[Volume XXV
THE CHICAGO BANKER
6
Pittsburgh has 31 National Banks, 25 State Banks and 38 Trust Companies, with total deposits of over $360,000,000. The oldest of all these
financial institutions, having been in continuous existence for 98 years, is
J. M. RUSSEL!
1 st Assistant Cashier
J. D. AYRES
Assistant Cashier
TT\e
Rank of Pittsbu rg h
-■-/N at ion. al JL AvS >s ociaiion
Surplus $2,800,000
‘THE BANK THAT HAS GROWN UP WITH PITTSBURGH‘ ESTABLISHED 1810
WILSON A. SHAW President
JOSEPH R.PAULL Vice-President
W. F. BICKEL Cashier
Capital $2,400,000
President . Vice-President .	.	. Cashier
Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier
$30,000,000
C. H. HETTIG .
W. B. WELLS
G.	W. GALBREATH J. R. COOKE
D’A. P. COOKE R. S. HAWES
H.	HAILL .
J. F. FARRELL
3rd NATIONAL
OF ST. LOUIS BANK
Capital, $2,000,000	Surplus, $2,000,000	Deposits,
ACCOUNTS SOLICITED
scattered over a great country like Canada or the United States. When you have big amounts to loan you look for some one who wants to borrow on a large scale. For this reason the great Canadian banks have established branches outside of their own country—m New York, Chicago, Minneapolis, and other speculative centers—not for the purpose of getting deposits in these places, where money is plenty, to loan in Canada, where money is scarce, but just the contrary. There is scarcely a community in Canada that is not in need of money to develop its legitimate industries, and yet a part of the small savings of those very communities is being loaned on the Chicago Board of Trade and the New York Stock Exchange.
This, however, isn’t the worst of it. When a few men are known to control vast sums of money they are constantly beset with importunities and temptations to use this money to promote enterprises outside the pale of sound banking. It is a matter of regret that some of the great Canadian banks appear to have yielded to this temptation. It is reported that one of them is putting large sums into a Light, Heat, and Power Company in San Paulo, Brazil. Another is promoting a street railway in the City of Mexico. Still others have loaned large sums for construction work on such things as interurban railways of a more or less speculative character in the United States.
This means that some of the surplus funds of the small Canadian towns are being loaned for development purposes in South America, Mexico, and the United States.
The Canadian banker will tell you, perhaps, that this is money not needed in Canada and that the home demand is cared for first; but it is impossible to believe that the loanable funds of the Canadian banks could not all be used to advantage in developing the splendid resources of that great dominion.
There is no doubt whatever that the Canadian bankers would rather loan their money in Canada for development purposes than anywhere else, other things being equal; but the trouble is that if the banks went into this kind of business at home, the calls would be so numerous and, in most cases, so small that the management could not afford to investigate them. Indeed, it would be a physical impossibility for them to do it. There are less than forty incorporated banks in Canada. In about
population of over one hundred thousand, and the prirnary deposits of these two cities are probably only a small fraction of the entire deposits of the dominion; yet the banking policy of the entire dominion and the disposition of its loanable surplus are largely dictated from these two cities.
Inasmuch as no bank can be chartered in Canada with a capital less than $500,000, there is no hope whatever for a moderate-sized town to have an incorporated bank of its own, and it must always labor under a disadvantage in the matter of credits. The proposition that a bank customer in a small Canadian town can get as good attention to his credit needs at the local branch bank as he would from a locally owned bank with a local directory is hardly worth discussing.
The branch manager is chiefly concerned in making a good record with the home office, so that he will be transferred to a better post. He is not only anxious to avoid losses on the loans he makes himself, but he is very careful about what applications he submits to the home office. A manager is not supposed to submit an application unless he thinks there is merit in it; and if he submits too many that do not meet the approval of the home office, they soon form a poor opinion of his judgment. In case of doubt it is safer to say no; and the man who is placed in a responsible position alone, in personal contact with no one whom he can consult, is pretty apt to have doubts when anything out of the ordinary turns up.
Some of the worst losses banks suffer never show on the books.
The losses that show on the books are those losses that come from bad loans,—losses that occur through a bank officer’s saying yes when he ought to have said no. But there is another kind of loss that is more serious, and that is the loss that comes to the bank, to its customer, and to the community, when credit is refused to the man who is entitled to it. Such losses never show on the books; hence the local manager under the branch system prefers to take the chance of that kind of a loss to the other. Much the same considerations apply to the general manager at the home office and to his directory. No machinery of credits has ever been devised or ever will be by which a few men at the centers of trade can pass intelligently upon the multitude of credit demands in the small communities
payers. The best business men of the town are glad to accept directorships in these banks and to serve without compensation. When the officers of these banks are called upon to ex-, tend financial aid to some enterprise that may promote the welfare of that place, they can call into consultation able men intimately acquainted with local needs and conditions; men who know personally the men applying for the loan. What method could possibly be devised whereby a more fair and intelligent judgment would be likely to be reached? Under this system the surplus funds of each community are used first for the benefit of that community under the supervision of men whose interests are local.
This system is largely responsible for the marvelous commercial growth that has taken place in this country outside of the large cities.
The total deposits of all the national banks in the United States in 1898 was approximately $1,960,000,000. Of this $1,120,000,000 was held in reserve cities and $480,000,000 in country banks outside of reserve cities. On February 14, 1908, the total deposits of all national banks was $5,036,460,000, of which $2,575,997,000 was held in reserve cities and $2,460,463,000 in country banks outside of reserve cities. From these figures it would appear on the surface that the deposits held by national banks are about equally divided between the reserve cities and the rest of the country. This, however, is misleading. The deposits in the reserve cities are made up largely of deposits of country banks. In Chicago about one-half the deposits of the national banks are deposits made by country banks and by banks in other reserve cities. You all know how such deposits are duplicated. A man makes a deposit, we will say, in a bank in some small town in Nebraska; that bank passes it on to Omaha. Omaha passes it to Chicago, and Chicago to New York. In this way the same deposit is practically counted in several different places. Eliminating these duplications, it is safe to say that two-thirds of the deposits in the national banks are controlled by the smaller country banks outside of reserve cities. Taking the state and national banks together, it is conservative to say that more than one-half of all the primary deposits of the country are held in towns and cities of less than fifty thousand inhabitants.
In Canada there are only two cities with a