The San Francisco Call. Newspaper, October 22, 1903, Page 6

THE SA FRANCISCO CALL, THURSDAY, OCTOBER 22, 1903. MEN OF RENOWN IN THE WORLD OF FINANCE MEET IN CONVENTION AND ADDRESSES OF BRILLIANCY ARE PRESENTED AT GATHERING Governor of State Is Cheered by Bankers. President Hardy Delivers His Report. ITH a promptness savori strict business - method twenty-ninth annual conven- tion of the American Bankers' Association convened yester- day morning et 10 o'clock at the Cali- fornia Theater Sen Francisco has had many gather- ings in its midst of representative men, but it s no exaggeration to say that rever in the history of this city has so many men of financial standing in the country been se here. ot easy to conceive the magnitude o wealth represented by the men that act as custodians of the finances of the American peopie. That the bankers eve been well trained to the jdea that time is money” was shown in yester- day's eedings, for not a minute was | ed the methods of ved with precis- 2 vass amount hed at the fipst no elaborate decoration of »w American flags were e boxes and the tables hes of flowers were \ Pregident Caldwell Hardy called t mee order, the theater was filled on r floor and many vi rs were se d in the balcony. On the tage were the officers of the association Governor Pardee, Mayor hop Nichols of the Episco- California, James D. members of the local recep- mmittee Prayer was offered by Bishop Nichols, ho asked guldance of Providence liberation of the bankers, and the assembled recital of the n and - WELCOMED BY THE MAYOR. City's Executive He Tenders Visitors arty Greeting. tz then welcomed the dele- t the people of Sen he sald r of this c I extend 3 in part < 4 the distant centers of | ve done us signal honor by . ‘ Vestern outpost of . our - as the meeting place r n, and it is the ur welcome shall 50 to the hearts or whatever be n r lands, we recognize that in e lite e American banker there is al- ways the play of the impulses of re s0 achievements which | possible for San Fran- | ifornia through th confidence of the | I arteries of the GOVERNOR PARDEE SPEAKS. s State’s Hospitality to the Dele- | gates and Friends. a warm re. | & And t nk & multitade of representatives . r ng world, com. f Governor's soul & My “‘paps e epted” with has the “‘drawee” af d | n this address | uestion w gre H, do ¥ know that everybod always Judge ¢ ty “of the degree of Se, as 1 are that | ts those | How really | do | Goiden Gate, wich opens on to a ‘thr which, ere long, will . Ormus and of Ind." Wel- %, our mountains, T amillone, whest sgdds now reside! iy depthe ana. omme: semite! Welcome to the i g RN : )\!"V"l to California! s no latéhstring and no " rs are gl _ajar il o tter loved ye canha be: | ull_ye no.coum beck agen?’ ames B, —Pheten welcomed the dele. n half of the San Francisco , his’ address was filied with s ‘showing . the rasources of Call. | a and of its banks the close f the ‘welcoming speech- e conventfon thén setfled down to PRESIDENT HARDY’S ADDRESS, Deals With Vital Questions of ¥i- nance in Skillful Manner. President Caldwell Hardy, who is the hes@=af the Norfolk National Bank of orfolk, Va., then replied to the address. es of welcome, which was followed by the annual address of the president of association sident Caldwell Hardy said: - Another year has ince vention, “und we o trethes, Seapresnd. ns WG &re at each of our gnnual gdtherings, with 1he anomentous tide which has- swept us along into history, the history of a commercial and financial epoch, such zs has neverrbeen wit. nessed before, ‘the futume of which. holds an interest for gl of us and i equajed omly by the glant forces which have been ‘mstrumental tasi theme events womd B Poi ents woul be Fhall aim to touch briefly on some saeGt potats bearing on our finences and commeroe, OUR DBEVELOPMENT. A few years ago we were engaged In @ battle | makin even in a ligitimate way, our capital would conservatively permit of? | Our steady increase of population, healthy as it is, is almost infinitessimal compared with | try | with | | | | Z, 7 =7, CALDWELL HARDY £ IPREGIDENT OF THE AMERICAN BANKERS ASSOCIATION < conclusion, es it always does, and in the final adberence to the gold standard Jald a new orner-stone of prosperity. And what has en- abled us to bufld on.this foundation the wide- spread edifices of our national growth? ' Good crops, as the fountain source, lending a. new impetus to the wheels of industry, insuring abundant employment for labor. in our fields, our mines, our factories and our rallroads. A tion of these reawakened energies sent pulsating ‘through our arteries of commerce an | increased demand and production, responsive 10 each other, Good times have come again to | our farmers and our manufacturers, and our | rafiroads have been burdened with ‘our crops | and products and the return merchandise pur- | chased-with their proceeds |~ The unprecedented prosperity of the past few growing out of these conditions, brought last fall to & climax of high prices for com- | modities and securities of all kinds. The same sunshine which brings to its full fruition our rich harvests also fosters the tares, unless they be plucked So among the substantial edifices of our prosperity have sprung up arti: | ficial commerolal structures, which have tafied | signally to stand the test of time. Oversan- cuine people, some probably not overscrupulous there are few people more capable of trouble than your full-fledged, unadul- terated optimist), swept away with the craze for making money or anxious to profit by this craze in others, had