New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-01-11
LIMITS OF BANKING.

The enormous profits Of the First
National Bank. as shown by the testi-
monv of its chairman, Mr.. George +.
Baker while dazzling to the public eye
are not in themselves a matter OF To-
Ultimate public concern. The methods
by which an institution with no pow
ers except those specifically granted 10y
It's charter made such profits are, how
ever. matter of legitimate public con-
Germ. The case Of the First National
Bank raises Il large question as to the
proper functions Of banks which must
in the near future he faced. 1t has al
ready been the subject of debate ana
difference of opinion between high Off
Gals of the government.
The practice so successfully and, we
believe. honestly followed by MI
Baker and his associates is one OF In
creasing prevalence. II has been COM
monty said that the great banks of this
city and Chicago no longer conhne
themselves TO a strict banking bust
ness. such as was contemplated by
their charters. but have made most OF
their money by more or less specula-
tive ventures. such as undertakings
syndicate participations and the buy
ing and selling Of Stock Exchange Sc
curities When these transactions
seemed to exceed corporate powers they
were often carried on indirectly, but
nevertheless really for the banks. The
managers themselves seem finally 10
have concluded that this business was
not strictly banking, and some OF them,
notably the owners of the First Ma
tiOnal. determined on technical disso-
citation Of their banking and specula-
tive transactions. Hence the securities
companies. whose legality is as much
in dispute as is the doing by banks OF
the business they have taken over. \
securities corporation having absolute
" the same stockholders and directors
AS bank and every share Of whose
stock is Siamese twin inscparable
from Il share of bank stock would
seem TO be separate institution only
by legal fiction.
II would be quite unjust TO assume
that this abuse of power-if it Is an
abuse-has been deliberately cngi-
neered to accomplish improper purposes.
| Properly TO understand such business
methods we must look ut them in the
| light of their development. They were
the product Of Il period Of universal
loose construction Of corporate powers.
\ corporation. once formed. considered
| itself empowered to do anything not
| specifically forbidden which a natural
person might do. Railroad companies
speculated in coal lands, insurance
! companies went into the real estate
/ business and ran clubs and banks be-
came promoters. II was all part Of
| the anarchy of business in the years
Of unprecedented expansion. and prac-
tically everybody accepted 1t az all
right. We may now see the dangers
of these loose methods and desire the
literal observance Of corporation char
4 ltIS anu ODJtCl W liic dIlllNdliDD VI
any doctrine Of implied powers to
them. without questioning the honor
or good faith of those who managed
things in the old way. But it must he
clear even TO financiers who have prof
tied by the old methods that change
is coming.
The country has come to be jealous
Of the use Of privileges granted by ut
TO accomplish purposes which it did
not foresee. 1t does not object to great
profits. but 10 great profits made by
| what II rightly or wrongfully thinks
the misuse Of charters granted for pub
| lie ends. That is at the bottom Of the
feeling about the money trust" and
il must be met by careful and sane
consideration of questions Of corporate
powers, such as Mr. Bakers testimony
raises. and by the strict confinement of
chartered institutions to their legiti-
mate functions