The sun. [volume] (New York [N.Y.]) 1833-1916, 1894-01-09

Superintendent Prestor Recommend
Chanaes n the RaurtuG Law.

Superintendent Prestou Rees-=sras
Chanzes IN the BautiuE Law.
ALBANY, Jan. 9--The annual report Of
Charles NJ Preston. State Superintendent OF
Banks. relative 10 State banks OF deposit and
discount for the year ended Sent. 30 last says:
During the last fiscal year. with 20S discount
banks in operation in this State there were
but five suspensions to wit; Canal Street
Bank New York city; the Cataract Bank. Nj
agara Falls; Queen Citv Bank. Buffalo; the
Madison Square Bank. Now York city, and
Commercial Bank Brooklyn. having an nRRre-
gate capitalization OF 81 .0OSOOO. The Queen
City Bank. after having remained closed for
about two months. resumed business with a
capital Of 500. 900. and il now in active opera
ton. with bright prospects OF success.
Sixteen new banks. Including the Queen City
Bank OF Buffalo. which has resumed. and one
individual banker. have been organized dur
ing the last year with combined capital OF
So 150.4S The net increase in State bank
capital during the year was ST03.4SO
Great care has been taken to EMPLOY COM
petent examiners only. and the examinations
Of banks. l am convinced. haye been much
more thorough and searching during the past
two years and a half than ever before. and the
defalcations disclosed have been Ascertalned
because Of the thoroughness Of the examina-
lions. But no supervision can absolutely pre-
vent failures caused by the dishonesty OF the
managing officers. The Superintendent at
times receives unjust censurc from those who
do not seem to understand or appreciate this
fact.
The Superintendent recomm ends that the
Ranking law he amended so as to provide that
the whole canital stock OF a bank shall be paid
in before the bank is authorized to commence
business that no officer or employee OF bank
should borrow any OF it's funds without first
making application to the Board OF Directors
and the favorable action Of at least quorum
OF such Board. on such duplication. and that
penalty be prescribed for violation OF this
provision; that every bank. whose surplus. or
undivided profits does not equal twenty per
cent. OF its capital stock. be required to set
apart from time to time from Its net earnings
before declaring q dividend. at least ton per
cent, OF such profits. until such time as such
surplus, or undivided profits equal twenty
per cent OF its capital stock; and that a
uniform method for the original entry OF de-
posits. in every bank and trust company. he
made compul sorry, and that the Supcrintond-
emit not only have the right TO prescribe such
method. but that IL be made part OF his duty
by statutory enactment
The practice OF a bank loaninR money on the
security OF Its own capital stock, the report
SAYS. should be prohibited. for the reasons.
first, that whenever 1t becomes necessary TO re-
debt and the bank Ia compelled to become the
owner OF it's own stock, Its capital while IL
remains the owner 10 in fact reduced by Just
so much and, second In the case Of insolven-
cy. the value OF the collateral Is reduced to the
extent OF the i'm pairme mt or insolvency. This
" to the depositors in a number OF instances
In tho last two years. The Superintendent
recommends that the banking law be amended
in this particular.