Waterbury evening Democrat., 1907-12-18
URGES BANK REFORMS
Special Banking Commission Re-
 ports to Governor Hughes.
WOULD RESTRICT BRANCHES.
Thinks Institutions In New York Ought to Have $5oo,ooo Capital Be-
 fore Opening and Trust Companies Reserve of 25 Per Cent.

fore Opening and Trust Companies Reserve of 25 Per Cent.
 Albany, N. Y., Dec. Ex-Governor Hughes made public the report of the commission headed by A. B. Hepburn appointed by the governor to suggest amendments to the state laws govern ing financial institutions with view of remedying defects uncovered by the recent financial panic. All the mem bers agree on every recommendation made except as to the reserve trust companies should hold. There is diff ference of opinion between the trust companies and banking representatives on this point.
 The commission, which consisted, be- sides Mir. Hepburn, of Presidents Ed ward s. Marston of the Farmers Loan and Trust company, Edward W. Shel- don of the United States Trust con- pany, A. s. Frissell of the Fifth Ave nue bank, Stephen Baker of the Man. haitian company and Andrew Mills of the Dry Dock Savings institution, all of New York city, recommends first that the state superintendent of banks be given veto power upon the estab- lishment of a bank or trust company or branch of any existing bank or trust company or the purchase of the control of one banking institution by another.
 Tt should be within his province to prevent the organization of such insti- tutiOns by improper men or their estab- lishment in localities where business conditions do not reasonably assure their success"
 The committee believes that banks in New York city should not hereafter be permitted to have branches unless they possess capital of $500,000, and we think that both banks and trust companies should be required to fur nish an additional $1OOOOO capital for each branch opened"
 The committee disclaims any opposi- ton to the organization of small banks believes they are necessary and ben CllSlul u 10 olllg. tiiC ol VI banks by people without banking ca- pacity or without proper motive for seeking such organization"
 The report, as a whole, is practically unanimous. All the recommendation are concurred in by Messrs. Hepburn, Baker and Mills. Mir Frissell would increase the requirement. for trust con- pany reserves still more than recom- mended by the majority, and Messrs. MarstOn and Sheldon would have a scale of reserve requirement. governed by amount of deposits.
 In general the committee would in- crease and make more direct and inti- mate the supervisory power and con- trol of the superintendent over all mon- eyed institutions, including banks of discount and deposit. trust companies, savings banks, safe deposit companies, mortgage loan or investment compa- nies and building loan associations, so that he could directly direct the dis continuance of unsafe practices In the matter of loans and invest ments the committee details at length some of the methods more commonly reSorted to for evading the restrictions of the law, recommends that 1t be made compulsory that "all loans, dis counts and purchases of commercial paper shall be read to the directors or submitted in written form, and inten- tional concealment of the making of such loans, discounts or purchases would penalize the interchange of de- posits by which directors and officers or others loan indirectly to themselves or "are enabled to obtain control of chain of banks" and of this practice says: "Of course no reputable bank would be a party to such a transaction, and the penal code should prevent such a practice on the part of any. And in this connection. we think, the law linn iting loans is too liberal, and We rec Ommend that the amount which any institution may loan upon collateral to any one interest be reduced from 40 per cent to 2J per cent"
 Concerning trust companies reserves the commission finds that a reserve of 2j per cent should be maintained by the trust companies in the city of New York proper thorough of Manhat- tam. of which lJ per cent should he cash on hand and 10 per cent cash in some bank or trust company approved by the superintendent of banks.
 The committee recOmmends also that in .'the reserve cities" of Brooklyn and Albany state banks and trust eOmpa- nies should keep the same reserve C2J Der cent required of national banks and in other places should keep I5 per ront