The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1899-02-07

Savings Bank of San Jose so soon after
| its examination and Endorsement by
| the Bank Commissioners again calls
| into question the usefulness of this
| important commission.
| For many years after its inception in
1878 the Bank Commission did good
work and enjoyed the public conf
dence.e
1t was a great mistake in my opin-
ion, to incumber the Bank Commission
with the care of banks in liquidation.
The proper duty of bank examiners
is, so far as vigilance will do it, to
prevent banks from failing, instead of
using their time and talents in looking
after those that have failed.
They should be doctors, not under
takers.
Since the supervision of failed banks
and other duties outside of the real
objects of their office were imposed
upon them, the usefulness and prestige
of the Bank Commissioners have been
steadily on the wane. Indeed, since
the scandalous failures of the Pacific,
Peoples Home and other banks, six
years ago, after favorable reports from
the Commissioners, the opinion has
DeSA SIOWlilS lldl TIC CO4IliAllo9AO4A 0OSS
more harm than good.
Much of the blame for the ineff1cien-
cy of the Bank Commission rests upon
the appointing power. There have
been too many changes in the person
mel of the commission. Think of it.
Nineteen new and inexperienced Com
missioners in twenty-one years!
The defling hands of politicians
should never have been laid upon this
Office. Ability and integrity should be
the only qualifications for members of
this board, and no changes unless for
cause"
The Bank Commission, with super
visory power over institutions handling
$275, 900 900, of which nearly 5000. 900, 900
belongs to depositors, is the most deli
cate and important office in the State.
1t was intended for a higher and no
bier fate than that of a -four years
home" for the Governors impecunious
political friends.
At least one of the Commissioners
should always be a resident of San
Francisco, whose banks subject to
their supervision handle 1881 200, 900 of
depositors' and stockholders money.
The last eight appointees have been
residents Of Oakland, Marysville, Pasa-
dena, Salinas, Los Angeles (two), Gey
serville and San Jose. Is it surprising
that the press and public of late
years speak of the commission as use
less and one that should be abolished?
Herewith I hand you copy of a let
ter written by me to Governor Budd
four years ago, which deals with this
subject in extenso, and its publication
at this time can do no harm and may
lead to amendments to the law during
the present session of the Legislature
that will put new life and vim into this
once useful and respected commission.
Yours respectfully,
EVAN ]. COLEMAN
San Francisco, Feb. 4, 1899
SAN FRANCISCO, Feb. %, 1895.
Hon. James H. Budd, Governor-Dear
Sir: In view of the fact that bill is be-
fore the Legislature to double the travel
ing. fund of the Bank Commissioners and
make other changes in the bank commits
sion act the following facts, figures and
suggestions may be of some value;
When the first Board of Bank Commits
sioners was inaugurated, in 1873, the total
number of banks in the State under its
jurisdiction was "a, with 800 900 of de-
first years examinations revealed the in
solvency of five savings banks with SILL
100000 of deposits) and the impairment of
capital of eight other banks.
The efficiency and usefulness of that
board has never been questioned, from the
fact that no banks Except those cIosed by
its orders) failed during its four years
term of office or for many years after
ward
The labors of the Bank Commissioners
have more than doubled since the office
was created-the deposits in savings banks
alone having grown from $50 900 in 1882
to S136 900 in 1893.
The supervision of banks in liquidation
was in 1887 added to the duties of the
Commissioners. This is a very onerous
duty, as it takes more time to supervise
the affairs of one insolvent bank and to
settle the differences between depoSitors
and stockholders than to examine twenty
solvent banks.
For the past five years (since the great
increase in the number of banks in all
parts of the State) it has been a physical
impossibility for three men, however
capable and diligent, to do thoroughly the
work required of this commission. The
occurrence of so many disastrous failures
during the last boards term (18S0-94), after
clean bills of health from the Commits
sioners, has almost destroyed the public
confidence heretofore enjoyed by this i'm
portant commission. Bank examiners are
not infallible, but perfunctory, work on
their part is worse than none at all.
A comparison between the work devolv..
ing upon the first board QS7S and that of
1893 offers partial excuse for the ap-
parent incompetency of the latter. The
board of 1878 made yearly examinations of
only "a banks, with $152 600 900 in resources.
The board of 1898 was required lin adoi-
ton to supervising failed bankS) to visit
and examine 233 banks) of which 2O6 were
outside of San Francisco) with S275 600, 900
in resources. The time consumed in
travelling Is very large item ter ana in is one
in the number of Commissioners here
after recommended.
The change every four years in the per-
sonnet of the commission Ghere have been
fifteen new men since its creation) is a
heavy handicap to it's efficiency. Ex-
perienced bank examiners can do better
work than new ones, and in half the time.
In view of the foregoing, the following
changes in the bank commission act are
suggested:
/. Increase the number of Commission
erS from three to five.
q Provide that not more than three
shall be members of the same political
party and that the three present Com
missioners shall be allowed to serve out
their terms of office.
This is to prevent the frequent changes
for political reasons only, and will always
keep at least two experienced men in the
board.
8. Provide that two of the Commission
ers shall be residents of San Francisco
whose twenty-six banks have S1S1, 000, 900
of reserves, as against $4,000, 900 held by
204 banks in other parts of the State.
Local knowledge of property values and
of the financial standing of borrowers is
all important for effective bank examina-
tons. For similar reasons 1t might be
well to have one of the Commissioners
a resident of Los Angeles to look after
the banks of Southern California.
A. The absurd provision that one of the
Commissioners shall be an expert of ac-
.IaI. III II