The Canton times., 1902-05-23
4 STATE BANK sUPERvIsIoN.v n

Subject OF an Able Paper Before the
Mississippi Bankers Association.
At the recent session of the Missis-
sippi Bankers Association, held in
McComb City, Mr.. J. T. Thomas,
cashier Of the Bank Of Grenada, read
the following paper on "State Bank
supervision:
"The prindple of state supervision and,
| in great degree, control OF business cor,
| Dorations, Is not a novel one in the United
| States, and the right to exercise 1t Is no
| longer open to discussion. We see one 0I
! the CHIEF and most striking manifestations
of this right In the national and state rail
road commissions. All great public cor.
| pOrations, exercising stupendous and quasi
| public functions, become, In time, so
| blended with and essential to the CONNER
| cial life and exchanges OF the country tnat
| they seem almost governmental agencies
| and instrumentalities. But however great
! the corporation, however far-reachlng ana
powerful its service and functions, 1t Is
still only a creature, an artificial being
| created either by state or natlonal ieGlsGt
tion. Brought into existence by law, u
owes its every light, every power, even life
itself, to the law 1t possesses nothing ex
| cept what is delegated to it. Therefore,
the creator, the law, has reserved the right
to control, If need be- the creature, the
| corporation, and it is difficult to attempt
to answer the proposition against the au-
| thority. Especially has the right of super
| vision and control been asserted with re-
| spect to the great corporate bodies pubic
| interest, or interests, more properly speak
| ing, of the whole public. therefore, we
| see railroau companaies, telegraph and ex-
| press companies, fire and life insurance
| companies, banking and trust companies
and like organizations subject to the opera
| tion Of the principle.
| Il have been asked, however, to dlscuss
only the right of supervision OF banks ny
the state, and | am also expected to CON
| vince this serious and reflective body that
not supervision alone, but even official eX-
animation, with coercive or disciplinary
authority, shall be exercised by the state.
| Aller conccding this right to the state,
the chief matters of interest to us are el,-
braced in and may be emphasized by three
questions:
.First-Why have state supervision of
banks at all?
'.second--If had to what limit should su-
peryision extend?
.'Third-Does government supervision
and examination inspire greater public con-
fidence and insure safer banking!
Sin answer to the first queiy, we may
corporations of any character is ever right,
| then, in a greater degree than Win any
other class, 1t is right and proper to su-
peivise banking Institutions as there are
| no commercial corporations i'll the lanl
which, In the exercise of their powers, du-
ties ami privileges, more vitality affect great
public and private interests than do the
banks. The finances of the world are man
aged through and dominated by the banks
The banks of the world have become ageh
cies of governments, not only IN countries
like Great Bmtain, where the Bank OF Eng
land is the direct arm of the government
but also in free republics like the United
States, where they are nominally separate
and apart. Eighty per cent OF the larger
public and private transactions are nego
tiated through banks or with bankable pa
per- Therefore in this day, the hrst ano
prime consideration of SOUND government i
the question of sound finance, and the mat
q t, n NOT Or
ly determined by the banks themselves thul
by all other agencies combined.
.In the first place, then, the question OF
proper and sound banking Is QUESTION u :
| sound and proper government, and Surel!
the government itself should have som'
voice in the exercise OF functions whlcn \
has created and authorized, ana Whicn
when set In motion, vitality reacts on itself
I'm the second place, there Is no CONNER
cial corporation which more vitally touches
and affects serious and almost. sacred PR
vate interests than does the bank. Ih'
first step taken by a bank, after organiza
| ton Is to invite deposits All classes o.
citizens, fiom the strong and alert man o
business to the weak and defenseless WIDOW
| and orphan, are invited and expected to in
trust their money sometimes their all, t
the possession and custody OF the bank 1
Is the communitys treasurer, dispense
of credit and guarantor to deposltors
It is the channel through which the mean
of all classes of society must flow. 1t Il
the guardian of surplus capital and one o
the most important factors In industrial de 1e
velopment. So high vocation should de
mand sterling integrity and accuracy IN TN
| conduct of business.
1.-The bank becomes, in a greater degree
than any other corporation, hducary
a trustee. Even the life insurance com
, | pany, which more nearly approaches TN
measure of banks trusteeship than an, an,
other corporation, does not equal IT,. IN
| insurance company offers a business IN
ducement and a counter benefit and pront
it bids for a mans surplus earnings; Whil
the bank holds out no great prontaDle o
speculative returns to the deposltor, yer
as has been stated, invites a deposit no
| of n stated sum, but of his whole account
his all. PaTt of a mans earnings may d.
lost in the failure of an insurance colhpany
| while recklesSneSs in the conduct OF m
| affairs of n bank may easily tear down tn
walls of industry, diss1pate the earning
| of years and destroy the reputation OF
. | life: so interviewer are Its relations win
community and the nature of its dealing
are such that safeguards and restraint
, | may be demanded and should be invited d!
the banks themselves. q,
Mississippi for the past ten or hfteen YEAR
does not give rise to demand Tor close
investigation and inspection OF the conduc
| of its banks. and further, that supervisor
| will not absolutely prevent failure, as W.
have sufficient evidence furnished by othe
: states and from the supervision OF natlona
banks. This, however, Is no more e. "h n az y,
contend that no penalty should be impose'
because the death penalty has not prevent
ed murder .,,
more than so per cent of all the monel
owned by the people, and 1t Is out OF TN
money that more than 50 per cent OF TN
; | banks profits are earned. This being true
and it being impossible to be otherwise ac
. curately determined the only recourse
confding public could possibly have agalns
mistaken Judgment excessive creolt; ,,h reeh
less banking and improperly managed bank
inc cornorntions Is. not only state Supervl