The Columbus journal. (Columbus, Neb.) 1874-1911, 1909-01-13

OF such tax to be a certain per cent Of
the average deposits as shown by the re-
ports of the department of banking and
payment to be made at stated periods
and for a fixed amount.
Our state department OF banking has a
complete record for the past eight years
showing the result Of receiverships of in
solvent state banks. This record shows
that since 1900 total deposit OF $5l5,-
2s4.2s has been placed in jeopardy by
reason of the failure of state banks. From
the assets Of these insolvent institutions
depositors claims have been liquida ted
until the balance unpaid for the entire
period of eight years is S19S.255.23 or an
average annual loss Of about SIG, 100000 to
depOsitors. Creditable as this showing is,
l feel quite certain that with a number
OF improvements which can be made in
our present law. the percentage of loss
can still be materially reduced. The
minimum capital required for the incor-
poration Of a state bank should be in
creased to at least sl5,O00O0. Bank ex-
aminations should be made twice a year
instead Of once as now required. Ex-
aminers should be assigned to a certain
territory and thus eventually would be-
| come familiar with conditions and secur-
tiles in that locality and would acquire
the necessary knowledge as to the worth
OF the bills receivable Of the banks which
they would examine. which is the essen
tial thing in determining the solvency of
any banking corporation.
Under a guaranty plan which would
make the banks Of the state sustain the
losses of the entire system. the bankers
should be given a share in the control of
the department. The present banKlng
board, which is composed of three officers
elected for an entirely different purpose.
should be abolished and a non-partisan
board established to be composed of three
members appointed by the governor each
OF its members to have had at least five
years practical experience in banking and
1t least two Of them to be actively en-
gagged in that business at the time of
their appointment. A bank commissioner
should be appointed by the governor with
the approval of the banking board, who
should have had an experience in the
banking business equivalent to that re-
quired of n member of the board, and he
should select the necessary number OF
examiners with the approval of the board
CO control. The banking board should sit
in session at Lincoln at stated periods
and be paid for the actual time in ses-
sion. They should have complete con-
troll of the issuance Of charters and the
general administration Of the banking
laws. l: has been urged by critics Of the
guaranty Of deposits plan that II would
lead to the establishment Of too many
hanks. This would be serious objec-
| tiCn il such were the result 1t would
greatly strengthen our banking system If
the banking board were empowered to ex-
ercise a proper censorship over the issu-
ance Of bank charters
The possibilities Of profit to be made in
taking other peoples money on deposit,
leaning it to the public ard s;eeping the
interest thereon is so aluring that at
times the number of banks increase more
rapidly than the needs of bushes require
with consequent overlOaninS. hazardous
risks, extravaganza in buildings and ex-
renses with the result that in lean years
failures occur ard innocent people suf-
fer. The overissuance CT charters can be
requirements as to the amount of capital
stock necessary TO be paid in by the
stock holders before q charter shall is
sue. The amount required in each in
stance should bear 4 proper proportion to
the population o. the town or city in
which the bank is to be established As
| ais example; showing the manner in
which requirements as to capital affect
the number of bank charters issued, 3.942
national banks have been organized since
1900 when the requirements O: capital
stock was reduced to s25, 10000 as the
minimum. This is $50 more banks than
| the entire number in existence when the
law was changed In that respect The re-
duction OF the minimum capital stock re-
Guircment to s25.000.O0 has doubled the
number of national banks in eight years
A substantial increase in the amount re-
quired as a minimum capital for the es-
Establishment of state banks would have
salutuary effect in keeping the number
of banks within n satisfactory limit and
also provide greater security to the de-
positors.
AS to the amount of assessment to be
levied in order to provide ar adequate
fund for the prompt payment of deposit
Ors of insolvent banks. 1 would suggest
that one fourth of one per cent be levied
upon the deposits as shown at the last
statement published prior to the COM
mencement of the operation of the law.
and this assessment to be followed with
| additional levies in like amount at periods
| of six. twelve. AMI eighteen months
thereafter. After the accumulation Of q
guaranty fund equal to one per cent of
the average deposits in the guaranteed
banks, an annual tax Of one-tenth OF one
per cent should b. levied, because 1t Is
necessary under a proper system of insur-
aEce that the prosperous years should
pile up a surplus fund to provide for the
inevitable demands Of less fortunate
times. AS an additional security against
any possible emergency. such as extra
ordinary demands upon the fund the
hoard should be empowered to levy an
assessment Of not 20 exceed two Per
cent Of the average deposits in any one
year. While this assessment might never
be levied, the power to use 1t would have
a sustaining effect in times Of possible
panics. Such provisions would result in
accommodating in eighteen months with
the average Of deposits remaining in state
banks as at present a guaranty fund of
$642. 351.0 This would be $127 ,0s7. 90
more than the entire amount Of deposits
involved in bank failures in this state
in the last nine years. 1t is three time:
| the amount that would have been neces-
sary to have paid upon demand all the
money due depositors in failed banks dur
ing the wears with the heaviest failures