The San Francisco Call. Newspaper, October 21, 1903, Page 6

6 THE SAN FRANCISCO CALL, WEDNESDAY, OCTOBER 21 1903, CITY’'S VISITORS ARE GIVEN GENEROUS WELCOME AT RECEPTIONS AT WHICH PROMINENT RESIDENTS OF SAN FRANCISCO ARE HOSTS g t NCISCo, 2 lcome w1 e tendered to Company - AR MemI;eZ of Califo MANY. varie RESOURCES ARE New York sald e the sentiments of every the Pacific and I eay that we T IMPRESSED B B 'Y CONDITIONS. g across your State I could not but the conditions your pioneer fathers jerra and settled in t yed every hour of the ns and over the have held out mu n to match the won- e lived 10 ses not eyen vement.”" the cordial wel- n the bankers You have here come in touch u country, after rtaking of your dayes In your de- Wordsworth did gazed back upon a estern. Europe and said: nd 0 turn back again.” tors of the Board of re: J. S. Emery, E. Sharp, Mrs. A. L. ggs, E. W. Mas- T. Cary P. Irish, W. . M. Wooster, Sweetser, Ed- and Mr. Mat- Jose. Mestiames J. . Emery, E. W. Maslin, N. P. P. Irish, W. H. Mills, B. and Matthews acted as & la~ >mmitte Ladies Are Remembered. committee in rge ‘of the ente nment of tk visiting bankers vesterday of the fact that king the lady members parties in its arrange- esterday afternoon every lady bo choige candy, a beauti- f flowers and a dainty pack- fruit with the complia 8an Franciecoe bankers. The were delivered to the hotel of the ladies and were, essary to state, gracefull hipman, el John 14, E Oak o ch ne ———— a Banking Corporation. : n is directed to the ad- s avherein appear s of the International Bank- n, setting forth its large | numerous and important s powerful and influential of special interest at this when our American bank- over the United States are ternational Banking Corporation f American bank authorized business outside of the United | ates vk is already doing a e and able business in China and the Philippine Islands, where it is the designated fiscal agent of the United States Government. and is doing splendid work in adyancing the interests of Ameri- ®an commerce abroad as compared | the | i< of officers of the association and the presentation of important financial papers and addresses. he Twenty-ninth Convention of the American Bankers’ Association will open at the California Theater aqd for three days. Fifteen hundred delegates, representing the leading financial institutions of America, are now in 1d their deliberations are fraught with importance to the entire country. 11 be delivered by Governor Pardee and the Mayor of San Francisco, and the business of the first day will At the proceedings to-day ad- This evening the delegates and their ladies at the Mark Hopkins Institute of Art, at California and Mason streets. and the Savi; i 1gs Bank sections of the’main organization held conventions and . elected = officers for rnia State Board of Trade Receive Guests at Rooms. SGTESTS AT HE convention of ' the Bank Section of the American ! Bankers' Assoclation was held yesterday afternoon in the Acad- Sciences building, 819 one hundred members to roll call emy ¢ Market $treet, respon: In t absence chairman of th ction, s presided over by G. chairman of and Myron T. Herrick the convention Byron Latimer, the executive committee. PROCEEDINGS ARE OPENED. G. Byron Latimer Presides in Ab- | sence of Myron T. Herrick. | The pre | gathering ing officer in addressing the said: | has been y Republican nomi| tion to th gh office of ernor of State of Ohio, and is at this time 3 of his campaign and unable to be We shall miss him from our were by-laws not prohibitory doubt that you would all welcome e-election as your chairman | Your vice chairman, James McMahon, presi- | @ent of the Emigrant Industrial Savings Bank, | New York, at advanced in years and | found it impossible to aently as chairman of tee I am here as your 1 ask your kind indulgence, y line. Assoctation held in New Orleans last November an amendment was adopted to the by-laws es- tablishing a savings bank section similar in scope to the trust company's section, and in pursuance to that amendment an organizatic was effected and constitution and by-laws ap- proved. - Officers were elected, consisting of chairman, vice chairman and nine members of the executive committee, three each for one, two and three vears respectively. The chairman, vice chairman and three members of the executive committee retire to-day and their places will be filled by election later in the meeting. Since our last meeting your executive com- mittee through its secretary, Willlam Han- hart, has sent out circulars 1o each and every savings institution in the United States, whether mutual or capitalized, outlining what the mew section proposed to do and soliciting their co-operation. We have had a large num- ber of replies and inquiries to our letters, and I believe to-day the American Bankers' Asso- clation numbers among its members over 500 savings banks, including trust companies and banks having savings departments, many of them, no doubt, due in a great degree to this organization. 