New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-12-15
MARKED CHANGE IN
BANK INVESTMENTS
Superintendent Van Tuyl
Reports Commercial
Paper in Favor.
SHORT TERM NOTES
BECOMING POPULAR
State Banking Department Finds
Many irresponsible Brokers
Are at Work.

Many irresponsible Brokers
Are at Work.
| Albany, Dec. 14.-During the last few
years there has been a marked change
| in the character of bank investments.
This is one of the subjects TO be treated
by George c. Van Tuyl, jr, of the State
Banking Department, IN his annual re-
port. In speaking of the matter to-day
Superintendent Van Tuyl said:
| AS a secondary reserve, banking in
stitutions were accustomed 10 invest
funds in municipal, railroad and indus
| trial bonds change in income basis
has resulted in the heavy depreciation
in valuation Of investment securities.
/ Short term bonds. notes and equipment
obligations are preferred to long term
| bonds because of the income return and
| the small prospect of depreciation The
| development of public utility. power and
electrical enterprises has brought an
other class of investments into promi-
hence, which are made attractive through
/ favorable rates of interest offered
Commercial paper is becoming in
creasingly popular as a short term bank
investment. Until a few years ago
loans were confined TO a banks own
customers. Now there Is a marked ten
dency TO look elsewhere for desirable
notes for investment In this state
alone over twO-thirds OF all the state
no o,,A
tion Of their funds in this class Of pa
per Well selected commercial paper,
purchased from reliable note brokers,
gives the banks an excellent secondary
reserve. reasonably certain Of payment
at maturity. The purchasing institu-
tion is under no obligation TO renew.
Increase Of Note Brokers.
Notes are being sold by city banking
institutions to their country correspon-
dents. Banks are acting as brokers in
placing notes Of customers with other
banks But, so far. the greater percent
age of notes are being sold by brokers.
With the increasing demands have
come many dangers. irresponsible per-
sons, without adequate capital, have
been found acting as note brokers. at
tempting TO sell undesirable paper 10
small country institutions. The charac-
ter and financial responsibility of all
note brokers is investigated by the Bank
ing Department Notes are being Of
fered as commercial paper which should
not be classed as such, and OF copcerns
whose legitimate demands could be met
by local banks.
ifpf n chnMld
be exercised in the purchase Of this
class Of paper. Banks arc advised by
the department 10 purchase such paper
only through banks and reliable note
brokers of recognized responsibility.
THE condition OF the eighty trust com
panies in this state at the close Of busi-
ness on September Q, 1918. compiled from
their official statement to the Banking
Department, shows a falling off in de-
posts, n considerable contraction In
loans and a moderate decrease In cash
holdings as compared with the previous
call of June a. There was shown an in
crease in these items. however. as COM
rarcd with the reports rendered on De-
cember 26, 1912. when the low point OF
the year was reached There was also
noted a decrease in the market value or
stock and bond investments and in secu-
rites held for surplus and undivided |
profits account.
Decrease Of Resources.
Compared with the figures in the re-
ports submitted at the close OF business |
on September .. 1872 the aggregate re-
sources Of these institutions decreased |
sl6S. 253. 754 There was a falling OFF In |
aggregate deposits of s142, 995076, and loans
were diminished by &S7.s48,3S6. The ratio |
of surplus TO capital. estimated on market |
value. decreased from 2.537 In 1912 TO 2.225 |
I'm 1913. In 1911 the ratio was 2.6O3.
increases in savings bank deposits |
have kept pace with the growth OF the
last few years. There were 40 savings |
banks on September 80 1913. and the in
stitutions reporting TO the Banking De- |
partment were identical with those Of the |
previous year. These institutions had
a fairly satisfactory year, the only draw
back suffered resulting from the accel- |
Grated decreases in market value OF sur
plus held, due TO the heavy declines in
the market for bonds in which such sur
plus moneys are invested.
While the aggregate amounts deposited
I'm the savings banks handsomely exceed |
ed the withdrawals the aggregate with |
drawals made a larger proportionate In !
crease than was shown in the aggregate |
gain in deposits.
Early in the present year every state
banking institution filed with the Bank |
ing Department a complete card record or
the firm, partnership and corporate afflli- |
atoms of their directors. With this data
the credit bureau of the Banking Depart |
ment and the bank examiners are enabled
10 know the bank loans In which the di-
rector may be interested, directly or indi- |
rectly. Security records, giving data con-
corning inactive securities held by insttu- |
tons for investments and as collateral. |!
have been compiled for use In connection
with examinations. Special Investigations |
have been made by the credit bureau Of
companies affiliated with banking insti !
tutions.
1.-THE records concerning the standing
of borrowers hypothecation Of bank |
stock, financial responsibility Of bank d. |
rectors, have been greatly augmented |
during the year. 1t is an interesting fact
that credit bureaus have been established |
I'm the banking departments OF two other
states, and action is contemplated by the