Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1900-11-26
OUR CURRENCY.
Continued from page ~

ton from the national banks, that of
2S,709 directors OF national banks in the
country 1854 were directly or indi-
rectly indebted to national banks I'M
der their management.
The aggregate sum owed by these
Is, 534 borrowing directors and 2219 Off
GERS and employees who were not di-
rectors was 500, 2S7 Al. AS the capital
stock of the national banks of the
country on June %, was s621 ,;,36. 4el. it
follows that the direct and indirect liza
bility of directors and officers amount
ed to 32.J3 per cent, or about one third
the capital. These direct and indirect
liabilities Of directors and officers to
banks under their management
amounted to 7.15 per cent. Of the total
loans and discounts of the national
system.
The comptroller then Gays
While these tables do not necessarily
indicate that national banking officers
and directors as Il whole abusc their
loans are among the safest owned by
the creditor banks. the comptroller be-
lieves the tables show clearly the
great Importance of Il properly framed
law placing additional restrictions ana
safeguards around these loans. in
which. the experience of the banking
system teaches. is involved the great
est dangcrof the improper and lax use
of banking funds.
In formulating provisions of law re-
Stricting loans to executive officers
and directors. it is important to make
thcmSo unreasonable as to drive from
such service the active. responsible and
honest business men of the country.
The problem is to devise such resti'ic-
lions for the safety of the depoSitors
as will discourage improper loaninE to
directors while not injuring the depos-
itors by discouraging to too great an
extent the assumption of the duties Of
bank dictatorship by the active and
responsible members OF the business
community.
Primarily, the Law should have in
view the safety OF the depostors and
it should be recognized that their safe
~ is much endangered by the passage
of law which does not restrict the
opportunity of dishonest directors to
abuse the powers of their position.
1t seems plain to the comptroller that
any law upon this subject should make
Il distinction in the nature of the re-
strictions upon directors who are not
officers which will not involve as much
of Il delay in the making of loans To
them as in the making of loans to the
executive officers Of a bank. since the
latter have the greater opportunity and
latitude for improper methods in the
use of trust funds.
The comptroller gives herewith a
copy of the bin Introduced at the last
session of Congress 10y Hon. Marriott
t;roSiuS. chairman OF the committee on
banking and currency I'll. K. l2043. 56th
Congress. first session.. which has had
his careful consideration and the pas
sage of which with some additions he
earnestly recommends This bill has
been drawn so as to insure Il greater
degree Of safety in loans TO directors
ana officers with what is believed to
be q minimum Of inconvenience to such
officers consistent with the safety of
such transactions. II properly rccoG-
nizcs the distinction in the relations Of
directors To bank and those sustain
cd by executive officers.
1t will he noted that the provision
mad" BY this bill for the fixing Of :,
line Of credit for each director in ad-
vance reduces 10 4 minimum the in
convenience of the greater supervision
proposed. After such a line of credit
has been fixed by the board of directors
for an individual director, he will he
no NOR" hampered within that limit
under the proposed law than he is at
present.
The text of this bill is printed in the
the report. In SubStanc" ii provides
that no national bank shall loan To its
officers or employees until the propuSi-
ton for the loan shall have been sub
mitted in writing 10 the directors or
executive committee of the bank and
approved by the ma jority Of them. \
fine is fixed for infractionS in this sec
tiOn. 1t provides that at any regular
meeting the directors of y national
bank may iiN by resolution the limit Of
credit which shall be extended to any
director. Within the limit of credit thus