The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-01-01
FOR SOUNDER BANKING
Governor Hughes Points Out Need "
Amendment to Statutes

Albany. n. Y, Jan. 1.-The annual
lessage of Governor Hughes which
was sent to the legislature today con-
aims many important recommends
IONS. Chief among these, in the light
II certain conditions disclosed by the
4cent financial upheaval, is recon-
ildafion recS'-ding taArs amendment u
law relating to banks and trust
ompanies. In bringing this matter to
ne attention of the legislatures, the
GOVERNOR urged them to adopt every
practicable means ''to prevent repeti-
tion of reprehensible practices and to
assure the proper management Of the
financial institutions chartered and
supervised by the state, upon whose
stability and prosperity the interests Of
our people in every walk of life so
largely depend"
Another important recommendation
has as it's object the complete suppress
sion of race track gambling throughout
the state.
Direct nominations at primaries and
simplified form of ballot are urged in
the message and recommendations also
are made for better provision for the
care and protection of emigrants.
With reference to the banking laws
the message says:
Recent events have demonstrated
the necessity for providing effective
means for preventing the exploitation
OF banks and trust companies and the
acquisition and u~e of a control Of a
number of institutions to facilitate
selfish schemes opposed to sound
banking. If suitable restrictions are
imposed in explicit form and with ap-
propriate penalties, insuring adequate
knowledge and proper action on the
part of the board of directors with
, regard to loans and other transac-
. tions; preventing the deposits of
moneys of one institution with another
and stockholders of the former may
obtain desired credits from the lat
ter; limiting the amount which NAV be
loaned by any bank or trust company
upon the stock of another financial in
stitution; reducing the amount which
may be loaned upon collateral to any
one interest; and erecting safeguards
against loans and investments in aid
of schemes of promotion represented
by unmarketable securities and If in
addition suitable means are provided
for the enforcement of the rulings of
the superintendent of banks with re-
gard to improper or unsafe practices.
the security of our financial institu-
tions and the confidence which springs
from just reliance on their proper
management will greatly be strength
ened.
TT is apparent that existence of de-
mand obligations requires reserves to
be maintained and that they have the
salutary tendency to prevent an undue
expansion of receipts. With regard to
trust companies, however, the matter
of reserves is a phase of larger ques-
tien. 1t was not contemplated by the
law relating to trust companies that
they should engage in the same busi-
ness as banks. In practice, however
they have engaged in the banking busi-
ness upon larger scale and the mon
eys deposited with them are for the
most mart T0avahla on daroand
Whatever reserves, or other rest1 ic-
tions may be deemed advisable with
reference to demand deposits in the case
of a bank, should be equally obligatory
with reference to the same sort of de-
posits in the case of a trust company
The governor recommends that pro-
vision be made for liquidation of insol-
vent banking institutions under the
supervision of the superintendent of
banks.