Omaha, Cedar Rapids and St. Louis. Mr. Stewart’s appointment marks the en trance of the Connecticut General in Nebraska. Making Good Record Mrs. Elizabeth Kenney, of Waterloo, Iowa, the only woman district manager for the Mutual Life of New York, is mak ing an enviable production record and is a member of the quarter of a million dollar club of that company. A college graduate, she was deprived of husband and a child at the end of three years of married life, and took up the teaching profession. She was at one time presi dent of the Waterloo Business and Pro fessional Women’s Club and, while at tending a state convention, heard an in surance lecture which caused her to take up selling insurance. Don’t Overlook Small Ones Some agents have their eyes fastened all the time on big cases as they work from day to day, and they miss many a small one that would supply them with a good deal of the wherewithal that they lose while hunting up the large amounts. There are comparatively few men who move only in circles where only big cases are written, and the average man does not, and he is a loser if he “ despises” the day of small things.” Besides, the duty of life insurance is toward the man of small means who needs protection just as much as it is toward the man of larger https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 THE means whose family may not have a need proportionately as great. And the buyer of small policies is likely in time to grad uate to the class of buyers of large poli cies.—Points. Group Insurance The Hamilton National Bank, of New York City, has provided its employes with group life insurance which totals approxi mately $170,000. Besides the protection, amounting to $1,000 for each employee in the main classification covered, the bank workers, when sick or injured, will be en titled to the services of a visiting nurse. The insurance is being underwritten by the Metropolitan Life Insurance Company on a cooperative basis whereby premiums will be paid jointly by the bank and em ployes. Book on Thrift Quite appropriately a book on thrift entitled “ How to Get Ahead Financially,” by William A. Schnedler, counselor on personal financial problems, Western Electric Co., has been published by Har per & Bros., just as the life insurance companies and underwriters country wide are preparing to observe National Thrift Week, January 17th-23d. Feeling that most people are eager to get advice Avhich will tell them how to gain financial independence by the proper observance of thrift, Mr. Schnedler has gone into considerable detail as to how this can be brought about. His chapters are under such headings as “ The Real Meaning of Thrift” ; “ Spending Less Than One Earns” ; “ How Much Should I Save?” ; “ Investing Savings Wisely” ; “ When to Borrow Money to Get Ahead” ; and “ Life Insurance.” One of his suggestions was that people should set aside a reserve fund out of their earning to provide for future emer gencies, just as every insurance company provides a reserve for each policy written, in order that claims may be paid when ever they fall due in the future. Henry Ford’s Plans Gossip in automobile circles centers on the plans, present and prospective, of Henry Ford. There seems to be no doubt that there is a real reason for the recent large decrease in the expenses of the Ford plant, and that the man at the head of it is planning for 1927 some unpleasant surprise for those who have ventured suc cessfully into competition with his lowpriced cars. One of the stories, which may or may not have any basis in truth, is that Ford contemplates a six-cylinder car on stylish lines to retail around $600. That would be a real sensation. The more men refine upon pleasures, the less they indulge in excesses of any kind.— Hume. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER 65 IOWA A N E D U C A T IO N A L CENTER There are tw enty-five Colleges and Universities in Iowa. The State is fam ous for its high schools, grade schools and district schools. Reason enough w hy Iow a has the low est percentage of Illiteracy of all other states. Iow a is also an Insurance center and the Iowa National occupies a very important position am ong its companies. Better still, the Iow a N a tional is the preferred company in the minds of Iow a people. F ire, L ightning, T o rn a d o and A u t o m o b ile Insurance Wonderful Record of Missouri State Life In 1 0 years fro m a little over $ 1 0 0 , 0 0 0 ,0 0 0 o f insurance in force to over $ 6 6 0 ,0 0 0 ,0 0 0 . In past five years business prac tically dou b led— 9 4 .3 5 per cent increase. A Great Company Daily Growing Greater M issouri S t a t e L ife IN S U R A N C E C O M P A N Y M. E. Singleton, President Home Office, St. Louis ........................ ................................... MAIL THIS COUPON FOR BOOKLET AND OUR PROPOSITION TO BANK ER AGENTS. B. C. Thurman, Manager, Des Moines Branch, 618 Insurance Exchange, Des Moines, Iowa. Please send me booklet onLifeInsurance Selling and yourproposition to banker agents. Name Address . J ■ « » l « THE 66 NORTHWESTERN BANKER January, 1927 LIABILITY INSURANCE Liability insurance is being written, many agents are making real money on it, and any agent can write it, dec1ares E. R. Warmoth, superintendent of the liability department of the Federal Surety Company. He continues: We sometimes wonder if the very name of this class of insurance, as generally used, isn’t one ieaion why some agents overlook its development. In one way, it hints at being a coverage on some remote or unusual exposure that the insurancebuying public is not interested in. Of course, such a view is decidedly wrong. The exposure to accident represented by the usual apartment, office building or store is not remote or unusual: Law suits against the owners of property or tenants of property are usually found on the court dockets in all parts of the country. Thi:Des Moines Life-»Annuity Compan? T he Co m p a n y o f Co - o p e r a t i o n Planning Ahead The man with initiative, the man who plans ahead and does things while others are thinking of them, is the man who makes the biggest success in the Life Insurance world. That is just what Des Bad as Auto Accident Moines Life and Annuity Cooperation is doing for its banker agents, and will gladly do for you. The man who would insure his automo bile can’t possibly explain why he wouldn’t insure his place of business or the property he owns. In the event of an accident, he can lose as much as a re sult of his ownership or tenancy of the property as he could as a result o f the ownership of the automobile. It is true that the chance of accident is not as great, but, on the other hand, his pre mium is not as great. In other words, while there is a ratio o f chance there is a corresponding premium ratio, and he pays less premium because there is less chance of accident. The important thing, however, is that there is not any ratio of difference as respects accident gravity and, if a $5,000 judgment would be seri ous as a result of an automobile accident, it would be just as serious as a result of an accident occurring on his property. It would help you analyze your field and determine its possibilities and then assist in the plans for producing business. Such is the kind of service we render willingly and gladly to all of our banker agents. J. J. Shambaugh, Pres. Des Moines Life and Annuity Company Des Moines, Iowa :u<sv Extending Business Frontiers High-pressure selling and marketing expendi ture in unprofitable areas is a national waste .— Herbert Hoover, U. S. Secy, of Commerce. A business does not consist of capital, build ings, machinery, stock and human personnel a business consists of customers and selling more to old customers. This, National Life salesmen are doing every day. So favorable are its lowcost policies that N. L. A. men experience little difficulty in selling additional insurance to old policyholders. One man in a small town in Texas confines himself solely to his home community and has averaged $22,792.00 per month for the 94 months of his contract. Opportunity Is Ringing Your Doorbell You can do as well as some National Life salesmen who increased their income by 50 per cent last year. A Na tional contract is your opportunity. Do not pass it by. Correspondence invited. AGENCY DEPARTMENT National Life Association H o m e O ffic e : Ve)BZ=^: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Des Moines, Iowa Top Contracts Available in Alabama Arizona Arkansas California Colorado Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Michigan Missouri Nebraska New Mexico North Dakota Oklahoma Pennsylvania South Dakota Tennessee Texas Washington Wyoming There isn’t as much chance of damage by tornado as by fire and, consequently, tornado insurance costs less than fire in surance. However, the extent of the dam age is not affected by the lessened chance of damage and it is quite usual to find most people carrying tornado insurance. The fact that, when the true values are explained to oAvners and tenants, they take this coverage is evidenced by the fact that some of our agents are Avriting it quite extensively. Conversely, the fact that some of our agents are not Avriting it at all is a fairly good indication that they haven’t explained these values and this coverage to the OAAmers or tenants of prop erty in their cities. Business Pays Good : d@* This business pays the same commis sion as does the automobile business, and much more than does the compensation business, and is usually renewed each year. January, 1927 THE Furthermore, this class of business takes comparatively little of the agent’s time, as Ave don’t have the change of car en dorsements and many assignments or pay roll audits and pay-roll adjustments to contend with. The man aaR o buys fir e insurance on a $5,000 property because it might burn doAAm, certainly Avould buy liability in surance if it Avas pointed out to him that an accident might happen that Avould cost him as much as his fire insurance Avould amount to, in the event of a fire. Why not specialize on liability insur ance for a day or tAvo, or even a Aveek, or month? It can be Avritten, it is being written, and you can Avrite it. Four Essentials ’Tis said that industry, initiative, brains, and Avhat in polite society is known as “in testinal fortitude,” will make a success of a man in business. I thoroughly believe this is true of life insurance. Our busi ness never whipped any man. The lack of one or more of these four essentials is the only thing that can ultimately make a man fail; and when one is not securing the results he should, the sane thing to do is, not to throAV up his hands and blame his hard luck and the difficulties of life insur ance, but to analyze himself thoroughly and learn Avherein he himself is falling down. H oav many failures do you know Avho Avere doing their talking to their pros pects, who spent very little time in their OAvn offices; Avho Avere constantly studying the business as Avell as Avays and means to get prospects, and who had the courage to keep on Avorking— even though the go ing did get tough at times? You must admit that the failures aaTlo showed these qualities Avere mighty feAv and far between. — Floyd Thompson in the New England NORTHWESTERN BANKER 67 Title Insurance eliminates wastes— reduces cost and time F o r the R eal E sta te In v e s to r There are five important points which commend Title Insurance to anyone owning or dealing in real estate: F irst— There is a thorough exami nation of title, once and forever down to a certain point. Second— There is an absolute guar antee, backed by the total resources of the Insurance Company, which is under direct supervision of the State. T hird— There is a saving of time and expense— two important items in business. F ourth— Great ease and cheapness in the making of mortgages and all subsequent transfers, where quick liquidation is desired. F ifth— Title Insurance is a busi ness asset, as all other kinds of insur ance are assets, enhancing the value of the thing it protects. Title Insurance D epartm ent Southern Surety Company 201 Y ou n germ a n B u ild in g DES M OIN ES IO W A Pilot. Added Service Pays A business man told us recently that he purchased îavo policies about a year ago from agents of different companies. The one agent brought his policy into the man’s place of business and said—“ Well, I see you are busy, so I will leave your policy with you.” The other agent called up the business man and asked him ten minutes of his time in order to explain some of the im portant things in his policy. When the appointment was granted, he brought the policy over and emphasized, in simple language, its main features. That business man said he Avould buy his next policy from the agent Avho had taken the bit of additional trouble to make the outstanding points in his policy plain to him, even though he realizes that the two policies are practically the same. —-(How to Hold Interest)— The Emanci pator. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis G R O U P IN S U R A N C E W h a t Are Y o u D oin g A b o u t It? Over 8,000 employers of the United States are carrying Group Insurance on the lives of 2,225,000 employees. This insurance covers whole groups of employees under a single contract without med ical examination, in amounts varying from $500 to $10,000 per employee. Includes total permanent disability without extra charge. The demand for GROUP INSURANCE for employees of factories, stores and business concerns of all kinds is rapidly increasing. It has proved of value to those who have adopted it and others will take it up as soon as they learn of its usefulness. Our book on “ GROUP LIFE INSURANCE’ ’ will gladly be mailed you without obliga tion. It will repay your careful reading. Because of our liberal contracts, sixtv years’ experience, unquestioned security and carefully trained personnel, the John Hancock Mutual Life Insurance Company of Boston can effectively handle your group insurance. A STRONG COMPANY Over Sixty Years in Business. Liberal as to Con tract, Safe and Secure in Every Way. L if e I n s u r a n c e C o m p a n y s of Bo s t o n . Ma s s a c h u s e t t s H ARRY S. HASKINS, State Agent 417-21 Southern Surety Building, Des Moines, Iowa 68 THE NORTHWESTERN January, 1927 BANKER For Bankers and Their Wants This department of THE NORTHWESTERN BANKER is to assist SUBSCRIBERS in obtaining goods or service hard to find. It is free to subscribers. Use it. ASK US, as we can tell you where to buy anything you need in your bank or for your bank. TELL US, as your “ want” will be published under the above heading free of charge. In answering classified advertisements which have key numbers please en close a two-cent stamp. This is used to forward your letter. Wanted: Ambitious man, preferably with bank or insurance experience, who is looking to the future to represent a rapidly growing bond house in Iowa. An exceptional offer awaits the successful applicant. In strictest confidence. Ad dress No. 2943, the Northwestern Banker— 1. Controlling Interest for Sale in good Minnesota bank. Purchaser may choose his official title. A modern home fur nished by bank. For complete details, write No. 2944, the Northwestern Banker— 1. Position Wanted: Cashier now em ployed wishes change. Twelve years’ ex perience. Best of references. Address No. 2945, the Northwestern Banker— Indef. Position Wanted as bookkeeper or assistant in bank in Iowa by young man nineteen years of age. High school and commercial school education and one year general banking experience. Rea son for change is desired for advance ment. Address No. 2946, the North western Banker— 1. Want to Buy check cancelling machine. Address No. 2947, the Northwestern Banker— 1. Position wanted as cashier or assistant cashier. Eighteen years’ experience in banking, eleven of which were as cashier in country bank. Married man. Can fur nish good references. Address No. 2948, the Northwestern Banker— 1. Position wanted as cashier or assistant cashier by man 32 years old. Ten years’ experience. Speaks German. Best of references. Address No. 2950, the North western Banker— 1. Wanted a few high-grade men to sell bonds. Men with banking experience pre ferred. Address No. 2949, the North western Banker— 1. We Appreciate the following letter just received: Omaha, Nebraska, December 4,1926. Northwestern Banker, Des Moines, Iowa. Gentlemen :— I want to thank you very much for running my ad in your good magazine. I have now located and would like to have you take out my ad. I may some time use it again as I think it is a serv iceable department and your maga zine a splendid one. Sincerely yours, (Signed by a Subscriber). Treasury during the trying period o f the Civil War. He was the oldest alumnus of Columbia University, having grad uated with the class of ’41 when that in stitution was known as King’s College. Since 1868 he was a member of the board of trustees of Princeton Univer sity. He knew Woodrow Wilson as a student, and after Wilson resigned to become Governor of New Jersey he served as president pro tern until the inauguration of John Grier Hibben. Mr. Stewart was of Scotch descent, his grandfather, William Stewart, who mar ried Kate Mclver, a daughter of the founder of the Cunard Line, was a resi dent of Stornway, in the Isle of Lewis— one of the outer Hebrides. Here, also, his father was born, and remained until early manhood, when he removed to New York and in 1813 married Mary Aikman, daughter of John Aikman. His brother, Admiral Edwin Stewart of South Orange, N. J., survives him, being the last of the family of seven. Admiral Stewart is the father of W il liam E. Stewart, Vice President of The American Insurance Company of New ark. At the time of his death, Mr. Stewart resided at 159 West 84th street, New York, and had a summer home at Mor ristown, N. J. Mr. Stewart differed from other aged men in that he had no recipe for longev ity. He says: “ I believe in moderation in everything, especially in eating anjd drinking. I have been careful on that score. I stopped smoking when I was twenty. Calmness and self-possession are also great assets.” The first man to quit work is usually the last man to be promoted. Better an ass that carries us, than a horse that throws.— Titcomb. Aged Banker Dead John Aikman Stewart, who until four years ago directed the activities of the United States Trust Company at 45 Wall street, New York, died December 16th. He was 104 years of age. He was still chairman of the board o f trustees of the Trust Company, of which he was the founder, and up until recently attended all important meetings. He is survived by children, grandchil dren, great-grandchildren, and greatgreat-grandchildren. Mr. Stewart was born the year after Napoleon’s death, August 26, 1822, at the family residence on Fulton street, New York. He was a close friend of Lincoln, and was Assistant Secretary of the https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 N ew Features: 2,6.6% greater size — 6 more painters — 5 0 % more color — all at the old price in Reed’s Mass-magazine Plan for 19 2 .7 . See it fo r yourself. Steel and Cooper Engraved S T A T I O N E R Y , B U S IN E S S ANNOUNCEM ENTS AND CARDS For quality work address The H o m e ste a d C om pany, D es M o in e s Sold in Iowa by J. H . W E L C H P R IN T IN G CO. 1166-68-70 Sixth Ave., Des Moines. Printers, Binders, Mfg\ Stationers. January, 1927 THE NORTHWESTERN BANKER South Dakota B ank N ew s Officers South Dakota Bankers Association President............................ Einer Johnson Volin Vice President........Harry M. Griffith Gettysburg EINER JOHNSON President Secretary........................Geo. A. Starring Huron Treasurer...............Geo. C. Fullenweider Huron GEO. A. STARRING Secretary W ould Safeguard Securities T HAS recently been recommended by E. A. Jones, state auditor for South Dakota, that legislative action at the coming session be taken on a simple sys tem which he believes will materially raise the character of South Dakota se curities in the eyes of the investor and prevent counterfeiting. As director of audits and accounts, Mr. Jones has become familiar with the sys tems used by counties, townships, school districts and municipalities in the han dling of their bonds and he states he in tends to propose a bill in the coming ses sion which will provide adequate safe guards. He says that his method of handling bonds under the proposed act is as follow s: I Several Suggestions First, that a certified copy of resolu tions authorizing each issue, after the is sue has been voted upon and passed, shall be submitted to the state auditor’s office to be officially recorded, and that accom panying their statement there shall be a certified copy of the legal opinions bear ing on the issue, together with a state ment of the investment banking house or bank or groups of banks stating the terms under which they will be bought. Second, that all bonds, or other certifi cates of public indebtedness, so issued, shall be printed on forms which are espe cially prepared for the state of South Da kota; these forms to be prepared from steel plates by some one of the bank note engraving companies that are equipped to guarantee the safe custody of original rolls, dies and plates. These forms, to gether with especially made coupon sheets, will be held in blank in the vaults of the state treasurer and will be fur nished at a nominal cost to the political subdivision under a plan which will make all parties concerned in the preparation of the securities responsible for every piece of paper used. Under this system, for instance, the city printing a bond issue would be re quired to return to the state treasurer’s https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis office all spoiled and unused sheets, to gether with the finished definitive bonds. In this way, Mr. Jones holds, a way is provided to prevent any extra bonds be ing turned out by any one connected with either the manufacture or sale of the bonds. Third, that all bonds so prepared shall provide for registration by the state au ditor’s office before they can be legally issued. Fourth, that any duplicate bonds Avhich may be required subsequent to the issu ance of the original issue for the purpose of replacing original bonds which may become lost by theft or fire, or otherwise, shall be printed only after the state audi tor’s office shall have been notified by the officials of the political subdivision and after an “ indemnifying lost securities bond,” which is to be written by any one of the surety companies authorized to do business in the state of South Dakota, shall have been furnished by the party who claims to have lost his securities, this bond to provide protection for the politi cal subdivision originally issuing the bond in case the originals of the securi ties which are claimed to have been lost or destroyed shall ever reappear and be cashed in error. This indemnifying lost security bond, which shall be written by the abovel-mentioned surety company^) shall be held in the custody of the state treasurer during the life of the outstand ing bond or bonds which may be thus duplicated. It shall be required that all such dupli cate bond certificates shall provide a space for the recitation of the facts that it is a duplicate bond issued in conform ity with the South Dakota state law and that proper and fully ample provisions have been made to protect any duly' reg istered holder thereof. Such duplicate bonds, of course, to be printed on espe cially protected border and coupon sheets of the state of South Dakota, but the color or borders and coupon sheets in this instance shall be different and distinctive in color from the borders of the original. 69 Fifth, that a penalty consisting of an ample fine and imprisonment of not less than two years and not more than ten years shall be provided for violation of this law for counterfeiters and those who directly or indirectly assist in counter feiting or selling or attempting to sell, or attempting to borrow on counterfeit bonds of the state of South Dakota, whether these bonds be now outstanding or are to be issued in the future. In speaking on the above five provi sions, which were prepared by Mr. Jones, he stated that the present method of us ing stock borders are dangerous and show extreme carelessness, in that any crimi nal can easily procure such forms from stationers in any part of the country. “ There is little doubt,” said Mr. Jones, “ that as South Dakota enjoys steady growth and prosperity there will be a proportional increase in borrowing by its various political subdivisions for their normal requirements to provide for growth and progress. With such a meas ure as described the securities of this state will be placed on such a plane as will inspire the utmost confidence in in vestment circles everywhere.” Urges Bank Law Repeal That the South Dakota bank guaranty law, as it now stands, should be repealed and that the depositors should stand their own losses, was the stand indorsed by delegates attending the Sioux Falls dis trict meeting of farm bureau directors and county agents at Sioux Falls re cently. This action reaffirms a resolution adopted at the state farm bureau meet ing held recently at Huron which was to the effect that no tax should be levied in order to make good the losses of deposi tors in closed banks. The Sioux Falls meeting, like several others over the state that have been called by State President R. M. Crowder of Elk Point, was for the purpose of dis cussing proposed legislation for the com ing session of the state legislature. 0. F. Thompson of Madison, in dis cussing the bank guaranty law, drew a parallel between the depositors in defunct banks and the farmers, declaring that many men have lost their fortunes in the last few years through farming and were never reimbursed. “ The farmer is not reimbursed in his losses, so why should the depositors be?” he asked. New Directors At a special meeting of stockholders of the Fidelity Trust and Savings Bank, Chicago, the board of directors was in creased from eight to eleven. The new members are R. B. Pearlman, David Saul Klafter and Rudolph Lederer. The vacancy in the board caused by the death of the late Forest B. Pratt was filled by the election o f Ernest Reichmann. T PI E NORTHWESTERN E S T A B L I S H E D 1879 The Responsibility of Your Chicago Correspondent Feeling that an added responsibility is attached to business transacted at a distance, the State Bank o f Chicago directs every consideration and atterr tion to the handling o f all o u t'o f town items. The ample resources o f this institution, its broad experience o f forty'seven years and its many facilk ties merit your consideration when selecting a Chicago correspondente The new State Bank o f Chicago building — now being erected a t L a Salle and Monroe Streets■ —will provide increased fa ' cilities for a constantly growing clientele. * H enr y A. H a u g a n Chairman Board o f Directors R alph V a n V echten President L eroy A. G oddard Chairman Executive Committee O scar H . H a u g a n Vice Chairman o f the Board State Bank of Chicago LA SALLE AND WASHINGTON STREETS Member Federal Reserve System Jf C apital , S urplus &c U n d iv id e d Profits O ver BANKER January, 1927 State Gas Tax South Dakota’s state gasoline tax for the past fiscal year, gave the state high way commission a net credit of $1,957,495, according to the figures of the state treasurer’s office. During the year the total number of gallons taxed was 76,970,318, while the gross tax receipts were $2,309,110.51. Gasoline used for industrial purposes ex empted from the tax totaled 10,785,2651/2 gallons, while the refund on exemptions was $323,557.96. The cost of collection was $12,615.17. New Beet Factory A neAV million-and-a-half-dollar sugar beet refinery is to be constructed at Belle Fourche, S. D., by the Utah-Idaho Sugar Refiners of Salt Lake City. The South Dakota tax commission and Chicago & North Western Railroad offi cials agreed upon construction in the state, assuring the construction of the plant. Establishment of the refinery was con tingent upon the building of two spurs by the railroad, which refused to con struct them pending adjustment of the railroad’s assessment. South Dakota Taxation An interesting set of charts on the status of taxation in the state of South Dakota, has recently been prepared by C. J. Carlson, of the state tax commis sion. His charts cover the year 1925 for all purposes. The figures given for schools do not include expenditures for the state edu cational institutions, these figures being included in the state expenditures for or dinary purposes. The school figures given are the expenditures by local tax ing districts for their local schools. In the division of $100 of taxes, the percentages are: State ordinary......................... $ 8.18 State bonds andspecial.......... 6.52 Counties ................................... 24.98 Schools ..................................... 42.74 ......................... 5.93 Townships Cities and towns..................... 11.75 The state bond and special is to care for bonds which have been voted by the people of the state, and covers the bonds for the soldiers bonus, highway work cement plant, and land settlement for the benefit of soldiers. In dollars the «expenditure for the dif ferent items are shown to have been: State ordinary.............. $2,772,311.20 State bond and special.. 2,209,173.45 Counties ....................... 8,433,139.00 S c h o o l............................14,484,299.13 Township ..................... 2,009,882.18 City and town................ 3,980,638.12 $10,000,000 Pleasure is far sweeter as a recreation than a business.—Hitchcock. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 THE NORTHWESTERN BANKER W. E. Hardy, of Lincoln, a merchant, has been appointed a director of the Omaha branch of the Federal Reserve Bank of Kansas City, for a term of three years. N ebrask a Hank News Officers Nebraska Bankers Association C. R. BLISS President President.................... Clarence R. Bliss Elm Creek Chairman of the Executive Council....................... A. R. Thompson Hastings Secretary............................ W. B. Hughes Omaha Treasurer................... .............J. B. Owen Omaha General Counsel.................. J. P. Palmer Omaha Banks of Alliance and Scottsbluff, in western Nebraska, have announced their total of clearings for October and No vember, reflecting the sound condition of business in their districts. In Alliance October clearings were reported at $1,008,000, and November, $910,553. In Scottsbluff the October clearings were $1,940,026 and the November clearings, $2,027,808. Bankers on the industrial committee of the Omaha Chamber of Commerce, con cerned with seeking new industry for the city and fostering those already located in Omaha, are James B. Owen, stock Yards National Bank; Fred W. Thomas, First National Bank, and E. T. Rector, who is a director of the Omaha National Bank. Otis Alvison, cashier of the Omaha Na tional Bank, has been appointed to a place on the committee on postal facili ties of the Omaha Chamber of Commerce. Clarence G-. Bliss, president of the City Bank of Elmcreek, Neb., newly elected president of the Nebraska Bankers Asso ciation, was a recent visitor in Omaha, discussing state bank association plans for the coming year with Secretary W il liam B. Hughes of the association. Alan Wolcott, formerly with the United States National Bank of Omaha, has been elected secretary of the Junior Chamber of Commerce of Omaha, assum ing his new duties December 1st. At the call of Guy C. Kiddoo, vice president and trust officer of the Omaha National Bank, and chairman of the civic affairs committee of the Omaha Chamber of Commerce, fifty business and profes sional men of the city attended a dinner and discussion of bettering Omaha’s traf fic facilities, recommending the opening and widening of several important through streets. Walter W. Head, president of the Omaha National Bank, was appointed by Governor McMullen as the official repre https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 71 WM. B. HUGHES Secretary sentative of the state of Nebraska, at the welcome to Santa Claus when he drove his reindeer into Omaha December 4th. D. P. Hogan, president of the Federal Land Bank of Omaha and of the Federal Intermediate Credit Bank of Omaha, was in Washington early in December, as one of the representatives of the Mis souri valley states in the successful fight to win from the United States Senate, ap proval of the plans for making the Mis souri river navigable from Kansas City to Sioux City. Contractors erecting the new Union State Bank of Omaha building, placed electric lights and labored 24 hours, Christmas week, in order to complete set ting the Bedford stone exterior up to the third floor. It is planned to build a wooden “ cocoon” around the seven-story structure, so that the building may be heated and work pushed during the cold weather for completion by May 1, 1927. The Security State Bank of South Omaha, Neb., has changed its name to the South Omaha State Bank. The an nouncement of the change was made by John S. McGurk, president of the bank, who was the principal buyer when the bank was taken over early in the fall. “ We feel that the change in name will ally us more closely with the business of South Omaha,” said Mr. McGurk. “ It will also tend to locate our institution more definitely in the mind of the public. No changes have been made in officers or directors.” FIFTY YEARS A G O IN NEBRASKA By Geo. F. Saivyer President, Saline County Bank Western, Nebraska My first experience in the banking business was from outside the bank counter, when I borrowed $15.00 from a bank in Crete, Neb. I was then liv ing in our dug-out. Clothed in the garb of the pioneers of more than fifty years ago, I was probably not a very promising risk. However, I succeeded in persuad ing the cashier that if I would get a good signer on the note he would let me have the money. As time went on, my circumstances grew better and I became a speculator. I borrowed from L. E. Southwick at Friend, Neb., without a signer, $100.00 with which I bought a team of horses. I soon after sold the poorer of the two for $90.00. The better one, tiring of life, died. I paid the note and interest, and I thought L. E. looked as well pleased to get the money back as he did when he let me have the $100.00. He had prob-. ably heard of the death of that noble animal. I have owned many horses since, some died, but none left the lasting, burn ing memory on my mind that that money and horse transaction did. L. E. and I are now nearing the end of the trail, each hoping that the winds which fill the life sails of the other, will be the gentle winds which will carry us to the other shore. I am now and have been for more than forty-one years, president of the Saline County Bank at Western, Neb., a small town seven miles from the land I home steaded more than fifty-six years ago, and on which we lived in our dug-out for five years. The bank has a capital paid in of $30,000.00, surplus paid $30,000.00, always some undivided profits, resources nearly $400,000.00. The combined age of my wife and my self is nearly one hundred sixty years. We have watched four daughters and two sons grow to strong, healthy woman hood and manhood, all in good homes, all in business for themselves, all doing better than we did at their age. We are surrounded by neighbors, some of whom we have known for more than fifty years, to whose honesty, loyalty and fair dealing I owe much of my success. * 72 THE NORTHWESTERN BANKER January, 1927 Forecasting Business Conditions USINESS statsitics, however pains taking- their preparation may be, do not to any great degree foretell the future, but the reliable statistical services do materially assist the business man to read the signs of the times, T. Bruce Robb, professor of statistics and business research of the University of Nebraska, told the Nebraska Bankers Association in convention in Lincoln. Much of Mr. Robb’s address was illus trated by the use of charts and methods employed by Babson’s, Brookmire’s and the Harvard research bureaus, and can not be reproduced in type. But his in troductory remarks, in part, were as fol lows : “ Ex-President Hadley of Yale Univer sity, has said that The success or failure of a man engaged in manufacturing, in transportation, or in agriculture, depends more upon his skill as a prophet than upon his industry as a producer.’ “ An investigation made by the Babson Statistical Organization, covering 400 concerns in 26 industries, showed that 57 per cent of business profits resulted from changes in conditions outside the busi ness, while 43 per cent were due to in ternal operating efficiency. “ Arthur Reynolds, the eminent Chi cago banker, said recently in System: ‘ There is a lot of talk about the two-forone ratio of current assets. Today that is a hollow expression. The relation of assets to liabilities has a bearing on bank ing relations, but it is secondary to the great economic forces which must be con sidered in relation to a business. These forces may be local. They may be na tional. They may be international.’ ‘Bankers are vitally interested in busi ness, for the banker is the financial B PROF. T. BRUCE ROBB backer, and consequently the financial counsellor of the business man. The busi ness man has been called ‘the pivot of the whole economic mechanism, for it is the function of the business man to combine all the elements of production so as to obtain the best possible results from them.’ “But what has all this to do with busi ness forecasting? The relation is this: The business man is the primary risk bearer in economic society. When we say ‘business man’ we include the farmer, for a farm is one of the best examples of a business unit and the risks and uncertain YOUR STOCK YARD COLLECTIONS Promptness guaranteed in handling your LIVE STOCK PROCEEDS Live Stock National Bank U n ion Stock Y a rd s — O m a h a https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ties of farming closely parallel those of other lines of business. The return that goes to the business man is profits and profits are proverbially uncertain. Profits are the reward for risk bearing. The risks of the business man are of a two fold nature. In the first place, goods must be produced in anticipation of de mand. In the olden days when our great grandfathers wanted a pair of shoes, they gave an order to the cobbler and he pro ceeded to make them; today, when we want a pair we drop into a shoe shop and find they are already made for us. This is the great age of capital and because of this production today must take place in anticipation of demand. The conse quence is that when the future demand is misjudged, loss is the result. In the sec ond place, it takes time to produce goods. Business is profit seeking and profits are the difference between costs of produc tion and selling prices. Costs of produc tion are matters of today as the business man contracts for raw materials, labor, and the other elements entering into pro duction. On the other hand, selling prices are a matter of the future, for the manufacturing process or the produc tion of crops on a farm requires time. It is this lapse of time between produc tion costs and selling prices that makes the business man so apprehensive of the future. He is constantly peering into the future and wanting to know how business will be, which to him largely means what will be the demand for his product and at what prices. “ The risks and uncertainties o f busi ness are largely connected with the fu ture. The business man must forecast the future. We are dealing with no theory today. As Grover Cleveland said, ‘it is a condition and not a theory that confronts us.’ The business man may guess what the future will be; he may have a ‘hunch,’ or he may arrive at his conclusions in some other way, but the fact remains that he must forecast the future. “ Consequently we hear a great deal these days about the business weather. Can it be predicted? About 1870 Con gress appropriated money to establish the weather bureau and since then rapid strides have been made in weather pre diction. Before the Civil War the old family almanacs at various places con tained statements like this: ‘About this time expect rain.’ Today when a farm er’s corn is burning up he doesn’t look at some old almanac that had been printed for more than a year to see if it is go ing to rain—he looks at the daily paper to see what the weather bureau says. Sometimes the weather bureau is wrong and yet we all agree its work is of great value. THE January, 1927 “ The weather bureau uses scientific principles in predicting the weather. Us ing scientific principles, what has been accomplished in predicting the business weather? That is the subject I have been asked to discuss with you. “ In attempting to forecast future con ditions, business men make use of current business statistics. Let us look for a minute at how this is usually done. Stu dents of business statistics distinguish between what they call business ther mometers and business barometers. You know what a thermometer is— it meas ures present temperature, but it throws no light on what the temperature at a future date will be. On the other hand, a barometer is something that antici pates a future condition. In considering current business statistics, it is very necessary to know what things measure nothing more than the present activity of business and what things actually fore shadow the future. “ Let us examine a few of the best known series o f current business statis tics and consider how much they help us in seeing into the future. Since prob ably 90 per cent of business is done with checks, the fluctuations in check transac tions are one of the best indicators of business activity. Check transactions are an admirable measure of the present sit uation, but they tell little as to the fu ture. They tell us no more as to what NORTHWESTERN BANKER business will be three months from now than a thermometer will tell us how the weather will be three months hence. In fact, indices, like check transactions, may mislead people as to the future, for hu man beings are prone to assume that present conditions will extend indefinitely into the future. “ Car loadings, as reported by the rail roads, are one of the most widely used indices of business. Only a few weeks ago we all read in the newspapers that weekly car loadings had passed the mil lion mark for twenty consecutive weeks, while at the same date last year there had been only twelve such weeks. It is diffi cult to think o f anything that we eat, anything that we wear, or anything that we read that is not touched by the rail roads in one form or another. For that reason car loadings are certainly one of the best indicators o f present business activity. But because railroads are hand ling much or little freight today is little indication of what they will be doing in six months. Car loadings measure the present, but they do not predict the fu ture. “ Changes in commodity prices are given the closest study by students of this sub ject. Business men now have splendid sources of information as to the move ment of commodity prices for Fisher’s in dex number is published every Monday and Bradstreet’s index and the one by 73 the Bureau of Labor Statistics are pub lished monthly. The raw materials of manufacture are heavily represented in these various indexes and the prices of these raw materials are very sensitive Ordinarily, when business is expanding, commodity prices advance. This must be so, for when business is expanding there is an increasing demand for the raw mate rials going into manufacture. On the other hand, when manufacturing output catches up with consumption capacity, stocks of goods tend to accumulate and production schedules are reduced. Since the prices of the raw materials entering into manufacture are very sensitive, they show very quickly when industrial activ ity slackens. Falling commodity prices are often valuable as a confirmation of business recession, but it is evident that they tend to follow after recession rather than precede it. It should also be noted that these relationships do not always hold, for commodity prices have been sag ging for a year in the face of the recent expansion of business. “ The iron and steel industry has long been considered a business barometer. Our material civilization is built on iron and steel. Iron and steel are the raw materials for the manufacture of automo biles, the building industry, farm imple ments, railroads, and many other things. When the steel industry is expanding, it must mean that the manifold fields of The Future’s Promise is best judged by the record of past performance. The continued patron age of our correspondent banks is proof of their satisfaction. The Om aha National Bank W A L T E R W . HEAD, President 5 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 74 THE industry that use steel as a raw material are also very active. But it is easy to see the limitations of such a so-called barom eter, for since steel is a raw material for these other industries its fluctuations would follow, not precede the expansion and contraction in these other lines. Steel production, then, instead of antici pating changes in business, tends rather to lag after them. But like commodity prices, it is so sensitive to these changes that we scarcely realize that business is expanding or contracting until we see the effect on the steel industry. “ We have pointed out the characteris tics of a few of the best known indices of business. Many more could be enu merated if time permitted. It is appar ent that whether you consider any one of these alone, or all of them together, there is little about them that foretells the future in any genuine sense. Yet it is such current business statistics that the most reputable forecasting agencies use. How then do they do it? I hope you un derstand that I am not trying to sell any of these agencies to you. What I will try and do is to describe how they are con structed and attempt to indicate the de gree of reliance that can be placed in them.” Editor’s Note:— The remainder of the address consisted of a discussion from charts of the methods and results of the NORTHWESTERN BANKER Babson, the Brookmire, and the Harvard agencies for forecasting business condi tions. charge. He is former county agent of Webster county. W. 0. Shane, for 49 years with the Omaha National Bank, and oldest in point of service of all its employes, re cently resigned as paying teller, and in future will devote all his time to work as a handwriting expert. Mr. Shane has been in much demand, in recent years, for expert opinion on handwriting. He made an exhaustive study of the subject for 29 years, from the time he became a teller at the bank. The guaranty fund commission of Ne braska has taken charge of the Farmers State Bank of York, and will manage the institution until it is reorganized. Gf. R. Buckner, for the commission, was placed in temporary charge of the bank. Mrs. Mary Hroch, wife of Charles Hroch, cashier of the Bank of Weller, Neb., died December 14th. The First National Bank of Plattsmouth, Neb., has been closed, and W il liam Wallace, national bank examiner, is in charge, following decision of the di rectors December 14th, when there was a mild run on the bank. Suit brought by the county treasurer of Cass county for return of a deposit, is believed to have caused the run. Directors hope to re open the bank. It has deposits of $250,000. II. N. Dovey is president of the bank. He is the son of E. G. Dovey, who founded it. J. W. Weiland, cashier of the Deuel County Bank at Chappell, Neb., has sold his stock in the bank to Clyde M. Empson, who has succeeded him as cashier. The Tri-County Bankers Association, in western Nebraska, met at Sidney De cember 16th to elect officers for the com ing year. Improvement of banking serv ice, and the bank guaranty fund ad ministration were discussed. W. M. Rodman, Kimball, was made president ; F. N. Slawson, Sidney, vice president, and F. C. Harris, Potter, secretary-treasurer. “ Year after year skirts grow shorter. What will be the ultimate effect ?” “ I don’t know,” answered Miss Cay enne, “unless each flapper hoists a parasol and calls it a petticoat.” A branch of the Federal Land Bank of Omaha was established at Hastings, Neb., January 1st. Henry R. Fausch is in O N January, 1927 the books o f T he B an k of A m e r ic a are the names o f eus- tomers whose accounts have been here for more than a century,— tangible evidence o f confidence earned by a record o f sound, conservative and progressive management. A TE W BUILDING o/ T hE BANK at W all, 1William and Pine Streets, 7\[ew T o r\ City'— the fourth home of the B an\ on the same site since 1812. T oe A m e r ic a https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis CJhe BANK of AM ERICA NEW YORK Capital, Surplus and Undivided Profits Over $11,000,000 January, 1927 THE NORTHWESTERN BANKER M in nesota Bank News Officers Minnesota Bankers Association President................. R. E. Macgregor Minneapolis Vice President..........A. G. Wedge Park Rapids Treasurer........... ....... A. M. Schaefer Jordan R. E. MACGREGOR President Secretary....................P. P. Fellows St. Paul F. P. FELLOWS Secretary Says Farmer W ill Solve His Problems ESPITE many farm and bank fail ures in the northwest, the future of agriculture in that section is bright, E. W. Decker, president of the Northwestern National Bank of Minne apolis, declared recently in an address before a group of farmers in St. Paul. He said, in part: “ In view of the adverse conditions which have existed in agriculture for some years past, I have a very profound respect for the man who has succeeded not only as a farmer but has also suc ceeded as a man, and I understand our guests are not only successful farmers, but are successful and well-rounded citi zens. Certainly no business commands more dignity and respect than farming. I am particularly interested in it be cause my father, who died within the year, at the age of 94, was a farmer for 80 years, 10 in New Jersey and 70 on the same farm in Minnesota. I spent the first 18 years of my life on this farm, learning to milk a dozen cows in the morning and walk two miles to school through the deep snow. Subsequently, with 39 years in the banking business in Minneapolis, I find that there is plenty o f hard work for both the farmer and the banker. D Why Farmers Fail “ No doubt many farmers have failed to succeed because of short crops and ad verse conditions over which they had no control, and no doubt many have failed because of the lack of either industry or efficiency of management. The same can be said of banking— no doubt many banks have failed, due to poor crops and adverse conditions, and no doubt many more have failed because of poor man agement, due perhaps to lack of proper equipment. The banking situation can be improved materially, in my judgment by requiring larger capital and closer and more frequent supervision, but this is not the place to d’ scuss those points. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “ However, in spite of the many farm failures, and in spite of the many bank failures. I have as much confidence in the future of agriculture in the Ninth Fed eral Reserve District, and in the future of banking in this district, as I ever had —really more confidence than ever. “ This dinner is a testimony to the fact that there are plenty of successful farm ers in our midst, and I can assure you that there are also a great many good banks in this district worthy of confi dence and support by the people. “ The financial and economic difficulties which we have all faced since the armis tice was signed, eight years ago this month, have been greater than during the four years of actual war. This is proven by the fact that the warring nations have increased their national debts and their currency circulation more since the ar mistice was signed than they did during the war itself. Having this in mind, the acid test which has been applied to in dustry and agriculture for the last eight years has been extremely severe. Increasing Production “ We were obliged to increase produc tion in both agriculture and industry tre mendously, in order to help win the war, and after its conclusion we found our selves possessed of more facilities than were needed. In industry, keen compe tition and the necessity for reducing over head was met, partially at least, by con solidation, thus reducing the units in proportion to the output. In agriculture this was practically impossible. “ According to figures presented by the National Industrial Conference Board under date of 1926, in farming today 60 per cent of all the men engaged are em ployers including tenant and 40 per cent are employes. In industry, not more than about 10 per cent are employers and 90 per cent employes. We must concede that it requires an abler and better equipped man to be an employer than 75 an employe. Therefore, it seems to me, we must conclude that the average cali bre of a man to be successful in agricul ture must be higher than the average of all men engaged in other pursuits. “ The employe gets his instructions as to what to do, and how and when he is to do it; the employer must do the planning; exercise unusual executive ability, and take the responsibility of the results. The farmer, whether he owns his land or is a tenant, must do his own planning, must make his own decisions and must, assume full responsibility. Therefore 60 per cent of the men engaged in agri culture must be good executives and good bosses, whereas, in other pursuits, it is only necessary that 10 per cent should possess these qualifications. High Cost of Labor “ No doubt one of the farmer’s prob lems has been due to the high cost of labor which he employed, and in this connection it would seem that we were justified in asking for an amendment to our immigration laws, which would per mit the admission of additional numbers from those nations that usually supply our farm help. “Again, industry not only consolidates but cooperates; surely the farmer has the same right in this respect, and doubt less could benefit himself by making a closer alignment with others in his own line of business, both in connection with planting his crops, disseminating infor mation and, under efficient and experi enced management, a certain amount of cooperation in marketing. It is a ques tion, however, whether the present ma chinery, which has been in operation for many years, for the marketing of grain, is not as efficient and as satisfactory in results to the farmer, as any method he could devise for himself.” Is Mellon’s Assistant Carl Schuneman, third vice president of the Schuneman & Mannheimer Com pany of St. Paul and a director of the National Exchange Bank, has been de signated by Secretary of the Treasury Midland National Bank and T rust C ompany i Resources $22,000,000.00 I MINNEAPOLIS TH E 76 Mellon as second assistant secretary of the treasury to succeed Judge McKenzie Moss. Mr. Schuneman will have charge of matters relating to internal revenue. Make Farm Land Survey Farm land sales in Minnesota are fairly active, according to a questionnaire sur vey recently completed by the Minnesota Realty Association. According to the survey, a total of 29,280 acres which have changed hands, has brought the total of farm land activity during 1926 to $7,718,300. The questionnaires were returned by real estate men and banks who are cooperating in the statewide NORTHWESTERN BANKER survey being made by the Minnesota Realty Association. unimproved land, to $175 an acre for well de\reloped property in Houston county. The additional 29,000 acres brought a total of $1,702,500, according to compila tions made in the office of Ruth B. Green secretary of the state association. The average price was around $55 an acre, but a considerable portion of the land in volved was wild and cutover property in northern Minnesota, purchased by farm ers who plan to develop it and put it on a production basis. Dr. P. C. Pilon has been made presi dent of the Security State Bank of Paynesville, Minn. He succeeds Anton Schmitt who died recently in St. Cloud. Mr. Schmitt was also president of the Lake Henry State Bank. A total of 241 farms were involved in the later reports, with prices ranging from as low as $5 an acre for the Avild. TH E N A T IO N A L P A R K BAN K of N E W Y O R K Established 1856 U p to w n Offices A venue and Seventh A venue 46th Street and 32nd Street D IR E C T O R S Banking In All Its Branches Charles Scribner Richard Delafield Commercial and Travelers’ Cred Francis R. Appleton it issued; Correspondents in all Gilbert G. Thorne principal Cities Foreign sold. in the W orld. Exchange Corporate bought and and Personal T rusts; Safekeeping of Securi Cornelius Vanderbilt Thomas F. Victor John G. Milburn William Vincent Astor Joseph D. Oliver Lewis Cass Ledyard, Jr. David M. Goodrich ties ; Collection of Income, Invest Eugenius H. Outerbridge ment Kenneth P. Budd Service for Customers. John H. Fulton Safes in our Safe-Deposit Vaults Frank L. Polk at moderate rental. Benjamin Joy C a p ita l, S u rp lus and U ndivided Profits, $34,000,000 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis F. E. Bengston has resigned as cashier of the Merchants State Bank at Eliza beth. A consolidation of the Federal Dam State and the First State Bank of Boy River, has been effected in that toAvn The neAv firm will continue as the First State Bank. Organizers have applied for a char ter for the proposed new Home State Bank at Middle River. The application has been signed by Evans Evans, Joe Carire, Anton Yngve, Knute Nelson and Henry Young. All are of Middle River. J. M. Evans, who was formerly assist ant cashier of the First State Bank of Woodlake, has become connected with the First State Bank of Crosby. 