The Clarksburg telegram. [volume] (Clarksburg, W. Va.) 1874-1926, 1911-01-19
BANK
.Gll(1TflIlv l-llllI'- N
.Ill1lUIll UlV[IV
AS Well as That of Trust Com.
panies in Publication by
Commission.

WASHINGTON, D. G., Jan. IA
very comprehensive history o
state banks and trust companies
since the creation of the nationa
banks in 1864 has been issued by
the National Monetary Commission
It has been prepared by Prof. George
Barnett, of Johns Hopkins Univer.
sity.
The various provisions of the laws
of the different states regarding
loans. reserves, capital. stockhold-
ers' liability, supervision and other
features 6f banking are exhaustive
| ly discussed.
State. banks have been steadily
snpplautins national and private In
stitutiops having small capital, but
Prof. Barnett's statistics seem to
shcw that there is little difference IN
the percentage of failures among
state banks or national Institutions,
although the rate of insolvency in
trust companies seems TO be some
what higher.
Professor Barnett points out that
as trust companies have gradually
given up fidelity Insurance and the
guaranteeing OF land titles. and have
assumed general banking business,
the legal restrictions imposed upon
them by the various states have be
come similar to the restrictions JIM
posed upon the banks. The present
tenteney Of state legislatures Is to
disregard names and lesislate for the
kna of business actually done. For
Instance, seven states CSew Hamp-
Shire, michigan, Connecticut, Massa-
chasetts. Rhode Island. California
ana TeXas) have provided that saw
ifss deposits in trust companies
shall be invested in the same way as
funds held by mutual savings banks.
and that the assets of savings depart
ments be segregated for the benefit
VI SAVINGS uSpOSllOlS.
n five states alabama. Ohio,
Oregon, MissoaTi and Nevada) The
stale constitution provides that
stockholders shall be chargeahle
oaiy for unpaid stock subscriptions.
IN eleven other state CArizona, Ar
kansas, Louisiana, Mississippi, New
Hampshire, New Jersey, Rhode Is
land, Tennessee. Virginia, Connecti-
ent and Delaware) there are no gen
erai laws imposing additional llabil-
ity on stockholders. In all the re-
naming states and territories where
stale banks are Incorporated an adj
[iitional liability is imposed on stock
holders" and in all but two the addi-
tloRal liability imposed is equal to
the amount OF stock held. How
ever, THE imposition of the statutory
liability on The stockholders of state
banks nd trust companies has not
proved of great service as a protec-
Ton 10 bank creditors against loss. /
because, (l) it is usually a liability
% individual creditors and not to
The bank, 90 it is usually a second /
asy liability, aad go transfers OF
sock to evade the liability are diff
cult to prevent.
rs Prof Barnett points out, with
our system OF small separate banks.
each bank having a limited number
OF customers for loans, 1t is we'll to
restrict Che amount loaned to sin
gle borrower. The states have gen
crafty followed the national bank
Law and have limited the amount
that state bank or trust company
can loan to single borrower to 10
;tn per cent of the capital and sur
plus of the bank Certain secured /
loans are usually excepted from this
provision. Three states california,
Nebraska and oklahoma) forbid
loans to officers, and other states re-
: rict such loans.
Most state banks, unlike national
banks, are allowed to loan on real
estate security, although there are
provisions "in some OF the state laws
defining the character of the loans
Rhieh may be made on real estate
Such loans constitute much greater
hereentage Of the capital of ranks in
mali cites than in larger ones. The
ability to make real estate loans is
valuable privilege TO the banker
no does not have a large clientele.