STATE BANK SECTION DISCUSSES FEDERAL RESERVE Officers elected for ensuing year: President: E. D. Huxford, President Cherokee State Bank, Cherokee, Iowa. Vice-President: C. B. Hazlewood, VicePresident Union Trust Company, Chicago. For lively debate and forensic talent the State Bank Section-although the juvenile member of the prolific family of Sectionsset the pace at the Atlantic City convention. Such topics as "exchange charges," member ship in the Federal Reserve system, mutual insurance for banks, usury, interest rates and uniform laws were treated without gloves. The result was considerable enlightenment on these various mooted subjects. Even Governor Harding of the Federal Reserve Board who addressed the members of this Section on "Why State Banks should join the Federal Reserve system" was plied with questions in approved fashion. The President, John H. Puelicher, briefly reviewed the purposes and growth of the State Bank Section which was organized at Kansas City one year ago and in that short time has acquired a voting membership of 7,381 and an associate membership of 1,070 making a total of 8,451. The report of the Executive Committee of the Section, presented by C. B. Hazlewood, vice-president of the Union Trust Company of Chicago, who was largely instrumental in bringing about the organization of this body, likewise set forth the excellent work accomplished by the committee and representatives in helping to shape Federal Reserve Act amendments. On the subject of uniformity of State laws, especially in connection with the laws of usury, legal rates of interest, liability of stockholders, etc., the sentiments voiced did not by any means reflect unanimity. The “standing room only" sign was Out when the State Bank Section reconvened for the second session at which Governor Harding of the Federal Reserve Board was scheduled to give a heart to heart talk on the Federal Reserve System and why state banks and trust companies should come into its protective folds. Governor Harding led up to the crux of his subject after first sketching the history of national banking legislation in this country. Following Governor Harding's address there was a vigorous discussion as to the justice and fairness of the "par" check collection system inaugurated by the Federal Reserve Banks which eliminates exchange revenue. WAR SAVINGS AND THRIFT DISCUSSED AT SAVINGS BANK SECTION MEETING Officers Elected for Ensuing Year: President: J. R. Noel, President Noel State Bank, Chicago, Ill. Vice-President: V. A. Lersner, Controller Williamsburg Savings Bank, Brooklyn. Secretary: Milton W. Harrison. The topic which was uppermost in the discussion and papers at the sixteenth annual meeting of the Savings Bank Section of the American Bankers' Association was that of enlisting the savings of the people and of stimulating thrift as a corollary to successful war financing. The delegates paid close attention to the informative address delivered by Basil P. Blackett, special representative of the British Treasury who described, in detail, the plan of operation of British savings clubs and certificate issues. The meeting was opened with President George E. Edwards of the Dollar Savings Bank of New York in the chair. After the welcome addresses and responses the principal part of the first session was devoted to the addresses by Mr. Blackett and by Professor Eugene B. Agger of Columbia University who spoke on "The Economics of War Saving." At the afternoon session the reading of the President's address and of officers as well as committee reports was dispensed with. The first speaker was President Leonard G. Robinson of the Federal Land Bank of Springfield, Mass., who presented a paper on "Granting of Amortized Loans by Savings Banks" in the course of which he defined the relations of the Federal Land banks with savings banks and the adaptability of farm mortgages to investment of savings bank funds. Next followed the reading of a paper forwarded by Mr. Myron T. Herrick of Cleveland on "Banker and the Farmer," in which he called attention to the successful methods pursued by a number of banks and trust companies in conducting agricultural departments. Dr. H. H. Wheaton, specialist in immigrant education, associated with the Department of Interior devoted himself to the education of immigrants as a means of stimulating loyalty and true Americanism. An excellent paper was next presented by Lawrence Chamberlain of New York on "Savings Bank Bonds in War Times." The remainder of the session was devoted to a general discussion on war-time conditions as affecting savings bank investments and the acceptance of such securities as collateral for Federal Reserve bank rediscounts. Federal Tax Ruling on Estate Deductions The Internal Revenue Commissioner has issued a ruling as to deductions, under the income tax law, from gross estate amounts. He says: "The Act of September 8, 1916, section 203 (A) (1) provides that there may be deducted from gross estate amounts which have been allowed for 'support during the settlement of the estate of those dependent upon the decedent.' It is plain that Congress, in enacting this provision, intended that there should be allowed as a deduction from gross estate only the amount actually expended by the estate for the support of actual dependents of the decedent. The regulation made in pursuance of this provision requires the existence of three things before the amount claimed as a deduction under this item is allowable: (1) A bona fide disbursement by the executor, (2) for the support of those actually dependent upon - the decedent, (3) in an amount authorized by the local law for that specific purpose. The Internal Revenue Bureau has also ruled that bonds of domestic corporations owned by non-resident decedents, if physically situated outside the United States, are not returnable as a portion of the gross estate of the decedent. Security Trust Company of Detroit The latest official statement of the Security Trust Company of Detroit offers substantial evidence of constant growth. The published statement of financial condition does not embrace the face value of fiduciary assignments which the company holds and which mount to a high figure because of the State-wide reputation this company. commands in rendering expert service of this kind. The statement shows total resources of $5,674,116, capital $500,000, surplus and undivided profits $934,702, and trust deposits $4,186,900. Requirements of Different Classes of It is of interest to note the variety of investors to whom the National City Company makes special appeal. It has built up a large clientele of investors, in the first place, among National and State banks and trust companies who require sound investments with ready availability on the market. Especially is this true at the present time when banks and trust companies are called upon to meet the extraordinary burdens of war. Another division of investors calling for specific securities are savings banks and trust companies as fiduciaries which must fulfill legal requirements. A third group is composed of insurance