Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1905-06-07
CARROLL TELLS Of
IOWA BANKS NEEDS
State Auditor Delivers an Ad-
dress Before the Iowa Bank
ers' Convention
THE CAUSE OF FAILURES
'E CAUSE OF FAILURES
DefaIcations and Excessive Loans Gem
orally at the Bottom of Failures Of
Banks Here and Elsewhere = State
Supervision of Private Banks is Fa.
vored.
Special to Times Republican.

Special to Times Republican.
Des Moines, June 7.-Auditor Carroll
delivered an address to the meeting of
bankers this morning in which he OUT
lined some improved legislation that
will cause bank directors to be more
careful in examining the affairs Of
their banks.
Mr.. Carroll prefaced his address by
stating that at no time since. he had
been in office had the banks of the
state been in better condition than
they are now. He then stated that he
could see more danger In too much leg
islation for banking reform than in too
little, but some changes to him seemed
advisable. For instance in the manner Of
signing the reports the custom now is
for two officers and two directors to
sign and the signature of the director
is usually perfunctory. The law ought
to provide that one attesting director
must himself have made the exanlina-
ton and then fewer number of sig
natures would be ample protection.
The duties of boards Of directors
should be made less technical, ar
gued Mr.. Carroll He said that 1t
seemed impossible to secure bank di-
rectors of sufficient skill to check up
the bank books, which work ought to
be left entirely to expert examiners
and the directors be required by law
only to pass upon the notes in the
banks possession. Mr.. Carroll ex-
planned that no expert was competent
to pass upon the paper in a community
where he was a stranger. but that the
directors should be charged with this
duty and made to do 1t much oftener.
eat no time during my term Of office,
said Mr.. Carroll. .haNe we found amy
bank in trouble but that we have also
found that the examining committee
failed to do its duty"
Speaking of recent bank failures Mr.
Carroll said that they We're not due TO
the "l,eef trust" as sensational writers
had concluded, but that all came under
two specific causes of defaEcation and
excess loans. On this subject ne said:
"The defalcations might have been
difficult to discover. but believe thal
sby reasonable care and attention upon
the part Of the directors, they might
have been detected, as they were fin
ally detected by the department. AS
to the excess loans there is neither
question or doubt but that they should
have been known to and prohibited by
the board of directors 1t is somewhat
remarkable, but nevertheless true,
that we have no bank failures IN Iowa
where the boards of directors are
faitlpful to the duties devolvines upon
them. and / would repeat with empha-
sis that the most important of all
the,r duties is to scrutinize tile bills
receivable and to see to it that the de-
positors' money is not loaned OUT upon
worthless paper. The crime OF tieralca-
ton is worse only in degree ulan the
crime of frittering the banks money
away nv recklessly making worthless
loans So far as the depositor is con-
canned it means loss of his money IN
either, instance. ] do not know to what
depree q. board of directors may be per-
sonally liable for setting idly by ana
,,er,,;tting the peoples money to pc
sn,,a ndered thru bad loans, when
nroner care might have avoided 1T. but
T a. know they ought not to be held
oO AAiAO'
excusable.
anniner checking the pass BOOKS MT.
Carroll suggested that this be done
frequently by special committee OF
directors. -,
Private Banks irresponsible.
r,,s, ,ag.rding private banks he
said: ....,a
~ seldom make these criticisms
with reference to the incorporated
hanks of the state but that Ieel 1iias
in a sense I ought to apologize for SO
doing. since there are more than nVe
hundred banks in the state or eratlhg
in omen competition with these banks
which are not only not required to op-
serve anv Of the provisions on Jaw
that have been discussing, pu'- Whleh
are under no restriction Whatever az
to capital, reserve, overdraits, EXCESS
loans or any other matter contaileo
in or forbidden by our laws governing
state and savings banks; neither are
they required to make public any mat
ters pertaining to the business of the
hanks This should rot. however
furnish any excuse for violation OF
n
nv Incorporated banks as it is unques-
tionably true that the increased mum
ber of failures in private banks is due
very largely, to the failure upon the
mart of such banks to observe these
regulations.
Auditor Carroll then referred to the
nlan to insure depositors against los
by means of a guarantee fund in fhf
hands of governmental bureaus as
new idea, but he advised legdsiatie
requiring all bank officers 10 CIV
bonds as additional protection to de
nositors. He also thought there wa
need for some careful legislation re
garding loan and trust companies
the whole statute now applying =
them is continued in a single sectics
of the code
In conclusion he said: LEST these