New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-01-02
LITTLE PRAISE FOR
WILLIAMS'S PLANS
Bank Deposits Now Well
Protected by Capital
and Surplus.
COURT PUNISHMENT
THOUGHT ADEQUATE
Inadvisable to Give Controller
Power TO Inflict Fines for
Minor Violations.

John SHELTON Williams, Controller OF
the Currency, is not a popular man in
Wall Street, not because Of unressons-
bic preiudices on the part Of the bank
ers, but rather owing 10 his arbitrary
methods in dealing with them. The
public utterances Of the Controller,
both written and oral, they say, have
ofttimes given the public an erroneous
impression of the policies governing
all the national banks OF the United
States, when his criticism may have
been aroused by the wrongdoing OF
only a single institution.
Those who are familiar with tho
present Controllers methods Of direct
ing his department assert that he does
not play the part Of a true executive
AS evidence Of his lack Of devotion 10
the more important questions Of his Of
nee bankers say they have received
from him ten and twelve page letters
on trivial matters which bear no rela-
ton 10 problems needful OF immediate
solution.
Controller Williams, in his annual
report submitted to Congress last Mon
day, included among his recommends
tons OF new banking legislation "that
the Controller be empowered 70 re-
move, with the approval of the Secre-
tary OF the Treasury, any director or
officers OF national bank guilty Of
violating any of the more important
Cf 70 L. j
that SUIT be brought against him in the
name of the bank 70 recover for the re
suits of any malfeassnce in Office"
Another recommendation directly af-
fectlng the business policies Of the
national banks was that they be re-
CURED 70 limit their deposits 70 ten
times their capital and surplus.
Both proposals came in for criti-
cism, but on the latter recommends
ton there was some difference Of opin-
ion among the bankers. All agreed.
however, that such a law, II enacted.
would have no direct bearing on tho
banking practices OF the national banks
IN the financial district. The country
banks, however, IN many instances
would be forced 20 increase their capt.
tai 20 continue doing business on their
present scale.
On this subject A. Barton Hepburn,
president of the Chase National Bank,
said: The Controller of the Currency's
recommendation that the national banks
limit their business 20 ten times the
capital and surplus is not considered
important so far as the big New York
banks are concerned, as practically all
Of them are doing business on 20
per cent margin. This question has
been brought up before, but has never
been seriously considered. IN theory
IL might serve 20 give greater protec-
ton 10 the depositors Of the banks, but
as a rule their interests are well pro-
tected under the strict regulations Of
the present banking laws"
Current national banking figures
show that the average capital and sur
plus is approximately 81 per cent OF
the total amount of deposits, but there
are a number Of national banks whose
deposits amount to more than ten times
their capital and surplus. In this case
the first margin of protection Is only
10 per cent, or less, of total deposits.
n such a bank has loans outstanding
equal 10 its deposits and suffers 10
per cent loss in loans, this would wipe
out both capital and surplus and rem
der the bank unable TO pay its de-
positors in full.
The Controller. therefore, suggests
that the national banking act be amend
ed so as TO provide that no national
bank shall be permitted 70 hold de-
posts in excess of ten times its unm-
paired capital and surplus. He even
suggests eight times as a safer mar
gin. SO as not to restrict a banks op-
erations nor limit its growth, it is sug-
gested that arrangements may be
made 70 increase the capital 70 SUI.
iicient amount whenever the OCCASION
arises.
While bankers admit that there Is q
certain rightly in regard 70 the espl'
talization of banks IN TINS c0uhII!'
they point out that the Controller APP
nears 70 overlook the fact that double
stock liability is provided in the ma
tional banking law which is calculated
IN meet such contingencies when they
arise The general custom ~ the
T-nited States is for bank 10 have its
+otaI capital subscribed and fully paid
an Only in case Of liquidation and in
soIvoncv are stockholders called upon
20 subscribe additional funds, but new
ertbeless they recognize that they are
always liable for this further obligs-
ton.
Regarding the Controllers proposal
that he be empowered 70 remove bank
officers practically at his discretion. the
opinion was unanimous that 10 put
such a weapon in the hands OF man
of Mr.. Williams's temperament would
be most inadvisable. Both friend and
foe declare that the Controller is
man of violent preSudlces, and would
be swayed by personal feeling. When
a bank officer has once incurred his
displeasure il would be difficult for
him, bankers say, 70 convince the Con-
troller of his innocence, should any o.
his acts come up for investigation.
Punishment fof banking malfea-
sance should remain entirely in the
hands of the courts-an impartial tn
bunal," was the substance Of bank
ers' comment on the Controllers rec
that he be empowered 10
act in such matters.