Evening Star Newspaper, June 20, 1929, Page 3

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Printing.| THE EVENING STAR, ' WASHINGTON, D. C, THURSDAY, JUNE 20, .1929. ATNONTAUK BEAC I‘E. Winchester Denio and: i’ Henry H. McKee Make | Opening Addresses. | | BY EDWARD C. STONE, Staff Correspondent of The Star MONTAUK BEACH, Long Island,| N. Y., June 20.—President Robert V.! | Fleming of the District of Columbia | | Bankers' Association called the eleventh | | annual convention to order here this forencon, many distinguished bankers | being present, including Roy A. Young. | governor of the Federal Reserve Board: | George J. Seay, governor of the Federai Reserve Bank of Richmond, and Rome | C. Stephenson, second vice president of | the American Bankers' Association. Following prayer by Rev. E. Hoyt Palmer, credentials report and roll call, the presiding officer made brief opening | remarks, greetings were presented from { the American Bankers' Association by Fred N. Shepherd, executive manager, while greetings from the City of Was! { ington were voiced by Sidney F. Taliaferro, Commissioner of the District. One of New England’s most able | bankers, E. Winchester Denio of Boston, aroused great interest among the bankers in the first address of the day. calling attention to the tremendous re organization in the investment accounts held by banks, naming the type of bonds most desirable for banks to car in their vaults as investments, sugg | ing ways to increase profits, and pic- turing the great advantages gained by a better working understanding between | big city and small country bank: Another brilliant address was made banker, who became nationally known | through his interest in the passage of | the McFadden banking act and | speeches made during that campaign before the American Bankers' Associa- tion. Mr. McKee's subject today related to the kind of secondary reserves which banks should maintain, their great value in preventing bank failures and in- spiring confidence in modern busines: Mr. McKee's suggestions and conclu- sions gripped the attention of the dele- gates as most beneficial. Progress Is Reported. Important reports were heard from | the association’s three newest sections— auditors, of which J. Dann Faber is| chairman; safe deposit, Charles E. Howe, chairman, and fiduciaries, Fred- erick P. H. Siddons, chairman. These sections were formed during the present ar and the first reports to the con- cent months. Following the appointment of resolu- tions and nominating committees, the vice presidents for the District of Co- lumbia of the American Bankers' Asso- ciation convened their divisions, F. P. H. Siddons being vice president of the trut company _section, Thomas J. Groom, Savings Bank; Hillery G. Hoskinson, national bank, and Joseph T. Exnicios, State banks. In his ‘address this forenoon on “A Bank’s Bond Account,” F. Winchester Denio, vice president of the Old Colony Trust Co. of Boston, and president of | the Massachusetts Piduciary Association, called attention to the tremendo: changes in investment accounts held by banks. The spezker noted two very significant trends during the past seven years. Investments of all banks have | increased from 11.38 billion dollars to 18.77 billion dollars, an increase of 64 per cent. The second trend occurs in the reorganization that has taken place in the secondary reserve itself. “I would cail attention,” Mr. Oenio declarcd, “to the reduction in the pro- portion of the United States Govern- ment securities between 1921 and 1928 from 33 per cent to 22.1 per cent and | the reduction of holdings in municipal | bonds from 12 per cent of the invest- ments to 9.9 per cent; a reduction in railroad bonds from 15.1 per cent to 9.1 per cent; an increase in public utilities from 6.2 per cent to 8.6 per cent, and an increase in industrial and other in- vest‘ment.s from 32.7 per cent to 50.3 per cent. Reorganization Takes Place. “In other words a tremendous reor- ganization of investment accounts has taken place. It will be most interesting to see how these figures will be changed in the report for June 30 this year, which will not be available until Decem- ber. There was an increase in invest- ments between 1927 and 1928 of 1.2 billion dollars exclusive of United States Government bonds. These two develop- ments have effected an investment re- organization involving at least six and one-half billion dollars. “In the past banks have been pro- verbially poor bond buyers. They in- variably buy and must buy when they have the money to do it; in other words, in time of money ease When prices are high. Then when prices are off they are obliged to realize on their secondary reserves and