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AGGREGATE AND AVERAGE AMOUNT OF DEPOSITS and number of depositors, in 31 immigrant banks, by race of proprietor
As a rule, immigrant banks in the interior communities do not handle foreign money except as an accommodation to their patrons, buying from them such small sums as are not exchanged upon their arrival at New York, and securing for them, usually from New York or local banks, such as they may wish on departure for Europe. Many of them keep a small stock of foreign currency for show-window purposes. Comparatively little foreign money is brought into the
TRANSMISSION OF MONEY ABROAD
The importance of immigrant banks as agencies in the transmission abroad of immigrant money is indicated by the fact that approximately one-half of the estimated amount of $275,000,000 sent abroad by aliens in 1907 passed through the hands of immigrant bankers. The transmission was effected by means of the "money orders" of certain large banking houses
which were placed in the hands of immigrant bankers and sold by them to their customers.
The amount of money sent abroad by various correspondent banking houses of immigrant banks in the two and one-half years ending June 30, 1909, is shown by the table below. This table is a summary of carefully prepared statements furnished by four general banking houses, the financial departments of an express company and of a steamship company, and three large Italian banks, including the New York office of the Bank of Naples. These are the leading concerns through which immigrant banks transmit money abroad.
IMMIGRANT REMITTANCES ABROAD
by various correspondent houses of immigrant banks, by country to which sent, January 1, 1907, to June 30, 1909.
a Including also some transmission to Oriental countries and to Greece. b China, Japan, Syria, also Greece and Turkey.
The remittances of immigrant bankers formed probably 90 per cent. of the total amount of money sent abroad each year by the above companies. It appears, therefore, that approximately $125,000,000 was sent abroad through these agencies by immigrant banking
establishments in 1907. The influence of the recent period of financial depression is apparent, transmissions through these nine houses falling from $141,047,381.92 in 1907 to $77,666,035.46 in 1908. In 1908 one hundred immigrant bankers, investigated sent abroad on account of their patrons approximately $7,182.675. These figures are strikingly indicative of the volume of money which passes through the hands of the hundreds of immigrant steamship agents, saloon-keepers and men of other occupations who call themselves bankers.
It is important to recognize that these transmittals of money do not properly constitute foreign exchange as it is commercially and economically understood. They are not commercial payments arising out of imports or the expenditures of tourists, but represent savings withdrawn from circulation here and sent abroad for the support of families, for payment of debts contracted prior to or in coming to this country, for investment, or for accumulation for future expenditures there. Immigrant bankers universally assert that these are the purposes for which their customers transmit funds, and this is also the opinion. of the larger financial concerns through which the immigrant bankers transmit money abroad.
During the industrial depression following the financial breakdown of November, 1907, many alien workmen withdrew their deposits from the banks and returned to their native lands. Outgoing steerage rates were very low and the immigrant wage-earners calculated that the expense of going home, of living there during the depression, and of returning to the United States with the revival of industrial activity would be less than if they remained in this country. Those with
out savings, many of whom had been in the United States only a few months, in many instances found support through the assistance of immigrant bankers. Cases are numerous where bankers exhausted their resources and brought about their own financial downfall by services of this description, their embarrassment resulting from errors in judgment as to when employment would be available. Some banks in the small industrial localities loaned as much as $20,000 in small sums to unskilled laborers. Altho the labor forces to which this assistance was extended were afterward widely scattered the bankers exprest themselves as certain that the obligations would be repaid.
The Unsoundness of Immigrant Banks
The unsoundness of immigrant banks, and the danger connected with banking of this character, are obvious. The United States Immigration Commission in its findings set forth the evidences of insecurity as follows:
1. Immigrant banks are usually unauthorized concerns, privately owned, irresponsibly managed, and seldom subject to any efficient supervision or examination.
2. They deal with a class ignorant of banking methods, distrustful of American institutions, and easily influenced by the immigrant banker.
3. The affairs of the bank and of the proprietor are, as a rule, indistinguishable. As far as legal restrictions or the demands of his patrons are concerned, the proprietor is at liberty to use the funds of the bank for his own purposes.
4. In general, the proprietor's investments are the
only security afforded the patrons of his bank. The funds of the bank become the proprietor's personal investments, and there is no limitation as to the character or extent of these investments. They prevailingly take the form of real estate, or loans on first and second mortgages, notes, and speculative enterprises. If the proprietor has no investments the patrons of the bank have no security. Neither capital nor reserve is required, and, as a rule, neither is found.
5. Men who operate these banks, particularly saloonkeepers, labor agents, grocers, and boarding bosses, are often ignorant and without any conception of the responsibility imposed. Even recently arrived immigrants find it easier to embark in the banking business than to enter other occupations which, tho less responsible, are nevertheless subject to regulation. Methods employed by bankers of this class are often very loose and unbusinesslike, and many of the immigrant bankers, notably steamship agents, advertise in a manner that is at least misleading, if not actually fraudulent and illegal.
6. Immigrant banks are radically different from other financial institutions. Their chief functions are the safekeeping of deposits and the transmitting of money abroad, and from the nature of these functions methods have arisen which are open to serious objection.
(a) Evidence of the deposit of money for safekeeping is often inadequate, useless, or entirely lacking. No reserve or other security for the depositor is required. There is absolutely no preventive or check against absconding.
(b) The purchaser of a money order receives no satisfactory evidence of his cash deposit. His receipt