The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1913-01-02

benefit to the state department in
helping TO enforce the banking laws
of the state. AT times he is power
less TO enforce the law in certain
cases, and as a result a bad condi-
tion will invariably follow. particu-
larry in the matter OF the collection
of zines imposed on banks for fail
ing TO make reports when requested
by the department.
Make Good Impaired Capital.
In the case OF the impairment of
capital. the examiner finds that the
stockholders in the majority of the
cases viii refuse 10 make an assess
ment on the stock, with the idea OF
forcing the minority stockholders 49,
Il voluntary liquidation OF submit to
suspension by The examiner. Tho
law does not give the bank examiner
t o intercede for The minority stock
holders and force the majority TO
make concessions which make ii inn
possible of contiscating the minority
stock. He suggests that the exam
iner be joined with the board Of di
rectors, which would then give him
authority to levy an assessment to
make stronger the impaired capital
where The majority refuse TO act.
Opposes zone Man" Bank.
The examiner makes a strong on
tention against the "one man bank,
as he has found it to eXist in a mum
Der Of cases among the banks. He
suggests that the directors be in
creased from three to five, and re-
quire from the five a closer attend
ance on the meetings of the board OF
directors, as he finds under the pres
ent conditions, but very few, If any
of the directors really understands
the conditions OF the bank with
| which they are associated. If the
work oil the banking department is
to become effective the examiner be
licyes that it should be necessary for
the directors TO meet with the eX-
amiuer when he goes over the affairs
of the bank. and recommends that a
| director be disqualified as such when
he fails to attend at least one meet
ing Of the directors each year.
Asks Double Liability.
AS Il further protection to he
stockholders and depositors. the eN-
amjner recommends the double liza
bility of stockholders He finds that
it is the history of failed banks in
The revealed facts had this been in
effect it would have resulted IN the
non-suspeusion of several of the in
situations which went under in the
past two years. 1t is this lack OF APP
plying the extra liability OF the pres
ent law which has caused suspension,
and which, in his opinion, could have
been obviated under the double liza
hility. Under the present law the
stockholders are only expected to
meet the extra liability when the
conditions require 1t.
Should Not Loan to Officers.
To avoid the loaning of funds to
officers of the bank, the examiner
makes the following statement:
Much pooling, wrongful diversion
and ENHANCEMENT of funds from
loaning TO associated interests could
be prevented by amending Sec. 30
Art. 2, by Inserting the word Cor
poration. and making it read as fol.
ows: No individual, firm or cor
poration t~ransacting a banking busi
ness in this state shall loan to an.
! single corporation, firm or individu
al, including such loan or loan
made to the several members of sucl
corporation, firm IL co-partnership
more than twenty-five per cen o
he paid up capital and surplus o
such bank ! invite close inquir.
nto the preceding suggestion ant
rust some action will be taken
Objects to Ovcrdrafts.
The examiner makes a strong pro
test against the %overdraft system EN-
ployed by many of the state banks
which he has found leads to EN-
barrassing conditions, and oftimes 1,
he suspension of the bank. The de
partment has been warning on tn,
ovcrdraft for the past five years. Blu
the examiner maintains that it viii
not cease until some legislation i
rendered which will make il a crime
with appropriate penalty, for an.
firm or corporation to force AN over
draft.
In a list of ~ banks and trus
companies the examiner shows III
Increase in capital stock in two year
amounts to $5T6,625, and that tn,
total increase for the same perio'
of the capital stock of all state
banks is ~$1,02S,325.