Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-20
D. c. BANKERS MEET.
AT MONTAUK BEACH.
E. Winchester DEMO and
Henry H. Mckee Make
Opening Addresses.
by EDWARD c. STONE.
STAFF Correspondent OF The Star.

| Fleming of the District of Columbia
Bankers Association called the eleventh
| annual convention to order here this
forenoon, many distinguished bankers
being present, including Roy A. Young.
governor of the Federal Reserve Board;
George j. Seay, governor of the Federal
Reserve Bank of Richmond, and Rome
G. Stephenson, second vice president of
the American Bankers Association.
Following prayer by Rev. E. Hoyt
Palmer credentials report and roll call,
the presiding officer made brief opening
remarks, greetings were presented from
the American Bankers Associat ton by
Fred N. Shepherd, executive manager,
while greetings from the City of Wash
ington were voiced by Sidney F.
Taliaferro, Commissioner of the District.
One of New England's most able
bankers, E. Winchester DEMO of Boston,
aroused great interest among the
bankers in the first address of the day,
calling attention to the tremendous re-
organization in the investment accounts
held by banks. naming the type of
bonds most desirable for banks to carry
in their vaults as investments, suggest
ing ways to increase profits, and pic
turing the great advantages gained by
better working understanding between
big city and small country banks.
Another brilliant address was made
today by Henry H. Mckee, Washington
banker, who became nationally known
through his interest in the passage of
the McFadden banking act and
speeches made during that campaign
before the American Bankers Associa-
ton. Mr.. McKee'S subject today related
to the kind of secondary reserves which
banks should maintain, their great value
in preventing bank failures and in
spring confidence in modern business.
Mr.. McKee's suggestions and conclu-
sions gripped the attention of the dele
gates as most beneficial.
Progress Is Reported.
Important reports were heard from
the associations three newest sections
auditors, of which J. Damn Faber is
chairman; safe deposit, Charles E.
Howe chairman. and f1duciaries, Fred
erick P. H. Siddons, chairman. These
sections were formed during the present
year and the first reports to the con-
vention revealed marked progress in re-
cent months.
Following the appointment of resolu-
tions and nominating committees, the
vice presidents for the District of Co
lumbia of the American Bankers Asso-
citation convened their divisions, F. P. H.
SiddonS being vice president of the trust
company section, Thomas j. Groom,
Savings Bank; Hillery G. Hoskinson,
national bank, and Joseph T. EXnicios,
State banks.
In his address this forenoon on "a
Banks Bond Account" F. Winchester
DEMO, vice president of the Old Colony
Trust Co. of Boston, and president of
the Massachusetts, Fiduciary Association,
called attention to the tremendous
changes in investment accounts held by
banks The speaker noted two very
significant trends during the past seven
years. Investments of all banks have
increased from 11.38 billion dollars to
1877 billion dollars, an increase of 81
per cent. The second trend occurs in
the reorganization that has taken place
in the secondary reserve itself.
Il would call attention" Mr.. DEMO
declared, Ito the reduction in the pro-
portion of the United States Govern
ment securities between 1921 and 1928
from 33 per cent to 221 per cent and
the reduction of holdings in municipal
bonds from II per cent of the invest
mentS to SO per cent; a reduction in
railroad bonds from ISL per cent to 81
per cent; an increase in public utilities
from 81 per cent to sc per cent, and
an increase in industrial and other in
Vestments from 1927 per cent to sos per
cent.
reorganization Takes Place.
In other words a tremendous reor-
gantzation Of investment accounts has
taken place. 1t will be most interesting
to see how these figures will be changed
IN the report for June 80 this wear
which will not be available until Deem
Der. There was an increase in invest
ments between 1927 and 1928 of IL
billion dollars exclusive of United States
Government bonds. These two develop
ments have effected an investment re-
organization involving at least six and
one-half billion dollars.
In the past banks have been pro-
verbally poor bond buyers. They in
vartably buy and must buy when they
have the money to do it; in other words,
IN time OF money ease when prices are
nigh. Then when prices are off they
are Obliged to realize on their secondary
reserves and sell when prices are down.
In many instances, the policy of these
Investments of one-third of their in
dlVldual deposits has been most casual
and haphazard
Two possibilities seem the most fea-
slble for the average bank. The first is
the adoption of a rapid turnover policy
In handling the bond account. This is
difficult and involves thoughtful study
OF trends in the price of money. The
ability to realize profits from price ap-
probation or to avoid losses lies al
most entirely in the ability to gauge the
credit situation and the outlook for
the trend OF short-term money rates
BY this do not mean the day-to-day
movements, but the major trends run
ming for a term of months to which
every bond buyer is subject whether
he makes an effort to determine the
changes and take advantage of them
or not.
IF the banker can, with a reasonable
degree of success, foresee the trend of
interest rates he is in position to
handle his secondary reserves by selling
his long-term bonds, buying short-term
bonds. and vice versa, as conditions
warrant. In no case will he be able to
accomplish this with 100 per cent per-
fectton-with no losSeS-but he can
limit the losses and probably increase
! his profits, which will strengthen the
bank for all depositors and stockholders
who are interested in 1t.
Much is being gained by the closer
Affiliations which are taking place be-
tween the moderate size banks and the
large city banks. Out of this closer
understanding by the city bank of the
country banks problem and by the
country bank of the city banks pur-
poses will be found a method of making
their contact one of mutual profit" Mr..
DEMO concluded.
Mckee Discusses Bank Reserves.
Henry H. Mckee, president of the
National CAPITAL Bank. was the next