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THE CHICAGO BANKER
July II, 1908}
WM. A. TILDEN, President	NELSON N. LAMPERT, Vice-President	HENRY R. KENT, Cashier
CHARLES FERNALD, Asst. Cashier	COLIN S. CAMPBELL, Asst. Cashier
MONROE AND CLARK STREETS
C HI C A G O
Capital $1,000,000 Surplus and Profits $400,000
UNITED STATES DEPOSITARY
ready been passed, others are to be defeated owing to political opposition and a loss of interest on the part of the public.
A uniform banking law effective throughout the United States compiled by bankers, and not politicians, and strictly enforced would soon work wonders as a confidence restorer.
A banking official said to me,—“But what are we going to do about it? You have your ideas as to what should be done, I have mine, so has every other banker, and you cannot get any two alike. If you make laws they will be broken, you cannot make men honest.”
Granted that you cannot make men honest by legislation, but it must be admitted that few men go dishonest in a day, and the most flagrant cases of so-called dishonesty have been brought about first by an overstepping of some law of banking, which later leads to a covering up to prevent criticism. When a banker first begins to cover up and hide it is time for him to resign for he is on dangerous ground.
The national government inspects the national bank, the state banking department, the state banks, and yet before either will deposit public funds in the banks which it examines, it requires unquestionable securities to be deposited. It would seem as if the nation and state did not have much confidence in its own system of supervision which is supposed to be for the protection of the depositor.
Judging from the experiences of the past, it would seem that the present system of examinations either national or state must always be ineffective and deficient. One of the commissioners of this state is reported as saying that “the present system of examinations was all a farce.”
(To be concluded in the July 18th issue of The Chicago Banker)
written statement of all purchases and sales of securities and of all loans and discounts made or paid since the previous meeting with the collaterals thereto is to be submitted. It is required that directors hold their stock free from hypothecation to prevent the improper use of corporate funds for personal advantage, and to prevent the securing control of chains of banks as was done by the Heinze-Morse interests in New York City; it is prohibited that an official of a bank shall make a deposit with another financial institution and secure a loan from it; it is further provided that the superintendent of banks shall pass upon the character and responsibility of incorporators of new financial institutions, and also whether there is a need where the proposed bank is to be organized; it is suggested that there be placed a minimum limit upon the size of a deposit account upon which a bank or trust company may pay interest; it provides for a reserve fund equal to fifteen per centum of the aggregate deposits in cities under eight hundred thousand inhabitants, and at least two-fifths of said reserve must consist of lawful money of the United States, or of lawfully organized banking associations; it further provides that the superintendent of banking shall approve of the reserve agents selected by a bank; it reduces the maximum of any secured loan to a single interest from forty to twenty-five per centum; it prohibits the loaning of more than ten per centum of the par value of the capital stock of another financial institution ; and limits the amount of real estate loans which a bank may make directly or indirectly to twenty-five per centum in the aggregate of the total assets of a bank in places of not over ten thousand inhabitants, and to ten per centum of the total assets in other places; and it prohibits loans on second mortgages.
Some of the measures enumerated have al-
Why should not the bankers themselves have a voice in the appointment? Why should not one or more members of the state bankers association be recognized by those states, which like California, have a strong and effective association, to the extent of making, say the president with one or more other officers of the association, members of the banking board, which in turn would select the corps of examiners?
Let the committee of uniform laws of the American Bankers Association in addition to their efforts for a uniform bill of lading, and the regulation of express money orders, bend their efforts toward a uniform banking law.
It is reported that some one asked a prominent financier of New York at the height of the flurry last October what he thought would most quickly restore confidence, and his answer was to the effect that state laws be enacted harmonizing with the National Bank Act, that while he realized it had its faults yet it was the best, and if generally in effect and enforced, would quickly restore confidence.
State, savings, and private banks would lose deposits if the Deposit Guaranty Law was framed for national banks alone. 1 his surely is an argument for a uniform banking law, and it would be unjust to have a law providing for advantageous features applicable only to a certain class of banks.
After the panic of last October, Governor Hughes of New York appointed a commission of bankers to examine into the laws governing state banks of New York, and to make such recommendations as they saw fit. In this case bankers and not politicians were asked to frame sane and sensible laws, just for the banker and just for the public. As a result of this report bills have been introduced requiring directors to meet once a month and a