The Birmingham age-herald., 1903-09-23
LETTERS TO EDITOR
A RlnaIn- Appeal.

By your kindness I take this method of making an appeal to the house of rep resentatives to pass the bill for the exam ination and regulation of the business or banking in Alabama We who are in the business and who feel the need of legisla- ton for the mutual protection of the banks and their depositors, had hoped the bill would pass without opposition.
 There are more than a hundred banks in Alabama, uncontrolled by single line of legal restriction, and over sl2Ooo'O9O of deposits in the absolute and unguardei control of state and private banks. Tue relation of the bank to its depositors is one of the highest trust, and no trustee should be allowed to do as he pleases with the money or estate of others in his pos session.
 So far as any law is concerned, Alana- ma Is the most inviting field in this coun- try for the wildcat bank and the ilieglti- mate bank. As might be expected, 1t has been thoroughly worked in some sections and every locality is liable to the same process.
 It Is surely to the interest of the state and the people to foster and encourage state banks, to make them safe and sound, and to promote their usefulness and their numbers. The disgraceful fail- ures of the recent past are great shock to public confidence in banks and sad loss to the people, and we can see now that they could have been prevented by a law no more rigid than the one under consideration
 The state, the counties and the cities can get no license taxes out or natlonai banks. The national bank can not lend on real estate mortgages. For these two reasons If for no others, self interest calls for legislative help to put the state bank on the highest possible plane of sound business relations with the people.
 The bill under consideration is exceed- ingly simple It provides for the exami- nation of the banks, for statements of re- sources and liabilities on call of the treas urer for A cash reserve, for making good impaired capital for writing off dead and worthless paper, and for so limiting loans that officers cannot proceed with large transactions without that consultation with the directors and their approval which prudent banking demands.
 It has been a source of great surprise to me that any opposition has developed to that clause in the bill which provides for the publication of bank statements in the newspapers of the localities con- cerned. Every banker recognizes that the publication of their statements by the national banks under the national bank ing law, is the most important restraint imposed upon those banks, and the most valuable protection provided for depositors Banks are dependent for their success on the public Their relation with the public Is their sensitive point No restriction can be im- posed upon them so strong and effective to make them careful, prudent and hon est, as a requirement that they let the public know from time to time what is their real condition. The most effective method of bank regulation yet devised Is to empower some officer to call for state ments on any past day he may select and to require these statements to be pub. lished. The restraint on the banker lies in the knowledge that he may be called at any time to make a showing.
 am informed that the senate bill, while requiring the treasurer to call for five statements provides that he shall call on the banks to publish only two of them. It would be vastly better for the deposit tors to require the publication of all five, Just as the national banking law provides. Four each year is the most common among the states, but to require only two would destroy the most valuable fea- ture in this bill.
 Even two statements per annum pub ljshed in the local papers, would do away with an evil all too common in AL absma where we have banks which pub fish a capital far in excess of their real capital, and others which, so far as the public Is informed, have no capital at all.
 On behalf of those state banks which realize that the real interests of legiti- mate banking are best subserved by pol icy that best subserves the interests of the depositors, and that no bank en- titled to the confidence of the depositing public has anything to fear from the provisions of this bill, l appeal to the house of representatives for the passage of such a law as the constitution de- mands.
 TOM O. SMITH. President Alabama Bankers Association.