Chapter IX:
Savings and Investments
When asked what they are going to do in America, nine immigrants out of ten reply "Make money." When asked what they are going to do with this money, they say "Save it." Thrift is thus seen to be the companion of adventure in the new country, and it therefore becomes important for us to know what part savings can take in the economic assimilation of immigration.
The American workman and the immigrant, with their first wages in their pockets, regard the outlook quite differently. The native American has fewer obligations, and, therefore, thinks of how he can best have a good time; and if he saves any money, how it can be made to earn more money. But rarely is the immigrant without obligations to his home people. In all probability he has to return money borrowed for the trip; to support the family at home; or he has to meet obligations in the nature of debts or taxes. He is also expected to succeed, and in turn to help others to come to America. The increased needs of his countrymen, due to the war, have further intensified his sense of devotion and have increased his responsibility to those in his home country. Here are qualities which are invaluable assets to America —fidelity to obligations, gratitude for help, sustained thrift in situations where waste abounds, and willingness to suffer privations to help others. The prevalence of these qualities so often accentuates even the natural thrift of the immigrant, that it sometimes explains his willingness to live under wretched conditions and what seems to be his delay in adopting the American standard of living.
In addition to the obligations which the immigrant owes to family and friends, a strong appeal is being made to him by the home country which is now impoverished by the economic burdens of the war. He is, therefore, contributing to relief and reconstruction measures, and is buying foreign securities and otherwise assisting his home country. He foresees that in helping to stabilize conditions in the native country he is safeguarding the future of those who have helped him to succeed in America.
But after meeting these many obligations, the immigrant, because of his thrift, still has a considerable amount of savings which, for lack of something better to do with them, and for their safeguarding, he often stuffs into his belt or under a mattress. The world of capital, investments, dividends, stocks and securities is unknown to him and when he seeks to acquire a property interest in America, he becomes easily the prey of many exploiters.
The immigrant bank is the one agency which is invariably at the immigrant's disposal, and which is always ready to minister to his economic needs. Because he is a stranger and is unable to secure advice and cooperation from American institutions which could help him to put his savings into circulation at a safe profit to himself, he readily turns to this banker. This immigrant banker performs many services for the immigrant. He helps him to write letters home and transmits his savings. He helps the immigrant to find a better job in order to increase his savings. He offers to draw up documents or otherwise help him with his legal affairs here and abroad. He encourages the immigrant to buy from him a steamship ticket for his friends or family. He offers to keep his baggage or valuables while he is traveling from place to place. He advises him concerning investments, and takes his money on deposit. By means of these services and, because of the prestige in which bankers are held in his native country, the immigrant banker soon comes to hold an important place in the immigrant's affairs. For the immigrant is convinced that his fellow-countryman has succeeded, and that he occupies an important position in American financial affairs. What, then, is more natural than to trust a successful man with money, especially if he is a compatriot?
One would naturally suppose that the immigrant banker, whose relation to the immigrant is also that of counselor, confidant, agent and friend, would be representative of the most responsible racial leadership. One would suppose also that the American business man would be interested in the way his banker conducted his affairs, if for no other reason than to maintain the prestige conveyed by the name "American Bank."
That neither supposition is correct is indicated by the character of the so- called immigrant banking institutions which have grown up in America. This bank may be in a grocery store where the till is also used as the safe deposit box; or it may be in the hotel where the immigrant lodges; or in the commissary's office in the railroad camp; or it may be simply in the pockets of the various representatives who go into industrial centers to collect money for the "central office." On the other hand, the bank may be a well equipped highly responsible house with correspondents abroad; or it may be the foreign branch of an American bank; or again, it may be the American branch of a government banking institution in Europe.
To the immigrant, a bank is a bank whether it is located in a shop, office or hotel. Since he has no practical means of knowing which are reliable, he will invariably entrust his affairs to the one showing the greatest evidence of prosperity; or to a compatriot who professes friendship; or to an institution carrying the largest advertisements in the foreign language press.
