New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-07-06
CITY BANK PLANS TO
HELP MONEY POWER"
viii Concentrate in National City
Company Bank Stock Hold
ingS of Its Interests.
KEEPS ABSOLUTE CONTROL
Stockholders Invited TO Acquire
Beneficial Interest to Extent
of Two fifths of Par
Value of Holdings.

Value of Holdings.
The National City Company. the $1,000
000 security company which was organized
last week by the directors Of the National
City Bank is not likely 10 prove a com
petitor of bond houses and brokerage
houses, as has been commonly taken for
granted. According 70 what should he
good authority. II has been formed for q
different and much more important pri-
mary purpose. as a step forward in the 6i-
reetion Of strengthening and consolidating
the so-caHed money power" Of the coun-
~. through concentration Of the bank
stock holdings Of the National CITY Bank
interests
In it's statement Of condition as Of June
:. IN response 10 the latest call Of the
Controller Of the Currency. the National
City Bank reported. exclusive Of United
States bonds on hand and deposited
20 secure circulation and United states
and other bonds 70 secure United
States deposits. Other stocks. bonds and
mortgages" asgregatine IN value '3,S72.Soo
A large part OF this amount probably rep
resents United States bonds. dealing IN
which is sanctioned by the national bank
act, and in which class ~ securities the
National City Bank does a heavy business
The stocks" forming part Of the item
will. II IS probable. be turned over 70 the
new security company, since the courts
have decided that q national bank has no
power 70 deal IN miscellaneous stocks 90
BONDS, The prohibition being implied from
the failure 70 grant the power Even
stocks which the bank had acquired
through the calling Of loans for which they
had been collateral security or had taken
for debt must be disposed Of as promptly
Is possible.
City Bank Active in Them,
Although bonds other than governments
are included in the securities which ma
tional banks ere under the implied prohl-
tition Of the law forbidden 10 handle, some
Institutions OF that class DO a large ousi-
nsss IN them, the most important being the
National CITY Bank Of New York and the
practice has grown into a custom 10 which
the Controller OF the currency irterposes
no objection
The Controller does however. object de-
cidedly 20 the national banks dealing or
investing In stocks. and it was not long
after the issuance Of warning on me
subject by the occupant Of the Office at
the time that the First National Bank.
which previously had carried probably
heavier holdings Of stocks than any other
national bank. formed its First Security
Company" IN February 1893.
While the courts have ruled against or
eratlons in stocks generally by national
banks as being not incidental - the bust
ness Of banking as defined by tie statute
one class Of such operations, the acquisition
and holding as an investment Of the stock
Of one national bank by another national
bank. has especially been forbidden IN the
leading case on this subject the court gave
In detail its reasons for refusing 20 permit
such investment, saying, in part:
The investment by national banks Of theif
surplus funds in other national banks. sitU-
sted perhaps IN distant states, as in tnf
present case, is plainly against me mean
Ing and policy Of the statutes from which
they derive their. powers, and evil Conse
quences would be certain 70 ensle u sJcf
course Of conduct were countenanced a.
lawful Such accumulation Of CAPT
tai would be lr disregard II the policy ol
the national banking law, as seen IN rs
numerous provisions regulating the amount
OF the capital stock and the methods TO bs
pursued in increasing or reducing f. The
smaller banks in such a case would be n
fact, though not i'm form, branches or tne
larger one.
The circular which has been issued 70 the
stockholders % the National CITY Bank
under date Of June Is advising them Of ths
formation Of the National City Company
and inviting them 20 acquire benedcia
interest in q 20 the extent Of two-hfths d
the par value of the banks stock held by
them respectively, their subscriptions 20 b,
exactly net by the 40 Per cent cash divi
dend which has been declared BY the d.
rectoTs Of the bank says the plan has
been 10 establish a corporation go organ.
ized that II may make investments and
transact other business which. though
often very profitable, may not be within
the express corporate powers Of a national
bank"
Control Absolute ard Perpetual.
AS in the relation between the First
National Bank and the First Security
Company the National City Company is
70 be under the absolute and perpetual
control Of the National City Bank, the
stakeholder being oestui que trust and
rot the actual holder Of certificates repre
senting his subscription 10 the $40 100, %.
stock Of the National City Company, and
the capital stock Of the latter corporation
20 be held by three trustees, who shall
be officers or directors Of the bank" the
first three trustees being James Sullman
chairman OF the board Of the National
City Bank. Frank A Vanderlp. president
and Stephen 5. Palmer, director
The trustees are 70 exercise the powers
OF ownership, elect the directors and re-
eeive al dividends paid by the National
City Company paying the money over &c
the bank for distribution among the bau5 !
shareholders who shall have acquired d
beneficial Interest in the investing com
psny