The Washington herald., 1917-06-25
HOLLAND LETTER
The Biggest Daily
Financial News Feature Of
the couniry's Best Newspapers.

When Frank A. vanderiip said In
half confidence some days before the
liberty loan saubscription was closed
that he knew OF one bank through
which subscriptions Of t75.Oo0.O0o. in
GLIDING Its own subscription, had
own bank would do better than that
Yet Mr.. Vanderlip was disappointed,
although his bank, the largest in the
United States, did make, by itself
and by the subscriptions which came
through II, one OF the largest of the
offerings for the liberty loan.
The bank to which he referred was
the First National, and now that the
hnal announcement is made that this
bank for itself and others entered
subscriptions somewhat In excess Of
tll0,00o,ooo for the liberty loan, there
is to be added another remarkable
] item to the list Of extraordinary
achievements OF this institution. For,
in addition to the fact that its SUBJ
scrpions were a little In excess OF
9SeGtTentieth aSo,i,T q the entire loan, and nd
loan which was taken by the Federal
reserve district, OF which New York
City is the center, the institution can
point to a record made in 1879 OF pur-
chase and sale Of $50. 900 OF ma
tional bonds. Presumably these were
/, for the most part the 4 per cent re-
funding issue, perfected by John Sher-
man, part Of which was utilized to
aid in the resumption Of specie pay
ments.
The First National Bank Of New
York has had a unique history, in
cluding the fact that IL was the first
OF the national banks to be organized
In New York City under the national
banking law of 1863. The banking
methods adopted by the institution
from those which have characterized
the upbuilding Of some Of the greater
American banks. In the first place.
the stock OF the bank was for many
years chiefly in the ownership Of five
men: men Frederic Thompson; whose
Baker H. c. Fahnestock. James A.
Garland and George Scoffield. Mr..
Scoffield was the cashier and his
holdings of the stock were much
smaller than those of the other four.
The principle adopted by Mr.. Baker
and his associates was probably one
Of the reasons why the government at
Washington, especially during the ad-
ministration OF John Sherman ss Sec
I retary OF the Treasury. placed su-
preme confidence in the bank, for able
I handling OF governmental fiscal ope-
rations. One OF the principles never
deHJated from was that IL was the
better part for bank SO to conduct
its affairs as to make reasonable prof
it's without any attempt TO attract
public attention TO the institution.
To carry out the principle the bank
declined TO initiate the example OF
other banks for II never advertised
in such manner as TO catch the public
eye. For many years its exclusive
method of advertising was by send
ing to financial institutions all over
the country. the reports which IL made
in response TO the call of the Comp
trQller Of the Currency. For a long
time there were about ten thousand
institutions thus reached. The num-
Der is now approximately twenty-five
thousand.
Had Mr.. Baker and his associates
decided that il was the better part to
begin strenuous competition for de-
posit accounts, he probably would
have been able to announce that the
First National Bank stood pre-emi-
nent among American banks in the
amount Of deposits. But no deposits
were sought excepting those which
came in a normal and almost unso-
licited way. TO the bank. Therefore,
the list Of depositors as a whole was
a list of prime names, nor was any
account accepted which was regarded
as not measuring up to the standard
of the bank. II by any chance such
was in a kindly way requested to
withdraw II.
The MANAGEMENT Of the bank knew
no favorites. Every customer was
sure OF receiving such accommoda-
| tiOns as his account justified. There
fore, when a customer was in need OF
funds, he had only 10 call al the bank
and secure the necessary amount. The
character OF the customer was In
good part the basis Of credit No
matter how large his account was, or
how influential he was, he was charg-
ed for this service exactly the same
price that the humblest depOsitor was
charged for similar service. Action
OF this kind inspired perfect conn
dence in the management of the
bank.
1t was deemed a better banking
principle to receive accounts that
could be regarded as OF first quality
than to solicit and receive any kind
Of new accounts in large ~ small
amounts. which would make a fine
showing when the total deposits were
reported to the Comptroller OF the
Methods OF this kind enabled the
bank to make money rapidly and also
to make investments, which so far as
Judgment and far-sightedness were
concerned. have never been surpassed
by any other bank management in this
country. After a time the investments
grew so valuable as TO enable the
bank through the appreciation in the
market value Of the investment greatly
to increase its capital stock. At one
time a trusted employe Of the bank
was discovered to have appropriated
for his own use, through several years
of misconduct, about $4,000. All that
the bank did. so far as this loss was
concerned. was to take the 10000
out. OF undivided profits. These were
so large and so greatly in excess OF
this amount that the withdrawal OF
$4,000 affected the undivided profits
very little.
been authorized by an act OF Con-
Cress to refund A very large amount
OF government bonds. which bore a
high rate of interest. decided upon an
issue bearing 4 per cent. he had sew
eral Informal conferences with Mr..
Baker and with others OF the First
National Bank party. Secretary Sher-
man, as he afterwards confessed, was
for a time somewhat disturbed lest
there might be difficulty in absorbing
this refunding issue which bore 4 per
cent interest Whatever anxiety he
NAV have had was dispelled after his
conferences with Mr.. Baker and with
other bankers. for he was assured
that there would be no difficulty about
placing the whole amount Of the re-
funding issue. the First National Bank
Dledging itself 70 assist in this work
to the extent Of its resources and
ability. It did so assist. and for that
reason was able to make a record,