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 Dep0si-
tors Accounts Urged as
Means to Prevent Fraud
From a staa correspondents.


LANSING. Mich, Jan. l2.-Sweep-
ing changes In Michigan's banking
laws were recommended by Banking
Commissioner +. II. Doyle In his an
nual report, made public today.
The commissioner recommended
the following pieces OF legislation:
IA law requiring total capital OF
state banks to be paid IN at the time
of organization or before a charter is
issued, by the state. But hall or 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"
PA law. prohibiting the ownership
OF private banks by stockholders OF
directors OF state banks unless the
state Is given authority TO 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, a
state bank with a minimum capital or
q
to be determined by the present Sc
curities commission. have come TO
the conclusion that In no case should
private banks exist in Michigan un-
less subject To state supervision. In
other words, ! recommend the pass
age OF such 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 TO state and national
banks, sufficient length OF time be
ing allowed to bring about such liquid
alton or conversion without working
any undue hardship"
ga law prohibitinE> excessive loans
to pseudo corporations\ THE Michi-
gan laws permit loans OF certain
percentage OF the capital and surplus
TO any one person, firm or corpora.
tion which would seem most\ con-
servative." says the report. III is
possible, however, for perSon en-.
gagged I'm several branches fl trade
to borrow for himself. persoIally, this
limit, and also to obtain (the same
amount for each branch ON his busi-
ness II he organizes each \division
into separate corporation. wNh him
self. wife. sons or daughters, or even
employees, as the only stockholders.
The danger Is increased hundred
fold where the dominant individual In
each corporation Is also a controlling
spirit I'm the bank"
Amendment OF the banking laws
so as to allow state banks and trust
companies to become members OF the
federal reserve system in case the
present reserve board interprets the
acts as permitting such a practice.
5-A law requiring the veriication
OF depositors' balances at stated inter
walls. Many banks in other states, the
report states. make annual verifica-
ton of depositors' balances by means
OF letters stating the exact conditions
OF his account and request him to
compare Il with the figures shown In
his passbook Still others use the
newspapers for this purpose, refer
ring TO accounts by passbook mum
bers only In recommending this bit
NJ 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 pay
ing teller. entered customers depos-
its in the banks books az a smaller
figure than on the depositors pass.
book or certificate OF deposit The
actual deposits In the institution were
approximately s125.000 more than
shown ~un the banks books What
verifcation there now Is In Michigan
Is done by examiners OF the depart
ment's stan
Ninety-nine per cent OF the timber
.