[Volume XXV
THE CHICAGO BANKER
22
hardly fail to have been impressed with the inequalities of the laws and regulations under which they are working, and there can be little question that the inadequacy of the savings bank system in some of the states and the total lack of it in so many others, has been the cause of the agitation for a postal savings bank.
There is nothing radical in the segregation plan which I have outlined. It requires no new institutions. It drives no existing institutions out of business. It permits a profit to continue to be made from the administration of savings deposits. The laws of several states, notably Ohio, Michigan, Utah, Oregon, Washington and Idaho, already provide that a bank may conduct two separate businesses or departments, “commercial” and “savings.” The segregation plan secures a legal and actual separation of these two fundamentally different classes of business, and requires savings deposits to be administered and invested in a manner which should command the entire confidence of the public.
T׳־»
The Boston Money Market
There is very little strength in the Boston money market for this season of the year. Bankers continue hopeful that better rates are in store within a reasonable time and yet there is no marked evidence of it as yet. The large bank reserves are held by a very few institutions, so that if any demand for money should appear, rates would probably advance much quicker than would be the case were surplus money better distributed.
On call money ranges from 2 to o.1/¿ per cent with 2^ per cent the more general figure. Time money is perhaps one-fourth higher than was the case two weeks ago. For dates this side of the new year quotations are 3j4 to 3A per cent, but over the year 4 per cent is practically the minimum. Year money is fairly free at MA per cent. There is a moderate volume of commercial paper selling. The choicest names range from 4 to MA Per cent f°r f°ur 1° six months. Good paper is selling as high as 5 per cent. For this side of the year best names are quoted at 3 V2 to 3A per cent. We hear of a four months’ city loan at 3^/2 per cent.
V*
The Citizens National of Raleigh, N. C., is making preparations to enlarge its present banking quarters, which will be entirely remodeled and a fifth story added.
RECEIVER’S SALE of MORTGAGES
I have for sale the following first mortgages on improved, irrigated farms in Montana. All draw interest at six per cent (6%). The first six are in Yellowstone County, the last two are in Carbon County. They are due in 1911.
Name	Amount	Description
Vaught	$2,000	NW Vx 19-2-24
Van Zyl	1,300	E % NE % 33-1-25
Jones	1,300	Lot 3 & SE % NW M 6-225־
Jones	2,200	Lots 4 & 5, 6-2-25
Malmberg	2,500	SE 14 14-1-24
Boshart	2,500	NW M 33-1-25
Kolstad	2,000	Lots 8 & 12, Sec. 5. Lots 1, 4, 5, Sec. 8, 3-24
Reynolds	1,500	SE K SE ׳.; Sec. 9. N V¿ NE Vx & SW Vx NE K, Sec.
16-5-16
These loans were personally injected by an officer of the Minnesota Title Insurance and Trust Company before making: them, and are believed to be choice.
Ditch stock accompanies eachloan,insuringamp!esupply of water.
Further information may be obtained by addressing the undersigned.
Bids tor one or more mortgages will be received and may be maae to
JAMES D. SHEARER, Receiver
Minnesota Loan and Trust Building
MINNEAPOLIS -	- MINNESOTA
The practical working of the principle is this: All savings deposits are required to be kept in a “savings department.” The accounts and investments of the savings department are entirely separate from those of the commercial department, or bank proper. The investments of the savings department consist of those securities and loans which in each respective state are considered proper investments for savings or trust funds. In case of failure or dissolution, the savings depositors have a first lien on the assets of the savings department, and if these are insufficient, they have an equal claim with other creditors of the institution on its general assets as well as on the investments of the capital stock and on the stockholders’ liability.
Such a segregation, legally required and extensively advertised, cannot fail to increase the confidence of the laboring classes in the banks, and to bring to them large amounts of money now withheld from circulation. Furthermore, it cannot fail to increase the confidence of those who have already deposited their savings in the banks and render them less timid in times of stress.
Against the extension of the segregation principle, it is often urged that the two functions of receiving savings deposits and commercial deposits should never be performed by the same institution; that there should be savings banks for savings deposits and commercial banks for commercial deposits. This is eminently sound and it would undoubtedly be well for the wage-earner if the trustee savings bank system prevailed all over the country. The fact is, however, that while it grows vigorously in the eastern states, it is making but little headway elsewhere, and even in the eastern states the receipt of savings deposits by state banks and trust companies is increasing perceptibly. Therefore, the question is not merely—what is theoretically best, but what can reasonably be done under existing circumstances and tendencies to better protect savings deposits?
