The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1902-11-22
AFTER BREIDENTHAL.
Commissioner .Albaugh Objects
to His Bank Scheme.

In his forthcoming biennial report
Morton Albaugh, state bank commits
sioner, will go after" the banking trust
project of John w Breidenthal, former
Breidenthal has organized and is ex-
tending chain of state banks. Mr.. AL
baugh will recommend that trust COM
panies be prohibited from owning stock
in state or national banks.
Mr.. Breidenthal organized a trust
company with capital stock of 800, 900.
Within the past few months he has or
ganized six or eight state banks in
which the controlling interest is held by
his trust company. Mr.. Albaugh wants
this made impossible and his recon-
mendation on the subject will be as fol-
lows:
"One trust company, the Banking
Trust company of Kansas City, Kan,
has been organized under the law pass
ed by the legislature of 1901. There are
number of sO-ealled trust companies
operating in the state that began bust
ness before the enactment of this law,
doubtless doing business of a character
that should require them to conform
with its provisions, but the fact that
this department cannot compel an in
spection of their books has to a large
extent prevented our either compelling
them to quit business or to comply with
the provisions of the law. The provis
ions of the trust company law are ex-
ceedingly broad, and permit a Wlde
range of business operations. It is par
ticularly important that this law be so
amended that trust company cannot
own stock in a state or national bank,
or in any other trust company.
If this is not done. under the provis-
ions of the present act. trust COM
pany with 100000 capital can be made
the nucleus for the organization or own
ership by purchase of innumerable
throughout the state. with, as a matter
of fact, no other foundation upon which
for the whole fabric to stand. except
the original capital of the parent com
pany. A trust company with $100,O0O
capital can purchase a majority of the
stock in a bank with $50 600 capital for,
say $4,000, and having secured control
can have this bank place $4,000, or any
other desired amount, of its deposits on
deposit with the trust company and at
once be ready to purchase another bank,
and repeat the former transaction. and
continue to make similar purchases . :
infinitum. Neither the people nor the
bankers of Kansas desire a system of
branch banking, and the present trust
law was certainly not enacted with the
idea that it could be made the means
to attain such an end"
Mr.. Albaugh's report will make the
remarkable showing that III new state
banks have been incorporated during
the period covered by the report, for the
two years ending September 1, 1900.
These new banks have capital stock
been organized II private banks have
reorganized as state banks. while IA
state and private banks have become
national banks. There are now under
the control OF the state bank depart
ment 426 state banks, SO private banks
and one trust company.
Concerning general banking condi-
tons in Kansas Mr.. Albaugh says:
''The biennial period just closed has
been without precedent in Kansas The
state has grown and prospered. Bank
deposits have increased. Bank invest
ments have grown in proportion to this
increase in deposits, but they have been
upon safer basis. While interest rates
nave decreased. yet. DIN account of this
Increased volume of business. owners
OF stock in Kansas banks have realized
satisfactory profits. The old theory of
ioanlng man money because his
credit is good has gradually given away
to loaning upon the collateral or secur-
ity that the borrower may furnish The
TACT that losses in the banks of Kansas
have been reduced to the minimum has
been the greatest factor in the reduc-
ton of interest rates."