The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-11-16
LOSSES BY LOOSE BANKING.

There are other than national banks
which are institutions of the highest fnan-
cial standing, but it is due to the fact that
the managers are experienced and prudent
bankers, and not to any laws under which
such banks are organized. In spite of all
the limitations and prohibitions which acts
of Congress have placed about the national
bank, now and then these go wrong through
the skill of the faithless bank official and
the failure Of directors and bank examiners
to understand the affairs of the institution.
If bank-wrecking is possible under so COM
plete system as that of the national banks,
there should be no surprise when banks or
ganized under loose state laws or under no
laws whatever, suspend b ause some Off
cial goes off and about loses his mind
as the absconding cashier of the bank in
Crawford county writes from his place of
refuge regarding himself. This suspension
seems more serious than some others, but
having an average of, perhaps, eight or ten
a year. people become accustomed to them.
Even if the requirements of the state law
for the organization of bank were lived
UP to, the security afforded is inadequate.
All the stock of the national bank must be
paid in before it is permitted to do business.
and the method of it's investments must be
set forth before it can begin operations.
The state law requires but half the capital
stock to be paid in, and all that is required
to satisfy the secretary of state of such
payment is the sworn certificate of the pres
ident and cashier. 1t has frequently been
discovered that banks doing business under
state charters have failed and disclosed the
fact that a large part of the stock has never
been paid in. Not only must the shareholder
in the national bank pay the full face val
ue thereof, but in case of failure he is held
for his stock and as much more.
If the State is going to give the good will
of it's name to banking institutions it
should require that those who are given the
privilege should make their institutions
reasonably SAFE Moreover, it's laws should
provide severe punishment for those who
are engaged in banking upon no capital.
The national system is safest and best, and
if 1t were not for such loosely managed in
situations as that which failed in Crawford
county, such banks would be located there
in in spite of the bowling of demagogues.
They are not located in such counties be-
cause it is much cheaper to do banking
business upon wind than upon a basis which
requires paid-in capital.
1t should be remembered that the cheaper
the banking system the more reckless the
banking. officers that give bond, bank
ing on stock half paid in, if paid in at all,
with no other security for deposits than
such stock, will not, as a rule, be as con-
sentative as are those who are hedged about
with financial responsibility. The bank Off
cial who has no fear of an examiner, who
gives no bond and who knows that the stock
of his bank is a myth is the one who will
back his financial judgment in the margins
of the stock exchange or send his orders to
the wheat pit. If fifty national banks
with $4,000 capital each could be scattered
about Indiana to take the place of the
Dwiggins string of fraudulent banks and
of those like that which has just exploded
in Crawford county, it would add to the
States financial solidity.