Kansas City daily journal., 1896-12-07
A new BANKING LAW.
COMMISSIONER BRETDENTHAL SAYS
KANSAS NEEDS ONE.
PRESENT LAW INEFFECTIVE.
MR. BREIDENTH.L OUTLINES PRO
POSED MEASURE.
Probability That 1t VIII BE Enacted
Into Law. With Few Change
Lcedy and the Metropolitan
Police Law-Knnsas Eo-
IIticaI News.

Topeka. Kas.. Dec. 5.-(speciai.' The bl-
ennial report Of state Bank Commissioner
BreideuihaI Was made public yesterday. \
large portion Of the report Is devoted 70
the publication Of ;he present banking law
. and the proposed Eew banking law pre-
pared by the commissioner. In his letter
Mr. RreiGeuthal says the necessary amend
nents and additions 10 the present law are
SO numerous that the adoption Of an entire
new Law viii be the better way 10 ae-
comEIIsh tne change. He says that the
banks Of Kansas. with very few e&cep-
lions. have their affairs in good condition.
The Objectionable item Of overdrafts has
been greatly reduced and the amount OF
loans decreased The reserve IS almost
double the legal requirement and the banks
are in condition to meet any ordinary de-
mauGs.
Tho present law does not clOthe the COM
missioner with sufficient power to protect
the creditors Of banks. Ii is not generally
known, but is fact nevertheless. that
under the old law the bank commissioner
has no authority to close up an insolvent
bank whose capital is not entirely wiped
out, which is rarely the case.
One banker in Southern Kansas was
posted on the law. however, and short
time ago when mis- bank became insolvent
he refused 10 turn L over 10 the deputy
commissioner. The officer was defed. The
banker raked around for day or so and
got things In shape and is still doing busi-
ness. The commissioner says this defect
ought 10 be remedfed or the office should
be abolished. He also recommends that
the fee for examining banks be raised suf-
hciently to make the department self
sustaining
The report Of Mr. BreidenthaI is very
interesting to bankers and financial men
generally, for the reason that his new
banking bin viii no doubt be enacted into
a law, with but few minor changes. His
party will be in control of every branch of
the state government and his word is law
with the Popuiists
In the proposed new law provision Is
made for the ownership of real estate by
banks Each is permitted to own a build
ing suitable for its business. of the value
including furniture and fixtures. of not TO
exceed one-thlrd Of the banks capital
The capital stock will be graduated ac-
cording TO the size of the town or city in
which the bank y located. 4 bank with
only 5000 capital viii not be permitted to
=
where It may secure a large amount of de-
pos!ts. The capital must correspond with
the volume of business
The reserve OF all banks must be kept
on hand in cash, or deposited at COM
merClal centers, subjec; to draft. and de-
poslts I'm small banks outside of the state
prohibited. penalty IS provided for vio-
lation Of the section Of the law prohibiting
excess loans
The officers Of bank are prohibited
from borrowing its funds except on ample
security and subject to the same restric-
tiOns other borrowers
Under the present law the commissioner
has no power to revoke the authority of
any bank under any circumstances, nor
power TO require a bank to make good an
impairment OF its capital As A result a
number Of banks in Kansas show a capital
that does rot exist.
The commissioner Is also vested with TO
power to close bank which keeps its re-
serve good until its losses exceed its cap
iial. This paUtakes of the nature of lock
ing he stable after the horse Is stolen"
All Of these defects will be remediad in
the new law. The commissioner is now re-
quired tn apply for a receiver Immediately
after taking charge of defunct bank.
Provision will he made giving him power
to place suitable person in caarEe tenn
porarily. for the purpose of arranging, if
possible. for n settlement without the ex-
pense OF a recelvership.
Receivers OF insoIvent banks will be re-
quircd to make reports to the bank COM
missioner, and such banks viii also be sub
jert to examination.
The double liability of stockholders will
be enforced by the receiver for the benefit
Of all creditors. and any collections on this
account distributed among the creditors
rro rata. Individual creditors are prohfb-
tied from collecting this liability.
he al inv 81 mo Cf hap l. ,1f
he permitted n any time 10 exceed three
times - capital and surplus. The com.
miss1, says any tank should be salts
fled with Investments amounting to s. for
every 81 of It's capital and surplus. In
solvency, as applied to banks. is defined
20 mean that stage Of the proceedings
when an institution fails to meet checks
against funds on Geposit.
Banks will be prohibited from borrowing
money hahituaily and at no time per
mittcd To borrow an amount exceeding 80
Per cent Of their capital And in no case
shall collateral in excess of the amount
borrowed lie given as security therefor
''Muoh trouble has been occas!oned by
banks nahttually borrowing large sums of
money for the purpose of reloaning the
same. So the commissioner states.
The directors or banking Institutions viii
he held equally responsible with the OK
cDutiye officers Tor any irregularities
I.
In the stock Of other banks Ample pro-
vision is made whereby a bank NAV re-
duce It's capital \ penalty is provided for
transactfrg banking business without
authority fTam The department
The proposed law also provides that
hanks shan Doc exempt from attachment
and other legal process whereby creditors
may secure preference The assets of a
Gofuuyt bank VIII be held for the benefit
or all its creditors
Bank officers VIII he prohibited from
using the banks name in iucurring any
liability tn any other manner than through
tn" proper discharge Of business. and Off
Gers VIII he restricted m the use OF the
banks falnds under severe penalty
II VIII hc made compulsory for the com
missioner To prosecute Violations of the
banking iaw n, Will b. required 10 lille
complaint with the county attorney against
any hank officer who commits any oftrnSe
against the banking law This. 1t is
claimed SSH. nay-~a wholesome effect and
VII prevent asaierS from making false
reports concerning tho condition Of the
affairs of their institutions Commissioner
Rrcd.uthal also recommends that all build
ing and loan associations and loan cor
r0ratigus of every character le placed un-
der the supervision Of his department.