[Volume XXVII
THE CHICAGO BANKER
18
IRVING NATIONAL EXCHANGE BANK
West Broadway and Chambers St., NEW YORK
BENJ. F. WERNER, Cashier DAVID H. G. PENNY, Ass’t Cash. HARRY E. WARD, Ass’t Cashier
LEWIS E. PIERSON, President JAMES E. NICHOLS, Vice-Pres. ROLLIN’ P. GRANT, Vice-Pres.
Member of New York Clearing House
CAPITAL SURPLUS . $ 3,000,000 RESOURCES............... 28,770,000
Strictly a Commercial #------Bank------#>
SPECIAL FACILITIES FOR COUNTRY BANKING
The LIVE STOCK Exchange National BANK
of CHICAGO
Volume of Business for Year 1908 Exceeded
One Billion Two Hundred Million Dollars
It is a well known fact that in any form of development a need must precede a supply, and I can imagine no more healthy development than that newer sections of our country should from time to time be in real need of banks, because that need will very promptly bring the supply and under our present banking system when the demand is met the community will have a complete banking service and not a trifling makeshift.
A great deal has been said by the advocates of postal savings banks concerning foreigners and the use which they would make of the postal savings bank. We haven’t the time to-day to answer this question as fully as we might. Let me remind you that in those sections of our country where, as a rule, the most desirable classes of foreigners are settling—in the West and the Northwest—banks are increasing most rapidly. The foreigners who come here to make their homes make use of our banks, both as places of deposit and as places from which to borrow. You have seen that over and over again in your own state, and in a final word of statistics, let me say that the number of banks has increased in North Dakota from 132 in 1898 to 571 in 1907. These figures speak volumes as to the value of banks in new communities.
It means more for the future of the United States that the banks be able to loan money in Kansas and North Dakota than that the government take the savings of foreigners in Brooklyn. For, at the most, the foreigner will either become an American in time and use our institutions or he will return to his native land. But the need for American banks and banking service will continue as long as business is transacted between men.
Before this audience it is only necessary to briefly touch upon the question as to whether the banking service of the country is developing and whether it promises to develop as time goes on. Such organizations as yours and other state organizations, and the American Bankers Association, are all working for the improvement of the individual banker, banks and banking laws of the several states. Greatly improved banking laws have been passed in a number of states within the last ten years—all calculated to make banks safer and more satisfactory to the public. In almost every case these laws have been passed through the co-operation of the Banking Association and the legislature.
The Annual Report of the New York Cham-
I have not visited, and I am now convinced that the need for additional savings facilities is very much less than has been represented.
I will add the figures showing savings deposits in some of the states in the South and West where it is claimed that there are no savings facilities :
Missouri...........................$72,374,836.00
Louisiana ......................... 21,583,063.00
Montana............................. 8,897,141.00
Washington......................... 27,511,455.00
It would seem that the “lack of facilities” argumet is not so strong as has been claimed.
In comparing the benefits and disadvantages, one may say at once that that banking system is best which handles the banking funds in such a manner that the community is most benefited.
The point which it is important for us to keep in mind during this discussion is that a number of our communities are in the early stages of development. The harm likely to result in the establishment of postal savings banks in such communities is very clear to anyone familiar with the development of the western territory. With the exception of the railroads, nothing has had more to do with the development of this territory than banks.
A small bank established in a new community is the means of bringing in outside capital at the start and of carefully conserving such local capital as may develop. The reserve money of the saving farm-hand and of the more prosperous farmer is taken by the bank and turned back into activity in the community by being loaned on first mortgage security, perhaps to some farm employee who is starting for himself and purchasing a farm, or some of the money may be loaned to a newcomer, who has bought a farm, to assist him in buying implements and animals for the development of his farm. After a time when these citizens have been built up to days of prosperity, they in turn become lenders of capital, through the local bank, which, in turn, will loan the money to home builders in the town, or to farmers or manufacturers as the community develops. This work can never be done by the postal savings bank. Even its most ardent friends would not claim this for it, and yet they would create this system which would handicap present small banks in new communities and without question defer for indefinite periods the establishment of new banks where needed.
bilities of development and regulation so that the needs will be met as the country grows.
In meeting the first point, I think one can say at the outset that the erroneous figures circulated quite generally from Washington, in advocating the passage of a postal savings bank bill, have been so misleading that many people have an exaggerated idea of the need for postal savings banks.
The advocates of the postal savings bank have taken the statistics compiled with reference to the mutual savings banks of the East as a basis for representing the need for government savings depositories. No greater mistake than this could have been made. For, while it is true that a very considerable part of the savings business in the East is done with exclusive savings banks, such business is not all done with mutual banks even in those states. For instance, in the state of Pennsylvania there are $200,000,000 of savings in the banks of that state outside of the mutual savings banks. Going into the West and South, and into the newer sections of the country, we find that most of the savings business is not done with the mutual savings banks, but with various capitalized state institutions and with national banks.
Thus it is that while the statistics which I have referred to show that there is a total of $3,600,000,000 of savings deposits in the United States, in the twenty-two states reported in Senate Document No. 544, which is a report of a hearing given to ex-Postmaster-General Meyer by the senate committee, we find, after correspondence with different state banking departments, that there are fully 15,000 banks that accept savings deposits in one form or another, and that these banks held in excess of $6,000,000,000 of savings deposits.
A brief explanation of these figures would be interesting to you. Senate Document No. 544 would give one to understand that there are no savings deposits of any character in your state; whereas, we find that there are 351 state banks which have savings deposits of $138,000,000 and there are in the state 75 national banks with $25,000,000 of savings deposits.
When I commenced the study of this question, I thought possibly there might be found some districts in which savings facilities were lacking. During the last six months I have visited a large part of the territory of the United States and have had intimate correspondence with representative men in sections which