1 consider this a very good showing for the first year and hope with your assistance to have that number materially in- creased during the succeeding year. We have | had prepared by some of our members papers which they will read upon subjects of mutual interest. These papers will be printed In the report of this meeting and sent to each of our members, and many of us will have occasion to refer to them when questions which they cover come before us from time to time. It is the aim of the eection to prepare for circula- | tion such papers of mutual interest and to bring into closer relationship our banks and | their officers where subjects of mutual im- | portance can be discussed. It has always been | a serlous question to me why our savings banks have so many different methods of do- | ing precisely the same class of business. This is true in relation to our methods in the East, and perhaps our Western friends can help us in the right direction. We find it difficult to | instruet our depositors upon simple subjects when asked what this or that bank will require under given circumstances, and If we could remedy only this emall defect we would have accomplished a great deal, and this would tend to make our institutions more popular, if, indeed, that were possible. If we hope for greater success we must keep our section prominently before all bank offi- | cers and in the absence of personal interviews | continue to circularize and write as during | the past year. Willlam Hanhart of New York City, secretary of the Savings Bank Section, then presented his report, showing that 548 savings banks had joined the section, being about one-half of the savings banks of the United States. BOND ACCOUNTS EXPLAINED. Colonel C. Sprague of New Yeork Interesting Paper. | The convention then listened to the ireading of a number of papers of special ts of speech-making are en- | meeting of the American Bankers' | | Thought to Busy Men. Savings | interest to savings banks, the first paper | confine ") y //{ i i /A ; THE CENTDRY (@z7-4 | periodical sums. | sum of money, payable on the first day of some | ideal arrangement, in my opinion, is & general | regard s paid to the accretion of interest op being by Colonel Charles E.. Sprague, president of the Union Dime Savings Bank of New York. The topic of Colo- nel Sprague was “Bond Accounts” and he dealt with the subject in a lengthy man- ner. In part, Colonel Sprague said: the most important branch ¥, next to depositors’ ac- f its Interest-bearing securi- ‘hese are generally of two classes: 1 2. Municipal or cor- ludebtedness, usually epoken of as ' From the fact that the physical tly available to the mortgage ilt and the term 18 so short ts of principal and rates of effected directly, the former estate mortgages, require some- lifferent treatment from the latter, i h the varlance between the contractud market rate of interest frequentiy re- suits in a premium or a discount. As either of these branches is a very large subject, I will myselt in this paper to the securities known as “bonds A bond is, generally speaking, a promise to a certain principal sum at a future date the meantime to pay as interest certain Comparison of a large num- ber of issues shows the following tendencies: The great majority of bonds are for a round and in month, the interest being semi-annual and the maturity of the bond being also on an interest day There are exceptions In every one of these particulars; some bonds are issued for odd dollars and cents, some bear annual or quarterly interest ome pay interest on the 2d, the 15th or the 28th of a month, some ma ture at a date not coincident with an interes d It may be observed that these anoma- It only hurt the marRetability of these bonds and thus injure the borrower without any cor- responding advantage. The most numerous bonds at present are 4s, January and July. The first point on which I wish to insist is that the bond ledger, or, to use the officlal language of New York State, the “stock in- vestments ledger, should be in a specialized form calculated fo afford on separate pages the most complete details as to each separate bond investment. The ordinary double entry ledger s totally inadequate to contain the particulars required, though it will answer for @n aggregate account showing in condensed form the total transactions of the kind. The ledger of the broadest comprehensiveness, with eubordinate ledgers of the most minute par- ticularity. The two opposing demands of com~ prehensiveness and minuteness confront us in all broadgauge bookkeeping, and can only be met by a duplex system of general and spectal ledgers, or systems of accounts; the former giving statistical and the latter individual in- forigation. My next suggestion is as to the t of interest. I find that in many Lastamn o even its