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The handsome, curly-headed, iron-jawed chairman first discussed the effects of new banking legislation on his institution. He noted a payment of $225,000 to Federal Deposit Insurance Corp., an additional liability for $676,000 and an unlimited liability after July 1 unless the deposit insurance law is modified. Yet, Mr. Baker found that new Federal laws as a whole had affected his bank "but little, except in one respect." Three directors had to resign because they were connected with the securities business.
Mr. Baker proudly reported that a quorum had attended all but two of the weekly directors' meetings in the past year. The Board's trust committee, responsible for investment of fiduciary funds, had been troubled by "the uncertainty pertaining to the future economic and monetary policies of the country." A special directors committee had thoroughly examined the bank in April.
Turning to his latest statement, Mr. Baker pointed out that investments in Government bonds had jumped $22,000,000 in twelve months—standing at $77,000,000. During the year the bank had bid for or subscribed to no less than $1,396,000,000 of long-term and short-term Government issues, for its own and its customers' accounts. Summing up the experience of bankers big & little. Chairman Baker remarked: "With the small demand for credit from our customers, it was necessary to invest a greater amount in securities."
One by one the big bank's major divisions were ticked off. The foreign department, particularly important to Bank of the Manhattan Co., did not do so well this year as last because of the decline in foreign trade financing. Personal trust business was substantially better but the corporate trust department was still in the dumps. In the commercial field deposits averaged 11% above 1933, but the average return on all loans and investments dropped in one year from 3.16% to 2.14%. Since that meant a decline of 1% on the return from nearly $300,000,000, Banker Baker ruefully added: "This tells a vital story."
New Era skeletons still dangled in Bank of Manhattan's closets. Caught with $70,000,000 of German credits four years ago, the bank has liquidated all but $11,800,000, at a loss of $7,000,000. "It may be wise," declared Chairman Baker, "to continue further the policy of liquidating German credits . . . even though such liquidation occasions further loss." More than $5,000,000 was used this year for write-off and reserves and Mr. Baker proposed to draw on surplus and undivided profits for an additional $6,500,000.
Another skeleton boldly rattled by Banker Baker was New York Title & Mortgage, a former subsidiary divorced before the guaranteed mortgage scandal broke. New York Title's rehabilitator is suing for various sums including dividends paid to the Manhattan Co. after the title company's capital was allegedly impaired. Mr. Baker did not seem worried.