The true northerner., 1897-01-13

| propagation as at present established.
and its enlargement In the future to Its
fullest possibilities. but at the same
| time provide substantial revenue for
| the state.
Banking Department.
| While / believe that most OF our state
banks are well managed and I'm good
| condition. still the lessons taught by
| the failures during the past two years
should not be unheeded or forgotten.
| and I feel that I cannot too strongly
urge attention to this subject FroA
the report OF the commissioner on bankV
ing IL appears that there are now up
wards of 10 state banks and three
| trust companies In existence In our
state with a liability to depositors or
| $95. 900 900 This is three times the num-
ber shown by the first annual report
and over twice the liability to deposi-
| tors. The severe strain OF the past
| three years has increased the burden
! and responsibilities of those charged
with the administration OF banks and
has developed some weak points In our,
banking laws. During the period men
toned number of banks have failed.
| In the city OF Lansing alone three
state banks failed. swallowing up near
| ly 81. 900 900 of depositors' money. The
| cause of these. and in fact nearly all
bank failures. may be distinctly traced
| TO the excessive loans made to the
officers OF those banks and to the vari-
Gus business concerns In which these
officers were interested. IL is hardly
necessary TO add that must or these
loans were made in violation OF the law
or by evading il. IL seems TO be fact
that too few bank directors understand
banking and most of them find 1t easier
when times are good. at least, TO leave
the management OF the bank with its
cashier or some other one off1cer.
Something certainly should be done
that will make bank directors more IA
miliar with the affairs OF the bank and
thus prevent msmanagement for which
they are morally, and should be legally,
responsible.
Quarterly Reports.
The quarterly reports, which are now
required TO be made TO the commission
en- should be verified by the oath of all
those who are required to sign the re-
port and the oath should contain
statement that they have personally
examined the books and assets of the
bank and that from such examination
they personally know that the state
ment signed by them Is true In sub
stance and i'm fact. II should be made
obligatory upon each bank to require
from its cashier or treasurer such
bond as shall be approved by the bank
ing commissioner. Whenever cashier
or treasurer shall without authority
shown upon the records OF the bank.
discount or cash any negotiable paper
or security of any kind. il should be re-
garded and treated as an unlawful use
ofthe money in the bank and appropri-
ately punished. A full and complete
record of the actions of the board OF
directors relative to loans and dis
counts should be kept, which record
should be signed by all those present
There is altogether too much red tape
in getting receiver under the present
law The commissioner has not suffi-
cient power TO enforce the law and pro-
tect the depostors. Whenever he finds
bank nsolvent or violating the law.
he must report to the attorney general
and the latter may, il he feels so dis
posed. apply to the courts to appoint
a receiver.
The banking commissioner should be
given power TO close a bank at once
whenever IL is insolvent An in gener-
al, / believe he should bc given the
same power over the state banks that
is given the controller OF the currency
over national banks. Every safeguard
possible should be placed around the
banking business OF our state. With
out banks. about whose safety there
can be no question, we cannot carry on
business. Each mercantile and manu-
featuring concern should feel that its
best and safest friend is the bank in
which il makes it's deposits and from
which it must necessarily be constant
borrower
In this country where sudden fort
unes are often made by some fortunate
speculative enterprise. the temptation
to make unsafe and illegimate invest
ments with depositors' money is often
too great to be overcome. Severe pun
ishment should be meted out to those
officers and managers of banks who are
thus led to betray their trust. Business
prosperity depends on sound banking.
Without IL we must always expect to
pay higher rate of interest than our
business will warrant.
Safe banking. pure and simple. with.
no capital stock-the depositors stand
ing i'm the relation of shareholders to
the extent of their deposits. and prof
it-sharers pro rata-are not obliged TO
earn money for share holders and de-
positors, too. They are enabled to
make very conservative investments.
AS there Is no incentive TO make great
profits such institutions are obviously
in the interest of depositors. TO whom
a reasonable dividend can be paid.
recommend that our general banking
laws be amended to admit OF such So
cieties for savings In Michigan.
am in favor of an inheritance tax
and an income tax. l earnestly hope
you may see your way clear to provide
for them.
Point I'm state Finances.
Without rejecting upon any previous
administration l feel IL my duty, here.
TO call your attention. and that OF the
people of the state of Michigan, TO a
deficiency which exists. and which L
am informed has existed for some time.
in the state finances. This has necessi-
tated the borrowing OF considerable
0f foh