whose aim is a banking business, the large foreign-exchange and money-order houses through which the bulk of this business is conducted are even more deserving of censure. The savings which are intrusted to the immigrant banker are customarily accumulated toward the purchase of steamship tickets or for an ultimate transmission abroad, and the facilities for carrying on this business can be readily obtained by the immigrant banker without any requirement whatever as to his own financial qualification, reputation, or business experience. The ease with which arrangements can be made with reputable banking houses-through solicitors or otherwise--for the transmission of money has been described as a potent factor in the development of the immigrant bank. Various bankers of the more responsible type have assigned as a reason for the Italian predominance in immigrant banking the fact that the business requires no capital, no property, no business experience, no education, and no responsibility. The small grocer, clerk, or saloonkeeper has sufficient intelligence to appreciate this, and he reasons that he might as well derive some of the profits which the business offers. He knows that he may rely upon the blind confidence which the Italian immigrants place in the leaders and business men of their own race. It is easy for him to secure the agency for a few steamship lines. It is perhaps easier to get the money-order blanks of some well-known banking house. He has nothing more to do but write the word "banca " on his window, bedeck a corner of his store with flaming steamship posters, and open his money-order book and his safe for business.

STATE LAWS ON THE SUBJECT.

It was impracticable to attempt a digest, or even a full synopsis, of all the laws of the various States having a more or less direct bearing on the regulation of immigrant banking. The difficulties of such an undertaking are manifest. It would call for a careful study of the banking statutes of every State. In some States it would require an examination into the provisions of the general corporation laws. It would probably necessitate in many instances an investigation into decided cases in order to ascertain the interpretation and application of the statutes. Such a thorough and accurate compilation was not deemed necessary.

For the purposes of the present report it is sufficient to give a general classification of States according to the nature and character of their laws in regard to private banking, and then to submit a somewhat detailed study of laws which have recently been enacted by certain States with the particular object of regulating immigrant banking. The following classification is based upon a study of state statutes, upon information gathered in the course of the field work of this investigation, and upon the replies received by the Commission in answer to letters sent to the various state bank commissioners. In the States of Delaware, Nebraska, Nevada, North Dakota, Oklahoma, Rhode Island, and Wisconsin private banking is virtually prohibited. In these States no individual, firm, or corporation is legally permitted to do a banking business (not always defined) unless regularly chartered or incorporated as a state, national, or savings bank under the laws of the State, some other State, or the United States. In spite, however, of such a prohibitory law, con

cerns performing the characteristic functions of immigrant banking do exist in several of the States mentioned.

In California, Colorado, Florida, Idaho, Indiana, Kansas, Missouri, New Hampshire, Oregon, South Dakota, West Virginia, and Wyoming the laws are such as to make it unlawful for any persons to engage in the banking business without due authority from the State and without being subject to the control and regulation which is exercised over regularly incorporated banks. While these laws are not aimed directly at immigrant banking, their provisions seem clearly broad enough to cover that business. Immigrants doing an unauthorized banking business, or, at any rate, openly receiving money for transmission abroad, are nevertheless found in nearly every one of the above-mentioned States. In none of these States, except Colorado, are they believed to be under any regulation or supervision. In Indiana and Missouri, particularly the latter, these immigrant institutions exist as full-fledged banking concerns without apparent control or regulation, and seemingly in open violation of law.