sell when prices are down. In many instances, the policy of these investments of one-third of thelr in- dividual deposits has been most casual and haphazard. _“Two possibilities seem the most fea- sible for the average bank. The first is the adoption of a rapid turnover. policy in handling the bond account. This is difficult and involves thoughtful study of trends in the price of money. The ability to realize profits from price ap- preciation or to avoid losses lies al- most entirely in the ability to gauge the credit situation and the outlaok for the trend of short-term money rates. By this I do not mean the day-to-day movements, but the major trends run- ning for a term of months to which every bond buyer is subject whether he makes an effort to determine the | changes and take advantage of them | or_not. “If the banker can, with a reasonable degree of success, foresee the trend of interest rates he is in a position to handle his secondary reserves by selling his long-term bonds, buying short-term bonds, and vice versa, as conditions warrant. In no case will he be able to accomplish this with 100 per cent per- fection—with no losses—but he can limit the losses and probably increase his profits, which will strengthen the bank for all depositors and stockholders who are interested in it. “Much is being gained by the closer affiliations which are taking place be- tween the moderate size banks and the large city banks. Out of this closer understanding by the city bank of the country bank’s problem and by the country bank of the city bank's pur- poses will' be found a method of making tieir contact one of mutual profit,” Mr. Denio concluded. McKee Discusses Bank Reserves. Henry H. McKee, president of the National Capital Bank, was the next speaker, his subject being “The Value of a Secondary Reserve.” He regretted the fact that in the past eight years 5,000 banks in the United States have failed. Failures, he sald, no not inspire confidence, and confidence is the basis of all modern business. “Under our system of deposit bank- ing,” Mr. McKee continued, “a bank is a debtor for the amount of its demand deposits. 1t must keep in condition to meet without hestitation at all times any demands that are made for the pay- ment of its debts. The fund that is kept for that purpose is the reserve, an amount fixed by law. “A primary liquid reserve includes the legal reserve required by law, cash carried in the bank's vault and funds on deposit with other banks that can be recovered on demand. A secondary recerve may be denned as ‘earnings as- ' that can be collected, sold or used s a collateral, to obtain without delay the cash necessary to meet withdrawal of funds and to keep the bank's legal reserve up to the percentage required by law. “It is & matter of record that if many of the 5,000 banks which failed during y vention revealed marked progress in re- | °- Open Bank Parley Upper: Robert V. Fleming, president of the District of Columbia Bankers Association, who called the eleventh an- nual convention to order today at Mon- tauk Beach. Long Island. Lower: Henry H. McKee, president of the National Capital Bank, who dis- cussed the value of secondary reserves to banks. S e the past eight years had maintained adequate secondary reserves they prob- | ably would have been able to weather the unfortunate conditions which forced | them into liquidation. Therefore, with this lesson before us, is not the creation | of a sccondary reserve a wise policy for banks regardless of their size? “The amount and character of a sec- ondary reserve cannot be standardized. They depend upon the size of the bank, the character of its business, its rela- tionship to other banks and the| economic condition of the community it | serves. Building Secondary Reserve. 1f the bank is a commercial bank with the larger part of its deposits sub- | ject to withdrawal on demand and a | smaller line of savings depositss subject to notice of withdrawal its secondary | reserve could be built up of the follow- ing assets in the order named: Bankers acceptances of the kind | ibed in section 613 Federal Reserve 2. Short-time, self-liquidating obli- gations issued by merchants of un-| doubted worth covering the actual sale and transfer of staple products. “3. Securities issued by the United States Government. “4. Securities issued by the political | subdivisions of the United States, pro- vided they have a broad and ready market in which they can be sold with- out delay. 