New-York tribune., 1907-12-18
SUBMIT BANK REPORT
FOR 60 PER CENT RESERVE
Practice of Promoters Getting Chain
of Banks Condemned.

OF Banks condemned.
Albany Dec 1.-THE committee of bankers ap-
pointed by Governor Hughes November Is, dur
ing the days of the monetary panic,
recommend notifications of the existing banking
laws of the State OF New York made its report
10 the Governor to-day The committee
lected from leading bankers and company
managers and asked suggest measures
which would tend to prevent the development of
pancs such the that Wall Street has just
experienced The report, general. expresses the
view that in New York City state banks should
maintain the cash reserve national banks
namely, y per cent, and that trust companies
should maintain also . per cent reserve, not
necessarily all in cash. A strong presentment is
made against the practice of promoters obtaining
control of g chain of banks to further their own
financial schemes.
While the committees recommendations ap-
ply only banks and trust companies in
New York city and state, their realization Of
national responsibility the part OF the city's
financial institutions is shown by the statement in
the report that New York is the Empire State
snd New York City is the financial and commercial
centre of this continent 1t is for this reason the
committee declares that New York City's cash
bank reserves must not be permitted TO become
impaired.
A Barton Hepburn. former Controller OF the
Currency now president OF the Chase National
Rank was chairman Of the committee. which also
consisted OF Presidents Edward S. Marston Of the
Farmers Loan and Trust Company. Edward w
Sheldon of the United States Trust Company, A
s. Frtssen of the Fifth Avenue Bank. Stephen
Baker OF the Manhattan Company and Andrew
Mill. Of the Dry Dock Savings Institution, all OF
New York City.
The report as q whole is practically unanimous;
ell the recommendations are concUrred in by
Messrs Hepburn, Baker and Mills but Mr.. Frissell
would increase the requirement for trust company
reserves still more than recommended by the ma
.ority, and Messrs. Marston and Sheldon would
have a scale OF reserve requirement governed by
amount of deposits
Governor Hughes expressed himself well
pleased with the work of the commission. which
served without compensa ton. and said he believed
the people should be appreciative OF what it had
done in the limited time al tied to it
VETO POWER RECOMMENDED
The report recommends first that the State Su-
perntendent OF Banks receive veto power on the
establishment of a bank or trust company, or a
branch OF any existing bank or trust company or
the purchase OF the control Of one banking instisu
tion by another
..Ir should be within his province to prevent the
organization Of such institutions by improper men,
or their establishment in localities where business
conditions do not reasonably assure their success
The committee believes that banks in New York
City should not hereafter be permitted TO have
branches unless they possess capital Of 100000
and we think that both banks and trust companies
should be required to furnish an additional slooooo
capital for each branch opened
be
organization of small banks; believes they are nee
essary and beneficial; 'it is only" IL says, the
organization Of banks by people without banking
capacity OF without proper motive for seeking
such organization, by people who, from want OF
good Judgment, seek establish an institution
where even with good management, 1t could not
reasonably hope 10 succeed. that should be dis
couraged-'
In general the committee would increase and
make more direct and intimate the supervisory
mower and control Of the superintendent over all
r,oneved institutions including banks OF discount
and deposit trust companies. savings banks safe
deposit companies mortgage. loan or investment
cornpanies and building and loan associauons' SO
that he could directly direct the discontnuance OF
A large section OF the report is devoted TO an
extended discussion Of bank and trust companies
-..erres and voluuinous figures given to
illustrate the situation. The committee describes
trust companies enjoying manllest ao'an-
fage from a money making standpoint ana
SAYS that "the percentage of the total resources
of the national banks earning interest is 1o3
where e22 per cent of the total resources OF the
trust companies is earning Interest
CASH RESERVES DISCUSSED
The report has this say the subject Of the
cp.h reserves To be maintained by banks and
trust companies:
New York is the Empire State; and New =, YORK ,t,s
City the financial and commercial cen centre o, ,,s us
the world but in the very near future II viii sui
pass in banking power ana coHiiefcial q Iii,
any other one city, Wherever Iocateo; I.s kio @ "a n
keep pace with the development of our our own coun
ana inc increasing wealth of the whole world This
fair prospect which must aPPe1 R fs Teee S
tion OF our banking and business interests Is per.
mitted TO decrease in the future as IL mas III 'ie
The combined status of all OF the banks in the the
metropolis constitutes In the eyes OF tne pupnc
the ultimate reserve strength OF the nauon. thls
10 necessarily weakened II a certain number OF
them are permitted hold less cash reserves tnan
The others do: the ouraen Is efq1uo neu1bers9
endeavors to maintain the siste hank mem
bers thereof voluntarily observe TINS. ana we see
no seqnd wy hey IN Hw Of ne the TACT
many of them are establishing branches mot per.
initted to national banks) which emphasizes the
DIFFERENCE OF REQUIREMENTS
The committee recognizes that the requirements
differ as between a bank OF discount and trust
company. and on this point says:
Some distinction should be made between banks
OF discount and trust companies IN are required
10 invest their capital in bonds or ene - mn
States or OF the state OF New ax be- " IN mort
cages. They must also deposit no. 9L less nenart-
nnenf in bonds These provisions to capitaL IN
yesImeats regarded In the nature VI &C.
and the public have therein q measure VI p''
ton
reserve of 25 per cent should be maintanrI HrI
pooer ,e soso ps Manhattan, Of which Is
cent should lie cash on hano ana poyed ~ p nv the
IN some bank trust company appio'ou ~
Superintendent Of Banks. ..,., IN
Trust companies claim TO specIa IN
sanzed fon Sn the the purpose Of making FOR
their stockholders. precisely as are III @nra eed
in the same class of business, we are unable 70 70
why they should not bear their iair snare NJ ~
commercial interests OF state by keeping proper
reserves. They have become a mn s hanEing sys-