been capitalizing and re- apitalizing schemes of all kinds and inducing people with paper profits to underwrite flota- tions which they were as unable to carry as Gulliver was to 1ift himself by his boot straps. The boom had gone too far and the pessimist predicted open disaster, the natural reaction in, money was in demand at increasing | ‘extended credits were being withdrawn, ierals and securities were cloely scru- zed &nd a general housecleaning begun Where it was most needed, in the weeding out ‘overcapitalization and infated securities. We have gone through a period of liquidation in speculative circles of the mest drastic char- acter without serious results except to the few a their depth. The rates, who have got too far bes process s not yet complete and the way 1s still strewn with cripples and “indigestible” | but that general business c i mo one can doubt. That ve an ebb and flow in the tides of indust: « as certain as the cycle of the seasons, and the source of these tides comes from our mother | earth to the tillers of our soil and, as seed time | 3 harvest yield returns, so shall our pros by " A WORD OF CAUTION. the attitude and rela~ g institutions to referred to and Let us review, briefly, of #ome of our bank conditions and incldents methods pursued by them in the prosecu o vneir business. 1 refer espectally to | lous policy of paying high rates for de- | ts, particularly savings and time deposits. | neidents of 1893 and the next few subse- t vears left their indelible imopress upon oinds of most of our older bankers, but are not wanting signs tbat these lessons | forgotten. 1f there s any class | more than others who should never epeculative risks it is those who are £ the earnings and savings of others, seeking of devosits at high rates of interest, which cen only be earned by specula- ve investments, is a menace to sound bank- e for safety of prinei- been Savings ¢ z | gather than alluring interest rates, which | are Becessarily coupled with greater hazards, should carefully shun such institutions, of Which there are, however, happily, but few. Our banks, indissolubly linked with the com- mer country, have been al interests of ot rvative, and the pres- a whole eminently cons ent confidence in their stability and sound- ness ts the ability and fidelity with which you revresentatives, have discharged your great responsibilities. HAVE WE OVERTAXED OUR WEALTH? The vest increase in our national wealth is unmistakably attested by the enormous in- crease in bank deposits, in the aggregate value of our marketable securities, of manufactured products and our industrial plants. That we have successfully steod the liquidation through which we have passed is another unmistakable evidence of our wealth, but, after all, have we ot been attempting to develop our resqurces, more rapidly than the field before us in undeveloped resources of our country. The population which eur coun- could successfully maintain is so0 far be- yond the ken of human knowledge that it re- nains fof meneration yet unborn to solve the Guestion. If this be o has not our develop- ment outstripped our wealth, and, if &, what is remedy? Certainly not by seeking to oush the development on borrowed capital or flated credit, but by contenting oursclves cutting our garment according to our cloth, bullding steadily, only &s our resources enable us, paying as we go, owning what we bu: CURRENCY. The changes have been rung on it and rightly. 1 fear you would be reluctant to ad- mit you know more about it than your Bible, but 1 suspect you think you do all the same, and if there is anvthing about which a banker thinks he knows more and probably knows less it is the currency. The conditions existing in this country differentiate the currency problem for us from that of any other country that has ever had @ paper currency, and every man's views are more or less theory when he has had no_opportunity of demonstrating them practi- cally. What part has the currency problem played in the stirring commercial events to which I have alluded? The vast majority of us feel assured we have had so far all the currency we have needed and that an increase of it just at this time would lend a further undesirable stimulus to speculation. The enormous production of gold in the last few years (about which we are to have some very interesting figures from one of our distinguished guests) has been either lost sight of, or, If studied, will furnish food for thought. The advantages claimed for the bank circulation of other countries over our bond secured notes have much merit from a scientific standpoint and woild bave more from a practical standpoint if the eclement of risk could be eliminated which has brought disaster in some instances— notably in that of the Australian banks some years ago. The practical question is, eould it be satisfactorily grafted on to our banking-| system, and, If 80, how? The idea of & ‘‘cen- tral bank” or & “branch banking system' is repugnant to our conception of free govern- ment and institutions, and, unless I mistake the temper of our people, will never be ac- cepted. Neither will any form of currency be ::Dl;flnn':!hlch d?l' not carry with it the © confidence o m:;.:! o Hy security which our bank e discussion of the matter from aca- demic standpoint can be prolonged indefnitely, but what the practical banker wants is detalls Wwhich will carry conviction to his mind, as to how such a currency can be 80 guarded s to fulfill the conditions outlined. We need is @ currency to be used, for the to en- DuToso of creating mew