The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1910-05-21
BANKERS TO URGE
BETTER LAWS FOR
THE INSTITUTIONS
CONTINUED FROM PAGE So


that the examiners live up strictly
to the law. An examination which
does not reconcile bank balances,
prove deposits subject to oh eek, is
scarcely worthy of the name, yet
am personally aware of instances
where this has not been done. Also
from the minute book the examiner
should learn of the duties performed
| by the directors and loan committees,
and larger responsibility should be
placed upon officers, other than those
in immediate charge of routine af-
fairs. Directors of state banks have
| told me that t<ey have. never passed
| on their paper or heard of its being
| submitted at any meetings OF the
board. These one-man concerns are
| menace to business and should not
be tolerated.
4 Failures, when not due to dishon-
esty. come about generally by what
almost amounts to the same thing,
one customer getting into his bank so
deep that the examiner Is unable to
determine whether the customer
owns the bank or the bank owns the
customer. In the wind up 1t is found
that the customer owns the bank so
his failure pulls the bank down with
him. To limit loans to 10 per cent
of capital and surplus is wise meas
ure in the national system In the
state there is practically no limit, be-
cause the percentage fixed is nullifed
by the privisos that the maximum
may be disregarded by consent OF
directors or when good security is
taken. The exceptions sh ould be re-
peaied and for much the same reason
banks own stock should be exclud-
ed as collateral under all circum-
stances for here is where the dishon-
est promoter gets in his deadly work.
s. Branch banking has been a
source of much attention at former
conventions but we will appear far
from solution of the dangers In
volved. I do not intend to criticise
the strength of any bank operating
branches, because all of them might
be, as some of them are, as strong as
the best. I criticise the system as
a whole, in It's operations, results ana
capacity for fraud. 1t is impossible
| In my Judgment for a branch bank
to render the service which is the
right of the community wherein To-
Gated. and / say this from practical
experience. Ht
Nashville Man Speaks
| Frank o. Watts of Nashville, vice
president Of the National Bankers asso-
citation, was presented and made a little
l
ham upon her remarkable growth. speak
| ing of the state associations work In
| Tennessee, and urged a closer relation
| between state banks associations and
the national association.
E. j. Smyer Of Birmingham made q
comparison of Alabama and New York
banking laws, and In summarizing MS
remarks. said:
ITO summarize: The law of Alabama
taken as whole, Is a blank cartridge;
1t makes a noise. but protects no one. NC
positive action can be taken to regulate
restrain direct or control the action OF
affairs of any bank until the bank is In.
solvent and the damage done. What We
need IL a law that will tend to restrain
and prevent insolvency. not a law te
administer an insolvent bank.
1.-THE law, as 1t stands, ID worse thar
no law, for the public is lulled into 6
sense OF security on the assumption tina
there Is an effective enforceable supervi
sion that protects.
"If there was no law on this subject
each bank would know that In its deal
ings with other banks 1t must 30 act al
to protect itself; and the public woult
know that II must investigate and &C
for It's protection.
"A law for examination and supervi
sion of banks without adequate mean
OF enforcing the commands and prohibi
lions Of the law amounts to nothing.
There may be provisions in such Law
where a money penalty for the violation
OF the provision would be sufficient t.
force obedience There will be provision
in an adequate law on this subject. wher
nothing short Of penal statutes will b.
sufficient to enforce compliance. In add
ton there should be collateral penal laws
to strengthen and fortify the law lor ex
animation and supervision. Under tn
New York law an OFFICER, agent. teller o
I clerk of . bank, who receives deposI
knowing that the bank Is insolvent, 1
guilty OF misdemeanor II the deposit i
under $26: IL guilty Of felony. punishabl
by imprisonment in the penitentiary 1
the deposit is over IS.
Many of the states have penal statute