Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1909-06-24
BANKS MAY INSURE
ATTORNEY GENERAL DECIDES
NATIONAL BANKS may DO 50.
WiCkerSham Says National Nav IN
sure Their Assets, While Demo-
cratic Platform Required Them So
to Do. An Insurance Company to
Be Organized for Purpose.

Attorney-General Wickersham, ac-
cording to announcements made at
Washington May 10th, decided that
a national bank has a legal right to
insure it's assets against loss. The
opinion was rendered in response to
a request from the Secretary of the
Treasury, who sent to the Attorney
General a form of policy to be is
sued "by an insurance company pro-
posed to be organized" The Attor-
ney-General approved the plan of in
surance, but suggested some changes
in the form of policy.
The Democratic platform year
ago recommended tax on national
banks, and on such State banks as
wished to come in, to raise a guar
anty fund to insure the depositors of
the banks. Mr.. Taft opposed this
plan in his campaign speeches, and
when Oklahoma as a State put the
plan into operation the then Attor-
ney-General decided that it could not
be applied to national banks.
Mr.. Taft opposed it as a PROPOSE
tion "to tax the honest and prudent
banker to make up for the dishonesty
and imprudence of Others" that "the
chief and, in the end, probably the
only benefit would accrue to the
speculator, who would be delighted
to enter the banking business when
it was certain that he could enjoy
any profit that would accrue, while
the risk would have to be assumed
by his honest and Woodworking fell
low
The form of insurance proposed
now is voluntary, but it is remarked
that insurance by one bank will force
all others in it's territory to insure
making it in the end practically conf
pulsory.
81 beg to say that, as general
principle" says the Attorney-Gener-
tirely within the powers of ma
tional bank to contract for the IN
.surance of its assets against loss.'
He says, however, that the form
of the proposed policy submitted is
somewhat peculiar, the contract
hereunder being in effect an agree
ment to pay to the banks any de-
flciency in its assets upon ultimate
realization necessary to enable it to
pay all of it's liabilities of every
kind; that one paragraph seems to
be objectional as committing the
bank to profit-sharing feature,
which might be contended to entail
a corresponding liability for losses.
Mr.. Wickersham advises that this
paragraph be eliminated.
He says also that he very much
questions the legality of another pro-
vision in the policy which subjects
the bank to a practical examination
by the examiners of the insurance
company, without notice and at such
times as the company may elect, one
of such examinations to be within
each period of six months covered
by the policy and all renewals there
Of. He quotes a statute which,
while not prohibiting the bank from
permitting an examination of its
books, does operate to prohibit it
from Obligating itself to permit such
examination. He advised that the
clause be reframed SO as to make it
clear that the agreement to insure
is not dependent upon the failure
to permit the examination, although
it might be stipulated that in case
at any time the examiner of the COM
pany should not bS allowed access to
the books of the bank for making
an examination, of the company
should have the option, upon reason
able notice, to terminate the contract.
The opinion concludes: "In my
opinion, therefore, it is matter for
the discretion of the directors and
officers of bank to determine wheth-
er or not they will enter into any
such contract in any given instance
this discretion to be exercised in
view of the solvency and general A.
nancial condition of the company
making the insurance and the reason
ableness of the rate Of premium; and.
the form Of the policy being modified
to conform to the foregoing sugges-
tions, see no legal reason why
bank may not enter into it,"