The sun., 1895-01-13
NEW YORK STATE BANKS.
CHhNGBs IN TIE BANNING LAW
sUGGEsTED BT MIR. PRESTON.

ne Also Suggests the Repeat of the Ns-
| ttouni nanking Act, So that All Hsnks
| Shall ne Under State Supervision.
ALBANY. Jan. 12.-superintendent Charles NJ.
| Preston OF tho state Banking Department In
| his report says:
THE Banking law should be so amended az 10
provide that the whole capital stock Of a bank
shall be paid In before tho bank is authorized to
commence business, for the reason that expert
ence has shown that the balance Of unpaid capt.
tai is not as n matter Of fact. paid In, In
cordancc with the statute.
| II respectfully suggest that nm amendment
| be made TO the Banking law providing that no
| officer or employee Of bank should borrow any
| OF its funds without first making an application
| to its Board OF Directors and obtaining the
| favorable action of at least quorum OF such
Board on such application, and a penalty should
| be prescribed for a violation Of this provision.
| Duringthe last fiscal year II has been demon
strated, in more than one instance, that tho
Suspension Of banks under the supervision of
| this department was caused largely by the off,
| cers-to wit, the President and cashier-loaning
| TO themselves large sums OF money. with their
| own paper as security, which paper has turned
| out to be worthless.
II recommend that the Banking law be so
amended "a to provide that every bank whose
surplus or undivided profit does not equal 20
| per cent. OF lLS ChplJAl btOCk buhll W
set apart from time TO time its net earnings be-
fore declaring n dividend. at least 10 per cent.
| of such profits, until such time as such surplus
| or undivided profits equals 20 per cent. of It's
| capital stock. IL frequently happens among the
smaller banks of the State that, after paying ex-
| penses and declaring a dividend, there is not
| sufficient margin Of profits left out OF which to
| pay losses which necessarily befall every bank;
| and it frequently occurs that, in the cxamina-
| -i-r-.
| be more or less impaired BY the enactment of
| the provision above suggested. this difficulty
would be largely avoided, and tho banks Of the
state would be in q much more satisfac tory con-
| dition.
The increase in the number OF financial In
stitutions throughout the State seems to be ac-
| companied by corresponding increase In the
variety of methods in keeping accounts. and
while 1t is not my purpose 10 interfere with the
general bookkeeping Of any corporation, am
convinced that the interests Of the public would
bc better served. and the efficiency OF the de-
partment materially improved. II q uniform
method for the original entry Of deposits. in
! every bank and trust company, were made
compulsory, and that the Superintendent
such method. but that it should also be made
part OF his duty. by statutory enactment. Most
entry Of deposits. so that on examination Of
such deposits. for any period. it can be easily
aseertSined the proper sdn amounts S, have been
stances separate deposit books are entirely iC-
nored. The receipts from all sources appear
| mixed together in the same books. and in u few
cases there is no book whatever between tho
deposit. slips and the ledgers; and in order to
any any, period. I examiners are obliged to depend
entirely upon the deposit slips; unless they ex-
The adoption Of such a provision, coupled with
provision enabling the Superintendent to
terialiy add to the efficiency OF bank examina-
tions and lessen the cost thereof. The same
banks Of deposit aud discount, all other institu-
tions OF this State under the supervision Of the
"The practice Of a bank loaning money on the
security Of It's own capita! stock should be pro-
hibited. for the reason. first, that whenever 1t
becomes necessary to resort to the collateral for
the collection of the debit and the bank is COM
PEELED to become the owner OF its own stock. its
capital while IL remains the ownerl II in fact
duced by just SO much; and second. in the
of insolvency. the value OF the collateral is re-
yency. This has been found in practice to work
disastrously to depositors In number of in:
that the Banking law be amended in this partic-
ulaEi; ..T;,s .,,or,.r.c.rsr,, ., ~. s,,.o :, ~.
cember. 1886, IN deciding that the American
Emigrant Company of the city Of New York was
added. in his opinion 1t would be. perhaps,
wise IL a business such as Is carried on by this
regulation % and examinetion. X " This % Company % has
recently failed with alleged deposits Of S4O0,-
900. credited to many thousands Of people
number OF them being emigrants unfamiliar
with the awsand business methods OF the state:
Institutions OF like character in New York and
Brooklyn, having an appearance of licensed au-
thority and governmental sanction, are said to
migrants. This matter is respectfully called TO
your attention in order that the legislature
may take such action as II deems proper"
On the subject of the currency the report says:
while 4 may be asked. what has the Legis-
CURRENCY question: / beg to remind that
New York contains 20 tai about Of m he entire
banking: and other Interests. The question of
ef Seng Eeesn CT That tax fe pespa s
OF the state Of, New York are not in
q The 81 h hst Sat-. Tns ns.G bY
Should. and probably win, be enacted by Con-
For this reason i think the Legislature has an
interest in this question and l. therefore desire
ing amendments to:the National Banking act:
First-Authorize the Secretary OF the Treas
thirty years. the proceeds OF which to retire the
legal tender and Treasury notes thus creating
used to secure the circulation to be taken out by
the banks on par basis.
all respects except the provisions relating to the
issue OF the currency and the securing Of the
and subject to State supervision.
There is no longer any good reason for the.
continuance Of the national banks as such
There should be but one banking system IL orch
state as well as system for the issuing OF
currency. AZ the present time there is more or
the national and State banks. II they were all
State banks they would all be entitled to be
treated upon their merits, Greater thorough
ness as TO examination and supervision could be
enforced II all the banks were State banks, for
the reason that then the territory would not be
so large but that the supervising officer In
each State could make his appointments
OF examiners from personal knowledge
nf fitness of the person apDOintel.
and would lie personally acquainted and con-
stantly in touch with his corps of examiners.
The law could provide that the banks should
duplicate reports of their condition 70 the Comp
troiler OF the Currency. which could be used by
him in cOllating his statistical information for
the benefit of Congress, and at the same time
the State Legislature would have such informa-
tion with regard to all tho banks of the State as
would enable II TO be fully conversant with that
branch OF business. and better enabled 20 pass
the necessary and requisite laws from time TO
time for tho Organization and supervision of the
banks.n