214 B r o a d w a y P ar k January, 1927 A consolidation has been effected at Breckenridge, betAveen the Breckenridge National and the Farmers and Mer chants State Bank, under the latter’s name. Revive James Story Revival of interest in the celebrated Northfield bank robbery in September, 1876, brought about through the looting of the Olmsted County State Bank at Rochester, has disclosed an interesting angle hitherto but little heard regarding the Northfield affair, says the Albert Lea Tribune, Albert Lea, Minn. According to a pamphlet received from the editor of the Northfield News, pub lished at the 50th anniversary of the James-Younger raid, Dr. H. M. Wheeler, one of the town’s defenders, killed Clell Miller, a member of the bandit gang and still has his skeleton. Wheeler, a young man at the time, stood in an upstairs window across the street and calmly tried to pick off the robbers, one by one. He killed two and perhaps wounded others. Clell Miller was one of those he brought down to death. How Wheeler came into possession of Miller’s skeleton, is told by George Doty of the First State Bank of Northwood, Iowa, who has talked frequently with people familiar with incidents in con nection with the Northfield raid. “ In those times,” said Mr. Doty, “ as I under stand it, medical students had to provide their own cadavers for experimental pur poses. Wheeler was then a medical stu dent at the UniversitA^ of Minnesota. January, 1927 THE NORTHWESTERN BANKER Shortly after the Fank robbery attempt, weight, and other varieties of live stock Wheeler was riding to Minneapolis with declined in price as compared with Octoanother medical student. ‘It is hard to . ber median prices. It is noteworthy that find a cadaver/ said the other student. as compared with a year ago, price ‘I do not find it so/ replied Wheeler. ‘1 changes of live stock exhibited as many just go out and shoot them and get them gains as losses, so that the live stock price that way.’ ” situation in general was fully as favor “ Well, the story goes,” continued Mr. able as in November of last year. Ship Doty, “ that Wheeler dismembered the ments of stockers and feeders during Miller corpse in his medical studies and November were nearly double the total finally when the bones were stripped dry, for the same month a year ago, hog ship he decided to keep the skeleton as a ments alone being r: >re than three times curio. He subsequently moved to Grand as large as last ve Forks, N. Dak., where it continued in his in this district i ¡in receipts at ter possession. minals continued to ex. ;bit totals below “ However, I have heard a little addi a year ago, the Volume n November be tional to what the Northfield News has in ing one-third below last v.',;r. This has its pamphlet. One day a little bent old been reflected in carloa^. -g for grain women came to the office of Dr. Wheeler and grain products, which were 27 per at Grand Forks and said, ‘Doctor, I want cent below last year when comparing the to take my boy home.’ Dr. Wheeler first three weeks of November in each thought that the visitor was a trifle out year. The median prices of the grains of her head. ‘I haven’t got your boy/ he during November as compared with a replied, ‘and I haven’t anybody else’s boy.’ “ ‘Yes, you have/ she replied, pointing to the corner of the office. ‘He is in that closet there.’ It was Clell Miller’s moth er and the doctor turned the skeleton over to the old woman who took it away and gave it respectable burial some place.” year ago declined 15 cents for wheat, 18 cents for corn and 34 cents for flax, and increased 23 cents for durum, 14 cents for rye, 6 cents for oats and 1 cent for barley. As compared with October medians, small declines were shown for all the grains, except durum and flax. Grain stocks in terminal ele vators at the end of November equalled those at the end of October and were 10 per cent greater than last year. The physical volume of business, as measured by carloading for the average working day during the first three weeks of November, was slightly larger than a year ago. Gains in carloading were shown for live stock, coal and coke and merchandise in less than carload lots. Reported shipments of linseed products and of flour were respectively, 35 and 17 per cent lower in November than a year ago. The money value of business trans- Reviews Business Conditions The past year has been a profitable one for livestock feeders and shippers, ac cording to last month’s summary of busi ness and agricultural conditions of the Federal Reserve Bank of Minneapolis. Dealing with this topic in part, the sum mary said: The outstanding event of November in this Federal Reserve District was the marketing of all classes of live stock in very large amounts. The total number of head of all varieties received at South St. Paul was 24 per cent over a year ago. Hog receipts reached record breaking to tals for November and were 49 per cent larger than in Ooctober in number of head. However, owing to the large pro portion of stock pigs received, average weights were much lighter than a year ago. These extraordinary receipts of live stock were reflected in the check payments through banks in the cities having live stock terminals, the gains in individual debits over November of last year being 23 per cent for South St. Paul and 10 per cent for Sioux Falls. In the face of such heavy marketing some price declines were inevitable. Median hog prices dropped $1.50 per hundred- Ten nationally'known paint' ers—twice as many as before — helped to make R eed’s Mass'magazine Plan for 19 27 . S e e ‘ it f o r y o u r s e lf. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 77 The service that corre spondent banks require is facilitated by the personal interest of our officers. THE NORTHERN TRUST COMPANY Capital, Surplus and Undivided Profits, over $7,500,000 C orner L a S a lle an d M onroe S tre e ts C H IC A G O T HE 78 acted in this district, as measured by check payments through banks in 17 cities, was below that in November a year ago, declines being shown in all re porting cities except Billings, Fargo, Hel ena, Minot, Superior, La Crosse, Sioux Falls and South St. Paul. Of these the first four named are in the wheat belt, and the last two named have live stock receiving terminals. Sales at retail, ac cording to preliminary reports made to us by department stores located in 12 cities within this district were 6 per cent smaller than a year ago. North Dakota’s Advantages North Dakota has a vast fund of things which go to insure the state’s full meas ure of peace, happiness and prosperity. Governor A. G. Sorlie said recently in a radio address over Station WMAQ in Chicago. Commenting in particular on the mistaken impressions most people have concerning North Dakota, the gov ernor said, in part: “ The erroneous ideas prevalent in all sections about North Dakota are a source o f amusing astonishment to most North Dakotans. We cannot understand how people can hold to such blissfully igno rant ideas. To many people, North Da kota means nothing but furious bliz zards, bitter cold, stark poverty and everything else that is undesirable and hopeless. The only picture they can NORTHWESTERN imagine is of a vast sweep of perpetually frozen, unproductive prairies and a popu lation that is composed of primitive In dian and radical bolshevist, living on the verge of imminent bankruptcy. “ Perhaps we North Dakotans are some what to blame for permitting such igno rant ideas and gross misrepresentations to exist. The truth is that we live in such comfort and contentment and we are so busily engaged in producing the things that make it possible for the rest of the country to live that we have not taken the time to broadcast the facts re garding our state. We have been work ers, not boosters. “ The majority of North Dakota citi zens,” Governor Sorlie said, “ come from England, Scotland, Wales, Norway, Swe den, Denmark and Germany, and have brought with them the ideas of culture music, art, poetry, and folklore which exists there and are doing much to place North Dakota’s cultural standards on a par with the highest anywhere. “ The 70,000 square miles of land in North Dakota make it larger than New York, New Jersey, Connecticut and Mas sachusetts combined, he said, and the state has more than 40,000,000 acres of til1able land with 64,000 farms and 17,000,000 acres under cultivation. “ In addition to growing annually more than 100,000,000 bushels of hard spring wheat, North Dakota grows one-half of THE HANOVER N A T IO N A L BANK OF TH E C IT Y OF NEW Y O R K Established 1851 Capital , . . $5,000,000 Surplus and Profits . $26,000,000 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKER January, 1927 the flax raised in the United States, more winter rye than any other two states, and ranks among the highest in the production of oats, barley and other small grains.” Farm Congress The Tri-State Farm Congress will hold a meeting in Fargo, January llth-14th, at which time the quality and standardiza tion of farm products will be discussed. Rox E. Willard, farm economist at North Dakota Agricultural College, is to speak on prospects for agriculture and the indications as to the trend of different crops and live stock at the opening session. A committee appointed by Governor A. G. Sorlie, the Greater North Dakota As sociation and the North Dakota Agricul tural College, will make its report to the gathering on the importance of the deep waterway to North Dakota. Banks Reopen The Farmers State Bank of Yale, S. D., which recently closed its doors, has been reopened for business. Also, the Farmers and Merchants State Bank of Britton, S. D., has been reopened. Correct “ Could I see General Blank?” “ I am sorry, but General Blank is ill today.” “ What made him ill ?” “ Oh, things in general.” January, 1927 T IIE NORTHWESTERN BANKER cannot pare our expenses more and con tinue to give good service. Some of the more profitable lines of banking are now carried on by non-banking financial in stitutions. It is unthinkable that we must carry on a side line to support banking operations. Therefore, is it not true that worth while service should be paid for by the party receiving the same ?” The advertisement headed: North Dakota B a n k N ew s Officers North Dakota Bankers Association President...............................H. T. Graves Vice President and Chairman Execu tive Council...............George H. Leick Hebron Treasurer.................................J. E. Davis Goodrich H. T. GRAVES President Secretary..................... W. C. Macfadden Fargo W. C. MACFADDEN Secretary Telling the Public About the Service Charge HAT the public can be thoroughly sold on the benefits and reasons for the service charge, is the belief of the North Dakota Bankers Association, which recently got out seven short essays on this subject, for use by their banker members. In commenting on this series, Secre tary W. C. MacFadden says: “ These ads are prepared in the hope that if they are printed in every county in the state consecutively, they will help the customers of the banks to understand the banker’s problems better than they apparently do now.” The first of the ads is headed: T MAKE THE BANKS SAFER BY MAK ING THEM PROFITABLE and one of the paragraphs reads: “ Our depositors have a right to expect that we conduct our business along profit able lines; that our profits will absorb the losses sustained by reason of indus trial and agricultural depression. Most of them have given us ample time in which to rearrange our affairs to meet the changed conditions. I f we therefore did not change our methods of carrying on our business and continued to render invaluable and essential service to the public at the expense of the stockholders and depositors, would we not be display ing a high degree of incompetency?” The second ad reads : WHAT A BANK SELLS “ A bank is an institution that buys' and sells CREDIT. “ The compensation that a bank re ceives and pays for Credit is known as INTEREST. “ In addition to being a dealer in credit a bank usually also sells SERVICE. There are really two separate and dis tinct departments in every well regulated bank, and that is, (1) the Credit Depart ment; and (2) the Service Department. “When you borrow money, or lend https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 79 money, at a bank you are dealing with the Credit Department. “ On the other hand, when you go to a bank and make a checking deposit, or to buy a draft, or to pay your taxes, or to apply for an automobile license, or to withdraw your state hail, or to have legal papers drawn up, etc., you are then deal ing with the Service Department of your bank. “ The Credit Department of a bank is supported by the income from credits that the bank collects from its borrowers in the form of interest. “ The Service Department of a bank must necessarily be supported by an in come in form of fixed charges for each kind of service rendered by that depart ment to its customers and patrons. “In past years, when interest rates, bonuses, and commissions received by banks were considerably higher, it was the practice of many banks to render a great many services to its customers free of charge, and let the income from the Credit Department support the Service Department of the bank. “ However, such an arrangement was clearly not fair, as the customers that patronized the Credit Department felt that they were therefore also paying for the overhead expenses of maintaining the bank’s Service Department. “ It is therefore only just and fair that each department of a bank sustain itself. Since banks are in the business of selling service, it is just and fair that those using such service should pay for it. We are therefore, sure that the SERVICE CHARGE SCHEDULE which the banks have agreed on will meet with the hearty approval of all customers of the banks.” The third advertisement is headed: OTHER MATERIAL FACTS An outstanding paragraph reads: “ A survey of the situation discloses that we cannot increase our earnings by demanding higher rates of interest; we TO BANKING PATRONS OF THIS COUNTY AND VICINITY reads: “ Let us follow, briefly, the course o f a cream check in the regular routine of business. It is first issued by a local buyer, usually for a small amount and payable at some distant point. It is es timated that 90 per cent of these checks are cashed by the banks. As the amounts are small, it usually requires payments in silver which necessitates a larger supply on hand than usual. This means the loss of the use of this amount of money, since it is tied up in silver on hand, and in addition, the express charges of ship ments into the city. The bank clerk must then make a record of all these checks, such as the name of the company issuing the same, the date, amount, where drawn and where payable, and then mail them out for collection and wait for the returns, which takes about five days. This means the additional expense o f clerk hire, postage and the loss of the use of the money for the stated period of five days. “ One can readily see that a bank is entitled to compensation for this service, and while the matter has been taken up with the creameries, no satisfactory ad justment has been made to date, and until such time, and commencing............. the banks o f ..............County will make a service charge o f ............. on all outside cream checks payable elsewhere. The next ad is headed: CHANGING CONDITIONS and reads: “ Outside depositors are no longer in terested in time certificates of deposit, as they are able to buy industrial bonds bearing higher rates, which results in less funds for loaning purposes by banks. So we find that in addition to state hail insurance, state insurance of public buildings, as well as state bonding de partments, many sources of income have been lost to the banks, or if not entirely lost, the income derived therefrom has been materially reduced. “ Profit is a necessary element in sound business and naturally banks are com pelled to adopt a different basis of opera tion since the .conditions affecting them have been so materially changed.” Reorganization of Konsberg Bank The Kongsberg State Bank of Kongsberg, N. Dak., has been purchased by the so T HE Citizens Bank, and the institution reor ganized. N. J. Kresbach has been elected president and cashier and Henry Raap and O. M. Olson have been made vice presidents. Clipping Coupons State Treasurer C. A. Fisher of Bis marck, No. Dak., says that clerks in his office have been busy clipping $300,000 in coupons from state bonds which have been registered and are on file in the state treasurer’s office. The bonds are owned by persons, firms and organiza tions in all parts of the United States and Canada, the largest single owner being N O R T H W E S T EEN BANKER the state board of university and school lands with $1,500,000. The registration feature is offered to purchasers of state bonds to insure them against loss, he said. When the bonds are registered the coupons are taken off and canceled and a record made of the owner of the bond. As the coupons fall due the interest money is sent to the per son who registered the bond. If a registered bond is lost or de stroyed the holder loses nothing since it is of no value to anyone else. Recently Mr. Fisher said the owner of a $1,000 bond reported that he had swept it up with other papers and burned it. Under the law, Mr. Fisher, said he was unable to replace it. Had the bond been regis tered the owner would eventually have received his money. Sutton Banks Consolidate The Farmers Bank and the Citizens State Bank of Sutton, N. Dak., have been consolidated. The bank is known as the Citizens State Bank. The State Guaranty N. Dak., has been taken County State Bank of bank is capitalized at posits of $130,000. “ Speaking of Prosperity” C E R T A I N writer struck the right note w hen he called atten tion to a select group o f business concerns and banks, located in various parts o f the country, that have sh o w n rem arkable growth year in and year out. These concerns, he points out, have without exception intensified their service and adopted a carefully planned program o f letting their customers and prospects know just what they can do for them. A ♦ To quote some of the results. The slogan of a metropolitan news paper: “This year will reward fight ers” was the reflection of a policy which resulted in a substantial in crease in business for itself and its advertisers. There is a store in Strasburg, Ohio, that does a million dollars worth of business per annum in a town of less than 1000 population. Another in Winner, S.D., has a turn over of $850,000 a year and has a population of only 3000. A western banker has proven beyond a doubt that Correspondent banks appreciate an aggressive policy of » » good service year in and year out. These are only a few of the many instances that create and add to the general prosperity. r r r In the Middle West there are more than one thousand banks that know and use Drovers service because it is conscientious and helpful. It has as its background personal acquain tanceship. In 1927 as in the past its Correspondents will find the human element an important part of Drovers service. W e sh a ll he g la d to sen d a c o p y o f the J a n u a r y issu e o f “ D r o v er s A d v e r t i s i n g S e r v i c e ” to a n y b a n k u p o n req u est. D rovers N A T IO N A L B A N K TRUSTSSAVINGS BANK U n i o n S to ck Y a r d s , C h ic a g o https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 Bank o f Harvey, over by the Wells Fessenden. The $20,000 with de January, 1927 THE NORTHWESTERN BANKER IOWA SEGTION Officers Iowa Bankers Association President........ _ ............... A. C. Smith Clinton Vice President...................John Sieh Spencer A. C. SMITH President Treasurer..................... F. A. Schuetz Lawler Secretary..................... Frank Warner Des Moines FRANK WARNER Secretary Says Federal Reserve Treats Iowa Fairly W. FOSTER of Guthrie Center, by a country bank as promptly and at Iowa, president of the First Na- exactly the same interest rate as can be * tional Bank of that city and a obtained by a city bank for any purpose. “ Speaking from experience, I abso former state senator, took issue recently with statements of Howard J. Clark, who lutely know that the machinery for holds the federal reserve system respon financing agricultural produce through sible for closing Iowa banks. The par the federal reserve works promptly and ticular part of Mr. Clark’s recent state well. ment to which Senator Foster objected “ To be sure, it will not discount second was that which asserted that the fed and third mortgages and other frozen eral reserve board has substantially elimi assets which are just now making so nated the entire property of Iowa as a much trouble to Iowa banks. If it did, basis of credit. it, too, would soon be full of frozen paper. “ In a recent issue of The Register,” The trouble with the banks that are fail Senator Foster said, “ Howard J. Clark ing is not the attitude of the federal re is quoted as saying: ‘The federal reserve serve banks, but it is these frozen assets board of eight men has classified the plus more or less loss of confidence on property of the United States that stands the part of depositors. as a basis of credit at the banks so that “ To be sure, the federal reserve bank the board has eliminated substantially does not make first mortgage land loans. the entire property of Iowa and by doing Why should it ? Such loans are easily this the banks of Iowa are compelled to obtainable from our federal land banks, close their doors because they cannot re federal joint stock land banks, life in discount paper to meet immediate needs surance companies, savings banks and of a continuing business.’ individuals. Farm loan agents are now riding about the country canvassing and Brands Statement False competing for this class of loans. No one, “ This statement,” Senator Foster as to be sure, wants second and third mort serted, “ is not only unfair but absolutely gages and other frozen assets, and I as untrue. The federal reserve banks serve sume Mr. Clark would not desire to fill no one better than Iowa and the farmer. up the federal reserve bank with this Indeed, they give an advantage to paper class of paper. arising out of agriculture and livestock Reserve Helped Iowa transactions. Farm paper having a ma J turity of nine months may be discounted freely, while strictly commercial notes, bills, etc., arising out of other business must have no more than ninety days to run. “ Notes of farmers and stockmen who are in good financial standing can be promptly rediscounted without any red tape by any country bank that is a mem ber of the federal reserve. Notes of re sponsible farmers, whether large or small, have equal standing. A note taken at a farm sale for a cow or a horse or 200 bushels of corn, or a bunch of shoats, or for a stack of hay, can be discounted https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis “ Probably no state has received greater service from the federal reserve bank than the state of Iowa. The critical period when values evaporated was in 1920 and the Federal Reserve Bank of Chicago increased loans to Iowa banks between February, 1920, and December, 1920, by over $76,000,000, making the peak loans to Iowa banks from the fed eral reserve bank of approximately $99,000,000. In addition to that amount, the federal reserve bank loaned large amounts to member banks located in Chi cago, which, in turn, reloaned to Iowa banks and bankers. 81 “ Without the assistance of the federal reserve during that critical period, there would have been wholesale failures of banks that were at that time full of good paper. The Federal Reserve Bank of Chicago, the bank which serves Iowa, did not enforce the payment of those redis counts in such a manner as to cause the closing of any Iowa banks, but such paper was renewed and, in my opinion, its operations were not the cause of decline in prices of agricultural products. “In its regular current operations the Federal Reserve Bank of Chicago stands ready to furnish and is furnishing to its member banks in Iowa exceedingly lib eral rediscount facilities for good farm ers’ paper growing out of current agri cultural operations, and encourages the taking of such paper by member banks and rediscounting the same when neces sary.” New Banker at Marengo John A. Rouse, a former county official, has become associated with the Peoples Savings Bank of Marengo, Iowa. Mr. Rouse has also been engaged in the real estate and banking business in South Dakota during the past few years. Banker Remains in Reinbeck L. H. McGrew, cashier of the First Savings Bank of Reinbeck, Iowa, will be in charge of the bank for another year, although his resignation of last fall named January 1st as the time he would leave the institution. Farmer-Banker Banquet The second annual conference and din ner of the Bankers and Farm Bureau was recently held at Harlan, Iowa. The chief topic of discussion was the securing of the 10-eent bonus per hundred on hogs sold to packers following accreditization of the county, which is expected Januuary 1st. The method of securing this premium or bonus was explained by Carl Kennedy, assistant State Secretary of Agriculture. This bonus is a voluntary offer made by the packers, for they feel that hogs from an accredited county are actually worth that much more to them due to the smaller number which are condemned because of tuberculosis infection. Judg ing by other counties which have been receiving this bonus for some time, it is expected that this extra 10 cents per hundred will bring in about $20,000 each year to Shelby county hog raisers. A certificate must be filled out by the hog owner and signed by him and ac knowledged by a notary to get this bonus. The hogs in the car or truck must be from an accredited county in order to receive this bonus. This certificate must either be attached to the bill of lading or mailed to the commission firm in order that it be there by the time the hogs are paid T II E 82 NORTHWESTERN BANKER Capital, Surplus and Undivided Profits Over $1,200,000.00 Established 1874 For the Coming Year w e wish to each of you prosperity and success, and it is our aim during 1927, as it has always been, to serve you in your every banking need. OFFICERS CHARLES E. PERKINS, Chairman of Board E. WEBBLES, President J. G. WALDSOHMIDT, Vice President C. T. SIMMONS, Vice President R. L. BUNGE, Vice President L. M. WILSON, Cashier ELMER RAUENBUEHLER, Assistant Cashier L. T. PANTHER, Assistant Cashier F. J. NORTON, Assistant Cashier R AY HUMPHREY, Manager Bond Department T. H. WILSON, Auditor FI R S T Ä ¡ K ! B A N K MEMBER January, 1927 for. If the hogs go to a local buyer the certificate goes to him, if shipped coop eratively, it will be handled by the asso ciation, if shipped direct the owner will attend to the matter. If the hogs are sold to a speculator or order buyer, the commission man should be instructed to get at least 10 cents above the best packers bid. This is done because the packers are the only ones who pay this 10-cent bonus. Payment is made by a separate check from that which pays for the hogs, so it is truly a bonus. Arrangements will be made to have the various banks, with which Shelby county farmers do business, handle these certificates. A supply will also be kept at the farm bureau office. In this way they will be available to every farmer in the county. Bank Elects Officers The Delaware County State Bank of Manchester, Iowa, recently held its an nual election. Judge E. B. Stiles was chosen as vice president to succeed the late Senator R. W. Tirrill and George A. Newman was made a member of the board of directors. The other officers and directors of the bank were reelected. Burglar Alarm Installed The Cerro Gordo Bank of Clear Lake. Iowa, has installed a new modern elec trical burglar alarm of the radio style having a wavelength system. The system was installed by O. B. McClintock Co. of Minneapolis. Window Display The Henry County Savings Bank at Mt. Pleasant, IoAva., had an interesting window display last month, when the Pi Beta Phi Alumna club of that city re ceive a shipment of hand-woven linen and hickory baskets and placed them on display in the bank. The national sorority maintains a school for all mountaineers living in and near Gatlinburg, Tenn., which is counted as one of the finest pieces of altruistic work being carried on by any organiza tion. The linens, as well as the baskets are hand woven by these mountaineers and the school sends their finished prod ucts to the various alumnae clubs over the United States who dispose of them, thereby aiding the mountaineers to be come selfsupporting. Among the articles which were for sale were the hand woven linen towels, table runners, pillows, luncheon sets, rugs, and baskets for marketing, candy, waste baskets, hornets nests, wall packets trays, etc. FEDERAL RESERVE SYSTE M BURLINGTON IA. Reward Employes Employes of the American Commercial & Savings Bank, of Davenport, Iowa https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 THE were all smiles last month, the result of an announcement that the board of direc tors had voted the customary generous cash Christmas presents, given to all em ployes of the big financial institution ex cept the officers. Those who have been in the employ of the bank for over five years received ad ditional compensation in the form of a cash Christmas present amounting to 10 per cent of their total annual salary. For those who have been in the insti tution for from three to five years the present was per cent of the annual salary while employes of from one to three years service received 5 per cent of their annual salary. NORTHWESTERN BANKER That interval of more than half a cen tury gives a rough indication of the ex tent of Lafayette Young’s career. He is dead now at 78, after an unusually crowded life. For a brief part of that life he was a United States senator, serving after the death of Jonathan Dolliver. And for a number of years he had been a state sena tor. But his major activity was as a newspaperman. The editor and pub lisher of the Des Moines Capital was one of the rapidly disappearing clan of per sonal editors. He was physically a ponderous man; he had a direct manner which could be gruffly direct or amiably direct, according 83 as he deemed necessary and right for the occasion; and he had a keen sense of irony, though he seldom expressed himself in print in a manner to blister men’s skins. He was a pioneer Iowan of the sturdiest, choicest kind. Iowa could show no finer citizen.—Editorial Chicago Jour nal of Commerce. It is the part of a wise man to resist pleasures, but of a foolish one to be a slave to them— Epictetus. Tired grocer: “ I ’d like to go where I’d be entirely cut off from the world.” Friend: “ Why don’t you try a tele phone booth, old man ?” Clinton County Meeting L. N. Williams, of DeWitt, was named treasurer of the Clinton County Bankers Association, to fill a vacancy, at last month’s meeting of the association, which followed a 12:30 o’clock luncheon at Clinton, Iowa. The annual meeting date was selected, the first Tuesday in Febru ary, 1927, but the place of the meeting was not determined. President F. E. Conover of the asso ciation, presided at the meeting, with Secretary H. G. Kramer recording the minutes. Fifteen Clinton county banks were represented. After the luncheon, M. L. Kirby, sec retary of the Clinton County Farm Bu reau, addressed the bankers, telling in an interesting manner of the work of the bureau and pointing out how the bu reau and the bankers can cooperate to the mutual benefit of the banks and the farmers of the county. President Conover then called upon A. C. Smith, president of the Iowa Bankers Association and of the City National Bank, who discussed the plans and sug gestions of the state association in fur thering the “ Still Better Banking in Iowa” campaign. HE strength of this bank and its reputation for prompt, intelligent^ handling of Iowa bankers’ bush ness, give you definite assurance that your business with us will be handled to your entire satisfaction. T Is Agency Manager Raymond G. Gregory, formerly con nected with the Aetna Life, New York, has been appointed agency manager for the Equitable Life Co. of Iowa at Buf falo. Mr. Gregory was a recent visitor in Des Moines for a conference with home office officials. Lafayette Young In his early teens, Lafayette Young toiled many hours a day on the Iowa farm which his father and elder brothers had left to him while they went soldier ing in the Civil War. More than half a century later, Lafayette Young served as chairman of the Iowa state council for defense while nearly all the available young men of Iowa were wearing their country’s uniform in another great war. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BANKERS TRUST CO. B A N K Cor. 6th and L ocu st Sts., D es M oines Capital $1,000,000.00 Surplus $200,000.00 TH E 84 NORTHWESTERN Brilliant Decorations 26.6% g r e a t e r s iz e in Patrons who recently entered the lobby of the First Iowa State Trust and Sav ings Bank of Burlington, Iowa, were given an optical treat in the form of brilliant Christmas decorations. Proba bly no Burlington institution ever worked out a more elaborate scheme of holiday decoration. R e e d ’s M a ssu n a g a z in e Plan for 19 2 7 , but no increase in price. See it f o r you rself. SOUND BONDS FOR B A N K January, 1927 BANKER I N V E S T M E N T Tinsel and cotton produced realistic snow and ice effects, and a roaring fire place functioned in the bank. Reminders of the Christmas Savings clubs were on all sides and Christmas trees were scat tered around at convenient distances. The bank has always entered into gen eral decorative schemes for city-wide decoration and this year made every effort to put its individual decorations on a level with those of firms in cities much larger than Burlington. Dumont Banks Merge The Farmers Trust & Savings Bank and the State Bank of Dumont, Iowa, have been merged, with headquarters in the State Bank, whose officers will be as sisted in the management of the business by John Campbell, cashier of the Farm ers Trust. W. E. Brown, assistant cash ier of the Farmers Trust, will also be as sociated with the new organization. Anxious to Oblige The First National Company o f Iowa H an fo rd M a c N id e r, P resid en t M A SO N C IT Y S e c u rity B u ild in g C e d a r R a p id s V a lle y N a tio n a l B a n k B u ild in g D es M o in es “ My hair is falling ou t/’ admitted the timid man to the druggist's assistant. “ Can you recommend something to keep it in r “ Certainly,” replied the obliging young man, who had recently left school. “ Here’s a nice cardboard box.” 1927 1870 HE CON SOLIDATED N A T IO N A L BANK, DuEj|jj ill Clique, Iowa, announces that it has acquired the business of the Pioneer Trust and Savings Bank of Dubuque, the oldest Savings Bank in Iowa. The title “ CON SO LID ATED ” is most fitting for this bank, which now represents the union of five banks operating under the charter of the old Second National Bank, issued in 1876. C o n s o l id a t e d N a t io n a l B a n k D u b u q u e , Iow a U. S. DEPOSITORY ASSETS SEVEN MILLIONS J. K. DEMING, President GEO. W . MYERS, Vice President HERMANN ESCHEN, Secretary JAMES M. BURCH, Vice President JOS. W . MEYER, Cashier https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 THE NORTHWESTERN BANKER 85 G oes to A ustralia and N ew Zealand M. W. Ellis, president of Hart-Parr Company, left with Mrs. Ellis last month for an extended business trip to Australia and New Zealand in the interests of HartParr business. In addition to being pres ident of Hart-Parr Company, Mr. Ellis is a member of the executive council of the American Bankers Association and also a member of the executive committee of the National Association of Farm Equipment Manufacturers. Mr. Ellis’ trip to Australia and New Zealand has more than the usual significance because of his banker’s knowledge and experience. For the last three or four years Hart-Parr Company has been developing a splendid M ERCHANTS N A TIO N A L, BAN K C E D A R R A P I D S , I O W A “W e ’re Strong for the Merchants” The cashier of a bank which has been a correspondent of The Merchants National, says: “ We have found The Merchants National Bank one that will do anything and every thing for its friends that could be reason ably expected. We have been associated with it for ten years, and during that time have never had cause for complaint of their manner of handling our account, or of any other matters going with our connection as a correspondent. “ We have had the pleasure of forming the acquaintance of some of the active of ficers and have the highest regard for their personal honor and business principles. “ We’re strong for The Merchants Na tional and they can have anything we have.” M E L V IN W . ELLIS Resources $ 15 ,000,000 export business in Australia and New Zealand. This business is largely con ducted through well-established English and Scotch importing organizations. Many of these companies have their head quarters in London and operate large branch establishments all over the world. As the importation of Hart-Parr trac tors into Australia and New Zealand has increased into a business of many hun dreds of thousands of dollars annually, naturally the question of additional cred its, banking connections, and relations, etc., comes to the front. It is here that Mr. Ellis’ banking knowledge comes into play. These distributing connections in Australia and New Zealand expect to double their business during 1927 as a result of Mr. Ellis’ visit. Mr. and Mrs. Ellis sailed from Van couver December 15th. They will be on the water twenty-four days going and twenty-four days on their return. Poetry is to philosophy what the Sab bath is to the rest of the week.