liabilities, bat us to move our crops without distress and abl, to liquidate comfortably liabilities already cre- ated. We shall, probably, arrive at some so- lution of this question, first, of a ©of the standards, an uncom and cltve_strasy bcl-e-l;‘a.. Gebavet ahd. . the e ., recogn! by the enlightened world: but, lwuumunm‘ the in- | heretotore | sity for dealing with this subject As a question | locking up of money | worse than the actual withdrawal of | Remove the cause of the discu: | reterence | porat that “‘a rose by somy sweeter,”” he says: ““Why will people continue to’ refér to this needed adjunct to our currency by a (emergency) that would preclude any sound banker from using it, when confess that he had reached air w not sufficient for his Wity UsINg o saying he was on his last legs and that there was only one hope of saving him, and that Was extreme measures. We don't want an extreme unction currency.” At your last convention, resolutions were adopted .authorizing the appointment by your president of a committee of seven eitizens of the United States tc consider and report to your ‘néxt conventicn on the ‘‘Currency Ques- ond, in pursuance of these resolutions, lHowing gentlemen were appolnted on the committee provided for: C. S. Fairehild, New York Security and Trust Company, New York; H, C. Fahnestock, First National Bank, New Yorl Myron T. Herrick, Soclety for Savings Cleveland; J. J. Mitchell, Tllinols Trust and Savings Bank, Chicago; J. C, Van Blarcom, National Bank of Commerce, Si. Louls; Homer §, King, Wells, Fargo & Co. Bank, San Francisco; George 'Q. Whitney, Whithey National Bank, New Orieans. They have given the matter serious and earnest consideration and their report, which will be presented to you to-day, reflects the care and conservatism with which they have discharged the duty imposed upon them. SUB-TREASURY SYSTEM, The natural function of a bank is to gather the money of the community that it serves and distribute it in loans on good security among those who need it. and the bank that performs this function with the greatest care and success best serves the interest of its people. The money of the country should stay in the channels of trade and the. miser who gathers his gold and hoards it is & para- site on the body politic, but when the Govern- thent by taxation gathers money in advance and in excess of its needs, and avithdraws the same from the channels of itrade, it g’ doing exactly what the miser does. No other intelli- gent people would have so long rested pas- sively under such a system, and we should volce our demands for a reformation of this pernicious. practice in no uncertain {ones. The disposition of & secretary to minimize g other name would smell a point where lungs, and he title | e would thereby | ygen, equivalent to the doctor’s | this difficulty should mot depend upon an in- | copstruction of the law, but the the subject should be made &0 e the duties of the Secretary and so regulate the operatio to meet its requiremen general finances of dividual statutes on plain as to mak ministerial only. of the Government without friction with the commerce. A discussion of the currency brings us jrresistibly to the consideration of this anti- quated method of handling Government funds, and the report of our currency committee, referred to, accentuates the neces- %o be first disposed of, precedent to the under- taking of any currency reform. The dcmoraliz- ing effect of the annual talk regarding the 1Al the treasury is almost { the funds. on and the ending of it will be quite as beneficial as the actual freeing of the money. 1 hope it may be your pleasure to push vigorously the reform recommended by the committee in this respect. INDUSTRIALS. A consideration of our present development | | | | ell, + - o PROMINENT BANKERS WHO ADDRESSED OPENING SES- SION OF CONVENTION. - * &+ 5 think that the movement will meet the ap- proval of the best banking thought of the country. OUR ASSOCIATION. For details of what has been accomvlished during the past year I shall refer you to the report of the chairman of the executive coun- within whose province the active work of thé association lies, more particularly, and the reports of the various committees. Our membership continues to show a healthy and graiifying incre and has risen beyond 7000 The work of our protective committee | time when has been pushed with the vigor and intelligence which characterized it for years past. Your committee on uniform laws has continued its valuable work, and we look forward to the thé law of negotiable instruments shall be the same in all of our States. T work being done by our committee on edus | tion_1s only d by the undeveloped field before It re may have been doubts at times in the minds of some of our members as to the value of this work, but the achieved, set forth in.the committee port, leave no further room for guestion. more eloquent tribute to this work could be | | paid than that which I received letter from one of our promin members, reading: ‘‘Already four of the most prominent men in instituting ‘our chapter have been in @ recent and conditions would not be complece Without | raiged from ‘the ranks’ to officlals in the banks of the present to our corporations y do in such day, standing as they necessaril | inttmate relationship to banking. In the formation of our great industrial cor- fons we have been confronted with new and strange conditions, so experimental with which they are connected. Your fidelity committee has devoted itself with painstaking care and assiduity for several years