The past experiences of the immigrant with these banks are not particularly pleasant for the average American to contemplate. For many years, the immigrant upon his arrival at the Battery at the Port of New York, was despoiled of his small capital by the porter, runner, cabman, expressman and guide, many of whom were in collusion with so- called bankers. He therefore began his life with resentment in his heart and with a greatly diminished respect for the sacredness of the property of others. His resentment was further increased by his experience with the private banker to whom he was taken, especially when he was ready to send part of his wages to the family in the home country. In order to be sure that his help reached the family promptly, he paid high rates for transmission and was often persuaded to cable money, only to hear from his family many months later, that it had never been received. In the meantime, while the suffering of his family grew, the banker was using for speculation the money which he had accepted for transmission. When the immigrant paid in full for steamship tickets to bring over his family, months often elapsed before the money was sent; and when he bought a ticket on the installment plan, the conditions sometimes proved so hard that he frequently lost his first payments. When he wanted to buy a home, worthless sand lots were often sold to him, or he was enticed into colonization schemes. When he deposited his money for safekeeping, he frequently received no interest, and it was not unusual for him to find that his banker had closed his grocery store or steamship ticket agency bank and had gone on a visit to his native country. When he wanted to buy a partnership, there was the ever ready business broker who sold him, more often than not, a worthless proposition.
For many years a careless disregard of the immigrant's savings and an indifference to his exploitation have prevailed among American business men, especially among American bankers. They have, with a few exceptions, scarcely raised a protest, and much of the resentment of the immigrant toward Americans is due to the bitterness caused by the immigrant's first financial experiences in America. This resentment expresses itself in many ways. The immigrant workman, discouraged and resentful because he has lost his savings, sometimes deliberately and again unconsciously decreases his output. The immigrant settler, disappointed in buying a home, and separated from his family because he has lost his savings, drifts from job to job and from town to town, and may eventually return to his native land, thereby steadily increasing labor turnover. The immigrant consumer, having lost much of his self- respect and standing in the eyes of his countrymen because he has lost his savings, lowers his standard of living and thus decreases his purchasing power in the American market. The immigrant investor, deprived of a property stake in America because he has lost his savings, joins the forces of unrest because he has nothing to lose. The immigrant thus exploited, without interest in his job, with no home or property to lose, becomes in time not only the exploiter of his fellow countrymen, but the enemy of America.
For, much as the immigrant blames his fellow countrymen who exploit him, he blames even more the great American nation which seems so little to concern itself in the protection of his interests. He blames the nation for allowing real estate sharks to sell to him a lot for a home that proves to be a sand plot under water or a section of marshland that is unfit for cultivation and remote from transportation. He blames the nation every time he becomes involved in a colonization scheme that is planned by a lumber company for the purpose of clearing its land of stumps. He blames the nation for permitting the operation of blue- sky schemes, and has come to believe that his money is safer in the old country. He blames the nation every time he loses his savings through a "run on the bank," and only by a very slow process and a very expensive process does he in time learn to entrust his funds to a Postal Savings Bank or to an institution that has a better reputation than the private immigrant bank. One can understand how the immigrant who has seen the savings of years wiped out over night might regard the Bolshevist propaganda, and how he would come to believe that "direct action" is better than the slow processes of law and order. And his native country which is also interested in his success also blames the American nation for what happens to their immigrants. When he returns home and tells the dramatic story of his losses, it hurts American business prestige abroad, even as it affects the attitude of that country toward America when it comes to decide upon new emigration policies. It has thus come about that the more responsible immigrant banks, supplemented by branches of foreign government banks, have come to form a strong link in the racial economic system in America, to facilitate the use of immigrant savings for the home country; and to provide measures of protection from the more unscrupulous immigrant bankers against whose methods neither the American banking business nor the law has prevailed.
