[Volume XXVII
THE CHIC A GO BANKER
30
The Central National Bank
in St. Louis, Missouri
Offers every inducement consistent with sound banking to customers of whatever class
H. P. HILLIARD, President
L. A. BROWNING, Vice President	M. R. STURTEVANT, Vice President	J. A. BERNINGHAUS, Cashier
J. J. BRODERICK, Vice President	FLOYD SHOCK, Vice President	A. N. KINGSBURY, Ass’t Cashier
FERDINAND DIEHM, Ass’t Cashier and Manager Foreign Department
		
solicits! Bankers’ Balances, City, LÆ Commission and Produce Market Accounts. ^	¡National Produce Bank¡ 1 CHICAGO I Ijf Edwin L. ^Vagner, President Ralpk N. Ballou, Caskier	| R E M I T S
		\| Promptly on all shipments m to Chicago of fruits, farm f■ and dairy produce.
ney־general and commissioner of banking.
6. Banks may loan on negotiable paper secured by above classes of securities.
Thirty-four per cent of savings deposits may be invested in collateral loans with collateral of known marketable value worth io per cent more than face loan; or a portion of this 34 per cent (not exceeding capital and additional stockholders’ liability) may be invested in negotiable paper, approved by directors.
Since such investments as these are not readily turned into cash the bank is given the right to provide against sudden calls for money in the savings department. I11 pursuance of such statute the bank may lawfully adopt a by-law calling for 90 days notice of withdrawal of savings deposits. On the other hand, in the case of commercial banks, the lawmakers aimed to satisfy the needs of business life and the demands for credit in mercantile transactions. Investments made by banks of this character, it is evident, must be readily convertible into cash. By specific provisions of the statute all commercial deposits are payable on demand without notice, except where there is a special contract with the depositor to the contrary. Real estate investments are not suited to the requirements of commercial banking, since they cannot be readily turned into cash, and this statute thus prohibits the commercial banks from investing in real estate securities except in amount not exceeding one-half of the capital stock, and then only when authorized by a two-thirds vote of its board of
lawmakers of Michigan were convinced that savings banks should be established to encourage thrift among wage-earners, to offer safe and profitable depositories for their funds and provide safeguards against loss, since the law expressly provides that savings banks may receive deposits from tradesmen, mechanics, laborers, servants, minors and others. While this enumeration of the persons from whom deposits may be received by savings banks in Michigan may have no particular legal significance in itself, yet it indicates very clearly the character of the business intended for a savings bank. The Michigan law also provides the amount of reserve to be kept on hand, and details how the remainder of the deposits of a savings bank shall be invested which, for convenience may briefly be stated as follows :
Fifty-one per cent of deposits shall be invested as follows:
1.	In notes secured by first mortgage on
property worth double the value of the loan.
2.	Bonds of the United States.
3.	Bonds of any city, county, township or
village in the United States.
4.	Bonds of steam railroad corporations
(subject to certain restrictions).
5.	Street railway, steamship, gas, and elec-
tric light and power bonds, under certain restrictions, and provided they are approved by the securities commission consisting of the state treasurer, attor-
I have just had an intimation that your committee on legislation has already concluded to adopt the segregation and safeguarding of savings deposits as its legislative policy. If that be true, then I am pleased to know that the jury has already, in fact, agreed upon its verdict, and thus so far as you are concerned the subject would need no further argument.
In Michigan
It may be of interest, however, to the members of your association to know how banks permitted to transact both a commercial and savings bank business are regulated. To those familiar with the statutes requiring the segregation and safeguarding of savings deposits in Michigan, it must be plain indeed that the savings depositors there were the special objects of care and solicitude on the part of the lawmakers, since the statute provides that separate books of account shall be kept, that all investments in the savings departments shall be kept entirely separate and apart from the other business of the bank. Originally the law did not provide for the preference of savings depositors, but the law was amended from time to time. In 1893 this provision was inserted, evidently after due deliberation and with the plain intent of taking special care of savings depositors.
The reasons for this are quite evident. The lawmakers returned to the original idea or purpose of savings banks as it was understood in the New England states when the English savings bank plan was adopted. It is apparent that the