Los Angeles herald., 1909-12-12

lures, Says institutions Doing
Sound Business Need
Have No Fear
In an address to one of the larges
crowds that has ever assembled a
the city club, j. f. Sartori yesterda
told about the new California bank
ing law and the effect it will have 0
the financial institutions OF the STATE
Mr.. Sartori believes that Californi
now has one of he best banking law
in the country. He said that to som
IT seemed unnecessarily harsh, bu
that the banks doing business on
sound basis and in a proper manne
had nothing to fear from it. In dis
cussing some of its harsh features
the speaker declared that the event
the framing of the la
should be taken into consideration.
was prepared just after the pane
when the people were clamoring fo
bank guarantees and just after a bi
bank failure in San Francisco. som
Of these features, he said, could b
by proper amendments late'
In part Mr.. Sartori said:
The new banking act. which went
into effect July /, 1909 repeals all
conflicting acts or parts of acts
and codifies all the laws on the
subject. This of itself is meritor-
ious and of great advantage TO
bankers, lawyers or la"nen, IL II
is desired to ascertain what the
law is on "a given subject, or on
all matters pertaining to the pusl-
ness.
The bank commissioners act was
entirely ignored. All the goou
features of the savings ana loan
CORPORATION act and other fragmeh-
tary banking laws Oh Iilerl'
incorporated.
It's arrangement and technique
follow To some extent that of New
York. -, .N,.oa
classes-savings banks, commerclaI
banks and trust companies. Artlcls
7 deals with general provisions ana
departmental banking article IL
relates to savings banks, artlCIe
III. commercial banks; artlcle ~,
trust companies; article W STATE
banking department ana supSt
vision The word bank IN the
Na,,orai nrovisions refers to all
Classes OF banks except, of course
national.
Given Power to Combine
The departmentil sections of the
hat,kinp act provide that any cor
Doration authorized Jy its articles
of incorporation so to do may con-
bine the business OF a com IClai
bank, savings bank and trust GoilI-
pany or any two or an Oh tneini !ni
livery hank doing a departmental
have the proper
total Maid in capital provided by
the law and the proper proportion
~ its total capital must be IN
vested in or apportioned TO eaen
department. ,.o.,I
II must maintain the proper lesal
,.asorva in each department, sep
rate hooks must be kept, ana an
casb and all assets and liabilltles
of each department must pe HeIu
separately and must not be iii'ea ,.a
mingled. No department sHail
ceive deposits of any other uepdti
ment of the same corporation: onsb o
preventing the pyramldlIlg % ,,,hara f'e,,a
saposifs. as may be done Where
dapartmental business is Trans
aotad under separate corporations.
C,aditora of each department.
taI,a first lien on its assets, tIle
savings depositors having 1,i9 III
lien on the savings assets Lnl3
being the law, and the punllsheC
renorts and advertising OF the laG'
mat a savings and commerclai anu,
oorbans trust business Is Delns
done. no one is deceived nor mas
right to complain. .,,i+o,.,
THE provision giving the creultors
of each department priority oL
lien was held constitutional py colil-
netent lawyers and Is the law III
other states; for instance Mlciii-
gan. ,,o Maid
v'oreign banks must have paiu-.
in capital and comply with an tle
requirements as to organization
and conduct relative TO state III
stitutions. IL. +bo,,
sbouId he permitted to do business
on more favorable terms than
hanks organized within the state
by its own citizens.
Stock Purchases Limited
The purchasing of stock of other
oornorations is prohibited, except
70 nrevent loss on loans already
made in good faith, and stock SO
acquired must be sold within SIX
months. =, s,u
Sneculating on the rise ana ran
of shares of corporations ana
hanks. and the assumption OF stock
holders liability, is not good ana
legitimate banking. The practice
In this state made the prohlpltlon
necessary. ..4,.
Contracts cannot be made with
depositors whereby the stock-
holders liability provided lor III
the constitution Is In any Ilanliei
TO he waived. Some prominent saw
i,oe hanks in this state (not, how
ever i'm Los Angeles) have been
taking contracts from depositors
waiving this liability. 1t was
sort of "Heads / win. tails you
lose" scheme, not justifiable IN
capital stock banking.
Funds of a bank cannot be de-
Dosited with another bank unless
such other bank has been deslg-
mated as a legal depository py
vote of a majority of the directors
exclusive of the vote of directors
who NAV be officers or directors OF
the depository bank so designated.
Directors without prejudice or the
Temptation of indirect gain and IN
good faith, should know how and
to whom the banks funds are
loaned, and where accounts are
carried.
National banks receiving deposits
of state banks must, at the request
of the superintendent of banks,
submit to state examination. re-
fusal authorizes the superintendent
to order the immediate withdrawal
of all state bank deposits from such
offending national bank. A refusal
to withdraw such deposits shall be
a misdemeanor. National banks
dacirinp .Such danOsIrs can legally