The herald., 1893-12-15
THE WISDOM OF LONG AGO.

amendment made to the constitution,
by which persons engaged in banking
business should be held personally
liable upon their individual property,
over and above their capital in the
bank, for their share Of the indebted.
ness to depositors. Several attempts
have been made to repeal this, but have
signally failed. The state of Oregon,
which was not sdmitted until three
years after this law went into effect,
failed to adopt q similar sort of legisla-
ton and has now good cause to regret
1t.
The contrast between the two cities
Of Portland and Los Angeles today Is
directly the outgrowth of q failure to
adopt such law. Last June we had
several suspensions here and one actual
bank failure. But it was q rotten con-
Germ from its very inception and should
have failed before 1t did. Portland,
however, shows a much worse condi-
ton of affairs. One of her banks con-
tanned over $500, 900 worth of county
deposits, consisting chiefly of taxes COL
lected for the year 1s91-92. The presi-
dent of this bank was one of the
sheriff's bondsmen, and another of them
was director in that bank. The county
judge had the approving Of the sheriff's
bonds, and accepted this bond, know.
ing full we'll that both these parties
were new comers within the state, and
their previous history was wholly un-
known.
After the bank examiners had made
examination of the affairs of this bank,
majority OF the depositors petitioned
the comptroller of the currency to allow
it to resume by paying 10 per cent
monthly to its late depositors. The re-
quest was granted and the bank re.
eumed. No sooner had it done go than
the sheriff aforesaid began depositing
there again, and had dumped some
twelve or fifteen thousand dollars more
of the peoples money into that sink
hole before he could be stopped. On
the third of the present month the bank
suspended again and the grand jury
hhd bluCO l4QlCtOu tlO OlnCOlb Va tlO
bank and the sheriff Tor criminal collus-
ion in the management of county funds.
Another bank in that same city sus-
pended in June. through culpable mis-
management on the part of its officials.
The president is man who came there
forty years ago and started small candy
store. Today he is worth million dol
lars at least. Being somewhat tired OF
hard work, he promoted the cashier to
the vice. presidency and made one of the
loaned out the money on good, bad and
Indifferent security, till the crash came,
and the bank had to close. 1t has not
yet reeumed and never will till it pays
up in full, which is not likely. The
president Of the bank is not going to
risk any more Of his money in that way,
and the several other large stockholders
have put in all the cash that they care
to risk in such banking; and as there is
no law Of individual liability to compel
them to 60 down into their private sacks
to redeem their forfeited credit, they
can sit in their palatial residences and
laugh at their impoverished depositors.
Such a condition of things as prevails
in that city, such general depression Of
business and such want of confidence,
would have been impossible under the
laws that exist in this state. But it is
not likely that the sagacious example
OF our pioneer Legislators will be init
ated in Oregon. The two great railway
corporations which control that state
the Union and Northern Paciic-elect
their own satellites and shape legislation
to please themselves; and as they do not
know how far this matter of individual
liability of directors might 90, they
would be apt to strangle such a measure
in its cradle.
1t is impossible to look over the differ.
ence in the business condition of the
two cities, Los Angeles and Portland,
without feeling a degree of sympathy
for the misfortunes of the latter. Her
banking clearances have declined in the
past year more than those OF Los Ange-
les have advanced; and the clearing
house statements since June show our
city to have advanced more than any
other American city in that respect.
Contemplating our growing prosperity
and locking compassionately upon the
misfortunes Of our sister city at the
north, we can only express our gratitude
to the legislators of our early days for
having made individual liability of off,
GERS the basis Of our banking eystem.
1t was far-aeeing wisdom and plain com.
mon sense that led up to the adoption
of such measures; and our magnificent
state is resping the benefit of such leg
ialstion today. 1t will lead to the in
vestment of capital in this state from all
other states that have not adopted such
salutary laws; and it will inure ten fold
to the growth and prosperity OF Califor-
mia, whose founders builded wiser than
they knew.
SANTA MONICA AND ODESSA.