companies who require safety and also fair marketability. Then there is the investor who is mainly interested in soundness and liberal yield; the business corporation that has a reserve or surplus funds which wants quickly marketable securities. The National City Company has also established a special war tax service, including charts showing application of income tax and pamphlets giving the text, analysis and a great variety of information covering the war tax laws. Deposit Record by Plainfield Trust Company Within the past three years the deposits of the Plainfield Trust Company, of Plainfield, N. J., have been practically doubled. During that period deposits have mounted from $4,673,648 to $8,072,836 each year, showing an average gain of over one and a quarter million dollars. Total assets amount to $8,749,434, the distribution of which reflects the highest possible standards of safety and reserve strength. The capital is $300,000, surplus and profits, $343,472. Manhattan Island covered by our own messengers All collection items payable at any point on Manhattan That liquidation of securities and decline of values in the New York market have reached a serious stage is too obvious to require affirmation. Among the numerous reasons assigned for the persistent downward trend of quotations and uninterrupted flow of selling orders the most important is the influence of the narrowing money market in connection with the exchange of funds and credits for Liberty Loan subscriptions. The second big factor is the effect of Government price-fixing and of war taxation on industrial, corporate and railroad earnings. The public is not in the market except insofar as it is responsible for sale of securities and conversion into 4 per cent. Loan bonds. The banks and trust companies refuse to sanction any bull movement at this time and are obliged to keep their own resources intact. It is significant of the low spirits which characterize speculative interests that the market has not made any appreciable response to the call money funds provided through the so-called "Money Committee," composed of responsible bank and trust company officials. This is logical because the prime purpose of the call money pool is not to stimulate professional activity but to prevent disorganization of the money market. One of the main causes of heavy liquidation was, of course, the pressure of rapidly declining prices, resulting in closing out of weak açcounts. It is quite, likely, also, that sales in considerable quantity have been made for account of foreign investors located in neutral countries to whom American investments had attraction before our own entry into the war, but which may have become less so since then, especially because of the blockade established upon neutral trade. Another source of liquidation has been the disposal of securities tied up in short-term British and foreign loans which have matured. Banking institutions have to some extent joined in the selling movement by way of preparing for the new Liberty Loan.and it is regarded as not improbable that withdrawals of deposits from savings banks for investment in the 4 per cent. Government bonds is a factor which will have to be considered. New York City The Second Liberty Loan "Drive" in Wall Street is most willing to accept President Wilson as prophet and authority on etymological niceties. The Presidential mandate that patriotism and profit are not on the best of speaking terms these days and that the latter must in every case yield to the former, has been vigorously brought home in particular to bankers, financial and investment interests and to brokers as well. The chief commodity offered by banks has been about the only thing left in the lurch in the great upward course of prices. The wares offered by investment houses suffer steady decline in the face of competition with Government loans and under pressure of a volume of prolonged liquidation which would have spelt collapse in more peaceful times. Sweeping personal, corporation income and excess profits taxes must be reckoned with contemporaneously with the flotation of another huge Liberty Loan issue. Woe to the man, however, who pleads immunity from the claim of national duty. The most noteworthy circumstance is not that these ordeals and sacrifices are met without murmur by those who carry the heaviest loads, but that they are bending themselves with enthusiasm and a spirit of rivalry to the present task of raising another three or five billions for the War Treasury. The uncertain perspective as to what the future shall bring forth, the consequences of huge mountains of national debt, the inevitable economic recoil when shy Peace again deigns to return to this planet-all these considerations are pushed into the background and subordinated to "winning the war." Whatever the feeling may be in other parts of the country in Wall Street just now the slogan is "keep the machinery of war running at top speed." However disappointing the official Liberty Loan subscription returns for the first two weeks of the second campaign, there is not a shadow of doubt in the "Street" that the financial needs of the Government will be satisfied in the present case and in the future. It is not a question of raising the amounts called for but a matter of public distribution and absorption through those channels which shall prevent congestion and impair the banking and credit machinery. The task of popularizing war loans is rendered more difficult here than abroad because there is not the stimulus which comes from air raids, the audible roar of artillery or the sight of mangled and wounded soldiers. As in the first Liberty Loan operation the banks, trust companies and varied financial agencies are relied upon, in the main, to arouse all classes of citizens to a sense of duty and obligation. It is a safe conclusion that when the final figures of the second Liberty' Loan campaign are at hand New York will again have set an example, which shall be heartening to our allies and confound the common enemy. A material aid to the second loan subscriptions is the agreement among banks and trust companies to lend money to subscribers at 4 per cent., to encourage installment buying. New York Reserve Bank Enlists Trust J. Herbert Case, vice-president of the Farmers Loan & Trust Company has resigned from that company to assume the office of Deputy Governor of the Federal Reserve Bank of New York. He succeeds, in that capacity, Robert H. Treman, who was Acting Governor for some time during the illness and absence of Governor Strong. The directors of the Federal Reserve Bank of New York have also elected F. I. Kent, vicepresident of the Bankers Trust Company as Acting Deputy Governor. Mr. Kent will not, however, sever his connection with the Bankers Trust Company and will devote his time at the Federal Reserve bank principally in handling applications for permission to export coin, bullion and currency in accordance with the embargo provisions announced by President Wilson by proclamation and subsequent rules issued by the Federal Reserve Board. |