New-York tribune., 1908-01-03
B4NKING LAW REFORNS.

In the few weeks that he has been IN Office
Mr.. Williams, the State superintendent OF
Banking has not only completed his tamlilarltF
with the needs of the state in regard 10 pahh
regulation, but has also found time TO prepare
q reDort which is q mastery study OF the sub
iect. The document is a remarkable proof OF
his rare fitness for the post In this critical
period As state banking has been managed III
the past certain evils have grown up which it
has been practically impossible to check To
any one who pointed warning finger at these
dangerous practices the retort has always been
made that never were the banking institutions
conducted under state auspices in so prosperous
a condition No criticism OF system that
was working so well was listened to for a
moment Mr. Williams takes hold when the
weakness of loosely regulated banking has been
drama ticalIy revealed and from what he has TO
say not even bankers who are interested in pre-
serving present opportunities will strongly
dissent
The first great fault of banking under the
laws of this state has been that, compared to
national banking. 1t was subject to cOmpara-
lively few and very loose restrictions. This Mr.
Williams would cure and so would Governor
Hughes ar" he commissioners who recently re-
ported aim. by considerably increasing the
powers Vf the Superintendent of Banking. He
should have real authority to check any bank
ing tendencies which seemed TO him dangerous,
and strict laws should be passed, which he
should have authority TO enforce, stopping all
those practices shown by the recent panic to
be perilousy involving banking institutions In
speculative ventures. We should have, in
word, real banking regulation. As a part of
this Mr.. Williams proposes that the Superin-
tendent have authority TO keep all the various
kinds Of banking institutions within the fields
which they now occupy The tendency of those
which are properly subject to lesser restrictions
TO invade the fields of those which are properly
subject 10 greater restrictions he would re-
press. without, of course, attempting to compel
any class of institution TO abandon any field
upon which it has already encroached That,
if seems to us, is d wise suggestion, the adop-
ton Of which would prevent the development
in the future of any such dangerous situation
as has developed i'll the past We should then
have an end Of the practice TO which institu-
tons Incorporated to do a kind of banking
which may safely be done without severe re-
strictions resort, of entering, under free con-
struction of the terms of their charter, upon
other line of business properly subject to greater
restrictions. We should not have deposit banks
formed to do a savings bank business under
another name and thus avoid the strict limita-
tons regarding investments which the state
has seen fit to impose upon institutions to
which savings are intrusted; and we should
not have institutions formed to receive and
manage trusts entering into commercial bank
ing without being subject to those regulations
which the law has laid down for commercial
banking. If there is any wisdom in the state
restrictions upon savings banking and upon
commercial banking, it. is folly and incompe-
tence for the state to stand idly by and watch
one Of its creatures, organized to do something
else, enter into either of those fields while ig-
noring the regulations which the state has inn
posed upon institutions within it.
Mr.. Williams would check developments of
this sort for the future. He would not attempt
to undo those which have already taken place
The discount bank which does a savings bank
business and the trust company which does a