The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-11-23
ROYCE ON BANKS.
The Commissioner Delivers an
Address at Ottawa.
Refutes the False Reports Sent
from Topeka.
DIRECTORS ARE REMISS
Says Very Few of Them Attend
to Business.
Law Should Prevent Officers Bor-
rowing the Funds.
DIRECTORS ARE REMISS

John Q. Royce, state bank commits
sioner, in an address before the bank
ers' convention at ottawa yesterday,
took occasion to refer to the recent
false reports. concerning the state
banking law in the following en-
phatic language:
ct may not have come to the at
tention of any of the bankers in this
presence, yet there appeared in the
last Sundays issue of the st. Louis
Globe-Democrat an article, under a
Topeka date line, stating that the
banking law of Kansas, of which we
are so proud and which is proving so
valuable to the financial institutions of
this state, was unconstitutional and
void, because it had never been sub
mitted to a vote of the people of the
state. The constitution of our state
provides that no banking law shall be
effective until it has been submitted
to a vote of the people of the state
at some general election and endorsed
by majority voting at such election.
The correspondent of the Globe-Dem-
ocrat, although being shown decision
of the supreme court of this state
holding that that provision of the con-
stitution applied to banks of issue and
not to banks of deposit and discount,
overruled the supreme court and de-
/ clQeQ Indt the enLlre Dank act was
| unconstitutional and void, and pre-
| pared nearly a whole column article
for that paper, which was copied by
some of the Kansas papers, and for
! fear some uncertainty may exist in
| the minds of some bankers or de-
| positors in Kansas banks from the
reading of that article, I dCNjre to
! take this occasion to correct that ia Use
statement, so far as possible. In the
] goth Kansas is a decision of the su-
! he, int E.,s,,
| ten by Justice David Brewer, of the
United States supreme court, holding
| that the section of the constitution
above referred to applies to banks of
/ issue and not to banks of discount
and deposit and that the legislature
had the right to pass laws for the gov
eminent and control of banks with
out submitting same to a vote of the
people Since the passage of the law
of 1891, under which we are now op-
1897, the supreme court has also
passed upon the cOnStitutionality of
that law The opinion was delivered
| by Justice Johnston, who is the chief
| justice of our present supreme court,
and reported in the 53rd Kansas, and
holds the law to be constitutional and
valid. There is no possible question
about the present kansas banking
law, and it is surprising that anybody
should even attempt to call it in queS-
ton in the light of the facts, which
were well known by the Topeka re-
porter on that paper when he pre-
pared that article"
Mr. Royce's address was filed with in
teresting information about the develop
Inent of the present Kansas banking law
and Kansas banks.
He said that the first called statement
under the banking law was made in 1891,
when IA banks reported a capital stock
of $40 45l.21S and total deposits of SIS 43S. 50.
me low e6b OF Kansas banking was
reached in 1898, when only 366 responded
to the commissioners call showing a
capital of 61z millions and deposits of %
millions.
At the present time the number of
banks is 619 with deposits of over So mil
lions. These figures all refer to state
banks only
Mr.. Royce intimates strongly in his ad-
dress that the directors of banks do not
attend to their business as they should.
He says:
Il imagine that many meetings of board
Of directors of Kansas consist in the di-
rectors called into the hank each quarter
to sign the report which the cashier has
prepared in their absence In my judg
ment a meeting of the board of directors
ought to amount to a full careful and
complete examination of the bank It
ought to be thoroughly done as the
regular annual examination by q deputy
from the commissioners office. Such an
examination can not be done in a few
minutes, nor ordinarily in few hours.
An examination. such as the law cOntem-
plates the board of directors shall make
each quarter, ought to consume an en-
tire day in the average bank and in some
banks possibly longer. The president
cashier and such other officers as give
their fun time to the banks. are paid for
their services, and can see no good
/ reason why the members of the. board of
directors Should not be paid for the time
which they actually put in to acQuaint
themselves with the actual condition of
their bank. Some banks in the state pay
the directors a regular fee for attending
the board meetings and it seems only
right that they be paid, and if each bank
in the state Incorporates in their bylaws
such a provision there viii be fewer let
tiers written the bank commissioner in
forming him of the failure to hold di-
rectors' meeting on account of the ina
bility of the cashier to get the directors
together. The directors ought to be as
familiar with the affairs of a bank as the
cashier and as they have taken an oath
to do. they should call a halt whenever
any officer of the bank attempts to ViO-
late any provision of the state banking
law
Recommends Change in Law.
Concerning the tendency on the part
of some banks to loan money to their
own officers, as is shown by the recent
Devlin failure, Mr.. Royce says:
MY judgment is that our law ought
to be so framed as to prohibit the active
officers of a bank from borrowing from
their own bank, with or without collat-
eral, or if not entirely prohibited the
amount which they ought to be permit
ted to borrow should not be to exceed
one-half the amount that can be loan
ed to the other customers of the bank.