[Volume XXV
THE CHICAGO BANKER
18
Rufus Clabaugh, president of the chapter, has engaged many business men and financiers to speak this winter. Among them are: Clay Herrick, of the Brooklyn branch of the Cleveland Trust Company; Prof. J. C. Monoghan, principal of the Stuyvesant Evening Trade School, New York; Dr. D. C. Houston, of Washington University; Father Conway, of St. Louis University; E. D. Hulbert, of the Merchants’ Loan and Trust Company, Chicago; John I. Beggs, head of the public utilities companies of St. Louis; W. B. Ridgely, W. R. Barclay, vice-president of Simmons Hardware Company; P. W. Coyle, commissioner of the Business Men’s League Freight Bureau, and J. C. Lincoln, commissioner of the Merchants’ Exchange Traffic Bureau.
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Seattle Chapter Debate
It is for the best interests of the people of this state that bank deposits should be insured. At least, that is the decision reached by the judges who heard the question debated in the last meeting of the Seattle Chapter of the American Institute of Banking, after hearing the reasoning of S. S. Hoover and W. H. John, who had the affirmative in the discussion. The negative was manfully sustained by W. P. Morris and H. A. Barton.
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Milwaukee Chapter Meeting
“A Decade of High Finance” was the title of an address delivered November 27th before Milwaukee Chapter, American Institute of Banking, by Prof. W. A. Scott, of the University of Wisconsin. Professor Scott is a distinguished student of political economy and the monetary systems of the world, and he has delivered a number of lectures before the Milwaukee Chapter, which has an excellent program for the coming winter months.
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New York Chapter Meeting
A meeting of New York Chapter, American Institute of Banking, was held on December 3d•
Atwood W. Edwards, financial editor, New York Press, spoke on the local traction situation, and Professor Charles E. Sprague, president, Union Dime Savings Bank, delivered a lecture on “Amortization” as required by the state law for the investments of savings banks and trust companies.
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Buffalo Chapter Meeting
At the next meeting of the Buffalo Chapter of the American Institute of Banking, Frederick W. Hyde, cashier of the National Chautauqua County Bank of Jamestown, will be the guest of honor and chief speaker. He will discuss the commercial significance of the Panama Canal.
The chapter’s winter studies are being taken up by a large percentage of the membership.
Indianapolis Chapter Meeting
The second series of lectures on “Parties to Bills, Notes, and Checks, and Their Capacity,” was given one evening last week at the Commercial Club Rooms, by James M. Ogden. Members of the Indianapolis Chapter are taking a great interest in these lectures. Invitations were extended to all bank men. The first lecture was delivered over a month ago.
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November Building Construction
During November thirty-seven of the largest cities in the United States took out building permits for 8,539 buildings at an estimated cost of $44,555,217, against 5,904 costing $22,615,-982 for the corresponding period last year. Nothing like this remarkable increase has ever taken place before.
Like in the other European central banks, no interest is paid on deposits, but on account of a very unique accommodation which the bank extends to its clients, nearly every bank and important business house carries a balance with the Reichsbank. Owing to this system such premiums or discounts in domestic exchange as we have between New Orleans and New York for instance are unknown. The Bank has over 300 branches and makes all so called “Giro-Conto” transfers free of charge. A book containing the names and addresses of all its clients throughout the empire is published by the bank and when a merchant in Berlin desires to pay a bill in Nuremberg he deposits the amount in the Reichsbank which immediately informs the payee by mail (or by telegraph against the payment of the expense), that he has been credited in Nuremberg for the amount in question; the transfer thus being a simple matter of bookkeeping. The bank discounts freely for any of its depositors commercial paper with two solvent sureties, and raises and lowers its discount rate according to the demand made upon its resources.
The Reichsbank is owned wholly by private shareholders but its management is practically in the hands of the government. The imperial chancellor has the general supervision, and the board of directors is appointed by the Emperor. All the officers of the bank are considered as government employees. A large share of the profits goes into the Imperial Treasury.
Besides the Reichsbank, Germany has numerous joint stock banks with many branches and very large resources.
These banks are helping much to facilitate the organization of large corporate enterprises, and are doing what we would term a trust company business. Many of them like the Deutsche Bank, with its 250 million marks capital, have also developed the deposit and discount business upon a large scale and have become very important factors in international finance.
