The herald., 1897-05-11
THE INVESTOR
CONDUCTED BY GEO. A. D0BlNsoN
OFFICE OF THE HERALD.
Los Angeles, May 10.

OFFICE OF THE HERALD,
Los Angeles, May 10
The new banking law OF Mexico u al
ready receiving large amount Of atten-
tion, Its chief Recommendation being that
It establishes a clearly defined and uni
form system and will undoubtedly exercise
1 marked influence In accelerating the
progress of the country. In many regions
enterprise has been cramped by the lack OF
credit facilities. as will readily be UNDER
stood when 1t Is stated that at least six
teeen of the states and territories are now
without banks Of any kind. The provisions
OF the new law are liberal, while surround
ing the banking business with all desirable
safeeuards. It provides that the note cir
(, culatiou of banks Of issue shall never ex-
ceed three times their paid-up capital, and
that such circulation, together with de-
posits payable on demand or subject to
withdrawal at three days notice, must not
be more than double the amount held by
the issuing institution in specie and bull
! ion. This IL a very liberal allowance and
will doubtless quickly attract both domes-
I tic and foreign capital into the foundation
Of banks In the states where they do not
now exist.
This new law defines with great distinct-
and may not be undertaken by banks
of issue, by mortgage banks and
by mining. agricultural and indus
| trial banks, which are the three classes
Of credit institutions comprised under the
new legislation. Thus, bank of issue may
[ not make q loan for q term exceeding six
months or discount other than two-name
}paper, unless collateral guarantees be fur
nished. On the other hand while well
defined sphere of useful activity is marked
out for mortgage banks and for agricu-
stural, mining and Industrial banks, they are
ldebarred from the issue-privilege proper
lly so-called. A specially useful mission is
lteserved for the last-named class of banks,
los their charters will enable them to aid
enterprises that have long languished for
hack Of credit facilities.
The law places all banks under the d.
rect control of the ministry of finance.
(which will be represented in each institu-
tion by an inspector empowered to exercise
lever the operations Of the bank the super
lVision necessary to ensure compliance with
iall the provisions of the new legislation.
Exemption from taxa ton on the capital Of
banks and some other franchises are au-
Ahorized by the law. but in the case of banks
0f issue those privileges are only to benefit
the first institution of such kind estab-
lished in each state, those that come after
wards being subject. besides general taxes.
to a special federal tax of per cent per
annum on their paid-up capital.
In an interesting article upon life insur-
ance the Sun says that New York is not
only the life insurance center Of the coun-
try, but 1t has the largest life companies
In the world. Three New York companies
have over half the total assets and surplus
of all the companies in the United States
and do nearly half of all the business. The
combined assets of these three companies
exceed $6s7. 100000. their surplus exceeds
$ss.ooo0o0. and their insurance in force ex-
ceeds g. .s59. 100000. Their annual income is
over $133. .0o0,0 900 and their annual disburse-
ments exceed $92, 100000. The death claims
paid by these companies frequently reach
100000 a month.
According to a recent computation by d.
N. Holway the United States leads the
world In life insurance. They have the
largest companies In the world. Their COM
panies do more business than those of
any other country, and they hold about "A
per cent of the worlds life insurance. 1t
is said that life insurance Is a direct out
growth of the love of home and the love
Of family. Judged by this test Americans
are home-loving people and their love
takes a practical direction.
New York is often spoken of as the
money center of the Western hemisphere.
1t Is not so often thought of as the life
insurance center also, nor do many realize
that the resources of the life insurance
companies having their home Offices in New
York are greater than those of any other
class Of financial institutions. Compare
son Of the figures given above will show
that such Is the case. The hanks of New
York city have a capital and surplus of
about $40. 1000, 900 and deposits Of about $780,
100000. or total resources of $71O, ,OO0O 900, as
compared with $40, 900 900 in assets held by
the life insurance companies of the city.
The deposits Of the savings banks of New
York state are greater than those of any
other state IN the union, being over $691,-
100000. against $3.50, 900 900 in Massachusetts.
but the life insurance companies surpass
the savings banks by about $3S, ,O0O, 900.
In speaking Of the marked gain of life
Insurance over savings banks, an official
Of large life company said to the Sun re-
porter:
':It Is because life insurance multiplies
mems savings by SO large a factor in case
OF ue&tn Inat ltS protection Is SO widely
sought. The annual cost of q policy at the
ese Of Is Is only about one-fiftieth of the
amount guaranteed by the company in case
Of death. A few years ago a financial
lunatic published pamphlet on the Cause
of the Present Hard Times in which he
gravely argued that 1t was because the life
insurance companies were boarding such
large amounts of money. He assumed that
their assets were all locked up in strong
boxes. and that in this way money was
kept out Of circulation. But one of the
first principles of life insurance manage
ment II that the funds of the company
must be kept earning interest. and so we
hnd that the companies of this state have
about !l00. 100000 invested in real estate.
about $2OO.000, 900 In bonds and mortgages
ana about $3.50, 10000 In United States, state,
city, county and railroad bonds. Other
loans aggregate about $65 000. .O0O and about
N5OOO.0O0 consists of deferred and unpaid
premiums. all of which Is amply secured
As matter of fact, the life companies
probably have . less percentage of. their
assets idle than almost any other class Of
financial institutions"
The life insurance business In the United
States To- almost entirely the growth Of
the last fifty years The early companies
relied chiefly on English experience. but
now the American companies are tho