Some Anomalies of Ratio Taxation

The State of New Jersey admittedly grants no privilege of succession to real property beyond its territorial limits. No more does it grant such privilege of succession to personal property of non-residents having no situs there.

The anomaly produced by the ratio provision becomes luminous in the case of a farmer who being domiciled in the taxing State owns two farms valued at $5,000 each, one lying within and the other without the State boundaries, and devises both to his widow. Granting an exemption of $5,000 there is no tax. But if the decedent be domiciled in the foreign State, the widow is called upon under the operation of the ratio provision to pay a succession tax of $25 upon the same farm within the taxing State. The right of succession to the farm within its boundaries is undoubtedly granted by the taxing State. The right of succession to the farm in the foreign State is not. Wherein is the value of the right to succeed to the farm within the State boundaries increased by the value of the right to succeed to the farm beyond? If it is not increased by and and in no way dependent upon the value of the farm beyond the State boundaries, why tax in one case and not in the other?

The argument against taxing succession to land in another State or taking its value into consideration in taxing land in the State of location is equally cogent applied to the cattle grazing there, if the succession taxed is in case of a non-resident decedent.

In fine not only does the statute in question

operate to impose taxes based upon property beyond the jurisdiction in one case and not in the other, but in so doing the ratio provision compels the accordance in case of the non-resident decedent of only proportionate exemptions and proportionate graduated amounts upon which the tax is computed.

A homely analogue to the situation created by the Ratio Provision in the statute under consideration is found in the case of the crafty shopkeeper who sells the same merchandise at one price to a shopper from the street and at a higher price to the carriage customer. The State, in the above instance, regulates the universal successions to property within its jurisdiction by imposing a higher premium upon the succession to such property equal in value when passing in case of a wealthier non-resident than when passing in case of a poorer non-resident, the successors being of like relationship. In the final analysis it is found that there is no more justification in ethics for the one case than there is legal justification for the other. Condemnation of the practice rests upon the same foundation in both cases:

Classification of customers or taxpayers based upon circumstances which are extraneous considered in their relation to the value of the merchandise sold or to the extent of the protection afforded, is fundamentally unsound.

Not only does elementary morality require equality of treatment in either case, but selfinterest also would suggest that those with ample means above all should not be discouraged in the business of investment by such discrimination.

Adaptability of trust company service in wartime and in meeting international requirements is evident from the recent establishment of the Paris branch of the Guaranty Trust Company of New York. For twenty years this company has maintained an office in London and the policy which has proven so successful in connection with that branch is now extended to France. This action is of special significance at this time in view of the movement of American troops to France calling for direct financial facilities. From a broader and more permanent standpoint, however, the Paris office will be a most important auxiliary in serving customers direct, in handling to better advantage the large volume of foreign business with France, participating in the work of financing and reconstruction after the war and in the cultivation of American foreign trade.

The Paris office is ideally located in a new

building at Nos. 1 and 3 Rue des Italiens, midway between the Bourse and the Place de l'Opera. The most important French credit and banking institutions are close neighbors. The office is in charge of Alexander Phillips as manager; G. Hebmann as sub-manager; William G. Wendell, secretary and Richard Staigg. assistant secretary. Mr. Phillips was selected as manager because of his valuable experience in international banking affairs having held the position of Paris representative of the Guaranty Trust for a number of years and having been formerly associated with the Paris Office of the Comptoir National d'Escompte and the Credit Industriel. Mr. Hebmann has been manager of various important branches of the Comptoir National d'Escompte de Paris. B. G. Smith, auditor of the New York office of the Guaranty is now in Paris supervising the installation of a system of accounting and auditing.

It was in 1900, or about that date, when a few banks began to advertise in the newspapers. In those days it took more courage than you may imagine for these few banks to venture out into the field of newspaper advertising; pioneering, so to speak, for arrayed against them were 99 out of every 100 banks that raised their voices in protest, pronouncing the step in no uncertain terms as undignified, unethical and unbecoming a bank. The pioneers who advertised were said to have lost their financial poise, and it was predicted that their recklessness would excite the public and make them suspicious of banks everywhere. But the die had been cast, the people in general took kindly to newspaper advertising by banks, hew business began to come in as a result of the effort, and in the course of a year, the opposition to newspaper advertising weakened, and the number of banks advertising was slowly augmented until today nearly every bank uses newspaper advertising.