falling due, but it is considered null until it takes the form of cash. I cannot help considering this as Dot the most perfect way for several reasons. We are trustees for our depositors. A trustee making his accounting to a surrogate or judge of probate is always charged with the Income ‘which ought to be received, and if he has_not collected it must show good cause why ot Similarly we should charge ourselves with tha proper revenue, and the charge should .stand until disposed of in cash or otherwige, T now come to & most important part of the subject, and one on which there may be siderable diversity of opinion. It is the qi tion of how we shall represent the vahie bonds purchased at prices above or below par; in other words, how to dispose of premiums and discount 1 am aware that many Institutions of high standing state all their bonds at par. To do this they must necessarily have treafed the sums pald for premiums as a 10oss or an ex- pense and have taken them, like other losses, from the surplus. In fact, some of them pub. lish with apparent pride the fact that “all pre. miums are at once charged to profit and Js; I observe that they do not say what becomes of _discounts. To discuss this metter fairly we must con- sider what this premium is. Why do we pay for @ bond more than it calls for, or why can we sometimes acquire it for less A premium is simply payment In advance for an abnormally high rate of interest, and aiscount is compensation in advance for an abnormally low rate of interest. In both cases the compensation 1s spread over the time that the bond has still to run; it does not apply merely to the present day or the present half year. By abnormal I mean differing from the normal, the current, the fair rate of interest on that exact grade of security, To reduce bonds as soon as purchased to par by artificlally treating premiums as losses and discounts es profits may be an easy process, but that seems to me its only recommendation. To endeavor to follow the market value from time to time, as many public reports require, is also objectionabie for the following reason: 1t is based not upon facts, but upon opinions. The investment securities in question are not o _continuously dealt in publiciy as to be quot- able like produce or potltry. Even in active “ AN AN SO o W BN, CTA. PUGILEY AND LIIFE _FPEANERT AT THE FrECLEF7ION BY STA7E BOARD Banx or con. o = LOWINE. Po7TER FoRES. AMIERICAN THRUST AND TAVING 5 g \p o+ GATHERING IN THE FERRY SCENES AT TWO BIG RECEPTIONS GIVE THEIR LADIES, AND SOME OF THE PROMINENT MEN = YESTERDAY AFTERNOON BUILDING. TO THE VISITING WHO ATTENDED THE REPRESENTATIVE BANKERS AND Earnings of Working Classes and Proper Investment Same Is Theme of Many Papers. | | | | -+ of ;= stocks and bonds it is well known that pub- lished quotations are not reliable. CAUSES OF FAILURES. — | ‘Willis Payne Treats Subject in Most Skillful Manner. ‘Willis Payne, president of the Consoll- dated National Bank of New York, fol- lowed with a masterly treatise on “‘Sav- ings Banks That Have Falled,” and he did not mince matters in placing blame where it belonged. He cited many in- stances where savings banks had been wrecked by deliberate dishonesty of di- rectors and officers And by the payment of large salaries and reckless speculation. In part, Mr. Payne said: Savings banks are a latter-day institution, This fact is evidence that in the development of the world's civilization the moral and ma- terial keep each other company and progress to a common end. The countries that are developing material prosperity witness the BTOWth of beneyolent institutions among their people—institutions for the care and comfort of the dependent and the housing of the great army of incapables. An institution that encourages prudent econ- omy and provides means for the safekeeping of savings serves a better—purpose, in induc- ing provision for the future, than do alms- houses for the improvident. Viewed in this 1ight savings banks cannot fail to he regarded as among the most beneficent of our moder) instititions. I venture to express the convi tion that however the people of the State may desire to accumulate, by securing large re- turns for the use of their money, those people sadly miss it who do not lay up in the present as against the 'inevitable future. That State misses it which fails to provide for this pur- pose by establishing savings institutions for the encouragement of thrift, where savings may be deposited in security andl the laborer may, when the years have gone by and the hand has lost its cunning have recourse to a fund provide@l through sacrifice, and which the inducements of a well managed savings bank have enabled him to accumulate. The recent wonderful development of our country has made us a nation optimistic, yet the experience of the past, with its failures, should not be. forgotten. Rightly utilized they should give us accurate judgment in