There are many National banks holding the stock of other banks, either Savings banks, State banks, or Trust Companies in their treasury, and some of them are holding the stock of two or more banks. Only recently it was discovered that a National bank had invested ten million dollars, directly or indirectly, in other banks throughout the country; possibly an examination would show that this ten million was partly the stock of other National banks, and partly the stock of state bank institutions such as Savings banks, State banks and Trust Companies.
Now, if there is one holding company more to be criticised, and more to be abjured than any other, it is a bank holding company, controlling the stock of a great many other banks, particularly so under different supervision.
When we behold the malformation of banking as now carried on in this country, due to the struggle of the various institutions to adjust themselves to these new conditions and to take advantage of all the opportunities in modern business, it reminds one of the crooked, twisted, knotted, and sadly misshapen tree-trunk that has grown up amidst and between huge rocks, that stand in the way of an upright and symmetrical development. These huge bowlders and rocks are the obsolete laws on our statute books, our ignorance, our selfishness, our prejudice, our political cowardice and our demagoguery.
Like our mutual savings banks, the original idea was that a Trust Company could only do a Trust business in the strict sense of that word. They could hold a railroad mortgage, and pay interest to the bondholders, perform similar functions for other corporations, and could act as a trustee in case of estates. Today you may assume that no kind of business will escape the scope of the charter of the so-called trust company, from the care of estates and the execution of corporate trusts to banking in all of its forms, and agencies of every conceivable kind. In other words, the all-round charter of the American Trust Company, popularly so called, permits it to do anything that the varied affairs of the American citizen may by any chance require.
Just as there are in the east mutual savings banks, which are relics of former days, so the Trust Companies, with their limited powers, are only a landmark in the evolution of American banking, and must disappear as a separate institution in time.
The growth and development in fifty years has produced in the United States a banking unit, doing in a conglomerate way what it ought to be doing as a departmental business, with four distinct functions: viz., a commercial business, the manufacturing of credit; a savings bank business, accumulating the savings of the laboring masses, which is a sacred trust fund that should be placed in high grade investments; a trust company business, executing trusts, and carrying on agencies of every kind; a note-issuing business, which is only another form of the commercial business, as the bank note is in fact only another form, as we have learned, of a deposit—a circulating credit in place of a check credit for the convenience of the people.
From Feb. 1, 1863, the birth of the National Bank Act, down to the present time there has not been one single change in the National Bank law worth mentioning. It is true we have dotted an "i" here, and crossed a "t" there; but as for a substantial change there has not been a single one made. Now, this is truly a most marvelous fact, when you consider how great have been the changes, especially since 1890, or during the past twenty-two years. Our banking resources have increased fourfold. In 1890 they were about six billion, today they are more than twenty-five billion.
Mr. Lawyer: This growth in our banking power is not so strange because it only reflects the growth of our business. The clearings of the United States in 1890 were only thirty-seven billion, while the clearings this year must pass the hundred and seventy billion dollar mark. The productions of the United States in 1890 were only seventeen billion. The productions of the United States in 1912 will exceed thirty-five billion dollars. The wealth of the United States in 1890 was only sixty-five billion dollars. The wealth of the United States in 1912 is estimated at about one hundred and twenty-five billion dollars. The imports in 1890 were seven hundred and eighty-nine million; the imports the present year will be one billion eight hundred million; the exports in 1890 were eight hundred and forty-five million; this year our exports will exceed two billion three hundred million dollars.
Mr. Farmer: And do you mean to say with this vast, almost incalculable increase of production and wealth and consequent increase of banking resources, there has not been a single step taken by the National Government to facilitate it?
Mr. Banker: Mr. Farmer, there has not been a single change made to facilitate the handling of this vast business. On the other hand, there seems to have been such a profound ignorance on the part of Congress, or such an abject fear, lest they might aid business, that every progressive movement of a legislative character has been left to the states, which have given us laws as varied as Jacob's coat of many colors; indeed, rivaling the fifty-seven varieties of the famous pickle man.