This first victory completely upset the old notion as to what was ethical and what was unethical for a bank to do in order to secure new business, and it went still further and opened the way for a new and more modern bank dignity. Soon banks began to use specialty advertising. The use of specialties too, was regarded at first as undignified and in direct violation of the rules of bank dignity. But the sturdy pioneers in newspaper advertising also championed the use of specialties. There was no such thing as going backward; to discontinue their use, because some bankers considered it undignified was an insufficient reason. Specialty advertising won out. Today there are but few banks that do not use specialties in one form or another.

Later booklets of every description, theatre programs, street-car cards, billboards, and direct-by-mail advertising receievd attention and were entered on the program of what constitutes financial advertising. And then when about three years ago banks began to use the *(Extract from address delivered July 22nd, at Convention of Pacific Coast Advertising Men's Association at Oakland, Cal.)

"movies," it seemed that the old idea of bank dignity would at last receive a complete knockout; but traces of it survived.

Novel Window Displays

But it can never survive what banks are doing today in the way of advertising. If 20 years ago you had suggested to a banker that he use his windows for advertising his business, you would have insulted him. He would have surely laughed in your face. But today, window displays by banks are coming into their own. Some banks place it next to newspaper advertising in effectiveness and result-producing. Just recently I received an inquiry from a large eastern bank concerning window displays. This bank is having plans drawn for a new building and their architect has specific instructions to give special attention to windows so as to provide ample display space. I can cite you many other cases. In Kansas City, St. Louis, Chicago, Cleveland, Philadelphia, New York and Boston, banks are awakening to the value of this medium. Many banks are remodeling their fronts to make room for window displays.

Last month I attended the St. Louis convention, spending all of four days with financial advertisers who had gathered there from every corner of the United States. Many delegates to the convention I found were more interested in window displays than in anything else. It was spoken of everywhere in favorable terms, and present indications are that within a year it will be universally popular. I happen to know that there is being written a book that is to deal with window displays exclusively for banks.

A Graphic Lesson in Thrift and Industry Let us draw upon our imagination and build a few window displays, just to see if they can be made an effective medium of bank advertising. At the Guaranty Trust & Savings Bank we used an observation hive of bees in one of our window displays. There in plain view could be seen the thousands of bees inside the hive with their queen, swarming and working all over the brood cells and honey comb. Along with the bees were displayed various products

of their industry-bees-wax, comb-foundation, comb-honey, strained honey, and also photographs showing ideal apiaries. The display was really instructive as well as interesting, and for almost two weeks the sidewalk in front of the window was crowded with interested spectators. A poster in the window called attention to the savings instinct of the bee and pointed out an object lesson to human beings.

Another display which dealt with saving on the part of railroad men, included a complete miniature railroad train, locomotive, freight cars, coaches, rock-ballasted road bed, blocksignals and a wig-wag danger signal. The entire equipment was gladly loaned for the display by the P. E. system, and was perfect in every detail.

The little miniatures were fully

equipped and capable of running on their own power, and the wig-wag which kept up a continuous nodding back and forth served to attract hundreds of people. The elaborateness of this display was entirely in keeping with the modern idea of a big bank, and you may be sure was a very effective advertisement. The poster used was illustrated in striking colors with a locomotive and engineer and read: "The thrifty man has right of way on every line." Advertising Which Inspires Public Confidence On certain occasions it becomes politic for banks to turn the trend of their advertising along lines which serve to produce a feeling of confidence and security in the banking system. At the time of our declaration of war on Germany, there was a slightly noticeable uneasiness among some classes of people, and at that time we used our windows most effectively. Our display used then carried the thought of "Under State Supervision." An attractive painted poster showing the State Capitol was centered in the display, and was accompanied with a photograph of the State Superintendent of Banks, Mr. Williams, together with copies of the bank's called reports and the State Banking Law. This display impressed on the public in a very novel way the fact that the Guaranty Trust & Savings Bank is a State bank, operating under strict State supervision, and in accordance with the banking laws of the State of California.

Banks make it a point to always emphasize that a depositor should have a purpose in saving.

"Save for a home," "save for college," "save for a vacation," are all common phrases with our bank advertisers. This same general thought was ably expressed in one of our window displays. The title of the poster read: "Pay Your Taxes on the Installment Plan." Home safes were displayed with tax receipts to carry out the general "atmosphere," and the plan of depositing weekly in a Home Safe in order to have the cash for tax bills was sug

gested. And let me assure you that there are many hundreds of prominent citizens in Los Angeles today who are doing just this thingsystematically saving to meet their taxes next Fall.

