The Goodland republic., 1898-12-02
THE BANK OF KANSAS.
Facts aod RecOmmsndatIous
from Breldsnthals Annual Report
NearIT 500 state Bank OpsratInE.

/ ont 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-
j lection Of deDOsitors and law placing
/ building and 1oaU associations under
! the control Of the banking department.
have already been published
| According to his report, there are at this date
/ 285 state dncluding three savings bauks) and
/ s. private banks under the supervision Of his
| department. Or this number. three state and
| seven private are IN process Of liquidation
/ During TIE period covered by his report (two
| years. s. state banks. with an aggregate capi-
/ tai Of S7BL 60 have been organized or this
| number, 3 we're reorganizsd private banks,
| 8 reOrganizsd national banks. 4 reOrgau-
| lied state banks and 81 were new or
| gauizations During the same period s5 state
! and Is private banks. with capital Of S1.042,-
| 80 have gone into voluntary liquidation, and
I l3 state and two private banks. with capital
OF 500 500, have been closed BY the department.
/ A number OF failures we're due 60 the misuse
/ Of the banks funds By its officers and utter
! disregard Of the provisions and requirements
| Of our law I refrain from mentioning these
/ by name for the reason that criminal pro
| Ceedings are pending against the ohicers OF
| several such banks but would impress up
on the minds OF al bankers the fact that they
| are trustees for the funds placed in their
I hands, and that as such trustees they
| cannot handle CT 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-
meut In their every act; and. in the matter OF
/ observance Of law, they should set an example
l Tor their entire community
| The annual statement Of receipts and dis.
| bursements for the year 1897 published in this
ceport) shows that during that year the banks
charged OF the following items Of loss;
Bad paper, loans s452 71621
| Depreciation In value Of real estate. 1635I812
I Depreciation in value Of furniture and
fixtures ------.-....-.---.- -------.---- 4lsSQs4
Total. s652 Sl5-27
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
adopt such a provision. The theory upon
which the adoption Of this section was urged
was that a banks Cspital should bear some
proper relation 90 the volume Of business
transacted by it; and, there being no feasible
way by which the amount OF deposits could bs
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 ana the security Of depOs-
itOrs
While there has been nominal reduction Of
capital and surplus Of over 44 OO0 O3O the actual
capital is greater today than in 1872, for the
reason that the presenA capital is unimpaired
and IS represented by assets worth par. where
as in 1892 none Of the losses resulting from the
boom period had been charged OF and the
impairment OF capital at that timo probably
amounted TO 50 per cent
Individual deposits increased nearly 81 O00.-
600, while demand and time deposits decreased
q, ,550OJ0 The item OF borrowed money, bills
payable and rediscOunts has been practically
wiped out, having been reduced from u, 900 OOJ
to less than $500, ,000 In this connection II is
proper TO state that at least 3 600 O0O Of the de-
mand and time certificates shown in 1892 repre-
sented borrowed money. upon which the banks
were paving from 6 70 10 per cent interest a
large portion OF such certificates being held by
banks and persons outside OF the state; while
at this time only $3.50 90 time deposits bear
per cent and not to exceed s50. 90 Of these are
held outside OF the state Thus the changes
that have taken place in the liabilities are also
Of q favorable character.
Since 1892 the banking business Of the state
has undergone many changes Seventy-six
banks, representing capital OF p ls3. 6I0, have
been closed; I57, representing a capital OF So
Sz6, so, have gone into voluntary liquidation.
and s. have reduced their capital TO the amount
OF e. 155 go. making an aggregate withdrawal
.
cent Of this amount has been used in the reor-
ganization Of banks, leaving net withdrawal
OF nominal capital Of g. sSI, 100
While there are number Of points in the
state where banks could be established with
reasonable assurance Of success, / am Of the
opinion that from this time the number Of
banks viii not materially Increase
While some Of our very best banks are con-
Quoted as private banks by individuals or firms,
there arc many serious objections 70 their con-
ae-- ar--.a - 80
OF any one Of the owners Of q private bank will
force its closing IS in itself sufficient reason
why the state should prohibit individuals or
CO-partnerships from engaging in the banking
business I therefore recommend that our
banking law be 50 amended as 70 require all
banks 70 incorporate
also recommend q uniform method By
which all claims against q defunct banking
Institution can be proven up. and advocate
the publication OF q list Of unknown creditors
suspension OF the bank I would also urge an
amendment 20 the present Law whereby the az
EreEate loans Of q bank to its Oncers and di-
rectors be limited 70 One-third Of its capital
This department should be given power to
examine the books and accounts Of any indi-
vidual firm OF corporation that he has reason
70 believe is conducting an iuegitimate bank
ing business This pertains 70 persons not en-
gagged in regular banking
The provisions Of our law relating to LEGAL
Festments in United States bonds 20 be in
cluded as part OF the banks reserve in lieu Of
deposits in other banks
A number Ct banks eFade the provision Of
law requiring the creation OF q surplus By pay
ing their entire net earnings in the form Of Of
6csrs' salaries I recommend that where the
total salaries Of the officers Of any bank exceed
ten per cent OF its capital and surplus. such ex-
cess shall be considered as dividends. and such
bank shall Be required 60 carry 70 surplus the
amount required by law before paying such ex-
cess salaries
In several instances small majority OF the
stockholders control the Affairs Of the bank
and absorb al its earnings in the payment Of
salaries and other expenses. TINS depriTing the
minority stockholders Of any income Under
our present Law there appears 70 be no relief
for the minority Where a banks business is
Improbable there should be some provision
whereby its Affairs could be wound up. I rec
ommend that provision be made Whereby the
interests of the minority stockholders may be
protected
Meeting Of s0utheast Eanaas Teachers.
Pittsburg, Kan. Nov. 25--The South
eastern Kansas Teachers association
convened here yesterday for three
days session The association com
prises 20 counties located in the south