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Tism in this land it is necessary to sys


We must abolish a system of taxation TICS AND LEGISLATION that attempts to collect taxes for the Gov

ernment not from citizens in proportion

to the benefits received from government, tematically oppose with sound Amer

but in proportion to their ability to pay. ican propaganda the propaganda of blind We must restore the principle that the fanatics and flannel-mouthed demagogues.

individual has a right to what he has We must get away from the craze for regu

earned so long as he does not injure his

neighbor. If union labor is to function lation and supervision. Constitutional safe

properly it must submit to the obligations guards must be restored and more energetic

of an incorporated body and to the liabilially enforced. Congress must be cleaned of

ties as reaffirmed in the Coronado decision. its “blocs," and the socialistic taint which Arbitration and Industrial Relations tribucharacterizes much legislation. It will fare nals-must take the place of strikes and colill with the American Republic in years to lective bargaining. Protection for the pubcome is the electorate persists in decimating lic must displace the idea of “One big the ranks of conservatives in both branches union” to control necessities and gain of legislatures, filling their seats with Non- political control. Partisan League advocates, with so-called This country sadly needs constructive, Progressives and men who are swayed by fearless statesmanship in politics and legisun-American theories of government that lation as well as in its industrial relations. will divide the country into hostile camps of There is too much thinking along lines of "privileged interests and undermine the favoring local constituency and of special sacred concepts of property right. The interests in Congress rather than recognipublic mind must be disabused of the idea tion of national standards. The Republithat Wall Street is running the railroads, can majority in Congress has thus far not industries, and dictating the policies toward vindicated its reputation for constructive labor.




THE FIRST GOVERNMENT BUDGET Genera! Dawes resigned July 1st as Director of the Budget to resume his duties as chairman of the Central Trust Company of Minois. Left to right: J. C. Roop. Assistant Director under General Dawes; Retiring Director Dawes;

Gen. H. M. Lord, new Director; R. O. Kloeber, new Assistant Director



HERE is an apparent concerted effort Tsioners of Uniform State Laws will T

on the part of labor unions and ormeet next month in San Francisco ganizations to establish banks of their to consider the tentative draft of a Uniform own and to accumulate funds through such Fiduciaries Act drawn up by the Committee

channels for their own advancement. The on Commercial Law, and which was pub

first enterprise of this character, the Brothlished in the September, 1921, issue of

erhood of Locomotive Engineers Co-operTrust COMPANIES Magazine. The legis- ative National Bank of Cleveland, which lation to be advocated in various states began business in November, 1920, now has been urged in substance for many years

reports resources of $14,000,000, and the by banks and trust companies and transfer

Brotherhood officials are actively engaged agents. It seeks to relieve banks and in organizing similar co-operative banks in trust companies from the unwarranted various cities. The Brotherhood Holding liability encountered in receiving or paying Company was also granted a charter in checks drawn by fiduciaries or authorized

Cleveland recently to deal in high-grade officers of corporations to personal order government, municipal, corporation, real as well as in connection with transfer of estate and listed securities with a capital stock where depository or payee has no

of $1,000,000. knowledge of breach of faith or evidence of In Washington, D. C., the Bank of the infirmity

International Association of Machinists has The liability of banks and trust companies The latest venture of this kind is the or

been organized by metal workers' unions. has become untenable because of certain court decisions. Under such rulings banks ganization of the Amalgamated Trust and

Savings Bank which was recently opened and trust companies are put on inquiry and constantly confronted with liability for re

in Chicago, organized by the Amalgamated ceiving on deposit or making

payment of Clothing Workers of America with a memchecks to fiduciaries and officials of corpora

bership throughout the country, which will tions, where such transactions may consti

be depository for the funds of the national tute a breach of fiduciary obligation or

and local unions. The report of the Execu

tive Council of the American Federation of agents are acting dishonestly.

Labor at the recent annual convention in The proposed Uniform Fiduciaries Act Cincinnati also dealt at some length on is intended to cure this defect in existing the subject of banking facilities, urging the law. Under the term fiduciary is included organization of co-operative banks, but also a trustee under any trust, expressed, im- voicing a warning note on the ground that plied or constructive, executor, adminis “if trade unions are to venture into the trator, guardian, conservator, receiver, trus- banking business, the urgency for the intee in bankruptcy, assignee for the benefit corporation of trade unions may become of creditors, partner, agent, officer of a more pronounced and make the bringing of corporation, public or private, public officer, suit against them and the seizure or imor any other person acting in a fiduciary pounding of their funds more easy of accapacity for any person, trust or estate.

complishment." At the recent annual meeting of the Na Labor union banking, so-called, is not tional Bank Section of the New York State deserving of public patronage if it is deBankers' Association considerable discus- signed to divert deposits and savings primarsion was devoted to the proposed Uniform ily for the advancement of union labor. Its Fiduciaries Act. It may be recalled that a mission should be to help inculcate thrift similar law was introduced in the New and the habit of savings among wage York legislature several years ago and earners, to assist them in building homes passed by both the Senate and Assembly. and acquiring greater independence. To Due to the opposition to having this law be successful, banking must be governed included as an amendment to the Negoti- by principles of service to the public. Any able Instruments Act, it was vetoed by departure from such sound business standGovernor Smith.

ards must eventually lead to failure.



