The San Francisco call., 1908-03-03
BEGIN PROBE OF
BANKING SYSTEM
State Legislative Committee
Opens Week of Investigation
in Rambling Discussion
Commission Is a Bluff" Says
John c. Lynch, With Begin
ming of Session

The bank commission is only
bluff"
With that terse Indictment against
the banking laws of the state, culled
from the vernaeular by one of the COM
missioners, John c. Lynch, for the in
struction of the special joint committee
on banking laws of the California leg
islature, the work of the committee
started yesterday morning in the rooms
of the harbor commissioners in the
Ferry building.
The committee spent it's first session
in a rambling discussion of the fertile
subject which lay before it; cursory
post mortem was conducted on the late
financial stringency, or bankers
panic" Commissioner Lynch compared
many of the banks of Los Angeles to
East street clothing dealers, who
grabbed pasers-by and made them
come in with their money" and an in
dication was given that one of the
most important reforms to be suggest
ed by the committee will be a law pro-
hibiting a bank from doing both
savings and commercial business at the
same time.
Senator Frank w. Leavitt of Alameda
is chairman of the committee, and As
semblyman p. A. Stanton of Los An
geles vice chairman. The other mem
city, Senator j. B. Curtin of Tuolumne,
Assemblyman c. NJ. Fisher of this city
and Assemblyman c. p. Cutten of Hum
boldt. Lieutenant Governor Warren r.
Porter was with the committee in the
morning.
This morning at IL o'clock the COM
mittee will sit with Homer S. King,
chairman of the San Francisco clearing
! house. and I. w. Hellman Jr. and A.
c. Mcintyre of the clearing house as
sociation and discuss the banking laws
situation from the standpoint of the
bankers. The committee will meet each
morning this week at 10 o'clock, and
the sessions may continue into next
week. T. T. Thompson was yesterday
\ selected secretary of the COMMITTEES.
L Some time during this Investigation"
said Senator Wolfe. I'VE shall want an
explanation from the bank commission
of how the California safe deposit and
trust company managed to get into the
shape it did"
You want to do that in executive
session." replied Lynch with a laugh.
When asked for an explanation of his
wish to have the commission investi-
gated behind closed doors, Lynch
laughed the question away.
Il Lynch's criticism of the Los Angeles
banks came In the afternoon. Wolfe
asked Stanton, the Los Angeles assem-
the Los Angeles clearing house that
% banks there must raise their capital
stock to $500, 900 before next October,
or their clearings would not be at
tended to.
Banking in Los Angeles is a great
deal like the clothing business here
in East street" commented Lynch,
waving a gesture, toward the shoddy
shops near the ferry building. when
anybody comes along with money they
grab him in and make him. start a
; bank"
But the banks there are in good
; condition" broke in Stanton.
, Lieutenant Governor Porter said that
1t was a great evil to permit a savings
, and commercial banking business to be
conducted under one management. as
the commercial banks were tempted to
use the resources of the savings depart
ment. He saw no danger, however, in
the same owners conducting savings
and commercial banks as a separate
business.
The lieutenant governor said that, in
his opinion, the recent financial panic
here which led to the issuance of clear
ing house certificates was not caused
by the local banks having too much
money held in the east. This was In
reply to the question put by Wolfe on
that particular point Wolfe contended
; that clearing house certificates were
fiat or Illegal money.
Before the noon recess Lynch began
to outline to the committee the meth
} ods of inspecting a bank In the aft
ernoon he produced the blanks used in
the work.
Lynch spoke of the systems of poor
banks, citing the example of the Bank
of Greater San Francisco which re-
Gently suspended.
ut had $22, 1000 on deposit and there
was little sign of any of it's capital
stock" said Lynch. THE funds were
being expended in the payment OF
salaries. The president got $500 a
month"
The meeting adjourned after a gen.
eral discussion Of trust companies.