[Volume XXV
THE CHICAGO BANKER
8
THE FARMERS’ AND MECHANICS’ NATIONAL BANK
OF PHILADELPHIA, PA.
427 CHESTNUT STREET
Capital .	.	$2,000,000.00
Surplus and Profits 1,320,000.00
Organized January 17, 1807
Dividends Paid . $12,707,000.00
OFFICERS :
Howard W. Lewis, President
Henry B. Bartow, Cashier	John Mason, Transfer Officer
Oscar E. Weiss. Assistant Cashier
ACCOUNTS or INDIVIDUAIS, FIRMS, AND CORPORATIONS SOLICITED PRESENT NUMBER OF STOCKHOLDERS 830

STATE BANK OF CHICAGO
ESTABLISHED 1879	
S. E. Corner La Salle	and Washington Streets
Capital	s1,000,000
Surplus and profits (earned) 1,300,000	
Deposits	19,000,000
OFFICERS	
H. A. Haugan, President L. A. Goddard, Vice-President John R. Lindgrex, Vice-President Henry S. Henschen, Cashier	Frank I. Packard, Asst. Cashier Henry A. Haugan, Asst. Cashier Samuel E. Knecht, Secretary William C. Miller, Asst. Secretary
YOUR CHICAGO BUSINESS RESPECTFULLY INVITED
bankers an actual statement of their conditions. It has been a continuous campaign of education in this country for many years to bring about this state of mind on the part of our borrowers and the successful introduction of this system of statements in the sale of single name paper has become an essential factor here, and I predict that the next ten years will find it generally introduced abroad.
To return to earlier times, as the business of the country continued to enlarge, the banking institutions of the East found their deposits increasing and many of them turned more and more to loans on commercial paper, believing that by fostering this class of business they were helping legitimate trade and commerce, and at the same time it was very profitable to those banks which engaged in it. Such paper buying institutions were constantly on the lookout for directors with large acquaintance not only in one line but in many lines, so that desirable names in various trades could be recommended. It, therefore, developed that as time went on the practice of purchasing paper of houses engaged in the boot and shoe trade, the leather trade, the grocery trade, etc., was increased.
It was about this time that banks more generally came to recognize the note broker as a necessary adjunct of the banking business. By the introduction of modern credit methods the banks soon found the solicitation of paper direct from so many firms, corporations, and individuals had its disadvantages, as for instance, one concern might be putting its paper out through many institutions, making it difficult to keep track of their operations. The note brokerage business at first in New York City was confined to only two or three houses (there are only eleven all told in the business in New York at present) who solicited paper from the merchants and sold it as opportunity presented itself, at a given rate, charging a brokerage fee. At that time the brokers did not usually advance any large sums to the merchant, only holding the paper for sale and giving the proceeds to him when the note was (Continued on page 20)
these departments consisted principally in noting up what certain directors had to say about the notes purchased.
It was not until the period from 1890 to 1895 that credit departments in banks were generally organized. In 1892, sixteen years ago, I made a careful investigation among banks of the country and there were not more than a half dozen credit departments in as many banks in the United States. During the entire time of the existence of the American Bankers Association from 1875 until that date, the subject.of -bank credits had never come before them for discussion; so that it is only during the last twelve or fifteen years that the introduction of credit departments in banks has become very general. In February, 1895, the executive committee of the New York State Bankers Association adopted resolutions recommending to its members that they request borrowers of money from their respective institutions to give them written statements, over their signatures, of their assets and liabil-ties “in such form as the committee on uniform statements of the various groups might recommend.” Acting on this recommendation nearly all the groups of the New York State Bankers Association adopted uniform statement blanks, and the example thus set has been followed by the associations of other states. In 1898, the National Association of Credit Men adopted uniform statement blanks, and in 1899 the American Bankers Association, in convention assembled, at Cleveland, adopted a uniform property statement blank and placed the stamp of its approval upon the credit department for banks. These efforts were practically the beginning of banking credit research and as we trace the subject during these years and note the growth of methods and the many difficulties which have been overcome, we certainly feel that much of substantial and lasting good has been accomplished in the direction of better credit methods for banks. It may also interest you to know that even in Europe and particularly in London the system of giving statements is gaining ground and the large and strong firms are giving to their
an historical standpoint some of the reasons for this method of borrowing. The open market for single name paper originally was confined to New York City, with considerable purchases of paper in Boston, Philadelphia, and throughout the Eastern states; and it has only been during the last ten years that the market for this class of investment by banking institutions has broadened. Now the banks of the West and Southwest have entered the field as commercial paper buyers, and the only part of our country at the present time which does not make investments of this character to any great extent is the Southern states. At first the selling of commercial paper was confined almost exclusively to the dry-goods trade in New York, as many houses in that line were old and well established, and those especially which did a large commission business and which made large advances to their mills were obliged to seek credit outside of their regular banks. The banking resources of the country were not then so large as now and no individual bank could give the dry-goods merchant in New York or Boston any considerable line. It, therefore, became the practice of some of the best men in that trade in New York to call upon banking institutions other than their own and offer their concern’s paper, either in the form of acceptances of their mills or straight single name paper. At that time all this business was done on what might be called “acquaintance sale.” One bank officer or director was acquainted with the merchant who wished to sell his paper, and when the bank had money to invest the officer or director would either ask the merchant for his paper or that gentleman would call and offer his note.
It has been my good fortune to have been connected with commercial paper buying-banks during my entire banking career, and one of my earliest recollections of the business was when as a young man I was sent out to “offer money” to certain dry-goods houses which the board of directors considered good. Only one or two banks in New York at that time had credit departments and the work of