100 much emphasis cannot be placed

might be termed a “secondary inflation” for which the stage is all set. Announcement of the reduction of rediscount rates by the New York and other Federal Reserve Banks to 4 per cent. must cause some misgivings to experienced bankers when considered in relation to the tendency to prematurely mark up commodity prices to consumers. With advancing prices there is created a new impulse to stock speculation which receives further encourage- ment from low call rates. It is only the

discrimination and caution observed by banks and trust companies in loaning money and credit that prevents this country from plunging again into an era of overexpansion and untimely inflation of values.

Although pronounced liquidation of loans and rediscounts is evidence of the payment of debts and release of frozen credits, the banking position is not altogether satisfactory. The plethora of money and credit

W. P. G. HARDING has obliged banks to employ their funds in Whose re-appointment as member and Governor of the the investment market. Loans on stocks

Federal Reserve Board is urged by the American banking

and Trust company fraternity and bonds are now higher than at any time since 1919. When commercial borrowing is is well to bear in mind that this gold must resumed at a stronger pace the banks will be regarded as a trust fund that will be liquidate their investments and collateral called for when international exchanges are loans with a result that is likely to be ad- headed toward stabilization. verse to the security market.

It is true that with reduction of commercial GOVERNOR HARDING ENDORSED borrowings from Federal Reserve Banks to 7F President Harding fails to re-ap$279,000,000 as compared with $1,123,000, 000 a year ago, and the ample loaning ca ing of the Federal Reserve Board, it pacity of member banks, the official dis- will be in defiance of the expressed unanicount rate has no appreciable influence mous wish of the whole banking fraternity upon the market rate for money. From and of his own Secretary of the Treasury, a political standpoint it may be regarded Mr. Mellon. One after another the State as wise to create the idea of cheap money Bankers' Association conventions held duras a symbol of confidence and returning ing May and June have passed resolutions prosperity. But from a purely banking as calling upon the President to continue well as psychological viewpoint the reduc- Governor Harding in his responsible office tion of rates is undesirable.

upon the expiration of his present term in To the present time there has been no August. Among the bankers' associations marked evidence of speculative buying which have formally passed resolutions to of securities or commodities that may that effect are those of New Jersey, Marybe attributed to the successive reduc- land, Ohio, Washington, Illinois and Iowa. tions in money rates. To the extent that Eugene Meyer, Jr., of the War Finance Corthe present large surplus of reserves and poration, and Comptroller of the Currency credit is predicated upon the mass of gold Crissinger, are said to be candidates for the in the vaults of Federal Reserve banks, it Governorship.


TO TEST RIGHTS OF NATIONAL as the questions in dispute arise from amend

BANKS AS FIDUCIARIES ments to the Federal Reserve Act which NOTHER test suit has been insti- were passed after the major decision was A

banks as fiduciaries which is likely to Court in 1917, in which the court held that come before the United States Supreme

Federal laws must not be in contravention Court for decision. The principal issue of State laws, regulating the business of upon which the latest controversy centers

trust companies. The safeguarding of relates to the question as to whether State

trust funds, and the jurisdiction of State or Federal law is controlling in regard to

courts dealing with fiduciary matters, are conflicting requirements. The famous Uni- also subjects in which both trust companies ted States Supreme Court decision of June, and National banks are mutually concerned. 1917, determined the right of Congress to bestow trust powers upon National banks RHODE ISLAND DECISION RELATand it also laid down the principle that Na

ING TO TRUST POWERS tional banks, in conducting their trust busi HIEF JUSTICE SWEETLAND of ness, must conform to the same laws which the Supreme Court of Rhode Island apply to trust companies in the various has just rendered a decision to the States in the exercise of trust powers. effect that National banks, in that state,

The difficulty encountered by National cannot execute trusts which arise in probate banks in different State jurisdictions, notably proceedings without coming into conflict in Pennsylvania, in failing to obtain the with the laws of Rhode Island governing necessary sanctions from the local courts, the administration of trust business in arises chiefly from the interpretation placed Rhode Island. It is understood that nationby the Federal Reserve Reserve Board upon al banks in Rhode Island which have reamendments to the Federal Reserve Act ceived permission to do trust business are passed in September, 1918. Some of these interested in appealing to the higher courts amendments, particularly that relating to for a final adjudication. segregation and deposit of trust funds The opinion sustains the demurrer of pending investment as well as examination Attorney General Herbert A. Rice to a of national banks having trust powers, are petition of the Aquidneck National Bank at variance with the laws of States which of Newport for a writ of mandamus to apply to trust companies. In Pennsyl- compel General Treasurer Richard W. vania the Orphans' courts of Philadelphia Jennings to accept $45,000 tendered him County and of Allegheny County have re- by the bank as security for the perforfused to grant necessary papers to National mance of duties as a trustee, which the bank banks on the ground that the Federal claimed it could perform under the Federal provisions are in contravention to State law. Reserve act.

