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The Orlando Morning Sentinel NUMBER 4161 matter
Morning Sunday). per MAY during the administration of dore Roosevelt, the House of gan will suffer little from this public inquiry. There are many angles to the Morgan There story that Morgan opposed Roosevelt for president; that Morgan's utility companies declared war Roosevelt when he successfully pired for the governorship of New York; that at that time there was an open break between the counboss banker and the coming statesman from New York. Morgan, of course, heavily terested in utilities. The fortune, built in railroads, must have suffered considerably during recent years. And his private bank sup ported other banking enterprises, they too, probably have been profitable. And with the ernment stepping into this huge Muscle Shoals project, which will directly compete with the Morgan Alabama Power Light Co., would seem that the House of gan not great once The final blow this inquiry into what Morgan and his partners probably would term the private business the banking concern. Just where will lead, no one can say this early stage. There basic fact that shadows all else in this investigation, however, and that this: Mr. Roosevelt wanted amine banking conditions and banking business in this country, he did not start with the He went to the top of the heap, the head of the financial hold of the country and asked the boss banker of the world to come down Washington and swer some questions. When you consider the influence that such man with such must possess, you must mit that the president picked tough for himself. As usual date, he delivered his man and now he to tell the world whether he good banker or one whose record should be criticized.
Banks
New Orleans jubilant over banks, which this week leased 32 millions of dollars frozen accounts. Orlando, still patiently waiting for some definite information an optimistic nature concerning banking problem, will likewise jubilant when our situation cleared up. Insofar The Sentinel to learn, there no definite news other than the same note of mism that was given out early March. Those in charge of the bank continue to move heaven and earth to reopen and The nel's prayer that they are cessful before the end of another month.
Florida came into the national eye for some very favorable nancial publicity last week when Garet Garrett, economist for The Saturday Evening Post, paid high tribute to Romfh of the First National Bank Miami. Declaring that "there are only two reasons why bank fails: judgment and character." Mr. Garrett also said: "There are only two reasons bank does not fail: again, judgment and character." But read Mr. Garrett's story Miami's Banker Romfh and how he operates bank for the benefit the depositor, told in The Saturday Evening Post: the case of an exceptionbank. Take in the unlikeliest place you might think Florida. Florida bank to have been still 100 per cent solvent and paying its depositors in full demand must have survived, first, one of the most disastrous real estate booms of this generation, and then immediately the worst depression in the life of the country. The First National of ami did. The head of it Romfh, of North Carolina ancestry, born common sense in Arkansas. During the Florida land boom throughout the state because he refused to lend his positors' money inflated real He had seen booms before. He had seen groves torn orange the roots to make room pineapples, and then the pineapple groves torn out to make room for oranges again, indicating to him that human beings were mercurial and expectant; besides, he never forgot how much land there Florida. "There have been so many runs his bank that he cannot remember all of them. When one bad enough to be interesting, he has photographed from the street and hangs the picture in the bank souvenir, for his depositors at. Once the Comptroller of the Currency and some friends to Miami to swordfishing him. When they went around the bank to pick him up, they found going They backed of and then telephoned to say they were sorry have to go fishing without him. be down right said; went fishing and was gone two weeks. From the top of the boom the slough of depression, his deposits fell from million dollars to twelve million dollars, during all that process of liquidation his bank was never less than per cent that against of deposits there less than $73 in cash and current securities. As the deposits fell, this percentage of liquidity steadily rose until 95. On Saturday, March fourth, the declared bank holiday the state of Florida to save its banks. The First National of Miami refused to close, and that day out half million dollars more demand. The president said: stay open and keep paying long the Government Washington does not fail me, or until makes me shut On Monday, March sixth, under the Federal proclamation, he was obliged shut up. Thereupon he took page space in the Miami newspapers and printed in full detail the ing assets of the bank, that every depositor might his money was safe. was representup to 90 per cent by three items -namely, in the vault, (2) Government bonds, and, (3) state bonds such as the United States Government accepts at par security for postal savings. for the remaining 10 per cent, any depositor would have been glad to take his share of such other assets loans and discounts, railroad bonds, utility bonds, mortgage loans and real estate. you ask him how he does will make no mystery of begin with, the depositor first concern. He makes no reservation in his mind about the contract, such as some bankers of late have been saying what bank deposit sents really is not much actual money payable on demand, but participation in the assets of the bank. He says that what deposibrings to the bank what entitled to receive the unequivocal money. the moral contract between banker and depositor. As to how bank shall keep itself able to perform the contract, he has formula that he found for himself. It is this: The total resources of to say, its total its power to pay back its depositors. From this total deduct cash and Government bonds. The mainder represents risk, or what the bank has done with its depositors' money in the way of loans, discounts and investments. And the total of this risk should never be more than four times the capital and surplus of the bank in good weather, not more than two and half times in bad weather. This what he calls the ratio of loans and investments to the capital structure of bank.
"Does banking pay on that basHe says did not pay business, he would not be business. It has paid as much 20 per cent year.
