ILLINOIS BANKERS OPPOSE EXTRAVAGANCE IN HIGHWAY CONSTRUCTION

The report of Chairman William G. Edens of the Committee on Transportation of the Illinois Bankers Association, gives an interesting sidelight on the extravagance and needless waste of public funds by State legislatures. Despite the strong opposition of public sentiment and the arguments presented by bankers the Illinois Legislature recently passed a good roads bill authorizing an additional bond issue of $100,000,000. In his report as chairman of the Committee on Transportation of the Illinois Bankers Association, Mr. Edens recites the steps taken by his committee to dissuade the Legislature from its purpose of passing an impracticable good roads bill and increasing the already heavy burden of taxation.

The $100,000,000 bond issue was opposed for reasons that must be regarded as irrefutable. In the first place Illinois has been carrying out the most active program of any State in the Union in the construction of new roads; secondly, the proceeds from the State bond issue authorized some years ago together with unexpended balance of Federal Government appropriation and income of an average of $10,000,000 a year from motor license fees, provide sufficient funds to pur

WILLIAM G. EDENS

Vice-President, Central Trust Company Illinois, Chicago

sue a "pay as you go" road building program. It is further contended that the provision of the new bond issue for construction of 1,000 miles of new road a year, is not only uncalled for but an absurd waste of public funds considering prevailing high prices for material and labor, whereas existing resources provide sufficient means to carry on a "go as you pay" plan for the next five years, without additional taxation, to complete the whole program for Illinois.

In his report as chairman of the Transportation Committee, Mr. Edens says:

"The hundred million dollar bond issue is unnecessary because the object which it seeks to obtain, namely, the extension of the main highway system of the State, can be reached in another manner which will involve no additional bond issue. This same program of construction can be provided for under the 'pay as you go' system, which is advocated by the National Grange, and by other organizations of farmers who believe that unless economy is practiced in road construction there will be an uprising on the part of those citizens who do not directly benefit from the use of the roads.

"This pay as you go program can be financed from the normal receipts from automobile license fees. The money on hand and in prospect from this source is sufficient to build each year for some time in the future all the mileage that can be constructed without overstraining the transportation systems of the State, without creating fictitious prices for materials, and without disturbing the labor market. The figures to prove this contention have been placed in the hands of all members of the Legislature."

THE BANK OF AMERICA

An excellent statement of financial condition is presented by the Bank of America, in New York, under date of June 30th. Resources aggregate $114,159,293, embracing loans and discounts of $61,154,856; stock and bond investments, $6,777,480; cash items, $16,228,642; specie and other currency, $1,179,111; due from Federal Reserve Bank, $11,513,426; due from other banks, $4,012,609; acceptances, $9,415,820. Deposits total $92,802,932. Capital is $5,500,000; surplus, $4,500,000; undivided profits, $83,574.

The Merrill Trust Company of Bangor, Me., reports resources of $11,365,000; deposits, $9,851,000; capital, surplus and undivided profits, $1,010,000; trust funds $1,511,000.

St. Louis

Special Correspondence

RECIPROCAL RELATIONS IN BANKING Discussing the dual relations and duties of the bank as depositary of the funds of the people on the one hand and as the source of loaning credit resources on the other, some interesting facts are presented by T. J. Kavanaugh, vice-president of the Mississippi Valley Trust Company. As custodian of the funds of the people the bank must seek to provide every safeguard. Would-be borrowers forget this obligation, very often, when they apply pressure for accommodation beyond the dictates of sound banking judgment.

"There cannot be a successful commercial banking relation without reciprocity," says Mr. Kavanaugh. "The banker depends upon deposit relations to give him his loaning, resources outside of his own capital investment. If he is not entrusted with community deposits his lending powers are restricted and soon become exhausted. Hence it is patent that the banker owes his first lending obligation to the man or firm who keeps regularly the most substantial deposit with him; and, on the other hand, he owes no lending obligation to the man or firm who keeps no money on deposit with him. In between these two extremes we find the various degrees of desirable or undesirable banking relations to which the banker owes some, little or no obligations to lend, as the case may be.

"There are other reasons why borrowers should keep reciprocal deposits with their banks. A commercial house in any event has to keep a checking account and the natural place to keep it is with its creditor bank. Then, too, a business house should keep a certain percentage of its quick assets in cash in order to keep itself in reasonably liquid shape and in order to keep a reasonable cash reserve against borrowings. Bankers endeavor to gauge this by requiring a deposit relation of 20 per cent. of the line of credit granted whether used or not. Experience seems to have established the banking rule that a firm should keep a cash reserve of approximately 20 per cent. of its established lines of credit whether it borrows or not."

S. C. COUCH JOINS MERCANTILE TRUST COMPANY STAFF

Sterling C. Couch, until lately treasurer of the Southern Trust Company of Little Rock, Ark., has resigned to accept a posi

tion with the Mercantile Trust Company of St. Louis. He will be associated with Oliver Richards, vice-president, in the development of the commercial banking department, particularly in maintaining contact with the out-of-town patrons of the bank.

