Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1915-01-15
FEDERAL SYSTEM
IS NOT ATTRACTIVE
Commissioner Smith Makes Inter
esting Comments Upon the New
Financial Conditions

State Commissioner or BANKING VIII
lam Il. Smith is of the opinion from
what he has observed that officers of
banking institutions operating under
State charters have determined that
any advantages which may accrue TO
them under the new federal system are
more than balanced by what they
now. possess. The commissioners re-
port was handed to Governor John Il.
Tener late to-day and in addition to
giving a summary of the operations or
the department for the year ending
November 80. 1914. contains OBJ
servations on conditions and some
recommendations.
In the discussion of the federal act
the report says:
The year just closed has been of
interest by reason of the amendment
to the national laws on banking and
the creation of the regional reserve
banks. Two thoughts in relation
thereto have been of paramount in
terest-the first being as to whether
it would be advantageous to our banks
and trust companies to be associated
as members of this system, the other
as to their legal right, under the laws
| of PENNSYLVANIA. TO become members
| If advantages to their respective COR
porations would thereby result.
I'm the last annual report of our
| department mention was made OF the
fact that there might be some reason
| to make recommendations to the
| Legislature in this regard. The re-
| gional banks have opened and have
been running along for three months,
| but there does not appear to be any
| desire, so far as we are advised, by any
| institution chartered by this common
wealth to join this system. 1t is our
| conclusion, after careful observation,
that the officers and directors who may
/ have taken this matter into consids
| GRAFTON have finally decided that any
advantages offered by the new federal
act are more than offset by the prtvi-
| leges which they now enjoy by their
| state charters. In fact, from infor-
nation received there appears to have
been but one state bank which made
application for membership and this
has recently been withdrawn. There
is nothing, therefore, for the depart
ment to consider or advise upon or to
refer to the Attorney General for a
legal opinion as to the right of a bank
or trust company in this state to ac-
cept membership in this national sys-
tenn.
One bank under our supervision
surrendered its charter and became
a national organization
Supervision Over $40
The report covers $40 institutions
293 trust companies, 175 state banks
l ] savings institutions, l unincorpo.
rated savings fund, 2 savings banks in
liquidation, banks in liquidation,
banks which had not commenced bust
ness when reports were called Novem-
Der ,, 0 trust companies in liqui.
dtion and trust companies which
had not commenced businels, 115 pri
vate banks and II private banks which
filed bonds and are exempt.
There were II state banks chartered
with $4SO,000 capital and trust com
panies with S1,125,000 capital in the
report period.
. The expenses of the department
were S99,13S.27, of which S70,399.S s.
went for examiners expenses and sal
aries. The revenue from examination
: and other fees received by the depart
. ment was S63. .001.S4.
The number of examinations madt
by the department force in the yea
was 1889 and four calls We're mad,
for statements.
The commissioner says that whil
the year was "one of the most tens,
anxiety to our financial institution
since the inception of the nationa
bank laws fifty years ago" conserv
ative management prevailed and re
duction of values and profits had mucl
, | to do with the fact that there were III
failures in consequence. 1t Is statet
that the department will continue &
; view impairment of surplus as seri
| ouSlN dS VI CdilAtdls
, 1t is stated that although not mem
bers of the regional banks, our Stat
institutions cannot be denied the bene
: fits which it is believed will accru
; therefroni. the first of which is con
ceded by all bankers to be an elasti
1 currency in case of general panic.
There will not be any change in col
5 lections and the reserve system viii
2 continue as heretofore.
1t is stated that the number of trus
: companies will be further increase
: this year.
, In comments It is said that "unde
: the general corporate laws of the Stat
t there has been an alarming liberalit
: in the privilege of purchasing invest
ments"; criticism is made of buildin
and loan association funds bein
loaned through men obtaining Iarg
commissions. and it is said that tn
: business of 'insuring the completion @
; building operations in which the in
vestors may not have sufficient fund
3 of their own has been found as dan
{ gerous as that of engaging in surety
ships of contractions."
: The commissioner concludes: TAX
ing into consideration all of the hnan
cial institutions embodied in this re
port, the general condition shows a
improvement in methods and a stead
[ increase in resources"