Kansas City journal. [volume] (Kansas City, Mo.) 1897-1928, 1898-11-20
INTERESTING FACTS FROM MIR.
BREIDENTHAL's REPORT.
NEARLY 800 STATE BANKS
IL ADDITION THERE ARE EIGHTY
TWO PRIVATE BANKS.
Fifteen Failures During the Past Two
lcars-NaHy ChunGe. HIVE Been
Undergone since -9:-S.stcm
of Assessment Banks
Defective.

TOPEKA. Nov. I9.-CSpecial.D State Bank
Commissioner Breidenthal to-day gave out
Tor publication advance copies of the rec
ommcndations which Will be contained in
his forthcoming biennial report. His rec
lamentations for a law creating It guar
anty fund for thu protection OF depositora
and u law placing building and loan as
sociations uuGcr the control OF the bank
ing department have already been pub
lished.
According TO his report. there are At this
date 2s6 state dncluding three savings
banks and eishty-two private banks IN
der the supervision of his department. Of
this number, three state and seven phi
waite are in process Of liquidation. Dur
ing the period covered by his report Uwo
years.. siNty-live state banks. win an ag-
gregate capital of $7>i.GO. have been or
ganized. Of this number. twenty-three
were reorEanized private banks. eight re-
organized national banks. four reorgan-
lied state banks and thirty were new or
CARNATIONS. During the same period. for
ty-eiGht state and fifteen private banks,
with a capital of sl.0I9. $50. have gone into
voluntary liquidation. and thirteen state
and TWO private banks. with a capital OF
5000, have been closed by the depart
ment.
The report continues:
while not one of these failures can be
attributed TO bad conditions existing al the
present time, there are some special feat
ures connected with several of them that
are worthy of notice. The Hutchinson
bank. which was closed within a year after
II commenced business, perpetrated u fraud
upon the community and practiced Il de-
ception upon this department that cannot
be too severely condemned. and | regret
that there is no provision of law where
by the guilty parties could be punished
or, at least. required TO make restitution
of the funds appropriated.
"A number of failures were due to the
misuse of the banks funds by its Of
ficers and an utter disregard of the pro-
visions and requirements of our law. |
refrain from mentioning these by rams
for the reason that criminal proceedings
are pending against the officers of sew
eral such banks. but L would impress upon
the minds of all bankers the fact that they
are trustees for the funds placed in their
hands. and that as such trustees they
cannot handle or invest the money under
their control in the same reckless man
ner that many individuals employ their
own funds. but must exercise the utmost
care and the best of judgment in their
every act: and. in the matter of observ-
ance of law. they should set an example
for their entire community.
The annual statement of receipts and
disbursements for the year 1881 published
in this report shows that during that year
the banks charged off the following items
Bad paper. leans .$ij2. .G p
Depreciation in value of real es-
DEGRADATION fafe in value Of fnrai. 1Ss''lS L.
ture and iNtures.---..--. 1850 81
One provision which produced the great
est opposition was the section which linn
iteG the total investments of every bank,
except savings banks. to four times its
gaDitdl and SURPLUS This WAS looked lInOn
as an innovation from the fact that no
other state had attempted to adopt such
a provision. The theory upon which the
adoption of this section was urged was
that d banks capital should bear some
proper relation TO the volume of business
tranacted by il: and. there being no FEAST
BILE way b. which the amount of deposits
could be restricted, the idea of restricting
the Investments appeared 10 be mol only
feasible. but wise.
The operation of this section has re-
suited In nearly 100 banks either increasing
their capital or surplus. Many have car
RED their entire earnings to surplus. there
by adding to the strength OF the bank and
the security of depositors.
While there has been a nominal reduc-
ton OF capital and surplus of over S4.J00. 0r1.
the actual capital is greater to-day than in
lss2. for the reason that the present cap
iial Is untmpaired and is represented by
assets worth par. whereas in 1872 none Of
the losses resulting from the boom pcrioa'
had been charged off. and the impairment
OF capital at that time probably amounted
to ~ per cent.
individual deposits increased nearly
S4.G00. y0n. while demand and time deposits
decreased 81, $4,000. The item of borrowed
money. bills payable and rediscounts has
leen practically wiped out. having been re-
duced from 81. 10000 to less than 500. Gi1.
In this connection ii is proper to state that
At least S3,0U.oO of the demand and time
certificates shown in 1899 represented boy
rowed money. upon which the banks We're
paying from 8 10 10 per cent interest. Il
large portion of such certificates being
keld by banks and persons outside of the
state while al fhiG limo nnNN AIt shh TINA
deposits bear 6 per cent. and not TO en-
coed $4,000 OF these are held outside of
the state. Thus the changes that have
taken place in the liabilities are also of a
favorable character.
Since 1872 the banking business of the
state has undergone many changes. Sew
en;y-siN banks. representing a apita OF
81 2.Gl0. have been closed; l57. representing
a capital of $3.50 $50. have gone into vol
untary liquidation: and sixty-five have re-
duced their capital TO the amour: Of l.l55.-
$50. making an aggregate withdrawal or
bank capital of 81. CAS-. 6ld. Perhaps 10 per
cent Of this amount has been used in the
reorganization of banks. leaving a net
Withdrawal OF nominal capital of $:9Sl.1oo.
While there are a number of points ia
the state where small banks could be es-
tablished with reasonable assurance OF sue
cess, l am OF the opinion that from this
time the number of banks will rot matera-
ly increase.
while some of our very best banks are
conducted as private banks by individuals
or firms. there are many serious objections
10 their continuance. The fact that the
u'aln OF inc owner or any one OF the own
crs of a private bank will force its closing
Is in Itself sufficient reason why the state
should prohibit individuals or co-partner-
ships from engaging in the banking bust
ness. Where a private banker has no other
business ana deVotcs his entire time 10
banking. he will probably conduct his hank
in "A safe and buSinesS-Iike manner. and,
Were II not for his liability TO death. he
might he permitted to continue without
slibJectinG his customers to unnecessary
81 risk: hut where he is engaged in other on
q terprises. as he usually is. II is a difficult
matter 10 keep his private affairs separate
and distinct from his bank. and to mincle
his private business with his banking bust
ness Is liable TO subject the bank and its
funds 10 risks that may result in its failure.
therefore that our banking
law he so amended as 10 require all banks
TO incorporate.
system of assessing banks is defect
I've. Our Law is Indefinite and conflicting.
and is construed differently by many as
SCISSORS, thus resulting in unequal taxa
ton. IN many. instances banks being re-
quired 10 pay excessive taxes. out of all
proportion TO other property. while. in
other cases, they avoid paying their just
proportion. Our assessment law should lie
amended so as to, provide a uniform and
just basis for the assessment of banks. re-
quiring them to bear only their Just share
of the burden of taxation"
Breidenthal a uniform
method by which all claims against a de-
funct banking institution can be proven up,
and advocates the publication of a list OF
a certain time after the suspension of the
hank. He also urges an amendment TO the
present law whereby the aggregate loans
of a bank TO It's officers and directors be
limited to one-third of its capital.
OF savings banks he saws:
AT this time there are only three saw
ings banks doing business II. this state.
These are organized and are doing bust
a-.s