[Volume XXVII
THE CHICAGO BANKER
34
Chartered in 1836
Girard Trust Company
Philadelphia, Penna.
WM. NEWBOLD ELY, 1st Vice Pres.	A. A. JACKSON, 2nd Vice Pres.
E. B. MORRIS, President
C. J. RHOADS, 3rd Vice Pres. & Treas.	EDW. SYDENHAM PAGE, Secy.
ganization expenses than its net earnings would amount to in five years, even if it should not lose a dollar in bad debts.
The comptroller’s office knows every bank promoter now operating and has a special report on file concerning him. It has full information as to the methods used, not only as a general rule, but in each particular bank. It has a fairly good file of the alluring advertisements and the handbills which they have spread broadcast in the places where banks have been promoted.
As soon as an application comes to the office for the establishment of a bank, if it bears any of the earmarks of the application of a promoter, although his name may not appear upon it, a letter is written to every man signing the application, raising these questions: First, did the idea of the organization of the bank originate with the people of the community themselves, and is it the outgrowth of a necessity for banking facilities, or is it the plan of a bank promoter; and, secondly״ if the bank is established, will the business which will naturally flow to it be of such volume and character as to reasonably insure success ?
The answers of these letters, in a great many instances, are that the organization of a bank was entirely the idea of outsiders who came there for the purpose of organizing, and that they signed the application with very little consideration as to the probable outcome of the venture. In these cases, the promoters are asked to make a deposit of a sufficient amount of money to cover the expenses of a competent examiner from my office to go to the community and make an honest and thorough investigation of the whole situation; and if his report is to the effect that there is no
If we are to have a great system of banks, sound, well-managed and prosperous, the greatest attention and scrutiny must be exercised before the government issues a charter. In the national system we want banks organized in places where the demand is spontaneous and originates with the people living in the place who feel an actual need of banking facilities. I do not believe in the organization of banks by promoters who go about the country, calling public meetings, and by methods of advertising characteristic of the circus, endeavor to arouse enthusiasm for the organization of a bank.
In some cases the promoter is satisfied to organize a bank for a fee of five to ten dollars on each share of stock, while in others he is contented with a commission of from three to six per cent on the capital stock and surplus fund. In other cases he expresses a willingness to organize a bank with the understanding that he is to be elected to office, receive a salary, and be given the privilege of having a company in which he is interested, loan the funds of the bank on a commission basis. There is still another type of promoter who makes a business of organizing banks for the sole purpose of having his company supply furniture and fixtures. And in some cases promoters have charged the bank more for or-
Interest centered in the address of the Hon. Lawrence O. Murray, the able, militant comptroller of the currency. Mr. Murray covered much of the same ground covered in his circular letters to national banks, in recent months. He acknowledged in the opening that “there has always been a great deal of criticism of the national bank examiners, and perhaps there always will be. Some of it is just; much of it is very unjust. When I became comptroller, I determined to find out exactly how the bank examiners did their work, and there seemed no better way than to ask the bankers themselves. A letter was sent to the president of each national bank, asking how the examiners were doing their work; whether or not it was being well done; and whether the examiners took time enough to go into the details of the bank as the law contemplates; and asking them, in a general way to point out every defect in bank examinations.”
On the subject of bank promoters Mr. Murray said:
Every comptroller of the currency takes a natural pride in seeing the banks grow in number, in strength, and in popularity. I believe in the expansion of the system, but I believe that that expansion should be along normal, safe and conservative lines. I do not believe in the organization of a bank in a community where there is no good reason for its existence. I do not believe in the organization of banks in communities where the business that would naturally come to the bank is insufficient to warrant success ; nor do I believe in the organization of any bank in a community where the board of directors will not be composed of men of business ability equal to the best to be found in that community.