[ Volume XXVII
THE CHICAGO BANKER
28
			
6% First Mortgage Bonds Guaranteed Principal and Interest by the American Water Works and Guarantee Co. of PITTSBURG, PA. Capital and Surplus, $4,500,000.00 C, There has never been a day’s delay in the payment of either principal or interest on any bond guaranteed by this corporation during the 28 years they have been in business We recommend these bonds for conservative investment J. S. and W. S־ KUHN (Inc.) INVESTMENT BANKERS PITTSBURG PHILADELPHIA CHICAGO			Second National Bank PITTSBURGH, PA. CAPITAL STOCK - $1,800,000 SURPLUS - - - 2,000,000 HENRY C. BUGHMAN, President WM. McCONWAY, Vice-President JAMES M. YOUNG, Cashier THOMAS W. WELSH, Jr., Vice-President BROWN A. PATTERSON, Asst. Cashier Depositary of the United States, the State of Pennsylvania and City of Pittsburgh DIRECTORS HENRY C. BUGHMAN, WM. M. KENNEDY, FRANK C. OSBURN, President Commonwealth Trust Co. Attorney-at-Law ROBERT D. ELWOOD, JAS. S. KUHN, EDWARD B. TAYLOR, of R. D. Elwood & Co. Pres. Pgh. Bank for Savings Vice-Pres. Penna. Co. CHAS. W. FRIEND, WM. McCONWAY, FRANK S. WILLOCK . Clinton Iron & Steel Co. of McConway & Torley Co. of Westmoreland Bnck Co. THOS. D. CHANTLER, WM. L. CURRY, L. L. MCCLELLAND Chantler & McClung McKeesport Tin Plate Co. Secretary J. S. & W. 5. Kuhn, Inc. Accounts Solicited—Our facilities insure prompt attention
			
from his late reports, has given the subject under consideration much thought and attention, and I take pleasure in referring you to the language he employs in his regard:
“While we may oppose the plan of state or government insurance or guaranty of deposits, we must sympathize with the desire of the people at large to have their deposits made as safe as they can possibly be made. It is not sufficient for us as bankers merely to oppose this proposition. It is incumbent on us to take steps to make impossible just as nearly as we can the failure of any state or national bank, and we shall fail in our opposition unless we are able to present a plan which will practically accomplish the desired end and at the same time be based on sound business principles. Is it better to regulate your own affairs or to have them regulated for you? Is it better to be compelled by government influences to do what is right or do it of your own initiative?”
I wish to congratulate the association of supervisors of state banks for having last year unanimously recommended the segregation and safeguarding of savings deposits.
I am especially pleased to find that among the officers of your association you have such ardent advocates of this subject as my good friend Mr. Johnson, your president, and I am pleased to remind you of what he said in part to the savings Bank Association of the state of New York in an address made by him last May, after referring to the guaranty of deposits and the postal savings plan, he said:
“Each of these questions being prominent in itself, I will pass on without further com-. ment, other than to say that we must meet this popular cry. The mere fact that we have protested publicly and otherwise against both of these prominent features is not sufficient to convince the masses of their undesirability. We must give them something as good or better and prove it to them.”
In fact, there is such an unanimity of opinion on this subject by those who have given it serious thought that it is unnecessary to quote as authority the opinions of others who are high in the profession of banking as well as in authority in supervision over our banks. To me it seems very clear that the advocates of the segregation and safeguarding of savings deposits have proven their case and that the recommendations made are irresistible.
tal savings depositories, yet, it would seem there is an apparent need at least for the segregation and safeguarding of our savings deposits.
Others have Recommended the Safeguarding of Savings Deposits
I am pleased to endorse what the distinguished now ex-commissioner of banking of the state of Massachusetts, Mr. Pierre Jay, said to you a year ago on this subject:
“The more I study this subject the clearer it seems to me that morally and essentially
E. R. FANCHER
Vice-President Union National, Cleveland, Ohio
savings deposits wherever deposited are trust funds and should be invested accordingly.
It is also argued by the state banks and trust companies that to be required to invest savings deposits in securities of more established value than mercantile credits will seriously diminish their profits. The answer is first, that for savings deposits safety, rather than large dividends, is the essential thing; and second, that profits will not be so largely diminished as they imagine.”
The very able commissioner of banking of the state of New York, Mr. Williams, it is evident,
ferent problem from one dealing with commercial banks. It is for the protection of the saving depositor that government postal banks are suggested as conferring absolute safety.”
Again, Professor Kinley, in his able article in opposition to the insurance of deposits, which appeared in the March number of The Review of Reviews last year, we find this significant paragraph :
“The only kind of deposits for the insurance of which there seems to be any reasonable ground are savings deposits. If it be true, as is generally admitted, that these on the whole represent the hard won earnings of the working people, public policy requires that they should receive all the security necessary to insure against their loss. This, however, is done by institutions of those states who have proper savings banks like Massachusetts and New York. There is something to be done in this direction where savings banks of the mutual type do not exist, but are simply branches of commercial banks. This, however, is something that cannot be reached by any national law. The deposits of the national banks, the only ones that can be reached by national law, are commercial deposits These deposits belong to the class in a community that is peculiarly able to take care of itself. These deposits fluctuate rapidly and largely from day to day. They need no special protection, either from the viewpoint of the interest of depositor or the !)anker.”
It is apparent that while Professor Kinley admits. that there seems to be reasonable ground for protecting or guaranteeing savings deposits, that he is mistaken in his assumption that such deposits are not accepted by national banks. The comptroller of the currency reports that on June 23, 1909, the date of the last call, the savings deposits in the national banks amounted to $380,494,598. Besides, it is well understood that not only the national banks receive these deposits, but state banks, trust companies, private banks, and building and loan associations also hold themselves out for their reception, and that a large volume of such deposits are also held by these institutions.
If Professors Laughlin and Kinley are taken as authority on one proposition they should be taken as authority on another. While it may be impracticable or unwise to adopt the insurance of deposits plan or urge the establishment of pos-