to the protection of your members against the unfalthfulness of employes and to in | the establishing of a uniform and fair form of character that we can, A8 yet, reach no con- | hond, at reduced rates, which has resulted in clusion as to what will be Eliminating those of a fraudulent or fictitious | mempers. character nearly all of them have been sub- ject to criticism in the matter of capitaliza- tion, and the weak point, 1 might say, with all of ihem has been the fallure to brovide a reasonable working capital. A considerabte number of minor corporations with local credit | probably, accomplished all it can do. were able to secure on a legitimate basis an aggregate of bank accommodation largely. in excess of that which could be secured by many of the .comsolidated corporations _into which these minor concerns have been merged. The necessities for enlargements and improvements have not been adequately provided for and the working cavital has often -been further.im- paired by the illegitimate declaration of divi- dends. That the follles and peccadillgs of these enterprises have not brought more serio consequences to the whole body politic is. & cause of congratulation, but it i3 a subject for regret that there have been 5o many, in- nocent sufferers from their operations. S RAILROADS. Thefe has been a greater creation of securities in the consolidation of many of our railroads than aetual values apparently justify, and where this has been the case We naturally cannot lend our approval, but the concentra- tion of management and control has brought about a stability of rates which has created en established value for their legitimate ee- curities without bardship ‘to the patrons of the roads. It is a serious question whether the aggregate market value of all of our rail- road securities equals the amounts originally expended in the construction of them with even a moderate return upon the Investments. The reduction in the cost of transportation by reason of the great improvement in the physical conditions of the roads hus made it possible to move freight profitably at rates which would_have formerly been considered impossible. 1 do not mean to sugwest -that the roads should be left entirely free. in the matter of fixing rates, but the reasonable con- centration of their management should rather facilitate their control in this respect by con- servative legislative enactment. The enor- mous increase of business developed by our prosperous condition has sq. overtaxed exist- ing facilities as to necessitate extensive im- provements, which have brought the roads into the market with borrowings which have seri- ously taxed our resources; but where these improvements have been undertaken on a legit- | imate basis there is ntly little reason to apprehend any difficulty in carrying them to a successful completion and utilization, PUBLICITY. A word on this subject, as it relates to all public corporations. Some criticism has’recent- Iy been made of the publication of the weekly New Yorlk bank statement. I use the incident ‘merely to point a moral. The form and meth- od of making tbis statement has begn, more or less, a subject of discussion for some time past. If the form and method of publieation is mot as acourate as it should be, make it thelr destiny. | the saving of many thousands of dollars to our The work of the committee has brought it to the-point of outlining the future possibilities In the establishment of a ‘‘bank- ers’ guaranty fund.”” This would seem to be the logical concluston of this work, and unless such a plan be adopted the committee has, The guccess which similar funds have met with in England and the establishment of them by large banks and other corporations attest their practicality. 1 cannot too strongly urge upon you the careful consideration of the re- port of the committee on this most important matter. In reviewing the various subjects touched upon, T havée not hesitated to criticize, where I have felt it necesary, and to display a danger signal where ft seemed to be required, but while counseling conservatism, I would not have you count me a pessimist. Banking has developed into a professfon and not a mere trade. We are insistinz upon a more ade- quate preparation for business, for a larger education, a'deepér knowledge ot principles and economics and a fuller appreciation of the principles which should govern the relations of men In banking and commercial life. The achievements of our assaciation in protective, educational and legislative work accentuate the possibilities of organized effort and our growth in membership and influence are the tangible returns of the seeds which we have sown. May our future years continue to be fllled with *the further. fruition of our efforts. Who can recount the friendship formed and tell of the memories of pleasant intercourse graven deep in our hearts, for which we are indebted to our beloved assoclation? These may not be weighed and measured.by scale and rule, but still would alone be sufficlent reason for our existence. Tet us turn our faces, then, to the bright future of our country and our association. When the rising sun to-day first touched -the casternmost_border of our country it looked down upon fhe richest and most prosperous na- tion in the world, and when to-night it shall have cast its last rays on the Golden Gate and passed on to Hawall and the Philippines it wili leave behind the most enlightened and progres- sive people It has ever shone upon—we of our great republic. OFFICIAL REPORTS SUBMITTED. Data Tells of Vast Growth of