New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1908-01-02
per cent instead OF 40 per cent OF the caplsi ana
surplus of a bank or trust company
| IyNDERWRIrTEN LOANS


UNDERWATER LOANS.
The above suggestion conIempiates limit upon
the which may DC Of m ee3
acter have been made in excess OF the anoulne pe
ps for by the W yRon IN, o e
several individuals Such loans are ared4ene e3 on
underwriting agreements pr9yidng dor sie and
not on the joint and several obligation OF the poi
roEers 80 ,.uo,r,,, g NOT objectionable in
itself form Of undertakng for P par as ct It
companies is cricisable only IN SO Lar as o ~
has Seeoms , common me'h0o iof
I might n SUCH loans than
upon form of the obligation but because OF ae
chg of NEUTRALITY-SUSPICIOUS. projects would seem wise
TO limit the amount of any such loan .u upon of the
capital and surplus of the bank or trust company.
term for which it is made 1t has been found that
those availing of this form OF 6 are credt
those interested in business enterprises OF
established character Therefore, II ~ou a. ,onger
proper that such loan be mace LOT iohse'
period than one year. ..r,.
LOANS ON STOCK OF MONEYED CORPORA
TONS.
Tnter5enendence of financial institutions has al
ready been alluded to one OF the causes toi tie
failures recently @ m shares Of stoek of
corporation with another control was heid OF ea 81
tai This interdependence contributed to the down
fail of six OF the failed Institutions Condltlons
pose of the control several of these institutions
to enable an improper use OF o te snch con-
t tnel. personal a0'a"'As' '''''. s
TO prevent occurrences of such conditions, | rec
ommend that a law be enacted prohibiting any cor
poration subject TO the banking law from making
ration which loans in the aggregate amount p Sha
70 per cent otsr of fns PaT I'll
LOANS ON REAL ESTATE.
A cause contributing to emba in some me
upon real estate Whether this amount was made
up of direct loans or of loans secured by the as,
found to be equally unavailable for in obtaining
credit Commercial banks making practice sat OF
embarrassed by the unInarketabiIty OF such Sc
The objection to real estate for bank of dis
count is not to its insuficency, but to its character
AS the obligations of such banks payable large
IL on demand ii is proper that the securities which
they hold should be readily convertible into cur
be good security. it cannot ordinarily be awaited
of by bank in an emergency .,,- .,.+ nro-
hbition against this character Of loans would ere
the state Where the making of such loans is
tia to profitable banking and required by ane neeu
ty for loans is rarely obtanable by country banks;
In localities where there are large amounts Oh
for the making of such loans by banks IS ma
l therefore recommend the passage of a law lin
ting the amount of loans which state bank may
make directly indirectly upon real estate secur-
ity or the assignment of a mortgage or other lien
or charge to . per cent in the ~ net OF more e
than 1o.ooo Inhabitants. and to 20 per cent of the
As it has been the practice of banks and trust COM
panies to loan upon mortgages, or the assignment
isIatinn recurring the record of such mortgages or
as security for loans. and should be prohibited
STOCK OWNERSHIP.
A prohibition exists at the present time by which
capital stock of any domestic corporation is limit
capital and Surplus Of the corporation making such
investment II seems wise to me TO go a step iur-
l therefore recommend a law limiting the hold ID
g Py Of n %
cent Of the amount of such stock outstanding pro-
to the ownership of the capital stock of a safe
deposit company by trust company. if the vaults
adjacent to an office Of such trust company.
DIRECTORS. e.
With the disclosures of the recent past there has
mands in no uncertain terms keener appreciation
of responsibility by those having in their care the
The theory which the boards of dir prs
their members should have great influence in Sc
curing. directly or indirectly business for their
companies. That this sphere of influence may be
as wide possible these boards have been en-
agg6 to m f sf SIZE results for OUR
However important may be the service IN obtaining
has been secured may be properly cared for. In
many these boards of directors are composed
but S5 G sh Of the ueg of @ m
the duties imposed by their steeships
The executive officers may be in some measure
ance of duty. being satisfied with Kitchen cabinet
believe it to be the duty of the officers of every
financial institution to adopt such means as are
with its affairs not only by formal report. but by
requiring personal familiarity with the condition
of this principle recommend the enactment
OF law reau2g the tS or @ Of bo
regular meetings once in each month.
STATEMENTS FOR DIRECTORS.
1 also recommend that the directors or trustees
should, by resolution duly recorded, designate
officer officers of such corporation whose duty it
should be to prepare and submit to eacn director or
trustee at each regular meeting of the board
written statement of al purchases and sales Of se
paid since the last regular meeting of the board,
the date OF the meeting at which such statement is
submitted. A copy of such statement. together
verified by The affidavit of officer charged with
the duty Of preparng such should he
day after such meeting, and be presumptve evi-
requirement of law The intentional concealment
from the directors of discounts and loans so made
should be misdemeanor. A failure to report the
same as suggested should be prima facie evidence
The banking law requires that director
shall hold certain number of shares of the capt.
tai stock of the corporation of which he is a
trustee and It also requires that such director shall
stock free and clear of encumbrance or hypothe-
cation.
the oath should be broadened with respect to tie
holding of stock free and clear of encumbrance or
loan cover the full period since the making OF
the last affidavit
IMPROPER USE OF CORPORATE FUNDS.
Certain instances have come to our notice of the
improper of corporate funds for personal ad-
vantage. l therefore recommend that the required
depositary of any corporation subject to the bank
ing law be designated by vote of a majority
of the directors trustees of such corporation.
exclusive of any director who is off,
Ger of the depositary designated.
| also recommend that law be enacted prohib
ting officers of any corporation subject to the
banking law from making maintan ming. or at
tempting to make or maintain, deposit with ally
atksr cnrnnra ton cnnditinn with The mulnr