The morning journal-courier., 1907-12-18
Committee Investigating Panic Recommends Equalization of Cash Banking
 .y-,,. Reserves. ..f3
VETO POWER IS URGED
Opposes Single Control of Chain of Banks to Further Promoters' scilenes-Denands Equal
 RcsponsibaRtS.

tee Of bankers appointed by Governor Hughes to recommend notifications of the existing banking laws of the state of New York, made It's report to the governor to-day The committee was selected from leading bankers and trus& company managers and was called upon to suggest measures which would tend to prevent the development of panios such as the one that Wall street has just experienced. The re- port In general, expressed the view that in New York city state banks should maintain the same cash re- serve as national banks, namely, 2S per cent, and that trust companies should maintain, also, a 25 per cent. reserve, not necessarily all in cash in its own vaults A strong presentment is made 'agarnst tho practice of promoters ob- taining control of a chain of banks to Further their own financial schemes.
 While the committees recommenda- tions can apply only to state banks and trust companies in New York city and state, their realization of national responsibilfty on the part of the city's financial Institutions is shown by a statement in the report that '''New York Is the Empire state and New York city Is the financial and com mercial center of this continent It is for this reason, the committee de- clares, that New York citys cash bank reserves must not be permitted to be- come impaired,
 The committee recommends that the state superintendent of banks be given veto power upon the establish plent of a hank or trust company, or a branch of any existing bank or trust company or the purchase of the con- trol of one banking institution hy another.
 It Is nn the subJecr the cash re- serves to be maintained by banks and tJ,Usis co nTanies fhag che ocnsrait1ee makes its rnos1 extended and proeably its most important reconhn enda lions. The committees sense of respnlsib hty in this respect is ser forth in the fsl- lowing
 ''The combined status of all of the banks in the metropolis constitutes, in the eyes of the public, the ultimate re- serve Strength of the nation this is necessarily weakened If a certain mum Der of them are permitted to hold less cash reserves than the others dor the burden Is unequa1ly borne. The clear ing house association (52 membsrs) en- deawprs to maintain the aggregate at or above the 25 per cent ratios most of the state bank members thereof volun- tardly observe this, and we see no. sound reason why they should no1 all be required to do go. especially In view of the fact that many of them are es- tab11shing branches (nor permits cd to national banky9 which emphasizes the need for fun reserves
 The committee recognizes that the requirements differ as between 8 bank of discount and a trust company and on this point says:
 Some distinction should be made between banks of discount and trust companies in respect to reserve re- qu1rementr.
 "A reserve of 25 per cent. should be maintained by the trust companies in the city of New York proper lborough of Manhattan) of which Is per cent should be cash on hand and 10 per cent. cash in some bank or trust con- pany approved by the superintendent of banks.
 "-Trust companies have no claim to special indulgence on the part of the state and we are unable to see why they should not bear their fair share of the responsibility of protecting the business and commercial interests of the state by keeping proper reserves. They have become g most useful, inn portant and powerful factor in our system. and they have con{e to stay, Their banking power nearly equals that of the discount banks and theiy responsibilities, so far as they do banking business. should be the same.
 care SnUd1Q DO IdheH IO prevent evasion of tho law as to due-fromr bank reserves. such as we find to have oeen praetioed under existing law, To iilusEate; Crust company "A depos- its $lO0,C0O with {oan1) tB,t "B' in turn deposits the same amount with Crust e and fC deposits the same amount with IA This would avoid an offset of deposits and 1esTe each insti- tution in possession of its original of funds and enable each to count such deposit as reserve, under tha present law"
 The committee concludes with the general recommendation;
 ''The laws governing banking cor porations should be subjected to re- revision and publication; they contain certain minor defects not the actual business, but nev- susceptible of improvement. l 7'h9 provisions covering related feat ures are oftAa scattered, the result of much additional legislation since the last cedifisation. Some provisions are duplicated. and altogether the body If