Bank- : ers’ Association. Secretary James R. Branch of the Bankers' Association then presented his annual report, which was as follows: To the members of the American Bankers' Association: ‘The membership and resources of the asso- clation have increased as follows: what it should be, but do not suppress it. The Paid mem- Annual publication, occasfdnally, of an Individual bank bership. dues. statement, which it subsequently develops is | September 1, 1875 1600 - - $11,606 not legitimate, would be & poor excuse for the | September 1, 1885 1395 10,940 suppression of bank statements in gendral, and | September 1, 1595, 1570 12,975 1 think a suggestion that we do away with | October 1, 1908. ... T065 76,58 bank statements would be unanimously vetoed. | The interest ‘on $10.000 ok statements, in general, convey fair and | Government ~ds, 1625, intelligent_information as to’the status of the | $400, makes a total in- h;g.l-“n and, if the --mlad x:;melxy from other come of e edh $76,048 e corporations cou required, a most | In the past year 313 members have been fost mportant, service would be rendered to the | tn ‘fallure, liquidation and wjthdrawal rn ltc‘.n ‘{hho sm‘tnlx;lwunnw companies, ‘“‘:2 -assoclation, reduct ‘the membership 00k e_publl tember 1, 1902, to wisdom of publicity by publishing full detatled t one h thirty-nine - m this principle is not volun- |'members have joined 1, 1902, tarily States making a net gainover last s total mem have protected the public by the establishment | bership of 826, e Tt Tarmest smber dmflmtwgon com- m:wm-mhurmlumn;g oo surplus below $50,000; 1501 banks with capital and surplus between §50,000 and $100,000; 1930 banks with capital and surplus between $100, 000 and $500.000; 357 banks with capital a surplus . between ' $500,000 and $1,000,000; 33 banks with capital and surplus of $1,000,000 and over. The aggregated capital, surpius and undivided profits of our members amount to $10,547,230,405. The report of the commitiee on re- adjustment of dues was submitted and adopted by a unanimous vote, after which George F. Orde, the treasurer, reported receipts, including balance of $157,921, and expenditutes of $85,589, the largest items being protective committee, $38199, and salaries, $15,656. The balance August 31, 1902, was $72,382. The reports of the secretary and treas- urer were adopted and the report of the executlve committee of the association | was then presented by the chairman, E. F. Swinney, president of the First Na- tional Bank of Kansas City, Mo. EXECUTIVE COMMITTEE. Recommendations of Importance to Financial World Are Made. The report of the executive council was submitted by Chairman K. S. Swinney. by the association during the last year. In substance it read: The membership during the last year has increased, as ‘well as the income of the association. The main item of expense was that in- curred by the protective committee in the running down and breaking up of danger- ous criminals. The committee on education has been showing good effects and its expenses have decreased, The committee on fidelity insurance of- fers the following resolution as an amend- ment to article III of the constitution of the American Bankers' Association by the addition of section 2: Section 2. The executive council shall ap- point a board of five trustees for the man- agement and administration of a fund to be known as the American Bankers' Guaranty Fund. Said fund shall be established for the purpose of enabling such of the members of this assoclation and their employes as may elect to become subscribers and contributors thersto, and to avail themselves of the advan- tages thereof to provide by means of & gen- eral co-operation among sald members and their employes, a fund from which sald mem- bers may be reimbursed for losses arising from the dishonest acts of their employes. Said board of trustees shall establish rules and reg- ulations for the government and management of said fund and the rules and regulations adopted by the trustees shall be binding upon all the contributors to and beneficiaries of said und. Vacancies In the said board of trustees shall be filled by the executive council, and it shall be the duty of the council to annually appoint an auditing committee to audit the books and accounts of said trustees; but nothing herein contained shall be construed as creating any financial lability by the assoclation on account of said fund. The council, after considering the ills which might arise should the association adopt the amendment, recommended that it be not adopted. Lewis E. Pearson vice president of the New York ‘National Exchange Bank, of- fers the following resolutio: Resolved, That this association adopt a bank money order system and that the president ap- point & committee of five to devise a plan whereby \ members _can be furnished uniform bank money orders with . proper advertisin matter in connection with the same at a mini- mum cost. The report of this committee shall be ren- dered to the executlve councll, which is here- by empowered and requested to authorize such expenditures as shall in their judgment be proper to enable the committee to carry out its recommendations. The council recommends the adoption of the above resolution. A resolution has been submitted by Stephen M. Griswold, president of the Union Bank of Brooklyn, N. Y., as fol- lows Whereas, The practice of paying interest on dally balances to individual depositors has Brown to the extent of impalring tie prosperity of many of the banks of our country, be it therefore Regolved, That