thus situated, and but few State and National banks throughout the State of New York have any of the favorable conditions named above. They protest strongly against the bad banking which is induced by this unfair competition. Two State institutions doing substantially the same business should be under the same regulations as regards reserve, whether called banks or trust companies. The report properly tries to help the situation as far as the country is concerned, but the borough of Manhattan is left to struggle with the difficulties alone, in a modified form.

State of New York,
Many of these banks

There are 404 National banks in the and 196 State banks, making 600 in all. have long and honorable records. The solution has been proposed by different trust company officers that the National and State banks should become trust companies. It can fairly be asserted that this would not be for the public good.

NO EXCLUSIVE RIGHT IN TIME DEPOSITS.

There is something amusing about the sacrosanct view regarding trust company deposits. There seems to be an implication that time deposits belong to the trust companies of right. Banks have always favored deposits likely to remain, and in fact they are the cream of the business.

The majority of the Commission tried hard to find some way of differentiating the trust company deposits, so as to arrange for one reserve on deposits subject to check and a different reserve on time deposits, but they found practical difficulties in enforcing any such provision.

Then the Commission tried to arrive at what should be the reserve for total deposits. The statistics gathered by the committee, contained in the report, show that:

The average gross deposits of the trust companies for three periods (Jan. 1, 1906; Jan. I, 1907; Aug. 22, 1907) were.

Deduct from this average sums held as executor, etc..

Which leaves net deposits of...

$841,000,000

35,000,000

$806,000,000

The average deposits represented by certificates were $81,300,000, or only about 10 per cent. of the net deposits. To represent this 10 per. cent. of time deposits, the report allows the trust companies to keep 15 per cent. cash reserve on their total deposits, as against 25 per cent. cash reserve proposed for the banks in the borough of Manhattan. This is really an allowance of 40 per cent. in reserve to cover the 10 per cent. of trust company deposits represented by certificates.

From my point of view this is not fair to the banks, as there are probably many banks which have more than 10 per cent. of deposits which may fairly be called time deposits, such as funds awaiting investment, etc. The bank I serve is one, and such banks should be considered instead of discriminated against in new legislation. Why should not those deposits of banks which are really time deposits be considered as well as trust company time deposits? The banks have been driven into paying interest by the trust companies doing a banking business, and should have the same opportunities for receiving time deposits, on as favorable terms as the trust companies. In fact banks were organized to receive deposits, while trust companies formerly only received deposits by inference. Trust companies already have advantages over banks in that they have a number of profitable functions other than receiving deposits.

TIME DEPOSITS NOT TESTED BY EXCHANGES.

The trust companies have argued that because the checks paid over their counters daily are not as large in volume as those which pass through the clearing house daily, it shows that their deposits are permanent, and therefore less reserve is necessary. This may or may not be true, because, taking a merchant, for instance, while his average balance may remain practically the same, the transactions on his account may be very numerous.

CONCLUSION.

A reserve for the State banks and trust companies in the borough of Manhattan of 25 per cent. in cash will put them on a par with the National banks, and will make the banking system uniform as regards reserve. Should this reserve

prove too high, or too difficult of accomplishment, the reserve called for in the National Bank Act could probably be modified. At present the National banks are harassed by the unfair competition of the trust companies, as shown by the introduction of bills in Congress tending to give them a better chance to compete with the trust companies. The express intention of the Legislature to equalize the reserves of the National banks, State banks and trust companies, would be a basis under which all would be working together under one reserve for sound banking, instead of working against each other, as is the condition at the present time, and the advantages of sound banking to the community as a whole can hardly be overestimated, in view of the anxiety, loss and depression of business caused by the present panic.

Respectfully submitted,

NEW YORK, December 16, 1907.

A. S. FRISSELL.

DECEMBER 16, 1907.

Hon. CHARLES E. HUGHES, Governor of the State of New York, Albany, N. Y.:

DEAR SIR.-A portion of the Banking Law which we have considered, but did not care to incorporate in our report, refers to the salary and term of office of the Superintendent of Banks. We feel that he should be appointed for five years and that the salary should be $15,000 per annum. A number of State officials have recently been appointed to whom that amount is paid and we feel that their duties and responsibilities are not in any sense equal to those imposed upon the Superintendent of Banks.

We trust this will meet with your approval.

Yours very truly,

A. B. HEPBURN,

E. S. MARSTON,

A. S. FRISSELL,

ANDREW MILLS,

EDWARD W. SHELDON,

STEPHEN BAKER.