The Montgomery advertiser., 1903-09-29
THE STATE BANK BILL
AN INTERVIEW WITH COL. TOM i. o. SMITH.
Birmingham Banker Tells Why the Banks Want the Bill and Ex- Plains Some of Its.
 Provisions.

Colonel Tom o. Smith. President of the Alabama Bankers Association, came down from Birmingham last night and is circulating among the members of the Legislature in the interest of the bank examination bIil.
 Asked by a reporter why the great body or the bankers of the state are so earn estiy In favor of the bill,. he said:
 Our interest in the matter Is second only to that of the depositors. We pre- sume that the constitutional requirement was put there In the interest of the peo- pie who make up the depositors. Every banker realizes that whatever safeguards that 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 money in the banks or the man who in- vests his money in the stock of banks. Both are equally at the mercy of the di- rectors and officers. The depoators hayc over sl2,000,000 in the banks and the stockholders above 5.ooo.0oo."
 Colonel Smith was asked how the Sen ate oiii now before the House, compares with the laws of other States.
 Nearly all the States have banking laws, 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 banking officer, only the largest States having a separate banking department. There Is not a requirement. or restriction in the bill not already in common use 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 yne who approved the bill was Judge Thomas w. Coleman. This eminent Jusist, who Is also President of State bank, de- clared There is not thing in the bill to which any honest banker can object'"
 What requirements of the bill are be- Ing objected to by the opposltfon?' Col onel Smith was asked.
 There are only seven requirements and restrictions in the bill. The first pro- vides for statements of resources and lia- bilities to be made to the State Treas- urer. and requires that two of these shall be published. The publication of these statements, the most impoitant feature of the bill to- the depositor, has been most bitterly fought of all. And yet two each year is an exceedingly mild require ment. The national banking law, vir- ginia, Connecticut and Indiana require five published statements every year. Mississippi. Kentucky West Virginia. Louisiana. Georga, South Carolina; Illi- nos New York. Pennsylvania. Iowa, Kansas, Michigan. Minnesota and Me- braska provide for four. Florida and Missouri require at least two and the officer may require more at his Only Tennessee, North Caro- liaa and California limit the number to two. Massachusetts requires monthly 
 'The second provision, found in Section 3. as to the minimum capital required. is precisely that now provided in the Acts for the organization of Statc banks.
 "The third provision. in Section 4. Is for a reserve fund of IS per centum of demand deposits. Some objection has been made to this as being too much. But it does seem to us that where a bank has $1o0,000 of deposits and lends $S5, GOO of them. 1t is not too much to ask that 1t keep $15,000 on hand with which to pay the checks and cash the drafts of its depositors. As a matter of fact, ev- cry prudent banker keeps more than Is per cent of his deposits on hand. Flor Ida requires 20 per cent. Georgia 20 per cent and Louisiana one-third.
 "The fourth provision, found in Sec tions and [. limits the right of the of Icers to loan to themselves or to their friends without security or the approval Of majority or the ulTeclOTS. l udNe heard of no objection to this.
 "The fifth requirement. in Section is that banks shall write off dead and worthless paper and I have heard no objection to 1t.
 'The sixth requirement in Section 3 Is for an examiner and examinations, just as is required in the Constitution.
 "The seventh requirement. found In Sec ton 16 of the Senate bill. provides for makinfi flood the capital when 1t Is im- paired. The treasurer requires the bank Do make good its impaired capital and the bill allows 1t to be done in any one of three ways. out of surplus and profits by assessment or by proportionate re- ductlon of capital stock.
 'Tt is declared that it would be great outrage if the State were allowed to pro ,eed against a bank because 1t failed to make good a small impairment of its capital. Why they say. under this pill If 1t was only $500. the bank could be reated as insolvent.'
 "Our answer to this attempt to tighten somebody. Is that the bill gives ninety days notice. A bank that can rot make Its impaired capital good in hree months is in too bad a fix to be llfowed to go on receiving money from he pubNc, and the smaller the amount he easier to make 1t good, and the fall ire to make good small amount is a | tronger proof of insolvency than If the | mount were large"
 Colonel Smith said in conclusion.
 We who are engaged in legitimate 'anking appeal to the Legislature to put | tate banks in Alabama on the same | igh plane with banks in other States 1, nd with National banks. We think the | egislature ought to do this for the sake | f depositors. But if not, then as tax | ayers and as institutions having five | millions of capital and twelve millions of | eposits at stake. we feel that we are | ntitled to protection against the disre- ute into which unrestrained and un- wild cat ba hiking Is threatening Q bring the whole business of banking