place of a cheery expectancy born of desire. And here let me “say’ that, with some exceptions, and because of the very character of ‘those ex- ceptions, the broad claim that our mutual or non-capitalized savings banks are to-day the strongest corporations, in & comparative sense, of all the financial institutions of our land, Is fully substantiated. It may be thought a strong statement to say that directors of sav- ings banks should be held to the strict ac- countability of individual trusteeship. We ad- mit that savings banks are corporations and this would seem to absolve individual respon- sibility as incorporation usually does. But reflection will show that this pecullar and in. dividual trusteeship, and its resuiting dutles, is a verity. To tax the deposits in savings institutions is to discourage the placing by wage-earners of their gains with such corporations. Not only are the dividends which they receive les- sened by the amount of the tax paid, but the | knowledge that the earnings are to be taxed. | and thus diminished, acts as a deterrent. To | tax the accumulations of the provident poor is often to tax the insurance which protects thelr offspring from becoming public charges in the event of the death of the parents, Yet | the Legislature of the State of New York enacted a law the year befor last which pro- | vided that every savings bank shall pay an an- nual tax equal to 1 per cent on the par value of its surplus and undivided earnings. The unwisdom of the enactment of this law is evident when It is remembered that a surplus ! is created to the end that when investments | depreciate the depositors may recelve in full | upon demand the moneys deposited, together with the earned dividends. It is especially the | duty of this savings banks section to foster a growth of public oplnion 2verse to this | phase of tax legislation. The incumbent of 2 savings bank receivership 1is necessarily brought into close contact with the sufferings of deserving people, caused by its failure, and is thereby deeply impressed with the absolute | necessity of throwing every possible safeguard around their deposits. An exsmination of the savings institutions in the State of New York that have failed re- veals three general causes of failure. As a first general cause, I would specify the “‘avail- able fund” clause in many of the charters of these failed banks, created by special legisla- tion. By ‘‘avallable fund” clause I mean the indefinite omnibus provisions of those special charters which permitted investments other than those especially authorized, but not ex ceeding @_fixed amount, in “‘such available form as the trustee might direct. As_a second general cause of failure I would name incompetency or carelessness in the board of trustees. Poor advice can be had for the asking, and indifferent or personally weak trustees may bestow a modicum of time or thought upon & business that brings them little or no compensation. ‘As o third general cause of failure I would designate the element of positive dishonesty. Yet this has appeared so infrequently in sav- ings bank management as to justify the be- lief that it s less common than sporadic crithe average humanity, m'l'ho :{mln‘- of the workingman are the interest on his capital of strength and skill. These savings bank deposits are his surplus income brought into being by reason of his ambiticn, The moment he opens an -account With a savings institution he is a capitalist, and thus becomes a conservator of order. A word as to the supervision of savings in- stitutions by the State. This supervision in the interest of safety and good management does not prevall in all States, but is seen at its hest In the States of Connecticut, Massa- chusetts and New York, where the strongest and largest savings banks are to be found. 1t a model is sought, those of us in attend- ance from the Bmpire State may point to the laws which control our savings institutions, the sggregats deposits of which on the first day of last July exceeded one billion, one hun- dred and twelve million dollars. DEALING IN TRUST ACCOUNTS. | Wiliam Hanhart, of New York City, | greatly, and so does their -+ secretary of the Savings Bank Section, presented a very able paper on “Trust Accounts in Savings Bank: and it was a composition of marked knowledge with financial subjects. to the proper method by accounts of various kinds should handled by savings banks. The main portion of Mr. Hanhart's dress was as follows: The subject of the so-called in savings banks bas always intrlcate, the' usages of savings banks di experience, and | with the desire of somewhat cle: | matter that I venture & - manner as possible, and in a general way governing principles underlying = the 3 with the hope that by giving the views experienced bank officer I may draw out opinions and experiences of others older i business, and with a better understandty more combetent to reason the subject ooy, o state In as brief The views of the speaker were directed which trust be ad- “‘trust accounts’ been a di | one to handle; the matter is apparently ;{!