The Cape Girardeau Democrat. (Cape Girardeau, Mo.) 1876-1909, 1897-02-06


National bank notes, legal tender
United States notes and god
and silver certificates. 800. 1859 20
Gold 3,=sO,5UI 80
Silver coin al, 3sG 26
.slU5, vi, 6I2 "a
LIABILITIES.
Capital stock paid .s2l, 263, II6 81
surplus fund on hand ........ .. S,4g7, $50 So
deposits subject TO drafts at sight
by banks and bankers go. -. 3,57I.g35 81
Deposits subject to drafts ut sight
by individuals and others........ 55.a7s,l.5 O5
Deposits subject to draft at given
dates 16,3Is.7I "A
Bills payable and bills rediscount-
7I5.945 "a
.gI7. 6I2 %
When examination began there was n great
deal OF careless banking. and apart from that
there were many banks in bad condition as the
result OF the stringent times that have pre-
vailed since 1898. Out of the 81 banks that
have closed in the last Is months quite Il num-
Der OF them had been getting in worse anc
worse condition for several years past.
WEAK INSTITUTIONS.
In this connection. it may not be improper tC
state what is a fact, that there are too many
banks IN the state for the amount of business
TO be transacted. In some places banks are
maintained where a pencil and paper and two
minutes calculation Will show that the profits
which can reasonably be expected from the
amount OF business will not equal the expense
of the institution on modest lines. Some OF
these banks necessarily resort to il
legal rates of interest iu order to keep
their heads above water. In some places
where it is questionable as to whether or
not one bank should be maintained. there are
two. How this condition OF affairs is to be
remedied l do not know. The convenience Of
banks in communities is not to be moderated,
and yet it would appear better in many in
stances to go q few miles further for banking
facilities than to encourage the maintenance
OF banks which can barely live. In this con-
n%ection, the inquiry PRESENTS itself as TO
whether or net it would be wise to increase
the requirements rs to capital stock. Private
banks are permitted TO organize with 5000,
and incorporated banks with $4,000. BY the
time the banking building, furniture and
fixtures necessary to conducting these in
sStutions is paid for but little capital is left
remaining. l would not be taken as discrimI-
mating against the smaller banks in favor Of
the larger ones, yet where institutions are OF a
hduclary character, the line OF Gemarkation
should be drawn in favor OF safety to the per-
Sons who entrust their funds to the keeping
thereof. AT least, if present conditions are TO
continue, the greatest care should be taken to
preserve intact, as much as possible, the capt.
tai stock by moderate charges for banking
houses, furniture and fixtures. the gradual
elimination Of the last item and provision in
the law requiring banks when they declare q
dividend first TO set apart to the surplus fune
ten per cent. Of their net earnings.
AMENDMENTS ~GGEsTE
/ would say in regard to the general banking
law that it needs amendment in several par
tiCularS. While making this statement l would
deprecate any radical changes in the present
Statutes. If 1t be true that other banking Sys-
TENS as a whole are more pprfppt than tba. Of
Missouri, yet they have grown TO be so by
gradual improvement. Laws of this kind are
evOlutions which grow out Of the experience of
the communities for whose benefit they are en-
acted, and l am decidedly Of the opinion that it
would be unwiSe to substitute for our Missouri
statutes an entirely new system which would
be to the public and to the Persons
who must do business under them. The
changes needed are rather to clarity than to
substantially alter our present laws. Section
R74S, which covers the duties of directors.
should be made more comprehensive. 1t
should distinctly require that boards OF di-
rectors shall meet at least once per month and
pass upon all the affairs. OF the bank, particular
ly bills receivable and bills payable, and keep q
written record Of their proceedings. This Sec
tion should also forbid the borrowing of money
by the bank except with the consent Of the
board of directors, and 1t should inhibit the
borrowing OF moneys OF the bank by any
director unless with the knowledge Of the
board of directors. This is the rock upon
which most wrecked banks have foundered
1t may be too radical to provide that direc-
tors shall not be permitted to borrow the
funds Of the bank at all, but it is certainly
no more than q reasonable safeguard that
such loans shall only be made with the
knowledge OF the board OF directors. While
this provision seems simple, moderate
and conservative, yet an inner view Of what
hos OcourraI NTH haplrc rvhfnb hara ynilo1 10
cause Of undue borrowing by directors shows
that if this had been the law, few, If any, such
failures would have taken place. In most
cases where disaster Of this kind has overtahen
institutions it has been caused by one or two
OF the directors with one or two of the officers
having gradually come to using more and more
Of the banks money, until reckless Specula-
lions have involved them and the Institution In
financial ruin. 1t has come under my observa-
ton that where reckless borrowing has been
done by banks In most instances 1t has come
about through the active officers of the bank,
without the knowledge or consent OF the ma
1ority OF the board l. Of directors.
There are other and minor amendments to
the banking law which might be made with
profit. ana some OF which have already been
suggested TO this general assembly in the
preparation and introduction of bills; but l
can state It to be my belief, after an expert
ence with bank supervision for the past
eight years, and examination for the past
two years, that il the general assembly will
adopt the amendments suggested as to
directors borrowing the funds OF the bank, as
to the clearing up the section to prevent ex-
cessive loans, and as to setting apart ten per
cent of earnings to surplus these provisions
alone. within u short period, will work a revo-
tion which will place the banks of Missouri in
an infinitely better condition than they have
ever before been in their history.
A. A LEsUEUR, Secretary OF State.
The report was read with interest by
che membera