Phillipsburg herald. [volume] (Phillipsburg, Kan.) 1882-1905, 1898-12-01
THE BANK OF KANSAS.
from BreldsntharS Annual Report
Nearly soc state Banks Operating.


Commissioner Breidenthal has given
out for publication advance copies OF
recommendation which will be con-
tanned in his forthcoming biennial re-
port His recommendation for law
creating a guaranty fund for the pro.
lection of depositors and law placing
building and loan associations under
the control of the banking department
have already been published.
According TO his report there are at this date
2Sb state Including three savings bauks) and
62 private banks under the supervision OF his
department or this number, three state and
seven private are In process OF liquidation.
During the period covered by his report 1.-TWO
years. o. state banks. with an aggregate capt.
tai OF S7sL6jO, have been organized. OF this
number, 20 were reorganIzsd private banks,
reorganiz3d national banks, 4 reorgan-
lied state banks and 80 were new or
CARNATIONS During the same p9riod IS state
and ID private banks with capital OF Hob
lbJ have gone into voluntary liquidation and
ID state and two private banks, with capital
OF t4O0,5O have been closed by the department,
A number Of failures were due to the misuse
Of the banks funds by It's officers and an utter
disregard OF the provisions aud requirements
OF our law. 1 refrain from mentioning these
by name for the reason that criminal pro-
ceedings are pending against the officers OF
several such banks put would impress up
on the minds OF all bankers the fact that they
are trustees for the funds placed In their
hands, and that rs such trustees they
cannot handle or invest the money under their
control in the same reckless manner that many
Individuals employ their own funds, but must
exercise the utmost care and the best OF judg-
ment In their every act; and, In the matter OF
observance Of law, they should set an example
for their entire community
The annual statement OF receipts and dis
bursements for the year 1897 published In this
report shows that during that year the banks
charged of the following items OF loss:
Bad paper, loans S452 7i62i
Depreciation In value OF real estate. 1854 5l8 IL
Depreciation in value Of furniture and
nxtures ''',,' OBSERVATION-DISCLOSURES, 4lo6uW
One provision which produced the greatest
opposition was the section which limited the
total Investment OF every bank, except savings
banks to four times its capital and surplus.
This was looked upon as an innovation from
the fact that no other state had attempted to
uubPp huSh ~ PIbNloluH' Ing injury upOu
which the adoption of this section was urged
was that banks capital should bear some
proper relation to the volume of business
transacted by IL; and, there being no feasible
way by which the amount OF deposits could be
restricted the idea OF restricting the invest
ments appeared TO be not only feasible, but
wise
The operation OF this section has resulted In
nearly 100 banks either increasing their capital
or surplus, Many have carried their entire
earnings TO surplus thereby adding TO the
strength OF the bank and the security Of depos-
itors.
While there has been q nominal reduction OF
capital and surplus Of over "a OOO OO0 the actual
capital is greater to-day than In 1892 for the
reason that the present capital is unimpaired
and Is represented by assets worth par. where
as In 1850. none OF the losses resulting from the
boon period" had been charged OF and the
impairment Of capital at that time probably
amounted to so per cent
Individual deposits increased nearly $4,000
900, while demand and time deposits decreased
u, 100000 The item OF borrowed money, bills
payable and rediscounts has been practically
wiped out having been reduced from 81, 400 0OJ
to less than 100000 In this connection 1t Is
proper to state that at least 5000 OC0 OF the de-
luhuu huu CtIJllChbtS SllOWu III lobs repre-
scented borrowed money upon which the banks
were paving from to 10 per cent interest
large portion of such certificates being held by
banks and persons outside of the state; while
at this time only 500 0JO time deposits bear
per cent and not to exceed 100 0JU 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 1892 the banking business OF the state
has undergone many changes. Seventy-six
banks, representing capital Of s2, l43. Go have
been closed; l57, representing acapital Of a.
sac, $50, have gone into voluntary liquidation,
and o. have reduced their capital TO the amount
of Il, los $50 making an aggregate withdrawal
Of bank capital OF i6 645, 6lJ Perhaps 10 per
cent OF this amount has been used in the reor-
ganization Of banks, leaving net withdrawal
of nominal capital Of Is 9Sl, 100
While there are number OF points in the
state whore banks could be established with
assurance Of success am Of the
opinion that from this time the number Of
banks will not materially increase
While some OF our very best banks are COM
Quoted as private banks by individuals or firms,
there are many serious objections to their con-
tinuance, The fact that the death Of the owner
or any one OF the owners Of private bank will
force its closing is in itself sufficient reason
why the state should prohibit individuals or
co-partnersnips from engaging in the banking
business / therefore recommend that our
banking law be so amended as to require all
banks to incorporate
l also recommend q uniform method by
which all claims against defunct banking
Institution can be proven up and advocate
,he publication OF a list Of unknown creditors
II failed bank within certain time after the
Of the bank 1 would also urge an
amendment to the present law whereby the ag-
,regate loans Of bank to its officers and di-
'ectors be limited to One-third of It's capital.
This department should be given power to
examine the books and accounts OF any indi-
yidual, firm or corporation that he has reason
o believe is conducting an Legitimate bank
ng business, This pertains to persons not en-
ragged in regular banking
The provisions OF our law relating to legal
eserve should be amended so as to permit in
in United States bonds to be In
luded as q part OF the banks reserve in lieu Of
deposits In other banks
number Of banks eVade the provision OF |
aw requiring the creation Of q surplus by pay |
ng their entire net earnings In the form OF Of |
lcers salaries recommend that where the |
otal salaries OF the officers OF any bank exceed
en- per cent. OF its capital and surplus, such ex-
ess shall be considered as dividends. and such |
ans shall be required to carry to surplus the |
mount required by law before paying such ex-
ess salaries
In several instances small majority Of the |
tockholders control the affairs OF the bank |
nd absorb all its earnings in the payment of
alaries and other expenses, thus depriving the
minority stockholders OF any income. Under
ur present law there appears to be no relief |