and seeks a more profitable investment for his depositors' funds. In this way deposits come to be used for loans or investments. As regards the tendency among immigrant bankers to invest funds intrusted to them in real estate and stocks, it is only necessary to state here that many of these bankers who receive deposits are property holders to an extent not warranted by the legitimate profits they would derive from their steamship, foreign exchange, or other business. A strong tendency on the part of the bankers to invest outright in real estate is noticeable. Such holdings are almost uniformly the heaviest assets of the banker. The tying-up of funds in this manner was productive of many failures during the recent panic. Speculative stocks of various kinds are another favorite form of investment. Considerable criticism of the immigrant banking system has rested on the fact that these bankers, forgetting all obligations to their depositors, are too prone to invest in speculative enterprises, and it is true that the assets of many who have failed include a surprisingly large amount of worthless stocks.

LOANS.

Banks of Class I ordinarily make loans in the regular course of banking operations. The rate of discount varies from 5 to 7 per cent. The loans are usually made to business men or home builders. To a prevailing degree mortgages, both chattel and real estate, are accepted as security. The greater part of the loans of one of the investigated banks of this class is, however, to brokers on stock collateral.

The loans of banks of Class II partake more of the nature of accommodations extended to laborers and home builders who are personal friends of the proprietor; that is to say, actual cash advancements are made from the proprietor's own funds or outright from the bank deposits. Loans to laborers are generally secured by notes bearing good personal indorsement; those to business men, by chattel mortgages and personal notes; those to home builders, by deeds of

trust.

Bankers of Class III advance money to their patrons for the purchase of prepaid steamship tickets or for a remittance home, and in some cases for food supplies. These loans are invariably of a personal and private nature and are not infrequently made from the personal funds of the proprietor. The borrower's note is sometimes taken, but no security whatever is required.

The distribution of immigrant bank funds among the various classes of investments has been studied by the Commission. During the time that this investigation was made an unusually conservative attitude was apparent, and deposits were being held to a prevailing degree in checking or interest accounts. The class of depositors who patronize banks of this character are almost universally laboring men, and they were perhaps more directly affected by the panic of 1907-8 than was any other class. Thrown out of employment in large numbers, they were not only unable to make further deposits, but were compelled to withdraw what they had. Prior to the panic these deposits were enormous, and the current prosperity led to wholesale investment. When the pressure came, many bankers were unable to realize on their securities, or dispose of their real estate, or call in

a For classification of banks see p. 419.

their loans to meet the demands of their depositors. Failures in such cases were inevitable. A study of the assets of these bankers who failed revealed an extraordinary amount of worthless notes, stocks, and questionable securities. Practically the only convertible resource consisted of real estate, on which at that time little could be realized for the depositors.

MONEY EXCHANGE.

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 interior.

RELATIVE IMPORTANCE OF DEPOSITS AND REMITTANCES.

On the whole, it is believed that the business of receiving money for transmission abroad presents graver problems and deserves more careful study than does that of receiving deposits. It must be borne in mind that many immigrants doing a banking business do not make a practice of receiving deposits other than small sums for temporary safe-keeping, whereas the receiving of money for transmission abroad is a highly important part of the business of every immigrant banker. As a matter of fact, there is scarcely an immigrant steamship agent, saloon keeper, or merchant in the country who does not sell what he is pleased to term "foreign exchange." Through these channels a steady stream of money is poured into Europe. The prevalence of the practice, the vast sums involved, and the peculiarities of the system under which transmission is made, attach to the taking of money for this purpose an overshadowing importance such as can not be ascribed to the receiving of deposits.

REMITTANCES ABROAD.

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 following:

TABLE 3.-Immigrant remittances abroad by various correspondent banking houses of immigrant banks, by country to which sent, January 1, 1907, to June 30, 1909.

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 the immigrant banks under consideration transmit money abroad. In each case representatives of these banking houses have asserted that local sales over the counters of the bank were inconsiderable, and none but the Bank of Naples, and possibly the express company, have more than a very few American correspondents or subagents who sell their "money orders." It is safe to assert that the remittances of immigrant bankers formed 90 per cent of the total amount of money sent abroad each year by these 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. 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. Some immigrant bankers carry small stocks of imported books and novelties, but remittances abroad in payment thereof, which they may make in the same manner as ordinary transmissions, are inconsiderable. It is unquestionably true that in their origin and ultimate purpose the transmissions of immigrant laborers constitute a distinct class of exchange.

The reports of the Auditor for the United States Post-Office Department show that the value of international money orders issued in the United States and paid in foreign countries during the period 1900 to 1909 aggregated nearly $500,000,000. Of this great sum the following amounts were sent to the countries of Europe during the fiscal years named: In 1906, $53,443,814.20; in 1907, $70,916,609.09; in 1908, $75,271,911.25; and in 1909, $63,478,655.48. It is believed that fully 90 per cent of these orders were purchased by immigrant laborers.

