Evening star., 1898-12-05

| dredthS per cent OF their total aSSets, the
! banks of st. Louis not over IA per cent OF
| their total assets; the banks of other re-
serve cities not over 1.51 of their total as
| sets.
| In other words. the proportion of their
assets which the country banks OF the
! United States can lean. in strict compliance
with section 5000 to one individual is
| sixty-three one-hundredths of 1 per cent
greater than in 257 reserve cities. seventy
! four one-hundredths of l per cent greater
| than in st. Louis over twice as great as in
| Chicago and nearly four times as great
| as In the city of New York.
| This provision as 1t stands at present
! constitutes an incentive to the making Of
! loans the larger in proportion 70 the total
| assets of banks in smaller communities.
where. as a rule. large loans which are
| safe are the most difficult to secure: while
| in the larger business centers of the coun-
| try, where commercial conditions create a
| certain demand both from banks and bor-
| rowers for large and safe loans, its effect
| is the reverse to such an extent as to be
| injurious.
Personal Penalty.
| He then says:
| The failure Of the present law to provide
the power to apply personal penalty for
! the making of excessive loans sometimes
| embarrasses the controller in endeavoring
| to check tender cies toward recklessness in
| ioaning. which point to the ultimate ruin
of a banking institution.
! AS before stated. the present provision,
when properly altered. should allow the
| banks Of larger communities to have more
| nearly the privilege of 1oaning a given pr
! cent of their total assets to one individual,
| which now belongs under strict compli-
ance with the present provision, to the
| banks of the smaller communities. From
| this privilege they are now debarred by
| law.
| The desired results can be obtained. in
our Judgment by adding, after the words,
|
one-tenth part Of the amount of the cap
| ital stock of such association actually paid
| in" the following words:
provided. That the restriction of this
section as TO the amount of total liabilities
| to any association. of any person. or of any
company, corporation, or firm for money
| borrowed shall not apply where loan in
| excess of one-tenth part of the capital
| stock shall be less than 2 per cent of the
! total assets of said bank at the time of
making said loan. Said loan shall be at
| all times protected by collateral security
| equal to or greater in value than the excess
| in the amount of said loan over one-tenth
| of the capital stock
The strict and personal penalty enforce
| able by the controller should then be pro-
vided for infractions of the amended sec
| ton by the officers of banks, to enable the
controller to successfully enforce general
| and strict compliance with its terms.
The penalty clause will enable the con-
troller not only to limit the size. but to
|
InsOlvent Banks.
| Cnder the head of insolvent banks the
controller discusses in detail his ruling of
| May 8. 1898 reversing the former position
of the office in refusing to revise an assess
| ment against stockholders when an error
in the first assessment became manifest.
He states that in eight banks a revision
of the first assessment has been made. in
| three he hcS SarCnI
| ment against stockholders in the interest
| of depostors, and in five cases he will
| make returns to stockholders of sums
Illegally collected from them.
He states that in the administration of
| insolvent banks in the interest of creditors
| he has effected annual savings approXimat-
| ing 100000.
| Domestic Branch Banking.
Under this head the controller, while
| recommending that domestic branch bank
! ing should be legaliZed in communities of
| less than 1000 inhabitants, many of which
| are unable to support independent
| banks. opposes the granting of any more
| liberal privileges of branch banking than
| these, on grounds of public policy.
He states that:
| Su,h privileges would place the larger
| banks of the great cities in competition
| with the banks of smaller communities, and
| would probably result in "A rapid Centrali
1
| try in the hands of constantly lessening
number of institutions. Theoretical advan-
| tages are claimed for such results, but in
our judgment they would be injurious to
| the best interests of our country
| Such a system would increase the diff
! culties in the way of the small borrower,
| though leSSening them for the large bor-
| ROVER. 1t would tend to separate the bor-
| rover from the lender, as 1t would of he
| cessity remove the central lending power
| from the small borrowers of small com
| munities.
| 1t may be claimed that the agents in
| charge of the branch banks would possess
| the same powers of loaning as the Off ers
OF the smaller banks now possess; but such
arguments ignore the prevailing tendencies
| of modern corporate management wkicn
| magnify OF necessity central responsibility
and constantly tend to subordinate to rigid
| systems the activities and responsibilities
| OF agents upon detached duty.
Foreign and Colonial Branch Bank
ing.
| In connection with this branch of his re-
port the controller discusses at length the
| necessity for the establishment of iterna-
| uonal and intercolonial branch banking
| He shows the disadvantages as compared
| with foreign trade, under which American
| export and import trade now llbors as n
| result of inferior banking facilities and
! shows that these same disadvantages are a
serious hindrance to the adjustment of our
| lraue relations TO the new advantages af-
| forded by territorial expansion
In this connection he discusses the Ha-
| waiian and Porto Rcan banking and trade
| situations. He says:
| The foundation for the greater growth of
| trade between the United States and her
| colonies must be speedily and firmly laid
| in proper banking laws, which will result
| IN enabling her merchants to do business
! with the people of the colonies without the
! disadvantages existing at present.
our present national banking laws do not
| authorize the establishment of American
| International or American intarcoonial
banks, nor could any national bank estab-
| llSh branch in a territory or colony such
as Porto Rico or Hawaii, even if our pres
| tnt laws unchanged We're extended over it,
| While it is questionable whether Congress
| should iegahze the establishing of foreign
| or colonial branches by narional banks
! transacting business under the present law
/ that it should at least pass laws au horiz.
| ing, under proper res ctions the general
| incorporation of banks organized to carry on
| international and intercolonIal banking. as
distinguished from domestic banking ad-
| mits of no reasonable doubt
Unless some such legislation is provided
| the American exporter and importer In his
| trade with Americas own colonies will be
| compelled to endure all the dsadvanta ges
! under which, in all South American mar
| kets and in many other markets of the
| world, he now labors in his competition