The Birmingham age-herald., 1903-09-29
BANKER DISCUSSES PENDING MEASURE Colonel Smith Gives Reasons Why Bill Should Pass THE PRINCIPAL FEATURES Bill Seeks to Protect Depositors and Do Away With Wildcat Banking.
 Statements Should Be
 Published.

sume that the constitutional requirement. was put there in the interest of the peo- ple who make up the depositors. Every banker realizes that whatever sale guards protects the depositor is equally a protection to the stockholders. There is not now line of law in Alabama to pro- tect either the man who deposits his mon- ey in the state banks or the man who in- vests his money in the stock of banks. Both are equally at the mercy of the dl- rectors and officers. The depositors have over 2,000 GOO in the state banks and the stockholders have about five million"
 Colonel Smith was asked how the sen- ate bill now before the house compares with the laws of other states.
 In Other States.
 Nearly all the states have banking laws" he replied, and the provisions of this bill are those in common use all over the country. Most of them make some one of the state officers the bank ing officer, only the largest states having a separate banking department. There is not requirement or protection in the
 
 states and approved by experience.
 'The bankers did not give their ap- proval to the bill without the most care ful inquiry and without submitting 1t to the best legal counsel Among others who approved the bill was Judge Thos w. Coleman. This eminent jurist, who is also president of a state bank declared there is not a thing in the bill to which any honest banker can object.
 The Opposition.
 What requirements of the bill are be- ing objected to by the opposition?' Colo mel Smith was asked
 "rhere are only seven requirements and restrictions in the bill The first provides for statements of resources and liabili- ties to be made to the state treasurer, and requires that two of these shall be published. The publication of these state ments, the most important feature of the bill to the depostor, has been most bit- terly fought of all. And yet two each year is an exceedingly mild requirement. The national banking law, and Virginia, Connecticut and Indiana laws, require five published statements every year. Mississippi Kentucky, West Virginia, Louisiana, Georgia, South Carolina, Illi- nois, New York, Pennsylvania, Iowa, Kansas Michigan, Minnesota and Ne braska provide for four Florida and Missouri require at least two and the banking officer may require more at his discretion Only Tennessee. North Car oIf Iir,aft to two. Massachusetts requires monthly statements.
 "The second provision, found in section 8 as to the minimum capital required, is precisely that now provided in the acts for the organization of state banks.
 Concerning Prudent Banking.
 "The third provision, in section 4, is for a reserve fund of 15 per centum of de- mand deposits. But 1t does seem to us that where a bank has S100,OOO of deposits and lends sS5.0O0 of them, it Is not too much to ask that it keep s15,oO0 on hand with which to pay the checks and cash the drafts of it's depositors. As matter of fact every prudent banker keeps more than 15 per cent of his deposits on hanG. flOTlud requires ZU per CeHti 1tOTBId Io per cent, and Louisiana one-third.
 "The fourth provision, found in sections 6 and T. limits the right of the officers to loan to themselves or to their friends without security on the approval of a majority of the directors. l have heard of no objection to this.
 "The fifth requirement of section is that banks shall write off dead and worthless paper, and l have heard no ob- jection to it.
 "The sixth requirement in section Is for an examiner and examinations just as is required in the constitution.
 "The seventh requirement found in sec- tion 16 of the senate bill provides for making good the capital when it is lm- paired. The treasurer requires the bank to make good it's impaired capital and the bill allows it to be done in any one of three ways-out of surplus and profits, by assessment by unanimous consent of the stockholders. or by a proportionate reduction of capital stock.
 Improvement of Capital.
 Again, 1t Is declared that 1t would be 1 6iSot Ohti o5t IT tiS oieit were dHOWtu to proceed against bank because it failed to make good small impairment of its capital. Why they say, under this bill If 1t was only $500 the bank could be treated as insolvent.'
 "Our answer to this attempt to frighten somebody Is that the bill gives ninety days notice. A bank that cannot make it's impaired capital good in three months is in too bad fix to be allowed to go on receiving money from the public, and the smaller the amount the easier to make it good, and the failure to make good a small amount is a strong proof of insov- ency than If the amount were large"
 Colonel Smith said in conclusions:
 We who are engaged in legitimate banking appeal to the legislature to put state banks in Alabama on the same high plane with banks in other states and with national banks. We think the legisla- ture ought to do this for the sake of de- positcrs. But if not, then as taxpayers and as insIllutions having five millions of capital and twelve millions of deposits at stake, we feel that we are entitled to pro lection against the dsrepute into which unrestrained and unrestricted wildcat banking is threatening to bring the whole business of banking under Alabama law"