America has thus gained a reputation for being an unsafe country for the investment of immigrant savings, a reputation which is capitalized by competitors of the American banker. This reputation is partly responsible for their being in circulation so little of the savings of immigrants—a distinct and vital loss to business expansion. In a recent report it was stated that the United States, with an estimated population of 106,700,000, has only 12,600,000 saving depositors, of which but 565,000 were Postal Savings Bank depositors; while in Belgium, with a population of 7,571,000, there are 3,063,000 savings bank depositors; in Denmark, with 2,021,000, there are 1,315,000 depositors; in Germany, with 66,715,000, there are 27,206,000 depositors; in Japan, with 56,350,000 population, there are 25,600,000 depositors; in Holland, with 2,692,000, there are 1,262,000 depositors. These foreign countries, with a total population of 171,357,000, had savings bank depositors of 77,000,000. Over 42% of the population were savings bank depositors as against about 11% in the United States. Undoubtedly the large number of immigrants who hoard their savings, and who are not yet drawn into the American savings bank system are to a considerable extent responsible for this low percentage.
This failure to protect the savings of immigrants and to interest them to use American banking institutions will eventually have an important bearing upon the future supply of immigrant labor. It is quite possible that, unless immigrant labor is obtainable, and the cost of production can be lowered so as to enable American goods to compete with those made abroad, American industries will have to be set up in countries where labor is available. American capital, even to a greater extent than at present, will then be searching for sound opportunities to establish paying enterprises in countries which have plenty of labor. Every foreign nation is ambitious to have such industries developed. The immigrant in America, who is constantly in touch with his native country, is an invaluable ally in reporting such opportunities and in securing concessions; but at present his services are used by the racial economic system rather than by the native American system.
The whole relationship of the bank to industry is one of great importance to the immigrant. To take but one illustration—the way in which profit sharing funds and bonuses are paid to workingmen—it has been suggested that instead of paying these directly to the workingmen that they be paid to the bank; that the employee be given a pass- book, and be free to draw or leave the amount, as he sees fit, and that interest rates be increased in proportion to the length of time the deposits remain in the bank. An interesting plan, well adapted to immigrants, has been proposed in the following form:
"The bank prepares a pass- book with name and check number for each employee. The employer notes on the pay envelope the bonus paid and how to deposit it. The pay envelope with pass- book is presented at the bank, the envelope serves as a deposit slip so that no writing or signature is required as only the owner can receive credit. The amount of deposit and interest to be earned at maturity is entered so that the employee can see the full benefit derived, and have a visible and tangible evidence of his co-partnership in the business. Interest is calculated on the basis of 7% , 3
by the employer, only if the account is allowed to run to maturity and undisturbed (5 years) otherwise only 3 is paid by the bank. Interest at this latter rate is calculated by the bank and shown on the card, so that the bank can know the interest reserve necessary for it to carry. If the employee dies, total interest as shown in his pass- book is paid, the employer reimbursing the bank for the amount in excess of that actually earned at 3 . In case the employees wish to remove to other localities, an endowment savings bond or certificate could be issued which might be purchased with their funds at any time that a sufficient amount had been deposited, to yield the same rate of interest—though not to include the company interest if that be a part of the plan adopted. Old age pension funds can be deposited in the same way, giving the employee the visible knowledge of the amount, rather than the promise of a certain amount."
It is the careful consideration of plans like these which will enable the immigrant to come into contact with American banking institutions and which will give him confidence in them, as he sees his savings earning interest, which will counteract the transmission of such vast sums abroad. Before the war immigrants transmitted more than $400,000,000 a year to those countries from which such information was available. The average savings at present of Italian laborers is said to be about $25 a month and there are at least one million such wage earners in this country. The average for the Greeks is higher, as 90% of them are wage earners. The average transmission of money per year of the immigrant to his family abroad has been found to be approximately $200. One post office from a village in Poland reports that the savings per man averaged $665 per year for each of the 37 men who had emigrated from that village to America. It is stated that 60% of the steamship tickets sold to emigrants are purchased with American wages. The failure, in 1910, of five racial banks in New York State showed that some 80,000 depositors had over $9,000,000 on deposit.
