[Volume XXVII
THE CHICAGO BANKER
28
THE FIRST NATIONAL BANK OF HURON, SOUTH DAKOTA
A handsome, impressive banking room in mosaic, green and white marble, mahogany and bronze, which we designed and executed to order.
It gives you an idea of the character of the work we are doing for the best banks all over the United States. Note the impression of substantial strength, the feeling of quiet harmony, that you get from this banking room. Does yours make that impression on your depositors ?
It should. Making the right impression is a mighty important factor in the banking business, and it is not expensive when you consult a firm that knows how. For 50 years we have been designing and executing bank interiors, fixtures and furniture and we can help you.
Write the nearest office and let us send our traveling representative to submit ideas at our expense. It obligates you not at all. Write now for our booklet showing other bank interiors that will interest you.
THE A. H. ANDREWS CO.
174-176 Wabash Ave.. Chicago	Pacific Building, San Franciso, Cal.
1161-1175 Broadway, New York	776 Commerce St., Tacoma, Wash.
Capital $3,000,000.00 - - ־ Surplus and Profits -	6,000,000.00
UNEXCELLED COLLECTION FACILITIES CORRESPONDENCE INVITED
R. H. RUSHTON, President	E. F. SHANBACKER, 1st Vice-President
B. M. FAIRES, 2nd Vice-President
R. J. CLARK, Cashier	W. A. BULKLEY, Assistant Cashier
W. K. HARDT, Assistant Cashier FRANK G. ROGERS, Manager Foreign Exchange Department
SHORT, STANTON & CO.
DEALERS IN TD H "NT TA Q
HIGH GRADE JD U IN LJ O
MUNICIPAL- RAILROAD-CORPORATION AND MUNICIPAL IRRIGATION
Suitable for Banks, Individuals, Trust Funds and Estates Principal Secured ; Income Assured Circulars describing offerings furnished on request
CHICAGO	CINCINNATI
533 First National Bank Building	1005 Fourth National Bank Building
Telephone Central 6047	Telephone Main 1280
ever, that the history of banking in this country establishes the fact that bank failures and consequent losses to depositors and stockholders, fairly attributable to this practice, is merely nominal, and that it can not be classed as one of the principal causes of bank failures, such circumstance would be persuasive argument in favor of exempting the banker from the general rule that a trustee may not loan the funds of his cestui que trust to himself.
Taking up the question of the guaranteeing or insurance of bank deposits, I feel that after the thorough discussion that has been had on this subject through one presidential campaign, together with all the prelude and aftermath of talk that has been had thereon, it is exceedingly difficult to say anything that will be new on the subject. In touching upon this question, I desire to have it understood that of the technique or practical part of banking, I know nothing. I have never had any practical experience in the banking business, and have not conducted any great amount of business with banks, and to be confidential with you, the withdrawal of my entire banking business from the most modest concern would not raise the least suggestion of a receivership. It is from the standpoint of the public, pure and simple, that I shall discuss in a very brief manner, the subject of guaranteeing or insurance of bank deposits.
You will find my own idea pretty faithfully reflected in bill 470 S. introduced by myself in the senate. I do not by any means assume that this bill is anywhere near perfection, but I believe that the general scheme of that bill should be about as inoffensive to the bankers as any bill I have seen upon the subject, at the same time affording the public all the security and safeguards claimed for the system. The central idea of that bill is that (Continued on page 30)
larger loan than they would accord one not connected with the bank under the same circumstances, he has placed himself under obligations to every officer of the bank, so that when one of them makes application for like accommodations, he is not in a position to apply to them the same severe standards that he would apply to one on the outside, and that which his duty as trustee of the trust funds requires him to exercise. In this manner each officer of the bank may gradually place himself under obligations to all of the other officers of the bank to the great detriment of the bank, to the trust fund they are administering, and in many instances, it has simply worked disaster. I say this is absolutely wrong and indefensible in principle, and should not be indulged unless long experience can clearly demonstrate that the practice can work no harm. The presumption is all against a trustee loaning the funds of his cestui que trust to himself, and the practice under discussion amounts to nothing less. It will be a part of the work of this special committee to satisfy itself on the question whether the history of banking in this country has been such as to establish an exception to the general rule in this respect, that a banker may properly, and with perfect safety to the community and to his cestui que trust, loan trust funds to himself. This is one of the subjects that the committee will be glad to hear discussed by bankers, and we trust that the invitation to discuss this subject will meet with a generous response. Just let me suggest, however, before leaving the subject, that in my judgment the subject should be presented from the standpoint of statistics showing the number of bank failures fairly traceable to this practice. As one member of the committee, I shall approach the consideration of this question with the presumption that, on general principles, such practice is wrong. Should it appear, how-
Wisconsin Legislature to Further Consider Her Banking Laws
(Continued from page 13) that he is wont to pass on the credit of other people; in other words go where he will be dealing at arm’s length in just the same manner that other citizens are obliged to do when they want accommodations from a bank. The money in that bank is, or at least should be regarded” as, trust money. It is held in trust for those who deposited it there. An officer of a bank is a part of the machinery by which that trust is administered, and every officer of the bank should, at all times be alert in the interest of the trust fund; he should never, at any time, have any interest aside from the jealous discharge of that trust duty, and the minute he becomes a borrower from that fund, to that extent he has an interest in absolute anagonism to the best interests of the fund. The bank is supposed to be manned by a certain corps of officers; it is so manned because experience shows that a certain number of officers is better fitted to guard and protect the interests of the bank and the interests of the depositors. When an officer becomes a debtor to the bank, he at once has an interest antagonistic to the interests of the bank, and his services and influence are, to that extent, lost to the bank and to the trust fund. Then again, let us reflect that human nature is human nature. Even though a cashier, a president or a director of a bank musi secure the consent of all the other officers and directors of a bank before he can secure a loan, his business associates will extend him a line of credit with less severity, with greater generosity, than he will be accorded where a stranger passes upon his credit. Then again, as soon as his fellow officers have shown him a little leniencv. strained a hair, perhaps, allowed him just a little