—Hare. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis James E. Hamilton, President P. C. Frick Vice President Mark J. Myers Vice Pres. & Cash. E. E. Pinney Vice President S. E. Coquillette Vice President Edwin H . Furrow Vice President E. B. Zbanek Vice President H . N . Boyson Vice President L. W . Broulik Assistant Cashier Roy C. Folsom Vice President Fred W . Smith Assistant Cashier THE 86 NORTHWESTERN BANKER O 'R C C ) . c<Wècf5>*s’ Happy blew Year! i To its many old friends throughout Iowa, and to the new ones gained during the past year, the officers and directors of the Cedar Rapids National Bank extend most cordial greetings and best wishes for a Happy and Prosperous 1927. It will be our pleasure during the coming year, as it has for the many years past, to offer to banks and bankers the wide range of our complete banking facilities. Feel free at any time to avail yourself of our friendly service. T3he C edar R apids N ational B ank CEDAR RAPIDS, IO W A OLD - TIME HOSPITALITY The S p ir it o f Our Service -OFFICERSR A LFH VAN VECHTEN Chairman o f the B oard VAN V ECH TEN SH AFFER V ic e P resid ent GEO. W . S W A B A ssista n t Cashier GLEN N M . A V E R I L L P resid ent C H A S. C. K U N IN G V ic e P resid en t and Cashier M A R V IN R. SE L D E N A ssista n t Cashier GEO. F. M IL L E R V ic e P resid ent P E T E R B A IL E Y A ssista n t Cashier B E R T H A M. W O L F A ssista n t Cashier January, 1927 Director Resigns Dr. E. T. Edgerly, at a recent meeting of the directors of the Iowa National Bank of Ottumwa, Iowa, resigned as a director and James F. Powell was named to succeed him. In severing his connections in an offi cial way from this old Ottumwa finan cial institution, with which the name of Edgerly has long been associated, Dr. Edgerly wrote the following letter: “ Mr. J. C. Jordan, President, Members of the Board of Directors, the Iowa Na tional Bank— Gentlemen: You have known that for several years I have felt and appreciated that the demands of my profession make it difficult for me to at tend meetings regularly, and that my study, reading and thought are along lines medical rather than financial, so when present I cannot render as valuable judgment as a man in business might. My previous tenders of resignation have hitherto been very kindly rejected. I understand now is a more propitious time and I tender it again. “ I shall leave your body with a very keen feeling of regret and shall always treasure highly the memories of the asso ciation with you and with those who have passed on. “ I feel confident of and certainly wish for the further success of the bank under your conservative management. Believe me, “ Very truly and sincerely yours, “ (Signed) “ Edward T. Edgerly.” The resignation of Dr. Edgerly as a director of the bank was accepted, and a committee consisting of C. S. Harper, W. D. Tisdale and W. T. Harper was ap pointed to draw a resolution expressing the regret of the board. Adopt New Policy In an effort to discourage the practice of creating overdrafts, both the Adel State Bank and the First National Bank of Adel, Iowa, have established a new rule. A minimum charge of fifty cents is to be made on each overdrawn account, with an additional charge of twenty-five cents for each check added to that overdraft. Both the National and State banking laws prohibit cashing a check which creates an overdraft and it is only to make customers more careful that the new rule is adopted— not for the pur pose of creating revenue. The move is one in line with sound business principles and should be wel comed by the depositors of both institu tions. Organize A. I. B. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Meeting at the Fort Armstrong hotel in Rock Island recently, some 225 bankers of the tri-cities formed the tri-city chap- January, 1927 THE ter of the American Institute of Bank ing, an organization which will conduct an educational program in banking methods and law, business practice and allied subjects, for the benefit of the employes of the local banks and for those of surrounding communities in Iowa and Illinois. Officers were elected as follow s: Presi dent, Clark G. Anderson, of Moline; vice president for Davenport, Herbert Brock; vice president for Rock Island, Ray Osterman; secretary, Miss Edith Ather ton, of Davenport; treasurer, C. C. Doxey, of Moline. The above officers, together with the presidents of the clearing houses of the tri-cities will constitute the executive committee. The presidents are Gustav Stueben, of Davenport; M. S. Hagery, of Rock Island, and R. C. Shallberg, of Mo line. Ray Nyemaster, of Davenport, was chairman of the meeting. The speakers were Prank R. Curda, of Chicago, presi dent of the Chicago Institute and J. H. Hart, of Des Moines, Iowa, committee man of the national chamber. Each of the speakers pointed out the many ad vantages of establishing a chapter of the institute in the tri-cities. Banks of Bet tendorf and East Moline also took part in the organization. Install Ventilation Mr. L. L. Corey, of the O. B. McClin tock Company, of Minneapolis, has made arrangements with the Commercial Na tional Bank of Charles City, Iowa, for the installation of a vault ventilator for the protection of the customers of the bank and the bank’s employes. The ap paratus is equipped with a fan and in the event anyone is accidentally or otherwise locked in the vault fresh air is brought in so that suffocation will not result. The new equipment will be installed at once. Becomes Vice President Rollin C. Bortle has been elected vice president of the Chatham Phenix Na tional Bank and Trust Company. Mr. Bortle, who was formerly a partner in the firm of Eastman, Dillon & Company assumed his new duties last month. For more than a decade Mr. Bortle has been a prominent figure in Wall Street bond circles. He first entered this field as a representative of N. W. Hal sey & Co., and when the firm was ab sorbed in 1916 by the National City Company, Mr. Bortle became associated with the latter organization. He at one time served the Bond Club of New York as its president, and a member of the board of governors for five years. I told my boss the other morning that I’d been up all night with a baby—he asked me what her name was. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER 87 1856 1927 Seventy-one Years Security and Service Preston’s H istory o f Banking in Iowa, in speaking o f frontier banking and o f W aterloo in 1854, says, “A little later, John H. Leavitt established a private banking wards house, became w h ich the after L eavitt fe? J o h n s o n N a t i o n a l Bank.” (Present title, Pioneer National Bank.) W aterloo’s Oldest Bank respect fully offers its services to those banks wishing a correspondent in northeastern Iowa. 88 THE i An outstanding law o f business success is confidence. Correspondents o f the F irst N a tio n a l know that their trust is w ell placed. Chas. H. McNider, President Willis G. C. Bagley, Vice President Carl A. Parker, Vice President Fred E. Keeler, Vice President Hanford MacNider, Vice President Robert P. Smith, Cashier Harold V. Bull, Assistant Cashier Harry C. Fisher, Assistant Cashier William W. Boyd, Assistant Cashier Roy B. Johnson, Assistant Cashier NORTHWESTERN January, 1927 BANKER Install Huge Sign The Citizens Trust & Savings Bank of Davenport, Iowa, has contracted for what it is claimed will be the largest electric bank sign ever installed in the city. It will be 33 feet high and will be hung on an angle so that it can be read from all directions. The letters will be 18 inches long in the word savings, 14 inches long in the word bank and 12 inches long in the word Citizens. ing in advance of the rest, saw two men fleeing the scene as he turned into the alley behind the bank. Belief that they might be other members of the committee, withstrained him from firing at them. Pieces of the torches found just south of town later led citizens to believe the bandits were headed for Des Moines. Investigation showed that the robbers had not gained entrance to the bank proper. Elected Boy Scout Officer James F. Toy, president of the Toy Na tional Bank, Sioux City, Iowa, was re cently elected president of the Boy Scout Council in that city. He was put through the regular initiation and was presented with the official badge of office. Mr. Toy succeeds James Rae as president of the Council. Named on Board Homer A. Miller, president of the Iowa National Bank, Des Moines, was named a member of the state banking commis sion, by Governor John Hammill, to fill the vacancy created by the resignation of John A. Hogan. Mr. Hogan, formerly president of the Des Moines National Bank, resigned, fol lowing his acceptance of a vice presidency of the Continental and Commercial Na tional Bank of Chicago. The new commissioner must be con firmed by the state senate within thirty days from the convening of the fortysecond general assembly, January 10th. Sells Insurance John M. Grimes, Jr., for several years assistant cashier of the First National Bank at Perry, Iowa, has resigned that position to become associated with the advertising department of the Bankers Life Company, Des Moines. Grimes is a nephew of Taylor and L. M. Grimes of Perry. He attended Grinnell College and later took a course in journalism at the University of Missouri. Foiled Burglar alarm wires concealed among telephone and telegraph wires in the base ment of the New Providence State Bank, New Providence, Iowa, prevented burg larizing of the institution recently. Bandits intending to rob the bank, first procured acetylene torches at a near-by garage and with them cut all wires in the basement of the bank. In so doing they interrupted a burglar alarm system which resulted in the calling out of the vigilance committee. One member of the committee, arriv Overcome by Gas A. F. Dean of Rockwell City, Iowa, president of the Rockwell City Savings Bank, narrowly escaped death through asphyxiation recently by gas from the exhaust of his automobile. Mr. Dean was found unconscious on the floor of his garage by his son, Cecil Dean. It is believed that he had lain on the floor of the garage about an hour and one-half before he was discovered. Although Mr. Dean’s condition was serious immediately following the acci dent, due to the fumes o f the gas and his exposure on the floor of the garage, re ports from the family indicate that he is well on the road to complete recovery from his experience. Will Your Customers Feed Their Corn? If so— have you sufficient outlet for Resources***10,000,000.00 FIRST N A T I O N A L BANK M ASO N CITY, IA. YOUR FEEDER PAPER? The Live Stock National Bank Located at the Stock Yards Sioux City, Iowa Is especially well equipped to handle Live Stock Loans YOUR ACCO UN T IS INVITED https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis January, 1927 TH E NORTHWESTERN BANKER 89 Will Take Rest Harry T. Blackburn, vice president of the Iowa National Bank, Des Moines, Iowa, who has been ill for a month, left with Mrs. Blackburn, December 16th, for Palo Alto, Cal., to spend several months with their son, Mortimer Blackburn and family. Blackburn has been ordered by his physicians to take a complete rest away from all business cares. Blackburn has been a Des Moines banker for nearly half a century. He was a former president of the Iowa Bankers’ Association, and is widely known in banking circles throughout the state. Elected President OFFICERS As we look into 1927, we see another prosper ous year. Let the First National Bank, with its many correspondent fa cilities, help you toward your share in this pros perity. S. G. Stein, Jr., son of the late Dr. S. G. Stein, was elected president of the First National Bank and first vice president of the First Trust & Savings Bank, Musca tine, Iowa, to fill the vacancies caused by the death of his father, at a meeting of the board of directors of the banks held recently. Mr. Stein has been second vice presi dent of each bank. W. F. Bishop was elected to succeed him as second vice president of the First Trust & Savings Bank. D. V. Jackson is president of this bank. A.F. DAW SON, JOE R .L A N E , IRVIN J.GREEN , C.RSCHMIDT, P.A.TORNQUIST , Prc»ridont V.Prcvidenl C a /h i o r Asst Cashier A»* Cashier W e Will Consider It a Genuine Pleasure to Serve You Assistant Cashier Announcement was made recently by E. H. Burkett, cashier of the First Na tional Bank of Perry, Iowa, that Mrs. Katherine McTaggart has been appointed as assistant cashier of the bank. Mrs. McTaggart a short time ago re signed a position with the First National where she had been employed for a num ber of years. She is in full charge of the note cage. F IR S T ■NATIONAL BANK DAVENPORT, IOW A Remains in Charge L. H. McGrew, cashier of the First Savings Bank, of Reinbeck, Iowa, wTill re main in charge of that institution for at least another year, announcement is made by officers of the bank. Mr. Mc Grew had handed his resignation to the directors at a meeting last fall to be effec tive January 1st and had urged their ac ceptance before that time, but at a meet ing of the directors recently he was urged to remain and has consented to do so. Employe Dies Andrew 0. Anderson, 61 years old, a resident of Sioux City, Iowa, for 33 years and an employe of the Farmer’s Loan and Trust Company, died in a hospital there recently, after an illness of two years. Mr. Anderson was a familiar figure to many of the patrons of the Farmer’s Loan and Trust Company. He was born in Sweden, November 27, 1865. He came https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis FRIENDLY, PERSONAL SERVICE No real person can ever afford to be a nonentity in his business re lations—just a name on someone’s books. No “ Security State” customer is. He is a person whom we get to know better every day, whose needs we can satisfy better, and who has a better appreciation of “ Security State Service.” S E C U R IT Y S T A T E B A N K KEOKUK IOWA T HE 90 NORTHWESTERN January, 1927 to the United States in 1883 and settled at Oakland, Neb., where he desided for 10 years before coming to Sioux City. He had been a resident of Sioux City since 1893. f New Horizons The traditional cordiality exist ing so strongly between this bank and its correspondents and clients for more than a half century has been a factor neces sitating our further expansion. Merger at Mingo Our new building will materi ally aid in the handling of the constant and steady increase in transactions with efficiency and promptness. \ BANKER A M E R I C A N C O M M E R C IA L S A V I N G S B A N K ç /* D a v e n p o r t , I o w a A merger was completed whereby the Mingo Trust & Savings Bank of Mingo, Iowa, took over the entire business of the Valeria Savings Bank. The Mingo Trust & Savings Bank paid all deposits of the Valeria bank and re ceived payment of all notes made to the Valeria bank. The Kimberleys bought a controlling interest in the Mingo bank several years ago and under the efficient and conserva tive management of C. W. Kimberly, has steadily grown until at present they have doubled the capital and surplus of the old bank they bought and also double the business, with more than $400,000 de posits. Story County Meeting he officers and directors of the C e n t r a l S t a t e B a n k invite the business o f banks and financial houses w ho enjoy dealing w ith an organb nation that is not only sound in its traditions, but also alert to the requirements o f modern b a n k i n g .......................... S IM O N C A S A D Y G R A N T M cP H E R R IN C h a irm a n o f th e B oa rd P r e s id e n t T H E O L D R E L IA B L E Ce n t r a l St a t e B a n k O F D ES M O IN E S Banking, T rusts and Investments Safe Deposit V a u lts Member https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Federal Reserve System “ Less ‘joyriding’ and more hours on the milk stool, less ‘chicken chasing’ and more ‘poultry raising,’ ” was one of the ideas advanced by Parley Sheldon, of Ames, dean of the Story county bankers, as a factor in the solution of the agri cultural troubles of the Iowa farmers, at a meeting of the Story County Bankers Association, at Hotel Story, Nevada, Iowa, last month. “ Get back of the worthy and ambitious young farmer who wants to buy a farm for a home, and not for speculation ; that is the class of men who will help to solve the farm land problem,” said Jay G. Dut ton of the Farmers Bank of Nevada. “Place ourselves back from twenty to thirty years and watch those fellows work themselves out as their fathers have before them. They will do it and we should encourage such investments at the prices that farm lands are now,” said Mr. Dutton. The officers of the association, E. L. McConkie, of the Peoples Savings Bank of Nevada, president; Seymour Hix of Zearing, vice president; J. A. Mills, Jr., secretary, and Eli N. Nelson of Roland treasurer, were all re-elected upon motion of the nominating committee, consisting of A. M. Henderson of Story City, 0. W. Parker of Maxwell and H. W. Stafford of Ames. There were 65 present at the meeting including bankers and those connected with banks and a few invited guests. The meeting followed a 6 :30 dinner in the club dining room of Hotel Story, and was presided over by E. L. McConkie, presi dent. A. K. Fredricks, of Iowa State Col lege, vigilante chief, was present and made a brief report on the recent state vigilante shoot and also upon the condi- January, 1927 TH E tion o f the arms and ammunition now in the hands of Story county vigilantes. The association voiced approval of