it is the semse of this con- vention that conservative banking demands that no such Interest shall be paid. Resolved, That the foregoing resolution be re- ferred to the executive councll for considera- tion and zction. This resolution will be placed before the convention. It has been the custom to appropriate the sum of $5000 to be used to help defray the exdenses of the convention in the city in which it is held, and this custom was carried out here. The bankers of San Francisce refused to accept the money and insisted on paying all of the expenges of the convention. The visiting bankers wére pleased with the extreme generosity of the San Fran- cisco bankers. TELLS OF NATION'S WEALTH. Facts and Figures Presented by the Currency Committee. _ The report of the currency committee was then read by the secretary of the assoclation, the report being as follows: To- the American Bankers' Associat instructed by the special mmcymm ‘com. appointed at Néw Orleans to # and report on the m‘:. currency sys. the. | our history. sidiary ‘silver: $17.850,254 Treasury notes of | 1890: '$335,377,568 United States notes: $399,- | 384,930 national bank notes. Total, $3,288,- | 9021178, making a circulation per capita of 1420760, comparea with §28 65 September 1, Tt gave In detall the work accomplighed | (Pt thele currency could be"retired when no | €O 3 3. SULLIVAN . oF CLEVELAND oAu'f‘Q_ {1 2 e e United States than at any previous period in Taking the country altogether, there iz no scareity of money, inciuding United States and national bank notes, to meet any | legitimate demands of business. Compared | with September 1 a year ago the national | banking eirculation has increased $52,827,551. | The general stock of money in the United | September 1, 1903, was as follows: 3,940 gold coin, including bullion in $565,853,404 standard silver dollars; $101,867,228 subsidiary silve $17,976,000 | Treasury notes of 1800; $346,681.016 'United | States notes; §418.587,975 national bank notes. | Total, $2,708,693,66: At ‘the same date there was in eireulation $620,575,159_gold coin; $394,155,919 gold eer tifleates: $72,950,012 standard silver dollars; $455,928,384 silver certificates; $92,876,952 sub- In the opinion of your committee the most serious need is the reform of the Subtreasury system in such wise that the money with- drawn from the banks for custom dutles, as well as Internal revenues, shall be use in the community froh which it has been | withdrawn. Such a reform could be inaugu- rated by giving to the Secretary of the Treas- ury dlscretionary authority to permit deposits to the extent of 50 per cent of the capital and surplus of national banks of customs recelpts, as well as internal revenue receipts guaran- teed by securities acceptable to the Secretary of the Treasury. Such an arrangement would render impossible the embarrassments which have frequently occurred as the result of Treasury accumulations. Regardiug the question of circulation, the first and most Impartant requirement s the immediate repeal 0f the present. limitations of $3,000,000 per month upon the withdrawal of circulation, so that the expansfon and con- traction will be automatic and governed by the surrounding, situations. Under the present restrictions many banks are unwilling to issue | currency for temporary and legitimate needs, which they would lssue if they felt certain r needed. mergency circulation could, within rfl"f“l} limitations, be safely permitted upon the act- | ual deposit with the Treasury Department of hecurities acceptable to the Secretary of the | Treasury. And vpon such deposits circulation | could be fssued promptly to meet actual emer- Soncies, which Would not be possible if time | Were. taken for the examination of xeneral as- sets by the Secretary of the Treasury and | Comptrotier of the Currency. A tax of 8 per | cent per annum should be imposed upon such | emergency circulation to insure and hasten its | return to the issuing bank: this tax to be set | aside as a safety fund to secure the United | States Treasury for the redemption of notes so issued. This emergency cirrulation should be jssued without any distinguishing mark from | other netional bank cireulation except to sub- Stitute the words *‘secured by bonds approved | by the Secretary of the Treasury,” instead of 103 | onty bona Delegates Favor Bank Money Orders. BondingEmployes Is Discussed at Length. made by the executive council at the Demver meeting in August, 1898, and adopted by the assoclation, “That a committee of this asso- ciation be appointed to inquire Into the rates of surety bonds and to pecommend a standard form of policy, and to consider any plan or pians that may be submitted,” we have en- deavored to carry out the wishes of the coun- cil and the assoctation to the best of our abllity. The committes in this work has endesvored be absolutely falr with all parties Inter- and has endeavored to comstddr without partiality the equitable rights of the employes. the employers and. the fdeiity companies, -and in its reports has endeavored to point out the true conditions as they have been found to ex- ist from the carefully gathered statistics re- ported to us confidentially by the banks of the country. We are satisfied the information we have is the most reliable of any to be had in the United States. The committee Wishes to emphasize the fact thet since its appointment in 1308, and the careful study of its reports by many of the members, the rates for writing bonds have become fnore uniform and have been reduced fully 25 per cent, resulting in the annual