On the other the state banks and trust companies argue that to be required to invest savings deposits in securities of more established value than mercantile credits will seriously diminish their profits. The answer is first that for savings deposits safety, rather than large dividends, is the essential thing; and second, that profits will not be so largely diminished as they imagine. In 1906 the total assets of Massachusetts savings banks with their restricted investments earned 4.01 per cent and the total assets of Massachusetts trust companies, practically unrestricted, earned 4.51 per cent. In 1907 the figures were 4.09 per cent and 4.67 per cent respectively.
I have been very glad of the opportunity to bring this matter before you in somewhat concrete form, because it has been suggested at meetings of the section so often in a general way that I believe it will fall on minds not altogether unprepared. As the membership of the section includes all of the five classes of institutions which I have enumerated as engaged in receiving savings deposits, its members can
NOTICE to BANKERS
«L If you desire to secure the services of an experienced bank officer, cashier, bookkeeper or clerk, correspond with The Walter H. Hull Company, Marshalltown, IoWa. We investigate carefully the past record of all applicants and none but competent men given consideration. We have on our lists bankers with available capital anxious to invest in good bank propositions. All correspondence confidential if desired.
trust funds, although court decisions classify them as mere obligations of the bank. On the other hand, in capitalized banks savings deposits are not regarded as trust funds, either legally or morally. But whether deposited in capitalized or uncapitalized banks, there can be no question that they are put there for identically the same purpose, and generally by a class of people whose education and training does not enable them to distinguish between the two kinds of institutions.
The Pittsburgh iron-worker invests half his savings in the mutual savings bank, and the other half in the trust company across the street. Is there really any difference in the nature of the two deposits? The Providence mill-hand puts his savings in the mutual savings bank on Saturday night and awakes on Monday morning to find that involuntarily he has become a depositor in a trust company. Has his deposit changed its nature in consequence?
The more I study this subject the clearer it seems to me that, morally and essentially, savings deposits, wherever deposited, are trust funds and should be invested accordingly.
In no state does it appear that mercantile credits, in which so large a proportion of our savings deposits are invested, are sanctioned by statutes or by courts as proper investments for trust funds. All courts and the laws of many states require trustees to invest their funds in securities or loans of established and permanent value. What an anomaly it is that while the investment of individual trust funds is everywhere carefully supervised by law or by the courts, the investment of that great composite trust fund, the laboriously accumulated savings of the wage-earners, should in so many states be entirely unregulated!
Should not all savings deposits be invested in the same manner by whatever institution they are received? And is not the wage-earner entitled to have his savings invested in approved securities whether he puts them in savings banks, state banks or trust companies?
This is a principle which has been adopted in, and placed on the statute books of five of the New England States. It also appears, in a less complete way, in the banking law of Michigan and in the newly passed Ohio law. At its convention in June the National Association of Supervisors of State Banks unanimously resolved to recommend its adoption in every other state in the union.
PRODUCE BANK OF CHICAGO
NATIONAL
CORNER CLARK AND LAKE STREETS
Statement of Condition at Close of Business Sept. 23, 190*
RESOURCES
Loans and discounts..........................S656.455.99
Other bonds and securities................... 158,011.84
United States bonds.......................... 108,968.75
Furniture and fixtures........................ 11.606.92
Due from U. S. Treasurer......................  2,000.00
Due from banks................... $162.154.61
Cash.............................. 184,506.12	346,660.73
«1,278,704.23
LIABILITIES
Capital stock................................$250,000.00
Surplus....................................... 50,000.00
Undivided profits ............................. 9.865.95
Circulation.................................... 99,500.00
Deposits................................. ....	869,338.28
81,278,704.23
RALPH N. BALLOU, Cashier
EDWIN L. WAGNER, President
DIRECTORS
WM. E. PHILLIPS WM. P. WAGNER
FRANK B. PETTI BONE EDWARD DICKINSON	EDWIN L. WAGNER
GEO. A. MACLEAN
WILLIAM WRIGLEY, Jr. CHARLES W. HIGLKY EDWARD R. DAVIS
A general banking business transacted. Three per cent paid on savings accounts.
Commenoed business August 26, 1907