[ 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. RUSSELL
1st Assistant Cashier
J. D. AYRES Assistant Cashier
TTL6
Rank of Piltsburok
Jl^Nat ion al JL Association w
Surplus $2,800,000
“THE BANK THAT HAS GROWN UP WITH PITTSBURGH’ ESTABLISHED 1810
WILSON A. SHAW President
JOSEPH R. PAELL Vice-President
W. F. BICKEL Cashier
Capital $2,400,000
.	.	President
. Vice-President .	.	. Cashier
Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier Assistant Cashier
C. H. HUTTIG .
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, $30,000,000
---------- ACCOUNTS SOLICITED ----
banks, failed to state the truth? Often, after a large failure, the bank examiners or their superiors admit that the bank was insolvent long before but for fear of general loss of confidence they did not act as provided by law. Is it surprising that the depositor should lose confidence when the truth is withheld and he is deceived so that he continues to increase his deposit while the condition of such banks has been covered up by the public officials?
The wealth, safety and reputation of conservative banks are to-day too much dependent on the movements of the unprincipled stock jobbery annexes to the great banking institutions. We must have something that will disconnect the affairs of the legitimate banker from these. With the guarantee of deposits such men as Morse, Heinze and others will not be permitted by bank examiners and public officials to cover up their peculations of long standing for fear of producing a panic. With the guarantee of deposits the career of this class of banks would be shorter. There would be every inducement to expose their condition as soon as their banking methods were discovered and their power and influence for harm to commerce in general would be greatly diminished.
In conclusion I will say that when a proposition is favored by probably one-half of the bankers and practically all of their customers, is it wise to act as the railroads did, who now appreciate the fact that they were too slow to act and remedy their faults and so compel the people to act?
Insurance of deposits cannot be downed because of the individual banker who places himself, through pride in his strength, personality and reputation against what is for the good of the nation.
The banker who opposes the guarantee of deposits because it might help a weak competitor and make all banks safe must give his attention to something more logical because this argument is not sufficient. By this plan we hope to make all banks safe because our system is like a fence, it is no stronger than its weakest place. The guarantee of deposits may have its faults but a plan that will furnish and maintain confidence, the principal asset needed in the commercial world, is one that I believe will in time overcome all the minor objections.
against fire because he was opposed to paying for the carelessness and crime of others?
No, gentlemen, we must look at both sides of the ledger and cut out all sentiment and nonsense and not depend so much on the length of our pedigree.
We must not forget that such men as Bigelow, Stensland, Crocker and many others, up to a short time ago, could outshine the most of us in that respect, and that now and then our depositors remind us of this at a time when we try to convince them that they are perfectly safe and call their attention to our reputation and standing in the community. We cannot depend too much on our reputations as we have witnessed time and time again that general confidence declines more rapidly than Wall Street stocks when there is something special doing.
Runs are common even among the largest and the oldest banks and only a word from an evil disposed person without reputation can, at certain times interfere materially with a bank’s career and expectations. What we need and must have at all times in banking is confidence and stability. It is everything to the banker and we cannot have it as long as we are subject to such performances as we had in 1907. At that time we were politely told that we could shift for ourselves and our correspondents would care for our funds. I do not criticise the big banker in this because he, like everyone else, had lost confidence in everything and was obliged to look out for himself regardless of results.
We were all to blame and yet it is not our fault but the fault of our banking system. Our banks were suddenly transformed into hoarding institutions and thereby created more mischief in a few hours to the commerce of the country than can be repaired in years.
The present is an age of insurance and security. We, as bankers, demand the highest recommendations from our borrowers and employees and yet we ask security from both. This is right and it is also right and proper to grant the depositor the same security that the government and state demand of us, especially when it is to our interest to do so. Is it surprising that the depositor loses confidence when the only privilege granted to him for safety is to examine our published statements which in almost every instance in unsound
the same if we paid your depositors?” No, like sensible men, looking out for their own interests, they wisely paid the depositors, and substantially applied the principle that we are advocating to-day.
But we, as independent bankers, cannot accomplish what the big clearing house banks can with their perfect organization and the millions of dollars behind them. Then why should they now oppose so vigorously the same principle to prevent a panic that the clearing house applied for their own protection, in the case of the Chicago National?
The Iowa State Bankers Association, in the past years, has been interested in and has accomplished much in matters pertaining to their financial welfare. If we had deposit insurance it is reasonable to suppose that they, being financially interested, would interest themselves in weeding out fraudulent banking. This would become an important feature of their business and I will vouch for much cleaner banking when these competent men, many of whom I have served with on committees, interest themselves in this matter. They are much better informed as to the banks and their management than it is possible for a few men to be, on whom all the responsibility and duty of investigation now devolves.
Gentlemen, I do not intend to worry you with statistics and figures as I have on former occasions, as this question has been so frequently discussed of late. The item of the cost of this insurance is conceded to be so comparatively slight that our opponents do not usually argue from that standpoint. The comptroller’s report shows that the loss is about i-20th of 1 per cent on the average yearly deposits of national banks since they have been in existence, and for the last ten years it has been very much less, so the loss is but nominal.
The main argument against insurance of deposits used by our opponents is not so much the expense as the principles involved. Gentlemen, I am free to admit that I do not like to pay for other people’s deficiencies and crime but do we not do so and do it willingly when we patronize fire, burglar, fidelity and numerous other forms of insurance? Would not the banker decline or decrease the line of credit to the merchant who refused to insure