Alabama, Arizona, Connecticut, Louisiana, Mississippi, New Mexico, North Carolina, Utah, and Washington legalize private banks, but impose regulations regarding their capital, reserve, advertisements, supervision, and examination. All, with the exception of Washington, require reports to be made to the state banking department. With the exception of Connecticut, these are States having few immigrant bankers. The law of Connecticut prohibits private bankers from using any corporate or artificial name and from receiving deposits as a savings bank. It also requires corporations, partnerships, or individuals, receiving money for safe-keeping or for forwarding, to report to the bank commissioner that they are so engaged, and to deposit a $10,000 bond with the state treasurer. This bond provision has not, in the opinion of the Connecticut bank commissioner, been in operation for a sufficient length of time to test its effectiveness. In the laws of Iowa, Maine, Michigan, Minnesota, Montana, Pennsylvania, Tennessee, Texas, and Virginia, there are only a few minor provisions relating to private banks. These provisions are chiefly regulations forbidding the use of the word "bank " and similar terms by unincorporated and unauthorized institutions. In none of these States, except Pennsylvania, are private banks subject to any supervision; and in Pennsylvania the supervision is exercised over those banks only which have started in business since the passage of the act of June 7, 1907. The significance of this situation is all the more striking when it is considered that in Pennsylvania alone there are over 400 private concerns doing an immigrant banking business. Michigan and Minnesota each have as many as 50, and Iowa at least 10.

Arkansas, Illinois, Kentucky, Georgia, Maryland, South Carolina, and Vermont have no laws whatever regulating private banks or immigrant banking concerns. In one of these States, Illinois, it is estimated that there are at least 275 immigrant banks.

Massachusetts, New Jersey, New York, and Ohio have attempted special legislation regulating immigrant banks. The Massachusetts and New Jersey laws have worked successfully; the Ohio law has been unsuccessful. New York has made two attempts to regulate the immigrant banking business. The old law (act of April 22,

1907; amended May 23, 1908) proved unsatisfactory and ineffective. The new law (act of May 23, 1910) was passed after the close of the present investigation, and information as to results obtained from its actual operation is not, therefore, at hand. It is, however, a complete and comprehensive statute directed against the main evils of the immigrant banking business, and because of the attention which it deserves it is printed in full in the complete report of the Commission.

The law of New Jersey (in effect July 4, 1907; amended in 1909) prohibits any person or corporation from transmitting money to foreign countries, or buying or selling foreign exchange, or receiving money on deposit to be transmitted to foreign countries, without a certificate of authority from the commissioner of banking and insurance. It further provides that nothing in the act shall be construed as authorizing any such person or corporation to receive money on deposit for any other purpose than that of transmission abroad. In order to lawfully receive deposits for safe-keeping or savings-that is, to do a banking business-authorization must be obtained under the banking law of 1895, which law explicitly subjects all private banks to the supervision and control of the department of banking and insurance and imposes heavy penalties for every violation of the statutory provisions.

The Massachusetts law (enacted in 1905; amended in 1906, 1907, 1908, and 1909) applies to all persons, partnerships, associations, or corporations engaged in the selling of steamship or railroad tickets for transportation to or from foreign countries, or in the supplying of laborers, that, in connection with said business, carry on the business of receiving deposits of money for safe-keeping or for the purpose of transmitting the same, or equivalent thereof, to foreign countries, or for any other purpose.

The Ohio law (enacted in 1908) applies to steamship and railroad ticket agents selling tickets for transportation to foreign countries who, in conjunction, receive deposits of money for transmission to foreign countries.

In Massachusetts, New Jersey, and Ohio (and in New York under the old law) the entrance into or carrying on of the business described is made contingent upon the filing of a bond. In each State the bond is conditioned upon the faithful holding, transmission, or repayment of the money received. In Ohio it is also conditioned upon the selling of genuine and valid steamship or railroad tickets.

DIFFICULTIES OF LEGISLATION.

The greatest difficulty surrounding the enactment of legislation looking to the control of immigrant banks is in framing a law which will reach these concerns without injuriously affecting American private banking interests, and which will, at the same time, stand the constitutional test of nondiscrimination. This was the chief problem confronting the framers of the New York law. The same troublesome question arose in Ohio, as indicated by a letter from the state bank commissioner, in which he says:

It has seemed impossible to make any laws to cover this class of bankers in this State, as laws must be general in their application here, and those made to affect one private banker would affect all of the State.

This problem presented itself in Pennsylvania where an attempt was made to impose certain restrictions upon immigrant bankers. Yet the State of Massachusetts under similar conditions appears to have solved it successfully.

