Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1913-03-01

u.
count transactions with them, especial .
~ in recent years, and having what
virtually amounts to an understanding .
not to compete, which is defended as .
principle of banking ethics Togeth- /
er they have with few exceptions /
preempted the banking business OF the I.
important railways of the country.
in Chicago this inner group asso- !
ciates with and makes issues OF Sc
curities in joint account, or through
underwriting participatiOns primarily
with the First National bank and the
Illinois Trust & Savings bank. and
has more or less friendly business
relations with the Continental and
Commercial National bank, which par
ticipates in the underwriting of Sc
curity issues by the inner group. These
are the three largest financial insti-
tutions in Chicago, with combined re-
sources of 1851 600, 600.
COUNTRY PATRONAGE.
"Radiating from these principal
groups and closely affiliated with them
are smaller but important banking
houses. such as Kissel, Kinnicut &
Co, White. Weld c Co. and Harvey
Fisk and Sons. who receive large and
/ lucrative patronage from the domin-
ating groups and are used by the lat
ter as jobbers or distributors of Sc
curities the issuing Of which they con-
troll. but which for reasons of their
own they prefer not to have issued or
distributed under their own names.
Messrs Lee, HigginsOn & Co, besides
being partners with the inner group,
are also frequently utilized in this
J service because of their facilities as
I distributors Of securities.
/ Beyond these inner groups and
sub-groups are banks and bankers
throughout the country who cooperate
with them in underwriting or guaran-
teeing the sale of securities offered
to the pubic and who also act as
distributors of such securities.
THE patronage thus proceeding
from the inner group and its sub
/ groups is of great value TO these banks
and bankers. who are thus tied by self
I interest 10 the great issuing houses
and may DC regarded as a part of
this vast financial organization"
/ Concluding its finding as to the eI-
/ istence of money trust the committee
said:
Your committee is convinced that,
however we'll founded may be the
+ assurances of good intentions by those
now holding the places of power wnIcn
have beer thus created. the situation
is fraught with too great peril to
our institutions 10 be tolerated.
HOW CONTROLLED.
Discussing the control of issues of
securities by this so-Called money
trust the report said:
Through their power and domino
ton over so many Of the largest ti1an-
cial institutions. which. as buyers, IN
derwriters. distributors. or investors,
constitute the principal first outlets
for security issues. the inner group
and its allies have drawn to them
selves practically the sole marketing
of the issues of the greater railroad,
producing and trading, and public util-
ity corporations, which in consequence
have no open market to which To ap-
peal, and from TINS position OF van
tage. fortified by the control exerted
by them through voting trusts, rep
resentation in directories, stock hold
ings. fiscal agencies. and other rela-
tons. they have been able in turn to
direct the deposits and other patron
age Of such corporations to these
same financial institutions, thereby
. strengthening the instruments through
which they work"
The report condemned interlockiDg
, dlrectorates and consultations, and
, devoted considerable space to STATE
, ment showing the development OF con
York institutions.
] 1T is manifestly improper" said
Z the report. and repugnant to the
theory and practice of competition
= that the same person or members OF
) the same firm shall undertake 10 act
! in such inconsistent capacities"
? The report condemns the use OF
) voting trusts in the control of finan
: cial institutions. and criticises pri
Nate bankers In the CdpdCI'E VI NC
positaries for interstate corporations.
, RECOMMENDATIONS MADE.
The recommendations of the com
mittee. as set forth in the report. and
as embraced in the bills accompany
: ing the report urged the following re
forms:
| Clearing house associations o.
which national banks are members
should be required to become bodies
T corporate Of the states in which they
: are located and every solvent and prop
l erly managed bank or trust comP-e!
e should have the right, enforceable e
r law, to become and remain member
Regular periodical examination
I of members by a committee of th'
}, clearing house association should b'
? prohibited and instead all such examin
: atoms should be conducted by public
I authorities"
L The committee would give the gov
I eminent supervision OF clearing hous'
I. certificates. and would prohibit tn
e fixing OF rates by clearing houses TO
the collection Of out Of town checks
I discount or interest on deposits.
), AS 10 the New York stock exchange