The American banker must take the responsibility for the situation in which the immigrant finds himself, with respect to his savings—unprotected, unwelcome in American banks, lacking in confidence in American banking institutions, besought by racial banks to send his money home, and a prey to every variety of exploiter. The American banker must also take his share of the responsibility for the unrest, the labor turnover, the resentment against assimilation, and the lack of sympathy with American government institutions which have resulted from the immigrant's financial experience in America; for it has been his responsibility to safeguard and make fruitful the savings of immigrants. The American banker must further take the responsibility of integrating the racial banker into the American financial system, having in view the fact that this should be undertaken early in the latter's career, because, should integration be delayed until the racial banker becomes a power in the financial world, he will then be less likely to use his influence to bring his fellow countrymen into closer relation with American life.
Successful as the American banker has been, beyond his own dreams of wealth and power, dealing as he has with millions and billions, he has been averse to doing business with "foreigners." There have been many reasons for this. Like the merchant who has ignored the foreign market in America, the banker has not cared for the immigrant's savings because he did not need them. Representing, as he does, the most conservative element in American economic life he is further removed from the immigrant and, generally speaking, he possesses a greater degree of race prejudice. He knows that the immigrant's dollar bills are crumpled, that his clothes are dirty and that he often smells like a coal mine or a sheep ranch, and he believes that such patronage will hurt his present class of business. He does not see why he should extend his banking facilities beyond his respectable corner into the industrial plant where the immigrant works, or into the foreign section where he lives; nor does he welcome the idea of opening his doors to the "hordes from across the railroad track."
The American banker also knows that the individual profits are small in immigrant banking, for it requires as much work to handle a $100 bond as a $50,000 bond. Also he is reluctant to enter a field where the name "banker" has such an unsavory reputation, for he knows that much of the enormous profits of the immigrant private bankers have been made through exorbitant charges and manipulation of funds. The American banker to- day does things on such a big scale and has such a commanding view of the business situation, that to him the immigrant is likely to be considered as "pretty small fry."
If the American banker regards the savings of the immigrant as "small fry," the European banker does not. He considers it well worth his while to establish in America elaborate institutions for the collection of such savings. These institutions range from American branches of European banks to consulate's offices which for this purpose have expanded their activities. The European banker is causing economic surveys to be made in immigrant countries in order to ascertain if the immigrant does not need greater protection and assistance. He is ready to make loans and extend credit to his countrymen in immigration countries in order to enable them to attain a more rapid success, in which the banker will participate. In financial undertakings, small or large, foreign governments cooperate with both the banker and the immigrant, of which the following is an illustration:
Recently, there was under contemplation a federation of societies belonging to a certain racial group in America. It required several thousand dollars to begin the work. Their leader, a naturalized citizen and a leading educational authority, when asked where he intended to get the funds replied: "Oh, from the Ambassador to America." And to the question, "Why the Ambassador?" he replied, "Because he is interested in our success." It did not occur to this leading citizen of America that this country would be interested in a federation of organizations in its own territory, nor did it occur to him to turn to a native American agency for help.
Since it is important for foreign bankers, working in the interests of their country, to interest immigrants to purchase homes and land abroad out of these savings from American wages it should not be less important for the American banker to perform a like service for America. Since the profits from the transmission of immigrant's savings from American wages are used by foreign bankers to finance European business enterprises, it should not be less important for the American banker to earn these same profits to put into American business enterprises. Since European bankers have shown a tendency to direct the activities of the institutions which handle immigrant savings, should not the American bankers see the necessity of having like institutions wholly under American leadership?
That American financial interests intend to cover this field is shown by the way in which they have recently begun, not only to study the subject, but to try experiments. There are, among many, two noteworthy instances of this intention:
A trust company in Cleveland has developed an enormous business with the foreign born residents in that city through the establishment of some twenty- seven neighborhood branches, many of which are largely patronized by immigrants. As a result of its foreign business, it now has direct connection with over two thousand banks in other countries. The system of neighborhood branches enables foreign born men, women and children to acquire "the banking habit." Three days a week these branches are open from five to eight P. M., thus enabling the worker to stop at the bank on the way from work. In its special efforts to secure the banking business of the foreign born population, this trust company has recognized its special racial needs and has organized a number of personal service activities to meet them. The spirit and scope of this service is expressed in this extract from a circular printed in polyglot and distributed to the immigrant clients:
"Let us assist you in solving your daily problems, regardless of their nature. We are ready at all times to give you personal advice, without charge, in any trouble, financial or otherwise, which you may meet in your daily life. . . . We want you to get acquainted with us, and to feel that we are interested in you at our office. . . . You will find a man who can talk with you in your own language. He will show you the most courteous attention and render you the best service possible. . . . Do not run the risk of being overcharged, or of dealing with irresponsible agencies. Ask us for prices before sending money to any foreign country. . . ."
