Americus times-recorder. [volume] (Americus, Ga.) 1891-current, 1910-04-05
REFORMS NEEDED IN STATE
BANKING SYSTEM.

BANh 1AU S1SIE4s
That is a very serious charge that
State Treasurer Brown brings against
the state banking system, that under
It some Of the banks, how many and
which he does not indicate, are run al
most entirely in the interest of their
directors. that the entire assets of
these institutions are loaned out to
the governing body, and that instead
of being a public convenience suehi
banks have really degenerated into
what might be termed a private snap
receiving the money OF the public uni
der the pretense Of doing a general
banking business when, as a matter OF
fact, the banks are nothing but an ao-
pendage TO the business schemes OF
the few directors.
Such a statement is liable to upset
confidence in the banking system OF
Georgia. If st is correct, and it isl
hardly probable that the state treas
urer would make such a charge With
out being in position to amply sus-
tain it, there is a pressing necessity
for a radical change in the laws gov
erning the state banks. Under the
national banking system the amount
that any officer Of the institution can
Obtain on a loan is strictly limited. The
interests of the public are safeguarded
by SUCH restrictions. Why the state
has failed to attach similar conditions
to the charters issued by it we do not
know, It was doubtless an oversight
But now that attention has been ofic-
tally called to the remissness of the
law in this respect the legislature at
this summers session should take
immediate. steps to correct it.
We do not believe that any large
number of state banks are guilty Of
the practice referred to by tie state
treasurer. The vast majority of them
are conducted on broad business lines,
to afford the amplest credit possible tc
the business communities they serve
and not TO advance the schemes Of
their directors. It is really to be re-
GREETED that the state treasurer couIo
not have been more specific in his
charge. An enumeration Of the guilty
banks might have been in order, to re-
lieye the public mind and free from
suspicion the others. It is a safe as
sert:on, we wager, that not one out OF
ten has allowed its policy to run IN
the direction indicated by Mr.. Brown
The other nine should not suffer in
the public esteem because Of the NAL
practice, even though it is not dis
tinctly prohibited by law, of the few.
The matter Of branch banks also
receives attention from the state treas
urer, and it is apparent, if his state
ments are well based, that there is am
pie ground for some legislative reform
work in this connection also. As lie
points out under the existing law, a
bank with small capital can start
several branch banks, without any
addition to its capital, greatly in
crease It's deposits, without providing
adequate additional protection for its
depositors in the shape of additional
capital. This, the State Treasurer
holds, is not safe banking.
Perhaps there are other weaknesses
.of the present state banking system that
need exploiting with view to reforms
at the hands of TIE General AS
sembly. The State Treasurer is 10 be
commended for bringing them to the
attention of the public. There is
nothing so powerful in forcing desired
reforms as wide publicity of the facts
At the same time it is possible that tle
State Treasurer might, in pointing out
these defects in the law, and the IT.
Irregularities growing out of them, have
laid more stress upon the fact that the
things complained of are confined to
a minority of the banks. Public con-
fdence in the state banks should not
be impaired. They are as a rule mag
niicently conducted institutions and
do not suffer in the slightest, in the
ability, honesty and conservatism of
their management, by comparison with
the best regulated national banks.