[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
1. M. RUSSELL
1st Assistant Cashier
J. D. AYRES Assistant Cashier
TT\e
Rank of Pittsburgh
-L/Natioixal JLAssociation w
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
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, $31,000,000
--—------- ACCOUNTS SOLICITED ----
"The people of the states of the Union are not interested in this question. They are not the depositors. I refer to the common people. The people who deposit in the banks and the people who borrow the resources of the banks are business men who can take care of themselves, and there is no reason why we should run mad in this idea of paternalism.”
T submit in all fairness to you men as practical bankers that if any banker would come before you and make a similar statement, that the people of the states of the Union are not interested in this question, that they are not depositors, you would be forced to admit that he didn’t know the primary principles underlying true banking success and that if he did not understand the primary principles he would not be fit to participate in bank management much less to become sole maker of laws covering the currency and banking questions of the great American people. Yet it is this type of bankers which now opposes a federal guaranty and you cannot disguise the fact that your opposition is not based upon sound economic principles but is founded upon absolutely selfish motives.
The true mission of a bank is one of public good. It presents the true spirit of scientific cooperation. An honestly managed bank helps men to help themselves and when a bank is established in a community־ it should be so organized and managed and the stock so widely distributed that the greatest number may־ share in its profits and bring to the bank the widest possible degree of public confidence, hence any national law which will further the true mission of a bank, such as a federal guaranty of deposits, is a law in the interest of the public welfare and one that will increase the profits of the banks as well.
Would a Form of Federal Guaranty Help, or Retard, the True Mission of a Bank ?
When men organize a bank, their primary object is one of profit, they find however that in addition to their own capital they must receive from the public, that it not only increases their profits but increases the usefulness of the bank as a community builder. Idle money in a community—like idle men, is an economic loss to a community. Idle money is one of the principal causes of idle men for it takes money to employ men. Therefore, no community will rise to its highest degree of financial and moral development unless the money of the community is kept in circulation. It is estimated that there is one
to have developed a new type of bank manager who believes that the sole right in a bank is centered entirely within the stockholder. This type may justly be styled the Wall Street banker.
So filled are they with the “divine right” idea that bankers of this class look upon their deposits as their own money־ and therefore their exclusive benefit. They chafe under any' and all governmental restraint and are usually' opposed to any form of banking legislation that looks to the welfare of the depositor and borrower. This principle seems to underlie every financial measure which has been favorably considered by the last session of Congress and is most strikingly' exemplified by the distinguished senator from Rhode Island, the republican leader in the senate, the author of the Aldrich-Vreeland Bill, the sole arbiter of American legislation in his speech, delivered in the senate on March 20, 1908. Congressional Record, page 4152.
In discussing the question of the federal guaranty of bank deposits, he says:
MAUSOLEUM
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or knowledge but where the cause of the failure being removed, the business reorganized, public confidence restored, the bank has invariably recovered its losses and continued as a dividend paying proposition to its stockholders. A most striking proof of this truth is found in the recent Knickerbocker Trust Company suspension which closed by the arbitrary action of a clearing house committee, and within eight months is found in a solvent condition and is now doing a prosperous business with nearly forty million of deposits.
In providing a government guaranty there would never be an additional tax levied to meet any loss, for there never would be any extraordinary withdrawal of deposits, and so long as the banker can rely with a reasonable degree of certainty' that his deposits will remain at a normal state he can tell with very great accuracy just how far he can extend his accommodations to the merchant and manufacturer and general borrower, and thus increase his earning capacity to the fullest limit. He can tell what loans can be safely' renewed, as well as what new loans can be made. Our recent panic, as far as the country at large is concerned, was caused more by fright upon the part of the banker than upon the part of the depositor. The average banker is not only an honest man, but a man of the highest integrity in his community and who prides himself upon being able at all times to give his depositors their money when they ask for it. So, when a condition of panic exists each conservative banker wants to keep his own institution strong, to call in outstanding loans, and to refuse to grant any new loans. While in many cases there is no real justification for this procedure, and notwithstanding the harm he works upon his individual community and as an integral part of the banking system of the country contributes his share of harm towards the country, yet he cannot be censured, for the reason that he does not know how soon his depositors may be frightened and line up in front of his window demanding cash, so a form of guaranty which will satisfy the depositor under any and all conditions is just as essential for the benefit of the banker as it is for the depositor, and still more is it essential for the fair interests of the borrower.
In the individual management of an incorporated bank and the laws which govern it, there are four separate interests to be conserved—viz.: The government either national or state, the stockholders, the depositors, and the borrowers. Under our modern system of banking there seems