The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-10-07
WHAT BANKS TO USE
LAR TO COUNTY AUDITOR
AND COMMISSIONERS
SOME PRONOUNCED UNSAFE
He Advises County Officials to De-
pOsit Their Funds Exclusively
in State or National
Institutions.

| Private banks are not regarded by
Public Examiner E. M. Pope as being
| under any circumstances safe or proper
repositories for public funds. Places of
deposit for the funds of the state are
| designated by state board Of deposit
! constituted by law, and comprising in its
membership nearly all of the principal
| state officers. This board is very careful
| in it's scrutiny of the applications from
| banks for state deposits and the bonds
! offered by those banks, and has confined
! its selection to national and state banks.
| County funds are for the greater part
! at the disposal of county treaSurers and
] boards of county commissioners, as far
| as repositories are concerned, and in
| many instances private banks have been
favored, for the reason that they pay
higher rates of interest than the state
or national banks. In circular letter
which will be issued today Gen. Pope dis
| cusSeS this question, and warns county
officers against depositirg public funds in
private banks. The circular, which is
addressed to auditors and boards of coun-
ty commissioners, is as follows:
An Incorporated bank, state or national,
is subject to direct supervision and exam
nations by the superintendent of banks,
| or the comptroller of the currency.
The capital of an Incorporated bank
must be paid in cash and kept unimpa1r-
| ed.
The amount and nature of it's loans are
regulated by law and a severe penalty is
| provided for violation of the law. No
dividends are permitted until all losses
| and bad debts have been charged off. A
provision is made by law for the crea-
ton of a surplus fund, before dividends
may be declared from it's earnings.
All the assets of every nature of an
incorporated bank are liable for the
claims of the creditors of such bank.
Stockholders can receive nothing until
all other creditors are paid in full, and
should the assets prove insufficient to
meet the liabilities, the stockholders are
liable to an assessment for an amount
equal to the entire stock of the bank,
| and the supervision of the state makes
it morally responsible for the solvency
of a state bank.
The death of any of the stockholders,
directors or officers does not suspend the
operations of an Incorporated bank.
A private bank or banker holds no as
sets exclusively for payment of depositorS
in the bank and the assets are liable for
Indebtedness accruing in outside business
or SpeculationS.
Under the laws of many states the car
rying on of a private banking business is
prohibited. In others it is regulated.
The laws of the state of Minnesota
make no provision for the inspection or
regulation of the business of a private
bank. 1t makes no report to the state
department, and is outside the pale of
banking laws. The use of corporate
name by an unincorporated bank is mis-
leading and facilitates deception.
money u6pOSlLSu III dIly DdHh D0COuleS
the property of the bank, and the bank
becomes the debtor to the depositor for
the amount of the deposits
The money deposited with a private
bank may be used by the person or part
nership for any purpose: it may be used
in speculation, or it may be used in
business of a more hazardous nature than
banking.
There being no law regulating transac-
tons between members or co-partners IN
private banking concern, an unlimited
sum may be loaned OR used IN another
and different business by one of the mem
bers of such co-partnership, subject only
to the general law as to the rights and
duties of co-partners inter Sc.
TERMINATES AT BANKERS DEATH.
The existence of a private bank is ter
minated by the death of the banker.
A co-partnership doing a private bank
ing business is dissolved by the death
OF any one of the co-partners.
In case of the death of a private bank
err the entire estate of such deceased per-
son becomes at once subject to. the laws
governing the probate, administration
and settlement of estates under our pro-
bate code, and the amount each creditor
is to receive depends upon the amount
which may be realized upon the property
owned by the deceased
The state board of deposit having in
charge the deposit of state funds has
not approved any applications from pri-
waite banks or bankers.
The public examiner does not hesitate
to say that public interests will be best
served and public funds best protected
by combining deposits of county funds to
Incorporated banks, state or national
The county is not in the business of
loaning money and it's primary object
should be security for it's funds rather
than a high rate of interest.
Concerning the legal limits of deposits
IN state or national banks the law is
found in section 729, G. S., 1894
provided that the amount deposited in
any bank or banking house shall not
exceed the assessed capital stock of said
bank or banking house as shall appear in
the tax lists of the counties. Capital
stock. for the purposes of this act shall
be defined as follows: AS including
shares of capital stock of national or
state banks, whether assessed in the
name of the bank or of the stockholders
The construction of this section, which
has the approval of the attorney gen
eral. is that the value of the CAPITAL
stock for assessment is finally determined
by the state board of equalization 1t IS
arrived at by taking (a) the paid-uD
capital, (b) the surplus, Co the net un-
divided profits
However. the amount of the assess
meht as fixed by the state board of
equallzat1on prior to any deduction for
realestate owned by the bank is the test
and establishes the legal limit of eo,1ntv
deposits in an Incorporated bank.
rms amount may be deposited at the
risk OF the county provided the bonds
are IN compliance with the provisions of
section 30. G. S. 1894, ct sea- and chan
ter A03 g. l.. 1901. Any amount denos
tied in excess of the legal limit is at
the RISK of the treasurer and his bonds