As a result of an extensive educational campaign through advertising and publicity and conferences with leaders of the racial groups and their societies, these branch banks are now used by many immigrant men and women to meet such simple banking needs as the payment of gas bills, furniture instalment accounts, and insurance premiums. On certain days, that are well advertised in advance, experts on the various American and home country relationships of the foreign born, hold office hours at the various branches and give aid and information to any person who applies, even though not a depositor. This is a fundamental Americanization service which frequently prevents the exploitation of the foreign born, facilitates his personal adjustments in the new country, and promotes trust and confidence in American business institutions.
Practically all such foreign departments in order to meet the needs and international affiliations of the immigrant, also engage in the sale of steamship tickets, in exchanging money, in drafting affidavits for passports and visas and in preparing other technical documents of a semi- legal nature. Advice in any foreign language is also given without cost regarding any investment or business proposal, especially real estate transactions.
The advertising manager of a trust company in Youngstown, speaking of their foreign department says:
... A large building, with as much floor space as the average Ohio bank has, was erected especially for a foreign department. A man well versed in the complicated science of foreign exchange, and who could speak several European languages, was secured as manager and the department was formally opened for the transaction of business. For several years the department lost money. Difficulty was experienced in getting the agency of the best steamship lines, because local agents insisted they had an exclusive privilege in handling them. But as the department's business grew the steamship lines realized that it would sooner or later get the bulk of the foreign business in Youngstown and before long the department was able to sell tickets on all steamship lines. The bank not only sold steamship tickets, but personally looked after incoming and departing foreigners. Often the banking room was filled with customers about to return to the old country. The lobby on these occasions was packed with bundles, baggage, women, children and dogs, and frequently a brass band accompanied the returning Europeans from the bank to their train. The bank was also used as headquarters for immigrants coming from Europe to Youngstown. Often the department presented a weird, old- world scene when filled with peasants from Croatia, Roumania or Serbia, clad in their native costumes. The department assisted these newcomers in finding their friends, helped them get boarding- houses, and in many cases told them where to apply for work.
"The department also opened a sort of semi- official post- office. They furnished their customers with postcards and letter- heads and arranged to have customers' mail delivered at the bank in the bank's care. This proved to be a popular move. The post- cards had pictures of the bank upon them and were sent to all parts of Europe and helped to advertise the institution abroad as well as in the United States.
"In order to acquire good banking connections across the water, the bank sent the manager of its foreign department to Europe where he visited England, Germany, France, Italy, the Balkan States and Russia, and arranged for a splendid line of banking connections with reliable banks. As a result of this trip the foreign department was able to send money to all parts of Europe with the smallest expense and with the greatest assurance of its safe arrival.
"But the hardest problem of all still remained to be solved, and that was to win the confidence of the foreigners. They seemed to be suspicious of American banks and were inclined to withdraw their money without warning upon the slightest provocation. Any sort of a wild rumor was enough to start a run upon the foreign department. A number of these runs occurred, some of them quite serious, but the same policy of stopping them was carried out in each case and resulted very satisfactorily. The plan was simple, but very effective. Depositors were paid off as fast as they could be waited on. It was found that it did no good to argue with the foreigners until after they had withdrawn their money. When they had their money back they were willing to listen to reason. After several big runs a plan was finally adopted whereby customers who drew their money out because they were scared were told they should start a savings account that drew no interest. They were informed that they could then withdraw their money when- . ever they wanted to without imposing upon the bank. A large number of these non- interest bearing savings accounts were started, but after depositors saw that the bank met each run promptly and seemed to grow stronger after every run, these accounts were gradually converted into interest-bearing accounts.