1 5. Miscellaneous securities, including | bonds, notes and debentures issued by suceessful corporations engaged in sup- plying necessary commodites and ser- | vice, provided such securities have been seasoned by several years' successful operation of the corporations which is- sue them and provided also they have a broad and ready market in which they can be sold without delay. “Some may not approve this list and s arrangement with respect to the re- lative importance of the different class- es of assets of a secondary reserve. They may insist that call loans to brokers secured by stock market col- lateral should head the list for the in- vestment of both commercial and sav- ings deposits. There is no doubt that up to the present time the stock market call loan has been the most liquid of all loans and under normal conditions no superior form of secondary reserve can be found. But as we are attempt- ing to_discuss fundamental principles the call loan situation deserves brief attention. Call Loan Situation. “The call loan situation today is a manifestation of a basic cause that has not been sufficiently studied and analyzed to enable us to determine whether it is a constructive and helpful force in our economic development or merely a gambling scheme. “The great difficulty that confronts many banks with respect to the estab- | lishment of a secondary reserve is the | feeling that local bank deposits should | be used exclusively to supply local needs. If such communities are attempting to support several banks ambng which the available prime commercial paper which originates in the community is distribut- ed, making it hard for each bank to get hold of enough to make up a fair and reasonable secondary reserve, would it not be better to concentrate banking resources and instead of having four or five weak struggling banks, combine them in one strong bank with adequate capital managed by trained bankers? The demand for bank credit in some communities amounts to more than the bank deposits, making it necessary, in order to supply the de- mand for credits to use all of the bank deposits in making unsecured, undiversi- fied, capital loans. “To meet such conditions would not branches of large, strong, well-managed banks offer better facilities than small, weak, local banks? These and other similar questions are engaging the at- tention of thoughtful bankers who realize that while the principles of credit and banking may be compara- | tively simple, it is no simple matter to apply them 'correctly and successfully amid the complex social and economic conditions that confront us today. If this brief address has given you any- thing of a constructive nature to think about it h = | 830 13th St. NNW. W. STOKES SAMMONS, WINDOW Have your window shades made-to-order at factory prices in our up-to-date shade factory. We are equipped to make one shade or thousands on a basis of 100% satisfactory service. CRUSADERS REGISTER o SUMMER SCHOOLS | WILL OPEN JULY 3 Schedule Calls for Closing on August 15—Senior High Sessions at Western. s Summer schools will! open this year July 5, with the senior | high in session at the Western High | School and the junior high schools | holding forth in the Macfarland, Stuart | and the Gordon buildings i The Summer schools will operate for | 30 school days, the schedule calling for | closing August 15. The classes will be in session each day from 8:30 to 12:30 | | and the studies will be intensive in each | of the cou s offered. These announoce- | ments were made today by W. B. Patterson, supervisor of special schools and activities. Subjects Are Listed. In the senior high schools the fol- | lowing subjects will be offered: English, | eight semesters; mathematics, six | semesters; commercial mathematics, two semesters; bookkeeping, two semesters; | Latin, four semesters; French, two and possibly four semesters; Spanish, two and possibly four semesters; shorthand, two semesters; typewriting, two | semesters; and’ history as follows: | Ancient, one. semester; medieval, two semesters; modern European, three and four semesters, and American or ad. vanced ancient, six semesters. In addi. tion to these subjects, chemistry, biology and commercial geography may be offered if the demand for these courses exists. Only those students recommended by their teachers will be admitted to | the Summer classes, and these will in- | clude the students who have a Teason- able chance to complete the work in | the six months of intensive study. | Pupils from private schools will have | to stand examination to enter or re- main in any class unless they are equipped with proper credentials from their schools. Must Be Recommended, Summer sessions in the junior high schools will admit seventh and eighth grade pupils recommended by their teachers for study in not more than two of the following subjects: English, history, mathematics, and general cience