Strengthening Credit and Business
Situation in Philadelphia

While recent successive advances in Federal Reserve discount rates may seem drastic to many the prevailing sentiment in Philadelphia banking circles is in agreement with policies which make for a building up of reserves and curtailment of unessential credits. Greater conservatism is called for in view of the complete demoralization of foreign exchanges, the continued outflow of gold, the danger of a breakdown in exports and a possible collapse in prices. The pronounced liquidation and break in stock market prices in New York during the first week in February when sterling rates declined to $3.19 conveyed an ominous warning and impresses upon bankers the necessity of clearing decks for any possible squalls.

Governor Passmore of the Federal Reserve Bank of Philadelphia has made it plain that a firmer control of bank borrowing is imperative. The Federal Reserve bank here is still marking reserve percentages close to the water line. Since December 26th there has been a reduction of gold reserve from $138,341,000 to $130,867,000 on January 30th while the amount of bills on hand on the latter date of $202,965,000 does not show much contrac

tion from the high total of $213,672,000 at the turn of the present year. Notes in circulation have been reduced from $240,273,000 reported December 26th to $222,802,000 as compared with $209,921,000 a year ago.

Real Estate Title Ins. and Trust Co., to Double Capital

Stockholders of the Real Estate Title Insurance and Trust Company of Philadelphia will meet on March 18th to act upon the recommendation of the directors for an increase in the capital stock of the company from $1,000,000 to $2,000,000. At the last meeting of the directors an extra dividend of $2 a share was declared in addition to the regular quarterly dividend of $4 per share. The increase of capital is predicated upon the substantial increase in volume of business transacted by the company while the past year also witnessed a large increase in all departments.

The Pennsylvania Company has called for redemption at the Girard Trust Company on June 15, 1920, the entire issue of the Pennsylvania Company 334 per cent. French franc loan of 1906 certificates, guaranteed by the Pennsylvania Railroad Company, at par and accrued interest.

The past fiscal year was one of substantial progress and well sustained earning capacity for the Pennsylvania Company for Insurances on Lives and Granting Annuities which is now in its 108th year since its organization in 1812. The report to stockholders covering operations for the year ending November 30, 1919, showed earnings of $874,269, equal to 43.7 per cent. on capital stock. Dividend disbursement during that period amounted to $560,000, equal to 28 per cent. on capital and $200,000 was written off as reserve against depreciation in securities. Deposits on November 30th last aggregated $30,101,399, representing an increase of $5,140,472 over 1918. Exceptional progress was also made in the trust department activities of the company, total trust funds, exclusive of corporate trusts, aggregating $253,434,822, an increase of $9,344,603 for the year. Directors were reelected.

Annual Meeting of Provident Life and Trust Company

President Asa S. Wing of the Provident Life and Trust Company of Philadelphia rendered a report of the past year's progress at the recent annual meeting of stockholders, which was most gratifying and exhibited one of the most successful years in the history of this sterling old trust company. Earnings reflected the increased volume of operations in all departments. The trust department showed a total of $80,713,807 trust funds. In accordance with the conservative policies which have always obtained at the Provident the balance sheet provided for charging off on securities to the market basis. The insurance department was exceptionally active with new insurance written amounting to $92,726,961 as compared with $27,614,000 ten years ago. standing policies aggregate $481,153,542 as against $217,718,000 ten years ago. Aside from

Out

increased earnings the company also made generous provision for employees. Charles H. Harding, J. Whiteall Nicholson, George H. Frazier, Samuel Rea and Charles J. Rhoads were re-elected directors.

Philadelphia National Bank's Standing

With the recent increase in capital from $3,000,000 to $5,000,000 and with total assets of approximately $190,000,000, the Philadelphia National Bank moves up still further in the front rank of the country's largest National banks. It is the largest bank in Pennsylvania and largest in the East, south of New York City. The remarkable advance made by this bank is best indicated by increase in its deposits from $58,000,000 in 1914 to $119,081,000 on the date of the last official call in November, 1919, representing a gain of over 102 per cent. Earnings during the past calendar year amounted to $1,182,000, of which $480,000 was disbursed in dividends and $702,000 added to surplus and undivided profits, with combined capital, surplus and undivided profits exceeding $15,000,000.

The foreign department of the Philadelphia National Bank recently took possession of new quarters on the first and second floor of the western portion of the bank's enlarged building which now extends from 419 to 427 Chestnut street.

Over $7,000,000 was added to the amount of capital invested in State banking and trust company enterprises in Pennsylvania during the past year. Of this added capital the sum of $2,700,000 is represented by newly organized trust companies, $1,465,000 by new State banks and $2,889,000 by increase in capital of established banks and trust companies. Fourteen new trust companies received charters during 1919.

Stockholders of the Rittenhouse Trust Company have voted to increase the capital stock from $250,000 to $500,000.

Franklin National Review on Business Prospects

The Franklin National Bank of Philadelphia, in its latest "Digest of Trade Conditions" surveys business conditions as follows:

"The remarkable period of business activity through which we have been passing for some months cannot be expected to continue indefinitely. The total volume of business done must soon decline from sheer lack of merchandise to sell. Consumption in most lines exceeds production every day and reserve stocks on hand are constantly shrinking. This being the year of the Presidential election some disturbance to business may be expected from the mid-summer conventions and the fall election. We have grown so used to disturbances that the effects of the campaign this year may be minimized but it is only natural that some let-down in business shr uld take place between the dates of the nominations and November 2d."

The Franklin National Bank reported aggregate resources at the close of last year of $85,059,000 and deposits of $66,090,000, the latter comparing with $33,323,000 November, 1914, a gain of approximately 100 per cent. Earnings for the last calendar year amounted to $574,227, of which $300,000 was distributed in dividends and $274,000 added to surplus and undivided profit account.