The Corn Exchange National Bank of The Federal Reserve act gave national Philadelphia recently filed a bill of excep- banks the right to do the business of trust tions to a ruling of the Orphans' Court of companies "in so far as the exercise of such Philadelphia in which the latter refused an power is not in contravention of state or application of the bank to act as guardian local law.” In dismissing the petition for in a specific estate. While the appeal is the Aquidneck Bank's writ of mandamus, based chiefly upon certain fiduciary trans- the court takes the stand that the "exercise actions requiring the affirmation of the of such power” by national banks in this courts, the test case also brings up the state is in violation of the Rhode Island laws. issue as to whether State or Federal law is The extension by the General Assembly to govern the trust department operations of the powers of trustee to trust companies of National banks. It is the intention of one of all corporations “is plainly because the Corn Exchange National Bank, if nec- the provisions governing their creation and essary, to carry the question to the United their regulation safeguard in a peculiar States Supreme Court for ultimate decision. manner the legal rights of those beneficially Trust companies as well as National banks interested in trusts,” states the opinion of will welcome a final adjudication inasmuch Justice Sw.tland.

IMPERILING TRADE WITH position, and considering geographical proxCANADA

imity, there is every reason for adopting a

more enlightened trade policy toward Canthe farmers' bloc” in Congress ada, as expressed recently by the Executive

threatens to seriously break down the Council of the American Bankers' Associmutually satisfactory trade relations which ation, as follows: have been preserved for many years be

"We declare our faith in the value of a tween the United States and Canada. closer community of interest between the Because of the Emergency tariff which has United States and our great neighbor, virtually cut off the American market to Canada. These two countries constitute the Canadian farmer, the Canadian Gov- the greatest geographical union of Englishernment has put into effect a new fiscal speaking people in the world. There is a policy which will unquestionably result in natural unity of purpose, unity of political diverting Canadian purchases from our ideals, and unity of business interests becountry to other markets which recognize tween the two peoples that should be emthe wisdom of the axiom,“Where you sell phasized rather than obscured by the borthere you must also buy."

der lines between them. We bespeak from The handwriting is already on the wall, American business, American banking and and unless Congress approves the principle the American public the continued developof reciprocity in dealing with our northern ment of friendly relations between the two neighbor, we shall have to reckon with the nations.” loss of important markets in Canada. The Congress should also give immediate atfolly of this is quite apparent when consid- tention to objections of Mortgage Loan eration is given to the exceptional oppor- Associations of Canada which protest tunities for developing closer commercial against the Denison Blue Sky Law now and financial relations with Canada. The under consideration in Washington, on the Canadian Government and people have ground that it unfairly discriminates against been most friendly and willing to enter first mortgages on Canadian farms. Free into reciprocal arrangements, but the "farm- flow of capital as well as unhampered comers' bloc" in Congress has compelled Canada mercial relations with Canada must be to adopt a policy in which it is entirely encouraged. justified. Heretofore Canada has obtained 75 per cent. of its imports from the United States, but the tendency of Canadian trade AMERICA'S INTERNATIONAL with the United Kingdom and other countries already shows that our business with

CREED Canada is rapidly slipping away: JIS 1920 T and peaceful aspiration

which char

HE unselfishness, the broad humanity were six times greater than from Great acterize American diplomacy in Britain, and in 1922 they were only four dealing with international affairs, have times greater. In 1921 Canadian exports rarely been expressed in more compact and to the United States were 250 millions virile words than those with which Secremore than to Great Britain. In 1922 Great tary of State Charles E. Hughes closed Britain is Canada's chief foreign customer. his recent address at the Commencement of This change must be attributed entirely the University of Michigan, as follows: to the artificial barriers created by our “Our ultimate security and the assurance Congress.

of our progress will not be found in constiCanada seeks closer financial as well as tutions or statutes or treaties or confercommercial ties with the United States. ences, important as these may be, but in American investors have shown an increas- the self-respect that will not permit abaseing aptitude for Canadian investments. ment; in the national pride and just selfBanking relations between the United interest that will not tolerate interference States and Canada have been rendered with independence; in the spirit of helpfulmuch more intimate by the consequences ness which seeks not alliances but honorof the war. With our dominant creditor able co-operation; in the love of justice

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