New-York tribune., 1905-01-02
High Rates on Commercial Deposits
Condemned.

I u
lhose institutions to establish their inttia-
i've branches subject only the approval of the
/ superintendent of Banks For the better protec-
non OF savings banks from unfair competition. the
superintendent suggests law prohibiting the use
! OF the word savings by institutions other than
'he regular savings banks and building and loan
associations
IN order TO prevent the wealthy from distributing
money IN small deposits among a large number
savings banks, thereby escaping taxation. he rec
oiilnehds statute providing that interest or all
sums up to $1,000 must be at a rate al least one
nan more than the rate paid above that
amount Regarding banks of discount Mr. Kill
burn says:
criticism TO make upon the conduct in general Of
te banks IN this State. and it VIII apply equally to
stltutlons of both classes which amenable
excessive rates of interest on commercial deposits
- ne Superlntendent has no power under the law
should @ be carried so far as TO threaten unsafety
~ ms outy TO lose no proper opportunity TO protest
with sound principles OF banking.
stitudon in locality where the practice prevails
70 70 qnlt II, and attempt reform single handed
lively easy matter for all banks which draw de-
etbeT tbrni ui COMMON mon teFritofy 10 SCI together'
% socaton 10 which they are attached. or in move
ai taiollsh reasonable maximum rate beyond which
terest upon money that is in daily employment and
therefore liable to Immediate caH and frequent
and violent fluctuations.
TRUST COMPANIES
Some of the items of the trust company reports
anord interesting comparisons. From July l. 1903,
to January l. 1904 the total resources of these in
55u1uIlons decreased by over one hundred inllon
dollars, but from the latter date July l. 1904 they
not only recovered all OF this loss but sixty odd
millions besides and their total assets then stood
al 81 400.9S0 The single item of interest paid
entire earnings Of the companies Which was an in
crease Of 37a per cent in year. Five years ago
/
Such increase ought never 10 have occurred and
initiates only against the companies but
also unfavoraby affects the banks. since il forces
business.
SAVINGS AND LOAN ASSOCIATIONS.
The betterment In condition of the savings and
loan associations of the State, which has come
dicated by, the, statement that not single asse-
Shaaon had to be referred TO the Attorney General
for dissolution. The number which persists in meth
Diminishing, and most even of those which adhere
to practices which regarded objectionabie are
seeking TO work out 70 approved and safe bases
Of operation. A receiver was appointed for
| association upon rs own application. during
! business went into voluntary dissolution
So-caled cooperative home purchasing compa-
MES are operated IN increasing numbers in New
purchase or build homes, or satisfy mortgages, for
members in the order Of the members association
nitialy Of small -s sums a' weekly which sfte s
nome nome 5 IS oGugnt % or ollt Gr a noTtggae paid are
rental rates and which are required then to be
paid monthly. Inasmuch as the companies dis
tribute their moneys as fast as they are received
they have practically no assets except loans OF the
character Indicated and are irresponsible.
RESERVE Fer TRUST COMPANIES
If the transactions which go to make the bulk
Of the business of institution determinative
OF the class and character which il belongs then
il is not denabIe that many the companies
in the State and particularly many Of those of
comparatively recent organization are hardly other
this the fact that critics of prevalent conditions
Side bT side in NeWYoTk tWo dsfinc svs.eg Of
banking, and that if the statutory obligations rest
safe conduct of business then the other has privi
leEes and immunities which 1t is contrary 10 the
public interest to permit to it,
While not subscribing in the remotest degree to
that the condition of the trust companies is not
altogether safe and strong. I yet far enough
that trust company should be organized merely
to do the business of bank. ard to hold that IN
ing legal reserve trust companies and banks
It IS accommodated that the banking law be
amended SO as to require that trust companies
in the city Of New-Yorll, reserve of fifteen per
shall be in cash; and those located elsewhere a
reserve of ten per cent at least onethrd OF which
shall be in cash.
AUTHORIZATION OF BANKS AND TRUST
COMPANIES.
Until within few weeks the construction of ths
reg TeSsaGdng the OF banks 81 o.
tbis danartroent end witch had been concurrad
IN orally AT least by Attorneys General. required
the superIntendents certificate OF authorization
10 ISSUE matter Of course and indeed as right
Of the applicants. after complete compliance by
the proposed corporators with the procedure which
the law requires on their part, Former Attorney
General Cunneen recently advised me- however,
thar the banking law charges the Superintendent
of Banks with discretion and responsibility in
such contrary to the view hitherto held,
and contrary to the practice followed since the
creation OF this department 1 have since con-
formed M TO such opinion
expressly not only confers the power, but also
imposes the dIty, upon the Superintendent of
an institution of this class to determine whether
the general fitness for the discharge of the duties
appertaining to such trust OF the persons named
in the certificate, is such as TO command the con
fdence Of the community IN winch such trust com
BaB is cdnTgne Rr9Gsfa adang R %oHd be po
noted by such establishment" II he conclude in
the negative, he must refuse authorlzaton
This unquesUOned provision and Mr. Cunneen's
Interpretation or the i4W Iesarong oanKs i yest II
have than once expressed the Op mon In my
aaalal Tfpos ono me Which it is often extremely
difficult TO exercise with confidence In the correct
tion Of the proposed rStlIuton Is IN the great cty
OF New-Yo-k with the vast and complex financial
possible that any man can oettIIIlhe
that there is not room Tor new company with
acter asking for ii and approving 1t with their
means and influence 1t would be arTogantly pre-
,1ra 10 50 hold The law must. therefore. be dead
letter as TO the city of New-Yo oFk
r,1f eeomparies 10 be formed Wherever capital
chooses to interest itself with the reservation
only that the proposed corporators shall be found
nv the Superintendent CT Banks to possess general
tuess for the discharge OF the duties appertalning
~ The com mIInity in which such trust company
IS 70 be located In that event however me m n
imum capital that trust COMPANY may rave
should be. increased TO at least 10000 and there
should be a requirement or Ia" th@t uuSt coAn-
paIies keep legal reserve
DEPOSITS NOT PROPER FOR SAVINGS