THE CHICAGO 'BAJVK.ETt.
Founded in 18 9 8
Volume XXVII	CHICAGO, NOVEMBER 13, 1909	Number 20
Bi¿ Bank Consolidation in New York
was open both day and night, and it was no uncommon thing for the boy to be on duty from dawn until midnight. As he was not busy all of this time, however, he determined to improve his idle moments with reading and study, and it was in this way that he fitted himself for a better position. The opportunity which came when he was 18 years of age was a clerkship in the Goshen (N. Y.) National Bank, a position in which he displayed so much intelligence and industry that, at the end of two years, when his determination to take his chance in the “big city” was reached, the bank officials gave him the best of recommendations for ability and integrity.
Armed with these passports and inspired with all the confidence that he could muster to his support, he tramped the streets of New York in an effort to find the chance that he was seeking. This came at last in the Produce Exchange Bank, and he acquitted himself so creditably as check clerk that, within a year, he was made receiving teller, and a few years later assistant cashier. By this time Mr. McGarrah’s ability had come to be pretty generally recognized in banking circles, and when the Leather Manufacturers’ National Bank was in need of a cashier he was the man upon whom their choice fell. So, too, when that bank was merged with the Mechanics’ National Bank, in 1904, he became the president of the new institution. In addition, he was for two years the secretary of the clearing house, the youngest man who ever held that responsible position, and he was a member of the loan committee of the clearing house during the panic of 1907. Just what this means only those who were actually behind the scenes in those turbulent days can fully realize. It was the most important financial committee to which the panic-stricken banking institutions could appeal; its members labored day and night devising remedies for emergencies. From the beginning to the end of the panic Mr. McGarrah was continually at his post and, when confidence had finally been restored and the financial situation was quiet again, banking officials everywhere admitted that their success in facing the perils was largely due to the relief measures that Mr. McGarrah had suggested.
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The Zillah Bank of Zillah, Wash., has been incorporated with a capital of $25,000. J. D. Cornett of Toppenish, Wash., is manager.
The plan originally contemplated the adoption of the English plan of joint managers, with equal powers, but as this seemed impracticable under the national banking laws, it has been arranged that Mr. Sabin shall divide with Mr. McGarrah the powers and duties of president.
A joint committee is now formulating a plan for the merger of the two institutions, which will
gates M. McGarrah
New York City
be presented to the stockholders in a few days. No difficulty is anticipated in securing their approval, as a number of stockholders, representing a very large interest in both institutions, have already approved of the tentative plan.
Until the legal requirements can be met, each institution will continue its business at its present offices.
Not very many years ago—in 1888, to be exact, says the Bookkeeper, Gates M. McGarrah decided to go to New York City in search of his fortune. Born at Monroe, N. Y., on February 21, 1868, he had spent a few years in attendance at the village school, but he had scarcely entered his teens when it come necesary for him to go to work in the local store—one of those country stores in which everything from dress-goods to codfish is sold. As this store was the center around which the life of the town revolved, it
New York, November 9.—The talk of the financial end of the town is busy with the new Gates McGarrah bank with its ten or more millions of capital and surplus. McGarrah’s career has been stellar to be sure, but it is conceded that he has won his spurs fairly and is entitled to wear them in any company. At the close of last week it was announced that the plans for the consolidation of the Mechanics National Bank and the National Copper Bank had been approved by the boards of both institutions. The consolidated bank, which will be known as the Mechanics & Metals National Bank, will have a capital of $6,-000,000 and a surplus of at least an equal amount, combined assets of the two institutions will approximate $100,000,000.
The consolidated bank will thus become one of the oldest and strongest in the city. The Mechanics & Metals National Bank will continue its business at the present offices of the Mechanics National Bank.
Gates W. McGarrah, now the president of the Mechanics National Bank, will be president of the combined institutions, while Charles H. Sabin, now head of the National Copper Bank, will become the first vice-president.
The directorate will be composed of the present directors of the merged banks, adding John
D.	Ryan and Thomas F. Cole, who are vice-presidents of the National Copper Bank, but not directors.
The Mechanics National Bank was founded in 1810. Its present capital is $3,000,000; surplus and undivided profits about $3,000,000; deposits about $78,000,000. The officers, besides Mr. McGarrah, who was president, include Alexander
E.	Orr, first vice-president; Nicholas F. Palmer, second vice-president, and Andrew A. Knowles, third vice-president.
The National Copper Bank opened for business May 1, 1907. It was organized by strong interests, and its exceptional success is evidenced by its deposits, which amount to about. $38,000,000. Its present capital is $2,000,060; surplus and undivided profits about $2,800,000. Other officers beside Mr. Sabin included John D. Ryan, Thomas F. Cole and Urban H. Broughton, vice-presidents. The directorate includes Mr. Sabin, Charles F. Brooker׳, George R. Sheldon, R. M. Stuart-W'ortlcy, ־ F. W. Roebling, Robert C. Pruyn, William A. Paine, Adolph Lewisohn, James Jordan, U. O. Havemeyer, James M. Beck, James C. Bishop and E. Lothrop Ames.
are massed. Our currency is rigid and cannot be quickly expanded to meet an emergency. Their currency is capable of instantaneous expansion. Our chief gold reserves are in the United States treasury unavailable as a basis for such expansion. Their reserves are in great central banks— immediately available for currency expansion. Besides, under our national banking system, a bank in a non-reserve city with deposits of, say $1,000,000, keeps six per cent, or $60,000 in its own vault, and nine per cent, or $90,000, to its credit with a reserve city bank. In the reserve city bank, however, the $90,000 is merely a deposit against which it keeps an actual reserve of about $20,000. When trouble comes, therefore, and the bank in the non-reserve city decides to increase its cash reserves from six to eight per (Continued on page 25)
eral of the other leading commercial nations combined, and while nearly all of the twenty or more thousand banks in the United States were sound, solvent and in normal condition. With over $900,000,000 of gold in the United States treasury and several hundred millions more in the country, we imported at great cost about $100,-000,000 chiefly from the coffers of the Bank of England, which itself only held $165,000,000.
The loss on investments and to general business by such a panic as that of 1907 is beyond computation. When we consider that we have had several such panics within the memory of living men, and that Other and poorer countries possess the means of avoiding such conditions, we naturally ask what is wrong or lacking in our financial system as compared to theirs?
In times of trouble our reserves scatter. Theirs
Favors Central Bank
A circular has just been issued by the National City Bank of Chicago advocating the establishment of a central bank of issue. It says :
The creation of a central bank of issue as a cure for the defects of our financial system is of such importance that a brief review of the proposition may be of interest to our clients :
The business of banking is probably as sound in this country as in any other. Our individual banks are, as a rule, prudently, honestly and capably managed. During normal times they deserve and enjoy the confidence of the public which they efficiently serve. Yet only two years ago they practically suspended because the system—that is the relation of one bank to all the others—had collapsed. This occurred while there was more gold in the country than existed in sev-