Levi L. Rue Again Heads Clearing House

At the recent annual meeting of the Philadelphia Clearing House Association, Mr. Levi L. Rue, president of the Philadelphia National Bank was re-elected president of that organization and John G. Boyd was re-elected secretary. The following were elected members of the Clearing House Committee: E. F. Shanbacker, president Fourth Street National Bank, chairman; Charles S. Calwell of the Corn Exchange National Bank; Joseph

Wayne, Jr., president of the Girard National Bank; William J. Montgomery; C. S. W. Packard, president Pennsylvania Company for. Insurances on Lives and Granting Annuities; William A. Law of the First National and William R. Nicholson, president of the Land Title & Trust Company.

E. P. Passmore to Become President Bank of North America

Announcement is forthcoming that E. P. Passmore will retire as governor of the Federal Reserve Bank of Philadelphia on March 1st to accept the office of president of the Bank of North America, which has the distinction of being the oldest bank in the United States. The position of president of this bank was recently made vacant by the retirement of Charles H. Harding, owing to illness. Lincoln A. Passmore, a director, was elected to fill the presidency temporarily. At the same meeting at which Mr. Harding presented his resignation, John W. Whiting was made an assistant cashier. The following directors have been added to the board: Charles O. Alexander, Leonard T. Beale, Marvin A. Neeland, James D. C. Henderson, Walter Erben and Samuel D. Jordan.

Governer Passmore has made an exceptionally fine record in directing the affairs of the Federal Reserve Bank of Philadelphia, especially in connection with the heavy responsibilities of war financing. He became governor on February 8, 1918, and during his incumbency the resources of the Third District Bank have more than doubled to $456,000,000. Mr. Passmore was previously associated with the Franklin National Bank as vice-president.

William R. Nicholson, Jr., son of William R. Nicholson, president of the Land Title and Trust Company, has been elected a director of the Textile National Bank.

Stockholders of the Olney Bank have voted to convert the bank into trust company with increase in capital from $50,000 to $125,000.

Bank and trust company depositories of municipal funds paid to the city treasury in interest on deposits during the past year $324.870 the rate of 22 per cent. per annum.

The West Jersey Trust Company of Camden, N. J.. has increased its capital, from $1,000,000 to $2,000,000.

Charles J. Rhoads has assumed his new duties as president of the Central National Bank of Philadelphia.

Directors of the Colonial Trust Company declared an extra dividend of one-half of one per cent. in connection with the last quarterly dividend of 2 per cent, and transferred $25,000 to surplus, increasing that account to $300,000,

The Logan Trust Company reported earnings during the last fiscal year of $165,000, equal to 161⁄2 per cent. on capital. Deposits totaled nearly $10,000,000 last September.

The Central Trust and Savings Company has added $50,000 to surplus, making the total $650,000.

Boston

Special Correspondence

Credit Curtailment and Money Market There is a growing suspicion that the Federal Reserve system is not functioning the way its engineers expected and that control of bank borrowing through advance in discount rates is a matter which the future must determine. Increase of rediscount rates on commercial and agricultural paper to 6 per cent., with rate of 434 on Treasury certificates and 51⁄2 per cent. on Liberty bonds and Victory notes has produced contraction of bills based on commercial paper, but it has also given a decided impetus to new borrowing on Government obligations, thus defeating the very purpose of deflation which the Federal Reserve Board has in view.

The necessity of strengthening reserve position, especially in view of the continued breakdown of foreign exchange and gold exports, is shown by a decrease in gold reserve of the Boston Federal Reserve Bank of nearly $22,000,000 to $144,490,000 for the week ending January 30th. During the same week there was an increase in the amount of bills on hand, mainly due to commercial paper rediscounts, from $184,244,000 to $212,529,000, while notes in circulation also showed an increase of $4,000,000. Since the Federal Reserve Board initiated its policy of advancing discount rates the Federal Reserve Bank of Boston has continued to increase its liabilities. Since early in November Federal Reserve notes in circulation have increased from $218,-. 358,000 to $234,991,000 while bills on hand, although changing largely in character, have increased over $11,000,000.

It is quite apparent that at this rate there cannot be much prospect of early deflation of excess currency and credit. The member banks are not to blame. They are co-operating as best they can to support the policy of the Federal Reserve Board by enforcing liquidation of war paper carried as a basis for loans, by discriminating against non-essential and speculative credits and by a general tendency toward greater conservatism in employing their funds. Nevertheless, the demand for accommodation from regular commercial borrowers grows apace with prices still on the increase and production, so far, showing no apparent signs of abatement. The problem of deflation is regarded as one that goes far deeper than control of bank borrowing.

There are five National banks in Massachusetts with resources each in excess of $25,000

000.

Liberty Trust Company Increases Capital

Stockholders of the Liberty Trust Company of Boston voted at their recent annual meeting to increase the capital stock of the company from $200,000 to $500,000. The increase will be provided through an offering of 2,000 of the new shares at $100 a share and the remaining 1,000 shares will be sold at $225 a share. The last recorded sale of the company's stock was at $270 with book value placed at $300.

The Liberty Trust Company has been scoring substantial progress, the banking department reporting at the last call date $4,638,000 deposits and savings department assets amounting to $1,367,890. The last report showed surplus and undivided profits of $380,808. George B. Wason is president; Melvin O. Adams, vice-president; Allan H. Sturgis, vice-president and treasurer; Wm. H. Sumner, assistant treasurer and J. Henry Milley, assistant treasurer.

The First National Bank of Boston has issued in booklet form a very timely and useful collection of charts which show fluctuation of foreign exchange rates for the year 1919. These charts are computed on a weekly basis from closing demand quotations.