Los Angeles herald., 1892-09-18
THE STATES MONEY DEALERS,
Statistics From the Bank Com
missioner's Report.
A Gratifying Increase in the Various
Banking Interests.
The Failure of the California Savings
Bank OF San Diego---Changes in
the Laws Bugge sted---Build-
Ing Associations.

4hO IL lEhhLD h6p ASSSANS0 . CORy VI
the report of the state board of bank
commissioners, which has just been
issued. 1t carries the condition OF the
banks in the state up to July 1st of this
year, and is volume of 544 pages, en-
bracing detailed reports of every bank,
together with elaborate consolidated
tabular statements. The report shows
a gratifying increase in the banking in
terests of the state.
1t contains the statements and exam
nations OF "a state savings banks, loo
state commercial banks, agencies CT
foreign commercial banks, 36 national
banks, and II private banks, showing a
total OF 268 banks in California, which is
a net increase of % banks since the last
report. There is also shown an increase
of "a, 1868. 1877 80 in capital and surplus,
and $l2, 1876, ,372 66 in deposits. The to-
tai of cash in all the banks is given as
$21 $50 1856 As, but of this there lie 81 .315,-
1862 80 in "checks and other cash items"
which would leave $19, ,934 ,920.16 of ac-
tual money in the banks.
During the past year 81 new banks
have been organized, while nine banks
have retired of the 20 new state hanks,
10 commercial and 10 are savings banks !;
one new national bank has been organ
lied, and one new private bank reports
to this commission.
The only failure during the year has
been that of the California Savings
bank, of San Diego, which aptly illus-
trates the remarks made in our last re-
port, under the head OF Savings Banks
as Adjuncts to Commercial Banks,
which we quote below.
The California National bank of
San Diego was doing large CONNER
cial business, and in its desire for more
deposits, established, under the state
law, the California Savings bank, with
the identical management, and located
it behind its own counters.
The savings bank, being incorporated
under the state Jaw, was ubject to the
examination of this board, and was but
one department of the California Ma
tional bank, over which this board had
no jurisdiction. An extraordinary large
proportion of the savings bank deposits
were constantly kept on deposit in the
national bank, and repeated efforts of
this board to reduce these balances we're
but temporarily. if at all, successful. i.
The national bank was using the
funds of the savings bank for Its own
purposes, and was virtually the custo-
dian of the entire savings bank business,
as both had the same management.
When finally this board made demand
upon the national bank for $101 ,654 S5,
held as deposit of the savings bank,
being nearly 80 per cent of the total as
sets OF the latter, the national bank sus-
pended payment. resulting in disas-
trous failure, carrying with it the saw
ings bank, for the reason that nearly
one-half OF its assets had been jeopar-
died by being used by the parent ipsti-
tuition for commercial business. The
board urges that savings banks and
commercial banks be kept entirely
separate.
Referring to the improvement of the
states banking laws, the board suggests
that the law should fix a minimum
amount OF cash capital required before
any banking corporation could engage
in business. If in large cities, at least
$1O0, 900 cash capital were required, and
in smaller communities lesser amounts,
but in no case less than $25, 900, it would
prevent undertakings that are not
strictly legitimate and seeking the pub
lie confidence in good faith. Such law
now exits in many states, and is
also a provision of the national
bank act. It would aid also
in preventing the establishment of
savings banks as adjuncts to CONNER
cial banks. Licenses to conduct the
business of banking have been issued by
law, the commissioners being powerless
to refuse them, where the amount Of
capital actually paid in was merely
nominal, and these concerns most loudly
proclaim their authorized capitol. We
have now seven banks with less than
$1O, 1000 paid up, and 20 with less than
$25 900 capital paid up. The law should
also prohibit the publication to the pub
lie in any forKa of larger amount of
capital than the actual amount paid up
in cash, and forbid the use of the word
"bank' by corporations, persons or
associations not doing legitimate bank
ing business.
Referring to building and loan asso-
Citations, the board says: "The last
legislature passed an act requiring all
building and loan associations to report
annually to this commission, and gave
it authority to examine them, but made
no provision for any expenses attending
the work. Two reports have been made
by this commissions regular annual
report of all the associations, and a
special report upon those doing business
under to so.called national system
and both of these reports were based
solely and entirely upon figures pre-
sented by the associations, no examina-
tions having been made, except two,
made subsequently at the special re-
quest of his excellency, the governor. :,
Building and loan associations are all
stock companies, all members being
stock kholders, and, under the laws OF
California, liable for the acts of the cor
poration. Banks in California, with
only two exceptions, are corporations
having two classes OF participants
stockholders and depositors. The
former are liable to the latter, and ii
was for the better protection of the lat
ter that this commission was created,
and its work, while incidentally of SER
vice to stockholders, is mainly for de
positors. As the majority of the mem
.bers OF building and loan associations
are poor people, not we'll acquaint
ed with business methods, and con
stantly investing their savings in these
associations, they have been considered
the same as depositorsi in savings banks
and entitled to the laws protection, anl
therefore the law above referred to wa
enacted. That they should have all th'