In other European countries as in Italy and Switzerland, the central banks are of more recent origin, but have proven to be the same unqualified success as those more fully described in this article.
In industries, systems, transportation, and innumerable other things we are undoubtedly superior to any country in Europe, but if a comparison of European and American currency systems teaches us anything, it is that things across the water are better than here, and that in this respect at least Europe may teach us some excellent lessons.
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Ladies’ Night at Chicago Chapter
Tuesday evening was “Ladies’ Night” at Chicago Chapter. This night is one of the annual social affairs of the chapter, and was held in Assembly Hall at the Northwestern University Building. An excellent program of music and entertainment consisting of five numbers by particularly good talent was provided for the evening.
At the conclusion of the program there was informal dancing. Nearly every Chicago Chapter member and his lady friends were present. This is one of the evenings looked forward to by all the boys.
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St. Louis Chapter Meeting
The St. Louis Chapter of the American Institute of Banking was addressed at a recent meeting by W. G. Lackey, bond officer of the Mississippi Valley Trust Company, and by V. L. Price, vice-president of the National Candy Company.
Mr. Lackey’s subject was: “Is the Banker Alive to the Educational Needs of His Profession?” Mr. Price’s subject was: “Knowledge Not All.”
the most excellent in the world and is subdivided into 5 committees.
1.	The discount committee which examines the papers handed to the bank for discount.
2.	The note committee having the making, signing, and registration of the notes.
3.	The book and portfolio committee having the bank’s books under his charge.
4.	The treasury committee looking after whatever matters affect the treasury.
5.	The auditing committee supervising the detail work of the bank. The bank is authorized to issue notes up to frs. 5,000,000,000 all of which are legal tender without any reserve requirements fixed by law. The management of the Bank is so conservative however that a specie reserve of about 60 per cent of all liabilities is kept on hand at all times.
Theoretically France has never abandoned bimetalism, and the Bank is permitted by law to redeem its notes in silver if it chooses; but in fact it pays gold at all times except there is a tendency for the metal to leave the country.
By means of this unique system the Bank controls the financial situation so completely that it is very seldom necessary to change the rate of discount, which is known to be the lowest and steadiest in the world. The Bank maintains about 300 branches, all of which are doing a discount business, but are strictly under the supervision of the head office. The Bank is in the habit of freely rediscounting bills previously discounted by other banks, and pursues a policy of favoring the small tradesman by accepting for discount bills as small as 10 frs. ($2) or even less.
But while the Bank has the monopoly of note issue, and enjoys the unlimited confidence of the French people, it has numerous and powerful competitors in the field of discount and deposit.
There are many limited joint stock banks which have branches in all of the commercial centers and are doing a very large and profitable business. The strongest of these institutions is the Credit Lyonnais, which has a capital of frs. 250,000,000, a surplus of over frs. 100,000,000, maintains over 200 branches throughout the world, and aggregates deposits which exceed even those of the Bank of France by nearly frs. 100,000,000.
When Mr. Vanderlip was elected vice-president of the National City Bank he took a trip to all the European financial centers before he assumed his new duties, and when President McKinley asked him on his return to give him an abstract of his conclusions he told him that he gained his most interesting impressions in Germany, and that the United States had very much to learn from that country. Of course he was referring principally to financial affairs, and particularly to the Imperial Reichsbank. The organization of this bank dates back to the end of the Franco-Prussian war, and the principles which govern its note-issue are very scientific and have proved to be practical during prosperous as well as hard times. Some provisions of the German system are based on that of the Bank of England, but are modified so as to make the note issue more elastic.
The Bank is required to keep a cash reserve of at least 33 per cent of its outstanding notes and the remainder in discounted bills, payable within 3 months, and bearing the endorsement of at least two solvent firms.
The maximum amount of notes which the bank is allowed to issue without other restrictions is fixed sufficiently high to fill all ordinary requirements. But the bank may issue notes in excess of this limit on condition of paying a tax of 5 per cent per annum to the government, and keeping the legal 33 per cent reserve against the same. This is the distinguishing novelty of the system and has been found to avert trouble in times of severe stringency.