the work of Mr. Fredricks and will recom mend to Sheriff Nebergall that Fredricks be retained at the head of the vigilantes which organization goes out encouraged by a resolution of the association offer ing “$2,000 reward for a dead bank ban dit and $1,000 reward for a live one.” The principal discussion of the eve ning was on the subject of the agricul tural and banking situation in Iowa to day and the best methods of working it out. Among those who talked along that line were Jay G. Dutton, Parley Sheldon of Ames, A. M. Henderson of Story City, and H. J. Hoogenakker of Nevada. Clay W. Stafford of Ames gave a brief talk on the workings of the clearing house at Ames and the enforcement of the minimum charge for handling smaller checking accounts and the cashing of for eign checks, handling of taxes, auto reg istration and similar service for which a charge is made. Prof. J. B. Davidson of Iowa State College, one of the guests of the bankers, who is an authority on agricultural en gineering, gave a talk on the conditions as he finds them in a trip covering 44 states and his proposed solutions. Prof. Davidson’s idea of a solution is through industrial absorption of more of the farm products, rather than through ex portation, as so often proposed. NORTHWESTERN BANKER 91 Spreading the Spread (.Little Talks on Tiling, No. 23) RO FIT earned on any farm P is determined by the spread between the production cost and the selling price of each unit of produce multiplied by the number of units sold. So profits are increased either by raising the unit selling price, lowering the production cost, or increasing the units pro- duced. The individual farmer can’t stretch this spread very much at the selling price end, but he can at the cost end by producing more units from each acre cropped and each hour of labor. Thus he increases his profits in two ways by one op eration— spreading the spread at the cost end, and increasing the units sold. Tile Drainage Spreads the Spread, Increases the Units Sold, and Enlarges Profits Mason City Brick and Tile Company 312 Denison Bldg. Mason City, Iowa Dawes and the Nobel Prize Charles G. Dawes probably does not need the Nobel peace prize for 1925, which he shares with Sir Austen Chamberlain. Unless he has materially changed, he will find a benevolent use for the $12,500 in his unadvertised and effective work among friendless children in Chicago. What is important is the official associa tion of his name with the Dawes plan, which has already worked wonders for Germany. Everybody knows that Charles G. Dawes did not write the whole plan. None of his friends, and least of all him self, ever claimed that he did. Ill-advised admirers of Owen D. Young have claimed the plan’s authorship for that gentleman. They could not give him more real credit than Dawes has conceded. The Wall Street Journal’s special corre spondent in Europe, enjoying the personal acquaintance of many of the foreigners who formed part of the Dawes committee, has mentioned such men as Sir Josiah Stamp, Sir Robert ICindersley or the late Sir William Acworth, as giving Mr. Young generous credit. But they called the solution, emphatically, “ the Dawes plan,” for an excellent reason. There was hardly a man on that com mittee who was not, in some particular, more profoundly informed than Charles G. Dawes. Sir William Acworth’s knowl edge of the German railroads, to say noth- https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis The officers o f the Iowa N ational B ank w ant to express to the bankers o f Iowa their sincere appre ciation for the business entrusted to them during C H A S. S H U L E R , P resid ent the past year, and to ex F R A N K B. Y E T T E R , V ic e P res. W M . H . G E H R M A N N , V ic e P res. L O U IS G. B E IN , Cashier H E R M A N S T A A K , A sst. Cashier tend wishes for a m ost prosperous 1 9 2 7 . Iowa National Bank Davenport, Iowa A dvertise in The Northwestern Banker Three entirely new features in Reed’s Massmagazine Plan for 1927 G See them fo r yourself. THE 92 NORTHWESTERN A neighborhood bank with nation^ wide connections and a banking on ganiz,ation w ith complete financial service. m i m a E. W. M ILLER , President JA M ES M. GRAHAM, Vice President H. W. WENTE, Cashier S. C. KIMM, Assistant Cashier R. L. PENNE, Assistant Cashier C. S. M cKIN STRY, Assistant Cashier L IL L IA N SHOEM AKER, Auditor JTieCommercial N ational,Ba n k BANKER January, 1927 ing of railroad systems the world over, may be truthfully described as unique. Sir Robert Kindersley, the principal Lon don partner of Lazard Freres, was an authority on foreign exchange such as Dawes never claimed to be, and Sir Josiah Stamp is easily one of the very first economists of his time. All those con sulted by our special correspondent said that suggestions of the most fertile and fruitful kind came from Owen D. Young. But there was just one man who could gather together all those powerful indi vidualities and merge them into a suc cessful result. Dawes is the only man since Roosevelt to understand the use of the calculated indiscretion. He succeeds in running the United States senate be cause he is about ten times as subtle as the senate supposes, and the most reasonable chairman in the practical conduct of its business the senate ever had. Put Dawes down in a committee room with a board of directors pulling a dozen different ways and he will bring them to a useful and practicable finding, taking something of value from each o f them. If the result looks absolutely fortuitous, so much the better. Dawes believes in re sults and does not care two cents who gets the credit. For once in a while history will be right when it talks of the Dawes plan. That solution of the reparations difficulty, in addition to its technical qualities, contains a profound principle. It makes it worth while for Germany to meet her obliga tions. It was Dawes who conceived that principle, and who never lost sight of it throughout the negotiations, however much they might be obscured or entan gled by specialists who could only see one side of the question. There was no need of the Nobel prize to write the name of Dawes into the world’s history. It was deservedly there already.— Wall Street Journal. Likes The Northwestern Banker! The 1926 Iowa Bank Directory, second edition, is a nice size, neatly made up and contains all of the information that one could ask for. We also receive T h e N o r t h w e s t e r n B a n k e r which I always read from cover to cover, enjoy your edi torials and all of the articles therein. We have other bank magazines but none are enjoyed as much or as interesting as T h e N o r t h w e s t e r n B a n k e r .— Paul Groszkruger, cash ier, Farmers Savings Bank, Fostoria, Iowa. CAPITAL &S URP LU S -O N E HALF MILLION DOLLARS WATERLOO,IOWA. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Savings Show Big Increase A billion-and-a-half dollar increase in America’s savings in banks in a year, a growth of nearly three million in num ber of depositors and a new high per capita savings rate for the nation of $211 are disclosed in the annual compilation January, 1927 THE o f the Savings Bank Division of the American Bankers Association. The figures, made public by W. Espey Albig, in charge of the division, show that on June 30 this year there were for all classes of banks in the United States 46,762,240 savings depositors and $24,696.192.000 in savings deposits. The same date last year there were 43,850,127 depositors and $23,134,052,000 savings deposits. “ The gain in the year ending June 30, 1926 of $1,562,140,000 which is approxi mately $400,000,000 less than the gain in savings during the preceding year and but one hundred million more than the savings gain for the year ending June 30, 1924, is thrown into stronger relief by the great increase in the number of sav ings depositors reported,” said Mr. Albig in presenting the figures. “ The number of depositors stands at 46,762,240, a gain over last year of slightly less than three million. The mutual savings banks gained over 300,000 depositors, other state banks and trust companies over 1.800.000 and the national banks over 700,000. More than half a million of the gain in the number of depositors came from the increased number of depositors in school savings accounts. “ General and widespread prosperity in the United States during the past year caused this great increase in the number of depositors, although in the United States generally the gain in the amount of savings has been less per inhabitant for the year ending June 30, 1926, than during the preceding one. This is not true, however, in the case of every state. New Hampshire, Maine, Connecticut, Del aware, West Virginia, Louisiana, Ten nessee, Indiana, Illinois, Wisconsin, Wyoming, Idaho, and Nevada made larger gains per inhabitant than during the preceding year.” Garage for Tenants Detroit, which brought individual transportation to the world in the auto mobile, will take another step forward in world leadership of personal service in business when the First National Bank shall have completed its 18-story garage building, directly connected with the bank, for the use of its customers and tenants of its office building, about a year hence. Within a few weeks wreckers will be gin to tear down two historic buildings, the Normandie and Hermitage Hotels on Congress and Bates Streets, and on the site the First National Bank *will erect its garage. When the building is completed, with space for 700 cars, customers and tenants of the bank may drive into the garage, leave their cars in the hands of attend ants and pass into the bank over a bridge structure which will connect the two https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER buildings at each floor over the present alleys separating the two properties. Having completed their business in the bank building, they may return to their cars and drive away without having had to cross a congested street on foot, worry about any parking regulation, or without the heartbreaking hunt for a parking place that faces every automobilist today in the downtown section of Detroit. Nowhere in the world, so far as is known, has any public institution, such as a bank, made such provision for its customers and its office tenants, and the unique innovation of the First Na tional Bank will no doubt be followed promptly by other great organizations in view of the pressure of necessity brought about by traffic conditions in busy centers. A department store in New York City erected a garage for the use of its cus tomers while shopping, but this was lo cated some blocks away, and did not make it possible for the customers to pass directly into the store without en countering the hazard of foot traffic in crowded pavements and dangerous cross ings. I f present plans, as announced by the bank are carried out, preferential stor age rates will be given to office tenants of the bank buildings. Customers of the First National Bank and the Central Savings Bank, who are not tenants of the building, will be able to use the garage while transacting business in the bank, a small charge being made if the car re mains in the garage over a specified time limit. A Sporting Man N ell: “ How did he make his fortune ?” Ted: “ Horse racing.” Nell: “ Not betting?” Ted: “ No. He started a pawnshop just outside the course for people who wanted to get home after the races were over.” A T THIS bank, the comJLVplete mechanism of a world-wide banking service is kept a living, human thing by the personal relationships existing between our officers and our customers. Every Banking Service C entral T ru st C O M P A N Y O F IL L IN O IS 115 93 aMonroe direct at LaSalle CHICAGO 94 THE NORTHWESTERN BANKER January, 1927 Becomes President of Fidelity Trust Opportunity For Profit By Investing In Foshay Backed Public Utilities And Industrials F o r O v e r N in e Y ea rs A l l Y o u r M o n e y — A l l T h e T im e — O n T im e At your service in Eastern Iowa PEOPLES T RUST & and SAVINGS Western Illinois BANK líu Samuel S. Conover, president of the Fidelity Trust Company of New York, recently announced that at the January meeting of the Board of Directors of that company, James G. Blaine would be elected its president. Mr. Conover also stated that the three chief executive officers of the Fidelity Trust Company, after Mr. Blaine’s elec tion, would be Samuel S. Conover, Ex ecutive Chairman of the Board of Direc tors; John T. Sproull, Chairman of the Executive Committee, and James G. Blaine, President. Mr. Blaine, who is well known in finan cial circles here, was born in New York City in 1888, and graduated from Har vard College in 1911. He lived in Provi dence, R. I., from 1911 to 1917, where he was engaged in the insurance and in vestment business. While there he served two terms in the Providence City Council and was active in state politics. In 1917 he was summoned to the American Red Cross in Washington, serv ing under the late Henry P. Davison and Harvey D. Gibson, president of the New York Trust Company. After the war, Mr. Blaine became vice president of the Liberty National Bank of New York, which later merged with the New York Trust Company, which in stitution he is now serving as vice presi dent. From 1920 to 1924 Mr. Blaine was eastern treasurer of the Republican Na tional Committee, and until recently was chairman of the Committee on National Affairs of the National Republican Club. Mr. Blaine is interested in philan thropy and is a director of the Associa tion for improving the condition of the poor, president of the S. P. C. C. of Nassau county, and treasurer of the Na tional Association of Travelers Aid So cieties. His clubs are the Union League, Knick erbocker, Racquet and Tennis, Manhat tan, Harvard, Piping Rock, Meadow (Brook and Hope Club of Providence, and he is a member of the Chamber o f Com'merce of the state of New York. Mr. Blaine is a son of the late James G. Blaine and the late Mary Nevine Bull, and a grandson of James G. Blaine, who was Secretary of State under Presidents Garfield and Harrison, and the Republi can candidate for the presidency in 1884. Mr. Blaine resides in Old Westbury. Long Island, is married and has two sons. PeoplesTrusiASavin^sBanii eopj CLINTON, IO W A .' Remember it this -way-«“PEOPLES TRUST T H E S T A T E C E N T R A L SA V IN G S B A N K K E O K U K , IO W A Capital ...............................................................................................$ 200,000.0Q Surplus and Undivided Profits........................................................ 329,574.16 Deposits ............................................................................................. 2,803,196.77 W I L L I A M L O G A N , P re s id e n t L . J. M O N T G O M E R Y , V le e P re sid e n t A S A P H R U C K , V ic e P re s id e n t C. J. B O D E , C a sh ie r A L V I N K R A F T , A s s is t a n t C a sh ie r L . J. W O L F , A s s is t a n t C a sh ie r ACCOUNTS OF BANKS AND BANKERS INVITED https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis No Use Mr. Henpeck: “I am thinking of taking a cottage about here.” Farmer: “But don’t you think the cli mate would disagree with your w ife?” “It wouldn’t dare.” January, 1927 THE NORTHWESTERN BANKER 95 9 2 7 Bank. Advertising Rises to New Standards of Excel lence Each Year. —W h a t will Your Bank do during 1 9 2 7 to establish its Leadership in this as in other respects? Pearson Hotel O n the near North Side Hotels M a d is o n and L e n o x CHICAGO —The day when one bank could create an advertising campaign of leadership is dead: —but Your Bank can still control the leading campaign for its entire trading territory. Send for the full facts on Reed’s Mass'mag' azine Plan for 1 9 2 7 . D E T R O IT Madison Ave., Near Grand Circus Park HE pleasure of your Chicago visit will be heightened if The Pearson is selected as your stopping place. It is located just outside of the business, the atrical and shopping district, yet within pleasant walking distance; its moderate rates, unexcelled equipment and service, notably good and reasonably priced food, all make it a perfect base for opera, concert, theatre and shop ping expeditions. A 300-car fire proof garage is close by. T SEND T O D A Y FOR ILLUSTRATED FOLDER P. M. 6~* B a n k e r R E E D A ssociates TRIBUNE TOWER N TH E heart of the downtown d i s t r i c t , near all public buildings, department stores and theatres, yet away from the noise of the city. I These twin hotels, so con veniently located, offer you accommodations of n o t a b l e excellence at prices most reasonable. Delicious foods of choice quality prepared by home cooks. The Pearson is a block east of the intersection of Pearson Street and N orth Michigan Boulevard. Rates for one person are from $3.50 to $5.00 a d a y ; for two $5.00 to $ 7 .0 0 ; tworoom suites $10.00 to $14.00. Every room and suite with private bath. When in CHICAGO Enjoy your stay— at the new MORRISON HOTEL Tallest in the World 46 Stories High Closest in the city to offices, theatres, stores and railroad stations 1944 Outside Rooms Am ple parking space. Good transportation to all parts o f Detroit. Each with bath, running ice water and servidor Lowest Rates W rite or wire fo r reservations FIR ST N A T IO N A L B A N K . Waterloo.!,owa D IR E C T O R S B. P. SW ISH ER Pickett, Swisher & Farwell R. J. H OXIE Secretary Waterloo Fruit & Commission Co. A. M. PLACE Vice President E. E. PEEK Vice President Waterloo Bldg. & Loan Association. H. W . GROUT Real Estate C. A. MARSH President k._____________ ____ /ÓG5 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis T H E First National Bank of Waterloo is A equipped to give you the highest degree of SERVICE, and do it promptly and efficiently at all times. Fifty-eight years of steady con servative growth enables this bank to ex extend such service. O F F IC E R S C. A. MARSH, President A. M. PLACE, Vice President W IL L A. LANE, Cashier P. W . EIGHM ET, Assistant Cashier O. L. MORRIS, Assistant Cashier Total Resources Over $2,900,000.00. D IR E C T O R S W. W . MARSH President Iowa Dairy Separa tor Co., President Associated Mfg. Co. J. T. SULLIVAN Lawyer. J. O. TRUMBAUER Vice President Farmers Loan and Trust Co. H. A. MAINE President H. A. Mains & Co. W ILL A. LANE Cashier THE 96 P lan L iq u id atio n Iow a Loan & T ru st S THIS issue goes to press, efforts are being made by the members of ‘‘ the Des Moines Clearing House Association to hit upon some plan for liquidation which will insure for the de positors of the closed Iowa Loan and Trust Company, an early dividend of substan tial proportions. They are working in conjunction with the state banking depart ment and expect soon to announce a plan whereby the closing of the bank will not seriously retard local business. The closing of the bank came as a sur prise to the Iowa banking fraternity. The bank has deposits of approximately seven million dollars