Third Step

To every good bank come many sound investing opportunities which must be refused because of legal restrictions. So, in order to widen their operating field, most large banks have investment affiliates, somewhat less conservative than the banks themselves. Step Three in the employment of currency would obviously be for the bank to organize an investment trust, and that is what Chicago's Continental-Illinois Bank Trust Co., largest U. S. bank outside Manhattan, did last week. President was Arthur Reynolds, who is board chairman of Continental-Illinois. Vice-president was James R. Leavell, also a Continental-Illinois vice president. The directorate included George M. Reynolds, Stanley Field, Charles F. Glore, D. R. McLennan, Eugene M. Stevens, Edward F. Swift, F. Edson White. Christened Continental Chicago Corp., and with an initial financing of $65,000,000, the new company was designed for an ultimate capitalization of $500,000,000. Continental-Illinois Co. (the investment affiliate of Continental-Illinois Bank) took 1,000,000 common shares of the 1,750,000 initially offered.

Unusual was the Continental Chicago Corp. in one outstanding feature. According to Mr. Reynolds, it was not designed to speculate in securities but was established primarily to assist Continental-Illinois' 40,000 commercial customers. Said Mr. Reynolds: "There are innumerable instances where a company is not entitled to commercial bank credit . . . and is in no position to go to the securities market. . . . Yet it is entirely sound and worthy of banking cooperation. . . . We know from experience that there is keen need for this additional banking service, that it is entirely sound and extremely lucrative. . . . There will be [in Continental Chicago Corp.] nothing of the speculative activity in which many of the present organizations [investment trusts] are prominent and which will undoubtedly, occasion difficulty unless it is abandoned." It appeared, therefore, that Continental Chicago Corp. would function as a financial foster-father for Chicago and Midwestern industry, would provide funds for the expansion of many a middle-western business, and that its well-being would not be inseparably connected with the upward revisions of market quotations. In discussing the new company, however, Mr. Reynolds issued a bullish bull to the effect that it would not have been considered "if we had not felt completely confident in the future."