‘kult ittle iffer it is the the subject, of an the the and To begin with, it must be understood that I address myself only to savings both mutual and capitalized, doing ings bank business, and not to savi tions that are speclally empower: charter or by the laws and carry out trusts: th institut) a real ng: ons, sav. ed by thels of thefr State to lcch:p: e latter have trust ofa. cers and also have counsel to advise them in sl cases. In the first instance let us counts are usuaily called tru may be broadly stated as all accoun opened or transferred, e consider what ac- st accounts; they are not simply in the name of one depositor, but having attached to them some qualifying clause, another, or for another, or opened in names, or in the name of a soclety or tion, or payable In a certain contingen in short, all accounts that are not si the name of one depositor. I will stas in my opinion, savings banks accoun by one person for or in trust for another at any time be withdrawn by the trus such as in trust for several corpora- cy, ete.; mply in that, ts opened in the event of the death of the latter the re. maining balanc be pald to the ‘‘cestui que trus tion of the bankbook and in adverse claim: but If the “cestui is not to be found, or does not exist, legal representative of the trustee bankbook, payment may be made t absence ot adverse demand. oint acounts sucl ““John Bro: Jones,” subject to withdrawal only on me. signed by both parties, are any, should and 1 may sately Presenta. the absence of i que trust” the Presents the © him in the Tom ¥ on receipts ovened by soms savings banks, but I have always considered them unsatisfactory to both the depositors, and experience has to be dangerous, because in the event of bank and the Droven them the death of one of the parties the question jnvae iarably arises: May the bank pay of the one surviving depositor? did the fund really belong? Of o on the receipt To whom pay- ment may be refused and a settlement waited for through the courts, but this is not visable in any event, of the progressive bank: such accounts; they are not safe to the and often become a source of contention, ad- and for years past many s have refused to open law- At 'Century Club Ladies Are Re- ceived. Society Gathers in Force at Head- quarters. ik HE Century Club tendered ® Te- | ception to the ladies of the bank- | ers’ convention yesterday after- | noon at the clubhouse on Sutter street, and it proved to be a bril- | liant affair. The rooms were embowered | in green boughs and gay blossoms and | music floated through the air. The | guests, among whom were many promi- | nent members of local clubs, were re- celved with true California hospitality by the following charming women: President, Mrs. Frederick G. Sanborn: past presidents, Mrs. A. L. Baneroft, Miss Anna Beaver, Mrs. A. F. Morrison, Mrs. P. B Cornwall, Mrs. John F. Mer Mrs. Frank Simms, Mrs. Frederick Hewl Mrs. Frank | Bowman; _directors, Miss Kate Hutchinson Mrs. B, F. Norris Mrs. J. K lson, Mrs, | Charies Slack, Mrs, Herbert Folger, Mrs. Louis Hengstler, Miss Caroline Van Dyke, Mr: Charles E. Cooper, Mrs. Timothy Hopkins, Mrs. D. W. Montgomery and Mrs. Frank Sum. ner. The women who thronged the rooms for two hours were, most of them, beauti- fully gowned; notably Mrs. Timothy Hop- kins, In a seductive gray satin pompa- dour surprisingly cut with a coat effec Mrs. John M in a gown of black lace; Mrs. Tripp, a guest stopping at the Palace, from Alabama, in a gorgeous white gown of thready lace, with a white lace and taffeta coat and a mink hat, | lightened with milk white feathers. The rooms have rarely looked more ‘hPauuluI th with feathery ferns and w: gracing nool and corners. the main hall in a wil- n derness of green a stringed orchestra dis coursed sweet music—and it was not of the insistent kind that precludes the chit | ckat that o’ercomes the funereal alr receptions—indee there were delightful hats and greetings over the dainty tables that will linger long in the mem the guests from over the Rock And the guests were prolific praise for the genui pirit of fraternity that pr iled in e club and that seems to pervade e life of who | dwell there. is dmitted hat | the home breathes forth the pe | of the dweller—hence must the | ity of the member be phenomenal, for t | welcome exte: was of the kind that | comes from the rt and the air breath- rie of home It hospi | ed it forth convineingly. The affalr will go down in the 3 of the club as one of its splendid succe 3 @ i @ quarrels among the and I joint ac- > Mary agree ay either | ene of these « tors on presentation of the | bankbook; ~such accov nsider as safe | to the bank, ar are very | useful and hel; in the majority of cases intly by near relatives, wite, mother and who