Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-03-10
MUST CHANGE
BANK LA w S
JOINT LEGISLATIVE COMMITTEE
SURE OF THAT
HEARS BANKERS AS TO NEW
PLANS IN MIND
Clearing House Committee and Small
Banks Representatives Present
Their Ideas-Hearings To-
day and Tomorrow

A Joseph's coat is what the Califor-
mia banking law is found to be by the
joint legislative committee now con-
Quoting an investigation of banking
methods in Los Angeles.
The committee began it's sessions at
the chamber of commerce yesterday
afternoon and will spend today and
tomorrow hearing financial and other
interests. 1t is composed of Senators
f. w, Leavitt of Oakland, chairman;
E. l. Wolfe of San Francisco and j..
B. Curth of Sonora, and Assembly
men Phil A. Stanton of Los Angeles,
vice chairman; c. p. Cutten of Eu-
reka and c. NJ. Fisher of Oakland
j. 4. Thompson of Oakland is Sec
rotary.
That this committee finds a Josephs
coat is due to the many pieces in
which the states financial garment
has been made. This being so the
committee is convinced that the only
thing to do is to get an entirely new
coat. And the present purpose is TO
hear the financial and other interests
in expressions as to the style and
fabric.
Under the laws now in force it is
possible. members of the committee
say, for savings banks to transact
commercial bank business and COM
mercial banks to be savings banks,
while trust companies may be them
selves and both the others. This con-
dition would not be bad if there was
legal regulation of the reserves for
each to protect depositors and other
restrictions, particularly as regards
the character and quantity of secur-
tiles in which savings banks invest. To
amend the present laws, perhaps, in
o 116D nf
only make the situation more involved
and confusing. A revision of the en-
tire code seems necessary.
Clearing House Committee.
The hearing yesterday was largely
preliminary. A committee represent
ing the Los Angeles clearing house,
composed of ]. E. Fishburn. w. H.
Holiday and w. r. Hervey, was pres
ent to discuss banking with the COM
mittee. but spent most of its time dis
cussing the proposed inspection sys-
tenn which is to be established
here. Under this system the clearing
house inspector examines the loans
made by the banks largely for the
purpose of preventing a borrower from
using his credit to it's limit at more
than one bank. AS the committee was
composed wholly of national bankers.
aiming national banks as one that
seemed the best.
The committee, however, is looking
for a system that will be able to
scrutinize the character and value of
securities as well as test the prima
facie evidences of safety. At the sug-
gestion of the chairman the clearing
house committee will embody it's sug-
gestions along the lines of legal rem
lNr =
sidered later.
The recent rule of the clearing
house withdrawing clearing privileges
to all banks with less than 100000 un-
il paired capital was brought before
the committee by Col. j. T. Lanker-
SHIN and ]. w. Mitchell of the South
ern Bank of California, w. r. Clark
of the Federal bank and President
Ames of the Miners and Merchants
bank. Under this rule, they repre-
sented the clearing house could ar
drive small banks out of bus
mess. Col. Lankershim was present
because, as matter of principle, he
was opposed to clearing houses having
such arbitrary power. The others
took the same view and expressed the
belief that it was a step in destroying
They did not offer any
legislative remedy, but merely COM
mendeQ the subject Tor the conSluera-
ton of the committee.
Said one member of the Legislative
committee last night: without pur-
suing our investigation any farther
we would be justified in declaring the
present laws inferior, to say the least,
and requiring careful reconstruction.
There must be a classification of the
banking institutions and laws regulat-
ing these branches clearly defining
the privileges and restrictions of each
must be enacted. We are not con-
WINGED that this cannot be done
through the banking commission, but
a new system of control must be de-
vised. There must be a centraliza-
ton of authority and a large enough
force of examiners to scrutinize the
business CLOSELY and in a general way
protect depositors from dishonesty
and needless management. Where we
now have what might be regarded as
the poorest laws careful work on the
part of the committee may procure
the best And the purpose of our
hearings is to enlighten us in our
work. We do not want one-sided en-
lightenment; all who have suggestions
of value are welcome to come before
u.s."
The committee will hear representa-
tives of the savings banks at III
o'clock this morning and of the trust
at ? O'Clock this afternoon
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