Los Angeles herald., 1907-12-18
TELLS HOW
TOPREVENT
BANK SCARE
MORE SUPERVISION NEEDED
BY STATE
Commission Appointed by Governor
Hughes to Devise Means for Pre-
venting Panics Submits
Its Report
By Associated Press.

BY Associated Press.
ALBANY, N. Y, Dec. 1.-THE commit
tee of bankers appointed by Governor
Hughes during tho monetary panic to
recommend notifications of the New
York banking laws reported to the gov
ernor today measures which Will tend TO
prevent the development of such panics.
The report in, general, expressed the
view that in New York city state banks
should maintain, the same cash reserve
as national banks-namely, % per cent
and that trust companies should main
tain also q 25 per cent reserve, not neces-
sariiy Rll In cash, in their own vaults. A
strong presentment is made against the
practice Of promoters obtaining control
of a chain of banks to further their own
ends The report says that as New York
city ia the financial and commercial CEN
ter of this country, her cash bank re-
serves must not become Impaired.
The committee recommends the state
superintendent of banks be empowered to
veto the establishment of a bank or
trust company, or branch, or the pur-
chase of control of one banking institu-
ton by another.
The committee believes that banks in
New York city Should not hereafter be
permitted to have branches unless they
possess a capital of $500,000; and we think
should be compelled to furnish an addi-
tional 100000 capital for each branch
opened"
Need Better Control
In general, the committee would in
crease and make more direct and intimate
the supervisory control of the state SUI
perintendent over all moneyed institu-
tions.
In the matter of investment and loans
the committee recommends 1t be made
compulsory that "all loans, discounts OF
all commercial paper shall be read to the
directors, or submitted in written form
at the meeting next succeeding the maxi
ing of the same, and any intentional
scheme in the making of any such loans
should be made a misdemeanor," and
would punish the interchange of deposit
ors by which depositors or directors loan
directly to themselves, or are enabled to
control chain of banks
Pointing out that 1.-The capital stock of
all banks and trust companies doing busi-
ness In the state amounts in round num-
bers to $263, ,000,00O and that the market
value thereof is several times larger"
the committee says that cit would be an
invidious and unjust discrimination
against banking investments to prohibit
the use of such stock as collateral for
loans"
Would Limit Loans
1t is suggested however, that loans
upon such capital stock be limited to 10
per cent of the capital of the corporation
whose stock is offered as collateral.
OF so-called ''underwritings," the COM
mittee declares that while individuals and
private banking houses may legitimately
participate in such ventures, IAN incor-
porated bank, or trust company assum-
ing to discharge trusts of the fidelity
nature, has no right to be engaged,
through the instrumentality Of syndi-
cate, in the construction Of trolley lines,
power plants or other enterprises OF like
character"
1t would also forbid any loan or ad-
vance where the institution itself Is lia-
BILE in any event for it's repayment
1t is recommended that trust companies
In New York city be required to main
tain reserve of 25 per cent. of which Is
per cent should be in cash on hand, 10 per
cent in some bank or trust company.