[Volume XXV
THE CHICAGO BANKER
14
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Editor	tal	comment
time that stress began to be laid on the business situation during the campaign and, since the election, has had even more attention than before.
The strong expression of public opinion in favor of conservative legislation is based on the desire to tempt capital into fields of investment where otherwise it would be timid. That much of what has been said and done during the past year or two has been unwise is the dominant note of many of the expressions on the subject. Above all there is a demand for greater liberty to railroads in the conduct of their affairs. As one of the chief railroad advisers of the administration lately expressed it, “the railroads have established the high-water mark of our prosperity.” Continuing, this man explained what he meant by saying that during the last year before the panic the country had barely transportation enough to carry its goods, so that it might be expected that no further production or consumption could successfully be carried on without larger transportation facilities. Increase in productive power and in prosperity beyond the level of 1907, therefore, meant an increase in the railroad mileage of the country. This, however, cannot be had, in the opinion of the politicians, without a more friendly attitude toward railroad investment designed to encourage investors to put their wealth into railroad securities in the assurance that they will be protected in the enjoyment of interest or dividends. The position which thus characterizes the present political attitude toward railroads is likewise characteristic of the general position taken on capitalistic questions.
There will be the tariff, the railroads, the currency, bank guaranty and postal savings banks and many other subjects upon which foolish breaks could be made but conservatism is likely to rule with the determination to be fair and favorable to the American business man and his enterprises.
One Way of Protecting Deposits
Minneapolis banks quickly saw the advantage of clearing house inspection before that little idea of W. T. Fenton’s had been very far developed in Chicago, and aggressively adopted it. Again it worked to perfection, and the probabilities are that similar inspection methods will be adopted all over the Northwest to work additional protection to that provided by state and national inspection. Shortly there will be in operation among the country banks of Minnesota a new plan for the protection of bank deposits, says the Minneapolis Journal. It is a plan devised by bankers instead of by politicians, and those who are fathering it firmly believe that it will actually achieve all the beneficial results which were promised by the advocates of the bank guaranty scheme.
California has gone ahead by organizing a state clearing house which will have a depart-
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time, which might adversely affect values in special securities. Many investors lock their securities in safety deposit vaults, and forget them, the demands of business being so great that they overlook developments likely to be of great importance to them in a financial way. A personal knowledge of the truth of this statement has convinced me that a special department of our business could be made profitable to our customers as well as to ourselves. We have, therefore, opened a department which will not only keep our customers informed of developments, favorable or unfavorable, as they occur, which may affect the value of their securities, but will also call their attention to indications of developments bearing on values in general, such as, for instance, the crisis of 1907, signs of which were visible for more than one year before the crash.”
It is not supposed that this is the only firm equipped for such business, but attention is called to the new departure so that those who care to can seek such facilities for the profitable care of investments after they have been made. There are new plans for investment of absolute safety and there are means of handling investments to greater than the average or fixed rate of income.
Confidence in Congress
Business and financial interests are perfectly sincere in their expressed confidence in the congress about to assemble. It is expected that Mr. Taft will keep his pledge to carry out the Roosevelt policies much as Mr. Roosevelt kept his inaugural pledge to carry out the McKinley policies. It was done in Mr. Roosevelt’s own way and Mr. Taft will, while keeping his pledge, probably have his own way of carrying out the policies begun by his predecessor in office. With a safe congress in session for the next three months and a safe president also in the chair after that period prosperity can step out into the open with some assurance. Ground swells are neither desired nor expected.
Congressmen have been more powerfully impressed than ever before with the aid that is to be had from the business element in politics, and are more than ever strongly determined that there shall be no “shock to confidence” due to idealistic or hasty schemes of legislative reform. This view became marked about the
Investments and Their Care
With deposits in banks going up and a not very strenuous demand for loans, bankers and owners of private funds soon will be in the investment market, if, indeed they much longer can keep out of the speculative field. There is a dearth of old-fashioned securities and farm loans “in the corn belt” certainly have a limit. The demand, however, is great and the Merchants Loan & Trust Company of this city has been doing a phenomenally lucrative business in this and regular bond lines. Those firms which cater to the “safe investment” side, such as the Trowbridge & Niver Co. of this city, have foreseen this situation and at the Denver convention had something new, even to live bankers, to show. It was an irrigation plant and guests of the convention went out by the hundred to investigate. This firm has a district in Bingham County, Idaho, which is bonded at a 6 per cent rate, the securities being a prior lien to. all other forms of mortgage indebtedness and “payable out of taxes.” This only is mentioned to attract attention to the class of securities named. Probably other firms have similarly safe and remunerative securities. Such a lien upon real farm land at less than ten per cent of its value is better than almost any other security that one could name.
These bonds are payable from taxes levied against the real property of the entire district, which tax liens are collectible the same as school district or other municipal taxes; issued under an act of the Idaho legislature, approved March 9, 1903. The farmers composing the district where these bonds apply, have recently bought out an established, going irrigation system in prime condition, which cost the district only $9 per acre, whereas the ordinary cost of a perpetual water right is from $30 to $50 per acre, so the district gets a great bargain. 80 per cent to 90 per cent of the land is under cultivation, has a population of 10,000 nearliy, good railroad facilities, three sugar factories accessible, and has every point known to a good security.
Private investors and banks, when they have made an investment, are not through with the matter, if they would get the best returns from it. A new plan brokerage is now in vogue which agrees to look after the welfare of its customers in a particular way. Such a house has been opened by Edwin L. Lobdell & Co. in Chicago. Mr. Lobdell is so well known that this will be no advertisement to him, but his name will give importance to the style of business he has taken up. In telling of the new department Mr. Lobdell says:	“The financial
crisis through which we recently have passed, contains a number of lessons for investors, one of which is that the time always comes rvhen their securities should be sold, either on account of general financial conditions, which affect all values sooner or later, or on account of trade conditions which arise from time to