New-York tribune., 1908-01-02

stockholders of the former may obtain desired
credits from the latter; limiting the amount
which may be loaned by any bank or rusl
company upon the stock of another financial IN
stitutfon; reducing the amount which may De
loaned upon collateral TO any one interest. ana
erecting proper safeguards against loans anu
investments in aid of schemes of promotion
represented by unmarketable securities; and IL
in addition suitable means are provided Tor the
enforcement of the rulings of the Superlntend-
ent of Banks with regard to improper or un-
safe practices, the security of our hnanclai IN
stitutions and the confidence which springs
from just reliance upon their proper manage
ment will greatly be strengthened.
The members of the committee are not agreed
upon the subject Of reserves. The maintenance
of reserves to the highest extent suggested, OF
course will not protect against the consequences
of improper investments save an institution
that is in unsound condition. But it is ap-
parent that the existence of demand obngatlons
requires reserves to be maintained and that they
have the sautary tendency to prevent an undue
expansion of credits. The arguments that are
adduced with respect to the different reserve
plans which are proposed | submit to your con-
sderation
With regard to trust companies however, the
matter of reserves is phase of larger ques-
ton. 1t was not contemplated by the law re-
lating to trust companies that they should en-
gage in the same business as banks. Their
powers were defined with reference to the execu-
tion of trusts and TO action in fiduciary capacf-
ties with such incidental privileges as were
deemed consistent with the general purposes. In
practice. however. they have engaged in the
banking business upon a large scale, and the
moneys deposited with them are Tor tne most
part payable on demand. Despite TINS deVelop-
ment of their business it was not until 1916
that they were required to keep any cash re-
serve. and this is much less than that required
Of banks. Whatever else may be said on the
subject. ii would seem clear that business of
the same sort should be transacted under the
same conditions. 1t is not the of the in
stitution which justifies the imposition the
omission of the restriction. but the kind of
business.
In my judgment nothing will meet the situa-
tion with fairness to the interests of the banks,
of the trust companies and of the public. which
deals with both, which does not require that each
distinct field Of operation should carefully be
delimted and that any corporation tTansactlng
business in particular field shall be subject to
the obligations and restrictions which pertain
to that field. Whatever reserves or other re-
strictions may be deemed advisable with ref
erence TO demand deposits in the case of bank
should be equally obligatory with reference TO
the same sort of deposits in the of a trust
company. Similarly, the savings bank business
is a distinct field, and business of this sort
should he transacted only by institutions sub
ject to the restriction of the savings bank law:
The amount of legal expenses incident TO the
liquidation Of insolvent banking institutions IN
this state is a grave scandal to which the COM
mittee of bankers fittingly calls attention: L
recommend that provision be made for llqulda-
tion under the supervision of the Superintendent
of Ranks and that he shall have authority to
appoint lQuidating agents and necessary as
sstants to enable him to wind up the business
in the most speedy and economical manner. L
do not think that there should be an attempt
to oust the court of its jurisdiction to appoint
receivers. But the present provisions OF law for
exclusive liquidation through receivers ap-
pointed by the court may be changed and the
courts should be left to exercise their jurisdic-
ton in cases where they deem 1t necessary to IN
terfere with the ordinary course of liquidation.
And it should be provided that application for
the appointment of receivers by the court shall
he made in the judicial district in which the
corporation has its principal place of business
and that proper notice of the application shall
should be made for the liquidation of building
and loan associations.