GENERAL ESTIMATE OF AMOUNT SENT ABROAD IN 1907 BY IMMIGRANTS.

Even with the material at hand, an attempt at estimating the total sum sent out of this country is at best an uncertain undertaking. Prior to the recent panic, this sum assumed enormous proportions, probably reaching its highest point in the year 1907. Based upon actual figures obtained from reliable sources, it is safe to say that $275,000,000 was sent abroad by immigrants in that year. Over $200,000,000 of this sum is accounted for in the figures of various banks and the Post-Office Department already presented. Although any division of this amount according to the countries for which it was destined would of necessity be an arbitrary one, it is nevertheless thought that the following table, based partially on the estimates and

statistics already given and partially on other material at hand, is a fairly close approximation of the amount of money sent abroad by immigrants in 1907:

TABLE 4.-Remittances abroad by immigrants in the United States, by country to which sent, for year 1907.

This is an estimate of the amount of money sent home by immigrants, and consequently does not take into account the large sums carried abroad by returning immigrants. It is meant to cover conservatively only remittances made through the post-office by international money orders; through immigrant banks, by money orders of large metropolitan banking houses and express companies, or by drafts direct on foreign banks; through foreign banks directly by means of general agencies in this country; and through American banking houses with foreign departments or other mediums of selling exchange directly to the immigrant. The considerable sums sent through consular offices or charitable and other associations, except where included in one of the above groups, are not taken into account, nor are the comparatively small amounts sent in currency through the mails.

The year 1907 was chosen for making this estimate, because both 1908 and 1909 were materially affected by the industrial depression. As a matter of fact, the foreign exchange business among immigrant bankers was very much demoralized during 1908, and the total remitted during that year was considerably less than in 1907. In 1908 thousands of immigrants returned home or were forced to withdraw their savings abroad instead of adding to them.

AVERAGE AMOUNT OF REMITTANCES.

Although the total amount of money sent abroad by immigrants is large, it is an interesting fact that individual transmissions are comparatively small. The average amount of remittances through the Bank of Naples to Italian families during the years 1906, 1907, and 1908 was as follows:

1906. 1907.

1908_

$35.32

35. 13

34. 16

This includes only the sums received by the Bank of Naples from its direct correspondents in the United States for the purpose of distribution to families of Italian immigrants and does not include

the amounts received for deposit. The average of these latter sums is always much larger than that of those intended for distribution. For instance, in 1908 the average remittance for deposit received by this bank was $120.43.

The average amount of the post-office money orders issued in the United States during the period 1906 to 1909 and paid in Europe during this period was $21.24 in 1906, $23.62 in 1907, $25.33 in 1908, and $21.26 in 1909.

METHODS OF TRANSMISSION.

It is of advantage to consider the methods by which sums of money are transmitted abroad by immigrant bankers. Although the process by which these sums are actually exchanged abroad does not differ from the usual manner of exchange, the nature of these remittances is such as to demand special facilities in their collection here and in their ultimate distribution abroad. In the first place, as has been pointed out, the peculiarly intimate relations existing between the immigrant laborer and certain leaders of his race cause him to bring to such leaders his savings for safe-keeping or for transmission abroad. By virtue of this fact these men become his bankers, although individually they are, in many cases, without financial responsibility or adequate equipment or facilities for carrying out the obligation imposed. In the second place, it is safe to say that a ma jority of the sums ordered to be transmitted are intended for towns and villages in Europe without banking facilities other than the government postal savings banks. Consequently, the demand of the immigrant banker for means by which he might expedite the trans mission of funds left with him without the institution of clearing arrangments for the prompt delivery and correct distribution of these funds abroad, has given rise to a system whereby certain leading American corporations with comprehensive foreign connections hair extended to the immigrant banker facilities for the payment of the remittances without necessitating on his part the maintenance abro of balances or clearing reserves. Figures that have been presente show that at least $125,000,000 of the amount originating among migrant bankers was sent by means of money orders through certa leading banking houses and steamship and express companies.

Books of these money orders are furnished immigrant banke upon application. Each order usually consists of a stub to be retai by the correspondent as a record, an advice or direction slip to! returned to the banking house, an advice slip to be sent to the pay and a receipt for the purchaser, better termed the sender.

The advice to the payee, omitted from some forms, is usua forwarded by the immigrant banker. When the advice for the pare is omitted, the purchaser is depended upon to notify the party whom the money is intended. Frequently, instead of forwarding each individual order the advice slip intended for the banking ho correspondents make up advice sheets containing directions for a n ber of orders during a given period. A remittance accompanies advice sheet. Sometimes the correspondent maintains a small ance with the banking house through which transmission is made which case the remittance need not fully cover the amounts advis