learly and east tand that any one | of them moy wit he funds, and aiso, that the death ither does not . interfers | with the account, in s s that the sur- | viv y withdra or the balange. estat 1 always be o) whether they be nsterred from the 3 ae; r. and power | mive ecutor to make withd t if several administrators fer to pay only on the joint in the event of the death of the administrator you should require the appointment of an administrator “de bonis * on the estate, and pay him only. accounts should be opened or sterred in the name of the guardian, stat- the minor's name: in the event of the th of the guardian it is well to require that a new guardian he regularly appointed, uniess the minor has, in the meantime, reached his when payment may be safely made except th are named it is receipt of them | a general when several executor named, the receipt of any one of the | has qualified is sufficlent to bind the | In the event of the death of the exee | oniy safe e e for the bank is to pay ters of a strator “‘Cum _testamento xo0,” that I h the will annexed ment under tlar circumstances has Dbeen | made to the legal representative of the exe- | cctor, and has been upheid in some cour | but T would advise against it, as it may in- volve the bank in litigation, while payment to a legal representative the estate, pre- | senting the bankbook, is always lawful and | the safest way. | The ab remarks apply to administrators’ | or her, as guardianship ceases ‘“ipso facto” ‘when majority is reached: 1f the amount is small, and no new guardian is ap- pointed, it is often found conventent and ad- visable to wait until the minor is of age, when the payment made to him becomes legal. 1f the account is opened by or in the name of a minor payment to such minor at any time is legal In most of the States. Fred Heinz of Iowa Tells of Need of Proper Legislation. President Fred Heinz of the Farmers and Mechanics Savings Bank of Daven- port, lowa, presented a paper on “The Dangers Threatening the Savings Banks.” In part he said: At present the savings banks throughout the country are in a prosperous condition. No doubt it Is the aim of all interested that they should be kept so. The dangers that threaten the savings bank are, in common with other banks, inefficiency and sometimes dishonesty in the management by those in charge on the inside, , occa- sionally, efficiency by the nom-empioyes get- ting at the funds from the outside. In addition to this all the savings banks are threatened with a greater danger, that of los- ing desosits if Government savings banks should be established. The agitation for Government savings banks is considerable, and ehould ordinary savings banks fail to any great number it would no doubt hasten the esta- lishment of Government savings banks. The main argument in favor of Government sav- ings banks is that it absolutely protects the deposits. There are, however, many objec- tionable features. To keen the present savings banks in popu- lar favor it is absolutely nec ¢ _that the greatest safeguards be provided for the safety of the deposits. When this is done the cry for Government savings banks will cease, other- wise not. No doubt the best part of a savings bank is that loans be good and kept good. Many States have laws fixing the kind of collateral that savings banks can invest in. For instance, the lowa law permits investment in real estate mortgages located In the State, Government bonds, and bonds, warrants and evidences of debt issued In the State, and a bank may make lcans upon commercial paper, notes. bills of exchange, drafis Or any other personal or public security, but not on its own stock The general drift of this Jowa idea is that the securities be local securities, and that Is the rule aiso in many other States and is no doubt a good one, for the closer the borrower is to the lender the easier it is to look after ‘securities. th;_h lu':‘ savings bank law is modeled after the national bank act. Among other safe- vards we have examination by a State bank & aminer, and it originally provided that the tank could not take more deposits than ten times its capital stock. Now tnis has been changed to twenty times its capital stock and e is, and hence when the bank has de Posits U to the limit the security of the de- Positors is mot so good as It was before. Dhis T believe is wrong. All laws shouid be de to give the public as abundant security T heir money &s a safe and conservative omking business will justify. ‘The investments of the savings banks should be of such a character that there be no shrink ‘of the principal and In such shape that fhey can be disposed of in case of need within easonable time. s lr:wouldmge‘well to have good savings bank laws enacted in every State of the Unfon. In most features the laws of the various States might be identical, although that would Dot be so mecessary as the uniform law on Continued on Page 7, Column 8.