"After over twelve years' experience the foreign department has over $7,000,000 of deposits all owned by foreigners. It has ten thousand depositors who have an average of over $700 per capita, which is a very high per capita deposit for this section of the country. The department has nine tellers who speak fourteen languages. These tellers not only attend to the financial wants of their customers, but act as so many bureaus of information and furnish most valuable aid in assisting their customers to understand and appreciate American ideas and ideals. Besides being a signal success as a department of the bank, the foreign division of the bank has performed a great civic duty in giving the foreigner the protection he so sadly needs in money and business matters."
There are many other movements which indicate that the assimilation of the immigrant, through his savings, is under way. The more responsible immigrant private bankers, aroused by the complaints of immigrants against exploitation, have under consideration the formation of a clearing house, to protect immigrant savings. A savings bank association is planning an advertising campaign in the foreign language press to acquaint the foreign born with American savings institutions.
In the field of credits, the National Association of Credit Men has sent letters to 33,000 of its members in which it urges them to participate in an educational movement to establish the confidence of foreign born people in savings institutions.
Are not these movements, however, undertaking to reap a harvest in a field in which they have not yet planted the seed? If American interests wish to make sure of this harvest, they must first do the planting and then the cultivating. It is therefore to the American banker that this country looks to do his share of the economic assimilation of immigration through the savings of immigrants; and to accomplish this the immigrant needs to be drawn more fully into the American financial system.
The first task is to educate the immigrant concerning the principles and operations of American financial organizations. This should be very elementary instruction upon the nature of banking institutions, of capital, investments, dividends, stock, partnerships, prices, and how capital goes to work and what it does—things about which the immigrant has known but little in his home country. The immigrant's first information concerning them should come, not in distorted form from propagandists, but in his own language from American authorities. The object of this education should be to see that every immigrant possesses a bank book, and comes to the bank as often as possible and hears regularly from the bank, in his own language, if need be. about financial opportunities that will interest him; and how his savings are earning interest for him. This will make him feel his importance in the new country and will stimulate his attention and interest in American affairs. A bank book and a relationship to an American bank is the kind of stabilizing influence which every new arrival is bound to understand and appreciate.
The immigrant needs encouragement to invest even the smallest part of his savings. The work in the mine and plant is much harder than he thought it would be; the pile of dollars grows more slowly than he had anticipated. As his hopes are deferred, he sees the dreams of his youth slipping away. As he grows older, he is reluctant to confess to those who helped him start life in America that his high hopes have not been realized. Since he has extolled the new country, to which he had gone so confidently and where pride now urges him to brag of success and not to wail over losses, he is too proud to appeal to the friends and relatives in the old country to whom he would have turned in time of sickness or reverses or unemployment, if he had remained there.
It is therefore of considerable moment that his savings should not be lost in speculation. It is part of the justification of his faith, which prompted him to leave his home and friends, to come to America, that he should not lose the first fruits of his toil. It is vitally important that he should not be swindled in his efforts to buy a lot and establish a home. It is to the future interests of production that the immigrant be not drawn into colonization schemes which result in failures. The American banker, with his facilities for judging good from bad investments and with his power to capitalize savings should be the friend of the immigrant from the time of his arrival so he may not become discouraged because he has so little at first to invest.
The immigrant needs credit. When he gets a little money he wants to set himself up in business. His ambition leads him, perhaps, to the humble ownership of a pushcart, of a partnership, of a shop or of a little farm. To whom does he turn for help? Not to the American banker but to the racial leader, the immigrant bank, or to his consul. To such an extent is this true that one immigrant, when asked who his friends in America were, replied: "The men who loaned me money to start the little business that takes care of me and my wife." It is therefore highly important both to the interests of America and of the immigrant that American credit be extended to such ambitious immigrants, so they will get out of the habit of applying exclusively for help to their own racial economic institutions. The American banker should go further than this. Of his own initiative he should seek a closer contact with the institutions of the immigrant, and should urge American capital to go into the ownership of the racial shop, the immigrant bank, the foreign language publishing business, and the productive enterprises which the foreign born own or operate.