and had nearly fifteen thou sand depositors. The immediate cause of its closing is said to have been the attempt of the state treasurer to withdraw at least a part of the half million dollars in de posits the state had in the closed bank. During the Saturday and Sunday pre ceding the bank’s closing strenuous efforts were made by the Clearing House to effect a merger with one of the larger banks, probably the Iowa National Bank. The deal was about completed when it was discovered that the Iowa Loan and Trust had indorsed about five million dollars worth of city mortgages for the Metropoli tan Life Insurance Company and that this constituted a real liability on the part of the bank, although Metropolitan officials Avere said to have notified the bank’s A NORTHWESTERN BANKER January, 1927 officers that they would not hold the bank cation has been developed, conditions are good. liable under any circumstances. “ There has been some activity in farm According to the last statement of con dition of the closed bank, capitalized at land sales. When farms now held by $500,000, it had more than a half million mortgages are sold to experienced people surplus, with deposits then around eight who intend to live permanently on the million and loans and discounts of five and land, values are bound to increase and one-half million. Officers were D. H. general conditions improve. McKee, president; C. S. Howard, George “ The movement of wheat to market in Williams, and H. T. Puller, vice presi this district was approximately onedents; J. E. Morton, cashier, and A. C. fourth smaller during August, Septem Wahl, A. L. Hammerstedt, A. Oppedahl, ber and October than during the same pe J. E. Atwood and R. W. Leriche assistant riod last year. Prices of Durum wheat, cashiers. barley, rye and oats were slightly higher than last year. SEE ANOTHER YEAR OF “ Retail stocks, generally are smaller PROSPERITY than last year, as is the amount of out standing notes and accounts receivable. (Continued from page 13) perity will be projected over into the new year. General business ought to be good for the next six months at least, for three of the outstanding factors that help to make and sustain prosperity, namely, construction work, a sound bank ing position and ample available credit, are quite favorable. A fourth important element is the confidence with which peo ple view the future.” Charles B. Mills, president, Midland National Bank and Trust Company of Minneapolis: “ Business conditions in this district are fair. Crops were not all that was to be desired this year, and as a result, some sections are rather quiet. In other districts, however, where diversifi “ The most encouraging reports come from districts where diversified farming has become a permanent institution. These districts are not being limited to one large pay day each year and are able to keep abreast with changing conditions by means of the regular income that comes from the dairy cows. Creameries when well managed, seem to be profitable enterprises, and the farmers who are able to sell their products to creameries con tribute much toward maintaining a fair volume of business in the country towns. “ The Northwest is recovering slowly but surely, and each year finds this dis trict nearer that sound basis which pre vailed quite generally prior to the World war.” “ ROLL OF H O N O R ” BANKS It is an honor to be listed among the Honor Roll Banks. It indicates that the bank has Surplus and Undivided Profits equal to or greater than its capital. Such distinction is accorded to the banks listed on this page. By careful management and sound banking they have achieved this enviable position. These banks will be especially glad to handle any collections, special credit reports or other business in their communities which you may entrust to them. Correspondence is invited. IOWA Town Davenport Ft. Madison Lake Mills Little Rock Bank Union Sav. Bk. & Tr. Co. Lee County Sav. Farmers State First National https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Capital Surplus and Profits $1,250,000 $1,250,000 56.000 50.000 38.000 25.000 26.000 25.000 Town Bank Monticello Soldier Wallingford Waterloo Monticello State Soldier Val. Sav. Farmers Sav. Pioneer National Capital Surplus and Profits $ 200,000 $ 225,000 28,991 20,000 35,000 15,000 210,000 200,000 January, 1927 THE NORTHWESTERN BANKER 97 IN D E X T O A D V E R T I S E R S American Bond & Mortgage Co........ 52 American Commercial & Savings Bank, Davenport ................................ 90 American Express Co............................. 5 B Baker-Kellogg & Co............................. Bank of America .................................... Bankers Trust Co.................................... Bartlett & Gordon ................................ Boldt, A. J., & Co.................................... Brokaw & Co.............................................. Brown-Crummer Co................................. 55 74 83 47 53 G General Motors Acceptance Corp.. . 58 H 48 86 90 93 52 92 84 30 Des Moines Duplicating Co.................. Des Moines Life & Annuity Co........ Des Moines National Bank ............... DeW olf & Co., Inc............................... Doherty, Henry L., Co........................... Drovers National Bank .............. 53 78 50 68 95 I Illinois-Merchhnts Trust Co................ 100 Industrial Acceptance Corporation.. 57 Iowa National Bank, Davenport . . . 91 Iowa National Bank, Des Moines . . 7 Iowa National Fire Insurance C o... 65 J J> 57 66 99 42 38 80 K Koeppe, Langston, Loper & Co..........54 Jj Eagle Pencil Co........................................ 68 Emery, Peck & Rockwood ................. 53 Eppley Hotels Co.................................... 78 Lane, Roloson & Co., Inc....................... 54 Live Stock National Bank, Omaha.. 72 Live Stock National Bank, Sioux C i t y ........................................................... 88 P M 60 24 32 82 26 89 88 2 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 76 64 56 77 62 o ........................ 73 Peoples Trust & Savings Bank, Clin ton ............................................................. Pearson Hotel ........................................ Philadelphia-Girard National Bank. Pioneer National Bank ................. .. Polk, H. H., Co............................................ Priester-Quail & Cundy ..................... 94 95 34 87 51 51 R, Rand McNally Co....................................... 4 Reed, P. M. & Banker Associates .................................... 68, 77, 84, 91, 93, 95 Roll of Honor Banks .......................... 98 Royal Union Life Insurance Co. .28, 63 Seaboard National Bank ................... Security State Bank ............................ Southern Surety Co................................ Stanley. Henderson Co........................... State Bank of Chicago ....................... State Central Savings Bank ........... Stern, Lawrence & Co........................... Stock Yards National Bank, Chicago 60 89 67 56 70 94 53 25 T Thompson, Ross & Co........................... 40 True-We.bber & Co.................................. 49 TJ Union Trust Co........................................ Mason City Brick & Tile Co.............. Merchants National B a n k ................... Midland Bank, Ltd.................................. Midland Mortgage Co............................ Midland National Bank ....................... Minnesota Loan & Trust Co............... Missouri State Life Insurance C o... Mitchell, Hutchins & Co....................... Morrison Hotel ........................................ “ A C A S H I E R ’S C H E C K ” for $ 3 .0 0 is all that is required to secure the monthly visits of the Northwestern Banker for an entire year. Each issue contains from 1 0 8 to 2 0 0 pages o f mighty interesting matter pertaining to banks and banking interests in the territory covere dby the magazine. “ OUR CO R R E S P O N D E N T S . ” Every bank in the northwest is in vited to a place on this list. Send us items of local interest, tell us about your bank and its growth, prospects, etc., also any other financial news of interest to bankers in your section. W e are always glad to head from our friends. “ SI G H T D R A F T S . ” W e always carry a large “ Reserve” of good will and additional service, and will prom ptly honor drafts made upon same by any bank. This department is for your special benefit. It may be made of very great benefit to your bank. D o not fail to avail yourself of its privileges. “ A C L EA RI N G HOUSE.” Our columns are a clearing house for all our readers. Express your visw on any topic of interest to 43 66 S John Hancock Mutual Life Insurance Co...................................................... 67 E Federal Surety Co.................................... Fidelity Trust Co., New York ........... First Illinois Co........................................ First Iowa State Trust & Savings Bank ....................................................... First National Bank, Chicago ......... First National Bank, Davenport . . . First National Bank, Mason City . . First National Bank, Omaha ........... 29 P Hanna, W . D., & Co................................. Hanover National Bank ..................... Hoagland, Allum & Co......................... Homestead Co............................................ Hotels Madison and Lenox ............. . 45 59 35 National Bank of theRepublic _____ National City Co............................... National Life Association ................... National Park Bank........................... North American National Life ......... Northern Bank Note Co....................... Northern Trust Co.................................. Northwestern National Life Insur ance Co............................... Omaha National Bank 44 C Cedar Rapids National Bank ........... Central State Bank ............................ Central Trust Co. of Illinois ........... Chapman, P. W . & Co........................... Chase National Bank ............................ Chicago Trust Co...................................... City National Bank, Clinton ............. Commercial National Bank, W ater!oo ............................................................ Consolidated National Bank ............. Continental & Commercial B an k s.. Page First National Bank, Sioux City . . . 2 First National Bank, Waterloo . . . . 95 First National Co., Mason City . . . . 84 First Wisconsin National Bank . . . . 31 Fisher Co............................... . . . . .............. 36 Foreman Banks ...................................... 33 Foshay, W . B., Co.................................... 94 Foskett, H. 1.............................................. 51 91 85 23 V 57 2 75 Valley National Bank ....................... 2 3 65 41 Welch Printing Co.................................. White-Phillips Co.................................... White-Price Co.......................................... Wollenberger & Co.................................. 37 27 46 95 W 68 the banking fraternity and sumbit same for publication. Y ou do not have to agree with us, or with anyone else. W e learn things by an interchange o f ideas, and people with whom we disagree often prove valuable teachers. W e shall be glad to hear from you. NO P R O T E S T ” has ever been offered to the statement that the field coverd by the Northwestern Banker is the money-producing section of the Am erican continent, rich in hogs, cattle, corn, etc., and dotted with thousands o f prosperous banks, all doing a good business, and the m ajority of them are readers of “ The North western.” “ SURPLUS AND UNDIVIDED PROFITS” increase very rap idly with those banks whose advertisements appear regularly in the columns o f this magazine. Full inform ation as to rates and our special service will be promptly furnished on appli cation. Your business solicited and appreciated. The “ Bankhas been twenty-nine years in its present field. THE 98 Positive Proof “ Are you positive the defendant was intoxicated“?” queried the magistrate. “ No doubt,” growled the officer. “ Why are you so almighty certain“?” “ Well, anyhow,” replied the police man, “ he put a cent in the patrol box and looking up at the town clock, groaned, Hie, I’ve losht 14 pounds.’ ” He Raised Him Man in elevator: “ Fourth floor, please.’' Operator: “ Here you are, son.” “ How dare you call me son? You’re not my father.” “ Well, I brought you up, didn’t I “?” Presence of Mind A few minutes after an alarm of fire was given in a hotel, one of the guests joined the group that was watching the fire, and chaffed them in their apparent excitement. “ There was nothing to be excited about,” he said. “ I took my time about dressing, lighted a cigarette, didn’t like the knot in my necktie, so tied it over again— that’s how cool I was. “ Fine,” one of his friends remarked, “ but why didn’t you put on your trou sers?”— Everybody’s Magazine. Another Version They were driving home. The night was black, the road unfrequented and it was past two o’clock. Suddenly the motor gave some convulsive sobs and the car stopped. The young man, visibly embarrassed, made an earnest effort to start the engine, but failed. After get ting out and looking over the engine he turned to the girl and said: “ This is most unfortunate. The gaso line tank seems to be full of Avater and we can’t move a foot.” The girl was far less perturbed. She said: “ Come on inside and stop looking worried. This has happened to me be fore. All we have to do is sit in the back seat about an hour and the water turns right back into gasoline.” Fifty-Fifty Pat was taking his first flight in an aeroplane. The pilot was taking him over New York City. When they were up about 3,000 feet the plane suddenly went into a nose dive. “ Ha, ha,” laughed the pilot, shouting to Pat. “ I’ll bet fifty https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis NORTHWESTERN BANKER per cent of the people down there thought we were falling.” “ Sure,” admitted Pat, “ and I ’ll bet fifty per cent of the people up here thought so too.” Coming Up to the Average A commercial traveler recently asked a Pullman porter the amount of his aver age tip. The negro replied that the average amount was one dollar, and the traveler handed him a dollar. The porter caressed the silver coin affectionately and said: “ Yessah, boss, but you is de fust puhson what has come up to the average.” Speaking About Pines The teacher had been reading to the class about the great forests of America. “ And now, boys,” she announced, “ which one of you can tell me the pine that has the longest and sharpest need les ?” Up went a hand in the front row. “ Well, Tommy?” “ The porcupine.” Salvation Free Parson Johnson: “ De choir will now sing, ‘I’m Glad Salvation’s Free’ while Deacon Ketcham passes de hat. De con gregation will please ’member, while sal vation am free, we hab to pay de choir foh singin’ ’bout it. All please contribute accordin’ to yo’ means an’ not yo’ mean ness.” Inconsistent Stage Manager: “ My dear, I wish you would wear a different gown in the sec ond act.” Ritta Ravenyelp: “ But that is the lat est style, and I paid $200 for it.” Stage Manager: “ That may be true, but when your husband says, ‘Woman, you are hiding something from me,’ the audience can’t figure out what he means.” Literally “ What did you say the crowd up at McGinty’s was doing to interest you so long?” asked Mrs. Elderberry, severely. “ They were telling antidotes,” replied Mr. Elderberry. “ You mean they were telling anec dotes.” “ Nope. Just what I said. It seems they started discussing home brew recipes and January, 1927 then drifted naturally on to antidotes.”— Judge. Bribed First Chorus Girl: “ What are you do ing nowq Mazie; I never see you in the theater any more?” Second Chorus Girl: “ Oh, an automo bile insurance company is paying me $500 a month not to wear a short skirt on streets where traffic is heavy.” Action A tourist stopped at a lonely cabin in the Tennessee mountains. He noticed four good-sized holes in the door. “ I don’t like to be inquisitive, but what are the four holes in the door fo r?” he inquired. “ We got four cats,” answered the mountaineer. “ But why didn’t you have one good sized hole ?” “ Hell, stranger, when I say ‘Scat,’ 1 mean ‘SCAT!’ ” Was Ever Thus Teacher (in grammar class) : “ Willie, please tell me what it is when I say ‘I love, you love, he loves.’ ” Willie : “ That is one of the triangles where somebody gets shot.” Bad Business One traveling man met another one in Thompson’s restaurant. “ What’s the matter, Bill? You are eating only crackers and milk. Are you on a diet ?” “ No, on commission.” Play may not have so high a place in the divine economy, but it has as legiti mate a place as prayer.—Holland. I should define poetry as the exquisite expression of exquisite impressions.— Roux. The value which all men put upon any particular pleasure depends on compari son and experience.— Hume. Every great poem is in itself limited by necessity, but in its suggestions un limited and infinite.-—Longfellow. None of you can tell where it (the shoe) pinches me.— Plutarch. January, 1927 THE NORTHWESTERN 93 BANKER I T H continued faith in the finan cial, industrial and agricultural re sources o f the great state o f Iowa, the officers and directors o f the D es M oin es National Dank view with full confidence the coming year o f 1 9 2 7 . W A n d throughout the N e w Year, we can wish for our friends nothing happier than renewed joy and prosperity in their every business enterprise. DesMoinesNational Dank Capital $1,000,000.00 https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis L O U IS C. K U R T Z , P r e s id e n t A N D R E W J . H U G L I N , V i c e P res . H E R B E R T L . H O R T O N , V ic e P res. H A R O L D R . H O W E L L , V i c e P res. G E O R G E D. T H O M P S O N , C a sh ier C L A R E N C E A . D IE H L , A s s t. V . P . W A L T E R J. R O B E R T , A s s t. V . P . R I C H A R D H . C O L L I N S , A s s t. Cash. E D W I N F . B U C K L E Y , A s s t. C ash. C L Y D E H . D O O L I T T L E , T r . O fficer T A M L I N S. H O L L A N D , M g r . B on d D ept. Conservative Traditions in Modern Banking In the Illinois Merchants Trust Company, the traditions of a half century of conservative banking stand back of each transaction. W ith its large financial re sources, its highly developed and specialized facilities and organi zation, its intimate business and governmental contacts at home and abroad, this institution is today one of this country’s lead ing banks— a logical choice for banks or commercial concerns establishing a Chicago banking connection. Personal attention to inquiries concerning our special ized services will gladly be given by our officers. I llin o is M e r c h a n t s T r u st C o m p a n y Capital & Surplus https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 45 SMillion Dollars
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