The matter of private banking in general does not enter into this question. Some States have seen fit to regulate private banking, while others have no laws whatever upon the subject. Where such laws exist their provisions ordinarily affect immigrant banks in an incidental manner only. On the other hand, the legislation that is necessary for the proper regulation of immigrant banks is hardly applicable to American private banks, many of which have existed for years and have always been operated by men of integrity. To bring American private banks of this character under the same jurisdiction with immigrant banks is not at all necessary for the protection of the alien. It is believed that, owing to the wide difference in the character and mode of operation of the two classes of banks, laws can be so devised as to regulate the one without injuring the other.

A very considerable difficulty will likely present itself in making any such law universally effective. In the different States there are hundreds of steamship agents, saloon keepers, barbers, boardinghouse keepers, and other irresponsible persons who are not bankers in the true sense of the word, but who, in a purely personal way, receive deposits for safe-keeping and money for transmission to foreign countries. Any law attempting to regulate the business should cover these small dealers. The evidence, testimony, and opinions in the hands of the Commission clearly indicate that this is essential. But, although the wording of the law should be such as to include all these persons, the fact remains that it will probably never be an easy matter to secure sufficient legal proof that they are conducting such a business in violation of the law. Many of those who do a business of this character, keep no record of their transactions; at least none that may be readily obtained and submitted as evidence. If the proprietor chooses to deny the receiving of deposits it will be a hard matter to secure proof to the contrary. For one thing he may issue no receipts. For another, the clannishness of the foreigner is a positive stumbling-block in securing testimony and evidence.

GENERAL OPINIONS AND RECOMMENDATIONS.

The preponderance of opinion among those who are in a position to speak intelligently on the subject of immigrant banks is that some regulation and the introduction of some element of security are absolutely necessary. The superintendent of banks for the State of New York, in a letter to this Commission, describes the extent and nature of the abuses as follows:

The abuses are most prevalent among foreign bankers doing a steamship and banking business with immigrants and the poorer classes. I should assume that from one million to two million dollars annually are lost to the owners through the operation of such bankers in this State. The operation seems to be somewhat as follows: A private banker will take deposits from his countrymen or moneys for transmission abroad, and on receipt of a sufficient amount to warrant, he absconds.

The bank commissioner of Rhode Island describes the situation in that State as unsatisfactory, and expresses the desire to secure such further legislation as will bring those doing "unauthorized banking," i. e., immigrant operators, under more effective control. The bank commissioner of Ohio, while asserting the need for legislation governing these banks, points out the difficulty in securing a law directly applicable to them alone. The commissioners of New Jersey and Massachusetts, where stringent laws have been passed, report their successful and beneficial operation. In the State of Connecticut restrictive laws went into effect on October 1, 1908. Writing a year later, the commissioner states that these laws have not been operative for a sufficient length of time to determine their efficiency.

It is probable that the bank commissioners in a number of States are not thoroughly familiar with the immigrant banking situation in those States. Replies were received from several commissioners to the effect that there were no immigrant banks within their jurisdiction, whereas this investigation showed a considerable number of such concerns in the States in question. In some of these States, particularly, an important and extensive immigrant banking business was being carried on.

In many localities visited a keen interest was shown in the problem of regulating immigrant banks. Many of the persons interviewed, who had no definite recommendations to make, nevertheless expressed a sincere desire to see these institutions placed under some effective control and supervision. It is significant that many of the bankers themselves stated that they would welcome restrictive measures. Under the present immigrant banking system hundreds of thousands of dollars annually have been lost to depositors. Unless remedies are applied, the same conditions will continue to prevail. The seriousness of the situation may be clearly seen by a consideration of the class of people upon whom this loss falls. It is the savings of the immigrant laborer which are swept away. It is true that these savings are small, but they represent all the fruits of his labor over a long period of time. The failure or abscondence of an immigrant banker brings disaster to the very class of depositors that can least afford to be exploited. His dishonesty means the ruin of a much greater number of persons than would the defalcation of a banker dealing with any other class.