The Detroit times., 1915-01-12
WOULD CLOSE
PRIVATE BANKS
In MICHIGAN
Commissioner Doyle Believes
They Should Be Abolished
Except in Villages
SWEEPING CHANGES IN
LAWS RECOMMENDED
Publication of State of Deposi-
tors Accounts Urged as
Means to Prevent Fraud
From a staa Correspondents.

LANSING, Mich, Jan. l2.-Sweep'
ing changes in Michigans banking
Z laws were recommended by Banking
Commissioner Z. II. Doyle IN ms an
nual report, made public TO-DAY
The commissioner recommended
the following pieces or legislation:
IA law requiring total capltal o.
state banks TO be paid in al the time
OF organization or before charter Is
issued, by the state. But half OF the
capital must be paid in under the
present laws. Numerous notes repre-
senting the balances due on STOCK
have been found in many banks, ac-
cording to the commissioner. Pass
age of this law will, according to Com
missioner Doyle, attract as stockhold-
ers persons OF strong financial re-
sponsibility and thus make addition
al stockholders liability mean some
thing"
"a law prohibiting the ownership
OF private banks by stockholders OF
directors OF state banks unless the
state is given authority 10 examine
private banks. In this connection the
report says: THE opportunities Tor
manipulation are many and the ease
with which assets are switched, and
have been switched in the past, make
such regulation necessary. Express
ing his own opinion, the commission
er declares that all private banking
organizations should be abolished ex-
cept in small villages where, by rea-
SON OF lack OF sufficient business,
state bank with minimum capital OF
$4,000 could not possibly pay, this
to be determined by the present Sc
curities commission. | have come 10
I the conclusion that in no case should
private banks exist in Michigan un-
less subject to state supervision. In
other words. i recommend the pass
age OF such a law as would eliminate
private banks In cities or villages
capable OF supporting state bank
with a minimum capital OF $4,000,
the elimination 10 be by liquidation
or conversion 10 state and national
} banks, sufficient length OF time be
ing allowed TO bring about such liquid
alton or conversion without working
any undue hardship"
3-A law prohibiting excessive loans
to pseudo. corporations. THE Michi-
gan laws permit loans OF a certain
percentage OF the capital and surplus
TO any one person, firm or corpora
tion which would seem most con-
servative," says the report. 1T IL
possible. however, for a person en-
gagged In several branches of trade
TO borrow for himself. personally, this
limit, and also to obtain the same
amount for each branch OF his bust.
ness IL he organizes each division
into a separate corporation, with him
self wife, sons or daughters, or even
employees. as the only stockholders.
The danger is s~increased~ a hundred
fold where the dominant individual in
each corporation is also controlling
spirit in the bank"
4--Amendment of the banking laws
so as 10 allow state banks and trust
companies to become members OF the
federal reserve system in case the
present reserve board interprets the
acts az permitting such practice.
5--A law requiring the verification
or depositors' balances at stated inter
walls. Many banks in other states the
report states make annual verifca.
tion OF depositors' balances By means
OF letters stating the exact conditions
OF his account and request him to
COulDdIt " Will Nlt liEuItS SHOWN IN
hfs passbook Still Others use the
newspapers for this purpose. refer.
ring TO accounts by passbook mum.
bers only. In recommending this bit
~ legislation the commissioner re
fers to the failure of the F.. Jossman
Stat ebank. in which the cashier. who
acted also as both receiving and paw
Ing teller, entered customers depos
its in the banks books az smaller
squire than on the depositors pass
book or certificate OF deposit. The
actual deposits In the institution were
approximately s125. 900 more than
shown on the banks books. What
Notification there now is IN Michigan
Is done by examiners OF the depart.
ment's stan
GA law to safeguard the organiza.
tion OF state banks by giving the
banking commissioner power 10 for.
bid such organization OF banks by un.
desirable parties or persons unht,
alike from the standpoint OF char.
acfer. financial responsibility or ex.
I periencel" In Michigan. AT the pres
enf time! such persons may organize
+ hanks and the law confers no power
On the baaking denartment TO with