The Minneapolis journal., 1903-04-04
SMITHS BANK Bill
There Is Hostility to State Banks
Opening and Advertising. Saw
ings Departments.
It Would Mean a Sailing Under
False Colors," Says E. II.
Moulton.

No banking bill before the present legis-
ture has attracted more attention than
has that introduced by Representative
George r. Smith of Minneapolis and
passed by the house. 1t provides for
the establishment Of savings depart
ments by state banks and the adver-
tis1ng OF the same.
Against the plan there is strong sem
timent. especially by those interested in
the maintenance Of a sharp line Of distinc-
tion between savings banks and CONNER
cial banks. The sentiment is by no means
confined to those directly interested in
savings banks. ...
r. II. Moulton, treasurer Of the Farmers
and Mechanics Savings bank, puts the
opposition in nutshell when he says: ut
would permit state banks, those desiring
to do so, to sail under false colors."
Further Mr.. Moulton says: Expecting
the protection that is thrown around saw
ings bank depositors, depositors in state
banks operating savings departments un-
der the law in question would get no such
protection Their funds would be
mingled with the general funds OF the
bank in the commercial business which
the bank would continue to do. Such
funds would not be kept separate and
would not have to be invested in special
classes Of securities from which the ele-
ment of personal credit Is eliminated
Examinations by the public examiner
would not help the matter, as the public
examiner cannot in the very nature of the
case know the financial responsibility of
the signers of the commercial paper In
all Of the banks or even a small proper
tion of the banks of the state.
Furthermore, the depositor In a COM
mercial bank having a savings depart
ment would not have the protection which
comes from the law forbidding the loaning
OF money to those interested directly IN
the bank. This law Is stringent as ap-
piled to savings banks.
Again, when 1t came to the matter OF
q run on q bank, the savings depositors.
especially in large cities, would be at a
great disadvantage. The savings deposit
ors would have to line up at the counter.
each taking his turn, and the number who
could withdraw their money in a day
the large depositors of the commercial
department could draw through the clear
ing house, leaving the small depositors
of the savings department to take what
was left in case the bank went under.
This is not to say that there are not
| strong, admirable institutions among the
commercial banks. But depositors should
not be confused as to the nature of the
| institutions they are dealing with.
Worst Of all, however, as stated, is the
| fact that banks operating under such
law as that proposed would be sailing un-
der false colors, invoking name which
under the admirable law now in force; q
law modelled after the best savings banl
laws In the United States, has come tc
stand for security in the minds of the
| thrifty who seek not place where they
may secure commercial conveniences, bu
safety, with interest additions to theil
tsavings."
! Some are disposed to take g differen
view of the law. These hold that state
banks now do a savings bank business
accepting money on interest and issuing
certificates therefor. TO this there is M
objection on the part of those hostile t.
the new law. 1t is just what it represent
itself to be. they say, and there is no U.s.
OF misleading terms. The difference II
the lines Of banking. commercial and say
ings is clearly marked and 1t is held tina
those seeking the protection of the bes
possible savings bank laws should not b
subjected to the possibility Of being mis-
led by ambiguous advertising with tn
Esanction of the law.