The intelligencer. [volume] (Lexington, Mo.) 1887-1891, 1889-02-09
THE BANKING LAWS OF MISSOURI

Now that the legislature has taken
up the question of our banking laws it
is to be presumed that the opinions of
bankers will at least be of interest.
Any one who will study the history
of Missouri banks will be struck with
the soundness of her institutions during
her entire history as a state, as we'll as
the very small losses to depositors by
reason of failures. When the federal
laws forced our state banks to retire
their circulation, their paper was worth
dollar for dollar in gold and two dol
lars for one of greeubacks, in the case
OF nearly all of our banks. Since the
war the failures in this state have
scarcely averaged one in two years and
the losses as compared with the losses
by other failures are lnconsiderable.
Yet the legislation on the subject of
banks in this state is more severe than
in any other state in the union. Not
only are the laws severe but they are
excessively unjust in their indefinite
uess. Laws properly severe are in the
interest of sound banks and are not
objected to by any one engaged in
legitimate banking. A bad bank fail.
ure causes u loss of confidence in banks
that is more of q loss in money to them
than what the depositors lose. Banks
must take each others exchange Of
ten without responsible endorsers and
must entrust large collections to each
other without security, hence it is easy
to see that sound and legitimate bank.
ing is protected, as well as those who
use the banks, by properly severe laws.
The present laws make the offensc
of receiving deposits or contracting
indebtedness when in a "failipg condi-
ton" Sehe same as for stealing that
much money. The fact of failure is
'prima fdcis evidence that the bank
received deposits when it was in q
"failing condition." repeat here that
no one else Is any more interested than
the bankers themselves in having banks
to cease receiving business when in a
failing condition. But so far as there
is anything in the law TO tell us every
one must guess tor himself what the
law means. Is q bank in falling con-
dition when its capital is impaired to
the amount of five per cent, or of fifty
per cent? When a banks capital is
impaired to the extent of ten per cent.
may it safely 60 Oh and try to make it
up or must it make an assignment? II
a bank loses its whole capital by de-
grees, makes an assignment and pays
out in full, yet its officers might be
criminally liable, although no one has
lost cent; at least such seems to me
to be the law. Again, if a bank fails
and pays ninety five cents on the dol.
lar there seems TO be the same crimi
nal liability as if it only paid five or ten
cents.
What must be the result of such
a law? Clearly it makes it necessity
for a banker who intends to fail as
speculation or one who fails through
misfortune, to keep hold of all he car
| lay Ddllus VII anu uSS IL ~ llOuL nlt
case through the courts.
The present constitution and banking
law date back to a time when bankers
here were as unpopular as Jewisl
money lenders in medieval Europe
They are the expression of passion anC
prejudice, not of cool and deliberate
business sense. He who strikes in pas
sion often misses his aim, and so il ha.
been in this case. No more grotesqut
piece of legislation has come to light II
this century than the form for a state
ment under our laws. Under penalt,
OF Imprisonment the banker must swear
that it is true statement of his bank
condition, yet it is impossible to show
any banks true condition if that foru
is used.
The item of "expenses' which by al
rules of bookkeeping belongs unde
the head of "resources" is entere,
among liabilities in the Missour
form. The item "surplus funds OF
hand will remain forever a myster,
rs to the meaning of the wise man whC
got mp the law. "Surplus" in bankin!
has a definite meaning, and L suspec
that the item should be, "surplus uuud
on hand.') The worst thing tor banl
to do is to keep its surplus on hand
; The best thing is to lend it and have i
earning money. If bank would maxi
out its statement exactly as the form il
the statutes requires, the two sides G
the account would not balance.
One purpose of incorporation law
is to induce men of means to inves
= beyond what they can personally over
see, leaving them liable to lose notbiu!
beyond what they have invested. Th
laws of this state in this case practi
cally undo all Limitation.
One of the would's great teacher
said "if man does evil, evil will fol
low, as the wheel follows the foot G
him who draws the cart" Legislalio
dictated in spirit of prejudice an
hostility against So important depart
= ment of business must necessarily hsv
consequences injurious to the Who'll