We frequently use our windows to portray certain interesting and historical facts and events connected with banking, and find that they are most effective in creating an interest in the bank and in getting people to go out of their way each week to see what new idea the bank has to present through its windows. As an example of this kind of a display I will mention one in which we used an exact model of the first savings bank, fashioned in clay. This bank was founded in Ruthwell, Scotland, in 1810 and at the end of the first year had accumulated only $750 in deposits. This amount was contrasted with the huge sum now on deposit in savings banks in the United States, nearly $10,000,000,000.

Three Million Deposit Gain by International Trust Company of Denver

War-time conditions, instead of exercising an adverse influence, evidently spell greater success and constant increase in volume of business for the International Trust Company of Denver, Col. A remarkable increase in deposits is shown in the official statement of this sterling mountain State trust company as of June 20th, the aggregate of $15,206,937 representing a gain in the short period since last March 5th of approximately $3,200,000. This gain establishes a new record for the International Trust Company and emphasizes its leading position as the biggest and oldest trust company in the Rocky Mountain section. Capital and surplus is $1,000,000 with undivided profits of $263,894. Resources now aggregate $16,637,343 as compared with $13,362,000 barely three months ago, including among the more important schedules loans and discounts of $5,872,709; cash on hand and due from banks, $5,911,421; Government, municipal, county and school bonds, $1,145,810; U. S. Government securities, $436,200; short term notes, $1,232,579; other bonds and investments, $1,763,621, and -value of bank building, $275,000. It is evident from this description that the International observes a policy of keeping its fund liquid.

The officers of the International Trust Company are: John Evans, president; Theo. G. Smith, vice-president; H. J. Alexander, vicepresident; P. E. Cleland, treasurer; H. H. Brooks, secretary and trust officer; F. G. Harrington, assistant secretary; A. M. Culver, manager safe deposit vaults; H. T. Sibley, manager bond department.

History and Evolution of a Great New York Banking Institution

The history of the Mechanics & Metals National Bank of New York City, covering a span of over one hundred years, derives a special significance at this time because of the splendid examples of steadfast adherence to the best traditions and approved policies which have characterized the progress of this institution in periods of war or national crisis as well as in peace. Its services through the panics of 1837, 1857, 1873, 1893, 1907 and 1914 testify to the manner in which this bank has upheld the best standards of the field in which it operates; the position attained in the financial community testifies to the reward that has come to it through adherence to high principle. It was this bank which took a leading part in the establishing of the New York Clearing House, five banks in 1852 forming an association and settling their daily balances with one another in certificates issued by the Mechanics Bank. In the following year, in response to a call from the Mechanics Bank, a meeting of bank officers was held to consider the matter of systematized check clearings, and on Oct. 11, 1853, the New York Clearing House handled its first exchanges.

The interesting record of the Mechanics & Metals National Bank, chartered March 23, 1810, and originally known as the Mechanics Bank, is related in a historical booklet recently issued by the bank, reviewing its progress from the beginning in a remodeled dwelling house on Wall Street up to its present leading status among our nation's banking establishments, with total resources of more than $200,000,000. In 1834 loans and discounts of the Mechanics Bank were $4,199,218, an amount greater than any other bank reported. In that year the bank was selected by the Treasury Department, on the removal of Government deposits from the United States Bank, as one of the three institutions to be a depository of the Government.

The General Society of Mechanics & Tradesmen, at the time one of the most powerful societies for political and moral influence in the State, was responsible for the formation of the bank. The motive of the society was to benefit mechanical interests and be "conducive to the more successful conducting of the manufactories" in the city.

The Mechanics & Metals National Bank of New York has prepared a booklet analyzing the amendments to the Federal Reserve Act. The amendments have revised 9 of the 25 sections of the Act, and are expected to have far-reaching effect on the nation's banking system. Copies of this booklet may be obtained by writing to the Mechanics & Metals National Bank, New York.

GATES W. McGARRAH UNDER WHOSE AHLE ADMINISTRATION AS PRESIDEN. THE RESOURCES OF THE MECHANICS AND METALS NATIONAL BANK OF NEW YORK. HAVE INCREASED 10 OVER $200.000.000