Evening star., 1911-08-24
big ROW IS IN SIGHT
Activity of Wickersham May
Cause Cabinet Changes.
QUESTION is UP TO TAFT
Contention Over Alleged Violation
Of Banking Laws.
HOLDING CONCERNS ILLEGAL9 2
Attorney General Says eyes," secre-
tary MacVeagh "No'-President
in an Embarrassing Position.
QUESTION is UP TO TAFT
HOLDING CONCERNS ILLEGAL 2

ciptdteo Dig cap1net rumpuS and
caused to be put up to President Taft for
settlement a question that Is loaded with
political dynamite, more serious in this
respect. probably. than even the Wiley
case, in which Mr. Wickersham figured
SO prominently.
That Mr.. Taft will not send letter Of
thanks to his Attorney General for the
trouble about to be caused him and that
he may explode in such a manner as to
give offense to Mr.. Wickersham were
suggestions today from responsible Off
cials OF the administration. 1t was even
hinted that there may follow some cabinet
| changes as a result of this and other
vicissitudes thrust upon the President by
cabinet officers who failed to settle the
questions that primarily were within their
province.
The situation at this time is caused by
the National City Bank and National
City Company case, which has been
hanging fire for some weeks. Some un-
printed facts about it are of interest
now In view of the Importance 1t may
assume In the cabinet life and politics
OF the country before a great while.
Organized Holding Concern.
Several months ago something like
three-fourths Of the stockholders of the
National City Bank of New York, a
Standard Oil concern, used an extra divi-
dend paid to them by that bank to or
ganize the National City Company, a
state chartered institution.
The avowed object Of this company was
to do business that could not be done
by q national bank. There is much that
national banks are not allowed to do
under the national banking laws Of the
country. They are not allowed to own
stock In other national banks; they are
not allowed to do a savings business:
not allowed to do a savings business;
they are not allowed to own real estate,
not to mention a number of other things.
Various state banking institutions have
profited by these inhibitions. with the re-
suit that the state banks have been run
ming the national banks nip-and-tuck
races for fat profits. In self-defense
stockholders of national banks some years
ago began organizing subsidiary COM
panies. some under the names of trust
companies and some under other names.
The Secretary Of the Treasury and the
controller of the currency made no OBJ
something like 200 of these affiliated COM
panies. The capital stocks of each are
separate and distinct, according to Treas
ury officials, and the failure of one would
not be affected by the other. The Ma
tional City Bank, for instance, would not
be impaired should the National City
Company close its doors from bad man
agement. There is simply an affiliation
that is mutual, but in which the funds
Of each Is not involved with the other.
There is no law, it is pointed out, pre-
venting the stockholders of national
bank from owning stock in another ma
tional bank, although one bank is pro-
hfbited from doing SO.
Wickersham Got Busy.
question should have ever been before the
administration. The holding companies.
as they are called, or the subsidiary in
stitutions, are not required to make re-
ports to the controller of the currency as
to their organization or what they are
doing The Secretary of the Treasury
officially does not know that they are in
existence. All these concerns obtained
legal advice declaring that they did not
violate any national bank or other law.
But the active Attorney General read
in a newspaper one day that the National
City Company had been organized. With
out comforting with Secretary MacVeagh
or any one else he proceeded to investi-
gate voluntarily. Before Mr.. MacVeagh
was aware that anything was going on
he received an opinion from Mr.. Wicker
sham that the company was in violation
Of the law. He relied upon the case of
Haskins vs. National Bank Ola U. S. re-
ports) to prove his point. This was a
case in which national bank had held
stock in another. The second bank failed
and then the first bank was held liable
for an assessment on the stockholders.
The decision of the court was vigorous
that g. control by one bank over another
was in violation Of federal laws.
Macveagh Was Dumfounded.
Mr. Macveagh was dumfounded when
he got what Treasury officials now term
1.-The butt-in" decision Of Mr.. Wicker
sham. He promptly gave consideration
to the matter however. finally reaching
the opinion that there is no law to pre-
vent stockholders of the National City
Bank organizing another banking COM
pany II they desire. He indulged in some |
extensive correspondence with the Attor- |
ney General on the subject, but Mr.. |
stood pat He would not |
change his views Of the case in the |
Charges have been made that |
he saw an opp ortunity to make political
capital by an onslaught upon what Is |
to be an unpopular institution |
Of its Standard Oil connections.
II President Taft upholds Attorney |
General Wlckersham 1t will put out OF
business 300 institutions now running. II
he upholds Mr.. MacVeagh he will be
charged with having permitted a trust OF
banks. He will be compelled to
defend his course on the stump and else
where
Treasury officials are unanimous in
Mr.. Wickersham for inter-
fering In the case at all, and predict that
he will cause Mr.. Taft grave embarrass-
ment before the matter is finally settled. /