The Leon reporter. (Leon, Iowa) 1887-1930, 1905-06-22
ADVERTISING Rates.
INCORPORATE THE PRIVATE
BANKS.

81 believe the time has come when
the reputable private banker should in
corporate his business and assist in
securing the passage of laws that will
eliminate private banking and so re-
lieve the banking business of the stigma
of the disgraceful failures of private
banks that have been so common in the
past few years and that might have
been avoided if all the banks had been
required to incorporate and submit to
official examination" said Ackley Hub
bard, president of the state bankers
association Wednesday. 1t took nerve
to say it before his organization, but he
spoke the truth, and no one was better
able to speak from knowledge since Mr.
Hubbard, while cashier of the Citizens
National Bank at Spencer, is himself
interested in several private banks.
The lesson of bank failures in Iowa
during the past three years has been
learned by most observing people, but
the statement has been made that the
influence of private bankers in the legis-
lature would always prevent any de-
sired reform. The T.-R. has heretofore
replied that the great majority Of pri-
vate bankers are honest and are at
tempting to conduct safe banking
hence will welcome an opportunity to
Inspire public confidence and to escape
from the odium recently cast upon
private banking. Here is an evidence
of it from private banker before a
selves.
A private bank is all right as long as
the private banker is both honest and
,e,,1 vho,, 10 >a
however, the whole bottom of the bank
falls out and there is little or no safe
guard for depositors. Hence it is that
out of $40 state and national banks and
500 private banks doing business in
Iowa last year the proportion of failures
was one national, four state and four.
teen private banks; and in the one
national failure depositors will get all
but $4,000. In the four state failures
depositors will lose nothing in three Of
them and only little in the fourth
while nearly 100000 will be lost to de
positors in the fourteen failures Of
private banks.
The reason for this is that incorpor
ated banks must have capital invested
to start with. This is safeguard tx
depositors. Private banks are not re
,auired to have any capital and some
actually do not have any. The capita
stock of an Incorporated bank usually is
divided among several stockholders
who risk not only the money put in but
an additional sum equal to the amount
of stock owned. Liability is thus dis
tributed among several men instead o
depending on one man only. Then il
the incorporated banks, the law limits
operations to safe banking and provides
for state inspection and also for ex
animation by boards of directors, put
ting check on every banker. State
Auditor Carroll said in his address We'd
nesday that he had never found banl
in trouble where the examining com
mittee OF directors had done it's duty
Private banks are not required to have
any examination of any kind hence al
is left to one man, his accounts are no
even audited in the interests of the de
| positors unless it is done voluntarily
The wonder is that private banking has
been as safe as it is in Iowa. However
the time has now come for reform
Private bankers should welcome ane
urge incorpor alton under a new state
law for their own protection and as al
evidence of good faith. -Marshalltow1
Times-Republican