New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-01-07
SECURITY COMPANIES
TO SELL BANK SHARES
Sale of Its Chase Stock by First
National to Have Far
Reaching Effect.
AVOID CONFLICT WITH u. S.
Announcement of S11, 900, 900
Deal by President Wiggin
Stirs Financial District
Will Affect 800 Banks.

W
When Wall Street recovered from its
surprise yesterday over the announcement
of the sale by the First Security Com
pany OF its holdings of 1900 shares OF the
stock of the Chase National Bank it dis
covered that the transaction was Of far
reaching Importance in its effect on other
national banks which are operating Sc
curity companies to hold the stocks OF
other banks.
Wall Street is inclined TO look upon the
hunt conducted by the Pujo committee
for the mysterious money trust" as one
OF the compelling reasons why the First
National wished 10 divest itself Of the
Chase stock. still more important in
depreciation Of the action of President
Wiggin of the Chase bank is, however,
discovered by several wiseacres in the de-
sire of the leading banking interests TO
avoid a possible litigation by the Attor-
ney General Of the United States.
The national banking law provides that
n national bank cannot hold directly the
stock of another national bank. 1t was
for this reason that the First Security
Company was formed In 1903. Similarly
the National City Bank organized the
National City Company in 1911, with
capital of S10.0o0Ooo. to take over the Sc
curity holdings of various banks, and for
this purpose a cash dividend of 40 per
nv 40
Bank 10 organize the company.
Disagreed on Legality.
At tho time of its formation Attorney
General Wickersham decided that the Ma
tional City Company was organized IN
violation of the Sherman antitrust law
but Secretary of the Treasury MacNeagh
maintained that its formation and avowed
purposes were strictly within the limits
of the statute The question was COM
promised by the company selling its hold
ings of bank stocks and agreeing TO re-
frain from dealing in such securities
President Taft then laid aside the papers
in the case.
There are said to be approximately
three hundred banks in the country whlch
operate security companies to acquire ana
hold the bank shares which are illegal
investments for banks under the national
banking act.
: on the same day when ]. Pierpont
Morgan was testifying recently before the
Puio committee 1t was brought out by an
expert accountant that there are eighteen
financial institutions in the United States
which, through interlocking directorates,
control S25. 1925, 10000 of capital. OF the
eighteen. thirteen are said TO be in this
city. three in Chicago and two in Boston.
Announcement of the purchase of the
Chase bank holdings was made yesterday
by President Wiggin and later on con-
firmed by President Francis l.. Hine, of
the First National. Mr.. Hine refused TO
say at what price the sale was made.
Chase Stock at 760.
The last bid price on the Chase stock
was 100 and based on this quotation the
holdings transferred to the name of Mr..
Wiggin have a value Of S1,400.OOO. 1t is
understood however, the Chase institu-
ton obtained its stock at lower figure
The statement made by President Albert
III. Wiggin follows:
Tie FIRST Security Company has for &
long time held a large block Of Chase Ma
tional Bank stock. An opportunity t.
purchase portion Of this stock was re-
Gently presented. To increase my owl
holdings in the institution, OF which ] ar
president, and which is TO be my litGWOrk
and that my associate officers in the bank
and the employees Of the bank might in
crease their financial interests In the IN
stitution. ] have taken advantage Of the
opportunity presented and have purchased
fifteen thousand shares Of Chase NatiOna
Rank stock. | hope TO identify more
CLOSELY with the bank important business
interest who are now connected with Us
by Offering them a stOckholdng Interest
10 limited amount.
As George T. Baker. chairman of tht
First National Bank board OF directors
was scheduled TO appear this week as 2
witness before the Pujo Congressona
committee. investigating the methods Of
tho alleged money trust. the sale of tn,
Chase National Bank stock At this tiElt
was REGARDED in the financial district a!
a means Of avoiding some of the questions
which Samuel Untermyer. counsel for The
committee. might otherwise have asked
The First Security Company, although
operated by the First National Bank. has
rs state corporation, held for invest
nent the securities Of Other institutions
among which was the stock Of the Chase
National.