15 THE CHICAGO BANKER July a, i9o8\ of the goods, unless the American banks are willing to become responsible for the delivery of the goods upon which sums of money are advanced. American banks in the present imperfect state of the bill of lading question are unwilling to take this responsibility. To refuse to accept bills of lading as collateral for money advanced on goods in transit would paralyze the industrial and agricultural business of the country more than those who have not studied the question can realize. This question has been most carefully considered in all its phases by some of the brightest business minds in the country desirous of co-operating with the American Bankers Association in bringing about legislation that will protect the banks and the shippers, as well as the foreign purchasers. A bill of lading that would meet the requirements specified by the American Bankers Association would mean the easier movement of the wool crop, the fruit crop, yes, and the copper crop of Michigan through making it safe for the banks to advance the money to get them to market. The bill proposed is in no sense a political measure, neither is it a law that favors any class of persons. It is a law making uniform the treatment of all bills of lading without reference to the state in which they originate. I would recommend that a special committee be appointed with ample authority to consider changes in the banking laws, and to co-operate with a like committee of the American Bankers Association. My thanks are due to the executive council of this association for its uniform courtesy and invaluable assistance in furthering the aims of this association and in making this event the great success it is. Our new and efficient secretary, Hal H. Smith, is also entitled to my gratitude for the manner in which he has handled matters connected with the association. He is also our counsel and will elucidate legal questions propounded to him by the members of the association. I thank you one and all for the patience with which you have listened to me, and for the support you have given whenever called upon for it, and in conclusion let me say that I believe the Michigan Bankers Association will be found on the right side of every question. V* Malcolm A. Karner succeeds Jno. A. Vance, Jr., as vice-president of the American Savings Bank of Columbus, O. foundation and are thriving. In my estimation there will be no need to test the efficacy of the new currency law for some time. While we have prospects of bumper crops, the railroads of the country last year took on 300,000 more cars than they need in normal years. There is therefore not much prospect of the congestion that last year tied up so many millions of dollars in goods and farm products in transit, and in the field, the factory and the mine. There will be a quicker moving to market and a more rapid turning over of the money making a larger field of activity for fewer dollars. Speaking of this reminds me of a misleading statement. According to the last report of the Comptroller of the Currency there were during the year 1907 in operation in the United States 19,746 national and state banks with deposits aggregating $14,000,000,000. This figure is pointed to as an evidence of the great wealth of the nation. We are rich, there is no gainsaying it and I do not wish to pose as a pessimist, but my sense of truth will not permit me to accept the statement in its entirety. Take a deposit, say of $100,000 made in a country bank. That bank sends it forward to its correspondent at Detroit, who, in turn forwards the amount to Chicago. In each case that $100,000 shows up as a deposit. Suppose the Chicago bank splits it and sends $25,000 to Philadelphia, and possibly $15,000 to St. Louis. We thus have this $100,000 showing up as a deposit of $200,000. Just how much of this $14,000,000,000 deposits is duplication is of course unknown, but it is safe to say that it will pull down the total of wealth materially. Financial legislation should be wholly divorced from politics and Michigan bankers should swing in line with the American Bankers Association with regard to the securing of legislation providing for a uniform bill of lading. What this question means to the business interests of the country is as yet but dimly understood. When it is realized that the movement of the crops, the marketing of manufactured goods abroad depends upon these instruments for the financing of the enterprises it can be realized that there is no question outside of the currency problem that is so important to the banks, farmers, carriers and merchants as the bill of lading question. Millions of dollars are yearly lost through the imperfect system of billing goods both to domestic and foreign markets. So serious has the menace of loss become that foreign banks are inclined to refuse to accept the bills of lading as a guarantee of the actual shipment compels the honest and skillful banker to bear the burden for the slovenly financier and the thief. If one of the latter class goes to the wall, under the insurance plan the bank that has by years of careful, honest administration built up a reputation must devote part of its earnings to make good the losses of the get rich quick fiend after he has deliberately allowed his institution to collapse. The argument is made by the friends of the insurance plan that the criminal law would reach such a banker, and that therefore failures would be few and far between. The criminal law will reach them if they do business under the general banking law of the state, as it now exists, or under the national banking law, demonstrating there is no real necessity for insurance.to protect depositors in well managed institutions. Insurance companies would be loath to write a policy on the life of a man who tosses about dynamite for a living. The great risk would mean a great premium. So it should be with the government. In commercial banks such as the state and national banks of the country, the customers are both debtors and creditors. This being the case, and if the government guarantee is to be made on an equitable basis, the government should insure the banks against losses through the borrowers as well as the borrowers against losses of their deposits. If the argument is made that banks should not make bad loans, the banks can reply by saying depositors should not patronize bad banks. It is a poor rule that will not work both ways. Government insurance of deposits would mean a tax upon the people patronizing banks in order to protect men who should have sense enough to protect themselves. In other words it would place a premium on incompetency, both on the part of the depositor and the banker. This species of paternalism is, in my estimation, foreign to the spirit of our democracy which protects every man in his rights, and leaves him to manage his own business as he deems best. If the government is to guarantee bank deposits why not guarantee all kinds of credits, and tax the retailers in all lines so that the wholesalers who sell on sixty or ninety days’ time can be sure of getting their money. One is just as logical as the other. Under a government, or any other guarantee of deposits, the work of years of effort, initiative, character, judgment, and sound integrity methods of building up and maintaining a banking institution count for nothing in attracting depositors. The bank of sound creation and the mushroom institution of yesterday stand upon the same level in the eyes of the depositor. Are bankers who have given years of their lives to the advancement of a particular institution to be accused of selfishness because they oppose a movement that would not only rob them of their prestige, but also of their honorably acquired right to prosper ? My view of the question is that a bank protects its depositors more by prudent investment of its funds than by having to assist in making good losses of other banks arising from unwise investments and bad loans. Banks conservatively managed do not require any guarantee. It is only the untried and incompetently managed institution that needs such artificial aid. I agree with Mr. Frame that the government guarantee of deposits would undermine the healthy constitution of our conservative banking system, and with Mr. For-gan, president of the First National Bank oi Chicago, who sees in such creation of artificial credit a lever for disaster. I have great confidence in the banks of the country and believe they are fully able to meet conditions as they arise. Were they not there would be a different tale to tell as a result of this last panic. I am glad to say that the financial institutions of Michigan are on a sound State Convention Dates Place Secretary Address Milwaukee..............J. H. Puelicher....Milwaukee . Duluth................E. C. Brown.........Minneapolis Colorado Springs......A. A. Reed..........Boulder.. Providence.............G. E. Allen........New York Billings..............Frank Bogart........Helena... Bedford Springs.......D. S. Kloss.........Tyrone. .. Baltimore..............Charles Hann.......Baltimore. Lincoln................W. B. Hughes.......Omaha .. Denver................F. E. Farnsworth....New York Chicago...............F. P. Judson........Chicago.. Date Association July 15, 16 . .Wisconsin July 24, 25 .. Minnesota July 23, 24 July 23, 24, 25 . .Bank Clerks July 27, 28 . ..Montana September 8, 9 . .Pennsylvania September 16, 17, 18. .. Maryland September 24, 25 .... .. Nebraska September 27 ... A. B. A. Nat. Conven... September .. Illinois November 11, 12 .. Indiana November 20, 21 . .Arizona The offices of the American Bankers Association, Eleven Pine Street, have been fitted up especially for the accommodation and comfort of its members, who are urged to call and use same when in New York. Illinois Group Convention Dates DATE GROUP PLACE CHAIRMAN ADDRESS July 23.........No. I.........Monmouth..........W. C. Tubbs......Monmouth.