Omaha daily bee., 1889-10-14
THE CAPITAL CITY CRlST.
Review of the Operation of the New
Banking Law.
SOME CRUDE THINGS EXPOSED.
a Bag as an Assistant Book Keeper
The Butchers Refuse TO Join
the Farmers In Fighting
Armour.
LINCOLN BUREAU OF Tur OMAHA BEE, J
109n II STREET,

i02a Il STREET,
LINCOLN. Nob., Oct. Is
Hon. A p. Brink, state bank examiner
had to suspend his work OF examination last
week on account of a sickness severe enough
to keep him confiued. he three examiners
have visited and gone through the books OF
about one hundred banks during the first
three months of their service, leaving about
four hundred yet to be examined While
many crudities in the methods of keeping
accounts have been encountered aud while
there are some misunderstanding as TO the
provisions aud requirements of the law, the
examiners report that they have found the
banks thus far visited in a sound and salts
factory condition, with very few exceptions.
In only one case-that at Venango-have the
examiners been compelled to resort to ox-
treme measures, and judicial proceedings
are under way for the appointment of a ro-
ceiver for the protection of creditors. Sow
eral of the largest banks in the state will
have to undergo re examination because of
peculiarities in their manner of book-keep.
ing, but the examiners give no intimation of
knowledge of anything to impair conf
dence in the institutions concerned.
The examiners express surprise at finding
the banks in so generally satisfactory con-
dltion because OF the crude and often care
less methods of the managers OF some of
them. Many directors are ignorant of the
provisions in the constitution and bylaws of
their corporations. For example, some OF
them have clause in their constitutions
prohibiting any Indebtedness except that due
depostors, and yet they borrow thousands of
dollars every year. One of the examiners
who has consulted able counsel is of the
opinion that the directors make themselves
personally liable for such violation of rules.
A clause in the constitution Of the state re-
CURES hanks to publish quarterly statements,
but an examiner says that nine out of ten
other than national banks, ignore the iniunc-
tion. He suggests that the statement made
to the state auditor under the new law may,
by publication, be considered as answering
the constitutional requirement. Speaking of
constitutions, the first round of the examiners
Will require more time and labor than subse-
Quent visits because of the necessity of going
carefully over the constitutions and bylaws
OF Incorporated banks to learn their limita-
tOns and advise directors of infructious that
will not be permitted in the future.
Apropos of conditions, an examiner found
a bank that kept sort of profit and loss ac-
count IN a little sack Whenever they re-
ceived cash for interest, exchange, etc, it
was put in the sack and bills for running eX-
penses were paid out of the contents of the
sack. The money remaining in the bag rep
resented the profits. At the end of each
month it was taken from the safe and emp
tied upon desk. The resultant pile was di-
two partners poCKeted one of them as his
share of the profits. There was nothing
wrong in the transaction. The examiner
found the bank well managed, and the de-
posiJors protected. But it was an original
way of keeping au account without running
it through a book. The )ankers had gradu-
ated from a farm, probably, and, being uu-
familiar with bookkeeping, Mother Necessity
invented an ingenius substitute, The exam
iner supplied them with form and book for
the account, and they have gratefully
avalled themselves of his suggestions. In
one case bank had no system of carrying
forward from day to day the balances of the
depositors. To ascertain the state of a mans
account was about as tedious making up
a grocery bill hy going through the grocer's
day book without the aid Of ledger
The present banking law is a good one as
far it goes" says one Of the examiners, "but
it is in a measure experimental 1t could
hardly be otherwise, but such defects as ap-
pear to the examiners will probably be en-
bodiedin in bill for the next legislature. For
example stopped over in II town recently to
examine q bank, and was politely told by
the proprietor that he had quit business in
August because it did not pay. He had not
reported that fact to the banking depart
ment because there is no provision in the
law covering such a case, and | lost whole
day in consequence. Our attention has been
called to one case in which merchant re-
ceives deposits from one of his customers
and pays the money out on tue latter's
checks. Under strict Interpretation of
the law the merchant would be classed as
banker. Then there is the case of the saw
ings banks that do a commercial business.
The banking board hold that they must full
fill the requirements of the law for
both kinds OF banks. The operation OF the
banking law is likely to result in an amend
ment that will compel all banks to have
charter from the state. With such a pro-
vision in force the state banks of Nebraska
could within two years be controlled as well |
as the national banks, and depositors would |
be as well protected in one as in the other. |
| know there is very general impression |
that the deposit made by national banks |
with the treasurer at Washington adds to |
the safety OF the depositors, but that is an
erroneous idea. The Washington deposit Sc
cures the banks circulation and is really for
the protection of the government. What
protection the government gives the dcpos-
itors comes from the Investigations of the
examiners. The state can give equally as
good security. With our banking law car
red TO its legitimate conclusion there is
likely TO be quite change from national to |
state banks within a few years. and the |
state institutions will share tho prestige |
now monopolized by those under national
charter