The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1897-12-31
UNIFORM BANKING LAWS.
How State Control Of Surface Should
BE Exerted.
THE PRIME OBJECT or SURPLUS
IL to Guarantee to Stockholders
Regularity ot Dividcnds--sccond-
airy TO secure Dcpositors.

Charles w. stevenson contributes an
article TO the Bankers Monthly, In which !
he advocates the enactment of laws that |
will insure more uniformity In State |
banking laws.
The value OF uniformity in State bank !
ing laws is Important, whether the III
stitution considered be small or large. |
Correspondents in large ccntcrs are Gus
todians OF hundreds of country banks.
Through the necessity OF exchange writing
interdependence is established, the rela-
tons become part OF stability. Each bank
in the Nation is Interested indirectly. II
not directly, in the stability Of every other
bank.
lie takes up the subject Of surplus:
a MooTED QUESTION.
| State control of surplus funds is exerted
| In behalf Of stakeholder rs we'll as de-
positor. The extent to which II IL either
right or polite for the States to Interfere
| with the free disposition OF earnings is
matter over which legislatures nave eN-
| pressed a variety OF opinions.
The bank acts OF the following STATES
make no requirement whatever as 10 the
accumulation Of surplus; Arizona, Soi-
orado, Connecticut Delaware. Idaho, IN
nois. Iowa Louisiana, Maine, Maryland
| Missouri. Montana, New Jersey, New Mex
| leo Rhode Island. South Carolina South
| Dakota Tennessee, Texas, Washington.
| West Virginia, Wisconsin and Wyoming
| Michigan, Minnesota. Nebraska New
| York and Ohio, each require that, before
dividend be declared, 10 per centum OF tne
net profi,s be set aside for a surplus fund.
until the sum equals 20 per centum OF the
capital stock California requires thar one
| tenth part Of the net profits be set asne
until the amount equals per cent or the
capital Indiana and Pennsylvania require
the same. Georgia allows no dividend I'M
iii earnings equal per cent or caplta,
which shall be surplus 10 which : per
cent OF succeeding net earnings shat there-
after DO added Kansas requires that ~
per centuIn OF the net earnings be set
aside until the sum equals 30 per cent OF
the capital. and virginia allows no diVi-
dend over per cent until surplus Is pro
vided equal 10 per cent OF the capital
PRIME OBJECT or SURPLUS.
The prime object of surplus is 10 guar
nntee to stockholders regularity OF diyi-
dend. and in this connection II has no
relation to the element Of safety, unloss
IL be made permanent by provision OF law.
when IL takes on the features. without thc
penalties. OF stocks 1t is subject TO with
diawal and affords no nxed bepcht To de-
positors.
: surplus ar "rest. us It is sometimes called,
adds strength to an institution, by u
, species of object lesson, from wheh the
patron Is enabled to see the genai ~ pres
perty of the bank. II has this erect: ou'
a bank may have TOO large u surplus DIV,
= bends must be earned upon surplus AS well
: ms stock, and when once 1t Is separated
n from undivided profits nny impairment Of
: tho amount suggests loss, so that once
< large sum is thus created 1t may not Do
. paid out for fear OF danger and "ct Is %
n heavy as to be burdensome NO count 10
= best practice Is 10 carry snug hurplu'
= proportiored 10 stock Gnd continuous
g fund OF undivided proflts proportoned u
&c volume OF business.
10 The secondary object OF surplus Is TO Sc
W cure the depositor. Tho state relics hei'
upon capital stock and buttresses Ia
l. stock with an additional fund, ana TOT
I'd Sufficient reason. Personal socntltF alNnS
De comprises a doubt IN the mobilization u
cash capital II becomes deposit 10 ais
tant hank, a note bin Of exchange.
word, an asset.
The stockholders liability Is prcpe
q, matter for State control, flNins its ehPen
" involves corporate rights ana prlViieRss' -
the attitude Of the State toward the banh
Is mo cornotatlon Is everywhere the same
a. uniformity In this particular might y
ensuv accomplshcd save for a latent dls
c. regard among the people OF the indispens
ut able commercial value OF bank
Surplus and shareholders LIABILITY or
ga near to have no relation or bearing 70 enc
IN other in State laws Tho two ideas 90 NJ
seem 10 have been considered together
90 LIMITATION or LlABiLiT Es.
he The limitation OF inability OF sharelso'df
should be considered IN connection WI
". official unhllity. not as between eS'isosii
~ ana shareholder hut az between Bhar'
py tolders In some forms OF stock companle
limitea. the Justice rs recognized Of makif
n officlaIs responsible for certain losses as
'ee safeguard TO shareholders not participant
nii in management. ,,,.
an. Noi ouly the extent OF the liability
raj r,is,a hui tho kind Of debt, loss or opig
IRE lion for which 1t shall exist, the time WI,
in Il shau accrue and terminate. and u
on manner OF apnortlopment between Ehar
bolGers. Here we fiud great diversity
~, state laws. The following states have sol
~ form IL double liability; Colorado, Gepfs
sts Illinois. Iowa, Kansas. Maine, Mlcnisa
- Minnesota Nebraska, New YORK, Nol
az Dakota. Ohio. Pennsylvania, South pnkp
Wert Virginia. Wisconsin aud Nyonli
single liability obtains in the toliowln
IN conneetieut. Louisiana, Maryland, ~
IN rouri New HAMPSHIRE, New Jersey, NJ
ing Nexico Tennessee and Virginia. htn.ue
ght sssumed double liability September OF u
ihs wear Arkansas and Texas have no ~
Sc law. In Illinois, II the liability accrue d'
'ge' ing Ownership. subsequent transfer h'
nct release Usually liability ceases si&
Twelve months after transfer