Omaha daily bee., 1889-01-13
state Banking in the West.

state Banking in the West.
American Banker: Among the states
in which special attention is being at
tractcd To state banking are Michigan
| aud Nebraska. The Michigan Bankers
ASSOCIATION was recently organized and
has already been successful in its efforts
to organize a state banking system.
The nccdful legislation has been OBJ
tanned after being under consideration
for some years. We shall publish a
| summary Of its provisions when we re-
ceivo the official copy of the news
statute. 1t makes full provision for
publicity. ample capital and reserves,
frequent bank inspection, and other
guarantees for prosperity against bad
business. There are on record at pres
cnt in Michigan Up banks in active
business. OF these IL are national
banks. The private banks are 222, aud
the state banks IS. The population of
Michigan is 2,l20,2Sl, and the aggre-
gate capital and deposits of its whole
banking system are $50, AS OPS, giving
AN average of Si3 per capita.
In Nebraska efforts for Il state bank
ers' association have been instituted,
and the organization will, it is hoped,
be put in operation before long with
similar good results. The Nebraska
banks are G2i in number, of which los
are national and 30t private, while pa
are state banks. The excitement aris-
ing out of the failure of several small
Nebraska banks during the closing
week of the year lSSS should tend to
bring about a revision Of the banking
II W in this state. At present.
they do not offer sufficient safe
guards against fraud, aud in other
respects they are complained of as be-
inn ga, lnS M th,Sn rriti.iSlps thn
recent exploits OF certain swindling
firms and of the broken banks give
abundant confirmation. Among the de-
fcctivc provisions OF the law rs it stands
at present are those securing cash re-
serves adequate capital and full public
ity with frequent inspection by expert
examiners. The present statute has,
however. several good points. 1t re-
quires that all bank corporations shall
annually report under oath to the state
auditor II full statement of their re-
sources and liabilities. This require
ment could be adapted to private banks.
If the Nebraska banks which are strong
will all unite in judicjous. well on
sidered efforts. the new Legislature will
no doubt be found ready and determined
to amend the banking law at an early
period, so as to prevent the repetition
of bank scandals. losses and disasters
such us those which have given an in
famous notoriety to the vicious policy
of certain broken banks at Valparaiso
and elsewhere. The ruin of these
banks was not caused by any lack of
profitable business. There are OPEN
ings for safe lucrative loans permitted
to state banks and TO private
bankers, more than to ma
tional banks, and such en-
ceptlonal transactions yield higher
rates of interest than the ordinary
banking business. Take for example
the mortgage loans. 70 the burdens of
the Nebraska, Kansas and Dakota
farmer is added the rate which he must
pay on his mortgage loans. Eight per
cent is an ordinary rate: but by the
time that the lender has collected his
commissions and charged his fees for
examination Of titles, the farmer who
borrows money frequently has to pay
10 to II per cent. or more.
1t is natural to suppose that such
profits must result in wealth and sol
vency among the bankers who get these
high rates. But the temptations to en-
bark in the business with little capital,
or to expand credits beyond the limits
of safe banking, are SO seductive, and
are practically so unreStrained by state
regulation that the wonder is the cul-
mination has not come sooner and been
more overwhelming in its disasters.
Such events show h necessity in Ne
braska ana other western states of a
we'll administered system of banking
laws. Efficient state associations of
bankers have it as their function to
promote the benefits arising from such
conservative legislation and to enhance
its power for good. In Nebraska the
population is 1920, 900, and its pres
cnt banking system reports for
the national and other banks an
aggregate of active capital and
deposits amounting to $43 ,673 1881. or
more than $i2 per capita; the proper
tion belonging to the national banks
amounting to about two-thirds of the
whole.
Few states IN the west offer such re-
sources and prospects of material
growth in the early future as Nebraska.
In none are there Il larger proportion
of sound private banking institutions,
state banks and trust companies to unite
in the practical objects above sug-
gested, for the prosperity Of the bank
ing system generally.