Economic assimilation, then, as the American banker's task, is to see that every immigrant workman as soon after his arrival as possible becomes a small capitalist through establishing personal contact with him; through furnishing attractive facilities for savings; through offering him safe and good investments; through opportunities to buy a home; through safe transmission of his savings abroad; and through conserving manpower through loans and credits.
The American banker, unless he undertakes on a national scale to satisfy the needs of the immigrant, will find himself in the same amusing and incongruous position in which the merchants is now placed. While he is furnishing capital and credits to nations abroad, he is neglecting the millions of their nationals in America. When he floats the loans of foreign nations, he leaves to companies or to individuals of each race which have their own ends to serve, whatever part the immigrants of those nations may take in the purchase of these bonds.
But the American banker has a further obligation. This is to secure the extension and full protection of American banking laws to immigrant savings, whether they be deposited or invested in America or transmitted abroad. A number of attempts have been made to secure such protection through state legislation, and the difficulty of this task is best illustrated by the experience of New York State. In 1907, the Wells Bill was passed, which was the first serious effort made to protect the immigrant. It provided that all private bankers who sold steamship tickets and accepted money for transmission should file, with the Comptroller, a bond for $15,000, conditioned upon the faithful transmission of all moneys received for that purpose. In 1918, this act was amended to include within its scope moneys received on deposit for safekeeping. The New York Commission of Immigration in its report of 1909, estimated that nearly $1,400,000 had been lost through bank failures in one year and urged the passage of a more comprehensive act, which was finally enacted in 1910. This provided for the licensing in cities of the first class, of all persons or firms who accepted deposits of money for safekeeping or for transmission abroad. For the protection of depositors, bonds ranging from $5,000 to $50,000 were required and all licensees were placed under the supervision of the Comptroller. Those who were able to file a $100,000 bond, or who were agents of express and steamship companies, were exempted.
Although a great deal of good was accomplished under this law, the largest immigrant bankers were still under no supervision and their capital, investments and reserves were not regulated nor was provision made for their liquidation. As a result of the continued losses through these banks, the legislature, in 1914, placed all private banks under the supervision of the State Superintendent of Banks. Five of the fourteen so- called immigration states have followed the lead of New York and now contain provisions which protect in various degrees the savings of immigrants.
In the absence of state legislation, municipalities have attempted to protect the immigrant. The frauds perpetrated upon him in the sale of securities became so great in Pittsburgh that a Bureau of Securities was created under an ordinance which provided that all persons or corporations offering stocks or bonds for sale should be licensed. The validity of this ordinance was questioned, and the court ruled that the matter was one for the legislature to pass upon, and granted an injunction against its enforcement. This instance illustrates both the prevalence of evils and the difficulty of securing protection.
But the difficulties of securing state legislation have led to efforts to secure Federal legislation. In 1920, a bill was introduced in Congress which provided for the establishment of a Bureau of Export Savings in the Treasury Department. Had it passed, it might have constituted a beginning in the national protection of immigrant savings. The Federal difficulties, however, are even greater than those in the states, as Mr. Paul Warburg, former Vice-Governor of the Federal Reserve Board, has pointed out in a recent address upon this subject. He says:
"This question of Federal legislation has been frequently ventilated. It could probably only be attempted, with any moderate likelihood of success, by treating the handling of immigrants' deposits and kindred transactions as matters interrelated with interstate commerce. It is obvious that an approach on these lines is not free from objections. To begin with, a very large, if not the largest proportion of such business does not come into the class of interstate transactions. In so far as it involves immigrant's deposits, made and withdrawn in the same locality, it is clearly intrastate. It would entail a very strained construction of the law to hold that remittances to Europe made from one state of the Union would constitute an interstate transaction. As a matter of fact it would involve a transaction not between two states, but between one state and a foreign country. An interstate transaction could be held to exist only if, to illustrate, a local banker of one state should send money to a banker in another state (conceivably New York) in order to have the remittance to Europe made from there. By establishing direct relations with the immigrants' old home country, it would be easy, however, for any bank or banker to keep his transactions free from the character of interstate business."
