[Volume XXVII
THE CHICAGO BANKER
22
The Girard National Bank
Of Philadelphia
Capital,	$ 2,000,000.00
Surplus and Profits, ,	. 4,100,000.00
Deposits,	40,450,000.00
FRANCIS B. REEVES,	President
RICHARD L. AUSTIN	JOSEPH WAYNE, Jr.
Vice-President	Cashier
THEO. E. WIEDERSHEIM	CHARLES M. ASHTON
Second Vice-President	Asst. Cashier
To Satisfactorily Handle Your Business, You Need a Philadelphia Account
Check Listing Typewriter
The Fox Visible Typewriter, especially equipped for listing checks, making the original and as many duplicates as desired, and at the same time listing the checks uniformly.
Send for full information and indorsements of banks where it is already in use.
FOX TYPEWRITER COMPANY
Executive Office and Factory
720-740 Front Street Grand Rapids, Micti.
Banking Law of California Given Praise
another bank unless such other bank has been designated as a legal depository by a vote of a majority of the directors, exclusive of the vote of directors who may be officers or directors of the depository bank so designated.
“Directors without prejudice or the temptation of indirect gain and in good faith, should know how and to whom the bank’s funds are loaned, and where accounts are carried.
“National banks receiving deposits of state banks must, at the request of the superintendent of banks, submit to state examination. A refusal authorizes the superintendent to order the immediate withdrawal of all state bank deposits from such offending national bank. A refusal to withdraw such deposits shall be a misdemeanor. National banks desiring such deposits can legally refuse this request, but will not, in fact, do so.
“A very important provision is that loans shall not be made on the stock of another bank unless such other bank has been in existence two years and has earned and paid a dividend on its stock. This, with the provision against the purchasing of stocks, prevents ‘chain of banks’ schemes by the use of depositors’ funds.
“Officers, directors and employees of all banks are prohibited from overdrawing accounts, or from receiving any commission or reward for loaning the bank’s funds to others. The latter is a form of petty grafting which is discouraged by a felony provision.
“Trust funds must not be mingled with the other accounts of the bank, and shall not be carried or counted as any part of the lawful money reserve. The California Safe Deposit and Trust Company failure suggested this provision.
Penalties are Provided
“Officers, directors and employees, who knowingly violate or consent to the violation of the foregoing prohibitions and other prohibitions of this act, not herein mentioned, are in nearly all cases guilty either of a misdemeanor or of a felony.
“Some objection has been made to the ‘tone of severity’ which prevails throughout the act. One statement was made that ‘the bankers’ work is divided into felonies and misdemeanors,’ another that ‘the act should be a part of the criminal code.’
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proportion of its total capital must be invested in or apportioned to each department.
“It must maintain the proper legal reserve in each department, separate books must be kept, and all cash and all assets and liabilities of each department must be held separately and must not be intermingled. No department shall receive deposits of any other department of the same corporation, thus preventing the pyramiding of cash or deposits, as may be done where a departmental business is transacted under separate corporations.
“Creditors of each department have a first lien on its assets, the savings depositors having a first lien on the savings assets. This being the law, and the published reports and advertising of the fact that a savings and commercial and, perhaps, trust business is being done, no one is deceived nor has a right to complain.
“The provision giving the creditors of each department a priority of lien was held constitutional by competent lawyers and is the law in other states; for instance, Michigan.
“Foreign banks must have a paid-in capital and comply with all the requirements as to organization and conduct relative to state institutions.
“There is no reason why they should be permitted to do business on more favorable terms than banks organized within the state by its own citizens.
Stock Purchases Limited
“The purchasing of stock of other corporations is prohibited, except to prevent loss on loans already made in good faith, and stock so acquired must be sold within six months.
“Speculating on the rise and fall of shares of corporations and banks, and the assumption of stockholders’ liability, is not good and legitimate banking. The practice in this state made the prohibition necessary.
“Contracts cannot be made with depositors whereby the stockholders’ liability provided for in the constitution is in any manner to be waived. Some prominent savings banks in this state (not, however, in Los Angeles) have been taking contracts from depositors waiving this liability. It was a sort of ‘Heads I win, tails you lose,’ scheme, not justifiable in capital stock banking.
“Funds of a bank cannot be deposited with
In an address to one of the largest crowds that has ever assembled at the City Club of Los Angeles, J. F. Sartori told about the new California banking law and the effect it will have on the financial institutions of the state.
Mr. Sartori believes that California now has one of the best banking laws in the country. He said that to some it seemed unnecessarily harsh, but that the banks doing business on a sound basis and in a proper manner had nothing to fear from it. In discussing some of its harsh features, the speaker declared that the events surrounding the framing of the law should be taken into consideration. It was prepared just after the panic, when the people were clamoring for bank guarantees and just after a big bank failure in San Francisco. Some of these features, he said, could be changed by proper amendments later. In part Mr. Sartori said:
“The new banking act, which went into effect July 1, 1909, repeals all conflicting acts or parts of acts and codifies all the laws on the subject. This of itself is meritorious and of great advantage to bankers, lawyers or laymen, if it is desired to ascertain what the law is on a given subject, or on all matters pertaining to the business.
“The bank commissioners’ act was entirely ignored. All the good features of the savings and loan corporation act and other fragmentary banking laws of merit were incorporated.
“Its arrangement and technique follow to some extent that of New York.
“It divides banking into three classes—savings banks, commercial banks and trust companies. Article I deals with general provisions and departmental banking. Article II relates to savings banks; article III, commercial banks; article IV, trust companies; article V, state banking department and supervision. The word “bank” in the general provisions refers to all classes of banks except, of course, national. Given Power to Combine
“The departmental sections of the banking act provide that any corporation authorized by its articles of incorporation so to do may combine the business of a commercial bank, savings bank and trust company or any two or all of them. Every bank doing a departmental business must have the proper total paid in capital provided by the law and the proper