[Volume XXVII
THE CHICAGO BANKER
14
Editorial Comment
American Banking Power
The report of the monetary commission when filed with congress will be a complete statement of American banking power and resources.
The commission now has nearly completed the investigation into the condition of the national and other banks, which it has been engaged upon ever since last spring, and will be in a position within a comparatively short time to make public the combined results of the study. It is stated that the showing made will be the most complete that has ever been presented for the banks of the United States. It will exhibit the returns from some 22,000 or 23,000 banks, national, state, and private, which were obtained for it by the office of the comptroller of the currency. The office formulated a blank, which was sent to the different banks and which they were asked to fill out. This shows in good detail the character of the loans and discounts carried, the bonds and other securities.
On loans and discounts it will be unusually complete, indicating the amount of loans carried on demand unsecured by collateral, the amount on demand but secured, the amount on time with two or more names, the amount on time with one name, and on time secured by collateral. Under the head of bonds and securities, including premiums thereon, will be exhibited the United States bonds, the state, county, and municipal bonds, the railroad bonds, the bonds of other public service corporations, of other bonds, of stocks, and of foreign securities, distinguishing between government securities and others, and the amounts of judgments, claims, etc., owned. This will be the first time in American banking history such data are available. To this extent the work of the commission has a real value. Whether or not its alleged central bank plan is to be adopted is for congress and the people to say.	xç
Excessive Bank Loans
A few California state banks are said to be converting to nationals to evade restrictions in the new state law. The restriction cited most frequently relates to loans to officers and directors, which has been called oppressive. To become a national may be in the nature of a “call” loan, for the monetary commission has been urged to include such a restriction in the new federal banking law when presented. There is enough prejudice against such loans, although often most profitable, and mostly safe, to pass such a bill. The question of excessive loans to one individual, borrower or corporation, has been quite as strongly urged upon the commission.
As it now stands, the national banking act provides that “the total liabilities to any association, of any person or of any company, corporation or firm for money borrowed, including in the liabilities of a company or firm the liabilities of the several members thereof, shall at no time exceed one-tenth part of the amount of the capital stock of such associations actually paid in
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has been passed the purchaser becomes a “seller” to his corporation and gets, not a rebate, but a commission. Same thing! Technically it is honest, but morally as wrong as before. Yet great forces are behind the great inland waterways improvement idea.
Henry T. Rainey of Illinois is one of the members of the house who are increasing in number to unreservedly favor a bond issue of liberal proportion—to carry on the work of improving the inland waterways of the United States. In discussing the subject generally, Mr. Rainey argues that the waterways of the country have fallen into disuse for two reasons. First, the railroads have been increasing their carrying capacity, building larger engines, building larger cars, laying heavier rails and double-tracking their lines, until now the limit of development seems to have been reached. Nothing has been done for waterways while this remarkable railway development has been in progress. In the second place, railroads paralleling rivers and reaching cities along our rivers have cheapened rates to river points. There has been for half a century a fight of the railroads against the rivers, with no organization until a comparatively recent period fighting for the rivers.
There is only one way to meet the situation and to restore to railroads the competition they ought to have, and that is by improving our rivers. Improve our rivers and you will have furnished to every man a great free national highway upon which he can launch his boat and carry his goods free of all charge to the ocean highways of the world.
The building of the Panama Canal meets with the approval of the country, and yet it will fail to accomplish the results for which it is intended unless we improve the 16,000 miles of navigable rivers lying within our mountain ranges in order to enable freights to be transported cheaply from the interior. The time is here when the country would approve a bond issue of large size for the purpose of improving rivers on a comprehensive basis. The development of the country now depends upon it.
Kansas City merchants are doing great work in urging a boat line to St. Louis, as a check upon rail rates. The idea will grow. It will help the whole waterways project. With deep water from lakes to gulf the eastern seaports might, so far as the West is concerned, for the time be forgotten.
Postal Banks in Canada
Over in Canada the postal banks pay depositors 3 per cent and, according to the Financial Post, there now is a plan whereby depositors in the Post Office Savings Bank may purchase Canadian government bonds, bearing 3% per cent interest. The bonds mature in 1925, and can be purchased at par. It is provided that the money-must have been in the savings bank at least three months at the date of transfer, and that one month’s notice of transfer must be given, such transfers to date from October 1, 1909, or January 1, 1910. It is claimed by some of the opposition press that these provisions will prevent a ready sale of the bonds. “Probably Hon. W. S. Fielding did not wish to make the sale at all attractive, because he realizes the mistake of obtaining any funds from our own people, when these can be secured abroad,” says the Post. The provision has undoubtedly been made merely to put the small Canadian investor on a similar basis to that of the English investor, to whom these bonds have been offered in multiples of £10. The amount on deposit in the postal and government savings banks is approximately $63,-000,000.
“It is to be hoped that the response to the bond offering will be such as to reduce the savings banks balance to such proportions that the government will conclude it might as well close these banks, which in these days are unnecessary, and have the effect of taking whatever money is deposited out of the regular channels of commerce, in which it would be utilized if deposited in the chartered banks,” is the verdict of the Post which concludes that, “It is a noteworthy commentary on the efficiency of our banking system that the belief among Canadian financiers that the postal savings banks might properly be abolished, is evident at a time when President Taft announces his intention to establish a postal savings system in the United States. Canada has passed that stage.”
This phase of the Canadian postal banking situation will be read with interest by all who are keeping in touch with the question in our own country.
Inland Waterways Improvement
Illinois has voted $20,000,000 in bonds for a waterway through the state from Lake Michigan to the Mississippi, the hope being a deep water passage from Chicago to the gulf. The spending of so much money involves many contracts with inevitable dabbling for the plums by the politicians. At Springfield the republican party split was attributed in large part to the desire of each wing to control the letting of the contracts. This was to be expected.
At Washington great national projects are halted or held up until those having the needed votes are “satisfied.” American business has adapted itself to many polite forms of graft. When a law prohibiting rebates to purchasers