But with the greatly increasing amount of business which immigrants are doing with their home countries, the adoption of some form of national protection seems to be inevitable. Should America and the American banker fail to provide adequate protection for the savings of immigrants, it will be necessary for foreign governments, foreign business and foreign protective associations to increase their financial activities in this country, in order that such adequate protection may be given to their nationals. This they are now attempting to do, and if the volume of business increases in the future, at the same rate which it has in the past, it is difficult to see how Federal regulation can be avoided. We have encountered a like necessity before and found a way to deal with the matter, when the enormous increase in immigration necessitated its removal from state control.
While the immigrant seeks to increase his income by a proper investment of his savings, and desires to advance himself by securing credits to enter business, it should not be forgotten that he is, in most cases, first of all a wage earner. It is therefore the American insurance company, no less than the American bank, upon which we must rely for the protection of immigrants from the hardships which result from sickness, old age, and disability. It is to such companies that the immigrant family should look for assistance when death enters its home. Any man needs such protection when he lands in a strange country with only enough money to carry him to his first job; and who is confronted with the possibility of deportation, if he seeks public aid; and with the probability of being buried in a potter's field, if he dies. With such a prospect in view he is more than willing to join an organization which will make these things impossible.
But again it is not the American insurance company but the racial society which meets this situation. As the immigrant bank has become a part of the racial economic system, due to the neglect and indifference with which the American banker has regarded the immigrant, so the racial, fraternal and benevolent society, described elsewhere, flourishes because it is primarily an insurance organization. While racial instincts and habits have drawn the members of each race together in such organizations it has been the economic benefits which have held them together. The leader of one such association, whose membership comprises more than 100,000 foreign born members, when asked for the secret of its success, said, "We give them something for their dues— we have the best sickness and death benefits in America." Before the war, the failures of such benevolent societies were almost as numerous as were those of immigrant banks, and the sums lost aggregated hundreds of thousands of dollars, because they also have not been brought under American law. It is no exaggeration to say that the failure of many of the American insurance companies to grasp the significance of the needs of 15,000,000 foreign born people and of the new immigrants who are daily arriving, has not only deprived them of a great amount of needed protection, but it has greatly facilitated the growth of racial institutions and of racial solidarities in America.
The political future of America, no less than that of Europe, is likely to be determined largely by its economic instinct, and America cannot afford to neglect this instinct in its millions of foreign born people. There are strong racial jealousies inherent in the handling of money which characterize our interracial financial transactions. The immigrant to- day distrusts the American in money matters, partly because of his exploitation and, partly, because of the poor judgment which Americans have shown in the exercise of injudicious charity; and partly because of the American's tendency to be inexact. We shall not, therefore, integrate the immigrant into American economic life by simply handling his savings— we must find a way to understand his attitude of mind and to secure his interest and cooperation.
What greater service to assimilation, through the savings of immigrants, can the American Bankers Association render than to establish a division in its organization which shall include all bankers who handle foreign exchange and transmissions of money, or who deal with immigrant peoples of other countries? One of the duties of such a division should be to study this whole field of operation in the United States, with its ramifications abroad; to devise means of preventing exploitation; and to set a high standard of admission to membership. This, more than any other thing, would put into operation the principles of assimilation, namely: the recognition of, and the reciprocity and participation by all such bankers, and it would go a long way toward securing identity of interest and unity of action. It would level racial financial walls and would start the merger of the parallel economic systems in the financial field. And what greater service can the great transatlantic steamship lines and express companies render to the immigrants who trust their lives and savings to them than to unite with the American Bankers Association and with the leaders of finance in the Federal government to reestablish the faith of the foreign born in American financial institutions, and to command through them a greater confidence from the countries of Europe.