New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-08-03
Attorney General Has Report
Almost Ready on Bank Stock
Holding Concern.
900 SUCH CORPORATIONS
Investigation Reveals Idea Orig.
mated by James Forgan Has
Spread Throughout Coun-
try-Court Decision
May Apply

Washington. Aug. 2.-Attorney Cen
eral Wickersham has almost completed
his inquiry into the National city Com
panv. the corporation recently formed
by the directors Of the National CITY
Bank of New York TO hold bank stocks
IL is understood he will send report IN
Secretary MacVeagh of the Treasury IN
q few days, saying whether In his opin-
| ion. any transgression OF the national
banking law Is involved. Upon Secre-
tary MacVeagh's final action will large
| " depend the future attitude Of the
government toward concentration Of the
banking capital Of large cities through
the medium Of so-called security com
ranies."
The question in the case OF the Ma
tional City Company is said 10 be sub
stantially parallelled I'm other cities. and
It is said the Department Of Justice has
taken cognizance of the First Trust
| Company, reported 10 be the security
company for the First National Bank %
Chicago. and the First Security Com
| pany. said to have been formed by the
First National Bank OF New York. Rec
ords in the office of the Controller OF
the Currency said to show the
| istence of almost three hundred smaller
and similar corporations throughout ths
country Of which the Department OF Jus
t!ce did not know when n began its In
quiry into the National City Company.
Report Kept Secret
officials of the Treasury are much di-
vided i'm opinion as TO whether the ma
tional bank law applies. What Attor-
ney General Wickersham's report to Sec
retary MacVeagh will be is not known.
Mr. Wickersham refuses 10 discuss It.
but in the Treasury it is hinted that it
will be unfavora BILE 10 the security COM
pany idea, unless there is bona fde
dissertation of the banks and the com
panies.
! Secretary MacVea CHS action on the
| Attorney Generals report will hinge on
whether he believes the National CITY
Company to be bona 1de corporation.
dissociated from the National city Bank,
or merely a device of that institution
TO hold stock il other national banks.
| Government agents who inquired into
the National City Company reported
that it appeared 10 be closely linked
with the National City Bank, and that
only stockholders I'm the National city
Bank could be stockholders in the COM
pany. The company issued no shares OF
stock. but indorsed ownership on the
| certificates of the bank.
Officials Of the National city Bank
have been in Washington lately for fre-
ouent conferences with government Off
cials. They volunteered 10 furnish any
information the Attorney General or So
licitor General Lehman might require
1t was from them that the government
learned OF the existence of three hundren
other corporations said to be operating
along the same lines as those proposed
by the National City Company
Less than a week ago government OIL
cials learned that the organization Oh tie
National City Company had been COM
pleted and that the bank shares ana
other stocks which 1t was formed 10 hold
had been transferred to it IL was SAID
that those transfers included the shares
CITY Bank have been holding I'm other
institutions in New York and other cities
which constituted what is popularity re-
ferred TO as National City Bank con-
troll" The directors OF the National City
Bank had been holding the stocks III
their own names, but II was generally
renorted I'm banking circles that they held
them for their bank.
Think Law Covers Case.
Those officials who hold that the ma
tional bank laws cover the case Of the
National City COMPANY provided that
the corporation is held 10 be a mere
adjunct 10 the bank, maintain that de-
cison Of the Supreme Court IN 1899 IN
terpreted the national bank act 10 intend
that there should be no ownership either
direct or indirect. Of stock by one ma
tional bank I'm another. The decision IN
question was I'm the so-called Indisnap-
ellis National Bank case, and in part the
Supreme Court held:
We think that the reasons which dis
qualify a national bank from investing IT.
money IN the stock Of another corporation
are quite as obvious when that other cor
noration Is a national bank as in the case
of other corporations. The investment BY
national banks OF their surplus FUNDS IN
other national banks, situated, perhaps In
distant states, as in the present case 10
plainly against the meaning ana pohcS o.
the statutes from which they derive their
MOVERS and evil consequences would De
certain 20 ensue II such course OF con-
duct We're Countenanced az lawtul.
one II the evident purposes u 10 con-
fine the management OF each bank 10 pr,
sons WHO live i'm the neghborhood, ana
who may for that reason be supposed I"
know the truStWorthinesS Of those VINO are
appointed officers OF the bank ana the
character and financial ability of taos,
who may seek To- borrow It's money buk
ii the funds of bank IN New Hampshire.
instead OF being retained IN the CUSTODY
and management of its directors, are IN
vested I'm the stock OF a bank I'm lndlana.
the policy of this wholesome provision OF
property of the local stockholders, so iai
as thus invested, would not be managed
by directors OF their own selection. - oy
distant and unknown persons.
Another evil that might result II large
and wealthy banks We're permitted 20 buy
and hold the capital stock Of other banks.
would be that I'm that way the banking
capital OF a community might he concen-
trated In one concern, and business men
be deprived OF the advantages that attend
competition between banks.
James B. Forgan. president OF the
First National Bank of Chicago. is ac-
credited with being the pioneer in the
security company" idea.
NO EXTRA PAY TO CAPITOL MEN.
Washington. Aug. 2-Upsetting a prac-
tg. .f,