sav ing to the members of the association alone $132.368 50, a sum of money almost double the annual dues of this association, nothing of the benefits the efforts of mittee have been to non-members, Wh easily equal that of the saving in premium to the members. We have had prepared by the best legal talent the American Bankers' Association copyrighted form of bond. This bond, we be- Heve. is the best form of bond written to-day It is equitable to the insurer and the insured, and gives protection to the bank. We are convinced of its merits, as there has never been, to the knowledge of this committee, a contested loss on this form of bond, and thers have been cases where. on the same risk, other forms have becn contested and the cla tion form paid Arother proof that our form of bond is su- perior s the fact that all fidelity companies, with three exceptions, exact a higher rate than on their own form for obvious reasons. We need to advance no stronger argument Why our members should use the assoclation’s form. Another proof of its merits is that 40 per cent of the members of the, association have adopted it after a careful examination of its provisions by their attorneys. This i3 the written that has to stand upon its own merits, as fidelity companies never offer to write it unless the banks insist upom hav- ing it, An advantage to members who use the as- sociation form of bond s that it is being uni- versally adopted and thereby secures uniform ity to banks in case of litigation. The Comptroller of Currency and the bamk- ing departments of many of the States. insist, and the laws of some of the States require, that banks bond their- emp not only - for the protection of their_stockhoiders, but for the protection of their ‘xsmmen as well The apparent desire of corporate fdelity in surance or bonding companies to discriminate against the American Bankers' Assoclation copyrighted form of bond has led this committes to recommend that the American Bankers' Association es- tabllsh what may be known as the Ameri- can Bankers' Guarantee Fund, under the man- agement of a board of trustees to be appointed by the executive council to guarantee the fidel- ity of the employes of those banks only that are members of the association From our reports we have learned that members are carrying $133.706,570 In bonds. and are paying annual premiums of $3SS 779 33 against a loss averaging for the past fen years mot to_exceed $45,000 per annu We are convinced that the bankers of this country are paying an excessive rate for this insurance, and our convictions are supported by statisties of English companies covering periods of thirty-seven and thirty-eight years Tespectively. We are convinced that it is not good policy for the American Bankers’ Asso- Siation to single out and authorize the Tetary, or any one the association might see fit to appoint. to solicit business for some par is now being - t o ticular bonding company, as done by many State assoclations, for & com mission which s paid into the treasury of This method carries a mor of any company that may places the association in a time might bring serlous the organization guarantee at best, be selected and position which mbarrassment T rammittee, having carefully studied conditions hers and abroad, and having gat ered statistics as complete as possible, reported %o the executive council and the New Orleans convention that unless it was the purpose of the association to put the information to some practical use, the committee be discharged. It was decided by the executive counell that this committee continue its labors for another year, and that its report be published in pamphiet in the words, ‘‘Bonds of the United States.” for. | form and sent to the members of the associa- being amply secured, there should be no dis- | {jon, calling the attention of the members crimination against it beyond the 6 Der cent | pavecially to this report and asking for their e . | approval or disapproval. Not having & com To further liberalize the circulation, vour | tEEC™Y(C, Tr Gur members, we sent our report committee recommends that the United States tax on cirevlation should be uniform on the issue of currency based on all classes of United States Government bonds. Tn the Judgment of your committee these modifications of law can be authorized with- out damage or discredit to the national bank clreulation, but your committee cannot recom- mend any step that will tend toward a return to the miscellaneous circulation which pre- valled in the country before the war, or any step which will disregard the history of finance among the commercial nations of the world, nor can'it recommend that any note should be issued without the certainty of its redemption in _standard coin of the United Sfates. The above report is signed by CHARLES S. FAIRCHILD, H. C. FAHNESTOCK, MYRON T. HERRICK, HOMER S. KING, 3. J. MITCHELL. In the foregoing report I am dissent from the recommendation for the repeal of the Jaw restricting the redemotion of na- tional bank circulation to $3,000,000 a month, for the reason chiefly that it seems to me to be inconsistent to in the same report recom- mend m method for an increased circulation and to insert a provision urging a means by which the circulation may be at any time di- minished. With the exception of this dissent the fore- going report has my hearty concurrence. EO. Q. WHITNEY. Frank W. Tracy, chairman of the committee on uniform laws, submitted its report. During the year two States had adopted the ble instrument law, which s now M force in twenty-three of