Mr. Couch started his banking career in 1905 with the Bank of Cabot, Ark. After two years he moved to Little Rock and entered the employ of the Mercantile Trust Company of Little Rock, where he remained for twelve years. On January 1, 1919, he went to the Southern Trust Company as assistant secretary, and after a year and a half was made treasurer. He is well known in banking and business circles in the South and Southwest, and most of his activities will be in that territory.

At a recent meeting of the board of directors of the Mercantile Trust Company, John Laurence Mauran was elected a member of the board. He is a member of the firm of Mauran, Russell & Crowell, architects, who recently designed the home of the Federal Reserve Bank of St. Louis.

Festus J. Wade, president of the Mercantile Trust Company, was one of Shipping Board Chairman Lasker's guests on the Leviathan in her trial trip to Bermuda.

Capital

$1,000,000.00

COMMERCE COMPANY ORGANIZED BY NATIONAL BANK OF COMMERCE INTERESTS

The organization of a new financial enterprise in St. Louis, to be known as the Commerce Company with a capitalization of $1,000,000 to handle investment loans such as first mortgage real estate loans, industrial bonds and other securities was announced recently by John G. Lonsdale, president of the National Bank of Commerce. The organization will be a new department of the National Bank of Commerce, and will be financed through the present stockholders of the bank, who number 2,300.

The plan contemplates the declaration of an extra 10 per cent. cash dividend, amounting to $1,000,000, which the stockholders will immediately invest in the stock of the new company, each shareholder holding his proportionate share of stock in the new organization.

The new company will be housed temporarily in the Pine street side of the Federal Reserve Building, formerly occupied by the Mortgage Trust Company.

The new organization constitutes the fifth new financial facility added to the National Bank of Commerce since Mr. Lonsdale became president in 1915. The other departments are savings, bond, trust and the assumption of the management of their own safe deposit vaults. Commenting on the new organization Mr. Lonsdale said:

"There are some financial matters necessary to the industrial and commercial progress of St. Louis territory in which our institution for 65 years has been a factor that cannot be transacted through a National bank, although allied with commercial banking. We have realized for some time the necessity of having a way to take care of this particularly valuable service to business development. The formation of the Commerce Company not only accomplished

this, but rounds out the departments necessary to the proper conduct of a modern department store of finance, and losing in no wise that friendly individual attention that has characterized our relationship with the public."

The June 30th financial statement of the National Bank of Commerce in St. Louis shows aggregated resources of $80,815,712 with cash and exchange of $15,097,000; U. S. bonds and certificates, $12,226,000; bonds, stocks, etc., $4,912,000; loans and discounts, $44,683,000. Deposits total $58,157,000, including $8,687,000 savings deposits. Capital is $10,000,000; surplus and profits, $5,310,000.

ST. LOUIS UNION TRUST COMPANY An exceptionally large volume of new trust business has been taken on by the St. Louis Union Trust Company since the first of the year, necessitating an enlarged staff and increased accommodations. The St. Louis Union Trust Company, now affiliated with the First National Bank, was the first corporation in Missouri to secure trust powers. A record maintained by the company shows many important estates that have been administered, as well as a large proportion of the estates which have passed through the Probate Court, and which have been under trust company administration.

ST. LOUIS BREVITIES

Walter W. Head, president of the Omaha National Bank and of the Omaha Trust Company, and also vice-president of the American Bankers Association, was one of the principal speakers at the recent annual convention of the Rotary International held in St. Louis.

As the result of a fractured skull sustained by being thrown from a horse, Mr. Charles Parsons Pettus, vice-president of the American Trust Company of St. Louis, recently died at his home in this city.

Frank O. Hicks, vice-president of the First National Bank of St. Louis, has severed his connection with the bank to accept the vicepresidency of the Missouri State Life Insurance Company.

HIBERNIA SECURITIES COMPANY, INC. The Hibernia Securities Company, Inc., of New Orleans in order adequately to handle its constantly increasing volume of business has decided to issue $300,000 additional preferred stock. This will increase the capital stock of the company to $800,000, $200,000 of which is common stock. The new issue has already been underwritten.

The board of directors of the company have elected George H. Nusloch, treasurer to succeed J. J. Farrell, who recently resigned. J. A. Baudean has been elected secretary and A. P. Smith, Jr., has been made assistant treasurer.

The growth of the American Trust Company of Boston is reflected in the June 30thstatement which shows aggregate resources of $27,902,308, including loans on time $14,960,000; loans on demand, $5,930,000; cash in office and banks, $4,097,000; investments, $2,404,000; acceptances, $348,516. 'Deposits total $22,843,741. The capital is $1,500,000; surplus, $2,000,000 and undivided earnings, $634,088. The officers are: Russell G. Fessenden, president; Arthur B. Chapin, vicepresident; Charles H. Bowen, vice-president and secretary; Walter Tufts, Jr., vice-president; Waldo F. Glidden, vice-president and treasurer; Arthur Bancroft, asst. treasurer; Leroy S. Ilsley, asst. treasurer; Pliny P. Mason, asst. treasurer; Fred K. Brown, manager Bunker Hill Branch.