The Washington herald., 1913-06-04
BANKS OF CITY
SUBJECT OF BILL
Representative Johnson Pro;
poses Regulating District
Fiscal Institutions.
HIS MEASURE Is DRASTIC
Interlocking Direetorates Are Opposed.
Provision Aimed at So-ealled
"Real Estate Ring"

Applying to all financial institutions
in the District the strict measure of
regulation which Representative ProHu
tvs bill, of recent introduction, applies
TO insurance companies, Representative
johnson of Kentucky, chairman of the
House District Committee, yesterday
opened fire upon the SOCIAL financial
ring in Washington.
The Johnson measure adopts methods
of regulating banks and trust COM
panies as to their real estate holdings,
organization expenses, and dividends.
much the same as does the Prouty bill
for insurance companies. except that
under the johnson measure the super
vision of banks is placed under the d.
rection of the Comptroller of the Cur
rency, and the insurance companies I'M
der the control of the District Superin-
tendent of Insurance.
Many Fcntures Eliminated.
The new bill embraces many OF the
regulatory measures for insurance COM
panies contained in the Prouty measure,
but a number OF important features are
eliminated. When the johnson measure
comes up for consideration by the House
District Committee, probably at the next
session of Congress- an attempt I'M
doubtedIy will be made to add to ii sew
bill, or. what would be more preferable,
cut out the insurance features OF John
sons mAsure and report out the Prouty
bill in Almost its present form.
The Johnson bill aims a severe blow
at a financial condition which it has
been broadly charged exists in Wash
ington. The measure prohibits interlock-
ing directorates in banks and financial
institutions or competing organizations.
Then ii declares that trust companies
which handle real estate are in compe-
tition with real estate firms. In other
words, it prohibits members of banking
institutions from having a voice in the
control or direction of real estate firms
or corporations
The bill is framed as the result of a
general charge that the real estate and
financial interests of Washington are so
closely interlocked that financial institu-
tions are conducted largely for the bene-
Mt OF real estate SPECTATORS While this
general charge never has been proven, il
has come to be taken as an established
fact in many quarters.
Outline of Bill.
Some of the striking features of the
bill in brief. are outlined, as follows:
All financial companies-national banks,
savings banks. trust companies &c
must SUBMIT organization plans ana lit
erature TO the Comptroller of the Cur
rency before organizing.
In organizing or increasing capital
stock, no institution shall spend more
than 10 per cent in organization ex-
penses.
No company shall pay a dividend ex-
cept from net earnings accumulated dur
ing the dividend period next prior to the
date of payment
No financial institution shall be a
stakeholder in any other corporation. In
terlOcking drectorates are absolutely
prohibited.
No such institution shall carry real
estate holdings aggregating more than
- per cent of its combined capital and
surplus, and such real estate must be
held only as the principal office of such
company in the District. Companies now
holding real estate in violation of this
clause are given three years from the
Passage of the proposed act in which to
dispose Of such holdings.
Financial institutions and insurance
companies are given the right to appeal
from the decisions of the Comptroller of
The Currency and the superintendent OF
insurance, respectively, to the Supreme
Court Of the District of Columbia.