or geography. Ninth year puplls, corresponding to the first year high schools, may be certified for the Summer sessions in the senior high school department at Western by their teachers. Only two subjects may be undertaken by any student in the senior schools. Heretofore the senior high school Summer sessions have been held at the Central High School, but owing to ex- tensive painting and redecorating of the | interior of that building during the present Summer the classes will be held at Western. Registrations for the sessions in both | junior and senior highs may be made | between 9 o'clock and noon on July 2 and 3. FOR MEETING HERE | Organization Sponsoring Interest | in Missions Convenes at Catholic U, . Registration of members of the | Catholic Students’ Mission Crusade in general convention at Catholic Uni- versity began this afternoon at 1 o'clock and before night approximately 700 are expected to be enrolled. The formal opening of the sessions takes place tonight, with addresses of wel- come by Right Rev. John M. McNa- mara, Auxiliary Bishop of Baltimore, and Right Rev. Mgr. James H. Ryan, rector of Catholic University. The mission crusade is an organiza- tion composed of Catholic boys and girls and its purpose is the stimulation of interest in both foreign and home missionary work. One of the features of the convention is an exhibit showing the work of the crusaders. JUNIOR COLLEGE SORORITY COMING FOR CONVENTION Sigma Tota Chi Will Hold National Meet Here Next Week. Sigma Iota Chi, national junior col- lege sorority, will hold its eighteenth biennial national convention at the Ralelgh Hotel, Monday, Tuesday and Wednesday. Mrs. Ethlyn Hopkins of Stephens College, Columbia, Mo., the national president, will preside. Dele- gates from 25 active chapters in all sections of the country will be present. In addition to the delegates, all alum- nae around Washington have been invited. A formal banquet will be given at the Raleigh Monday night, and a formal dance Tuesday night. There will be an informal luncheon Wednesday noon. ‘The afternoons will be given over to sightseeing, and the mornings will be devoted to business sessions. Organization Dinner Held. The District history section of the Women's City Cluk held an_organization dinner last night at the club, 22 Jack- son place. Mrs. Merritt O. Chance, president, presided. Dr. and Mrs. Har- vey W. Wiley spoke on “The Value of Knowledge of District History.” Miss Mary E. Lazenby also spoke briefly. Moustaches of the walrus variety are reported to be popular among the gal- lants of Mayfair and other sections of London and a return to the moustache cup of the Victorian era is anticipated. E SN S SSS) For Better Service Select an Apartment Under Wardman Management See Classified Proprietor SHADES Ask for samples of Dupont ‘Tontine—the marvelous, modern and beautiful window shade cloth. which is GUARANTEED washable, sunproof and wrinkle- proof. Estimates upon request. suit sgainst the Rocky Mountain News yesterday when a Federal district court Jury returned a verdict for the news- pllpel' after a brief period of delibera- tion. The writer's suit against the News was declared unusual in that it charged that. the News, through Lee Taylor NOVELIST LOSES SUIT. Denver Verdict Against Sinclair in $200,000 Libel Case. DENVER, June 20 (#).—Upton Sinclair, novelist, lost a $200,000 libel P 3 Casey, News columnist, had libeled Sinclair through the review of a !g:lalnphy of Sinclair written by Floyd The book review severely arraigned Sinclair on the basis of the biography, and also upon his own writing and acts. The News, in defense, pleaded that the arralgnment was the truth. and the case was given to the jury with the instructions that if they thought the review was the ti a verdict for the defendant should be returned. Before the case went to the jury, Judge Foster Symes eliminated Sinclair’s claim for $100,000 exemplary damages, allowing a claim for $100,000 actual damages to stand. URE, sweet buttermilk is the ideal drink when the days are hot and you have that “all gone” feeling. A glass frequently during the day will refresh you and give you that added stimulus s0 necessary to carry on with your work efficiently. Let us have our driver leave you a trial bottle with your regular order tomorrow morning. Let the REAL buttermilk flavor convince you of its place among our Highest Quality Dairy Products Chestnut Farrmes Dai Selected as the World’s Model Dairy Plarit and Rated 100% by the District of Columbia Health Department Phone Potomac 4000 for Service Washinston Owned and Operated Consistently ‘Rated One of the World's Very Finest ‘Dairies - - - Scientific in . EveryDetail of Production