the States—Floj New York, Massa- chusetts, Colorado, Maryland, Virginia, North Carolina, Wisconsin, Tennessee, Oregon, Connecticut, Washington, Utah, Rhode Island, North Dakota, Towa, New Jersey, Ohlo, Pennsylvania, Montana, Idaho; also in Arizona and the District of Columbia. The committee recommend- ed that earnest efforts be made to have the law passed next winter by Louisiana, Maryland, Mississippi and Vermont. The report of the committee on Bureau of Education was presented by the chair- man, Robert J. Lowry, the paper dealing with the requirement of a uniform system of educating bank employes. The report of the committee on fidelity insurance. presented by the chairman, John L. Hamilton, led to considerable dis- cussion on the part of many of the dele- gates.. The gist of the report dealt with the necessity of the banks of the associa. tion bonding their employes in place of accepting bonds from fidelity and guar- antee companies. The report of the com- mittee suggested an amendment to the constitution of the association by which the banks could accomplish this end, but the executive council had reported against its adoption. The members of the association that favored the adoption of the resolution to enable the banks to do their own bonding were opposed by delegates who repre- sented fidelity and security.companies, the latter seeing that the adoption of the resolution meant a loss of business to their corporations. ——— BONDING OF BANK EMPLOYES. h‘gndm\of Committee Leads to ‘Discussion at Length. The report of the committee on. fidelity Jnsurance was as follows: The committes on fidelity imsurance bews to report that, in pursuance of & recommendation impelled to to all bankers of the United States, and in an swer to our inquirfes received repiles from | forty-two hundred and fourteen (4214) mem bers, or about two-thirds of this association. reporting favorably to the association taking up the work; three hundred and ninety-thres (398) reporting untavorably. while two thou sand and ninety-six ( of the members, or less than one-third—mostly private bankers and bond brokers—were indifferent and did not an swer our inquiries. From non-members of the association we raceived twenty-seven hyndred and sixty-nine (2769) replies, and of this num ber twenty-seven hundred and fifteen (2715) favored the scheme, while fifty-four (34) op- posed it. A majority of those banks not mem- bers favoring the groposition wrote that it suit able vlans were adopted by the association they would become members thereof. Ninety- one and one-half (9114) per cent of those an swering favored the proposition and_ nigety- eight and one-tenth (98.1) per cent of the non- members answering favored the proposition Sixty-nine hundred and twenty-nipe (A members and non-members are favorable to the proposition, while four hundred and forty- seven (447) have expressed themselves as un favorable. Ninety-three and nine-tenths (93.9 per cent of the answers recefved are favorabls 1o the association taking up this-line of work The executive eouncll at New Orleans de- cided that| If a majority of the banks, members of the asskciation, were favorable to this prop- osition the committee should consider and rec- ommend the best plan for the-association to adopt in the bonding of its employes and. pr pare ruies and regulations governing the same. Tn compliance with said directions we have prepared and filed with the secretary of this association an amendment to article three (3) of the eonstitution by the addition of section eleven (11), creating the “American Baakers' Guaranty Fund,” controlled by a board of five trustees to be appointed by the executive coun- cil. Having considered the different forms of corporations, and owing to the conflicting laws of the different States, under advice of the best legal talent, we have decided that there is anly one safe and practical way to bond employes, and that is by the creation of a guaranty fund in the hands of trustees. In this manner mem- bers will be furnished indemnity, amply se- cured by a trust fund, giving better protection than they mow bave ond uitimately, we be- Meve, at a rate mot (o exceed one-third the es now paid. Your e ittes s convinced of the practi- cabllity of this plan. It is not an untried experiment, for it has been in pictical opera- tion im England for thirty-eight years under he Bankers' Guaranty and Trust Fumd, and for thirty-seven years under the Colonial Trust It The number of employes honded In the Pankers' Guaranty and Trust Fund is aimost jdentieal with that of the membership of this assoclation. The average losses in thi®country e lonly seven cents on the $1000 from that I Joreign countries, as shown by statistics thered by this committee. n ‘addition to_these companies we have the evidence of the Union Bank of London, which ortapiished a fund in 1800; the London and City Midland, which established a fund in 1889; tho Scotland’ guarantee fund, estabiished guarantee_fund, established England guarantee ANl these funds y the leading banks our own country we have Company and the American who bond their own em- . and in the Adame Express Express Company, g Your committee has prepared rules and regu- of such & fund. changing them suffi- for the D of the banks, members of this they be adopted. The members of your committee wish in this, our last repert, to thank the officers and - bers for the many courtesies shown us. Wo also wish to thank the non-members who hav- s0 ly and to_our prompt! cheertully responded inquiries. Alflnhm!lllt_'--:v Continued on Page 7, Column 3. . i